Court Opinion

ID: 6679742
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:19:40.716283+00
Date Added: 2024-06-11T16:00:48.604673
License: Public Domain

Mr. Justice McIver,
dissenting. Being unable to concur in the conclusion reached by Mr. Justice Pope, upon the main question involved in this case, I propose to- statemyown views. As I understand it, it is, and must be, conceded that *217the defendant, Lucy J. Green, held the sum of $3,000, received by her as the amount of the insurance on the dwelling house, in trust for herself for life, and for the remaindermen mentioned in the first clause of her mother’s will. This was expressly decided under the former appeal in this case, and is, therefore, undoubtedly, the law in this case, at least, and must bé, and, as I understand it, is fully recognized 'by all parties concerned. I may add, that I think it is the law of the land, applicable to- every case which may be presented under similar circumstances. .
4 The next inquiry is, what is the nature of this trust ? Mr. Justice Pope, in his opinion, seems to regard the trust as a resulting trust,. and though he does say: “the transaction falls under the second division of -resulting trusts in the classification of Mr. Perry, previously referred to-,” yet the cases which he cites, in a subsequent part of his opinion, to vindicate his conclusion that this was a resulting trust, are all cases (except the case of Mathews v. Heyward, 2 S. C., 245, which will be presently more particularly noticed), in which the trust sought to be set up could only fall under the first division of Mr. Perry’s classification. It seems to- me, however, this is not a case of a resulting, but of a constructive trust. As is said in 2 Pom. Eq. Jurisprudence, sec. 1030: “The second main division of trusts * * * -embraces those which arise by operation of law, from the deeds, wills, contracts, acts or conduct of parties, either with or without their intention (italics mine), but without any express words of creation;” and in a note to that section, the distinguished author says: “The most natural and simple name by which to designate the entire class of trusts arising by -operation of law, would be ‘implied trusts,’ as distinguished from ‘express trusts,’ created by words intentionally used.” In the same section, he says: “This entire grand division consists of two- general classes: resulting trusts and constructive trusts. The line of distinction between these two classes is clear and definite; the failure to observe it has produced much unnecessary confu*218sion.” The learned author then proceeds, in sec. 1031 et seq., to define and describe resulting trusts; and in sec. 1044, he says: “Constructive trusts include all those instances in which a trust is raised by the doctrines oí equity for the purpose of working out justice in the most efficient manner, where there is no intention of the parties to create such a relation, and in most cases contrary to the intention of the one holding the legal title, and where there is no expressed or implied, written or verbal declaration of the trust” (italics mine). And after giving various instances in which a constructive trust arises, the author, in sec. 1049, says: “Another important form of the trust arises from the acts of persons alreadjr possessing some fiduciary character, or standing in some fiduciary relation. Whenever a trustee, or other person in a fiduciary capacity, acting apparently within the scope of his powers — that is, having authority to- do what he does- — purchases property with trust funds, and takes the title thereto in his own name, without any declaration of trust, a trust arises with respect to1 such property in favor of the cestui que trust or other beneficiary. Equity regards such a purchase as made in trust for the person beneficially interested, independently of any imputation of fraud, and without requiring any proof of an intention to' violate the existing fiduciary obligation; because it assumes that the purchaser intended to act in pursuance of his fiduciary duty, and not in violation of it. This doctrine is of wide application; it extends tO' trustees, executors and administrators, directors of corporations, guardians, committees of lunatics, agents using money of their principals, partners using partnership funds, husbands purchasing property with money belonging to the separate estate of their wives, parents and children, and all persons who' stand in fiduciary relations towards others. Equity jurisprudence contains few more efficient doctrines than this in maintaining the beneficial rights of property.” If this be the rule, even where the trustee had authority to make the purchase a fortiori, it applies to a case where the purchase is made without author*219ity; and it is so laid down in sec. 1051, Pom. Eq. I desire to add just here, that I have felt at liberty to say that, in my judgment, this is a case of a constructive and not a resulting trust, because I do not understand that this Court, in the 7 case of Rogers v. Rogers, 52 S. C., at page 392, approved the classification of resulting trusts adopted by Perry in his work on Trusts, as is .-stated in the leading opinion; for, Mr. Justice Jones, in delivering the opinion of the Court, stated the classifications of resulting trusts, as made by Pomeroy and concurred in by Adams in his work on Equity, by Perry, and as found in the Am. & *Eng. Ency. of Law, without expressing a preference for either one of the classifications, and then proceeded to- show that the testimony in that case did not bring it “under any of the classifications above.” It may be as well also to correct two manifest clerical errors or misprints in the opinion in that case. The citation from Pomeroy Eq. Jur. should be sec. 1031, instead of 103, as the, last named section makes no reference whatever to resulting trusts; and the word “third,” in the eighth line from the top of page 393, should be “second.” But whether the trust in this case should be properly designated as a constructive or as a resulting trust, is a matter of no real practical importance in this discussion; for even if it should be properly regarded as a resulting trust, it must necessarily fall into- the second class mentioned by Mr. Perry, to wit: “Where a person, standing in fiduciary-relation, uses fiduciary funds to purchase property and takes the title in his own name,” which is,, substantially, the same as one of the instances in which a constructive trust arises as described by Mr. Pomeroy in sec. 1049, above quoted. If, then, the life tenant, Miss Lucy Green, stood “in a fiduciary relation” towards the remaindermen, and if the insurance money — $3,000—was a fiduciary fund in her hands, as has been heretofore determined by this Court under the former appeal; and if the whole, or any part of that trust fund, has been used by her in acquiring the property mentioned in the complaint, then, under the authority above *220cited, it follows, necessarily, that such property, so soon as it was acquired by the life tenant, became impressed with the trust above described, either in whole or in part, as the case may- be, and the Court should so declare.
5. The next inquiry, in natural order, would be whether the whole or only a part of the trust fund was used in acquiring the property in question; but this being a question of fact, need not be pursued in detail in a mere dissenting opinion. I do not, therefore, deem it necessary to say more on this point, than that the undisputed facts as found by the master, are, in my judgment, quite sufficient to' show that the property above described in the complaint, and fipon which the plaintiffs ask that the trust thereby impressed upon it may be declared, was in reality acquired solely by the use of the original trust fund.; for although the Stanley note was at first paid by Miss Green out of her own funds, and the real estate at the corner of Bull and.Pendle-ton streets were originally paid for, in part, by Miss Green out of her own funds, yet these payments were reimbursed to1 her out of the proceeds of the sale of the brick yard tract, upon which, according to my view, a trust was impressed by the facts set forth in the pleadings and the testimony. But if I am in error in concluding that the whole of the property in question was acquired by the use of the trust fund, and that, in fact, a portion of said property was acquired by Miss Green by the use of her own funds, it becomes necessary to* inquire what is the effect of that. In such a case, has the cestui que trust the right to follow the trust fund into* the property which the trustee has acquired, partly by the use of the trust fund, and partly by the use of the trustee’s own funds, and -have a trust declared upon the property, or rather upon such a proportion of the property as is represented by the amount of the trust fund used in its purchase, leaving' the remaining portion of the property in the hands of the trustee unaffected by any trust; or is the cestui que trust only entitled to a lien on the property to* secure the trust fund? As I understand it, Mr. Justice Pope, after conced*221ing that the trust fund, at least to the extent of $2,200, was invested in the brick yard tract, holds that the remainder-men are not entitled to1 have a trust declared upon a proportionate part of the said tract, hut áre only entitled to' a lien' on so much of the proceeds of the sale of that tract as are now in the hands of Miss Green, to- wit: the bond and mortgage for $30,000, for the forthcoming of the trust fund ($3,000), at the termination of the life estate. It seems to me that there are insuperable objections to1 such a conclusion. In the first place, the well settled and salutary rule of equity is that when a trustee purchases or otherwise acquires property by the use of trust funds, such property becomes at once impressed with a trust, at least to- the extent to which the trust fund has been used in its acquisition; and such property does not stand as a mere security for the trust fund — 2 Pom. Eq. Jur., sections 1049 and 1051. For in such a case: “Equity regards the cestui que trust} although without any legal title, and perhaps without any written evidence of interest, as the real owner, and entitled to all the rights and consequences of such ownership.” Sec. 1058. It, would, therefore, be altogether anomalous (not to' use any stronger term) for a Court of Equity, which regards the cestui que trust as the real owner of the property, to- hold that the cestui que trust has a lien on his own property. Such conclusion would also- be in direct conflict with that broad principle of equity, which is universally acknowledged, “that a trustee, or person clothed with a fiduciary character, shall not be permitted to use his position or functions so- as to obtain for himself any advantage or profit inconsistent with his supreme duty to his beneficiary,” which principle, Mr. Pomeroy says, in sec. 1050, extends “to all actual and quasi trustees.” It is very obvious that this wise rule of equity has the most salutary efficacy in protecting trustees from the temptation to speculate with trust funds, and thereby preventing any loss or diminution of such funds; and hence the rule should never be overlooked or disregarded. Plere, however, I desire to disavow, in the most emphatic terms, any intention or disposi*222tion to- impute to the trustee, Miss Green, any wrong or improper motive or intention whatsoever. Besides her high character, which, of itself, would be sufficient to negative any such imputation, it is perfectly manifest that until s'he was otherwise informed by the decision of this Court, under the former appeal, she honestly believed that the insurance money was absolutely her own, unaffected with any trust, and hence that she had the perfect right to dispose of it as she saw fit. It is, and must be, conceded by every one that her intentions were not only innocent, but of the most commendable character. But, as has been shown in the authorities above cited, the question of intention plays no part in considering a trust of this kind, and the Court is bound to determine this case just as it would any other, upon the well established principles of equity. And here I may add, that I am unable to- perceive any hardship or injustice to which Miss Green would be subjected under the view which I have adopted. For she would still be entitled to hold and enjoy all the property upon which I think a trust should be declared, in precisely the same manner and to the same extent as she was entitled to hold and enjoy the property originally devised to her by her mother’s will; and it seems that she has been for several years in the receipt of quite a handsome income from such property, and this she will foe entitled to-enjoy as long as she lives. The principles above laid down do not rest alone upon the authority of Mr. Pomeroy, but are also fully supported by other authorities, as I will proceed to show. Thus, in 2 Story Eq. Jur., sec. 1210, as another illustration of the doctrine of implied trusts, it is said: “If a trustee, authorized to- purchase lands for his cestui que trust or beneficiaries, should purchase lands with the trust money, and take the conveyance in his own name, without any declaration of trust, a Court of Equity would, in such a case, deem the-property to be held as a resulting trust, for the persons beneficially entitled thereto. * * * In every such case, however, it must be clear, that the land has been paid for out of the trust money; and if this appears, a trust will *223be implied, not only when the party may be presumed to' act in execution of the trust, but even when the investment is in violation of the trust. For, in every such case, where the trust money can be distinctly traced, a Court of Equity will fasten a trust upon the land in favor of the persons beneficially entitled to the money.” And in sec. 1211 of the same volume, it is said: “If a trustee should misapply the funds of the cestui que trust, the latter would have an election either to take the security or other property in which the funds were wrongfully invested, or to demand repayment from the trustee of the original funds.” Now, in this case, it is conceded that the application of the original trust fund to the purchase of junior liens upon property was a misapplication of such funds; and the plaintiffs, by this action, have elected to pursue the property in which the trust fund was wrongfully invested, rather than to demand of the trustee repayment of the original trust fund. See, also, sec. 1258. So-, also, in sec. 1260, it is said, that where a trustee, in violation of his duty, should acquire land by the use of a trust fund, and take a conveyance in his own. name, the cestui que trust would be without remedy at law. “But a Court of Equity would hold the cestui que trust to be the equitable owner of the land, and would decree it to- him accordingly.” And in sec. 1261, it is said: “Nor is the doctrine confined to- trustees, strictly so- called. It extends to- all other persons standing in a fiduciary relation to the party, whatever that relation may be.” See, also-, sec. 1262, where it is said: “In cases of this sort, the cestui que'trust- (the beneficiary) is not at fill bound by the act of the other party. Fie has, therefore, an option to insist upon taking the property; or he may disclaim any title thereto, and proceed upon any other remedies to- which he is entitled, either in rem or in personam In all these quotations from Story’s Equity, the italics are mine.
*2293 *223I propose next to show that these fundamental principles of equity jurisprudence, laid down by two standard text-writers, have been recognized in the decided cases, and have *224not been repudiated, nor even disapproved in a single case, so far as I am informed, where such principles have 'been invoked for the protection of the rights of a cestui que trust. In the case of Oliver v. Piatt, 3 How., 333, the Supreme Court of the United States distinctly recognized and followed the principles above laid down by the text-writers. So in the case of McNeil v. Morrow, Rich. Eq., Cases, 172, the same principles were distinctly recognized. The facts of that case may be concisefy stated as follows: James R. Morrow, one of the defendants, being the guardian of his brother John, held a judgment against Tabitha Morrow as part of the assets of his ward’s estate. Tabitha, being unable to pay her debts, conveyed, five slaves to the said James R., upon condition that he should pay her debts. Thereupon the said James R. entered satisfaction on the judgment. James R. Morrow having become insolvent and not having paid any of the debts of Tabitha, his letters of guardianship were revoked, and the plaintiff, McNeill, was appointed guardian of John, in his place, and he filed the bill to restrain the creditors of James R. from selling the said slaves/and to subject them to the payment of the judgment against Tabitha in favor of plaintiff’s ward. The bill was sustained, and the slaves were ordered to be sold and the proceeds applied to the payment of the amount due oh the judgment. Judge O’Neal, in delivering* the opinion of the Court, after saying that James R. received the slaves impressed with a trust, and that when he entered satisfaction on the judgment, it operated, in law, as an acknowledgment of the receipt of the amount due on the judgment, uses this language: “In w'hat he received it, whether in money or property,ds a question which his ward might investigate or not, if he chose. He might ijave elected to1 consider it as money, and have charged his guardian accordingly. But if it was more advantageous to-’the ward to follow the specific property received, it is, I think, demonstrable that he had a right so> to do.” And after citing several decisions of Chancellor Kent, whom he characterizes as “The most eminent Chancery *225Judge of modern times,” he says that the rules laid down in those cases conclusively show “that it is a clear principle of equity that a trustee cannot make any advantage h> himself by the application of the trust fund to his private purposes.” Again, the learned Judge uses the following language: “So' long as the fund or property received for the cestui que trust can be traced, it must enure tO' his benefit. Here the property was received by his guardian, in payment of the debt due to his ward, and although he, no doubt, did not intend the property to be his ward’s, yet he cannot, by the use of his ward’s funds, make any advantage to hi'mself, and as the very thing received in payment is now within the power of the Court, it must be followed as belonging to the ward (italics mine). If the defendant, James R. Morrow, acquired a title to the slaves by the entry of satisfaction on his ward’s judgment, it was, in effect, purchasing them with the funds of his ward, and a trust results for his cestui que trust.” Again, in the same case, it was said: “If the complaint had sought a recovery of the whole of the slaves as a resulting trust, from the purchase being- made with his ward’s funds, he might 'have succeeded even to this extent, upon showing that Mrs. Morrow owed no other debt. But as he has. not made this claim, and has only sought to make the property liable to the payment of the debt due by Mrs. Morrow to his ward, and as it has not appeared that Mrs. Morrow did not owe other debts, the slaves will only be declared liable to the payment of that debt.” This, it is claimed, is a mere dictum, and, therefore, not authoritative. This is true in one sense, but the doctrine there laid down necessarily follows from the principles previously laid down, upon which the whole case turned, and was not applied in that case, simply because the complainant did not ask that it should be applied. The Court, therefore, after laying down the law applicable to the cáse where property has been acquired by the use of trust funds, recognized the right of the cestui que trust to elect whether he would claim that the property thus acquired became impressed with the trust which rested upon the trust *226finid in its original form, or claim that t'he property should be subjected to the repayment of the original trust fund; and the cestui que trust having, by his guardian, elected to make 'the latter claim, it was allowed. The next case which I cite is Haynsworth v. Bischoff, 6 S. C., 159, which, as it seems to me, is, in principle, practically identical with the case under consideration. The facts of that case may be stated briefly as follows: J. M. McCall, as administrator of an estate, had in his hands as administrator money belonging to his intestate’s estate, which he loaned to one W. E. McCall, taking his notes therefor, payable to himself individually and not as administrator. Afterwards, J. M. McCall sued these notes, recovered judgment, and under the execution issued to enforce said judgment, the land in question was sold by the sheriff, and bid off by J. M. McCall, -who took title in his own name. The amount of his bid was more than sufficient to satisfy his own judgment, and he paid the balance of his bid, after satisfying- his judgment, by giving .his' note to the holder of another judgment against the judgment debtor, W. E. McCall, secured by a mortgage of the land in question. Some time after this, J. M. McCall contracted a debt to Bischoff, for which he gave his note, and several months thereafter he executed a mortgage on the land to Bischoff to secure the payment of said note. Subsequent to the execution of the mortgage, Bischoff commenced an action on said note against J. M. McCall, and having recovered judgment thereon, issued execution under which the land was levied on by the sheriff and advertised for sale. Thereupon the plaintiffs, who were beneficially entitled to the assets of the estate of which J. M. McCall was the administrator, commenced this .action for injunction to restrain the sale, claiming that the land in question had become, by substitution, assets of the estate in which they were interested, and their claim was sustained. Mr. Justice Willard, in delivering the opinion of the Court, speaking of the judgment recovered by J. M. McCall against W. E. McCall, under which J. M. McCall bought the land and took title in *227his -own name, uses this language: “The judgment was in it'self an asset, and enured to- the benefit of the estate;- J. M. McCall having- become the purchaser of the lands and taken title in his own name, to the extent that the consideration of such purchase was the money due on the judgment, he became in equity a trustee for the use of the estate. It was, in substance, the ordinary case of a trustee purchasing lands with 'trust funds, and talcing title in' his own name, whence arises in equity a trust for those entitled beneficially to- the trust funds” — citing McNeil v. Morrow, supra. Three things are to- be noticed about that case: ist. That the principles upon which my conclusion is -based were recognized and enforced even against an innocent purchaser -who- had no-notice of the trust, because he co-uld not claim the position of a purchaser for valuable consideration without notice, as his mortgage was given to- secure an antecedent debt, and there was no- evidence that it was based upon an agreement to forbear enforcing payment of said debt. 2d. That the trust folio-wed the original fund upon which it was impressed, through all its subsequent mutations until it finally rested upon the land. 3d. That though the trust fund did not constitute the entire consideration for the purchase of the land, yet there was no- intimation or even hint that such a circumstance would have the effect of limiting the right of the cestui que trust to a mere lien on the land to secure the repayment of so- much o-f the trust fund as was used in its purchase; but, o-n the contrary, it was distinctly held that the. land itself became impressed with the trust to the extent that the trust fund constituted a part of the consideration. For example, as I understand it, if the trust fund constituted one-half of the consideration, then the cestui que trust has a right to- claim that’one-half, in value, of the land impressed with the same trust as that resting upon the original trust fund. Otherwise, the trustee would be allowed to make a profit to himself, by the use of the trust fund, to the extent that -one-half of the land, or its proceeds, if sold, would exceed the amount of the original *228trust fund, in flagrant violation of the well settled and universally accepted doctrine that a trustee will never 'be allowed to make a profit to> himself by the use of the trust fund. So in Covar v. Cantelou, 25 S. C., 35, when a testator gave a portion of 'his residuary estate to- his executor in trust for the sole and separate use of Mrs. Tillman, a married woman, during her life, and after her death to- be equally divided among her children, which fund was afterwards invested in a tract of land under an order of the Court, and subsequently a portion of said land, upon the petition of the life tenant and her trustee, to which the remaindermen, though then in esse, were not parties, was sold under the order of the Court, it was held that the rights of the remaindermen to the land so sold were no-t divested. In the opinion of the Court I find the following language: “There can be no doubt that the plaintiffs, as children of Mrs. Tillman, were, upon her death, entitled as remaindermen under the will of John Ryan to the share given to her, or for her use, during her life; and when that share, or a portion of it, was invested in the land in question, they thereby acquired an interest in the land which could not be divested by a proceeding to which they were not parties. It is urged, however, that the original fund to- which the plaintiffs were entitled in remainder, was not the land now in controversy, but was personal property, which was invested in this land by the order of the Court in a proceeding to which they were not parties; and, hence, that they have, no claim upon the land, but only upon the fund invested. Whether they were necessary parties to the proceeding under which the investment was made, need not now be considered. For even conceding that they were (though we are not to be understood as intimating any opinion upon that question), and that, not being parties, they were not bound by the investment, yet that cannot affect the present inquiry. If their funds were invested in land without authority, they had the election either to- disavow the investment and pursue the fund, o-r to- sanction the investment and claim the property in which the fund was invested; and they *229have elected the latter alternative by bringing these actions.” See, also, the case of Brazel v. Fair, 26 S. C., 370, which fully recognizes and applies the foregoing principles, and is especially important as showing what will be the effect of a trustee mixing the trust funds with his own in making an investment; for Mr. Justice McGowan, in delivering the opinion of the Court, quotes, with approval, from the case of Knatchbull v. Hallett, 13 Ch. Div., 696, the following language : “In that case, according to the now well established doctrine of equity, the beneficial owner has the right to elect either to- take the property or to hold it as security for the amount of the trust money laid out in the purchase; or, as we generally express it, he is entitled to his election, either to take the property or to 'have a charge on the property for the amount of the trust money.” It is contended, however, that the three cases cited were all cases of express trusts, and, therefore, not applicable to this case. But the authorities above cited, especially from Pom. Eq. Jur., show that the principles upon which I rely apply as well to quasi or implied trustees as-to express trustees; and it is difficult to conceive why there should be any difference in this respect between express and implied trustees; for these principles grow out of the essential nature of the trust relation; and it cannot make any difference, whether such relation is created by the express act of the parties or arises by operation of law. So soon as the trust relation arises, no matter how, these principles become at once applicable, because they do not grow out of the manner in which the trust is created, but out of the nature of the trust relation which is created.
8 I will next proceed to notice such of the cases cited by counsel for respondents, as it seems to me require attention. The case of Myers v. Myers, 2 McC. Ch., 2x4, so far from being in conflict with the principles upon which I rest my conclusion, expressly recognizes those principles, as may be seen by reference to page 265. The case, however, seems to have been cited for the purpose of showing that the fact that the trustee has mixed the trust *230funds with his own in acquiring property, is not sufficient to warrant the Court in impressing a trust upon the whole of the property. At that page I find the following language, which is quoted in the argument of counsel for respondents : “A person may sometimes, by mixing the estate of another with his own, subject himself to' the loss of both; for it is his own fault that they have not been kept separate. But it does not appear to me that this is a case which will subject the defendant to the loss of all the property he has in possession, merely because he cannot show what part of it has been purchased with the proceeds of the trust estate.” Inasmuch as the conclusion which I have reached does not rest upon the ground that the trustee, Miss Green, by mixing the trust funds with her own, has thereby subjected herself to- the loss of her entire property, but I only contend that so much of the property, whatever may be now its form, which was acquired by the use of the trust fund, shall be declared to- be impressed with the trust which rested upon the trust fund in its original form; it is very clear that the case of Myers does not -conflict with my views, but, on the contrary, rather supports them. The case -of Wallace v. McCollough, i Rich. Eq., 426, is relied upon by counsel for respondents to- show that the plaintiffs 'here are only entitled to- a lien on the property acquired by the trustee- through the use of the original trust fund t-o secure the repayment of the amount of said fund. But that case differs materially from the case under consideration. In that case, Robert McCollough (the defendant in the c-ase) and Elizabeth Wallace (one of the plaintiffs), in contemplation of marriage, executed a deed of marriage settlement, whereby the property of Elizabeth, consisting of lands, slaves and dioses in- action, was conveyed to William Wallace, to- be held by him in trust for the purposes declared in said marriage settlement, to- wit: “that the-sáid Robert should, after the said intended marriage, have, receive and enjoy, during the joint lives of the said Robert and’ Elizabeth, the interest and profit of the said lands, tenements, personal property and other matters and things in *231the said schedule set forth; that the same, and the profits, after the death of either of them, should be at the disposal of the said Elizabeth, notwithstanding her coverture.” After the marriage was consummated, the property seems to have gone into the possession of the husband, rightfully, as the Court seemed to think, as by the terms of the settlement the husband was entitled to “have, receive and enjoy, during the joint lives of the said Robert and Elizabeth, the interest and profit” of the said property, and with the proceeds of some of the notes which he collected he bought certain slaves, one of which he sold and the others he threatened remove from the State. Thereupon thebill was filed by the executor and executrix of William Wallace (the trustee), and Elizabeth, the wife, claiming that the slaves so purchased by the husband were subject to the trust declared in the marriage settlement, and praying that the husband “be required to give security for their forthcoming at the termination of his estate.” Several grave and important questions, which in no way concern our present inquiry, were presented in that case, upon which the Court was much divided; and all that was said upon the point which it is supposed does concern the present case, is embraced in the following quotation from the opinion of the Court in that case: “Nor can the Court attach a trust upon the negroes received in lieu of the money, to any greater extent than bo declare a lien on them and the rest of the property, until the defendant shall repay the money to the executors of the trustee, or secure the payment of the same, by instruments to be approved by the commissioner and by the Court, upon the same being reported. The defendant being entitled to1 the interest and profits of the fund, was entitled to borrow it from the trustee, upon proper security, and make the most profitable use of it within his power. Resolved into its elements, the transaction which took place was substantially this, that the defendant borrowed the money from the trustee, and with it bought the negroes from Wallace and Parham, and is entitled to the benefit, of his bargain. His only obligation is to replace the *232money; but until he does this, or secures it being done, the negroes purchased must represent the fund employed” (all the italics in this quotation are mine). From this language it is very obvious that the Court did not regard the husband as a trustee in any sense, -but simply as a borrower of the money from the trustee, William Wallace, appointed by the deed of marriage settlement; that he was not a trustee but merely a debtor to the trustee, and his only obligation, therefore, was to return the money borrowed; and hence neither the trustee, Wallace, nor his executors, nor the parties beneficially interested, were entitled to anything more than a lien, not only on the slaves, but on the rest of the property of the defendant, to secure the payment of such debt. But in the case before t'he Court, Miss Green is, and has been declared to be, a trustee, and as such bound by all the obligations incident to that relation, and cannot, therefore, be treated as a mere debtor. It is obvious, therefore, that the case of Wallace v. McCollough has no! application to the case now before the Court. The case of Mathews v. Heyward, 2 S. C., 239, which is cited by counsel for. respondents and by Mr. Justice Pope, will next be considered. The facts of that case may be substantially stated as follows: On the 15th July, 1857, Thomas Savag'e Heyward bought from Richard F. Reynolds'a house and lot as a family residence, and the same was conveyed to the said Heyward, as trustee under the will of Miss Harriet Ann Ashe. The purchase money of said premises was paid and secured in the following manner: T. S. Heyward 'having in his hands, as trustee as aforesaid, the sum of $4,629.10, which 'he held for the sole and separate use of his wife, and after her death for her children, applied a large portion thereof, to wit: the sum of $3,666.66, to the cash payment required by the terms of the purchase, and gave his bond, as trustee as aforesaid, secured by a mortgage of the premises, for the balance of the purchase money; and afterwards applied the balance of the trust fund towards the payment of the first instalment due upon said bond. Subsequently, this bond and mortgage were assigned by the said *233Reynolds to the plaintiff, Mathews, who had notice oí the facts above stated. Mrs. Georgianna Heyward died1 about a year after the purchase, and on the 29th of August, 1866, three of her children, who in the meantime had come of ag'e, filed their bill in the Court of Equity, in which, after stating that the premises had been purchased with the trust funds as above mentioned, and family reasons rendering it beneficial that the same should be sold, go- on to- say that there was due on the purchase money about $2,500 secured by a mortgage given by the trustee, the holder of which was pressing for his 'money, they prayed that the property be sold, the mortg-ag'e debt paid, and the balance divided amongst the beneficiaries under the will of Miss Ashe. T. S. Heyward, the trustee, and the other children of Mrs. Georgianna, all of whom were minors, answered, the latter by guardian ad litem. On the 19th of February, 1867, Chancellor Lesesne made an order, by consent of counsel, directing a sale of the premises at such time and on such terms as might be designated in writing by a majority of the adult parties, provided the consent of the mortgage creditor be first had, and that from the proceeds the master should first pay the'mortgage debt and the costs, and that from the balance he should pay the adults the shares to which they were respectively entitled, and hold the shares of the infants subject to' the further order of the Court. No-further proceedings, so far as appears, were taken in that case, which is designated as Heyward v. Heyward. But on the 17th of August, 1867, the plaintiff, Mathews, filed his bill to foreclose the mortgage which had been assigned to him. In that case (which is the case cited), the Court held that the proceeds of the sale of the mortg-aged premises should be applied, first, to the payment of the shares of such of the children of Mrs. Georgianna Heyward as were minors at the time of the filing of the bill in the case of Heyward v. ■Heyward; next, to the payment of the mortgage debt — the adult children having estopped themselves by the allegations in their bill in the case of Heyward v. Heyward, from claiming any priority over the mortgage debt. From this state*234ment it is very clear that the' case of Mathews v. Heyward has no application whatsoever to this case. The question which the Court is called upon now to decide was not, and could not, under the pleadings, have been raised in that case. The Court was not asked, in that case, to' declare any trust impressed upon the property paid for, in part out of the trust fund. The only question there was whether the proceeds of the sale of the property, bought by the trustees and paid for, in part, out of the trust fund, and the balance secured by a mortgage of the premises, should be applied, first, to the mortgage debt, or to the repayment of the trust fund used in its purchase — a totally different question from that presented in the case now under consideration. I am, therefore, at a loss to perceive what bearing that case has on the present case.
Again, it seems to me that plaintiffs’ third exception, which imputes error to the Circuit Judge in holding that the offer of Miss Green was in strict compliance with the decision of this Court under the former appeal, should be sustained, as it is based upon a misconception of that decision. The 'Court, as the case was then presented, was only called upon to determine whether the insurance money received by Miss Green was a trust fund, and that was all that was then decided or could have been decided. Whether any part or the whole of such trust fund had been used by Miss Green in acquiring the property which the plaintiffs claim is impressed with the trust, or whether the said property was acquired, in whole or in part only, by the use of the trust fund; and if so, what would be the effect, were questions which this ’Court could not, and did not, then undertake to decide. This third exception does not seem to have been specifically noticed by Mr. Justice Pope in his opinion; but under the view which I take of the case, it seems to me necessary that it should be noticed, for if this Court has already decided these questions, I would, of course, be bound by such decision.
*2359 *234I do not know that it is necessary, in a dissenting opinion, *235to consider the additional grounds upon which this Court is asked to sustain the judgment appealed from, as they were not passed upon by the Circuit Judge, and were not considered or passed upon by Mr. Justice Pope in his opinion, for the reason that, under the conclusion he reached, he did not deem it necessary to- do- so-, fBut as I have reached a different conclusion, it may, possibly, be necessary that I should consider them. I will,- therefore, proceed to notice briefly these additional grounds. The first of these grounds is that the plaintiffs’ action is barred by the statute of limitations. A complete answer to this position is that the statute could not commence to run in favor of the life tenant against the remaindermen until the a falling in of the life estate, unless the life tenant does some act which imperils the rights of the remainder-men. This is for the obvious reason that the life tenant is legally entitled to the possession and use of the estate during her life, and may make any -disposition o-f it that she pleases, except such as may be destructive of or prejudicial to the ultimate rights and interest'o-f the retnaim-derman. See Clark v. Saxon, 1 Hill Ch., 69; McCreary v. Burns, 17 S. C., 45, as well as many other cases cited in the argument o-f counsel for appellants. No-w in this case it does not appear that Miss Green ever did any act which would give the remaindermen a right of action against her until the 16th o-f June, 1892, when she conveyed in fee simple part o-f the property covered by the trust to- Halcot P. Green, as trustee for the Heywards; and that was within less than six years before the commencement of this action, to wit: on the 28th of May, 1896. Without going further into- this question, it seems to be clear that the action is not barred by the statute of limitation.
b The next additional ground is that the remaindermen are barred by their laches and by their acquiescence in the disposition which Miss Green has made of the trust fund. As to laches, it is difficult to- understand how that can be imputed to- the plaintiffs, when, as has been seen, the *236plaintiffs never had any right of action until a comparatively short time, considerably less than the statutory period, before the commencement of this action. As to ácquiescence, that is based upon the fact that the ancestors of the plaintiffs, then the remaindermen in existence, knew of and did not object to the use which the life tenant made c of the trust fund; but how that can affect the claim which the plaintiffs, who have succeeded to the rights of those remaindermen, now make, I am unable to conceive. It may be possible that, if the plaintiffs were now seeking to hold the life tenant responsible for making such use of the trust fund, the acquiescence of their ancestors in such use, might, by estoppel, defeat such a claim. For example, if the investment of the trust fund had proved very disastrous instead of very profitable, and the remaindermen were seeking to hold the absolute estate of the life tenant liable for such loss, such acquiescence on the part of their ancestors might possibly bar such a claim. But no such claim is now being* made. But, on the contrary, the plaintiffs, by their action, distinctly sanction this use of the trust fund, and all that they ask is that the property acquired by such use of the trust fund shall be declared subject to' the same trust that rested upon the original fund. It does not seem to me, therefore, that the plaintiffs are barred by the acquiescence of their ancestors in the use which the life tenant made of the trust fund from making the claim which they now make.
The third point made by the additional grounds is, that the disposition which Miss Green made of the insurance money should be regarded as a family arrangement. I am unable to find a particle of testimony h> sustain any such view. There is no evidence whatever which even tends to show that such an idea ever entered the heads of any of the parties concerned. On thecontrary/itis perfectly clear from the whole testimony that Miss Green honestly believed that she had the right fi> use the insurance money as her own absolute property; and so believing, she used it for the sole *237purpose of protecting the property of her afflicted brother, so that he might have a comfortable support for the remainder of his life. Since this most commendable purpose has been served, it turns out that Miss Green was mistaken in her belief that the insurance money was absolutely her own, but that it was a trust fund, the income of which she was-entitled to for life, and at her death it would go* to the remaindermen mentioned in her mother’s will. And all that the plaintiffs ask is that the property which has 'been acquired by the use of the trust fund (which no longer exists except in -the form of such property) shall be declared subject to the same trust as rested upon the fund in its original form. They do not seek to deprive Miss Green of any right which she was entitled to enjoy by the terms of her mother’s will in the trust fund, either in its original form or in the form into which it has been converted by her; but, on the contrary, they fully recognize her right to the absolute enjoyment of the income of the property, largely increased, as it has been, for the whole term of her natural life.