Court Opinion

ID: 6602620
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:09:06.607098+00
Date Added: 2024-06-11T15:58:04.271945
License: Public Domain

The following opinion was filed in January7, 1878:
EyaN, O. J.
It is not impossible that.when this cause was here before, Wilcox v. Bates, 26 Wis., 465, the opinion of the late Mr. Justice EaiNE, and the judgment of the court, were too broad. The court may have intended only to hold that a trust was established, and that the respondents in that appeal, the appellants in this, should be held to account for the administration of the trust, without determining the details involved. But the prayer of the complaint is very specific; and the opinion directs judgment “ for the relief demanded in the complaint, conditioned upon the payment of whatever may be due; ” and the judgment of the court followed the opinion.
It may have been by inadvertence that the court directed the judgment in this form; overlooking the effect upon details. Such a thing might well happen. In cases of the kind, the *142mind of tbe court is often directed, as it appears to bave been in this, to tbe main question on tbe merits, tbe general right to maintain the action; and so diverted from details involved in it. And the general judgment pronounced may inadvertently govern details, beyond tbe intention, because not within tbe attention, of tbe court. When that unfortunately happens, tbe remedy of the party is by motion to rehear tbe appeal. No rehearing was moved in this case. Tbe court has now lost all power to reconsider or correct tbe judgment. Pringle v. Dunn, 39 Wis., 435; Pierce v. Kelly, id., 568. Tbe opinion and judgment on tbe former appeal are res adguclieata, and must rule tbe present appeal, as far as they apply. Du Pont v. Davis, 35 Wis., 631.
Tbe complaint prays that tbe deeds of partition or division of tbe trust property between tbe ■ trustees, tbe appellants, should be adjudged void as against tbe respondent. The judgment covers tbe prayer; and tbe case must now be considered as if those deeds bad never been executed, and tbe trust bad been administered by tbe appellants without attempt to sever tbe subject of their trust or their administration of it. And tbe trust estate must be surrendered to tbe respondent in entirety, upon payment of what may be due to tbe appellants on foot of tbe trust. It would be wholly inconsistent with tbe judgment on tbe former appeal, to bold now that each of tbe trustees might account severally for so much of tbe trust property as be held in severalty under tbe partition, without regard to tbe several account of bis cotrustee for what be took in severalty, or to tbe aggregate state of tbe account of tbe whole trust of tbe entire estate.
A trust rarely or never makes trustees partners. And it may be difficult, pei-haps, to understand now tbe precise sense in which tbe former opinion declares tbe appellants partners in tbe trust. Re that as it may, tbe complaint prays that their interest in tbe estate may be adjudged a mortgage to, secure their advances; that an account may be taken of those, and of tbe rents, issues and profits chargeable to tbe appellants, and that, upon payment of any balance found due to them, they *143may be adjudged to reconvey. This prayer is plainly for a joint account, upon a joint claim and a joint liability of the trustees; and for a reconveyance of the whole trust estate, by the trustees jointly, upon payment of any balance due to them jointly, without regard to the state of their several accounts with several parts of the estate, or of the account as between themselves. It clearly excludes' separate accounts with each of the trustees, or on foot of several parts of the trust estate. This appears to subject them, as against the respondent, to the liability of partners, each responsible for the other. And it is impossible now to say that it was not in this view that the former opinion calls them partners.
Such a personal liability certainly exceeds that to which co-trustees are generally held. The general rule, subject to many exceptions, is that trustees are not liable for the acts and receipts of cotrustees. 1 Perry on Trusts, §§ 415, 423; Story’s Eq., §§ 1280-1284. "Whether there is evidence here to bring the personal liability of the appellants within the exceptions to the rule, as argued by the learned counsel for the respondent, we need not stop to inquire. The rule that one trustee is not responsible for the acts and receipts of his cotrustee, is generally to be understood as confined to personal liability to the cestui qxie trust. No case was cited to us, and we recall none, of an executory trust like this to joint trustees,' where the trustees were permitted to sever in their accounts, so as to charge the trust estate with a balance due to one, unaffected by a balance due from his cotrustee, on foot of the joint trust. The rule applicable to personal liability would apply with very doubtful propriety to such a case, in favor of a trustee who suffered a balance to accumulate in his own favor, by suffering a balance to accumulate against his cotrustee, in the administration of the trust estate. The trust is joint, and though one trustee ought not always to be personally responsible for the receipts of his cotrustee, yet it would work great hardship if one could hold the trust estate for a debt due to him accruing in whole or in 'part by the default of his co-*144trustee, in tbe joint execution of tbe trust. We say joint, because the judgment avoiding tbe partition of tbe trust estate restores tbe joint nature of tbe trust, and charges tbe appellants with its joint execution throughout. If one of tbe appellants suffered the other, bis cotrustee, to become indebted to tbe trust estate, while' it was becoming indebted to himself, we find it difficult to understand on what equitable principle we could bold him entitled to a several lien for bis debt, which a faithful administration of tbe trust by both trustees would have prevented. That would not only excuse tbe trustee for bis neglect of tbe trust, but would indemnify him against personal loss arising from it, at tbe expense of tbe trust estate. It is in vain for the appellant, Bates, to excuse himself, and to rest bis claim upon tbe ground that tbe administration of the trust was sevei’al by each trustee, as to several parts of tbe estate. Tbe partition is no longer in tbe case, and bis relation to tbe trust estate must now be determined without reference to it, and as if it bad never been made.
We have not considered this aspect of tbe case with tbe care which it would require if tbe question were an open one here; and we need not pursue it. It is enough for tbe present appeal that the former judgment clearly bolds tbe appellants jointly liable, each for tbe acts and receipts of bis cotrustee; clearly provides for a joint account; and clearly entitles tbe respondent to the trust estate upon payment of whatever balance may be due to tbe appellants jointly, without regard to tbe particular state of their several accounts.
. The prayer, and the judgment following the prayer, require tbe appellants to account for tbe rents, issues and profits of tbe estate justly chargeable to them. Tbe terms used would prima facie almost exclude rental value, as distinguished from actual receipts. Leeds v. Powell, 1 Ves. Sen., 171. And tbe general rule is, that trustees in possession are chargeable with their actual receipts only, not “ with imaginary values,” as Lord Keeper Nobth says, except upon proof of fraud or negligence, “ very supine negligence',” as tbe Lord Keeper defines *145it, followed by Chancellor Kent. Palmer v. Jones, 1 Vernon, 144; Pybus v. Smith, 1 Ves., 189; Osgood v. Franklin, 2 Johns. Ch., 1; S. C., 14 Johns., 527.
Our attention was called to no evidence in the case, and we have discovered none, tending to show either such fraud or such negligence as would charge the appellants with imaginary values, estimates of value, beyond their actual receipts. On the contrary, for a long part of the time covered by the trust, they appear to have ignored the trust and to have dealt with the estate as their own. This goes to repel negligence in its administration. And the only fraud imputed to them, to charge them beyond their actual receipts, is the fraud of ignoring the trust. But the fraud which would charge them with imaginary values must be fraud bearing on the profits of the estate; fraud in lessening or concealing actual receipts. If a trustee by mistake or fraud deny his trust, and deal with the estate as his own, the fact bears only upon the general right of the cestui que trust, and its tendency is in favor of the care and productiveness of the estate.
Upon the evidence before us, we cannot hold that the appellants were chargeable beyond their actual receipts. As far as they can be ascertained, and in the absence of gross negligence or fraud bearing directly on the productiveness of the estate, we hold that the account should charge them with actual receipts only, that is, the actual receipts of both.
/ If one purchase certificates of tax sale against an estate and hold them adversely, he is entitled, as against the estate and its owner, to the rate of interest which such certificates draw by statute. But a trustee can neither purchase nor hold them adversely. Certificates of tax sale, in the hands of a trustee, with whatever purpose purchased or held, are always taken as purchased and held for the benefit of the estate. Except in special circumstances, the purchase of certificates of tax sale by a trustee will operate, like their purchase by the absolute owner, as a redemption of the land from the tax sale. In special cases, perhaps, the trustee might keep them alive to protect the estate, and even take title under them subject to the *146trust. But in any case, the trustee expends the purchase money for the benefit of the estate, and can charge the estate only with the amount paid, and simple interest upon it. He cannot hold the certificates against his own trust, so as to charge the estate with the statutory interest accruing on them by way of penalty. That would be inconsistent with his duty as trustee, and with his instant right to charge the estate with the purchase money. Here the certificates appear to have been purchased upon an understanding between the trustee and the cesttá que trust, and for the benefit of the latter. And the trustee can no more be tolerated in charging his cestui que trust with the twenty-five per cent, per annum interest allowed on such certificates, than he could have been in taking title under them adverse to his trust.
We are inclined to think that the weight of evidence is, that the respondent himself paid the note of $150 on which the appellants made a point. At all events, there is no such preponderance the other wray as would warrant us in reversing the finding of the court below. Indeed, we are not sure that the question is not foreclosed by the former judgment.
A curious ground of error is assigned, that a stipulation of counsel in open court, and entered of record, was not made in fact. Possibly, in such a case, we might take jurisdiction by mandamus to the court below to vacate the entry. But upon appeal we can listen to no suggestion, accept no proof, that such an entry is untrue. While it stands, it imports absolute verity. Germann v. Schwartz, 21 Wis., 661.
The question of costs in the action appears to have been settled by the former judgment. If it were to be settled anew, we would again affirm the respondent’s right to them.
We have reviewed all the grounds of error assigned; overruling all, except the principle on which the account of the rents, issues and profits of the real estate was taken. On that ground only we reverse the judgment.
A rehearing having been granted, the cause -was reargued, at the August term, 1878, by J. B. Bennett for the appellant, and submitted for the respondent.