Court Opinion

ID: 6505117
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:17:26.143288+00
Date Added: 2024-06-11T15:54:42.888843
License: Public Domain

LIGON, J.
1. No question can arise on the action of the Chancellor in overruling the demurrer to the original bill in this case, for the obvious reason that the defendant has assigned no cross errors on the record, and we can only decide on such as are assigned and insisted upon in this court.—Van Eppes v. Smith, 21 A. R. 317.
2. It is urged by the defendant in error, that tho bill is so fatally defective, in setting out the cause of action, that no case for relief is made out, and on this ground alone the decree of the Chancellor should be sustained. If this be true, this court will certainly dismiss the bill, regardless of any demurrer, or motion to dismiss for want of equity in the court below.
The complainants set out in their bill, that at the time it was filed they were the only surviving children of Nelson Andrews, one of the defendants, and as such beneficiaries under a certain deed of trust made by him to the defendant Hobson, bearing date the 28th day of March, 1839, a copy of which deed is exhibited with the bill.
This deed conveys to Hobson an absolute title to the land and slaves named in it, and then proceeds, “ Now this deed is upon trust, that the said Matthew Hobson shall take possession of all and singular the several parcels of land herein conveyed, and of the negroes herein mentioned, and shall by himself, or by his *230agents or attorneys to be chosen by him, and at his discretion, proceed to work the said slaves, and cultivate the said lands, and in all things manage the same in a husband-like manner, and shall have the disposition and management of the crops and products of the same, and from the products and proceeds thereof shall allow to the said Nelson Andrews a reasonable allowance for the comfortable support and maintenance of his family and the education of his children ; and shall proceed to pay off and discharge the debts now contracted of the said Nelson Andrews, with such interest as has or may accrue thereon, and costs, and charges; he, the said Matthew Hobson, having the authority to compromise, get day of payment, or otherwise arrange and settle the same, to borrow money for the purpose of settling the same, and other things to do as if the same were his own ; and upon this further trust also, that, if the said Matthew Hobson, his executors or administrators, should find the crops insufficient to satisfy said debts, within a reasonable time, either from a failure of the crops, from the multiplicity of the debts, or other cause, or should, in his or their discretion, think it most advisable to make sale of all or part of said land or negroes, or either of them, for the purpose of paying the same, or paying off such liabilities as he may incur in extending or getting time upon any of them, then it shall be lawful, and the said Matthew Hobson is hereby empowered, to proceed and sell any and such portion as he shall deem proper, upon giving thirty days notice in three or more public places in Greene County, at auction in the town of Greensboro, to the highest bidder, either for cash, or on a credit, as shall seem to him most proper ; and, upon such sale or sales, (should more than one take place,) shall make the purchaser or purchasers good and sufficient deed or deeds to such of said lands as may be sold, convoying them in fee simple, and shall also make sufficient conveyances of such of said negroes as shall be sold, and shall apply the proceeds of such sale or sales as hereinbefore specified. And this deed is upon the further trust also, that so soon as the said Matthew Hobson, his executors and administrators, shall have paid off all the debts now existing of the said Nelson Andrews, and discharged all the liabilities of the said Andrews, or of himself, or of themselves, contracted under or by virtue of the trust now taken upon him, the said Hobson, he, the said Hobson, his executors and admin*231istrators, shall convey to the children, then living, of the said Nelson Andrews, all the lands herein conveyed, then remaining unsold, and all the negroes herein mentioned, and then alive and unsold, and their increase, to be held by them as their sole and absolute property, subject only to the following condition and trust : that the said negroes and land so conveyed to them, shall, during the lives of the said Nelson Andrews and his wife, Polly Andrews, and the life of the survivor of them, be subject to the maintenance of the said Nelson Andrews and the said Polly Andrews, or the survivor of them, and the proceeds thereof, so far as the same shall be necessary, shall be so appropriated, and the said Matthew Hobson, his executors or administrators, is and are hereby directed to convey the same in trust accordingly. And the said Matthew Hobson doth assent to the trust hereby created, and accept of the same, and bind himself to the faithful execution of the same.”
This deed is executed by Nelson Andrews and Hobson; it was acknowledged by them before a notary public, and duly recorded in the office of the clerk of the County Court of Greene County.
By its terms, the property, both real and personal, is “granted, bargained, sold and conveyed” by Nelson Andrews to Matthew Hobson, upon the trusts above mentioned, and it is alleged in the bill that Hobson went into immediate possession of the property, and continued to possess and manage it by himself and his agents, until the sales in the year 1843.
It is clear that Nelson Andrews, by the terms of this deed, and the delivery of the possession of the property to Hobson, divested himself of all legal estate in it, and could not have revoked it, had he desired to do so. The title vested in Hobson, on the delivery of the deed, so that the trust in favor of the creditors and children of Andrews is vested, and it could not be afterwards divested by any act of Nelson Andrews alone, nor by any concurrent act of Andrews and Hobson, for the reason that the-former had parted with all control over it whatever, and the latter had received it subject to the specific trusts of the deed under which he holds it. To allow either, or both of them, to use the property for any other purpose than those set forth in the deed itself would be-a fraud upon the rights of the beneficiaries; and although the deed, so far as it relates to the complainants, is to a certain -extent voluntary, yet, after it was delivered, it *232could not be revoked by the grantor, nor mil it be tolerated that the trustee, who.covenants to hold for them, shall cast off his trust, and set up this fact against their title. — 2 Story’s Eq. § 973 and notes 3 and 4.
It is insisted, however, that, although ^the deed vests Hobson with the legal estate, and defines the trusts in subjection to which he holds it, ye.t, as no valuable consideration passed from the complainants to the grantor, the trust in their favor will not, at their instance, be enforced by a court of equity ; that persons standing in this relation are mere volunteers, and will not be allowed to set up their claims against the voluntary donor, or a purchaser for value.
That a cestui que trust, who has paid no valuable consideration to the grantor, can enforce the execution of the trust in a court of equity against the trustee, has already been decided by this court, on very full consideration, in the case of Sledge’s Adm’rs v. Clopton, 6 A. R. 598; and that he will be allowed to do so against the grantor, and a’purchaser for valuable consideration with notice of the trust, has also been decided in the case of Eldridge et al. v. Turner et al., 11 A. R. 1049. With these decisions we are entirely satisfied ; for it is the peculiar province of a court of chancery to protect the interest of beneficiaries, who, having no legal, yet a good and complete claim in equity, cannot sue at law. If no relief in chancery remained to them, a fraudulent grantor and tustee might appropriate the trust estate to their own use, and thus defeat the ends of justice with impunity.
But it is said that the necessary parties complainant are not made by this bill; that the creditors of Nelson Andrews are indispensable, and as they are not brought in, the bill should be dismissed. Under the form of this bill, we do not think the creditors, if any there be, necessary parties complainant. It is, in effect, alleged that the debts are all paid; and if this he so, they have now no interest under tho deed, and the sole remaining trust in the property is that in favor of the complainants, and in this aspect their bill is framed.
Again: no bill should be dismissed for want of proper parties complainant, unless the objection is taken in the court below; and on suggestion of the names of the parties that are improperly omitted, if, after this, the complainant refuses to join *233them by an amendment of his bill, the court may dismiss it without prejudice, but not absolutely. -
It is contended, however, that, as Hobson was empowered by the deed to convey the legal estate in’the trust property to the complainants, on the happening of a certain contingency, it shows that something remained to bo done before the trust became complete in the complainants; that the deed of Nelson Andrews to Hobson is a mere power, and consequently revocable at the will of the grantor. It is further urged that, as the grantor assented to the sale of the trust property, such assent amounted to a revocation of tho power. An examination of the deed, and the trusts created by it, will readily show the fallacy of the first part of this argument, and establish, beyond controversy, that the trust exists, independent of the power to Hobson to convey the legal estate to the complainants, and that this power is coupled with tho trust. Consequently it is irrevocable, and a court of equity will compel the execution of the power.- — 2 Story Eq. § 1061, and authorities there cited in notes 1 and 2.
The trusts of the deed aro as follows:
1. The trustee is to “ allow the said Nelson Andrews a reasonable allowance for the comfortable support and maintenance of his family and the education of his children,” so long as the property remains unsold.
2. He is to pay the expenses of keeping up the plantation, with all debts created for this purpose by himself or agent, and the debts of Nelson Andrews existing at the date of the deed.
3. When these trusts are executed, he is to convey whatever remains of the property to tho children of Nelson Andrews, to be held by them s< as their sole and absolute property,” subject to the trust, that Nelson Andrews and his wife shall be supported during their joint lives, and the life of the survivor of them, from the proceeds of the property so conveyed to their children.
How far this deed would have been upheld against a pro-existing creditor of Nelson Andrews, who would not accept the provision mado in it for his benefit, we need not determine, as the question presented for 'our adjudication does not arise between such creditor and the grantor, or one claiming under him, but is between the trustee and the cestui que trust. The rights of the two are essentially distinct, and are governed by entirely different rules, Between the trustee and the beneficiary, the *234deed must regulate their rights, and the former will not he permitted to deny the right of the latter, but he may show that he has parted with, or forfeited it, in such a manner as to deprive himself of the privilege of calling upon the trustee to account concerning it.
Had Nelson Andrews executed a voluntary deed, by which he covenanted with Hobson, or any other person, that at some future time he would convoy to him property in trust for his children, this would not amount to the creation of a trust, and, being without consideration, would not authorize a court of equity to interfere in behalf of those in whose favor he promises to create such trust, in order to compel him to do so; for, in such case, he would have the right to disaffirm his agreement, and the locus peniientice remains to him until the deed creating the trust is made. But we apprehend the rule would be very different, if, in pursuance of such an agreement, he were to execute a deed to the trustee, investing him with the legal title to the property, and declaring the trusts which he engrafts upon it, defining them with certainty, and appointing a time when the trust shall cease, and the beneficiary receive the legal estate. A direction in such a deed, pointing out the terms and manner in which the trustee shall convey the legal estate to the beneficiary, cannot affect the trust created by it; neither can it be construed to the prejudice of the rights of the beneficiary, nor be appealed to for the purpose of showing that the trust is incomplete until the deed required to be executed by the trustee to the cestui que trust is made. Such a construction would wholly pervert the meaning of the instrument, and render that necessary to the creation of the trust, which is only required by the parties to be done in order to terminate it and invest the beneficiary with the legal estate.
The trust in this case was perfect the moment the deed was executed ; and the value of the property, and not the nature of the interest of the children, is rendered contingent, on account of the preference given to creditors by the deed. Their right to the property, if any remained in the- hands of the trustee after the debts were paid, was as complete in equity before the payment of one dollar of the debts, as it could become after all the debts were paid. The only difference is this : they could not call on the trustee to convey to them the legal estate in *235the property before the debts were paid, while the deed gives them this right after such payment is made.
2. The bill seeks to set aside a sale made by the trustee of all the property mentioned in the deed, at which he became the sole purchaser, and the question is, should this be done under the circumstances of the present ease 1
It is insisted in favor of the .validity of the sale, that the trustee had advanced his own funds in payment of the debts of the maker of the deed of ti ust, (which were secured by its provisions,) until nearly or quite all the debts had been paid by these advancements and the proceeds of the crops raised on the plantation, and that under these circumstances the trust of Hobson was coupled with an interest in the subject matter of that trust, and therefore he had a right to purchase at his own sale.
It is conceded by the defendant in error, that sales of trust property, at which the trustee becomes the purchaser, will ordinarily be set aside at the instance of the cestui que trust. But as some exceptions have been engrafted upon this general rule by this court and a few others, it is supposed this case comes within those exceptions; and even if it does not, the sale here has been ratified by Nelson Andrews, the grantor in the deed, and acquiesced in by the complainants for so. great a length of time, that it must be treated as valid, and cannot now be disturbed. The rule laid down by Lord Alvanley, in Campbell v. Walker, 5 Ves. Jr. 680, we apprehend to be the true one, in cases of sales by trustees, at which they become the purchasers. It is this : “ that a trustee, purchasing the trust property, is liable to have the purchase set aside, if, in any reasonable length of time thereafter, the cestui que trust makes known his dissatisfaction.” This rule has been invariably acted upon in the English courts, so far as we have been enabled to see, with the solitary exception of the case of Whicheste v. Lawrence, 3 Ves. Jr. 750, in which Lord Rosslyn held, that such a sale was good, unless it was shown that the trustee gained some advantage by the purchase. This case was never followed, but is overruled by Lord Eldon, in the eases of Ex parte James, 8 Ves. Jr. 345, and Ex parte Bennett, 10 ib. 381; and by Lord Alvanley, in the ease of Campbell v. Walker, supra.
Our own court has departed from it in the case of executors and administrators, who have an interest in the estate which *236they represent, in the eases of Brannon v. Oliver, 2 Stew. 47, and McLane v. Spence, 6 Ala. 897; holding that these may purchase, subject to have the sale set aside for unfairness or fraud. While we do not feel at liberty to depart from these decisions at this late day, we confess that the reasons upon which they are placed by the court that made them have failed to convince us that the departure is proper.
In the case of Saltmarsh v. Beane, 4 Por. 288, the court refused to apply the principles settled in the case of Brannon v. Oliver, taking a distinction between executors and administrators and other trustees; and intimating very pointedly, that the decision in Brannon v. Oliver must be confined alone to cases of sales made by executors and administrators, inasmuch as the peculiar reasons on which it is based are inapplicable to any other class of trusts. We are willing to let it rest at that point, but wholly averse to extending it, or multiplying exceptions to a general rule so salutary as that which prevails in the English courts, and which tends so strongly to guard the trustee from those temptations to unfairness and fraud to which the adoption of a contrary one would expose Mm.—14 Ala. 149.
We are of opinion, therefore, that the purchase by Hobson, the trustee, cannot stand, if it is shown that the complainants are dissatisfied with it, and have made known that dissatisfaction within a reasonable time, and that they have never ratified and confirmed it, after being fully informed of every fact connected with it, of which the trustee himself was possessed at the time of such ratification, necessary to enable them to form a correct judgment.
It is contended that the sale was • consented to and fully ratified by Nelson Andrews, and that Andrew S. Andrews, who was of full age when it took place, and who saw the account current which was rendered by Hobson to Nelson Andrews, never expressed any dissatisfaction until a short time before the filing of the bill in 1848. As to the other complainants, they were then infants, and had no power to affirm it.
The consent of and ratification by Nelson Andrews are wholly immatei'ial, so far as the rights of the complainants are concerned, even if they are shown to exist. He has parted with all title in the corpus of the trust property, and has oxxly reserved to himself an interest in so much of the profits, arising from the *237use of the -lands and slaves, as will support himself and wife during their lives, and the life of the survivor. He cannot, on this account, be allowed to conclude these defendants by any act of his.
The fact that Nelson Andrews is the natural guardian of his children does not, as the defendant’s counsel supposes, give him any greater power in this respect. No guardian has the power to divest the title of his ward to property in which he is legally or equitably interested, unless it be done under the sanction of the court to which he is amenable; and, as he has no such power himself, he will not be allowed, by his consent, to give validity to the act of another, irregularly and illegally done, which will have that tendency.
There is no evidence which shows affirmatively that Andrew S. Andrews, the only one of the complainants who had attained his majority at the time of the sale, ever distinctly ratified the sale ma.de by Hobson. His assent, it is said, must be presumed from the fact that he saw the account current which was made out and handed to his father by the trustee. It does not appear that Hobson ever gave him full and complete information concerning the affairs of the trust estate, or, indeed, that he imparted anything to him concerning it, as one who was interested in it. All direct communication between him and the family of Nelson Andrews, upon this subject, seems to have been confined to Nelson Andrews alone. Under these circumstances, the time which elapsed between the sale and the filing of the bill is not unreasonably long to enable Andrew S. Andrews to ascertain the facts necessary to prepare him to act understandingly in the assertion of his rights.—Roche v. O’Brien, 1 Ball & Beatty 338. From all that is found in this record, it does not appear that Andrew S. Andrews ever examined the account rendered to his father, for any other purpose than that of informing the latter of what it contained ; and this was rendered necessary by the fact that his father was illiterate and could not read it for himself. It seems to have been treated by all parties, at that time, as an affair in which Nelson Andrews and Hobson were the only parties interested, and doubtless such was then the opinion of all who were concerned in it. It is evident, from the answer of Hobson to the original bill, that he did not regard the complainants in this suit as parties to whom he was bound to account, *238or who were entitled to any disclosures from him; and under these circumstances, it would be a very rash presumption to suppose that he did, in fact, render the one, or make the other.
The decree of the Chancellor dismissing the original hill is, therefore, erroneous, and must be reversed.
As the case must go back for an account^ it may be as well to lay down a few general principles, which must govern the master in taking it.
The facts shown by the answer and proof are not sufficient to give to the account rendered by the trustee to Nelson Andrews the dignity of a stated account, as against these complainants, although, as to Nelson Andrews, such would be its character. It was not rendered to Andrew S. Andrews, as an account to which he was in anywise a party, nor does his attention appear to have been called to it in that aspect at all. It would be highly unjust to apply to him the rulo, which governs in cases where accounts are rendered to the party who has made them with a view, not only to their inspection, but their settlement also. In such cases it is both just and right to charge the debtor with their payment, if he retain them for a long time, without objecting to them, unless he can surcharge and falsify them. It is right, in such cases, to throw the omis of showing errors in the account on the party who thus retains it.—Langdon v. Roane’s Adm’r, 6 A. R. 518; 10 A. R. 900. But it will not do to apply this rule to cases in which the accounts between an illiterate father and his- creditor casually fall into the hands of the son, who examines them solely with the view of informing his father of their contents, and without being aware, at the time, that his own interests are involved in their accuracy.
It is clear, that such of the complainants as were infants at the time the account was rendered, are not bound by it.—Powell v. Powell, 10 A. R. 900.
As the defendant took no title to the land and slaves by his purchase at his own sale, they must still be regarded subject to the trusts of the deed under which he took possession of them, and the account in the court below must be taken in reference to thpse trusts.
Hobson’s representative, on such accounting, must, as to pay*239ment, stand in the place of the creditors, whose demands his intestate has paid, and be accounted with as such.
We deem it unnecessary to give more specific instructions in this respect, and leave it with the Chancellor to add such others as will guide the master to correct results. We will only add, that there is nothing in the whole case which tends, in the slightest degree, to raise a presumption of unfairness or fraud on the part of the trustee ; the errror into which he fell, and for which the sale is here set aside, is solely a mistake of his powers and his rights.
In relation to the cross bill of Nelson Andrews, it need only be said, that much the larger portion of the charges and allegations which it contains have no connection whatever with the matters involved in the original suit. It sets out a partnership between said Andrews and his co-defendant, Hobson, in stock raising, with which the complainants in the original bill have nothing to do, and which is entirely unconnected with the trust. It also sets out, that Hobson sold three negro slaves belonging to Nelson Andrews, which were not included in the deed of trust under which the complainants claim, and consequently, in which they have no interest; with many other matters, wholly foreign from any legitimate defence which could be made to the original bill, and which concern Nelson Andrews and Hobson alone.
It is well established, that a cross bill is a mode of defence to the original bill, and its matter must be pertinent to that suit.—Danl. Ch. Prac. 1742; Nelson & Hatch v. Dunn, 15 A. R. 501.
On this cross bill no relief is sought against the complainants in the original bill, nor would its allegations justify the court in granting any. Under these circumstances, it cannot be allowed to stand as a cross bill, and was properly dismissed by the Chancellor. His decree, in this respect, is consequently affirmed.
A decree must be here rendered' against Nelson Andrews for the costs on the cross bill in this court and the court below; and on the original bill, against the administrator of Hobson for the costs of this court only, leaving the costs of the court below to be hereafter disposed of by the Chancellor, as to him shall appear right.