Court Opinion

ID: 6675947
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:15:54.801329+00
Date Added: 2024-06-11T16:00:42.391219
License: Public Domain

The opinion of the court was delivered by
Mr. Chief Justice Simpson.
[Omitting the statement of facts.] The plaintiffs have appealed upon several exceptions. These exceptions, however, raise but three questions. 1st. That his honor erred in holding the bond and mortgage to be trust property. 2d. In holding that the plaintiffs’ testator became assignee with knowledge of the trust, or at least of facts sufficient to put him upon inquiry, which, if properly conducted, would have resulted in the discovery of the trust. 3d. That he erred in holding that the defendant could defeat the action on these grounds.
I. Did Bryan hold these papers as trustee of Mrs. Jarrott, and under the limitations of the original trust deed? There can be no doubt that, as between himself and the cestui que trusts, he did so hold them. They were the result of a sale of a tract of land which he had purchased as the trustee of these parties, and paid for in part, at least, by the proceeds of the sale of a portion of the original trust property. This land was conveyed to him as trustee. True, it is not stated in the deed who were the cestui que trusts, but there can be no doubt on this subject. If the contest here was between him and the cestui que trusts, could any court hesitate to enforce the trust under the facts as stated? Besides this, upon the face both of the bond and mortgage it appears that they ivere each executed to him as trustee of Mrs. Jarrott.
II. Now, the important question arises, Did Salinas have knowledge of this fact, or knowledge of facts sufficient to put him upon such inquiry as would have led to a discovery of the trust *184impressed upon these papers ? If so, he could not hold them discharged of the trust, unless they were properly assigned under the power of the original deed — of which hereafter. His honor, the Circuit Judge, found as matter of fact, that Salinas did have the knowledge above. Is that finding contrary to the manifest weight of the testimony ? If not, this court, under the authority of many decisions, must let it stand. We do not see such manifest weight of testimony against this finding of the Circuit Judge as would warrant us in overruling it. On the contrary, there is evidence to support it. The very papers assigned to him advertised him of the fact on their face, that they were connected with a trust, and that Bryan held them, not as his own property, but as a trustee for Mrs. Jarrott. This, it seems to us, ivas enough in itself to make him hesitate, at least to make him inquire into the nature and character of this trust. It does not appear that he had done this, nor that had he looked into the records he would have failed to ascertain the facts in reference thereto. We think that Mr. Salinas must have known that he was dealing with a trustee, and with reference to trust property.
It may be urged, however, that he thought this trustee had the right to sell and assign, when done with the, consent of the cestui que trust, and he knew this consent had been given. True, the trustee had power to sell the trust estate or any portion thereof, with the written consent of Mrs. Jarrott, for reinvestment. Was the assignment here for reinvestment ? Certainly not. It ivas to pay a debt contracted by Mrs. Jarrott and her husband for supplies, and its effect was not to keep the trust estate alive, but to destroy it, and this must have been apparent to Salinas. A purchaser is not ordinarily required to see to the application of the purchase money where the vendor has power to sell, but where he knows, or ought to know, that a breach of trust is being committed, he cannot shield himself. Simons v. Bank, 5 Rich. Rq., 272; Webb v. Graniteville Manf. Co., 11 S. C., 407; Mayer v. Mordecai, 1 S. C., 398. Especially where the breach of trust and the improper application of the funds is for his benefit.
III. Lastly, can the defendant interpose the objections above, and thereby defeat the action ? Has there been a legal assignment ? If not, the plaintiffs must fail to recover.. That there has *185not, is the defence, and we think the defence has been sustained. We say this, however, without prejudice to any equitable claim which the plaintiffs may have, arising out of the transaction, against the income of the trust property, upon proper proceedings, with all parties before the court, as suggested by the Circuit Judge.
It is the judgment of this court, that the judgment of the Circuit Court be affirmed.