Court Opinion

ID: 6689559
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:36:29.495+00
Date Added: 2024-06-11T16:01:04.249846
License: Public Domain

GATES, J.
(concurring in result). I think that my respected Colleague has arrived at the correct result. I arrive at the same result, hut by a somewhat different route.
A trust relation concerning tiie property of an estate arises between an administrator and die heius of a deceased person regardless of the fact that title to the property may not be lodged in the administrator. Pomeroy, Eq. Juris. § 1077.
Section 1618, C. C., provides:
“A trustee may ntot use or «teal with tíre trust property for his Own profit, or for any other purpose unconnected with the trust, in any manner.”
It is undisputed that the administrator dealt- with property under hfe control as administrator for a purpose unconnected with 'the tritst; therefore he violated that section of the Civil Code. Bidwell v. Smith, 23 S. D. 120, 120 N. W. 880. It will not do to siay (or intimlate by declining tot concede) that he violated no duty itn purchasing the land at foreclosure sale, inasmuch as there were no fundís available to pay off the mortgage. In bidding ait tíre foreclosure sale it was to hfe own personal interest to stifle competition. As administrator it was Ids duty to encourage competition'. In Fulton v. Whitney, 66 N. Y. 548, the court well said:
“They were not bound! to buy in the property for the benefit of the truis-t estate, having no trust funds applicable to that purpose; but they had no right, by undertaking to purchase for their awn benefit, to create an ¡interest in themselves hostile to' their duty as trustees. As purchasers for their own benefit, it was to their interest to .prevent 'competition at the sale, and to slot manage that they could bid in the property at the lowest price, and thlis was 'directly in conflict iwlitb their duty as trustees. * * * No actual fraud on the part of the 'defendants is alleged1 or found, nor is it necessary that there should be. The object of the rule which- precludes trustee® from -dealing for their awn benefit, in- matters to which, their trust relates, is to- prevent secret frauds by removing ail inducement to attempt therm. * * * *335It is 'urged, on the part of the appellants, .that this rule is mot applicable to the present case,’ because the mortgaged' premises fanned no part of the trust estate. This objection was answered by Ohaniceltor Walworth, in the casé of Van Epps v Van Epps, 9 Paige [N. Y.] 241, by saying that the rute te not 'confined to trustees or others who hold 'the -legal title to the property to be sold, but -applies universally to 'all -who eorii-e within its principle, which is that no party can -be permitted1 to purchase an interest in property, and hold it for hiis own benefit, where he has a duty to perform, in relation to such .property, which is inconsistent with the character of a purchaser on his own account.”
Section 1623, C. C., provides:
“Every violation of .the provisions- of the preceding sections of this article is a fraud against thie beneficiary of the trust.”
This seotjion makes the above violation a fraud' regardless' of the absence of intentional fraud. Section 60, siubd. 6, C. C. P., declares that the following bind' of .action must be begun within 6 years:
“An action fcir relief on due ground! of fraud, in -cases which heretofore were solely cognizable by the .court of chancery, the cause of action i.11 such case not to. be deemed to. hlave 'accrued until thie discovery, by thie aggrieved party, of the facts' .constituting the fraud.”
This is the bind of action that -at common larw was cognizable solely by a court of chancery. Therefore that -section applies. I think it is -entirely unnecessary to enter -upon a lengthy discussion in regard to expires® trusts add resulting trusts. To my mind the -above-quoted sections of statute dispose of the matter.
However, there' was -an entire failure -of proof that the facts constituting the fraud were not -discovered by respondents until a date within 6 years prior to beginning the action. What the proof did) fend to show was thlat the respondents- did- not discover tlbeir supposed! i-egal rights based upon such facts until shortly before the action was begun.
Eor the foregoing -reason, and -also because of newly discovered .evidente, I comcur in -a reversal of .the judgment and order .denying a nieW trial.