Cox v. John

32 Ohio St. (N.S.) 532
Ohio Supreme Court·Decided December 15, 1877·Published

Opinion

Scott, J.

The controversy in this case is now limited to the findings and rulings of the court below, on the exceptions taken to the report of the master in relation to the final account of the plaintiff’ in error, as administrator of the estate of S. J. John. The main question in' the case is, Did the court below err, to the prejudice of plaintiff in er[539]*539ror, in finding, from the vouchers and testimony in the case, and from the facts found by the master, that the claims against the estate, which were purchased for about one-third of their nominal amount, “ were so compounded and purchased by Richard IT. Collins, while retained and acting as attorney for said administrator, in the settlement of said estate;” and in holding that, “bylaw, said administrator was entitled to credit in his accounts for the sum or amount actually paid for the said claims respectively, and for no more ? ” And was the final order and judgment, made in accordance with such finding, erroneous ?

These questions present mainly, if not solely, an issue of fact. For we do not understand that there is any substantial disagreement between counsel, as to the law governing this main subject of contest. "We do not understand counsel as questioning the soundness of the rule, well settled in equity, that á trustee is not permitted to manage the subject of his trust so as to make profits or gain therefrom for himself. The beneficiaries in the trust have a right to' expect and require the exercise of his best judgment, care, and diligence on their behalf, and the gains resulting therefrom inure to their sole benefit. An administrator can not, therefore, be allowed to compromise, adjust, and settle claims agaiust the estate for which he is acting, for less than their face, and put the difference in his own- pocket. And it is equally clear, that what he can not do directly, he will not be allowed to do through his attorney or agent. The maxim, “ qui facit per alium, facit per se,” is, at least, as efficacious and forcible in equity, as at law.

If, in purchasing or satisfying these claims, Collins was retained by, and was acting as attorney for, the administrator, we think it immaterial whether, as between themselves, it was understood that he was retained by the administrator personally or officially. In either case, so long as the trust continues, such purchase is the act of the trustee, and must inure to the benefit of the cestuis que trust, and not of the administrator personally. Nor does it make any difference whether, in this business, Collins was employed solely [540]*540by the administrator, or by him and others, with a view to their joint profit, For, what he may not do singly, the policy of the law will not permit him to participate in doing. In matters pertaining to his trust, he must be the servant solely of the beneficiaries. These principles are so well settled as to require no citation of authorities in their support. Nor do we understand them to be drawn directly in question by the able counsel who represent the plaintiff in error.

The main question, then, is one of fact: Was Richard Collins, in the purchase or adjustment of the claims in question, acting as the agent or attorney of the plaintiff in error, or was he acting solely for others ?

The following facts, bearing more or less directly on this question, appear from the record :

Circumstances, which to a great extent were beyond the control of the plaintiff in error, have rendered his admin-' istration of the estate of S. J. John an unfortunate one for himself. The assets of the estate were not administered according to law. A large portion of them, amounting at the appraisement to some $47,000, or more, were, by an arrangement deemed prudent at the time, taken by the widow at the appraisement, for which he took her note without security. She turned this property over to him to be disposed of otherwise than by public sale. He was liable for its appraised value, and lost largely by the operation.

His brother, George Cox, was one of the sureties on his administration bond. Before the purchase of the claims in controversy, George Cox died intestate, leaving considerable property. His brothers and sisters were his heirs ; of whom Edward Cox, the plaintiff in error, was one, and the wife of Richard Collins was another, There were several other brothers and sisters, and the testimony tends to show that they were apprehensive of a liability devolving on them in consequence of the suretyship of their brother, George, for the faithful administration of the John estate; and that all the heirs of George Cox, including Edward Cox, the present plaintiff, allowed and authorized Collins [541]*541to use, for the purchase of the claims in dispute, moneys which came to his hands from the estate of George Cox, and which were the joint property of his heirs.

In the administrator’s account, the disputed claims are all stated in the names of the original creditors, and not as payments made to Collins, as their assignee.

The record also shows clearly that, for several years prior to the settlement of these claims with the creditors, Collins had been acting as the attorney of plaintiff in error, in endeavoring to collect and adjust doubtful claims in favor of the John estate, and in defending his partial settlement accounts against exceptions taken thereto by the widow and heirs, and regarded himself as general advisory counsel for the administrator. Among the last vouchers in the administration account, is a receipted account of Collins for $1,200, as fees “ for his efforts to collect or compromise bad debts, defending ads. widow and heirs, and advice generally.”

When Collins first commenced getting in claims of creditors, the business was transacted in the name of the adminstrator, and receipts were taken as for payments made by him. Subsequently, the formal mode of operation was so far changed, as to substitute for a receipt a transfer of the claim of the creditor, without recourse.

The claim of one creditor was adjusted by Collins, by an agreement which seems to have contemplated and provided for the conveyance to the creditor of certain real estate, of which John died seized. This arrangement seems to have been carried out without objection by the administrator.

There is much testimony in the case, both by creditors and attorneys for creditors, with whom settlements were made by Collins, tending to prove that, in many cases, favorable terms of settlement and large discounts were obtained from creditors, by the representations of Collins that the John estate was insolvent, and that he was acting in the premises on behalf and in the interest of the administrator, the widow, and the heirs of S. J. John.

[542]*542It) one case, an attorney representing a creditor’s claim, wrote to-the administrator, demanding payment. In response to this letter, he was, shortly afterward, visited by Collins, on whose representations a very favorable settlement and large discount from the face of the claim were obtained from the attorney acting for his client.

It is true Collins testifies: “ I did not act as the attorney of the administrator in the purchase of these claims, but as the agent and attorney of the heirs of George Cox, using their money for that purpose.” But, it must be remembered that the administrator himself was one of those heirs. Indeed, he was the one most deeply interested in the settlement of John’s estate.

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Cox v. John, 32 Ohio St. (N.S.) 532 (Ohio 1877).

32 Ohio St. (N.S.) 532 (Cox v. John) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.