Harrison v. Mock

10 Ala. 185

• Court: Supreme Court of Alabama
• Decided: June 15, 1846
• Status: Published

Opinion

ORMOND, J.

We will first consider, whether the trustee appointed by the deed accepted the trust, and if he did, the duties and responsibilities he thereby assumed, and the consequences of his neglect in their performance.

It is very clear, we think, that the trust created by the deed was accepted by Harrison, the trustee. The whole case shows, that there was great intimacy and confidence existing between him and Meyer. It is not usual to appoint a trustee without consultation with him, and although there is no proof that his consent was previously obtained, it may be fairly inferred from his subsequent conduct that such was the fact. He admits that he received the deed from Meyer, and kept possession of it until he handed it to his counsel. It is also admitted on the record, that he permitted Meyer, from and after the execution of the deed, to keep possession of all the trust property, and to take the crops, and sell and dispose of them as he pleased until his death. In the spring of 1841, one year after the execution of the deed, he promised to sell the property in a few days, and after the bill was filed, told one of the complainants they would have got their money sooner, if they had not filed the bill, but now he would keep them out of it as long as he could. On the 30th January 8.142, he addressed a letter to Mr. Austill, by which he; authorized Meyer to rent the lands, and take a note for the; rent to him as trustee. These acts of interference, unequivocally establish his acceptance of the trust, and independent of the natural and inevitable presumption, the admission is-made of record, that these acts “ were from, and after the execution of the deed.” There is then no foundation for the argument, that the acceptance of the trust tvas at some subsequent period, from which his liability is to be dated. It is clear that it was cotemporaneous with the deed, and it would be a most unreasonable inference, that he was not fully apprized of the intended execution of the deed, and of his appointment as trustee. It is also evident, that his acceptance of the trust, had the effect of placing the property, beyond the legal pursuit of Meyer’s creditors. His duties as trustee, are to be ascertained by the power conferred on him by the deed. They were, “ to take possession of the property, and as soon as the same can be done, consistently with the interest of the creditors, to expose the same to sale, and appropriate the proceeds to the payment of the debts.” His duty is here set forth, in plain and explicit terms, and having accepted the trust, the law casts on him the obligation of performing it. The creation of the trust placed the property beyond the reach of the creditors by the ordinary means provided by law, and placed the trustee in their stead, and it is not too much to say, that he shall be held to a strict performance of the stipulation, by which alone he acquired the right to interfere between the debtor and his creditors. It was his plain duty, under the deed, as soon as practicable, consistent with the interest of the creditors, to take possession of the property, sell it, and appropriate the proceeds as the deed required. Instead of this, he permits the debtor to keep the property in his own possession, and appropriate the proceeds to his own use, as if the deed had never been made. By this course of procedure, the whole effect of the deed was, to keep the creditors from the pursuit of their debtor, by the means the law had provided. This was a perversion of the trust, to an unjust and improper purpose, and was a plain violation of his duty as trustee. It might be added that it was open and undisguised, as he threatened the creditors to protract the litigation as far as possible.

It is supposed, that it does not appear that the interest of the creditors required an earlier sale. The requirement of the deed was, to take possession, and if any cireumstance existed, making an immediate sale improper, it should have been shown. The only excuse offered for not selling is, that there was a difficulty about the title to the land; but certainly, this was no reason why the debtor should be permitted to keep the slaves, and other personal property, and use it as his own. The excuse offered, has not the semblance of justification ; it rather furnishes a reason why that portion of the property about which there was no difficulty, should have been converted into money.

Having ascertained that there was a violation of duty on the part of the trustee, necessarily injurious to those whose interests he had undertaken to protect, we proceed to consider the consequence to him of such wilful neglect.

It is the duty of a trustee to do all acts which are necessary and proper for the due execution of the trust which he has undertaken — he must act with reasonable diligence, and be vigilant in the discharge of the duties he has assumed. Some discretion he must necessarily have in the performance of his duties, and when he acts in such a manner as a prudent man would act in relation to his own property, he is entitled to the protection of the court. On the other hand, if he omits to act when duty requires him to be active, or if he is wanting in the necessary care, or diligence, he is personally responsible for the consequences. In the recent case of Clough v. Bond, 3 Milne & Craig, 495, Lord Cottenham thus sums up the doctrine on this subject. “ It will be found to be the result of all the best authorities on this subject, that although a personal representative, acting strictly within the line of his duty, and exercising reasonable care and diligence, will not be responsible for the failure, or depreciation of the fund, in which any part of the estate may be invested, or for the insolvency, or misconduct of any person who may have possessed it, yet if that line of duty be not strictly pursued, and any part of the property be invested by such personal representative, in funds, or upon securities not authorised, or be put within the control of persons who ought not to be entrusted with it, and a loss is thereby eventually sustained, such personal representative will be liable to make it good, however unexpected the result, however little likely to result from the course adopted, and however free such conduct may have been from any improper motive. Thus, if he omit to sell property when it ought to be sold, and it afterwards be lost, without any fault of his, he is liable, [Phillips v. Phillips, Freeman C. C. 11,” &c., and citing and commenting on many other cases. See also, Oliver v. Court, 8 Price, 127; Lawson v. Copeland, 2 Bro. C. C. 156; Powell v. Evans, 5 Ves. 839; Bacon v. Bacon, Ib. 331; Hanbury v. Kirkland, 3 Simons, 265; Underwood v. Stevens, 1 Merivale, 712; King v. King, 3 Johns. C. 552; Hart v. Ten Eyck, 2 Id. 76; Thompson v. Brown, 4 Id. 619.]

The result of the examination is, that the trustee is justly chargeable with all the property covered by the deed, which has been lost, or destroyed through his negligence, and for the value of the services of the slaves, whilst they remained in the possession of the debtor.

It is also contended by the counsel for plaintiff in error, that the chancellor erred in setting aside the sale of certain slaves, and subjecting them to the satisfaction of the debts of the creditors, and at all events the trustee should have been allowed a credit for the debts of Meyer extinguished by the sale of the slaves.

Three of these slaves, Jim, Frank and Gustin, were, as it appears sold by the sheriff under execution on the same day the deed was executed. These executions were a lien on the property conveyed by the deed. It does not appear that the trustee had any control over these executions, or any right to the proceeds of the sale. He did not purchase the slaves at the sale, nor does it appear that they have ever been in his possession, or under his control, and we can see no reason why he should be charged with them. Although they were conveyed to him by the deed of trust, the liens created by the executions, had already attached, and he had not, so far as we can judge from the record, any power to prevent the sale.

The slaves Hagar, Aaron, Eliza, Nancy, and her child, stand upon a different footing. They were sold by direction of the trustee, in June, 1842, nearly a year after the bill was filed, to satisfy judgments, which he claimed the right to control, and at the sale he became himself the purchaser. This was a breach of his duty as trustee. The deed devoted the slaves, and other property to the payment of all the creditors, in equal proportions, and he cannot be permitted to do an act beneficial to himself, and injurious to the rest of the ere-ditors, whose interest he had undertaken by the acceptance of the trust to protect. The sale being made at his instance, and for a purpose not authorized by the deed is voidable.

It does not appear, that the executions under which the sale was made, were liens upon the slaves when the deed was executed; nor are we able to perceive that it would alter the case, if such was the fact. The deed provided for the payment of all the creditors rateably, if the property was not sufficient to pay all, as was the fact'here, and by accepting the trust, the trustee consented that his own claim should be thus apportioned. He in effect waived his lien, and consented to come in as a general creditor, except so far as he was preferred by the deed. [Hawley v. Mancius, 7 Johns. C. 184; Rogers v. Rogers, Hop. C. 523.] His purchase, therefore, of these slaves, must be considered to have been made by him in his character of trustee, and for the benefit of those concerned in the trust.

It is further urged, that if these slaves are to be considered a part of the trust fund, the trustee is entitled to a credit for the amount of debt extinguished by the purchase of the slaves. This is doubtless correct, and the answer of the opposing counsel at the bar, that he should have presented his account to the master, is not an answer to the objection, because it does not appear from the record, that he has had the opportunity of doing so, the account which was taken of the debts of Meyer, being previous to the decree ascertaining that this purchase was invalid. But it is to be observed, that as ■the trust deed provides for the payment of a certain class of creditors in preference to others, if this claim of the trustee did not exist at the time the deed was made, he must be postponed until all the preferred creditors are satisfied. In addition it should be remarked, that the trustee in his answer, states the indebtedness of Meyer to him, at two thousand dollars, when the deed was executed. This is an admission of the extent of the debt at that time, which cannot be contradicted unless by leave of the court an amended answer is filed, putting a larger amount of indebtedness in issue.

It is also contended, that the chancellor had no power to set aside this sale, because it was not put in issue by the pleadings. As already observed, this sale was made by the trustee, after the bill and answer were filed. The object of the bill was to charge the trustee, for a breach of his trust, and charges those acts which were relied on as constituting such breach — that he took possession of the property, and has received the product thereof since the execution of the deed, converting and disposing of the same to his own use, and has made no division or appropriation of the fund. The design was to hold him responsible for the property conveyed by the deed, and for its product, whilst under his control, and we do not think it was either necessary or proper that a supplemental bill should be filed, at every fresh malversation of the trustee. It was his duty, if he claimed the right to control this property, independent of the trust deed, to put the facts distinctly in issue. This pretended sale, and purchase by himself, was but another breach of his duty as trustee, and covered by the allegations of the bill.

It is also objected, that it is contrary to the practice in this State, to make such a reference as was made in this case to the master, which was, that the master should report the ev~ dence of the manner in which the trustee managed, and conducted the trust estate.

The inquiries which may be devolved on the master by the chancellor, are so numerous and diversified, that it is difficult, if not impossible, in advance to describé or embrace them, by any general definition. Nothing however is more common, or more conducive to the convenience both of the court and suitors, than to refer to the master the ascertain-, ment of facts, and this seems to be all that was contemplated by this order. But in point of fact, it was inoperative, as the parties by their counsel admitted that the trustee permitted the debtor, from and after the date of the deed, to keep possession of the property, and take the profits to his own use.

' There can be no doubt of the power of the chancellor to enforce the delivery of property in the possession of, or under the control of a party to the suit, by an attachment. . In this case however, we understand, that the administrator of the trustee was required to deliver the three slaves, Jim, Frank and Gustin, which were never under the control of the trustee, but as appears from the testimony, were purchased by, and went into the hands of third persons. For these the trustee was not responsible, and- if he was, as they were in the hands of third persons, no attachment could issue for their non-delivery, but the party should have been charged with their value.

As the cause must be remanded, it may be proper to remark, that although we understand fjom the testimony, that the estimated value of the hire of the slaves ($1000,) is exclusive of these three negroes, Jim, Frank and Guslin,yet as there is some ambiguity in the testimony, if the fact be otherwise, and these negroes were included in the general estimate made by the witnesses, the account should be reformed in this particular.

Let the cause be remanded for further proceedings, conformable herewith, and let the costs of this court be equally divided between the complainants and respondents.