Wormley v. Wormley

21 U.S. 421, 5 L. Ed. 651, 8 Wheat. 421, 1823 U.S. LEXIS 290
CourtSupreme Court of the United States
DecidedMarch 12, 1823
StatusPublished
Cited by166 cases

This text of 21 U.S. 421 (Wormley v. Wormley) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wormley v. Wormley, 21 U.S. 421, 5 L. Ed. 651, 8 Wheat. 421, 1823 U.S. LEXIS 290 (1823).

Opinions

Storv, Justice,

delivered the opinion of the court; and after stating the case, proceeded as follows : — Such is the general outline of the case ; and in the progress of the investigation, it may become necessary to advert to some other facts with more particularity.

And the first question arising upon this posture of the case is, whether [194]*194Strode, the trustee, by the sale to Yeitoh, has been guilty of any breach of trust. And this seems to the court to be scarcely capable of controversy. That there are circumstances in the case, which raise a presumption of bad faith on the part of the trustee, and expose him to some suspicion, cannot escape observation. But assuming him to have acted with *entire good faith, his proceedings were a plain departure from his duty. In respect to the supposed exchange of the Fauquier for the Frederick lands, it is impossible for a moment to admit its validity. In the first place, it was not made between parties competent to make it. Wormley had no authority over the estate, after the marriage-settlement. The chief object of that settlement was, to secure the property to the use of the wife and children, during the joint lives of the husband and wife. And though it is said, in another part of the deed, that Wormley shall occupy and enjoy the estate, and the issues and profits thereof, during his life, yet this was to be, under,leave of the trustee ; and to suppose that he thus acquired an equitable interest for life, is to defeat the manifest and direct intention of the other clauses in the deed, which avow the whole object to be, the security of the estate, during the same period, for the use of the wife and children. The true and natural construction of this clause is, that it points to the discretion which the trustee may exercise, as to allowing the husband to occupy the estate, and take the profits, for the maintenance of the family, whenever the trustee perceives it may be safely done, without involving the trustee in any responsibility, to which he might be exposed, by such a permission, without such an authority. But at all events, the right to dispose of the equitable fee to any one, much less to the trustee himself; did not exist in Wormley ; and any exchange attempted to be made by him, however benefi-c*a*’ wou^ have been utterly void. But no *exehange was, in fact, consummated. It is true, that the removal to the Fauquier lands took place, upon an agreement to this effect; but no definitive conveyance was ever made; and the trustee himself never settled, and never took a step towards settling, the Fauquier estate upon the trusts of the marriage-settlement, as it was his indispensable duty to do, if he meant to conduct himself correctly. As to the substituted Kentucky lands, the transaction was still more delusive. The agreement for the substitution was merely conditional, depending upon the subsequent election of Wormley, and his dissent put an end to it. As to the conveyance- to Lee, ostensibly for the trusts of the settlement, it can be viewed in no other light than an attempt to cover up the most unjustifiable proceedings. That conveyance was not executed, until after the dissent and dissatisfaction of Wormley were well known ; and so far from its containing any valid performance of the trusts, it expressly gives a prior lien to the purchasers of the Frederick lands, as security for their covenant of warranty ; and to complete the delusion, the trustee reserved to himself the authority to substitute any other lands, leaving the trusts to float along, without fixing them definitively upon any solid foundation. If we add, that the Fauquier lands were mortgaged to the purchasers for the same covenant; and that this mortgage was discharged only for the purpose of selling the property to Grimmar and Mun-dell, we shall come irresistibly to the conclusion, that the trustee never was ™ a sitaati011 *t0 g^e an unincumbered title on either the Fauquier or Kentucky lands, to secure the trusts ; and that if he was, he never, [195]*195in fact, executed any conveyance for this purpose. In every view, therefore, of this part of the case, it is clear, that no valid exchange did, or could take place; and that as there was no equitable or legal transmutation of the property from the eestuis que trust, it remained in the trustee, clothed with all the oi’iginal fiduciary interests.

But independent of these considerations, there is a stubborn rule of equity, founded upon the most solid reasoning, and supported by public policy, which forbade any such exchange. No rule is better settled, than that a trustee cannot become a purchaser of the trust estate. He cannot be at once vendor and vendee. He cannot represent in himself two opposite and conflicting interests. As vendor, he must always desire to sell as high, and as purchaser, to buy as low, as possible ; and the law has wisely prohibited any person from assuming such dangerous and incompatible characters. If there be any exceptions to the generality of the rule, they are not such as can affect the present case. On the contrary, if there be any cogency in the rule itself, this is a strong case for its application ; for, by the very terms of the settlement, the trustee was invested with a large discretion, and a peculiar and exclusive confidence was placed in his judgment. Of necessity, therefore, it was contemplated, that his judgment should be free and impartial, and unbiassed by personal interests. The asserted *exchange, so far at least as it affects to justify or confirm the proceedings of the trustee, may, therefore, be at once laid out of the question.

Then, was the sale to Veitch a breach of trust? The power given to the trustee by the settlement, is certainly very broad and unusual in its terms ; but it is not unlimited. The trustee had not an unrestricted authority to sell, but only when, in his opinion, the purchase-money might be laid out advantageously for the eestuis que trust. It is true, the sale and re-investment are to be decided by his opinion ; which is an invisible operation of the mind. But his acts, nevertheless, are subject to the scrutiny of the law ; and if that opinion has not been fairly and honestly exercised, if it has been swayed by private interests and selfish objects, if the sale has been at a price utterly disproportionate to the real value of the property, and the evidence demonstrate such facts, a court of equity will not sanction an act which thus becomes a fraud upon innocent parties.

Much ingenuity has been exercised, in a critical examination of the nature of the power itself, as it stands in the text of the settlement. It is contended, that the acts of sale, and of re-investment, are separate and distinct acts, and the power to sell is, therefore, to be disjoined from that of re-purchase, so that the sale may be good, though the purchase-money should be misapplied. How far a bond fide purchaser is bound, in a case like the present, to look to the application of the purchase-money, need not be decided in this case. There is much reason in the doctrine, that where the *trust is defined in its object, and the purchase-money is to be re-invested upon trusts which require time and discretion, or the acts of sale and re-investment are manifestly contemplated to be at a distance from each other, the purchaser shall not be bound to look to the application of the purchase-money ; for the trustee is clothed with a discretion in the management of the trust fund, and if any persons are to suffer by his misconduct, it should be rather those who have reposed confidence, than those [196]*196who have bought under an apparently authorized act.

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Bluebook (online)
21 U.S. 421, 5 L. Ed. 651, 8 Wheat. 421, 1823 U.S. LEXIS 290, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wormley-v-wormley-scotus-1823.