Majority
p. 220William Sheldon against Jemima Sheldon and others, Executors of Joseph Sheldon, deceased.
Headnote
Where >A. confesses a ¿údgment to B, ond Bf covenants to sell the .Tprpperty of A»' - ’ u'nderthat judgment, andapply á sufficiency bf the proceeds tO‘ tlié* payment of A is debts j and account with him for the.re jnVipder, B. may himself become a‘purchaser at a sale under an execution issn' edon such j udgment; for the Jegal and equit^bletuie-ih the property re* maining in Á. ■until the sale, B is nota trustee áa to- 'thatpropertynor is B accountable to.A. beyond the sum’ fop whj- h the property was soid: iMiq. ‘This was- an action of covenant, which’ was tried at ,the Albany circuit, in April 1815, before Mr. Justice Platt.
The action was founded on the following -instrument, under’ seal, executed by the defendants’ testator : “ Whereas, William-Sheldon is-indebted to me.iri the sum of one hundredarid t-wenty- ■ five dollars, arid whereas the said ' Wiliifimhsih-.this. day duly, executed to me a bond, and warrant of attorney t.b confess judg? -merit thereon, w-hich bond is in the penal .sym: of eight thousand Mbllars., ’conditioned for the payment Of four thousand dollars j and whereas it is agreed that under that judgment I shall sell. all. the real and personal’ property of the Said William,. an,d apply a sufficiency of the moneys arising therefrom ’to the paymqnt of all his honest debts, and account with him the said William.for the remainder-thereof. Know, therefore1, all. men by these presents, ■ that I the said /oséph do covenant, promise,, and agree to and with the. said William, that I will well and faifhfull-y., oii my part,keep arid .perform the before-recited, agreernent; and to insure a faithful performance thereof,-1 bind myself, my heirs,-execritors; and administrators,: and each and' every of them, iri the penal sum -of four thousand; dollars,, to him the said, William,, his ’’heirsj .- executors, administrators,-and assigns,, In witness,-T&c,.. The., breaches specially assigned on .this .covenant were,, that the.de? fondants’ testator, had riot applied a sufficiency of the money arising from the sale of the plaintiff’s estate to the'payment, of bis -honest-debts; and that the testator, Or his. executors, had- pot accounted with-the plaintiff for the money arising from ’ the sale . of the plaintiff ’.s real and .personal property' remaining in their possession after ;páying'all his honest-debts. .
Judgment was duly entered on the bond and warrant of at? torpey, mentioned ip the.covenant, and an execution.being issued, thereon to the- sheriff.of Rensselaer, the property’of the plaintiff, which was.all.situated in that county, was.sold fairly, and without collusion, to the defendants’’ testator, as the highest bidder, for -about, the. sum of 1,200 dollars'; and the testator paid the honest debts of the plaintiff tb mor? than 1,500 dollars. The .
p. 221contended, that the defendants’ testator, being a trustee, could not, himself, become a purchaser. It is a settled principle in equity, that if a trustee-become a purchaser of the trust estate, the cestuy que trust has.a right to set aside the sale, and have the property resold. Should it be said that this was a judicial sale, it may be answered that the trustee cannot avail himself of the benefit of such sale, for he can derive no profit or advantage whatever from his trust; and if it is for the interest of the cestuy que trust, a court will always avoid the sale.[2] The only question is-, whether the plaintiff can avail himself of this principle in a court of law ? The testator, by his covenant, stipulated to perform certain duties as a trustee, and he is here called upon to answer for a breach of that covenant, or, in other words, for a violation of his trust. In a court of equity the cestuy que trust might either set aside the sale, or call on the trustee to account for the profits. Now, the trustee, in this case, has purchased, for 1,600 dollars, property worth 4,000 dollars, and he is called on to account, or pay the difference. The inquiry, as to the value of the property, at the trial, was, in this view,
plaintiff offered to prove that at the time of the execution of the .covenant, and of entering the judgment, the plaintiff owned property of the value of 4,000 dollars; but the evidence was! objected to'on the ground that the Only proper inquiry wras for wh^t the property sold under the execution, and the judge being of that opinion rejected it. The plaintiff next offered to prove, tjiatfthe testator, after the purchase at the sheriff’s sale, had sold part of the property at a much higher rate than he gave for it, with the proceeds of which he had-paid the honest debts of the plaintiff above mentioned, but the judge ruled that the testator was not bound to account to the plaintiff' beyond the amount for which the property sold under the execution. The plaintiff submitted to a nonsuit, with leave to move the court to set it aside, and grant a pew Lr¡a}„
S. A. Foot, for the plaintiff,
Bliss, contra,
contended, that by declaring for a breach of the covenant, in this case, the plaintiff affirmed the sale,. This is distinguishable from the ordinary case of a sale and purchase by a trustee. No third person was ever interposed in this case. It
p. 222was a judicial, sale, by-thé' sheriff, the public la w officerj so1 that,' all idea of.collusion or fraud is exeliided. Indeed, the.'parties;' by their contract, contemplated a sale by a sheriff. In Jackson, ex dem. Gillespie, v. Woolsey,[2] thé court said that a guardian, tit litem,: might purchase the estate of the'infant, sold.by the-PGm®issi6nefs for making partition. And in Davison v. Gardner,[3] Lord Htírdwicke said, a trusted might purchase at open salé,At auction, before the master.[4]
delivered the opinion , of the coiirt. The first question which arises, upon the motion to set Aside thé non-, suit granted in this casé is,, whether the' testator, Joseph Shetdcm, could legally purchase the property sold under the execution, in his. fay our,, against the plaintiff in this cause. The objection which has teen urged against this right is* that he was a trustee for. the plaintiff, of the, property' sold, and, therefore, disqualified from-becoming a purchaser. It would be a sufficient an-' fewer to this objection, that it forms no part of, the breaches assigned in the declaration; But it is- not true,'in point of. fact,: that the testator stood in the character of trustee to the plaintifE Neither the legal nor equitable title to the - property was transferred to' him,' It remained, entirely in the plaintiff, and was under
p. 223
his absolute control until the sale, made under the execution, The testator only covenanted that he would sell the property under the execution, to be issued upon the judgment confessed, and apply a sufficiency of the money arising therefrom to the payment of the plaintiff’s honest debts, and account to him for. the, remainder. Under. such circumstances there could be no possible objection to the téstator’s becoming a purchaser, at a public sale made by the sheriff. And, indeed, it may well be questioned* whether the rule applies at all to such public sales, there being no chance of practising any' fraud upon the cestuy que trust, by purchasing the property under its real value. ■ ( 11 Johns. Rep. 455 .) But the rule itself is not as broad as was Contended for by the plaintiff’s counsel. In Whichcote v. Lawrence, (3 Ves. jun. 750.,) the Lord Chancellor says, the rule'is laid down, not very correctly, in most cases where you find it. Jt is stated as a proposition, that a trustee cannot buy of the cestuy que trust; certainly, says he, that naked proposition is not correctly true ; the real sense of the proposition is not that the sale is, ipso jure, null, but that he who undertakes to act for another., in any matter, shall not, in the same matter, act for himself. Therefore, a trustee to sell, shall not, gain any ad= vantage by being himself the person to buy. And, in Davison v. Gardner, (cited 1 Cruise, 551.,) Lord Hardwicke said, the court of chancery will not suffer a trustee to purchase the estate of the cestuy que trust, during his. minority, though the transaction be fair and honest; but that the rulé against trustees purchasing did not extend to trusts for persons of full age. And where there is a decree for sale of the cestuy que trust’s estate, and an open bidding before the master, then the Court has permitted the trustee to purchase; for that is >an open auction of the estate. x
The next question is, whether the testator was bound to account to the plaintiff for more than the amount produced by the auction sale. The decision of this point is, necessarily, involved in the answer given to" the first question. For, if the testator might legally become a purchaser at the auction, the avails of the sale thus made must be the amount for which the testator was accountable ; and the plaintiff can surely have no reason to- complain of such sale, as it was made according to his own agreement and stipulation. The
p. 224
covenant upon' which the present áctión is fóuntiéff provides, • that- the real and personal estate of the plaintiff shoüid be. Sold under the judgment; and if that was a fair, bbháfidb s’alé', Which, indeed, has riot been at' all questioned, there'can be no ground, for calling, on the. defendants to account for more than the avails of such. sale. And thé casé shote, that the testator did ripply. such avails to the paymeut of the 'plaintiffs dé'btSj ás by- the covenant he was authorized and required to do... There Ms, therefore, been no breach of the covenant, and th# plaintiff was properly nonsuited... The motion1 taust, aéccird¡nglyi,-hé' denied. ... ' -" ' , '
Motion denied.