Summary
In Brothers v. Brothers, 42 N.C. 150, Chief Justice Pearson said: "It is an inflexible rule, that when a trustee buys at his own sale, even though he gives a fair price, the cestui que trust has his election to treat the sale as a nullity, not because there is fraud, but there may be fraud."
Summary of this case from Davis v. JenkinsOpinion
(December Term, 1850.)
It is an inflexible rule, that, when a trustee buys at his own sale, even if he gives a fair price, the cestui que trust has his election to treat that sale as a nullity, not because there is, but because there may be, fraud.
CAUSE removed from the Court of Equity of GATES, at Fall Term. 1850.
A. Moore for the plaintiff.
Heath for the defendant.
In this case, the following facts appeared from the pleading and proof:
The plaintiff, about 1842, for the purpose of securing his creditors, by deed conveyed to the defendant some real estate, and some negroes and other personal property in trust, that, if the plaintiff should fail to pay the debts recited in the deed, when the same should be demanded, he, the defendant, should sell the said property at public sale for cash, after advertising the same for six months, etc., for the space of, etc., and, out of the proceeds of such sale, pay off the aforesaid debt, and the residue, if any, pay over to the plaintiff. The defendant, in the year 1843, after giving the required notice, as trustee, exposed the said property to sale at public sale, and at his request one John H. Hinton bid off the property for his (the defendant's) own use and benefit, and took a conveyance therefor from the defendant, as trustee, but afterwards reconveyed it to him in his own right. The property remained in the possession of the defendant, who claimed it as his own, from that time up to the filing of the bill, with the exception of one (151) negro woman, who died, and the real estate which was sold by the defendant for the same price, at which it was bid off at the public sale. This bill was filed in January, 1851, and the plaintiff, after setting forth these facts, prayed that the said sale be set aside and a new scale ordered and an account taken, etc.
The cause was set for hearing upon the bill, answer and proofs and transmitted by consent to this Court.
The plaintiff has by his proofs made good his allegation, that the defendant bought the property at the sale, made by him as trustee, by the instrumentality of Hinton, who bid off the property as his agent.
Nothing has been done amounting to an affirmation of the sale, and the plaintiff applies within a reasonable time to have it set aside, and the property sold over again. He has a right to do so. It is an inflexible rule, that when a trustee buys at his own sale, even if he gives a fair price, the cestui que trust has his election to treat that sale as a nullity, not because there is, but because there may be, fraud. It must be declared to be the opinion of this Court, that the plaintiff is entitled to have the land resold, unless the subsequent sale by the defendant was bona fide and for a fair price.
There must be a reference to inquire, whether the land was sold by the defendant, and if so, for what price, and the value of the land at the date of the sale, and it is also referred to the Clerk and Master of Gates County to take an account of the debts secured by the deed of trust, and the rents and hires of the land and negroes, that have been or might, without his default, have been, received by the defendant; and the cause is reserved for further directions. By consent of (152) the parties, W. J. Baker, Clerk and Master of the Court of Equity of Gates County, is appointed Commissioner, to sell the negroes at public sale, on a credit of six months, taking bonds and approved security, and the defendant must surrender the same to the said Baker on demand.
PER CURIAM. Ordered accordingly.
Cited: Patton v. Thompson, 55 N.C. 288; Froneberger v. Lewis, 79 N.C. 431; Stradley v. King, 84 N.C. 638; Dawkins v. Patterson, 87 N.C. 387; Bruner v. Threadgill, 88 N.C. 367; Gibson v. Barbour, 100 N.C. 197; Cole v. Stokes, 113 N.C. 272; Austin v. Stewart, 126 N.C. 527.