Opinion
(June Term, 1829.)
1. When no rule for the management of a trust estate is prescribed by the creator of it, the law enjoins good faith, by which is meant honesty and diligence, carefully applied; and a departure from the rule prescribed by the creator, or a failure in good faith, is a breach of trust for which a trustee is liable.
2. Where a testator directed his debts to be collected, and a tract of land to be sold, and with the fund thus created a residence for his family to be purchased, but the executors purchased to an amount exceeding the fund, and in the exercise of good faith refused an advantageous offer for the land: It was held, that they had been guilty of a breach of trust only in exceeding the amount of the trust fund, and the purchase being divisible, they were decreed to hold the excess on their own account.
From GRANVILLE. From the pleadings, proofs, and exhibits, the case was that John Hester died, having made a will and appointed the defendants his executors, having devised all his property as follows, viz.: "I wish my tract of land in Granville sold, and out of the proceeds of the sale, together with the money due me, I wish my executors to purchase a piece of land somewhere most agreeable to my wife, Mary J. Hester, for her and my children to live on. The balance of my property I lend to my wife during her natural life, to raise and school my children on." After which, in the event of his widow's marriage, he directed all his estate, both real and personal, to be divided among his widow and children. At the death of the testator, his net personal estate, exclusive of his negroes, amounted to $1,484, which, together with the sum to be realized by a sale of the land, constituted the fund (329) appropriated by the testator for the purchase of a tract of land for the residence of his family. Before a sale of the Granville land had been effected, the defendants, influenced by the urgent requests of the widow, and against their own judgment, purchased a tract of land for which they gave $3,000, executing their own bonds to secure the excess of the purchase money over the fund in their hands. After this they made what they thought an advantageous sale of the Granville tract for $1,000; but the widow of their testator being extremely dissatisfied with the price, they, upon her remonstrances, vacated the bargain.
Devereux and Hillman for plaintiffs.
Badger and W. H. Haywood for defendant.
The plaintiffs were the widow and children of the testator, all of whom were infants, the former having become dissatisfied with the purchase made by defendants. The prayer of the bill was that they might be compelled to take it upon their own account, and to purchase another tract more suitable to the wishes of the plaintiff Mary, and that they might be charged with the $1,000 which they had refused for the land.
By an interlocutory order, the land devised by the testator had been sold, and produced the sum of $400.
A breach of trust necessarily supposes that there is a rule for the government of the trustee. The creator of the trust may prescribe what rules he pleases. In the absence of one prescribed by him, the law enjoins good faith, which includes not only what is commonly understood by honesty and integrity, but care, diligence, and attention, and in matters of judgment and discretion, that they should be carefully applied. To purchase more lands than the funds appropriated for that purpose would pay for was a clear departure from the rule which the testator in this case had prescribed to the executors, the trustees. Good faith and purity of motive afford them, therefore, (322) no protection from the consequences of that act. But in the sale of the Granville lands the testator prescribed to them no rule. The exercise of their best judgment and discretion, with vigilance and attention in obtaining the best price they could get for the lands, is the rule which the law has enjoined, and without a departure from it they have been guilty of no breach of trust. We cannot consider the omission to take the offer of $1,000 a departure from that rule; and more especially as the sale met the decided disapprobation of the principal cestui que trust, and the only one who was of age, and in whom also the testator reposed confidence, in an important part of the execution of the trust, by directing her wishes to be consulted as to the locality of the lands to be purchased. But even without such excuse, we cannot consider a mere error in judgment, in omitting to close with that which after circumstances showed to be an advantageous offer, and which at the time was matter of doubt, to be a breach of trust. If such was the rule, it would drive trustees into disadvantageous contracts, or, rather, it would prevent all prudent and discreet men from assuming the character of trustees. In cases of this kind, where judgment and discretion are confided in, and no rule given, good faith, defined as it is above, should afford protection. In the present case the gradual declension of property in price, particularly lands, is matter of history unexampled in this or perhaps any other country. The most prudent who wished to sell have held on from day to day, from month to month, and even from year to year, in hopes of better times. But they have as yet hoped in vain. Many of the most prudent have been protracted, and have property now in market which when it was first brought there would have commanded double its present price. To visit upon these trustees, who have acted with good faith, the consequences arising from acts so common throughout the country with prudent men managing their own concerns, would be applying to them rules which they never thought of subjecting (333) themselves to, and which neither the testator nor the law imposed.
The master will ascertain the amount of the funds set apart for the purchase of the lands, valuing the Granville lands at the price obtained for them; he will take with him the surveyor of the county of Granville and five freeholders, and lay off, for the purposes of the trust, as much of the land purchased by the executors as the said sum will pay for, rating the whole land at $3,000, the sum which was given for it by the executors, having a due regard to the locality of the lands and the convenience both of the cestui que trusts and the executors. He will also take an account of the rents and profits of the surplus land whilst it was in the hands of the cestui que trusts, so far and so far only as it benefited them above what the fund would have purchased. I would also sequester to the use of defendants the interest of the widow, if I could do so without vitally interfering with that of the children; but I cannot see how that can be done. Each party to pay his own costs.
PER CURIAM. Decree accordingly.
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