Opinion
(December Term, 1856.)
Where a trustee has been guilty of a breach of trust by secretly buying the trust property at his own sale, in order to avail himself of the cestui que trust's acquiescence in his ownership as a bar to his rights, he must show that he fully apprised the latter of the nature and extent of the fraud practiced on him.
A trustee who purchases at his own sale, and keeps the cestui que trust in ignorance of the fact, cannot rely upon the statute of limitations or the lapse of time as a bar to an account.
A trustee who has never settled his account with the cestui que trust, or closed the trust in any way, but still owes a balance, cannot be protected by the statute of limitations, or the presumption arising from the lapse of ten years.
CAUSE removed from the Court of Equity of Mecklenburg county.
Guion and H. C. Jones, for plaintiffs.
Osborne, for defendants.
Sarah Sloan died in January, 1825, having made a will, which was duly proved and recorded. In the 9th clause of this will, is the following bequest: "It is my will and desire, that immediately after my decease, that my son, James Sloan, take into his possession my negro woman, Hannah, for the use of my daughter, Fanny West, and dispose of her in such a manner, as he thinks best calculated to support the said Fanny West during her life, but in the event of the said Fanny's death, the said negro, or her value, is to be equally divided between the children of the said Fanny West." In pursuance of this will, the trustee, James Sloan, took possession of the woman, Hannah, and had possession of her and her offspring up to the time of his death, in 1847, and since that event the latter have been possessed or disposed of by the defendants, his children and legatees. Fanny West, with her husband and children, removed to Alabama, and thence her husband went further west; and there was much evidence tending to show that he was dead when the suit was brought. It was fully proved that he is now dead. Mrs. West and the family, while in this State, and after their removal, were in very necessitous circumstances, which was the case up to the filing of her bill; her husband was a very indolent, careless, and improvident man, and altogether abandoned the charge of his wife and children after going to Alabama. She was not able to read or write, and not acquainted with the transaction of business.
About the year 1829, James Sloan, professing to exercise the discretion given him by the will, advertised the negroes Hannah and two children, and sold them at public auction, when the defendant Wm. M. Stinson became the purchaser at $440 for the three. He, immediately thereafter, without giving any note or paying any money, without taking any title and without taking any possession, relinquished his purchase to the trustee, James Sloan, at the price he had bid, and Sloan took the slaves home with him from the place of sale. Stinson is now the son-in-law of Sloan, but was not so then.
The plaintiffs allege that this sale was fraudulent; that the property was bought by Stinson, as the agent of Sloan, and by a collusion with him. The prayer is for an account.
The defendants, in their answer, say that this sale was made for the convenience and benefit of Mrs. West; that the slave Hannah had become feeble, and, having two young children, she could not be hired for anything, and the best thing that could be done for her was to convert the slaves into money, and give her a portion of it for her support and maintenance; that, with this view, the salves were sold and bought by the defendant Stinson, without any concert with the defendant Sloan, and that he bid for them a fair price; that, afterwards, he sold the slaves, at the same price, to James Sloan, who took them home with him. They say that Mrs. West gave to James Sloan divers receipts recognising the sale, of which the following is an example:
PICKENS, May 8, 1838.
"Received of James Sloan, executor of Sarah Sloan, dec'd., and agent of Fanny West, as left by the will of the said deceased, the sum of fifty-eight dollars and fifty-two cents, it being the interest of four hundred and forty dollars, the price of a negro woman slave Hannah and two children, the same being the interest on said amount from 2nd of Jan., 1836, 'till this date, after deducting five per cent commission. I say received by me." Signed by plaintiff, Mrs. West.
They showed receipts to the same purport, dated in 1835, 1836, 1843 and 1845, which are all the payments that were proved to have been made after Mrs. West went to Alabama. The defendants relied on the statute of limitations, also upon the length of time, as evidence of abandonment, c. They admitted, however, that there had never been a settlement of the trust, and that there was a balance due for interest.
Replication, commissions and proofs.
The cause was set for hearing and sent to this Court.
Sarah Sloan, by her last will, bequeathed to the plaintiff Fanny a negro woman named Hannah. The bequest is in the following words:
"It is my will and desire that, immediately after my death, my son James Sloan take into his possession my negro woman Hannah, for the use of my daughter Fanny West, and dispose of her in such manner as he thinks best calculated to support the said Fanny West during her life-time, but in the event of the said Fanny West's death, the said negro, or her value, is to be divided between the children of the said Fanny West."
James Sloan, the trustee, took the negro into his possession, and he, by his will, bequeathed the slaves in question among his children. The defendant E. B. Sloan, is the acting executor of James Sloan, and took into his possession the slaves in controversy, and delivered over to the legatees, under the will of James Sloan, the negroes respectively bequeathed to them, and some he has sold. All the proper parties are before the Court. The bill prays that some suitable person may be appointed trustee for her and her children, and a decree that the defendants deliver over the slaves in their respective possession, being the descendants of Hannah, and for an account, not only of their hires, but of the value of such as have been sold. Fanny West, with her children, removed from the State in 1827, leaving the negro Hannah in the possession of James Sloan. The latter occasionally remitted to her small sums of money, or paid them to her agent. The first of these payments was in 1835; the next in 1836; another in 1838, and another in 1843. The last was in 1845, and it is admitted that there is still a balance due the plaintiffs. The will of Sarah Sloan is dated in 1825.
The answer of E. B. Sloan admits that his father received the negro Hannah into his possession, under the trust created by the will of Sarah Sloan, but being in delicate health, and having her children, and being satisfied that it would be more to the interest of the plaintiffs to have her sold, as in her present state she could do nothing towards plaintiffs' support, the trustee caused her and her children to be put up to auction at the most public place in the district, after due notice, when the defendant Wm. M. Stinson purchased the whole of them for $440.
If the sale was a fair and bona fide one, the defense is a substantial one. Under the provisions of the will of Sarah Sloan, James Sloan had an unquestionable right to sell Hannah, if he thought it best for the support of Fanny West, notwithstanding the ulterior limitations to her children. She was the primary object of the testator's bounty, and had a right to be supported by the slave as far as it would go. The testatrix evidently looked forward to such a result, for after creating a trust, she proceeds, "in the event of the death of the said Fanny, the said negro, or her value, shall be equally divided among her children. "Independently of this provision, by the will creating the trust, the trustee had unlimited power over the slave Hannah, and, therefore, in the exercise of his discretion, had a right to sell her and her children for the purpose of executing his trust. But we cannot agree that James Sloan ever did actually sell Hannah and her children. The form certainly was gone through, but the device is too flimsy to deceive any one. Stinson, the pretended purchaser, is the son-in-law of James Sloan. He never paid a cent for the negroes, gave no note to secure the purchase-money, took no bill of sale, and the negroes went from the place of sale to James Sloan's, in whose possession they remained up to the time of his death. To call this a sale is a mere mockery. It is true Stinson swears that he purchased the negroes fairly and for himself, but his oath cannot avail the defendants under the facts of the case. James Sloan, it is evident, was induced to make the sale, not for the better support and maintenance of the plaintiff and her family. The plaintiff was in great poverty, and mainly dependent upon the labor of Hannah for her support. She removed from the State in 1827. The first remittance of which we have any knowledge, was made in 1835; the next the year following, and then there is a gap of two years, the next payment being in 1838. The payments then ceased until 1843, a lapse of five years, and the next and last in 1845. Thus, after this pretended sale for her greater comfort, he suffers, in the first instance, several years to elapse from her removal, before he makes her any payment, then another lapse of five years. If the object was the better providing for Mrs. West, and the sale an actual one, why did he not regularly send her the interest of the money? James Sloan acquired the possession of Hannah as a trustee. She was never out of his possession until his death, and her children passed into the possession of his legatees, who, being volunteers, must be held to be trustees for the plaintiffs, of such of the issue of Hannah as are in their respective possessions. We are satisfied that the slaves were sold to enable the trustee to acquire the property for himself. This is proved by the testimony of Mr. Carroll.
It is said, however, that the plaintiff acquiesced in the sale of Hannah, and dealt with her trustee on that footing. If she did acquiesce in the sale, the trustee, to avail himself of it, must show that, after the breach of trust, he fully and plainly apprised her of it. If, with the full knowledge, she goes on to deal with him in this new capacity, Equity will consider her as having acquiesced in it. Adams' Equity, 62. The dealing with the trustee in this case is the reception of the interest of $440, the price bid by Stinson at the alleged sale. Where is the evidence that James Sloan ever communicated to the plaintiff the true facts of that transaction? She was poor and illiterate; unable to write or to read writing, living in another State, and a feme covert. No doubt he informed her that he had sold Hannah. She knew that he had the power to do so; and believing everything to have been fairly done, she, from time to time, receives the interest. This is not such a dealing with the trustee as a Court of Equity will look upon as amounting to acquiescence, for a fraud was practiced upon her. The length of time, if it could be applied in this case, as presumption of payment, abandonment or satisfaction, is not what the statute requires to form a bar, for it was only seven years from the last payment to the filing of the bill.
It is further said, that the plaintiff has come too late to have an account. It is material in Equity that an account be claimed in a reasonable and proper time.
It is a sufficient reply to this objection that the trust is still open.
Our attention was called to the case of Davis v. Cotten, 2 Jones' Eq. 430. It differs materially from this. Roderick Cotten, by his will, after giving several legacies, directed that all the residue of his estate should be divided into two lots, one of which he gave to the children of his son Richard Cotten, and the other he lent to his son S.W. Cotten for life, making provisions for its distribution after his death. Among the slaves was one named Lavinia. Mrs. Cotten, the widow, was appointed executrix, and Thomas Snipes, executor, who duly qualified. In 1827, the executors, under an order of the County Court duly obtained, sold the woman Lavinia and her two children, and Mr. Charles Williams purchased them for Mrs. Cotten, into whose possession they returned. The defendants, in their answers, say, that, at February Term, of the County Court of Chatham, Thomas Snipes, the acting executor, made a settlement of his administration of the estate, with commissioners duly appointed, in which he was charged with the value of Lavinia and her children, to wit, the sum for which Williams bid her off. This money was, by Mr. Snipes, paid to the legatees. The bill was filed for a reconveyance of the interest of the plaintiffs in Lavinia and her children, and the settlement was made, in 1830. The Court say,
"If the executors had made no settlement, or had not paid over the balance, there was an express and unclosed trust, as to which the statute of presumptions does not apply; but if the executors had closed up the business, and the several legatees had received their respective legacies and filial portions, then there was no express trust, but a mere right to have the executrix converted into a trustee in regard to the slave Lavinia and her children, and the statute would apply. "In our case there was no settlement between the parties, and no full payment; it is, therefore, an open trust.
The plaintiffs are entitled to a decree for a reconveyance of the descendants of Hannah, and to the appointment of another trustee, and to an account of the hires of the slaves, and of the value of such as have been sold to purchasers without notice.
There must be a reference to the clerk to take an account; in doing so, he will allow the defendants the several payments, and the expense of such as were a charge in their raising.
This being a proceeding for a fund for the separate use of the plaintiffs, the joining of the husband would have been merely formal. If he was not dead when the bill was filed, we are satisfied he is now dead.
PER CURIAM. Decree accordingly.