Summary
In Harrington v. Erie County Savings Bank (101 N.Y. 257) it was in effect held that the rule that a trustee may not purchase or deal with the trust property in his own behalf, does not render such a purchase void from the beginning, but voidable only, and at the instance of the cestui que trust, and that the title, even while in the hands of the trustee, may be confirmed by acquiescence and lapse of time, as well as by the express act of the cestui que trust.
Summary of this case from Kahn v. ChapinOpinion
Argued December 10, 1885
Decided January 19, 1886
George Clinton for appellant. E.C. Sprague for respondent.
The record shows that this action was commenced on the 19th of April, 1877, to recover possession of certain promises lying on the corner of Main and Court streets, in the city of Buffalo, then in possession of the defendant, but to which the plaintiff claimed to have title. The defendant admitted possession of the premises, and denying any title or interest in the plaintiff, among other defenses asserted a legal title in itself, acquired in April, 1865, by purchase, in good faith and for a valuable consideration, from one Edward L. Stevenson, without notice of any claim on the part of the plaintiff; facts sustaining this allegation were in evidence before the plaintiff rested, and of themselves justified the nonsuit against which this appeal is taken.
It appeared that Isaac R. Harrington was the common source of title; that he died in August, 1851, leaving a will under which the plaintiff took if at all, as one of several residuary devisees. But before that, as the plaintiff also showed, his testator in November, 1847, conveyed this, with other property, to Edward L. Stevenson and Elbridge G. Spaulding "in trust to sell and dispose of the same upon such terms and conditions as in their judgment might appear best and most for the interest of the parties concerned, and convert the same into money, and by and with the proceeds of said sales and collections, to "pay the expenses of the trust and care of the property, and apply the balance upon debts" named or referred to as set out therein. His wife, Amanda, joined in the assignment, and she was also the sole executrix of his will. In December, 1852, the assignors and Mrs. Harrington, for an expressed consideration of $10,000, conveyed the property to George P. Stevenson, and he on the 25th day of February, 1856, conveyed it to Edward L. Stevenson, who on the 10th of April, 1865, for an actual consideration of $20,000 then paid to him, executed a deed with warranty and covenants of seizin to the defendant. In each instance possession of the premises corresponded to the legal title. The assignment and several conveyances above referred to were all duly recorded before the execution of the deed to the defendant. It vests a plain record title, and we agree with the learned trial judge and the General Term in the opinion that nothing was proven to impeach it.
Suppose we concede on behalf of the appellant that the jury might have found that the conveyance by the trustees to George Stevenson was a device to get the title into Edward, who was one of the trustees, to satisfy a claim of the latter against the estate of Isaac, the creator of the trust, and provided for in his assignment. The existence and bona fides of the claim cannot upon the evidence admit of doubt, and it was proved that by the transaction, the claim was to that extent satisfied. We are, therefore, unable to see how the act can be characterized except as one done for the benefit of the estate, apparently within the terms of the power in trust, and not in conflict with them. The appellant relies upon the well-established doctrine that a trustee cannot purchase or deal in the trust property in his own behalf, or for his own benefit, directly or indirectly. This is a rule of equity and is not to be impaired or weakened. Such a purchase, however, is not void ab origine, but voidable only, and at the instance of the cestui que trust, or of a party who has acquired the rights which belong to one in that relation. Even while in the hands of the trustee the title may be confirmed as well by acquiescence and lapse of time as by the express act of the cestui que trust. These elements exist, but need not be considered, for a legal estate acquired by a subsequent bona fide purchaser in good faith and without notice cannot be impeached even in equity. He takes the land freed from the trust.
That seems to be the situation of this defendant. There was nothing on record to show that its grantor had not a perfect right to convey, and if he had not, it was owing to some undisclosed act or circumstance of which there is no reasonable ground for suspicion the defendant had notice.
We have examined the various propositions of the learned counsel for the appellant, but find none which shows error committed by the trial court in dismissing the complaint, or which, in view of the opinion above expressed by us, requires further notice.
The judgment should, therefore, be affirmed.
All concur.
Judgment affirmed.