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as beneficiary under the trust created by the will, no interest is conferred on the latter that he or his assignee in bankruptcy can successfully assert in a court of equity or any other court. Nichols v. Eaton, 1 Otto, 716.

§ 337. Bondholders have a clear right to have executed that power of the trust deed which requires the trustees to take possession of the property upon default in payment of interest. If the trustees refuse to perform this duty the cestui que trust has the right to apply to the court to compel them to do it or appoint some one who will. Wilmer v. Atlanta & Richmond Air Line R'y Co., 2 Woods, 409.

§ 338. Miscellaneous.— If a cestui que trust, under an assignment for the benefit of creditors, buys a right of property which the assignees were empowered to sell in the execution of their trust, he must claim as a purchaser under them, not as a cestui que trust. Wilkinson v. Wilkinson, 2 Curt., 582.

§ 339. Under the statute of Illinois an unrecorded declaration of trust is inoperative against creditors. Hubbard v. Turner, 2 McL., 519.

§ 340. Where a trust is created for the benefit of a third party, without his knowledge, he may affirm it and enforce its execution. Bank of the Metropolis v. Guttschlick, 14 Pet., 19. § 341. It is a well-established principle in equity that the act of a trustee shall not prejudice his cestui que trust. If a trustee purchase the estate of his principal, the sale, as a matter of course, is set aside unless ratified. Piatt v. Oliver, 2 McL., 267.

§ 342. A deed of trust of certain shares of bank stock provided that the title to the stock should remain in the grantor till his death, but that the dividends on the stock should be for the exclusive use of the beneficiary and her family, but that such beneficiary should neither sell, dispose of or change said stock without the consent of the grantor, or that of such guardian or trustee as the proper court should appoint after his death. It was provided further that the release of the beneficiary should release the trustee or guardian. Held, that on the death of the grantor the bank might pay the dividends to the beneficiary direct, she being married, though she was a minor and had a guardian appointed before the grantor in the trust deed. Linton v. First National Bank of Kittanning,* 10 Fed. R., 894.

§ 343. Where the whole beneficial interest in land, directed to be converted into money, or money directed to be used in the purchase of land, belongs to the person for whose use it is given, a court of equity will permit the cestui que trust to take the money or the land, at his election, if he elect before the conversion is made. But in case of the death of the cestui que trust without having determined his election, the property will pass to his heirs or personal representatives in the same manner as it would have done if the conversion had been made and the trust executed in his life-time. Craig v. Leslie, 3 Wheat., 563.

§ 344. Property was conveyed to a husband for the use of his wife during life, remainder to her children, or, in default of such children, to his heirs. He was permitted to sell the land with her concurrence, when the proceeds were to remain subject to the trust. The land having been sold with her consent, the proceeds were used by the husband in the business of the firm of which he was a member. To secure the wife the husband assigned to her, in the firm name, a deed of real estate executed to the firm, reciting in the assignment that it was made to secure her for the money thus deposited with the firm. Held, that, as the wife had only a life interest in the property, she had no title to the money used by the firm, and therefore had no money on deposit with the firm, and could not hold the real estate assigned as against the firm creditors. In re Chisholm,* 8 Ben., 242.

VIII. TRUSTEES.

1. Rights, Powers and Duties.

SUMMARY - Loss by investment in Confederate money, § 345.— Relief under general prayer,

§ 346.

§ 345. A trustee who keeps no account of trust funds, but invests them in his own name, cannot charge them with the loss resulting from his having taken Confederate money in pay. ment. Mitchell v. Moore, §§ 347, 348.

§ 346. Where a bill charged a trustee with a breach of trust, asked for an accounting, for the removal of the trustee, the payment of the income to the complainant, and for general relief, it was held that it was proper to direct the payment of the principal to a new trustee, as that relief was necessary in order to carry the removal of the old trustee into effect. Ibid. [NOTES. See §§ 349–397.]

MITCHELL v. MOORE.

(5 Otto, 587–591. 1877.)

APPEAL from U. S. Circuit Court, Southern District of Alabama. STATEMENT OF FACTS.- Mitchell was trustee for Mrs. Moore, and under her father's will, of which Mitchell was executor, continued to hold her property for many years after his testator's death. He mingled the trust funds with his own, and during the war (he living in Alabama) converted much of it into Confederate money, by means of which it was lost. She filed a bill by her next friend for an account, and the removal of Mitchell as trustee. There was a decree in her favor, and Mitchell appealed. Further facts appear in the opinion of the court.

§ 347. A trustee who keeps no separate accounts, but mingles the trust funds with his own, is liable for all losses from bad debts or Confederate money. Opinion by WAITE, C. J.

There can be no doubt that the trust fund in this case was always used by the defendant as his own, and that all investments were made by him in his own name, with nothing whatever to indicate an appropriation to the purposes of the trust. When inquired of by the complainant in October, 1860, in respect to the trust, the defendant wrote: "If you will be contented I will fix your money so that you can see it any instant. But as the time is now, it is in a better fix now than it would be if you had it." In his deposition taken in his own behalf, when upon cross-examination he was required to make a full, complete and detailed statement of his execution of the trust, he said: "I kept no separate account of the trust fund after it came into my hands. I accounted for the annual interest to the agent of the complainant, and was ready to pay over the principal in the event of the death of A. L. D. Moore, which was the time fixed by the will of my father for me to pay over to my sister the corpus of the trust. I thought this was all I was required to do, and, therefore, kept no separate and distinct accounts of the trust fund, and cannot give the dates of the loans or other particulars inquired about. When necessary, I put some of my own funds with it to make out the sum a borrower might wish to get, and kept no separate accounts of it, and can furnish none."

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Under these circumstances, clearly, the defendant is in no condition to charge the trust with the losses he has sustained from payments to him in Confederate money. As long ago as 1681, it was said in argument, and approved by the then lord chancellor of England, in Dashwood v. Elwall, 2 Ch. Cas., 56, that" if an executor hath orphan's or other men's money in his hands, and hath power to lend it, if he do so, and take security in his own name, which faileth, he shall answer the debt in his own money, unless that he indorse the bond or do some other thing at the time of lending the money or taking the security which may doubtless declare the truth," and this because "heed was to be taken that we make not such examples under which dishonest men may shelter themselves." If this were not the rule, it was also said: "It will be in the power of one who deals for several persons and for himself also, taking security by bond in his own name, if any of the debts fail to gratify whom he pleaseth with good securities, yea, himself, and play the securities, good or bad, into his own hands, or what he pleaseth." Thus were set forth in the language of the time a rule, and the reason of it, by which courts of equity have universally required trustees to account; and it can never be de

parted from without danger that wrong will be done. Massey v. Banner, 4 Madd., 413; Wren v. Kirton, 11 Ves. Jr., 377; McAllister v. The Commonwealth, 30 Pa. St., 536; Stanley's Appeal, 8 id., 431. This disposes of the first assignment of error. There is no dispute as to the amount of the trust fund, and no complaint is made of the rate of interest for which the defendant has been decreed to account, if he is liable to account at all.

§ 348. When a trustee is removed it is competent for the court to appoint a new one, although not prayed for in the bill.

The second assignment of error is to the effect that the court could not direct the payment of the principal sum to a new trustee, because such a decree was inconsistent with the specific relief prayed for. The prayer is for an account, the removal of the old trustees, the payment to the complainant of the money she is entitled to, and for general relief. There is no specific prayer for the appointment of a new trustee, or the payment of the principal of the fund to him when appointed; but such relief is necessary in order to carry into full effect an order for the removal of the old trustees.

Decree affirmed.

§ 349. Cannot claim adversely to cestui que trust or treat trust property as his own.— A trustee who uses trust property to purchase securities cannot treat them as his own and turn them over to the trust fund at a higher price than he paid. Campbell v. Campbell,* 8 Fed. R., 460.

§ 350. A trustee cannot deny the title of his cestui que trust, or set up that the transaction out of which the trust grew was illegal as between the grantor and the cestui que trust. Railroad Co. v. Durant,* 5 Otto, 576.

§ 351. Rights of as creditor.- A creditor does not, by becoming a trustee for his debtor, lose his right as a creditor. Prevost v. Gratz,* Pet. C. C., 364.

§ 352. In bankruptcy.- The trustees of a bankrupt take his property subject to all legal and equitable claims of others, and are affected by all the equities which could be urged against him. Cook v. Tullis, 18 Wall., 332.

§ 353. To question validity of trust.- A trustee cannot be allowed to attack the validity of the deed under which he has gone into possession, unless he clearly shows that he has been deceived into taking a title which, without knowledge or laches on his part, really belonged. partly or wholly, to himself; nor can an executor be allowed to attack a deed of trust to his testator as in fraud of such testator and other creditors, unless he alleges, and clearly shows, that said testator was ignorant of, and deceived by, such fraudulent intent. Hunt v. Danforth.* 12 Law Rep. (N. S.), 74.

354. Reimbursement for taxes paid on trust property.- Where lands are conveyed to A., which under a contract with B. should have been conveyed to the latter, and A. is subsequently adjudged to be trustee for B.. held, that all taxes paid by A. while in possession to protect the title and prevent a sale of the property are not voluntary, and that A. is entitled to be reimbursed. Sherman v. Savery, 2 McC., 107.

§ 355. Trustees are bound to pay taxes on trust property if in funds, and are entitled to money advanced for that purpose. They may also keep such property insured. Burr v. McEwen, Bald., 154.

§ 356. Compensation.- The general practice in America, and especially in Massachusetts, is to allow commissions to trustees in cases of open and admitted express trusts, unless the trustees have forfeited them by gross misconduct in the administration of the trust. Jenkins v. Eldredge, 3 Story, 325.

$357. In Pennsylvania trustees are entitled to compensation for their services in the execution of the trust whether there is any provision or agreement touching it or not. Burr v. McEwen,* Bald., 154.

§ 358. In Pennsylvania all trustees are entitled to a commission on moneys passing through their hands; the usual rate is five per cent., and any departure therefrom is under special circumstances. Askew v. Odenheimer, 1 Bald., 380.

§ 359. Under the equity of the act of assembly of Pennsylvania, which allows commissions to executors, trustees are entitled to claim them. Quære, if trustees are so entitled by the general rules of courts of chancery. Prevost v. Gratz, 3 Wash., 434.

§ 360. A trustee will not be allowed and duty. Flagg v. Mann,* 3 Sumn.,

compensation for doing an act in violation of his trust

84.

§ 361. It is the rule in this country to allow a trustee compensation from the trust estate unless he has been guilty of fraud or negligence. Barney v. Saunders,* 16 How., 535.

§ 362. O., the assignee of a claim against the Mexican government, supposing his title good, collected the amount of the claim, but it afterwards appeared that his title was bad. Held, that he must be considered as a trustee holding the fund for the owners, and was entitled to compensation from the fund for his services and expenses in securing it, and in defending suits brought by third parties against him to recover it. Willianis v. Gibbes, * 20 How.. 535.

§ 363. A trustee may convey his own interest though the assignment may not convey the interests of his cestui que trust. Piatt v. Oliver, 3 McL., 27.

§ 364. To insure trust property.— A trustee, though having no personal interest in the trust property, may, although there is no obligation on him so to do, insure it to its full value. Insurance Co. v. Chase, 5 Wall., 509.

§ 365. To submit interest of cestni que trust to arbitration.- If a trustee who has procured insurance upon property held by him in trust be empowered by the cestui que trust to adjust the amount of the loss and sue for its recovery, he may refer to arbitration the question as to the amount due on the policy, and an award pursuant to the submission binds the cestui que trust. Brown v. Hartford Fire Ins. Co.,* 11 Law. Rep. (N. S.), 723.

§ 366. Where a trustee appointed by will with power to make partition of lands does not in making the partition give his personal attention to the division of the property, but by agreement with one of the heirs submits it to the arbitrament of disinterested persons, it is nevertheless valid, as it is confirmed and carried into effect by the execution of the trustee of the requisite indenture for that purpose. Phelps v. Harris, 11 Otto, 370.

§ 367. Power to sell How construed.- A trustee with power of sale for holders of railroad bonds has a right to decide whether parties asking a sale have sufficient title to justify such demand. But any person interested adversely to such sale has the concurrent right of appealing to the courts for an adjudication upon the claims of those in whose behalf the trustee assumed to act. North Carolina Railroad Co. v. Drew, 3 Woods, 674.

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§ 368. Notwithstanding the rule that a naked power or trust must be strictly construed and literally followed, a trustee empowered to sell lands may make a conveyance in consideration of coupon bonds, such transaction being a sale within the meaning of the power. Speigle v. Meredith, 4 Biss., 120.

§ 369. A trust for sale, with nothing to negative the settler's intention to convert the estate absolutely, will not authorize the trustees to execute a mortgage. Patapsco Guano Co. v. Morrison, 2 Woods, 395.

$370. Where a trustee was given power to sell, held, that a mortgage given by him was of no effect as far as the trust property was concerned, although authorized by an order of the court rendered in accordance with section 2327 of the code of Georgia, which declares that "a trustee, unless expressly authorized by the act creating the trust or with the voluntary consent of all the beneficiaries, has no authority to sell or convey the corpus of the trust estate, but such sales must be by virtue of an order of the court of chancery upon a regular application to the same." Ibid.

371. To purchase trust property.- A trustee cannot purchase or acquire by exchange the trust property. Wormley v. Wormley, 8 Wheat., 421.

$372. A purchase of trust property by a trustee is not void, but voidable. Prevost v. Gratz. Pet. C. C., 364.

§ 373. Where property held by a trustee is taken out of his hands, he may purchase it freed from the trust of one authorized to sell it. Ibid.

374. In order to sustain a sale between parties standing in a fidicuary relation to each other, it must be made to appear, first, that the price paid approximates reasonably near to a fair and adequate consideration for the thing purchased; and second, that all the information in possession of the purchaser which was necessary to enable the seller to form a sound judgment of the value of what he sold was communicated by the former to the latter. Brooks v. Martin, 2 Wall., 70.

$375. The administrators of an insolvent estate sold and conveyed certain real estate pursuant to the directions of the probate court having jurisdiction, and took in payment the notes of the purchaser, on which, not being paid, judgment was entered and the land was sold on execution to one of the administrators for a fair price and without fraud on his part. Held, that he took a good title, and was not liable as trustee at suit of the heirs of the intestate. Shakely v. Taylor,* 1 Bond, 142.

376. If one acting as trustee for others becomes himself interested in the purchase of the trust property, the cestuis que trust are entitled to have the sale set aside unless the trustee had fairly divested himself of the character of trustee, and the fact that the purchase was made through the intervention of a third person makes no difference. But the fact that the

trustee, thirteen years after the execution of the trust and its judicial confirmation, in the face of opposition by the cestui que trust, comes into possession of the property by purchase from the purchaser at the trust sale, does not of necessity vitiate the trust sale as fraudulent. Stephen v. Beall, 22 Wall., 329.

$377. A trustee cannot become the purchaser of the estate or property of which he is trustee; nor can he buy an outstanding claim or title for his own benefit, and it will inure to the benefit of the cestui que trust. Lenox v. Notrebe, 2 Curt., 386.

§ 378.

as buyer and seller.-A person cannot legally purchase on his own account that which his duty or trust requires him to sell on account of another, nor to purchase on account of ar other that which he sells on his own account. Michoud v. Girod, 4 How., 509. § 379. A purchase, per interpositam personam, by a trustee or agent, of the particular property of which he has the sale, or in which he represents another, whether he has an interest in it or not, carries fraud on the face of it. Ibid.

§ 380. Amount of care required of. Where property is conveyed on a general undefined trust the trustees are bound to bring to the administration of the trust only the same care and fidelity they would exercise in their own concerns. Burr v. M'Ewen,* 1 Bald., 154. § 381. Must act in good faith.- Where the trustee in a marriage settlement has a power to sell and re-invest the trust property, whenever, in his opinion, the purchase money may be laid out advantageously for the cestui que trust, that opinion must be fairly and honestly exercised, and the sale will be void where he appears to have been influenced by private and selfish interests, and the sale is for an inadequate consideration. Wormley v. Wormley, 8 Wheat., 421.

§ 382. Trustees, when tenants in common.- Where several grantees in a conveyance take and hold for purposes of certain trusts, they take as tenants in common. Robinson v. Codman.* 1 Sumn., 128.

§ 383. When trustees must act jointly. In the case of a strict trust, not public, all the trustees must act together unless the power to act is given to a less number either expressly or by fair and necessary implication. Held, under the circumstances of this case, where three trustees were appointed to carry on an extensive business as carriers, that the three trustees need not concur, but that a majority had power to act. Sloo v. Law,* 3 Blatch., 459. § 384. Where there were two trustees of the property of insolvents, and one of them made an assignment, but the other neither joined in it, nor assented to it afterwards, the assignment was void. Wilbur v. Almy, 12 How., 180.

§ 385. One of several public officers who are trustees of a public trust, and who acts as the attorney of the others, has no implied authority to consent to a decree which will have the effect to divest the trustees of the trust estate and place its execution in other hands. Vose v. Trustees of International Improvement Fund,* 2 Woods, 647.

§ 386. If there be two joint trustees with a joint power of attorney to sell, the trust cannot be executed by one alone either in the life-time of the other or after his death. Boone v. Clarke, 3 Cr. C. C., 389.

§ 387. Although in the administration of a trust where there is more than one trustee all must concur, the entire body can direct one of their number to transact business, and the acts of the one thus authorized are the acts of all and binding on all; and if within the scope of his agency he procures an insurance on the trust property, it is for the other trustees as well as himself. If he does it without authority, still it is a valid contract, which the underwriter cannot dispute, if his co-trustees subsequently ratify it; and suit brought on the policy in their names is a sufficient ratification. Insurance Co. v. Chase, 5 Wall., 509.

§ 388. Feme covert or infant as trustee.— An infant may be a trustee and be compelled to execute his trust. Especially if, after he came of age, he affirms the trust, and ratifies the acts which he did in accordance with the trust, will it be out of his power to deny that any trust ever existed. Irvine v. Irvine, 9 Wall., 617.

§ 389. A., doing business under the shelter of the name of B., a feme covert, purchased land with his own money, the title, being made to B. for his use, which land he subsequently sold as attorney in fact for B. under a power of attorney from her. Held, that the conveyance was good notwithstanding the coverture of the trustee. Gridley v. Westbrook, 23 How., 503. $390. Miscellaneous. A trustee has no power to hind, ex directo, the trust estate by promissory notes or bills of exchange, though such acts may make him personally liable. Patapsoco Guano Co. v. Morrison, 2 Woods, 395.

§ 391. It is not competent for trustees, even with the sanction of a court of equity, to divert the trust funds to the payment of any other debt than that for which such trustees hold them. Duncan v. Mobile & Ohio Railroad Co., 2 Woods, 542.

$ 392. If bonds are made "payable on or before" the day mentioned in the condition, but the decree under which the sale is conducted does not authorize the insertion of these words, it seems that the trustees have no right to receive the money before the day; if they had, the

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