Summary
In Patton v. Thompson, 55 N.C. 285, it is aptly said: "Who but the guardian can be relied on to show the property to persons wishing to buy, and to take the necessary steps to make it bring a fair price? Who but the guardian can the court look to for information as to whether the matters have been conducted in such a way as to bring the property to sale under the most advantageous terms, and that in fact it did sell for a fair price?
Summary of this case from Graham v. FloydOpinion
(December Term, 1855.)
Where a trustee buys at his own sale, even though he may give a fair price, the cestui que trust has his election to treat the sale as a nullity, not because there is, but because there may be fraud. Therefore:
A guardian who petitions for the sale of his ward's estate, gets an order of sale, acts as the agent of the clerk and master in making it, cries the sale, takes the bonds, and gives the information to the clerk and master, on which the report is made and the sale confirmed, will not be allowed to hold the land of his ward, purchased by another for him at such a sale.
CAUSE removed from the Court of Equity of Alamance.
Winston, Sr., for plaintiff. (288)
Graham for defendant.
(286) The bill was filed to compel the defendant to bring in a deed for cancellation, and for an account of the rents, etc.
Joseph Patton was a lunatic, to whom the defendant was guardian; he had a few articles of personal property of small value, and a tract of land containing sixty acres, worth between five hundred and a thousand dollars, and no other means of subsistence. In 1848, the guardian filed a petition in the Court of Equity of Orange, (then having jurisdiction), stating that the proceeds of the land and other property were insufficient to support the ward, and that it was necessary to sell the land; whereupon, that Court made a decree that the sale should be made, and appointed the clerk and master of that Court to make it, on a credit of six and twelve months. The master advertised the land, and sold the same to one John Stewart, for $499, the defendant acting as his agent in crying the sale at auction, and in taking the bonds. Upon the coming in of the master's report, opposition to the confirmation of the sale was made, and it was continued for one term. Afterwards, it was confirmed, and in the mean time the new county of Alamance having been laid off, and having taken jurisdiction of the matter, the sale was, in that Court, ordered to be confirmed. At the Spring Term, 1850, of the Court of Equity of Alamance, an order was made "that the master transfer to Robert Thompson, the guardian, the bonds for which the land was sold, to be applied by the said guardian to the use of his ward; and that the master of this Court make title to the purchaser." The bonds were accordingly delivered to the defendant; and in June, 1850, the clerk and master of that Court made a deed for the premises, to the purchaser, John Stewart. On the 20th September following, Stewart conveyed the same land to the defendant, for the consideration of $666, as expressed in the deed. No money was paid by Stewart on obtaining the deed, nor did defendant advance any thing to Stewart for his bargain; but the consideration on which Stewart conveyed to defendant, was a surrender of his (Stewart's) bonds by the defendant. The clerk and master delivered the deed for the purchaser, to the defendant, at the same time he delivered him the bonds under the order of the Court. (287)
The plaintiff alleged in his bill, that this sale of the ward's land was unnecessary; that divers of his friends had proffered to take the lunatic and land, and support him off of it; that defendant acted as agent to sell the land, and that in appointing a day of sale, he selected one on which there was a large gathering in the neighborhood, and most of the persons who might compete for the land were gone there. He alleges that the defendant did not advertise; that he did not state the full number of acres in the tract; and that he spoke doubtingly of the title; that he acted as crier of the sale; that he had procured Stewart to bid off the land for him; and when it came to the bid at which he knocked it off, he did so hurriedly, and in a way to prevent further competition. It was further alleged, that the land was worth from $1000 to $1200. The bill charges that the land adjoined the lands of the defendant, and was very much desired by him, and that in all this proceeding he was actuated by the fraudulent design of getting the land at an undervalue, and that he finally succeeded in doing so. The prayer is for a surrender of the land, and an account; also that the deed be surrendered for cancellation, and for general relief.
The defendant denies, in his answer, all these allegations, except that he told Stewart, and he says he told others, to bid, and that if they did not like their purchase, he would take it off their hands. He says that he did this solely from an anxiety to make the land bring its value. He also insists that the sum agreed to be paid for the land is its full value; and that this bill has been brought against him, not from any belief that he has got it too low, or that he has acted unfairly, but from an idea that a valuable copper vein has been discovered in close proximity to it, which is supposed to extend into it.
There was replication, and a large amount of proof taken, the material part of which is noticed in the opinion of the Court. The cause was set down for hearing, upon the bill, answer, exhibits and proofs, and sent to this Court for trial.
"It is an inflexible rule, that where 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, but because there may be, fraud." Brothers v. Brothers, 42 N.C. 150. So, there is no question as to the principle of equity which the bill seeks to enforce. Our question is one of facts merely, i. e., do the proofs establish as many of the allegations of the bill, as are necessary to bring the case within the operation of the rule?
The allegations tending to show actual fraud, as that the sale was not duly advertised, competition was suppressed, etc., are not sustained by the proof, and must be put out of the case; but these facts are proven, i. e., the defendant was the guardian of the plaintiff; he conducted, and had the entire control of, the sale, and reported to the Court that one Stewart was the purchaser; the sale was confirmed, and, by order of the Court, title was made to Stewart, who thereupon conveyed to the defendant, upon a surrender of the notes which he had given for the purchase money; Stewart bought by reason of an assurance on the part of the defendant, that if he did not like his bargain, he (the defendant) would take it off his hands. Stewart had no expectation or belief that he would like his bargain; for the land (some fifty or sixty acres) had no house upon it, no water, and was unfit for his purpose, unless he could get some land adjoining, which he knew he could not do; whereas, it suited the defendant precisely; he owning land adjoining, to which this land would be a very desirable accession. So, we have no doubt as to the truth of the allegation, that Stewart acted merely as the agent of the defendant, for the purpose of buying the land for him! and that the defendant, being well aware that, according to the "inflexible rule" above announced, he could not become the purchaser directly, attempted to effect his purpose indirectly, by the instrumentality of Stewart; and we have no doubt that the (289) defendant, in consequence of his desire to become the owner of the land, authorized Stewart, and that he did bid more for the land than any other person was willing, under the conditions of sale, and the state of the property, to give for it. But the defendant knew he had this advantage over any other person who wished to buy; that, being guardian, he would not be compelled to pay the price according to the terms of sale, and "might take his own time;" and the result has been, according to the direct allegation of the bill, that the defendant has not, up to this time, been required to pay the amount bid for the land.
If the allegation, that, in point of fact, Stewart bought the land for the defendant, needed any further confirmation, the defendant has supplied it by the testimony of one of his own witnesses, viz., James T. Hunter, who swears in substance, that the defendant requested him to attend the sale, and buy the land, with the assurance that if he did not like his bargain, he (defendant) would take it off his hands, provided it did not go over $500, telling him he thought the land was worth four or five hundred dollars. Witness attended the sale, and bid so as to run the land up to above $400, with the expectation that if he became the purchaser, the defendant would take it, as he knew it would not suit him, because there was no water on it, and very little wood, and there was no chance of buying any adjoining land.
The position taken for the defendant, that this being a sale by order of a Court of Equity, and the sale being confirmed by the Court, makes an exception to the general rule above announced, and is to be considered res adjudicata, does not apply to this case; because here, the Court had no notice that the guardian was in fact the purchaser.
We are, therefore, not at liberty to express an opinion whether such an exception can be allowed; but we will say this, if it is allowed at all, it should be done with extreme caution, and only under very peculiar circumstances. Who but the guardian can be relied on to show the property to persons wishing to buy, and to take the steps necessary to make it bring a fair price? Who but the guardian can the Court look to for information, as to whether the matters have (290) been conducted in such a way as to bring the property to sale under the most advantageous terms, and that in fact it did sell for a fair price?
It must be declared to be the opinion of this Court, that the defendant holds the title as trustee for the plaintiff, and there must be an account as to the rents and profits, making allowance for any necessary and permament [permanent] improvements. It is proper also to say, this proceeding makes it necessary for the Court of Alamance county to appoint some other person to take charge of the plaintiff and his interests, in the room and stead of the defendant.
Per curiam.
Decree accordingly.
Cited: Sc. post 411; Johnston v. Coleman, 46 N.C. 293; Rogers v. Holt, 62 N.C. 111; Froneberger v. Lewis, 79 N.C. 430; Dawkins v. Patterson, 87 N.C. 387; Bruner v. Threadgill, 88 N.C. 367; Sumner v. Sessons, 94 N.C. 375; Cole v. Stokes, 113 N.C. 273; McEachern v. Stewart, 114 N.C. 372; Smith v. Land Bank, 213 N.C. 346; Graham v. Floyd, 214 N.C. 82; Harris v. Hilliard, 221 N.C. 333; Peedin v. Oliver, 222 N.C. 670; Davis v. Jenkins, 236 N.C. 286.