Huckabee v. Billingsly , 16 Ala. 414 ( 1849 )

COLLIER, C. J.

A trustee, it is said, is a person holding the legal title to property, under an express or implied agreement to apply it, and the income arising from it, to the use and for the benefit of another person, who is called a cestui que trust. — Story on Con., 2d ed., § 296. The powers pertaining to a trustee over the trust property depend upon the nature of the trust and the terms of the instrument by which it was created; if these do not inhibit, he may reduce the trust estate into possession, and may sue or defend a suit at law in respect to it. — Chambers et al. v. Mauldin et al. 4 Ala. Rep. 477; Marriott & Hardesty et al. v. Givens, 8 ib. 694; Nicoll v. Mumford, 4 Johns. Ch. Rep. 529; Brooks v. Marberry, 11 Wheat. Rep. 97; Gray v. Hill, 10 Serg. & R. 436; Halsey v. Whitney, 4 Mason’s Rep. 206; Acton v. Woodgate, 2 Mylne & K. Rep. 492; Garrard v. Lord Lauderdale, 3 Sim. Rep. 11; Small v. Marwood, 9 B. & Cresw. Rep. 300; Galt v. Dibrell, 10 Yerg. Rep. 146.

Although no one is compellable to undertake a trust, yet if the party named as a trustee intend to decline its administration, he ought to execute a disclaimer, or at least never interfere in the matter. Lewin on Trusts, &e. 225. It is said to be a universal rule, that a person who has once undertaken the office of trustee, either by actual acceptance or by construction of law, cannot discharge himself from liability by subsequent renunciation. The only mode by which he can obtain a release is either under the sanction of a court of equity or by virtue of a special power in the instrument creating the trust, or with the universal consent of the parties interested in the estate. Ib. 260.

Wherever a trust is created, a legal estate sufficient for the execution of the trust shall, if possible, be implied: consequently, a trust to sell, even on a contingency, confers a fee simple at law, as indispensable to the execution of the trust.— Lewin on Trusts, &c. 234. .

A trust estate, whether real or porsonal, may, like a beneficial estate, be conveyed, assigned, or incumbered by the trustee at law. As the dry legal estate in the hands of the trustee is affected by the operation of law, and may be disposed of by the act of the trustee, precisely in the same manner as if it were vested in him beneficially, so it confers upon him all the legal privileges and subjects him to all the legal burdens that are incident to the usufructuary possession. Thus, he may sue at law respecting the trust estate; the cestui que trust, though the absolute owner, in equity, is regarded in a court of law in the light of a stranger. Lewin on Trusts, &c., 244 to 248.

The cestui que. trust may proceed ’ against his trustee and oblige him to the execution of any particular act of duty: if, therefore, the legal estate in the hands of a trustee be assailed by a stranger, the cestui que trust may compel the trustee to assert his legal right. So if the cestui que trust have reason to believe, and can show to ihe satisfaction of the court, that the trustee is about to do an act that is not within 1he scope of the trust, he may obtain an injunction to restrain him from an un-authorised exercise of power. Lewin on Trusts, &c. 603 to 609.

Where the trustee commits a breach of trust, the cestui que trust may follow the estate into the hands of a stranger to whom he has conveyed it, — the rule being that the equitable right of the cestui que trust may be successfully asserted against any person, who is either a volunteer with or without notice, or a purchaser for a valuable consideration with notice. So he has a remedy against the trustee personally to recover compensation for the injurious consequences of his unauthorised act. Lewin on Trusts, &c., 610.

The deed of trust under which the plaintiff attempts to deduce a title, is a conveyance of the premises in question, together with some personal estate, by Huntington to Howell, to secure the payment of certain debts due by the grantor to Harrell, and to indemnify the plaintiff and Parish against the payment of certain notes which they had signed with the grantor as his sureties. It is professedly a deed between the grantor, the trustee, and Harrell — authorises a sale after default, upon the request of either of the beneficiaries, and gives to Harrell a priority in the payment of his demands. Harrell and the trustee united in the execution of a quit-claim deed to Huntington of the premises, in which it is recited that they had received satisfaction to the extent of their value. Subsequently Huntington and wife sold and conveyed the premises for a valuable consideration to Foster, whose tenants and those claiming through him have held the possession under the assertion of a right adverse to the plaintiff or the trustee.

Although Harrell was the only beneficiary who was made a party to the deed of trust, and its primary object was to secure him, yet we have seen that there were others who had interests provided for. Harrell having joined in the quit-claim to Huntington, cannot charge the trustee for a breach of duty; but the plaintiff and Parish may complain, and if prejudiced by that act, are entitled to be indemnified, in the mode we have indicated would be proper, where the trustee transcends his authority. Lewin on Trusts, &c., 464. The deed, however, was valid as between Harrell, the trustee and Huntington, divested the legal estate of the trustee, and left him no interest in Ihe premises to which he had quitted claim. Having voluntarily parted with the estate confered by the deed of trust, he could not execute the duty it enjoined, and which he had undertaken to perform; for it was essential to its performance that, he should have the legal estate. This conclusion is fully supported by the work we have cited, which is little more than a compilation of the adjudged cases. Pistole v. Street, adm’rx, 5 Port. Pep. 64.

The quit-claim re-invested Huntington with the legal estate, and left nolhing in the trustee — not even the naked power to convey a complete title in the grantor’s name: this was inseparable from the estate with which the trustee parted. Conceding, however, that the trustee could upon the requisition of the plaintiff and Parish have sold an equitable interest, the plaintiff could not recover in the present action, because it is indispensable to his right to recover at law'that he should show a legal title in himself. This he could not do, for the reason, as we have seen, that the trustee had no such title to convey.

It is immaterial to the presént case whether the agent of Foster had notice of the trust at the time he purchased ■; however this may be, the effect of the quit claim to divest the legal estate is still the same. The question 'of notice might perhaps be important in considering whether the equitable rights of the Cestui que trusts were affected, but beyond this, we cannot perceive that- it is entitled to consideration.

We are not inclined to go beyond the case before us and enquire what aré the respective rights of Ihe plaintiff and defendant in equity, upon the hypothesis that the agent of Foster purchased with notice. But we are disposed to think that the defendant is entitled to stand in the situation that Harrell occupied, and if the sale should be set aside he may claim a prior lien to the extent of the consideration that Harrell and the trustee received for their quit claim to Huntington: provided it does not exceed the amount of the sum that was due to Harrell. Ás to the right of the defendant to be compensated for improvements made upon the premises, this will not present a question of great difficulty when the facts are developed.

This view leads us to the conclusion, that by executing the quit claim deed to Huntington the trustee parted with his legal estate, and consequent authority to' make the subsequent sale under the deed of trust at which the plaintiff purchased ; consequently the third charge prayed should have been given. We will not stop to consider the othér questions raised, as the conclusion expressed is decisive of the present case. We have but to add that the judgment is reversed, and the cause remanded.