Brannan v. Oliver , 2 Stew. 47 ( 1829 )

By JUDGE COLLIER.

This cause presents for the decision of the Court the following questions: 1st. Can an administratrix become a purchaser at a sale, made by hei’self, of her intestate’s estate? 2d. Will a sale made by an administratrix of her intestate’s estate, in another state, without an order of Court, be considered-regular, when it does not appear what is the law of that State?

An administrator is considered as a trustee for the benefit of the creditors aud distributees of his intestate’s estate; and, upon that hypothesis. I proceed to consider this case. The weight of English authority is against the right of the trustee to purchase the estate of his cestui que trust, and is predicated upon reasoning, the force of which roust impress itself upon every mind.- To permit a trustee to purchase, while he is enjoying the confidence of his cestui que trust, it is said, would be to license him to speculate, by abusing his situation. His duty obliges him to communicate all information, and to exert all the care and industry necessary to dispose of the estate as advantageously, for his cestui que trust, as if he were selling it for himself. His interest would sometimes thwart bis duty, and the infirmity of human testimony would render it impracticable at all times, to prove its violation; hence the policy of the rule which divests him of a legal capability to purchase. In its correctness, when not carried to too great an extent, Imost cordially acquiesce. ladmit its wisdom, when applied to a purchase by an agent, at a sale by himself, of his prinpai’s property, and to other purchasers under the same circumstances; but I must repudiate its application in the case I am considering.

The rule, with reference to a purchase by an administrator, has been frequently considered, both in the English and American Courts. By the former, it has been held apply in all its strictness. The case of Fox and Mackreth, noticed in 2 Brown’s Chancery Cases,^a which scemsto engaged a full portion of the time of the Court of Chancery' and the House of Lords, goes the entire length. The case. of Crow and Bullard,^b the cases in 5 Ves. jv.^c and 6 Ves. jr.,^d are to the same point. It is worth}* of remark, that in only one of these cases, was the sale at auction.

The reasoning on which the rule is founded, inclines my mind to the opinion, that it does not extend to a purchase by an administrator, at a sale made by himself, of his intestate’s estate; or, that if it extends to such purchase, it cannot be considered as applying, where the sale was made fairly. Let the case be examined by an application of this criterion to the facts on the record. Mary Arm Brannan, one of the appellants, and the mother of the appellee, administered on the estate of her husband, the father of the appellee, in South Carolina, where he died and before his death resided; and after the grant of the letters of administration, she sold Ihe negroes mentioned in the ■appellee’s bill, at public auction, without an order of tire Courtof ordinary, purchased them herself, for anything appeai,jna, p, pie contrary, at a full price, and made a return Q£ g£q0 tQ tpc pr0per Court.

These facts develope, no unfairness in the purchase by the appellant, Mary Ann. The idea of unfairness is repelled, by the circumstance that the sale was not made'privately, but openly, where all persons who wished had an opportunity of bidding. There is no allegation in the bill that the slaves were sold at an under price, and there is no' proof that such was the fact. It is not alleged that the slaves were not sold pursuant to the laws of South .Carolina; nor is there any thing on the record, from which such a conclusion can be legitimately deduced. If the laws of that State do not tolerate a sale made in the manner this was, it should have been shewn by proof, what formalities the law required there to make it legitimate. In the absence of proof upon this point, the Court can only look to the common law to aid it in its determination, and suppose that it has been adopted in South Carolina as the governing rule on this topic. What says that system of jurisprudence? That an administrator may sell, or otherwise dispose of his intestate’s personal estate, accountable however, fora correct discharge of his duty in this particular, and for an honest application of the proceeds. This sale may be made privately without a license from Court. The law under which be receives his appointment confers the li~ cense’ aQd makes him answerable for its abuse.^a Had the appellant have designed to defraud the appellee, and by that means derive a benefit to herself by a purchase of the slaves of her intestate, would she not, under the circunisiances, have acted differently? It cannot be true that sho would have exposed the slaves for sale publicly at auction; or if she had, she would never have returned to the Court an account of the sale. Had sho intended to act dishonestly, and disregarded that moral duty she owed to the creditorsand distributees of her intestate’s estate, as well as to her securities for a correct administration of the estate, it would not have been difficult to have acted otherwise. It is beyond the power of the human mind to fathom her intentions; but he they what they may, there is nothing in the record which manifests an unfairness of fact or intention; and it would be against a settled and charitable rule of law gratuitously to presume it.

Let us examine the reasoning of the rule which maintains the invalidity of a purchase by an agent or trustee, with a vievy to ascertain if it embraces the case wo are consider.'Xng. The great difficulty of discovering a disregard of the v Tights and interest of the cestui que trust, induced the determination of the Courts, that the trustee had no right to purchase,so long as his vicarial character continued. There, the only means, in almost every instance, to ascertain unfairness in the sale, was by such communication as the trustee might think proper to make;, and it is unreasonable to suppose that he would make any disclosure, which would operate adversely to his interest; even when called on in equity, to answer on oath, if he was convinced that a knowledge ofthe facts was inclosed within his own bosom. How widely dissimilar is the case made out by the facts here? The administratrix sells at public auction the property of her intestate, where all who wish to purchase, have an opportunity of doing so; she returns an account of the sale to the Court, from which she receives her authority, and it is there recorded. If there was any unfairness in such a sale, the testimony of those who were present, (and some persons must be, or the sale cannot be public,) and the records of the Court, would, I may venture to say, in forty-nine fiftieths of the cases, disclose it; without depending alone upon the answer of the purchaser, in equity. Hence, I conclude, from the publicity of. the transaction, that the rule when extended to a case like the present, is not sustained by just notions of policy; and that an administrator may purchase at a sale made at public auction, under legal authority, of his intestate’s estate.

The authority furnished by the English and many of the American decisions, in favor of an extended application of the rule, cannot bo received as conclusive or pertinent, in those st ites where administrators dispose of their intestate’s estates by a public sale authorized by a special license from a Court ofrecord, or where they make a return of such sale to the Court. These decisions are predicated upon a different state of fact. There the grant of administration is a license to them to perform whatever pertains to them in the character of administrator, and dispenses with a special authority. There the sale is good, though made privately; consequently, sales made by administrators under such circumstances, are less public, and the probability of detecting a fraud greatly diminished.

I understand the rule to be founded upon the idea, that the purchase is a fraud in law upon the rights of those interested in the estate. ’ I consider it as most congenial with the condition of society and the character of human dealings, to narrow the catalogue of le'gal frauds to as Tew ns' practicable, and to declare no act as fraudulent per se, where a wise and just policy docs not imperiously demand it. Every lawyer who is not too much enamoured wHh. his early notions of law, will admit that the benefits which result from an extension of the doctrine of constructive frauds bears no comparison with the injury it inflicts. I introduce this view, merely to shew, that the rule should not be held to extend to all cases of trust.

I will now notice some authority in favor of the right of the administrator to purchase. In Lindsay v. Lindsay, administrator,^a the Court of Chancery in South Carolina determined in favor of the sale and purchase by the administrator. Another case in the same book, isto the same point.^b In M’Guire and wife, and others, v. M’Gowan and wife, administratrix,^c the same Court seem to treat the subject as if it was still an open question. Two of the Judges were in favor of the general authority to purchase; one of them, though he did not concur in the general authority o'' the administrator to purchase, held, that the trust being coupled with an interest in the particular case, he might be permitted to purchase; the other two Judges maintained the broad principle of incapacity. In Perry and wife v. Dixon,^d the Judges seem to have been divided, as they were in the case of M'Guire and wife,and others, v. M'Gowan and wife, administratrix. The inferen cededuciblefrom these decisions js, that an administrator, where he has an interest in the estate, may purchase; but where he ir<s a mere naked trust, he cannot. The case we are considering comes within the rule as thus modified. The appellant, as the relict of her deceased husband, was entitled t • one third of her husband’s estAe, and the appellee as sole heir and distributee, to the remaining tw thirds. Without bending the strict rule further than it has been made to yield in the cases in 4 Dessaussure, it was competent for the appellant to have purchased.

In Anderson and Starke v. Fox and others,^e the question as to th > right of an executor to purchase property exposed to sale by himself, was discussed. Judge 'Rucker in the opinion which he deliveied, remarked, that he was no me? as prepared to say that as to such purchase the executor was a mere trustee. “If this Court,” said he, “were 'o declare the law >s> b.e such in ail cases, even whom there was an undoubted deficienc of assets, and aitho’-gh the sale should have been made after due notice at public, .ductfon, and with all possible fairness, it would probably ■bethe immediate parent of a thousand suits in chancery, to set aside such purchases, either in behalf of the legatees, distributees or creditors.” Again; “The practice has been too general in this country, and has prevailed too long, to be drawn in question by analogy to the doctrines in England concerning trustees of lands or commissioners of bankrupts. For though executors and administrators arc, to many purposes, considered as trustees in a Court of equity, they are not so in all cases.”^a Judge Roane deemed it unessential to a decision of the case to express an opinion upon the question; rather intimating however, that the English decisions did not consist with the usage and understanding which prevailed in Virginia upon the subject. The opinion of,Judge Tucker, has ever since been considered as correctly ascertaining the law in Virginia.

The remark of Judge Tucker, as to the gcneralitv of the practice of executors and administrators in Virginia, purchasing at sales of the estates they represented, will apply with equal force to this country; and the injury consequent upon a decision in opposition to usage, would be alike incalculable. Under these circumstances, nothing but rules of law too inflexible to yield to considerations of general convenience, should superinduce such a determination. Where rights have matured under a general impression that they were sustained by law, such impression should not be lightly regarded. And in cases where the adjustment of the law is more important than in what way it be settled, it should receive a controlling influence.^b

In 2 Carolina Law Repository^c the general authority is maintained, with this restriction, that the personal representative shall be answerable to the creditors to the full value of the property. And in 2 Haywood,^d it is held that an executor may purchase the property of his testator at a public sale by order oi Court.

’’ Having shewn that there is little danger of unfairness in the sale passing undetected where it ismade publicly, I proceed to consider whether a just policy doesi.ot require a relaxation of the rule in such cases. It is certainly for the interest of the creditors and distributees, that the estate should yield, when sold, as large a sum as practicable; and as the surest means to effect that result, a fair and honorable competí! >on should not only be tolerated, but encouraged. The widow or some near relative is most frequently die persona! representative, and most solicitous to purchase some particular portion of the intestate’s estate; and if not permitted to purchase by openly bidding, would procure some one to become the ostensible purchaser, and acquires» through him the ownership. If this can be done, and it is beyond the operation of human laws to restrain it, witkoul inhibiting, to an impolitic extent, the transier of propc*rly, why declare that the administrator shall not be permitted to purchase? The rule • when extended to such a case can produce no good; since by a kind of tacit understanding, which the law cannot reach, he can acquire title through another. Surely, reason and good sense demand. that he should be permitted to do that, directly, which he can do indirectly; and when too, if there is unfairness in the sale, detection is almost inevitable.

This course of reasoning has brought my mind to the conclusion, first: that the purchase by "the administratrix is prima .facie valid, because divested of all unfairness ;> second: that the sale is prima facie legal, because it, does not appear what the law oi South Carolina is. Without therefore expressing an opinion upon the other assignments of error, I am of opinion that the decree should be reversed, and the cause remanded, that an opportunity may be, given to shew the law of South Carolina; and with me the. Court concur.

Reversed and remanded ^*

The Chief Justice and Judge Crenshaw, not sitting.

a Page 400.

b B ,g *ch. Case™p! U7.

c wSerj>aae 1 678. E., pnrte

d Ex parteHughes 617. 3311S"

a ffiw°-sl33 Jio"

a 1 Dess. 150.

b .r;v. 1/i.i’s it rsy .Dray-ton et ji. 507.

c i Dess. 487.

d Ib. 5C4nrte.

e 2 Heii. and ftluixi. 245.

a 2 Vesey. 482.

b Jones v. Logwood. 1 Wash. 42. Colhoun v. Snider. 1 Binn. 153. Waters et al. v. Stewart. N. Y. Cases in Error 47,

c Page 49.

d Tomlinson’s Exrs. v. Detestitatius Exrs. p. 284.

* See tlie Cases of Gayle etal. v. Singleton. X Stewart p. $75.