Abell v. Howe , 43 Vt. 403 ( 1871 )

The opinion of the court was delivered by

Redfield, J.

The bill states that the testator, Tilly Gilbert, made a bequest of one fourth part of the residue of his property to his executors in trust for his son James Jervis Gilbert. That Zimri Howe, the sole acting executor, paid all the debts and legacies of the testator except this provision for James Jervis Gilbert; that on the 29th of March, 1864, John Howe was appointed administrator de bonis non of the estate of Tilly Gilbert with the will annexed; and that, on the 15th of June, 1864, at the request of James Jervis Gilbert, he purchased with said trust funds a house and lot in Eairhaven, and took the title'to himself, without naming the trust. That defendant Harris attached said house, as the property of John Howe, by the agency of defendant Willard, his attorney. Said writ was never entered in court, but on the 1st of February, 1869, said Howe conveyed said house and lot to said Willard. John Howe having become insolvent and having removed from this state, he has been removed as administrator, by order of probate court, and the orator appointed in his place. Willard sold and conveyed the premises to Farmer for §1850.00 ; and claims, as the attorney of Howe, to retain of the avails of the sale about §700 to pay the debt of Harris.

I. It is insisted that the orator, as administrator de bonis non with the will annexed of the estate of Tilly Gilbert, cannot maintain this bill. Neither Zimri Howe nor his successor John Howe have ever settled their administration accounts in probate court, or in any way been discharged from their trust as administrators of the estate. The “ one fourth the residue ” of the estate has never been severed or set apart from the general assets of the estate by any order or decree of the court. Neither have given bonds, as trustee ; nor have such funds been placed in the hands of either as trustee. In the case of Newcomb v. Williams & others, 9 Met., 525, A. & B. were joint executors of a will and gave a joint bond in probate court: The will created a trust, and imposed the duty upon B., of administering such special trust. The executors settled their account as executors, and the balance was retained in the sole possession of B., who gave no bond as trustee. Ch. J. Shaw, in giving the opinion of the court, says: “ It seems to us very clearly that, by these proceedings, and by operation of law, the executors became ^responsible for the personal property of their testator, and that they must remain thus responsible until some legal discharge is shwn.” Again he says, page 534, “ if the trust is cast upon them as executors, the execution of such trust is a duty superadded to their official duties as executors, and until they qualify themselves, and assume to act in their separate capacity as trustees, the bond to perform their duties as executors binds themselves and their sureties to the execution of such trust.” See also Conkey v. Dickinson, 13 Met., 51, Hall v. Cushing, 9 Pick., 395, Dorr v. Wainwright, 13 do., 328, Towne v. Ammidown, 20 do., 535. We have no occasion to decide in this case to what extent the sureties of an executor would be bound, where the executor’s account had been settled in probate court, and such executor had proceeded to administer - the balance found in his hands as a special trust under the will without qualifying himself by giving bonds as trustee, and without order of the court passing the funds into his hands as trustee. We could readily conceive a case, where an executor had fully settled his executor’s account, and by open and unequivocal acts had taken possession of the whole balance found in his hands, according to the will, and with the implied asseht of the probate court, and had squandered such assets in the administration of a protracted trust, where there would be a patent equity in excusing the sureties of the executor from responding to such devastavit. But we see no reason in this case why John Howe could not properly have been called into probate court to make a final settlement for all assets that came into his hands as administrator; and if all claims upon such assets are found to be satisfied, he should be required to qualify himself, and the funds by order of court passed into his hands as trustee. And if he should decline thus to qualify himself, another should be appointed trustee, who would execute the required bond.

And John Howe having perverted the assets of the estate to the purchase of real estate, without authority of the probate court, or warrant of the will, and sought to appropriate this property to the payment of his private debts, he was very properly removed, and required to settle his account. And we think it the right and duty of the orator to “ gailer up the. fragments that remain ” of said estate, and bring them into probate court, and place them in order and due course of administration according to the will. John Howe was never 'discharged as administrator because he had completed its duties, but removed because he refused to perform his duty.

James Jervis Gilbert is not entitled.by the terms of the will to the possession and use of the fund as a beneficiary, but it is an active trust, requiring the action and discretion of the trustee. And it would seem, upon general equity principles, that the orator, as the representative of the estate and the will, is the very person to invoke a court of equity, that he may reach these funds, which have been wrongfully perverted, and appeal to any and every legitimate agency to bring these funds 'to the use provided in the will.

II. It is insisted that defendant Harris is a bona fide purchaser, without notice of the trust. Harris had paid no value, and had discharged no debt. Howe conveyed the estate to Willard, and authorized him to apply a portion of the avails to pay Harris’s debt. Harris is not an innocent purchaser for value, for he has paid nothing. When a purchaser of trust property has notice of the trust before the money to the full value of the property is paid over, and beyond his power to recall; he cannot be regarded an innocent bona fide purchaser. Willoughby v. Willoughby, 1 T. R., 763, 769 ; 2 Story’s Eq., 754, § 1502.

But it is claimed that Harris was a creditor of John Howe, and obtained a valid lien by his attachment. That lien was dissolved, if any was had, when the suit was abandoned and the writ not entered in court. Yet if the writ had been entered in court, and judgment rendered, and execution levied, all in legal form, Harris would “ take in execution all that belonged to his debtor, and nothing more.” And as John Howe had, in equity, no title, his creditor obtained none by his levy and set-off. Hart, Leslie & Warren v. Farmers & Mechanics’ Bank, 33 Vt., 252; 2 Story’s Eq., § 1503, b.; 3 Redfield on Wills, 538 ; Hackett v. Calender, 32 Vt., 97 ; Poor v. Woodburn, 25 Ib., 234.

III. Willard, the attorney of Harris, was aware of the trust; and if the attorney had notice of the trust, the law will presume the notice was communicated to the client; and if this knowledge comes to the attorney or agent while acting in another and different transaction, the client and principal will be affected with notice. Hart et al. v. F. & M. Bank, ut supra. And the same rule is established in England. Dresser v. Norwood, 17 C. B., (N. S.,) 466.

The great office of a court of equity, in matters of trust, is to follow trust property alienated and perverted and restore it to its place, that it may perform the duties assigned it; and we are relieved of all embarrassment in this case, lest we might wrong some party who had become innocently involved while dealing with the trust. No person possessing these attributes appears in this case.

The decree of the coui’t of chancery, dismissing, pro forma3 the orator’s bill, is reversed, and the case remanded, with directions to enter a decree for the orator against all the defendants for the amount of the money in said Willard’s hands, received from the sale of the premises, set forth in the bill, which he holds for the benefit of said Harris, and to the amount of Harris’s debt; and a decree against the defendants Howe and Willard for the residue of the sum received by said Willard on sale of said property, not otherwise accounted for in probate court or paid to the orator,—interest to be computed from the time of such sale, and the orator recover his costs.