Grubbs v. McGlawn

Brown, C. J.

1. It was insisted that the equity of this bill was fully sworn off by the answer, and that the Chancellor erred in refusing to dissolve the injunction and dismiss the bill. As a general rule, it is the duty of the Chancellor to dissolve the injunction when the equity of the bill is sworn off by the answer of the defendant. But we cannot agree with the counsel for the plaintiff in error that this is such a case.

2. The equity of this bill hangs on the decision of the question, whether the administratrix had the right to purchase the lands of the intestate at her own sale, and whether the sale was good as against creditors. The rale is well settled, in this Court, that such a purchase is not void but voidable, and that it may be set aside at the instance of heirs or legatees, if they commence proper proceedings for that purpose within a reasonable time. 8 Ga., 236; 12 Ga., 594; 23 Ga., 151; 30 Ga., 780; Smith vs. Granbury, ante, 381.

But it is insisted by counsel for plaintiff in error that creditors have no right to have the sale set aside for their benefit, that they have no title to the property, and that the sale is good as against them, and they must look to the proceeds of the sale for satisfaction; and the case in 28d Georgia, 151, is relied on as favoring that view of the case. We are not prepared to say that the position contended for finds no support in that decision. But if the decision was intended to go to that extent, we do not think it can be sustained by reason or authority. Judge Story, in his Equity Jurisprudence, vol. 1, sec. 321, lays down the rule as follows: “ And, therefore, if a trustee, though strictly honest, should buy for himself an estate of his cestui que trust, and then should sell it for more, according to the rules of a Court of Equity, from general policy, and not from any peculiar imputation of fraud, he would be held still to remain trustee to all intents and purposes, and not be permitted to sell to, or for himself.” In section 322, he says the true ground is, “ that the prohibition arises from the subsisting relation of trusteeship.” Newland on Contracts, chapter 32, page 461; 6 Vesey, 625-626 ; 1 Madd. Ch. Pr., 92-93; 2 Vesey, 138. Again, in the same section, he says : “But the principle applies, however innocent the purchase may be in a given case.” 8 Ves., 337-345; 10 Vesey, 381-385; 2 Dow. R., 289-299, (ante, see. 311.) It is poisonous in its consequences. The cestui que trust is not bound to prove, nor is the Court bound to decide that the trustee has made a bargain advantageous to himself. The fact may be so, and yet the party not have it in his power distinctly and clearly to show it. There may be fraud, and yet the party not be able to show it. It is to guard against this uncertainty and hazard of abuse, and to remove the trustee from temptation, that the rule does and will permit the cestui que trust to come at his own option and without showing essential injury, to insist upon having the experiment of another sale. 2 John. Ch. Rep., 252; 10 Ves., 381, 385, 386.”

This authority makes the sale voidable in case of any sale and purchase by a trustee at the option of the cestui que trust. Now it will not be denied that the administratrix, in this case, was a trustee. Who is the cestui que trust f Judge Bouvier’s Law Dictionary, vol. 1, p. 232, says: “Cestui que trust is a barbarous phrase to signify the beneficiary of an estate, held in trust. He for whose benefit another person is enfeoffed or seized of lands or tenements, or is possessed of personal property.” Now I ask, for whose benefit was this administratrix enfeoffed or seized of this property — for the heirs alone, or first, for the benefit of creditors, and after they are satisfied, then for the heirs ? The right of the heirs is postponed to that of creditors. Why then may not the creditors, as well as the heirs, claim the “experiment of another sale,” whenever it is necessary to the satisfaction of their j ust claims ? The administratrix is the representative of the rights of the creditors as well as of the heirs.

This Court has decided in 8th Georgia, 236, that, “ creditors and heirs, as a general rule, can only sue third persons through the representative of the estate. The exception is, where there is collusion, insolvency, Unwillingness to collect the assets, when called on, or some other like special circumstance.” In 12 Georgia, 598, Judge Lumpkin says: “In Torrey vs. The Bank of Orleans, (9 Paige, 650,) it was held to be a settled principle of equity that a person who is placed in a situation of trust or confidence in reference to the subject of the sale, cannot be a purchaser of property on his own account, and that this principle is not confined to a particular class of persons, such as guardians, trustees and solicitors, but that it is a rule of equity of universal application, that no person can be permitted to purchase an interest in property where he has a duty to perform inconsistent with the character of purchaser.” It would seem to be quite clear that this administratrix had a duty to creditors to perform that was inconsistent with her character as purchaser. It was her duty to creditors to make this property bring as much as possible. Her character as purchaser was to buy the property for as little as possible. We hold that the purchase by her was not void, but voidable at the option of the creditors, as he had no other estate or property but this land to look to for the satisfaction of his debt. In 30 Georgia, 793, this Court uses the following language: “The doctrine, however maintained as it respects this class of trustees by this Court, is this: that where a purchase is made by a trustee on his own account, of the cestui que trust, although sold at public auction, it is in the option of the cestui que trust to set aside the sale, whether bona fide made or not, that it is voidable only, and not absolutely void.” “This, then, is the unanimous doctrine held by this Court, notwithstanding obiter dicta to the contrary. And it is the unanimous judgment (says the Judge) of the present Bench upon this point.”

We will add, that if the case in 23d Georgia holds a different doctrine, it does not seem to have met the approbation of the Court in the case last cited in 30th Georgia, which used the broad terms trustee and cestui que trust. It is also to be remarked, that the case in 23d Georgia was a claim case, and not a proceeding in equity, which distinguishes that from the other cases. In Wortley vs. Johnson, 8th Georgia, 236, the rule is distinctly laid down that, “If heirs elect to set aside purchases made by executors, administrators, or guardians at their own sale, they must go into equity, and such sales are voidable only, and not per se void. In that case the proceeding was by the heirs. But the substance of the rule is, that the cestui que trust, whoever he may be, must go into equity to set aside the sale. We think the creditor in this case has that right.

Judgment affirmed.