Hamer v. David

July 14, 1919. The opinion of the Court was delivered by The facts are: Mr. Gibson, Mr. Bethea, and Mr. Hayes were executors of H.P. Price and as such under the will of Mr. Price, were in charge of the land referred to in these proceedings. It appears that one Rising was the beneficiary for life. The plaintiff acquired the interest of Rising. The terms of the will are not set forth. Mr. David leased the land from the executors. The lease was about to expire, and Mr. David desired to renew it. After conference between Mr. Hamer and the executors, a lease was agreed to be given to Mr. David, by the executors, for a term of 10 years at a rental of 60 bales of cotton per year. There was another agreement between Mr. David and Mr. Hamer, by which Mr. David agreed to pay to Mr. Hamer 15 additional bales of cotton per annum for the full period of 10 years. These two contracts were executed on the same day, to wit, May 13, 1913. It appears that since that time the interest of Mr. Hamer has terminated. Mr. David delivered the 60 bales to the executors and the 15 bales to Mr. Hamer for two years. After that he refused to deliver the cotton to Mr. Hamer and this suit is brought by Mr. Hamer on his 15-bale contract. Mr. David refused to comply with the 15-bale contract, on the ground of fraud. He claims that Mr. Hamer told him that he (Hamer) had already leased the place from the executors, and would not let him (David) have it unless he would agree to pay 75 bales; that, if David would agree to pay 75 bales, then Hamer would secure a lease for a term of ten years, the rent to be paid 60 bales to the executors and 15 to Mr. Hamer. Dr. David alleges that he found out later that Hamer did not have an agreement for a lease; that he was induced by this false and fraudulent representation to sign the 15-bale contract; and that it is void for fraud.

Mr. Hamer states that, while he did not have a lease, yet the executors consulted him, as the beneficiary, as to the term of years and the amount of rent. Mr. Hamer states that Mr. Gibson, one of the executors, was doubtful about a lease for a term of ten years. Mr. Hamer said:

"I want to say that Mr. Gibson, when I approached him, he said, ``He wants it for ten years, and I said I did not think we ought to rent it for ten years.' I said, ``I don't see why you object or any one else, if I am the beneficiary, and I don't object.' He said he had not thought of that, and then he consented to the 10 years."

Mr. David was very anxious for a 10-year term and was willing to pay 75 bales per annum. It is undisputed that Mr. Hamer used his position as beneficiary to secure the term of 10 years for Dr. David. The contract as made with the executors for the estate extended the term beyond Mr. Hamer's interest, as subsequent developments now show. Mr. Hamer used his position as the beneficial owner of the life estate to secure for himself a contract for 15 bales of cotton per year, for years after his estate might, and in fact did, terminate. Can he have the benefit of that contract, to the detriment of the estate after his interest terminated? The answer should be, he cannot.

In Smith v. Daniel, 2 McCord Eq. 149, 16 Am. Dec. 641, we find:

"A tenant for life is considered in the nature of a trustee for those in remainder, and the Court may, therefore, take all the necessary steps to prevent or restrain an abuse of his trust. And when a person purchases with a knowledge of the situation of the property, he takes it coupled with the trust, and will be considered as standing in the same relation to the party."

Hamer took Rising's place, temporarily, and has the right to the rents while he occupied that place; but, now that the estate has been restored to Rising, the latter is entitled to the benefit of the contract which Hamer must be held to have made for the benefit of the estate, and not for himself after his interest terminated, since he was in equity a trustee for those who might succeed to the estate. No Court should allow Hamer to get the 15 bales of cotton per year that will be due after his interest terminated. The 15-bale contract is not void. A contract made with a trustee inures to the benefit of the trust estate, whether the contract is made payable to him as trustee or as an individual. If this side contract had been made between Dr. David and Mr. Gibson, the interest of the trust estate could not be doubted. Why doubt it when the contract is made with the trustee, Hamer? Executors are trustees.

Dr. David says there was fraud and the whole contract is void. Not necessarily. The Courts do not destroy a contract unless the party complaining has been injured by the fraud. There is nothing in the case to show that Dr. David has been hurt. If Mr. Hamer had told Mr. Gibson that this excellent tenant who is improving the land is willing to pay 75 bales instead of 60 (as he was bound to do), Dr. David would have paid it. So the alleged lease to Hamer, whether true or false, did not affect Dr. David. It is said that Mr. Hamer wanted to keep the 15-bale contract secret. Dr. David agreed to keep it secret, and he cannot complain. The procuring of a 10-year term was a valuable consideration to support the 15-bale lease, but it inures to the benefit of the estate and cannot extend Mr. Hamer's interest. Mr. Hamer cannot have the benefit of it longer than his interest continued.

For the undisputed facts of this case, when the quasi trustee, Hamer, made the 15-bale contract, it inured to the benefit of the trust estate, and, therefore, the executors should be made parties and allowed to assert their interest.

It is the duty of the Courts to protect trust estates. This case should be remanded to the Circuit Court, with directions that the representatives of the estate of Price be made parties and an accounting be had between all parties.

MR. JUSTICE HYDRICK: I concur in this opinion and also in that of the CHIEF JUSTICE.