Hester v. Hester, 16 N.C. 328, 1 Dev. Eq. 328 (1829)

June 1829 · Supreme Court of North Carolina

16 N.C. 328, 1 Dev. Eq. 328

Mary J. Hester et al. v. James Hester & Samuel Young, ex’rs. of John Hester,

From Granville.

When no rule for the management of a trust estate is prescribed by the creator of it, the law enjoins good faith, by which is meant honesty and diligence carefully applied — and a departure from the rule prescribed by the creator, or a failure in good faith, is a breach , of trust for which a trustee is liable.

Where a testator directed his debts to be collected, and a tract'of land to be sold ; and with the fund thus created, a residence for his family to be purchased — but the executors purchased to an a-rnount exceeding the fund, and in the exercise of good faith, re. fused an advantageous offer for the land — It was held, that they had been guilty of a breach of trust only in exceeding the amount of the trust fund, and the purchase being divisible, they were decreed to hold the excess on their own account.

From the pleadings, proofs, and exhibits the case was, that John Hester died having made a will, and appointed the Defendants his executors, having devised all his property as follows, viz. “I wish my tract of land in Granville sold, and out of the proceeds of the sale, together with the money due me, I wish my executors to purchase a piece of land somewhere most agreeable to my wife Manj J. Hester, for her aud my children to live on, the balance of my property I lend to my wife during her natural life to raise and school my children on,” after which in the event of his widow’s marriage, he directed all his estate both real and personal, to be divided among his widow and children. At the death of the testator, his nett persona] estate, exclusive of his negroes, amount-fid to 1,484 dollars, which together with the sum to he realized by a sale of the land, constituted the fund appropriated by the testator for thr purcha.se of a tract of land, for the residence of bis family'. Before a sale of the Granville land had been effected, the Defendants influenced by the urgent requests of the widow, and a-sjainst their own judgments, purchased a tract of land for which they gave 3,000 dollars., executing their own bonds to secure the excess of the purchase*money over the fund in iheir hands. After this they no de what they thought an advantageous sale of the Gra:r,i.!e tract for 3,000 dollars, but the widow of their testator being extremely dissatisfied with the price, they upon her retnon-strances, vacated the bargain.

The Plaintiffs were the, widow and Children of the tes tator, all of whom were infants, the former having become dissatisfied with the purchase made by Defendants. The prayer of the bill was, that they might be compelled to take it upon their ow n account, and to purchase another tract more suitable to the wishes of the Plaintiff JUary, and that they might be charged with the $1,000, which they bad refused for the land.

By an interlocutory order, the land devised by the testator had been sold, and produced the sum of $400.

The case was argued at June Term, 1827, by Dene-mix, for the Plaintiffs, and by Badger & W. II. Haywood, for the Defendant. At this term it was again argued by

Hillman, for the Plaintiffs.

— As the proceeds of the sale of the tract of land directed to be sold, and the money due, constituted the only fund out of which they were authorised to purchase and pay for the land directed to be bought, it follows of course, that they ought to have lost no time in making the sale, and ascertaining the nett amount of debts due, in order that they might, know what amount they would be justified i?¡ contracting to give, for the piece of laud which they were directed to purchase. It appears however from the answer, that soon after the death of the testator, and before thev had J sold the tract of land which' he owned, they contracted for q)c purchase of a tract of land for the sum of $3,000, which they were aware was an imprudent purchase, and exceeded in amount what they were authorized to give; hut they allege as an excuse, that they made it at the earnest request of the widow. This excuse cannot avail the Defendants. The will directs that the widow should be consulted as to the place where, not as to the quantity of land, or the price to be given for the piece of land directed to be purchased. . In this they were expressly limited to the fund before mentioned — and when it is recollected that she is but one of the parties interested, her consent will have but little weight. The infant devisees and the other complainants, who were not consulted, have certainly a right to a fair execution of the trusts of the will. The widow was intended by the testator to be a trustee of the land to be purchased, for the purpose of raising and schooling the children. Her interest was so •blended with theirs, that it cannot be distinguished. She had no right to consent to any thing that would lessen the fund, or impair her means of accomplishing the bene-•v olent objects of the testator.

The answer admits, and the proofs abundantly show, that the Defendants were offered $1,000 for the tract of land directed to be sold. Here again the excuse for not selling is, that the widow' objected to the price. The answer to this is, that the executors thought the price a fair one, and that the testator knowing her weakness and want of skill and judgment in these matters, thought proper to confide the management of his estate not to his wife but to them. It is conceived however, tiiat the motives of the executors have nothing to do with the case. The will directs that that tract'of land be sold, and leaves no discretion in them. They were therefore bound to sell j and I take it to be well settled law, that if they have failed to do so, and any loss has been thereby, they are bound to make ¿rood the loss, (krffreu * ' * * v. Darby, (6 Veseij Jr. 488.) — Ld. Montfort v. Ld. Gado-gmi, (17 Bo. 485, B. C. 2 Merivale 2) — Massey v. Ban-ncr, (1 Jac. and Walk. 241,) — l,angslon v. Olixan'c, (Coop. S3) — .Mije v, Feuületean, (l Cox' 24,)— Holmes v. Bring, (2 Do. I,) — Seurjíeld v. Ilatves, (3 Tiro. C. C. 90) Saddler v. IFobls, (2 Do. 114,) — Jldair v. Chato, (1 $c/w. c«ii Dr/. 243.)

The Defendants contend, that they are entitled to be indemnified for their advances from the other property oí their testator, but I suppose if, cannot be necessary in this Court to cite authority to show, that where a power is given by a will, the exercise of which so expressly limited to a particular fund, the executors cannot exceed that fund, the more especially when all the other property is given away by the will, for another and a differen*; object. To Isold that they could, would ha not to dem-ei an execution of the trusts of the will, but to set aside tito, will and to substitute another, utterly different from any views the .testator ever entertained,

fTSse Court intimated that this proposition was too pial?, to admit of doubt.)

Henderson, Chief-Justice.

— A breach, of trust necessarily supposes, that there is a rule -for the government of the trustee. The creator of the trust may prescribo what rules he pleases. In the absence of one prescribed by him, the law enjoins good faith, which includes not only what is commonly understood by honesty and integrity, but care, diligence and attention ; and in matter? of judgment and discretion, that they should be carefully applied. To purchase more lauds, than the funds appropriated for that purpose would pay for, was a clear departure from the rule, which the testator in tins case hail prescribed to the executors, the trustees. Good faith and purity of motive afford them therefore no protection from the consequences of that act. But in the sale of the Granville lands, the testator prescribed to them no rule. The exercise of their best judgment and discretion, with vigilance and attention in obtaining the best price they could get for the lands, is the rule which the law has enjoined, and without a departure from it, they have been guilty of no breach of trust.. We cannot consider the omission to take, the offer of §1,000 a departure from that rule$ and more especially, as the sale met the decided disapprobation of the principal cestui que trust, and the only one who was of age, and in whom also the testator.reposed confidence, in an important part of the execution of the trust, by directing her wishes to be con-suited as to the locality of the lands to be purchased. — ■ But even without such excuse, we cannot consider a mere error in judgment, in omitting to close with that which after-circumstances showed to be an advantageous offer, and which at the time was matter of doubt, to be a breach of trust. If such was the rule, it would drive trustees into disadvantageous contracts, or rather it would prevent all prudent and discreet men fr’om assuming the character of trustees. In cases of this kind, where judgment and discretion are confided in, and no rule given, good faith, defined as it is above, should afford protection. In the present case, the gradual declension of property in price, particularly lands, is matter of history unexampled in this, or perhaps any other country. The most prudent who wished to sell have held on, from day to day, from month to month, and even from year to year, in hopes of better times. But they have as yet hoped in vain. Many of the most prudent have been protracted, and have property now in market, which when it was first brought there, would have commanded double its present price. To visit upon these trustees, who have acted with good faith, the consequences arising from acts so common throughout the country, with prudent men managing their own con-ceras, would be applying to them rules which they uever thought of subjecting themselves to. and which neither '•’=* ,j *1 the testator nor the law imposed.

The Master will ascertain the amount of the funds set apart in;* the purchase of the lands, valuing the Gran» vilie lauds at the price obtained for them — he will take with 5ium the surveyor of the County of Granville, and five freeholders, and lay off, for the purposes of the trust, as much of the land purchased by the executors as the said sum will pay for, rating the whole laud at S3,000, the sum which was given for it by the executors, having a due regard to the locality of the lands and the convenience both of the ceüni que trusts and the executors.—

He will also take an account of the rents and profits of the surplus land, whilst it was in the hands of the cestui que trusts, so far and so far only, as it benefited them above what the fund would have purchased. I would also sequester to the use of Defendants, the interest of she widow, if I could do so without vitally interfering with that of the children j but I cannot see how that can be done. Each party to pay his own costs.

Per Curiam.

— Let a decree be made accordingly.