Cole v. Stokes

• Decision Date: 14 November 1893
• Citation: 18 S.E. 321,113 N.C. 270
• Parties: COLE v. STOKES.
• Court: North Carolina Supreme Court

18 S.E. 321

113 N.C. 270

COLE v. STOKES.

Supreme Court of North Carolina

November 14, 1893

Appeal from superior court, Person county; Henry R. Bryan, Judge.

Action by George F. Cole, administrator of the estate of Caroline Cole, deceased, against W. T. Stokes, executor of the will of Thomas Stokes, deceased, for the amount due said Caroline under said will. Judgment for defendant. Plaintiff appeals. Reversed.

Boone & Parker and W. W. Kitchin, for appellant.

J. W Graham and V. S. Bryant, for respondent.

SHEPHERD C.J.

In order to dispose of this appeal it is only necessary to determine whether there was error on the part of his honor in charging the jury that the burden was upon the plaintiff to establish the fraud alleged in the replication, and embodied in the first issue. The plaintiff is the administrator and sole distribute and heir of his deceased wife, Caroline Code and he brings this action against the defendant, who is the executor of Thomas Stokes, deceased, to recover the amount due his intestate under the will of her father, the said Stokes. The defendant denies his liability, and relies upon a deed executed to him by the plaintiff, on May 1, 1890 conveying to the defendant all of the plaintiff's interest, real and personal, in the said estate. At the time of the execution of the above-mentioned deed the defendant had not made his final settlement as executor, and the fiduciary relation therefore still existed between him and the plaintiff. It is well settled that an executor or administrator, in dealing with the estate, and with those who are interested therein, is regarded as a trustee, and as such is subject to that principle which raises a presumption of fraud against him when he undertakes to purchase the trust property from his cestui que trust. In respect to purchases of trust property, real or personal, directly or indirectly from himself, whether privately or at auction, the law considers them invalid; and, says Pearson, J., in Brothers v. Brothers, 7 Ired. Eq. 150, even if the trustee "gives a fair price, the cestuique trust has his election to treat the sale as a nullity;" and this, "not because there is, but because there may be, fraud." Patton v. Thompson, 2 Jones, Eq. 285; Stilly v. Rice, 67 N.C. 178; Froneberger v. Lewis, 79 N.C. 426; Gibson v. Barbour, 100 N.C. 192, 6 S.E. Rep. 766. In respect to purchases, as in this case, from the cestui que trust, the court of chancery in the time of Lord Erskine seemed much inclined to impose a total disability on the trustee. This view, however, did not prevail, and his power to so contract is not absolutely prohibited, though, remarks Ruffin, J., in Boyd v. Hawkins, 2 Dev. Eq. 195, the restrictions imposed "almost extinguish it." He further observes that such transactions are viewed with anxious jealousy, and that "it must appear that the relation has ceased, at least that all necessity for activity in the trust has terminated, so that the trustee and cestui que trust are two persons, each at liberty, without the concurrence of the other, to consult his own interest, and capable of vindicating it; or that there was a contract definitely made, the terms and effect of which were clearly understood, and that there was no fraud or misapprehension, and no advantage taken by the trustee of the distress or ignorance of the other party. The purchase must also be fair and reasonable. Coles v. Trecothick, 9 Ves. 246; Fox v. Mackreth, 2 Brown, Ch. 400. These cases are not allowed to turn on nice inquiries,--whether it might not possibly be for the benefit of the cestui que trust to make that particular contract rather than none at all,--but when there is a fair judicial doubt, as some of the cases express it, whether the trustee has not availed himself of his confidential situation to obtain...