Frazier v. Jeakins

• Decision Date: 08 March 1902
• Docket Number: 12,503
• Parties: N. F. FRAZIER v. CLARA A. JEAKINS
• Court: Kansas Supreme Court

68 P. 24

64 Kan. 615

N. F. FRAZIER v. CLARA A. JEAKINS

No. 12,503

Supreme Court of Kansas

March 8, 1902

Decided January, 1902.

Error from Butler district court; C. W. SHINS, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. TRUSTS AND TRUSTEES -- Profit by Trustee. Trustees for the sale of land will not be permitted directly or indirectly to make profit for themselves out of the trust estate.

2. GUARDIAN AND WARD -- Purchase by Guardian, or his Wife or her Husband. The guardian of the property of a minor cannot legally buy it at his own sale, nor can his wife or her husband. If they do, the non-existence of fraud and the payment of full consideration will not validate the purchase.

3. GUARDIAN AND WARD -- Proper Practice Suggested. It seems that if a guardian, or her husband or his wife, wishes to buy at the guardian's sale, the proper practice would be to obtain leave of court to do so, upon a showing of reasons therefor.

4. GUARDIAN AND WARD -- Confirmation of Sale -- Res Judicata. The confirmation of a guardian's sale is res judicata as to irregularities only, and not as to matters of substance.

5. GUARDIAN AND WARD -- Notice Imparted by Recitals in Deed. A deed that recites that the grantors are husband and wife, the names of which grantors are identical with those of the grantor and grantee in a recent guardian's deed of the same land, imparts notice to the purchaser that his grantors were also husband and wife at the date of the former deed.

6. GUARDIAN AND WARD -- Title Does not Pass to Purchaser with Notice. The title of land sold and deeded by a guardian to her husband does not pass to a purchaser who has notice of their relationship, and ejectment for its recovery may be maintained by the ward.

Buck & Spencer, for plaintiff in error.

Redden & Kramer, for defendant in error.

DOSTER C. J. JOHNSTON, SMITH, GREENE, ELLIS, POLLOCK, JJ., concurring. CUNNINGHAM, J., dissenting.

OPINION

DOSTER, C. J.:

This was an action of ejectment to recover land which had descended to a minor upon the death of her ancestor, but which had been wrongfully sold and conveyed by the minor's guardian. Serena J. Jeakins, the owner of the land, died intestate, leaving as her heirs a husband and children. One of the latter was Clara A. Jeakins, a minor. The others were adults. Mrs. Permilly Scheel was appointed guardian of the property of the minor and thereafter maintained the ward at her expense. She purchased the interests of the adult heirs in the land, taking conveyances therefor in her own name. She procured from the probate court an order to sell the minor's interest in payment of the cost of her maintenance, and she sold this interest at private sale to her husband, Carl Scheel; the sale was confirmed and the guardian's deed approved. Some claims of fraud in making the sale and of lack of full consideration for the land are made by counsel, but we do not take a view of the case which requires us to advert to them. We shall treat the sale as made on fair consideration and free from fraud in fact.

About three years after the guardian's sale, Mrs. Scheel and her husband sold the entire tract to N. F. Frazier. The record of proceedings in the probate court did not disclose the relationship existing at the time of the guardian's sale between Permilly Scheel, the guardian, and Carl Scheel, the purchaser, but Frazier knew they were then husband and wife. Besides, the deed he received from them recited their relationship, and the identity of names in that deed with those of the grantor and grantee in the guardian's deed imparted a notice which is the equivalent of knowledge. (15 A. & E. Encycl. of L. [2d ed.] 918.) A purchaser of land is always chargeable with the knowledge of whatever facts are suggested by the recitals in his title papers. (Knowles v. Williams, 58 Kan. 221, 48 P. 856.)

Clara A. Jeakins brought ejectment against Frazier to recover her undivided interest in the land. Although the cause of action stated was not joined with one for partition, the defendant made no objection in the court below on the ground of the irreclaimableness of undivided interests by cotenants. Upon the argument of the case in this court, counsel for Frazier disclaimed a desire to raise the question, and, therefore, we are not concerned with any doubts which may exist as to the right to maintain the action. Certain it is that objections to its maintenance, if any can be properly made, do not go to the jurisdiction of this court. Judgment went for plaintiff in the court below, and the defendant has prosecuted error.

The sole question in the case relates to the validity of the guardian's sale and deed of the land of her ward to her husband, made, as before stated, upon fair consideration, and free from actual fraud. Are they valid? If not, are they of the class denominated "void," and, therefore, subject to collateral attack? Our judgment is that they are void, and their nullity being known to Frazier, the purchaser, no title passed to him, and, therefore, the collateral action will lie.

Nothing in the law of fiduciary trusts is better settled than that the trustee shall not be allowed to advantage himself in dealings with the trust estate. He shall not be allowed to serve himself under the pretense of serving his cestui que trust. The 0most usual way in which evasions of this salutary rule are attempted is in purchases of the trust estate by, or in the interest of, the trustee. That such purchases shall not be allowed the realization of their purpose is the universal holding of the courts, and a citation to the multitudinous decisions would encumber an opinion more than it would elucidate the rule. A large number of the cases are collected in the notes to Tyler v. Herring, 19 Am. St. Rep. 263 (67 Miss. 169, 6 So. 840); Tyler v. Sanborn, 15 Am. St. Rep. 97 (128 Ill. 136, 21 N.E. 193, 4 L. R. A. 218); Wilson v. Brookshire , 9 L. R. A. 792 (126 Ind. 497, 25 N.E. 131); and this court, in Webb v. Branner, 59 Kan. 190, 52 P. 429, recently added another to the list. Nor, in such cases, does the fact that the sale and purchase were bona fide and upon full consideration avail to constitute an exception to the rule. That was distinctly so declared in Webb v. Branner, supra, in which it was said:

"It was shown that a fair price was obtained for the lot, but there being a manifest conflict between the duties of the trustee and his personal interests, the courts, for the purpose of removing all opportunity for fraud, generally hold such transfers to be void, whether they appear to be fair or not."

The above-quoted remarks imply that there may be, perhaps, exceptions to the rule, but we know of none. In fact, the main rule that a trustee may not profit himself out of the trust estate is no better settled than the subsidiary one that lack of fraud in the trustee's dealings will not validate the transaction. The fiduciary relation of trustee and cestui que trust is one which does not call so much for rules to redress accomplished wrong as for rules to prevent its accomplishment. The one in question, therefore, is not intended to be merely remedial of wrong actually committed, but, rather, to be preventive, or deterrent, in effect. The opportunities which are open to an unfaithful trustee to advantage himself out of the trust estate are so many and so tempting, and the condition of the beneficiary in the trust ordinarily so helpless and confiding, that the law gives warning in advance against all transactions out of which it is possible for the former to make gain at the expense of the latter. Hence, as was tersely and wisely said by Chief Justice Beasley, in Staats v. Bergen, 17 N.J.Eq. 554: "So jealous is the law upon this point, that a trustee may not put himself in a position in which to be honest must be a strain on him."

Do the foregoing considerations apply to a sale by a guardian of the ward's land to the guardian's husband or wife, as the case may be? We have no hesitation in affirming that they do. It is true that the common-law fiction of the legal identity of the husband and wife and the very nearly complete merger of the latter in the former does not now have recognition. In this state, as allowed by statute, the wife may contract with her husband. They may own separate estates free from any present claim of interest by one in the property of the other -- that is, as against the other; but it is not true that, as to their respective possessions, they are strangers in such sense as to take a trustee's sale by one to the other from out the operation of the rule in question. Upon the death of either of them, one-half of his or her property descends, under the statute, to the survivor, and under the statute neither one, without the other's consent, can, by will, devise more than one-half his or her property. It is true the interest of the one in the property of the other is contingent and uncertain, and dependent upon survivorship. It is true that the interest of the one in the land of the other is not of the character of any of the estates known to the common law, but it nevertheless possesses the elements of property. This was distinctly so ruled in Busenbark v. Busenbark, 33 Kan. 572, 7 P. 245; and, on the strength of the quality of property attaching to the inchoate interest of a wife in her husband's land, she was allowed in that case to maintain an action to prevent its fraudulent alienation.

However, over and beyond that property interest which husband and wife have in each other's estate, and which possesses the element of pecuniary value, there is a larger consideration. It was well expressed by counsel for defendant in error, who said:

"The affection existing between husband and wife the marital...