Freeman v. Cook

• Court: North Carolina Supreme Court
• Writing for the Court: NASH
• Citation: Freeman v. Cook, 41 N.C. 373, 6 Ired. Eq. 373 (N.C. 1849)
• Decision Date: 31 December 1849
• Parties: HARRIET FREEMAN et al. v. JONES COOK et al.

6 Ired.Eq. 373

41 N.C. 373

HARRIET FREEMAN et al.

v.JONES COOK et al.

Supreme Court of North Carolina.

December Term, 1849.

A want of good faith or of proper diligence will subject a trustee to the loss, which may be consequent upon it.

A marriage settlement stipulated that the property settled should remain in the hands of the husband; but if, in the opinion of the trustees, it should become necessary for any purpose to take the property out of the hands of the husband, the trustees should be at liberty to do so, without the interruption of the husband. Held, that, when the trustees found that the husband was wasting and disposing of the property, it was their duty to resume the possession, if it could be done by proper diligence, and, if they failed to use such diligence, they were responsible for any loss that might occur.

The advice of counsel will not protect a trustee from the consequences of a failure to discharge his duty properly. If he has doubts, he should apply to a Court of Equity, which will always give him directions upon which he may rely with entire confidence.

When trust property has been improperly disposed of, and is capable of being followed in specie, the party in possession, with notice, may be compelled to reconvey it. If it cannot be followed or the person in possession cannot be made liable to the trust, the trustee will be decreed to compensate the cestui que trust, by payment of the value of the property so lost, and also to account for all rents, hires, interest and other profits, which would or might have been made from the property so lost.

The case of Beal v. Darden, 4 Ire. Eq. 54, cited and approved.

Cause removed from the Court of Equity of Franklin County, at June Term 1849.

Harriet Green, a minor, now the plaintiff, Mrs. Freeman, being about to marry William D. Freeman, a marriage settlement was executed by the parties, whereby the property of Harriet Green was conveyed to the defendants, upon the trusts therein expressed. The property conveyed consisted of lands, negroes, money and securities for money. By the settlement, it is provided that William D. Freeman, “is to have, use, and enjoy all and singular the profits arising from the said land, negroes and other property, hereby conveyed, during his natural life.” And if he should die, his wife surviving him, then the property “to enure to the benefit of the said Harriet Green and her children, who are then alive, and their heirs forever, as tenants in common. It is then provided, and further it is the intention of the parties, that, if in the opinion of the said Marmaduke Jefl??ries and Jones Cook, or the survivor of them, &c., it shall become necessary, for any purpose whatever, to remove the aforesaid property hereby conveyed, or any other part of it, out of the possession of the said William D. Freeman, the said Jefl??ries and Cook or the survivor of them, &c., shall be at liberty to do so, without the interruption of the said William D. Freeman.” The defendants executed the deed of settlement and assumed the trust. The infant plaintiffs are the only children of Mrs. Freeman by her husband Mr. Freeman and who were alive at his death, which occurred in February 1828. Immediately upon the marriage, the whole of the property conveyed, both real and personal, was by William Harrison, the guardian of Harriet Green, delivered over to the husband: none of it ever having been in the actual possession of the defendants or either of them. The money and other property of that kind, were wasted by Freeman; and soon after he took possession of the slaves, they were seized by officers, under executions against the husband, and sold to pay his debts. They were purchased by different persons, and some of them were carried out of the State, beyond the jurisdiction of the Court. All, that were retained in the State, have been recovered at law and are in the possession of the plaintiffs. The defendants had full notice of the sale of the negroes and were present when it took place.

The bill charges a breach of trust in the defendants, in not suing William Harrison for the money and the securities for money, and for the value of the negroes that were carried off, and for not taking proper steps to secure them. It prays for an account of the trust fund.

The bill is taken pro confesso against Marmaduke Jeffries, who has left the State and is insolvent.

Jones Cook, in his answer, avers that the property, conveyed by the settlement, was all put into the possession of William D Freeman, after the marriage, by an order or decree of the County Court of Wake, without his knowledge or consent. As soon as he heard it, having no confidence in William D. Freeman, and anxious to discharge his trust, to the best of his ability, he demanded the property from him. He refused on the ground that he was entitled to it during his life. He thereupon took the advice of respectable counsel, who stated, that, under the settlement, the husband, W. D. Freeman, had an unquestionable right to the property during his life, and that the defendants could not interfere with it. And further, that he doubted if the marriage settlement was not void, because of the nonage of Mrs. Freeman, when she executed it; that the strong impression on his mind was, that, for that reason, it was void. They were further advised, if an attempt should be made to sell the negroes, it would be their duty to attend and make known to the purchasers, the rights of Mrs. Freeman; so as to fix them with notice. All of which they did, exhibiting the settlement.

W. H. Haywood, for the plaintiffs .

No counsel for the defendants.

NASH, J.

The first enquiry presented by the case is, have the defendants been guilty of a breach of their trust. Justice Story in the 2nd volume of his Equity Jurisprudence, p. 576, sec. 1275, thus sums up the duty of a trustee. He is to defend the title to the property at law; should any suit be brought concerning it, to give notice to his cestui que trust, to prevent any waste or injury to the trust property, &c., and must act in relation to it with good faith and reasonable diligence. He must be particularly careful, says Mr. Willis, in his treatise on trustees, p. 125, to execute the trust faithfully and according to the intention of the parties creating it; and however fully a discretionary power of management may be given, yet if he omit doing what would be plainly beneficial to his cestui que trust, he will be answerable. A want of good faith or of proper diligence will subject a trustee to the loss which may be consequent upon it. If the case before us be tried by these principles, the defendants have acted negligently: not with that...