Johnson v. Leman

• Decision Date: 21 January 1890
• Citation: 131 Ill. 609,23 N.E. 435
• Parties: JOHNSON v. LEMAN et al.
• Court: Illinois Supreme Court

131 Ill. 609

23 N.E. 435

JOHNSON

v.LEMAN et al.¹

Supreme Court of Illinois.

Jan. 21, 1890.

Appeal from appellate court, first district.

Bill by George B. Johnson against H. W. Leman, trustee of the Sherman House property, and F. T. Sherman, M. E. Marsh, Frances E. Marsh, E. J. Marsh, L. M. Aldrich, J. F. Aldrich, Ida Sherman, Augusta De Haven, F. C. Sherman, E. Eaton, Goodell Sherman, and Edwin Sherman, to have his claim for commission for obtaining a loan paid out of the trust fund. The circuit court dismissed the bill, and the appellate court affirmed the decree. Complainant appeals.

Peckham & Brown, (Tenney, Bashford & Tenney, of counsel,) for appellant.

W. T. Burgess, William C. Wilson, and David L. Zook, for appellees.

SCHOLFIELD, J.

Appellant's case, stated briefly, and in the most favorable view for him warranted by the record, is this: He was employed as a broker, by the trustee of the Sherman House property, in Chicago, to obtain a loan for the benefit of that trust. The best interests of the trust required that the loan should be obtained, and the trustee promised him that he should be paid for obtaining the loan a stipulated commission from the trust fund. He did all the work necessary to obtain the loan; but, before the party from whom the loan was to be obtained signified its formal acceptance of the terms proposed by him, the trustee by whom he was employed died. A subsequent trustee obtained the loan on substantially the same terms as those for which he had negotiated, and thus the trust had the fruits of his labor. It is not alleged that the agreement between the trustee and the appellant was that the trustee should not be personally liable to appellant upon their contract, or that the compensation for obtaining the loan should be a specific lien on the trust fund, or that the same was thereby assigned by the trustee to the appellant, nor is it alleged that the trustee was, or that his estate is now, insolvent. The question is, does the claim of appellant for compensation for his services in obtaining the loan constitute a charge against the trust-estate which a court of equity will decree payment of out of that estate (the funds being ample) on bill filed by appellant? The general rule is that the expenses of properly administering a trust are a lien on behalf of the trustee on the estate in his hands; and he will not be compelled to part with his control of that estate until such expenses are paid. But this, unless it may be in exceptional cases, does not extend to persons employed by the trustee. In general, their only remedy for compensation is personal against the trustee employing them. Hill, Trustees, (4th Amer. Ed.,) 879, [567;] Lewin, Trusts, (7th Ed.) 549; Perry, Trusts, § 907; Tiff. & B. Trusts, 583; Worrall v. Harford, 8 Ves. 7, 8; Hospital v. Ross, 12 Clark & F. 507; Hall v. Laver, 1 Hare, 571; Francis v. Francis, 5 De. Gex, M. & G. 108; Re Sadd, 34 Beav. 650; Jones v. Dawson, 19 Ala. 672; Fearn v. Mayers, Trustee, 53 Miss. 458.

It is manifestly irrelevant to notice cases where, the beneficiary of a fund in the hands of a trustee becoming indebted, it has been held the creditor may have satisfaction from the fund, as in Frazier v. Brownlow, 3 Ired. Eq. 237, cited by counsel for the appellant, since this is not the contract of the beneficiary of the fund, but of the trustee; nor are cases that might be cited where it has been held that solicitors, etc., had a lien upon the amount realized to the estate in the case in which they had been employed for their costs, because appellant is not a solicitor or attorney seeking the recovery of taxable costs, nor is he seeking the enforcement of a lien upon a specific fund brought to the estate through his endeavors. The borrowed money was paid out in satisfaction of previous loans, and appellant seeks recourse against any unappropriated trust funds of the estate.

Counsel for appellant cite and rely upon Noyes v. Blakeman, 6 N. Y. 567, and New v. Nicoll, 73 N. Y. 127, as laying down a rule by which his claim may be sustained. Those cases certainly go in the direction of his contention much further than any other cases of which we have knowledge, but, if we were to concede that they are the law here, it is impossible that he could recover. In Noyes v. Blakeman the recovery was only sustained by a divided court, and there upon the ground that the agreement was that the trustee was not to incur any personal liability, and that the claim was to be paid out of the income of the trust-estate. In New v. Nicoll it is conceded in the opinion (page 130) that ‘the general rule undoubtedly is that a trustee cannot charge the trust-estate by his executory contracts, unless authorized to do so by the terms of the instrument creating the trust. Upon such contracts he is personally liable, and the remedy is against him personally.’ The court, however, adds: ‘But there are exceptions to this general rule. When a trustee is authorized to make an expenditure, and he has no trust funds, and the expenditure is necessaryfor the protection, reparation, or safety of the trust-estate, and he is not willing to make himself personally liable, he may, by express agreement, make the expenditure a charge upon the trust-estate. In such a case he could himself advance the money to make the expenditure, and he would have a lien upon the trust-estate, and he can by express contract transfer this lien to any other party...