Kincaid v. Hensel

• Decision Date: 30 March 1936
• Docket Number: 25795.
• Citation: 185 Wash. 503,55 P.2d 1050
• Parties: KINCAID v. HENSEL et ux.
• Court: Washington Supreme Court

55 P.2d 1050

185 Wash. 503

KINCAID v. HENSEL et ux.

No. 25795.

Supreme Court of Washington

March 30, 1936

Department 2.

Appeal from Superior Court, King County; Calvin S. Hall, Judge.

Suit by Rex Kincaid, by his guardian ad litem, Mary E. Williams against Wm. C. Hensel and wife. Decree for plaintiff, and defendants appeal.

Affirmed.

Russell H. Fluent, of Seattle, for appellants.

Hazel &amp Hazel, of Seattle, for respondent.

BLAKE Justice.

This is an action to set aside a sale of real property under execution. The facts out of which the controversy arose are as follows: Rex Kincaid is the son of Julia A. Kincaid and the grandson of Julia A. Hines. The latter conveyed the property in question to Julia A. Kincaid in trust for the use and benefit of Rex. Under the declaration of trust, the trustee had the power to sell, and, pursuant to that power she entered into a contract to sell, the property to the defendants Wm. C. Hensel and Estella P. Hensel, his wife. This contract was dated November 10, 1931. September 28, 1933, the trustee declared a forfeiture of the contract.

In February, 1934, the Hensels instituted an action against 'Julia A. Kincaid, individually and as trustee for Rex Kincaid, and Rex Kincaid, a minor,' to recover the purchase money paid, the value of improvements, and rents collected by the trustee. Rex Kincaid interposed a demurrer to the complaint, which was sustained on the ground that as to him the complaint did not state facts sufficient to constitute a cause of action. The cause proceeded to judgment in the sum of $4,500 against 'Julia A. Kincaid, individually and as trustee for Rex Kincaid.' Upon this judgment, execution issued, under which the trust property was sold. It is this sale which the cestui qui trust, Rex Kincaid, seeks to set aside in the present action. In the court below he was awarded a decree, from which defendants appeal.

As we understand appellants' position, it is, first, that the judgment against 'Julia A. Kincaid, as trustee for Rex Kincaid,' was a judgment against the trust estate; and, second, that the judgment is res judicata as to Rex Kincaid. We do not think either contention tenable.

First. A trustee of an express trust acts and deals as a principal, not as an agent. When a trustee contracts as such, he is bound by the contract, for the estate cannot promise. Taylor v. Davis' Administratrix, 110 U.S. 330, 4 S.Ct. 147, 28 L.Ed. 163. Even though the trustee may be express stipulation exempt himself from personal liability, he cannot commit the trust estate to liability beyond the powers conferred upon him by the deed or declaration of trust. Austin v. Parker, 317 Ill. 348, 148 N.E. 19. He, not the trust estate nor the cestui qui trust, is liable for his acts in the administration and management of the trust estate. And this is true whether the liability arises in contract or tort. Clinch v. Ferril & Weslow, 48 Ga. 365; Plimpton v. Richards, 59 Me. 115; Truesdale v. Philadelphia Trust, etc., Co., 63 Minn. 49, 65 N.W. 133; Gardiner v. Rogers, 267 Mass. 274, 166 N.E. 763; Alfano v. Donnelly, 285 Mass. 554, 189 N.E. 610; O'Brien v. Jackson, 165 N.Y. 31, 60 N.E. 238; Louisville Trust Co. v. Morgan, 180 Ky. 609, 203 S.W. 555, 7 A.L.R. 396; Parmenter v. Barstow, 22 R.I. 245, 47 A. 365, 63 L.R.A. 227. In the case last cited the rule is stated: 'The law will not allow trust property to be impaired or dissipated through the negligence or improvidence of trustees, nor will it permit them to create any new or additional liabilities against the same. The beneficial interest thereof belongs to the cestuis, and it must be held intact for them.'

The rule is applicable even though the liability of the trustee is such as would entitle him to reimbursement from the trust estate. Austin v. Parker, 317 Ill. 348, 148 N.E. 19. It follows that a judgment against the trustee as such does not bind the trust estate, and execution issued on such a judgment cannot be levied against the trust property. Clinch v. Ferril & Weslow, 48 Ga. 365; Plimpton v. Richards, 59 Me. 115; Zehnbar v. Spillman, 25 Fla. 591, 6 So. 214; Odd Fellows' Hall Ass'n v. McAllister,

153 Mass. 292, 26 N.E. 862, 11 L.R.A. 172; Wahl v. Schmidt, 225 Ill.App. 501, affirmed Wahl v. Schmidt, 307 Ill. 331, 138 N.E. 604.

Appellants cite Rem.Rev.Stat. § 180, and the case of Martin v. Moore, 49 Wash. 288, 94 P. 1087, and Hayward v. Tacoma Savings Bank & Trust Co., 88 Wash. 542, 153 P. 352, as conflicting with the rules above stated. We do not so read either the statute or the cited cases. So far as we are concerned with it, the statute merely authorizes the trustee of an express trust to sue without joining his cestui. The cited cases, so far as they can possibly affect our problem, simply hold that a trust is an active one where the trustee has power to sell or convey. The argument is that, since the title to the property is in the trustee, the beneficial interest of the cestui can be reached through a judgment against the trustee as such. We do not think either the statute or the cited cases are susceptible to such interpretation. Of course, the trustee of an active trust can, by the exercise of powers conferred by the deed or declaration of trust, bind the trust estate. But the trust property can be subjected to the obligation only by an equitable action in rem. Moore v. Stemmons, 119 Mo.App. 162, 95 S.W. 313; Austin v. Parker, 317 Ill. 348, 148 N.E. 19. Under such circumstances, this court has held that the cestui qui trust is not a necessary party to the action. Thompson v. Price, 37 Wash. 394, 79 P. 951; Merz v. Mehner, 57 Wash. 324, 106 P. 1118. But to such case is presented here. This was not an action in rem. The judgment did not run against the trust estate nor against the cestui, Rex Kincaid. It was strictly a money judgment against Julia A. Kincaid, and bound her alone. The description of her as trustee was surplusage. Odd Fellows' Hall Ass'n v. McAllister, 153 Mass. 292, 26 N.E. 862, 11 L.R.A. 172; Hampton v. Foster (C.C.) 127 F. 468.

Second. What we have said disposes of the contention that the judgment...