Meeks v. Miller

• Decision Date: 13 May 1926
• Docket Number: 7 Div. 606
• Citation: 108 So. 864,214 Ala. 684
• Parties: MEEKS et al. v. MILLER et al.
• Court: Alabama Supreme Court

108 So. 864

214 Ala. 684

MEEKS et al. v. MILLER et al.

7 Div. 606

Supreme Court of Alabama

May 13, 1926

Rehearing Denied June 10, 1926

Appeal from Circuit Court, St. Clair County; W.J. Martin, Judge.

Bill in equity by Jennie Meeks and others against G.C. Miller and others. From a decree sustaining demurrer to the bill complainant appeals. Affirmed.

J.S Fannin, C.B. Powell, and G.M. Edmonds, all of Birmingham, for appellants.

J.A Embry and J.P. Montgomery, both of Ashville, for appellees.

THOMAS J.

The suit was at law, filed December 31, 1921, process executed August 21, 1922, and duly removed to the chancery docket. The recited pleading was conformable to the order of removal. Stover v. Hill, 208 Ala. 575, 94 So. 826.

The appeal is from a decree sustaining demurrers to the bill as amended. It had for its purpose the declaring null and void an order of sale of lands and all the proceedings relating thereto, and for cancellation of certain deeds by alleged purchasers at said sale, etc. The special judge was appointed under section 3381 of the Code of 1896, providing for a special judge where the presiding judge is "incompetent for any legal cause" to act in the premises.

It needs no citation of authorities to the proposition that one may not sit in judgment in a matter in which he is interested. This rests upon the fact that the final arbiter must be beyond the imputation, in law, of bias or prejudice or the influence of the relations in life recognized by our statutes of disqualification--statutory and common-law. Woodmen v. Alford, 206 Ala. 18, 89 So. 528; Gill v. State, 61 Ala. 169; chapter 309, vol. 4, Code 1923.

From such fundamentals come the long prevailing rule that a judge, fiduciary, trustee, or agent is not permitted to become the immediate purchaser of land of which officer or person has direction, dominion, or control in representative capacity or stands in confidential relation to the owner. In Saltmarsh v. Beene, 4 Port. 283, 292, 293, 30 Am.Dec. 525, it is said of the English rule:

"In Ex parte James, 8 Ves.Jr. 345, it was decided that the purchase was not permitted in any case, however honest the circumstances; the general interests of justice requiring it to be destroyed in every instance--no court being equal to the investigation and ascertainment of the truth in much the greater number of cases. Lord Rosslyn was of an opinion, that to authorize the sale to be set aside, it should be shown that the agent or trustee had gained an advantage by the purchase. Whichcote v. Lawrence, 3 Ves.Jr. 750. But the correctness of Lord Rosslyn's opinion is denied by Lord Eldon, in the cases of Ex parte James and Ex parte Bennett already cited. And the true rule now recognized in the courts of chancery, both in England and in this country, is that laid down in Lord Alvanley, in Campbell v. Walker , that a trustee purchasing the trust property, is liable to have the purchase set aside, if in any reasonable time thereafter the cestui que trust makes known his dissatisfaction."

This was approved in Calloway v. Gilmer, 36 Ala. 354. It follows that the rule long prevailing in this jurisdiction is that a trustee employed or appointed cannot directly or indirectly for himself effect a purchase of the property he is required to sell; and an administrator has been held to be a trustee for the benefit of distributees and creditors. Evans v. Evans, 200 Ala. 329, 330, 76 So. 95.

In Cottingham v. Moore, 128 Ala. 209, 213, 30 So. 784, 785, is contained an extended statement of the rule:

"No principle of equity is more firmly ingrafted on the jurisprudence of this country than that a purchase by a trustee for his own benefit at a sale of the trust property, is voidable at the option of the cestui que trust, and will be set aside on timely application made for that purpose. And in the application of this rule it is unimportant whether the purchase be made directly or indirectly, in person, or through an intermediary who subsequently reconveys to the trustee, and without regard to the question of fairness in the purchase. This doctrine is too familiar to call for citation of authorities. Such sales, however, are not per se void, but only voidable at the option of the beneficiary or cestui que trust, when seasonably expressed, though in some adjudged cases there may be found loose expressions to the effect that the purchases of trustees are void, or that a trustee cannot purchase at his own sale."

After some review of the earlier cases, this rule was again declared in Schloss & Kahn v. Brightman, 195 Ala. 540, 543, 544, 70 So. 670, 672:

"In Bank of Wetumpka v. Walkley, 169 Ala. 648, 53 So. 830, this court said: 'It has been long and well settled by the decisions of this court that a purchase by a trustee for his own benefit at a sale of the trust property is voidable at the option of the cestui que trust, and will be set aside on timely application made for that purpose; and in the application of this rule it is unimportant whether the purchase be made directly or indirectly, in person or through an intermediary, who subsequently reconveys to the trustee, and without regard to the fairness of the purchase. *** The authorities recognize and sanction but a single exception to this rule; that is, that executors and administrators, who have an interest in the property sold, may purchase at a sale of the property of the estate, provided there is no unfairness, and property is exposed for sale under the ordinary mode, and under such circumstances as will command the best price.' See, also, Cottingham v. Moore, 128 Ala. 209, 30 So. 784; Calloway v. Gilmer, 36 Ala. 354; Foxworth v. White, 72 Ala. 224; Randolph v. Vails, 180 Ala. 82, 60 So. 159.

"The case of Penny v. Jackson, 85 Ala. 67, 4 So. 720, is of peculiar interest in this connection, and we therefore take therefrom the following quotation: 'It is unquestionable that a trustee is required to act, in all matters pertaining to the trust, with the utmost good faith, and solely for the benefit of the beneficiary; and he will not be allowed to deal with the subject of the trust, so as to gain, directly or indirectly, any advantage to himself. An advantage so gained will be construed as inuring to the benefit of the cestui que trust.' " ***

This was adhered to in later decisions. Tolly v. Hamilton, 206 Ala. 634, 91 So. 610; Id., 209 Ala. 533, 96 So. 584.

The many authorities in this and other jurisdictions are collected in note to L.R.A.1918B, 7, to the text, that the rule is almost unanimous, both in the United States and in the British Empire, that an administrator or executor may not purchase at his own sale of the property belonging to the estate he represents. Frazer v. Lee, 42 Ala. 25; James v. James, 55 Ala. 525; Foxworth v. White, 72 Ala. 224; McMillan v. Rushing, 80 Ala. 402; Charles v. Dubose, 29 Ala. 367, and Calloway v. Gilmer, 36 Ala. 354, to the effect that such sales are void, have not been followed.

The exceptions to the general rule under consideration are indicated in Peters Mineral Land Co. v. Hooper, 208 Ala. 324, 327, 94 So. 606, 609, as follows:

"*** After one has performed his office as agent, or has in good faith severed his relation as agent, he is free to negotiate for his own interest and can act 'adversely to his former principal as fully as any other person.' McKinley v. Irvine, 13 Ala. 681; Clay v. Cummins, 201 Ala. 34, 77 So. 328; 2 C.J. 714. The purpose of the cases touching the relation of principal and agent is to secure fidelity in the agent, and as a means to this end the law will not permit the agent to place himself in a situation in which he may be tempted by his own private interest to disregard that of his principal. The infallible truth that 'a man cannot serve two masters' is the reason for the tests found in the several statements of the rule governing agency. Tisdale v. Tisdale, 2 Sneed (Tenn.) 596, 64 Am.Dec. 775; Porter v. Woodruff, 36 N.J.Eq. 174."

And in the earlier decisions it was held that executors or administrators having an interest in the estate might purchase the same at their own sale, provided there was no unfairness in the sale. Brannan v. Oliver, 2 Stew. 49, 19 Am.Dec. 39; Saltmarsh v. Beene, 4 Port. 283, 30 Am.Dec. 525; McLane v. Spence, 6 Ala. 894. If unfairness exists the sale will be set aside. Payne v. Turner, 36 Ala. 623. The exception was recognized and confined to one having interest in the property sold. Calloway v. Gilmer, 36 Ala. 354; McCartney v. Calhoun, 17 Ala. 301; Julian v. Reynolds, 8 Ala. 680; Daniel v. Stough, 73 Ala. 379; Frazer v. Lee, 42 Ala. 25; Pearson v. Darrington, 32 Ala. 227; Cottingham v. Moore, 128 Ala. 209, 30 So. 784.

The several assignments of error present for review the action of the trial court in sustaining demurrer of the several defendants to the bill, among other grounds, on the theory that the facts averred show the bar of the statute of limitations, the operation of the rule of repose, and that of laches; that the same, being apparent upon the face of the bill, is available to respondents by demurrer as well as by plea or answer. Harper v. Raisin, 158 Ala. 329, 48 So. 589, 132 Am.St.Rep. 32.

It is a familiar principle that, aside from statutes of limitation courts of equity will discourage laches and delay in the enforcement of rights (Kidd v. Borum, 181 Ala. 144, 61 So. 100, Ann.Cas.1915C, 1226; Miller v. Vizzard Invest. Co., 195 Ala. 467, 70 So. 639; Turner v. Turner, 202 Ala. 515, 81 So. 17; Wooddy v. Matthews, 194 Ala. 390, 69 So. 607; Johnson v. Toulmin, 18 Ala. 50, 61, 52 Am.Dec. 212; Hendrickson v. Hinckley, 17 How. 443, 15 L.Ed. 123; Wagner v. Baird, 7 How. 234, 12 L.Ed. 681); that is to say, nothing can call forth the court of chancery into activity...