Teal v. Pleasant Grove Local Union No. 204, Farmers' Educational & Co-operative Union of America

• Decision Date: 05 April 1917
• Docket Number: 8 Div. 983
• Citation: 75 So. 335,200 Ala. 23
• Parties: TEAL et al. v. PLEASANT GROVE LOCAL UNION NO. 204, FARMERS' EDUCATIONAL & CO-OPERATIVE UNION OF AMERICA.
• Court: Alabama Supreme Court

75 So. 335

200 Ala. 23

TEAL et al. v. PLEASANT GROVE LOCAL UNION NO. 204, FARMERS' EDUCATIONAL & CO-OPERATIVE UNION OF AMERICA.

8 Div. 983

Supreme Court of Alabama

April 5, 1917

Rehearing Denied May 17, 1917

Appeal from Chancery Court, Marshall County; James E. Horton, Jr. Chancellor.

Bill by Pleasant Grove Local Union No. 204 of the Farmers' Educational & Co-operative Union of America, and certain individuals, against Z.M. Teal and others, to set aside and annul the transfer of certain stock, and to reissue same in the name of complainant, to determine who are interested in the shares, and their respective interest, and to require respondents to pay into court the full amount of dividends received. The chancellor decreed that the transfer of the two shares of stock be divested and revested in the Pleasant Grove Local Union, and pay the dividends collected thereon. From the decree respondents appeal. Affirmed.

The case made by the bill is: That the local union and certain members thereof subscribed for and purchased two shares of stock in the Farmers' Union Warehouse Company, a corporation doing business, and owning a certain warehouse in the town of Albertville, paying for the same the sum of $50 per share, and at the request of all the complainants said stock was duly issued to and in the name of the Local Union No. 204, which was to hold the said shares of stock in trust for the benefit and use of all those members of said local union who had contributed to the payment of said purchase price and collect any and all dividends that said stock might earn, and distribute the same among those contributing to the purchase price of same, according to their respective interests. That complainants in this case subscribed $5 each and it was agreed and ordered at a regular meeting of the local union that the said two shares should be issued to the local union to be held by it as trustee for the use and benefit of those contributing, and that in pursuance of this agreement, the money was turned over to the committee, who purchased the said stock in the name of the local union, and said stock was duly issued by the Farmers' Union Warehouse Company, to the local union. That during the year 1913, Z.M. and A.L. Teal, who were at that time members of the local union, by misrepresentation and fraud to the local union, procured the transfer of said two shares of stock to themselves, said misrepresentation and fraud consisting in this: That at a regular meeting of the local union they represented to those present that they had purchased the individual interest of all those not present who contributed to the purchase price of said shares, except one or two members, and had arranged to secure the interest of said one or two members, and that they were then the present owners of the several interests of those members not present, and thereby induced and procured one Andrew Sampson to sell them his interest in said stock, and procured said local union to transfer said two shares of stock to them, when as a matter of fact they had not purchased the individual interest in and to said shares of stock of quite a large number of the other members, among them being the complainant in this case. The next paragraph sets out the proceeding of the local union whereby the stock was ordered transferred, and also the proceeding of another regular meeting of the local union when a motion was made and passed annulling the transfer because of fraud, and requesting a return of the stock to the local union.

Street & Bradford, of Guntersville, for appellants.

McCord & Orr, of Albertville, for appellee.

THOMAS J.

This is a bill filed by a trustee to protect the rights of the beneficiaries of the trust.

In its simplest elements a trust is a confidence reposed in one person, by and for the benefit of another, with respect to property held by the former, for that other's benefit. The person in whom this confidence is reposed and who holds the title to the property in question is the trustee; and the person for whose benefit the property is so held by the trustee is the cestui que trust, or, as formerly referred to in the Roman law, the fidei-commissarius. Brown v. Brown, 83 Hun, 160, 164, 31 N.Y.Supp. 650; Carter v. Gibson, 29 Neb. 324, 332, 45 N.W. 634, 26 Am.St.Rep. 381; 3 Pom.Eq.Jur. § 1055; Deming v. Lee, 174 Ala. 410, 56 So. 921; Butts v. Cooper, 152 Ala. 375, 44 So. 616; Coleman v. Coleman, 173 Ala. 282, 55 So. 827; Hughes v. Letcher, 168 Ala. 316, 52 So. 914.

No express words are necessary to the creation of a trust if that intention appears. Gifford v. Rising, 51 Hun, 1, 3 N.Y.Supp. 392. It may be inferred from the facts and circumstances of the case. Coleman v. Coleman, supra; Butts v. Cooper, supra; O'Neal v. Greenwood, 106 Mich. 572, 582, 64 N.W. 511; Hedges v. Keller, 104 Ind. 479, 3 N.E. 832.

To hold stock in a warehouse corporation for the benefit of the contributing purchaser and collect and disburse the dividends accruing therefrom among those who contributed to the purchase of the trust property is the creation of an active trust in the trustee (Green v. McCord, 30 Ind.App. 470, 66 N.E. 494; Repp v. Lesher, 27 Ind.App. 360, 61 N.E. 609), who should protect the property for the benefit or use declared.

It is therefore the duty of such trustee, not only to hold the property for the beneficiary, but to disburse the proceeds to such beneficiary according to the terms or circumstances of the creation of the trust in and out of the estate. Gindrat v. Montgomery Gaslight Co., 82 Ala. 596, 2...