
    Buckles v. Lafferty’s Legatees.
    August, 1843,
    Lewisburg.
    (Absent Cabell, P., and Brooke, J.)
    [40 Am. Dec. 752.]
    Principal and Agent — Purchase by Agent from Principal. — The doctrine of the English chancery, that a person standing in the confidential relation of agent cannot, while that relation continues and before that confidence is withdrawn, make a purchase from the principal (that will bind the latter) of a subject within the scope of the agency, recognized and acted upon.
    Same — Same—Legatees—Impeaching Purchase — Delay —Interest of Legatees — Ascertainment of — Resale-Upset Price — Proceeds of Resale — flow Applied. — A testator (amongst other things) directed lands to be sold, and legacies to be paid out of the proceeds. The administratrix with the will annexed, on whom the power of making the sale was conferred, appointed an agent, who did the business of 293 the *administration, and received the commissions allowed the administratrix. She was old, and had great confidence in him, and he acted in a great degree without her supervision, and practically conducted the administration without control. After several previous attempts by the agent to sell one of the parcels of land, it was put up at auction (as the sale bill announced) for the last time, and knocked down to a person requested by the agent to bid (for the purpose of promoting the sale) at 21 dollars 52 cents per acre,, a higher bid than had been made on any previous occasion. Some persons present were willing to have given as much as 25 dollars per acre ; and one of them, who was surprised when the land was knocked off and not to his bid, on the same day (immediately after sale) stated to the agent his willingness to have gone higher if necessary. A few weeks afterwards, the agent purchased the land from the administratrix by private contract at 22 dollars per acre, and took a conveyance of it from her. This was in 1829. In 1835, a hill was filed hy the legatees to rescind the sale and conveyance. The hill alleged that the proceeds of the sale were insufficient to pay the legacies, and it further alleged that most of the plaintiffs were nonresidents who had not been in Virginia since the sale, and that some were infants and femes covert. Hekd, 1. A purchase hy such an agent is in substance no better than a purchase from himself, and though it might hind him, is not binding on the legatees, unless ratified hy them deliberately and on full information. 3. No such ratification appearing, the delay in this case to impeach the purchase (due allowance being made for the infancy of some and the nonresidence of others) does not deprive the plaintiffs of their right to the aid of equity. 3. The extent of the interest of the plaintiffs ought hy a proper account to he ascertained, to the end that the purchaser may, if he thinks proper so to do, remove that interest hy paying to the plaintiffs the parts unsatisfied of their legacies. 4. If the purchaser should not do this, the plaintiffs will he entitled to have the land reexposed to sale at a proper upset price, to he ascertained hy debiting the purchaser with the profits of the land or with a fair annual rent therefor since his purchase, and crediting him first with his payments and interest on the same, and secondly with all his substantial and permanent improvements. The balance, with the addition thereto of a reasonable amount for the commission and charges of resale, is the sum at which the land should he set up, on a credit of 6,12 and 18 months, hearing interest. 5. If the land and improvements should not sell for more than the upset price, the purchase should stand confirmed: if it should sell for more, then the 294 former sale should be vacated, -'the purchase money on the resale duly collected from the purchaser at the same, and a conveyance made to him, and the proceeds of the resale applied, 1st. to pay the charges of sale; Sdly, to pay the first purchaser the balance due him upon an account stated as before mentioned: and the surplus to the legatees, according to their respective rights.
    Thomas Rafferty by his will bearing- date the 20th of September 1824, after certain specific devises and bequests of lands and chattels, and a bequest to his wife Catha-rine Rafferty of one third part of the remainder of his personal property, devised as follows:
    ‘ ‘Item 6th. It is my will that the balance of my property both real and personal, namely, the land joining line with the heirs of Coontz, Rucas, Selby and Rems-burg, and the land joining line with Butler, Vendier and Ozburn, shall be sold by my executors, and after paying all my just debts, funeral expenses, &c. shall be disposed of as I shall now direct.”
    And then the testator directs that there shall be paid by his executors, out of the money arising from'the sales of said lands and personal property, to his son George Rafferty 600 dollars, to his son Thomas Rafferty 500 dollars, to his son Samuel Raf-ferty 600 dollars, to his daughter Rebecca Harris 600 dollars, to his son David Rafferty 800 dollars, to his grandchildren the heirs of his son John Rafferty 400 dollars, and to his son William Rafferty 800 dollars. The 400 dollars bequeathed to the grandchildren he directed to be paid to them or their guardians, and appropriated to their education. And the 800 dollars bequeathed to his son William he desired should be put on interest by his executors, and the interest paid yearly to testator’s wife Catharine Rafferty for the support of his son William. If William should live longer than his mother, he desired that Thomas Rafferty should take him, and directed his executors to pay Thomas the 800 dollars, which Thomas was to put on interest, and 295 apply the interest or so much of x'the principal as the necessities of William- might require. Should William die before his mother, the will directed the executors to pay the 800 dollars to her for her own use, to dispose of as .she might think best. If the two pieces of land directed to be sold, with the two thirds of the persona^ property, should not amount, after paying just debts and funeral expenses, to 4300 dollars, the aggregate of the sums given the legatees, the testator directed that they should lose in proportion to the sums given them; if there should be a surplus, he directed that surplus to be paid by his executors to his wife Catharine Rafferty, to will, use or dispose of as she might think best.
    The county court of Jefferson refused to admit the will to record; but on an appeal from its judgment, the same was reversed by the circuit court on the 30th of August 1827, and the will recorded. Daniel Buckles, who alone was appointed executor, renounced the executorship. And thereupon Catharine Rafferty the widow qualified as administratrix with the will annexed, giving bond as such, with Daniel Buckles and others as her sureties, in the penalty of 1500 dollars.
    On the first of April 1829, a deed was made between Catharine Rafferty as ad-ministratrix with the will annexed of Thomas Rafferty, of the one part, and Daniel Buckles of the other part, conveying to him, for the consideration of 2126 dollars 37J^ cents, a tract of land containing 96 acres 2 roods and 26 poles, being the land described in the will as “joining line with the heirs of Coontz, Rucas, Selby and Remsburg. ” This deed was acknowledged before two justices of the peace the 15tb of September 1829, and admitted to record in the court of Jefferson county on the 16th of September 1833.
    At December rules 1835 a bill was filed in the circuit court of Jefferson, by the parties, or the representatives of the parties, to whom legacies were bequeathed out of the proceeds of the land, against the 296 widow in *her own right and as ad-ministratrix, and against Buckles, praying that, the sale and conveyance to Buckles might be rescinded; that he might be compelled to account for the rents and' profits of the land since it had been in his possession, and for all wood &c. sold and taken therefrom; that the same might be offsetted against his advances; and that there might be a resale of the land, and other relief.
    It was alleged in the bill, and admitted in the answer of Buckles, that the admin-istratrix, upon her qualification, constituted him her agent, that he acted as such, and that he received the commissions allowed to the administratrix. As the respondent “did the business and bore the responsibility, he considered” (he said) “there was no sort of impropriety in the stipulation that he should be entitled to the commissions.” But he positively denied that there was any thing fraudulent or improper in the sale, or that the price was inadequate. The transaction was stated by him to have been as follovts. At a public sale by him as agent, on the 10th of March 1829, he had requested mr. John V. Cookus to bid, for the purpose of preventing the land from going below its value; telling Cookus that if the land should be knocked off to him, he (the respondent) would ta,ke it off his hands. Cookus’s bid of 21 dollars 52 cents per acre was the last and highest. He told Cookus, that if he was inclined, he might keep the land; but Cookus would not keep it, and the respondent felt bound to take it off his hands. Hearing after-wards that one of the Lucases had said he would have gone higher, the respondent, instead of claiming as the substitute of Cookus a right to the land at the price it was knocked off, purchased it by private contract from the administratrix on the 4th of April 1829, at 22 dollars per acre, which was not only more than the price at which it was knocked off, but more than had been offered for it on any previous occasion 297 when the attempt *had been made to sell it. And the respondent said he did not claim as purchaser from himself as agent, but as purchaser from mrs. Rafferty, by private contract fairly made and for a full consideration. He exhibited with his answer the contract of the 4th of April 1829.
    As to mrs. Rafferty, the bill was taken for confessed.
    Many depositions were taken by the plaintiffs to prove, and by the defendant to disprove, the charge made against him of actual fraud or covin. But the opinion of this court resting upon the relation of the parties, and upon the principle of law applicable to that relation, it is unnecessary to state more of the evidence than what follows. — It appeared that there had been an attempt to sell the land in the fall of 1827, when the highest bid was 19 dollars, and two other attempts in 1828, when the highest bid was about 17 dollars per acre: that Buckles declined letting the land go at either of those bids: that in March 1829 the sale bill announced that it would positively be the last sale; and- that it was knocked down to Cookus (bidding for Buckles as stated in the answer) at 21 dollars 52 'cents per acre. Some persons however, who were present, deposed that they were willing at the time of the sale, if the land could not be got for less, to have given as much as 25 dollars per acre for it, and one of those persons seemed to have been surprised when he found that the land was knocked off and that it was not his bid. On the same day, immediateljr after the sale, he stated to Buckles his willingness to have gone higher if necessary. The evidence further shewed that mrs. Rafferty was an old woman, who went from home very little; that she was not present at the attempt to sell in 1827 or 1828, or at the pub Lie sale in 1829; and that she had great confidence in Buckles, and entrusted the sales to him. It was alleged in the bill and not controverted by the answer, that the proceeds of the real and personal estate set apart by the testator for the 298 *payment of debts, funeral expenses and legacies, had fallen greatly short. And the bill further alleged that most) of the plaintiffs are “residents of the western country, and were so previous to said sale, and have not since been in Virginia, and had not, until very recently, known the facts, some of them being infants and femes covert. ’ ’ The parties' plaintiffs were the administrator, widow and heirs of George Rafferty, one of whom was an infant suing by her next friend; the administrator, widow and heirs of Thomas Rafferty; the children and heirs off John Rafferty, some of whom were infants suing by next friend; Rebecca Harris, whose husband was joined as plaintiff pending the suit, and Samuel, David and William Rafferty; as to which last, upon a suggestion that he was a person of unsound mind, the bill was by consent amended so as to make him a plaintiff by his next friend.
    The cause coming on to be heard the 16th of June 1838, the circuit court decreed that Buckles, on receiving back his purchase money with interest, should convey the land to mrs. Rafferty to and for the uses in the will, and that he should account for the rents and profits of the same during his possession thereof.
    On the petition of Buckles an appeal was allowed.
    Arguments were submitted in writing (or printed) byRdmund J. Ree jr., Richard Parker, J. T. Dougherty and A. H. H. Stuart for the appellant, and by Green B. Samuels for the appellees. They were chiefly upon the question of fraud in fact.
    The general principle that trustees, agents, and other persons acting in a confidential character are disqualified from purchasing, was not denied by the appellant’s counsel. But they said this principle had not hitherto been acted on, in Virginia, with much strictness against executors. Anderson &c. v. Fox &c., 2 Hen. & Munf. 245; M’Key ex’or of Fuqua v. 299 Young, 4 Hen. *& Munf. 430; 2 Rob. Pract. 65, 6. What chancellor Taylor spoke of in 4 Hen. & Munf. 430, as being common in his day, they said, continued to be the practice, and was so generally understood to be admissible, that the maxim communis error facit jus ought to be applied. And they argued that even if the general principle before adverted to were to prevail in Virginia, it could not affect this case, because here Buckles purchased at a private sale from the administratrix, and not at a public sale made by himself. They further insisted that the legatees must have had the benefit of the purchase money which had been paid, and that their receiving the same and acquiescing in the sale for more than six years was sufficient to prevent the court from disturbing the transaction. Nor (they urged) could the circumstance of some of the plaintiffs being infants and others nonresidents help the case. Bor others of the plaintiffs were adults living here, prominent in the case in their own right and as the next friends of the infants, and the suit might have been brought in the same way as well six years ago as now. They were as well acquainted then with the grounds on which the bill rests as now. And the explanation of their delay was only to be found in the fact that land generally in the neighbourhood has since risen in value, and this particular tract is especially improved by judicious cultivation and by the industry of its present possessor.
    
      
      Flduclaries — Purchase of Trust Subject. — See footnotes to Bailey v. Robinsons, 1 Gratt. 4; Wellford v. Chancellor, 5 Gratt. 39.
      Same — Same,—A purchase of trust property, made by one while holding the fiduciary or confidential relation, is voidable at the option of the cestuis Que trust, although the fiduciary may have given an adequate price, andgainedno advantage whatever. For this proposition, the principal case is cited in Newcomb v. Brooks, 16 W. Va. 59, 62; Feamster v. Feamster, 35 W. Va. 13, 13 S. E. Rep. 57; Lewis v. Broun, 36 W. Va. 7, 14 S. E. Rep. 446; Tennant v. Dunlop, 97 Va. 241, 33 S. E. Rep. 620; Harrison v. Manson, 95 Va. 598, 29 S. E. Rep. 420; Ferguson v. Gooch, 94 Va. 9, 26 S. E. Rep. 397; Christian v. Worsham, 78 Va. 107; Howery v. Helms, 20 Gratt. 7. See also, Carter v. Harris, 4 Rand. 204; Segar v. Edwards, 11 Leigh 213; Moore v. Hilton, 12 Leigh 1; Lane v. Black, 21 W. Va. 618; Anderson v. Fox, 2 H. & M. 245; McKey v. Young, 4 H. & M. 430.
    
    
      
      Same — Same—Resale—Upset Price. — In syllabus 5 of Howery v. Helms, 20 Gratt. 1, it is said, that where land is resold, because the commissioner appointed by a decree in a partition suit to sell the land, became himself the purchaser, the usual and proper course is to offer the property at an upset price, to be fixed by the decree, according to the cases of Buckles v. Lafferty, 2 Rob. Rep. 292, and Bailey v. Robinsons, 1 Gratt. 4.
    
   STANARD, J.,

delivered the following as the opinion of the court:

The court is of opinion that the evidence in this case is insufficient to fasten on the appellant the charge of actual fraud or covin in the purchase of the land that belonged to the estate of Thomas Bafferty. The appellant, however, was confessedly the agent of the administratrix with the will annexed of Bafferty, on whom the power of making the sale was conferred by the will; *and, as the evidence shews, an agent acting in a great degree without the supervision of his principal, and practically conducting the administration without control. A purchase by such an agent is in substance not better than a purchase from himself, and though it might bind him, is not binding on the beneficiaries interested in the execution of the trust, unless ratified by them deliberately and on full information; and they, to the extent of their interest, are entitled to the benefit of any advance that may be realized on a resale. The court is further of opinion that no such ratification of the appellant’s purchase appears in this case, nor does the delay on the part of the plaintiffs in the court belów to impeach the purchase (due allowance being made for the infancy of some and the nonresidence of others) deprive them of their right to the aid of a court of equity.

The court is further of opinion that the plaintiffs, the legatees of Bafferty, were interested in the sale of the land and the proceeds thereof, to the extent only that those proceeds were necessary to pay their legacies; and if those proceeds, blended with the other funds dedicated by the will to the payTment of those legacies, were adequate to discharge them, the plaintiffs, having under the will no interest in the surplus, would have no interest, and consequently no title, to question the sale. The allegation of the bill that part only of those legacies had been paid not being controverted by the answer, the court was justified in proceeding on the assumption that part of the legacies remained unpaid; but as that gave to the legatees but a limited interest in cancelling the pdrchase of the appellant or having a resale, the extent of that interest ought by a proper account to have been ascertained, to the end that the purchaser, if his purchase was not effectually questioned by any other than the plaintiff legatees, might have the opportunity, if he thought proper to use it, of ^removing the interest of those plaintiffs in, and consequently their right to, the experiment of a resale, by paying to them the parts unsatisfied of their legacies. If, on such an account, the purchaser should not avail himself of the opportunity to prevent the experiment of a resale, the plaintiffs would be entitled to have the land reexposed to sale at a proper upset price, to be ascertained in the manner following. An account should be taken, in which the appellant should be debited with the full amount of the profits of the land, or with a fair annual rent therefor, since his purchase, and credited, 1st. with the payments made by him for the purchase, with interest on those payments from the dates respectively at which they have been made available to the legatees, and 2dly, with all the substantial and permanent improvements made on the land since the purchase. The balance of such account, with the addition thereto of a reasonable amount for the commission and charges of resale, is the sum at which the land, on a resale should be set up, on a credit of 6, 12 and 18 months for equal instalments of the purchase money, with interest on those in-stalments from the day of sale. If the land and improvements should not sell for more than the upset price, the purchase heretofore made by the appellant should in all respects stand confirmed. If it should sell beyond that sum, then the former sale should be vacated, and the case further proceeded in by causing the purchase money on such sale to be paid, and a proper conveyance to be made to the purchaser, and the proceeds of sale applied, 1st. to pay the charges of sale; 2ndly, to pay to the appellant the balance shewn by the said account to be due for purchase money and improvements; and the surplus to the legatees of Bafferty, according to their respective rights. The court is consequently of opinion that the decree of the circuit superior court is erroneous. It is therefore adjudged, ordered and decreed that the said x’decree be reversed, and that the appellees pay to the appellant the costs expended in prosecuting his appeal in this court. And the cause is remanded to the circuit superior court, for further proceedings according to the principles above declared.

Note by the reporter. — The leading cases upon the principal question in this are Whelpdale v. Cookson, 1 Ves. sen. 9; 5 Ves. jun. 683; Fox v. Meck-reth and others, 2 Brown’s C. C. 400; 2 Cox 320; 4 Brown’s Par. Cas. 258, (Tomlin’s edi.) and The York Buildings Company v. Mackenzie, 8 Brown’s Par. Gas. 42, (same edi.). The last two decisions were in the house of lords, where the subject underwent the ablest discussion; a discussion in which light was obtained from the writers upon the civil as well as from the judges of the common law, and the doctrine traced back to its original source. “It is,” said the counsel for the York buildings company, (p. 63, 4,) “the constitution of nature itself, and is as old as the formation of society, and of course it must be universal. It proceeds from nature, and is silently received, recognized and made effectual wherever any well regulated system of civil jurisprudence is known. The ground on which the disability or disqualification rests is no other than that principle which dictates that a person cannot be both judge and party. No man can serve two masters. He that is entrusted with the interest of others cannot be allowed to make the business an object of interest to himself, because, from the frailty of nature, one who has the power will be too readily seized with the inclination to use the opportunity for serving his own interest at the expense of those for whom he is entrusted. The danger of temptation, from the facility and advantages for doing wrong which a particular situation affords, does, out of the mere necessity of the case, work a disqualification; nothing less than incapacity being able to shut the door against temptation where the danger is imminent and the security against discovery great, as it must be where the difficulty of prevention or remedy is inherent to the very situation which creates the danger. The wise policy of the law has therefore put the sting of a disability into the temptation, as a defensive weapon against the strength of the danger which lies in the situation.”The doctrine is laid down in like general terms by the chancellor of New York in two recent cases, Van Epps v. Van Epps, 9 Paige 241, and Torrey v. The Bank of Orleans, 9 Paige 663. He says in the last, “It is a settled principle of equity that no person who is placed in a situation of trust or confidence in reference to the subject of the 303 sale, can *be a purchaser of the property on his own account.” He adds, “In the recent case of Greenlaw v. King, decided in the court of chancery in England in January 1841, (5 Lond. Jur. 18,) lord Cottenham held that the principle was not confined to a particular class of persons, such as guardians, trustees, or solicitors, but was a rule of universal application to all persons coming within its principle; which is, that no party can be permitted to purchase an interest, where he has a duty to perform that is inconsistent with the character of purchaser.”

The decisions of lord Eldon strongly support the rule. In Ex parte James, 8 Ves. 345, he said, “This doctrine as to purchases by trustees, assignees, and persons having a confidential character, rests much more upon general principle than upon the circumstances of any individual case. It rests upon this, that the purchase is not permitted in any case, however honest the circumstances; the general interests of justice requiring it to be destroyed in every instance, as no court is equal to the examination and ascertainment of the truth in much the greater number of cases.” On a subsequent day he said, (p. 348) “My opinion in this case is purely upon the principle.” — “The principle is, that as the trustee is bound by his duty to acquire all the knowledge possible, to enable him to sell to the utmost advantage for the cestui que trust, the question what knowledge he has obtained, and whether he has given the benefit of that knowledge to the cestui que trust which he always acquires at the expense of the cestui que trust, no court can discuss with competent sufficiency or safety to the parties.” “The courts have said, it is better for the general interests of justice that in some cases a loss should be sustained by a cestui que trust, than a rule should be established which would occasion loss in much more numerous cases.”

Lord Eldon must be understood here as alluding to a case in which the confidential relation still continues. For in Ex parte Lacey, 6 Ves. 626, he had said, the rule does not preclude the trustee from bargaining that he is no longer to act as such. “The cestui que trusts may,” (he observed) “by a new contract, dismiss him from that character: but even then, that transaction by which they dismiss him must, according to the rules of this court, be watched with infinite and most guarded jealousy; and for this reason, that the law supposes him to have acquired all the knowledge a trustee may acquire; which may be very useful to him, but the communication of which to the cestui que trusts the court can never be sure he has made, when entering into the new contract by which he is discharged.” Again, in Ex parte James, 8 Ves. 353, adverting to Fox v. Mackreth, he states the question properly to have been, “whether a person who had a confidential situation previously to the purchase, had at the time of the purchase 304 ^shaken off that character, by the consent of the cestui que trust freely given after full information, and bargained for the right to purchase.” And in Coles v. Trecothick, 9 Ves. 246, he says, “A trustee may-buy from the cestui que trust, provided there is a distinct and clear contract, ascertained to be such afters a jealous and scrupulous examination of all the circumstances, that the ces-tui que trust intended the trustee should buy; and there is no fraud, no concealment, no advantage taken by the trustee of information acquired by him in the character of trustee. I admit it is a difficult case to make out, wherever it is contended that the exception prevails.”

These doctrines have 'been recognized in many other cases in England: Ex parte Bennett, lOVes. 393; Randall v. Errington, 10 Ves. 427; Morse v. Royal, 12 Ves. 373; Sanderson v. Walker, 13 Ves. 601; Downes v. Glazebrook, 3 Meriv. 207; Wood-house v. Meredith, 1 Jac. & Walk. 222, and Rothschild v. Brookman, 5 Bligh N. S. 190. And they have also been approved and sanctioned by many of the courts in this country: in New York by chancellor Kent, as well as by the present chancellor, Davoue v. Fanning, 2 Johns. Oh. Rep. 252; Hawley v. Cramer, 4 Cowen 734; by chancellor Desaussure of South Carolina in Butler &c. v. Haskell, 4 Desauss. 705; by chief justice Marshall in Teakle v. Bailey, 2 Brock. 52; by the supreme court of the United States in Wormley v. Wormley, 8 Wfieat. 421; and by this court in Carter &c. v. Harris. 4 Rand. 204, and Segar v. Edwards and wife, 11 Leigh 218, as well as in the present case.

In the present case, it could not be said that the relation of the principal and agent had been changed; that the confidence in the agent had been withdrawn. And as strict a rule was applicable as that laid down by lord Eldon in Gibson v. «leyes, 6 Ves. 271. He there said, “An attorney buying from his client can never support it, unless he can prove that his diligence to do the best for the vendor has been as great as if he was only an attorney dealing for that vendor with a stranger. That must be the rule. If it appears that in that bargain he has got an advantage by his diligence being surprised, (put. ting fraud and incapacity out of the question) which advantage, with due diligence, he would have prevented another person from getting, a contract under such circumstances shall not stand.” — “From the general danger, the court must hold that if the attorney does mix himself with the character of vendor, he must shew to demonstration (for that must not be left in doubt) that no industry he was bound to exert would have got a better bargain.” And the court in the present case might properly conclude, as lord Eldon did in that, “Therefore, without imputing fraud, a general principle of public policy makes it impossible that this bargain can stand.”

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