624

FEDERAL REPORTER, vol.

49.

CHAFFIN

et al.

'I).

HULL

et al.

March 5, 1899.)

1:. REBInJUDIOATA.a consideration paid by the husband of C., a deed of land was executed 1840, for

·

(Otrcutt Oourt, E. D. MisSOUri, E. D.

to·a trustee in trust for C., which by mistake vested only a life-estate in C., remaint\er to her childreJ;l, or, in default of children. to her right heirs, the intention: being·toat &fee should be vested. Thereafter an action was brought to reform the deed, in which the trustee and other parties to the deed, but not the contingent remainder-men, were made parties. Before final decree' therein, the husband of C. died. Held, that the trust became executed by the statute of uses, and the trustee duties to perform, and the deoree thereafter entered was not bindillg On the contingent remainder-men,tneynot being represented in the action.

H,; whfle acting asoonfidenJ;ial agent in oharge of property, both under C. and 'tbe trti$tJees under C.'swill,aoquired full information of a defect in C.'s title, and the,intentibn of C. and oUhe trustees to title, or to oontest v!llidity,but secreto/ purchased suoh title in thl;l name of another, and by his oonllivance oaused the teliants of the property to attorn to the person to whom the outstanding title had been conveyed. Held, that he would not be allowed to profit . but would betl'eated in equityas,holding the title for his principals, 8. BAMlIl. , No" will the heirs of an attorney who was jointly interested with H. in the pur. cl/.e.se, IIlld conducted all the negotiatlolils with full knowlege of. H.'s relations to C., ,stall-d in any better position than H.
,; 1'R1l'8T!ilJ!l8.:i:DUTIES

la.RlifS'lJIir:u;<1'

OF AGENT.

:T.betelltament!lry trustees.under C.'s will were given full power to sell, mortgllo8:e, ",nd lease, and reinvest the proceeds, in their discretion. Held, that they had 'pOwin' 'to bUy in an outstanding claim as a oloud on their title, and could maintain the,aotion against H. and the others to them as construotive trustees, and ill. Sllllh defendants would 1:le wi,th the rents and profits, and credited With .all 'expenditures fOr taxes, insurance, and improvements,' and the sums expendedin'purchll8ing the outstanding interests.
.,

AND LiABILITIES. '

In Eq,uity. In the opinion by BREWER, J., on demurrer to the bill, (39. Fed. 887,) the, facts were stated as follows:
"In 18,40"one William Myers was the ownel' of the property in question. of $4,000 paid by Elija4 Cllrtis, a deed was executed by FQr fl wife to one Samuel Russell in trust for Mrs. Curtis. '.rhe deed, as executed, vested a life-estate in Urs. Curtis, and the remainder in Mr'rlght heirs. It was so drawn and executed through a mistake of the draug'htsman; the intent of all the parties being that the fee shou'id be vested, and nota Ufe-estate, and that Russell,whd so held the title as, trustee for Mrs. Curtis, could, with his cestui que trust, convey the fee. After the deed had been so executed and recorded, in 1843, the mistake having been discovered, proceedings were had in the circuit court of St. Louis county to correct that deed. A decree was entered that it be reformed so as to express the intent of the parties, and vest a fee instead of a life-estate. To that proceeding Mr. and Mrs. Curtis, Mr. Russell, the trustee, and Mr. and Mrs. Myers, the grantors, were parties. The heirs of Mrs. Curtis were not made parties. By SUbsequent conveyances, the title vested in Mrs. Curtis and Mr. Russell, her trustee, passed to one Edward Chaffin, in 1850. He entered, took possession, and remained in possession until his death, in 1883. There. after the present complainants, holding under his will, took possession, and retained it l1ntill886. Mr. Curtis, the husband of Mrs. Curtis, the party who paid the money, died in 184:3; but Mrs. Curtis lived until 18!:!4, when she died, leaving no children. Mr. Chaffin during his possession became aware of the fact that, inasmuch as the heirs of Mrs. Curtis were not made parties to that decree of reformation, they had, at least, an apparent title to the re-

CllAFFIN

v.

HULL.

525

mainder. During the years of his possession, at least during the last few years of bis possession, he himself having removed to Massachusetts, he employed Leon L. Hull, one of the defendants, as his agent to look after the property, to pay taxes and insurance, to rent the property, and have general eharge thereof as his agent. During the years of that relationship he communicated to Mr. Hull his doubts as to the completeness of his title as disclosed by the record, and made several efforts, through him, to ascertain the residence and the names of the right heirs of Mrs. Curtis, with a view of obtaining from them releases of their apparent title to the remainder. Mr. Hull was fully possessed ofInformation in this respect from Mr. Chaffin, his plincipal. On the death of Mr. Chaffin these compl(linants, finding Mr. Hull in possession as agent, continued him in that position, and he assumed the same confidential relations to them that he had had to Mr. Chaffin. After the death of Mrs. Curtis, in 1884, Mr. Hull, the agent, conspiring with one William Clark and one Samuel Herman, proceeded to hunt up the right heirs of Mrs. Curtis, and obtained deeds from them, the deeds being made to William Clark, one of the cQnspirators, of their respective interests in tile remaind.er. While apparently continuing as the agent, and representative of these complainants, in pursuance of this conspiracy he caused legal proceedin,gs to be instituted, which, being carried on collusively, terminated in the '<1ispossession by the defendants of these complainants, and the transfer of pos.session to· Clark, one of the conspirators. This was accomplished in 1886. The chQrge is that, these arrangements and transactions between Clark, Hull, .a.nd Herman w.ere apart of a conspiracy, and were a breach of the trust relations existing bet'Yeen the cc;>mplainants and Hull. All these facts being titated in the bill, the. prayer is that this court shall decree that the decre.e -of the St. Louis circuit court, reforming that 4eed. concludes the right heirs of Mrs; Curtis, and operated to vest the full legal title itiMrS. Ourtis antl her trustee, and these complainants claiming under her; or, Uthe court cannot so decree, that it now decree a reformation of that deed, correcting the mis.take,- and making the deed to-day operative as a transfer of the fee, and therefore cutting off all interests in the remainder in the heirs of Mrs. Curtis or :their grantees, or, failing that, that the court decree that the transactions by which Leon L. Hull, with his co-conspirators, obtained the legal title to the remainder were in breach of the fiduciary relations existing between Hull and the complainants, and therefore that the title which they acqUired was acqUired in trust for the

Cunningham « Eliot, for complainants. S. N. Taylor and Joseph S. Laurie, for defendants.

THAYER, District Judge. 1. The court adheres to the views expressed 'in its decision overruling the demurrer to the bill, (39 Fed. Rep. 887, 890,) that the contingent remainder-men are not bound by the decree entered in the St. Louis circuit court on September 16, 1843, in the case ·of Elijah Curtis and Wife v. Wm. Myers et also That suit was instituted for the express purpose of reforming the deed of¥yers and wife, and thereby destroying the estate or expectancy of the contingent remaindermen. The latter persons were entitled to he heard in defense Of theit rights, but, in point of fact, their interest was not represented. Before the final decree was passed, the trust originally created by the deed of William Meyers and wife to Samuel Russell, trustee, bad been executed' by the statute of uses. The trust ended when Mrs. Curtis became discovert. 'Thenceforward she hild a legal estate for life. The' trustee had no further

,52t?

J

vol. 49.

duties to perform i thelife..tenant or remainder-men. It wlls,not:even necessary for him to execute a conveyance to the remainder-men on the death of ,Mite. Curtis. all the statute of uses' had al'ready dIvested him of title. No such conveyance has in fact been 'made by the trustee siricethe termination of Mrs. Curtis' life-estate, .nor it pretended that such a conveyance is or was necessary to perfect the title of the remainder-men. Roberf.8 v. Moseley, 51 Mo. 282; Ware v. Richardson. 3 Md. 505; Bandy v. McKim, 64 Md. 561,4 Atl. Rep. 125; Bacon's Appeal,07 Pa. St. 504; 512; Watkins v. Reynolds, 123 N. Y.2U, 25 N.E. Rep. 322; Richardson v; Btodder, 100 Mass. 530; 2 Washb. Real Prop. 499, 500; Perry /fr\lsts, § 310a. and citations; and see. also, 6, Wall. 458,4:n, and Young v. Bradley, 101 D. S. 782. Curtis before the court, at the time As there was no person but the final decree was entered, who had either a legal or equitable estate in the premises to be affected by the decree. and as the issue to be tried was' 0Ile in which the interest of Mrs. Curtis, the life-tenant, stood opposed to tbtitof the remainrler-men,'it is evident that the remainder-men were in the suit .extinguish their expectancy. It is also ma,nifesi'that there was no real controverily in that suit, for the rpason, no doubt, that there was no person before the eourt having an interest in identir-al with th!!t of the remainder-men, (or having any estate, legal or equitable,)who was interested in making a defense in theirbepalf·. A number been cited by complainants' sel in, support of the propositioq,that the final decree of September 16, 1843, was binding on the remainder-men, but the court is of the opinion that they do not sustain the contention. In the case of Miller v. Railway Co.; 132U. S. 662,10 Sup. Ct. Rep. 206, a decree annulling a will was adjudged to be, conclusive as against certain persons in whose favor the ",ill created an executory devise, for the reason that the executor of the will,an<.l an infant son of the who was II. devisee in fee of the whole estate, had been made parties to the suit. The interests of the executory devisees and the devisee in fee were clearly identical. The former were aceordingly well represented by the devisee in fee and the executor. It may also be admitted that a tenant in tail may well represent succeeding tennnts in tailor contingent remainder-men in all litigation a,fIecting the estate where the interest of the tenant who is made a with that of the persons who are to be ,bound by repreIt may be conceded that an active trustee can represent benetmst, if they are very numerous; and it may :also, he:conceded that, in suits to change. investments nnd in suits lor .p,',a.l',.ti,tion,'.it,',iS generally SU, ,fficient to brin,g before the co,urt all who can parties. Hapl.:ins v. liapl.:ins, 1 Atk. 580,590; Lorillard v. Cos.ter,'.5 Brumett v. MOxon, L. R.20 Eq. 182; Richter v. Jerome, D. ,S.2?3, S Sup. Ct. 106; v. Stewart, S. ,155. See, 1.1,1 130, llcArtlni-r, v. ScoU, 113 D, S. 400.,-403, 5 Sup. Ct. Rep. 652. , B.uttllese decisions fall short of estnblishing the coiltlmtion that the ()f a contingent can be extinguished ,when is no represent hjm but a

tP

CHAFFIN

v.' HaLL.

527

whose trust has been executed und er the statute of uses, and alife-tenant whose estate is to be made an estate in fee by the operation of the expected decree. The doctrine of virtual representation ,'as generally understood and enforced in this country,istlOt applicable to such a case, and will not warrant the cortclusion that the contingent remainder-man is barred of his right: McArthur v. Scott; 113 U. S. 340, 407, 5 Sup. Ct. Rep. 652; Moseley v. Hankinson, 22 S. C.323;Covar v. Cantelou, 25 S. C. '85; Monarque v. Monarque, 80 N. Y. 320; Nodine v. Greenfield, 7' Paige, 544; Johnson v. Jacob, 11 Bush. 646; Downin v. Sprecher, 35 Md. 474. In McArthur v. Scott it was said that "in every case there must be such parties before the' court as to insure a fair trial of the issue in behalf of all." 2. The second controlling question in the case the court decides in favor· of the complainants. That is to Sl1y, the court holds that defendant Hull acquired the interest of the remAinder-men in the property in controversy under such circumstances that' a court of equity must treat him as a constructive trustee. Hull was the confidential agent of com·: plainants' testator for many-years prior to his death; forat least six years prior thereto he had chargeiof the particular property nowin controversy. During that, period heacquiredfullinforrnation of the defect inbis principal's title. He becll.me aware of the fact that it was doubtful whether'his principal had more than an estate per autre vie in theprem-' isesin question; ,that his principal wasarbtio,us to remove the cloud upon the title; and that, in any event, he did not 'intend'to surrenderthe possession of the premises -to the remainder-men; on the death of Mrs. Curtis; until there had boohan adjudication of the validity of their title, inasmuch as it was doubtful whether their title was valid. It cannot be doubted t:hatEdwin Chaffin, the testator, frequently consulted with 'Hull concerning the outsta.nding title,and that Hull was fully advised of his intention to contest its validity if he did not succeed in acquiring it for a fair consideration. The death Mthe testator did not nIter the defendant's relation to the property. He still continued to act as the confidential agent and adviser of the complainants in all matters permining to the property, aild was fully aware of their purpose to contest the title of the remainder-men, if they did not succeed in acquiting it. The fact that Mr. Hull rendered his accounts of rents collected from the property to the local administrator (Mr. Eliot) is of no significance, so far as his relation to the complainants is concerned, for the reason that the administration in this state was merelyanciHary to the administration in Massachusetts. The mere interposition of a local administrator between the defendant and the foreign executors and trustees did not terminate the relation of trust and confidence which existed between them, or lessen the obligatibn of fidelity which the defendant owed to the executors and trustees. The interest of the remainuer-meli was purchased:by the defendant during the existence ofhis agency, and was' asserted against the complainants in amanner which deserves censure. The negotiations for the purchase were conducted by the defendaI1tsecretly; with a view, atfirat ,elltertaimid, of acquiring the outstanding

528

FEDERAL REPORTER,

vol. 49.

interest, and selling it. to the complainants at a profit. The title, when acquired from the remainder-men, was conveyed to a third person for the purpose of concealing the defendant's connection with the transaction. By the intentional neglect of the defendant to discharge his duty to his clients, (if not by his advice and persuasion,) the tenants in possession of the property were induced, during the existence of the agency, to attorn to the person in. whom the outstanding title had become vestellj alld,after the complainants had been thus dispossessed, the defendant, as agent of the COmplainants, and at their request, brought a suit to recover the possession, without advising them that the tenants had in realityattorned to hiPlself as owner of the outstanding title. In the light of these facts, which are not seriously denied, it is sufficient to say thata,Oourt of equity will not allow the defendant to profit by his purchase, but will treat him as holding the title in trustfo,: his principals. The ,,"uthQrities fully warrant the conclusion that an agent in charge of property: will not be pe;rmitte'd to purchase and assert against his principal an outstimding claim or interest, which the principal is desirous of acquiring .&$ a means. of perfecting his title. Even if it be conceded t;11at an. agent may purchase the reversion where his principal is the owner ofan interest that is. clearly only a life-estate, (Kennedy v. Keating, 34. Mp. ·.25.,) yet that rule will not justify an agent in purchasing all outstanding claim of doubtful validity ,which the principal intends to contest if he cannot acquire it by pm:chase, (Michaud v. Girod, 4 How· .503, 558; Ringo v. Binns; Pet. 269; Grurnley v. Webb,44 Mo. 444, Massie .\". Watt8, 6 Cranch, 148; Baker v. Humphrey, 101 U. S. 494, JamiBrm Vi GlaB8cock, 29 Mo. 191; Gardner v. Ogden, 22 N. Y. 327, Perry, 'frusts, § 206, and l;1itations.) 3. The heirs of Samuel :a:erman,. deceased, who are parties to the suit, stand in no more favorable attitude before the court than their codefendant. They are not innocent purchasers for value of the interest of the remainder-men. ThElir ancestor, Samuel Herman, appears tohave entered into an arrangement with the defendant Hull to purchase the interest of the remainder-men for their mutual profit. He was an attorney at law, conducted, all the negotiations leading up to the purchase, and appears to have acted as Hull's adviser, both as to the attitude he should assume towards the complainants, the representations he should. make,and the facts he should conceal from their knowledge. He was also fully aware of Hull's relation to the complainants. Having acted as Hull'!:l adviser in all of the transactions, with full knowledge of hie relatio!lW the complainants, his heirs cannot derive any benefit from the purchf}se, but must be likewise treated as trustees. 4., Finally, the court is of opinion that the complainants, as testamentary trustees under the will of Edwin Chaffin, deceased, have the right to maintain suit for the purpose of charging the defendants as constructive .trustees. point made, that they have no right to prosecute the suit in that aspect, for the reason that the:'\Vill gave them no power to purchase the outstanding claim of the remainder-men, appears to the court to bEl without merit. By the will of Edwin Chaffin, they were

NORTHERN PAC. R. CO. 11. AMACKER.

529

vested with the title to all of the testator's real property, (including the property now in controversy,) to hold upon certain active trusts. They were given power to sell, mortgage, or lease all the property committed to their charge, and to reinvest the proceeds as they deemed advisable. It can hardly be doubted that, under the provisions of the will, they had the right to buy in an outstanding claim that was a cloud upon their title, and that a court of equity or probate would allow them to \ take credit for such an on account of the trust-estate. But, in any event, an agent of the complainants, who has violated his trust, cannot be permitted to make such a defense. It does not lie in his mouth to say that no relief should be granted because the court will probably grant relief upon conditions with which the complainants have no right to comply. It may be that the rents and profits of the property, while the defendants have been in possession, will be fully adequate to reimburse them for their expenditures in purchasing the interest of the remainder-men, without requiring any expenditure on the part of the trustees. 5. A decree will accordingly be entered in favor of the complainants, adjudgiJ;1g that the defendants hold the legal title to the property in controversy in trust for the complainants, and further adjudging that such title be divested out of the' defendants, and vested in the complainants, as trustees under the will of Edwin Chaffin, deceased. A reference will also be ordered to one of the standing masters in .chancery, to take an account of the rents and profits which defendants have received during their occupancy, and in stating such account the defendants Will receive credit for all expenditures on account of taxes, iasuranoo, and iinprovements, as well as for all sums expended in purchasing the interest of the remainder-men.

NORTHERN PAC.

R. Co.

11. AMACKER

tt al.

(Co£rcwtt Ooon Qf AppeaZ8. Ninth OircuU.

January 26, 1899.)

L

QUIETING TrrLB-PLEADING-POSSESSION.

A bill to quiet oomplainant's title to 160 acres of land platted by defendants u IUl add,ition to a oity averred that complainant" is seised tllereof in fee-simple, " that eight lots tbereof were in possession of two defendants, and the balance "is vacant, unimproved .land. " . HeW, that the averments should be construed together, and meant that complainant was seised in law and not in fact, and therefore not in actual possession of the land, and, under Code Civil Proc. Mont. 866, providing that an action may be brought by any person "in possession" to determine adverse claims, that the bill was bad on demurrer·

*

.. Sll4E-MuTIPLICITY 011' SUITS.

Such bill will not be sustained on tbe ground of avoiding a multiplicity of suitt. it appearing that only two defendants are in possession claiming title and exercl.. ing ownership, nor will it be sustained on the ground of the extensive land IJ(llIs_ sious of complainant under a land grant, and the hardship of takinr poaaeasloll 01 all suoh lands before bringing 4;6 1l'eQ.. Rep.2llll, aflI.rme4.

v.49F.no.7-34·