.532
FEDERA.L REPORTER.
mined, an accqunt which follows should cover everything within it to the time of taking the,account. Co. v. Goodyear, 9 Wall. 788. Of course, any qnestion ,as to what is or not within the scope of the accounting decreed may be made before the master, and taken before the courtl according to the rules and practice in such cases.
SIMMONS,
Trustee, v.
BA.YNARD
and others.
lJ. South. Oa.rolina.
'I.
PARTITION-DECREE-CONCLUSIVENESS-ApPEARANCE.
In a sUitlor'partition. all the parties interested were made parties, either plaintiffs or defendants, and all tile were Many of the defendants tiled no answer. They were all represented by counsel, bl,lt no formal was entered, and no notice'of appearance' filed. These attorneys'consented in writing tOl'all orders, without WhOlIl they consented. 'Held, that the irregulfl,rity did, not relieve the parties ,from being bound. ' .. ' , '. . " "'. ." Certain,mirrors were served. but no petition for (Su.ardlan ail litem WlliS .pre· sented, and no appointment was made. 13ut ;fillld an a,nswer, as g-uardian ad litem, for them, with a formal ,consent to act as such Held, since in 'equIty iIifantsara treated as wards of the courts, the decree binds them.
2.
'SAME-iNFANTS.
8.
TRUST-SALE UNDER-Brr.L TO CONFIRM.
Plaintiff purchased at the sale under. the former proceedings in partition as a trustee of all the parties. In attempting to sell the property in the execution of his trust, he met with a grave doubt and a denial of the quantity of land conveyed to him, ancl itwas alleged that the proceedings under which he held were irregular and invalid. The validity of the proceedings depended on matters not of record. Held, that he was entitled to obtain authority to convey from the courts by a suit to confirm Iiis sale, ,to 'which 'all interested in the sale were made parties. · " . ', . '
4. COSTS-PARTITION.
These proceedings. having been caused by the failtrre of the record to disclose the parties represented by theattbrnilYB who 'llippea;red,and in partition it beiI;lg the duty of aU the parties to see that the record is perfect, tll-e fund must bear the costs. . POWER OF SALE"':-ExERCISE OF. '
t5.
The trustee Was empowered to seU:at private sale, before Navember 5, 1883, for nbt less; than, $6,000; and on November 5.1883, at public sahl in Charleston, South Carolina, he sold on" that day, but. the purchaser failed to with his bid. Instead of compelling him to take' the title, he advertised and wId again to one who sold to 1. T. H. and 1. F. H., parties to this proceeding. Held, that the first sale exhausted thE! power, so that the second sale was v o i d . , '. LIMITATION OF ACTIONS-CONCEALMENT-FRAUD-BANKRUP'rCy.
6.
W., one of the parties interested in the lands, became a bankrupt in 1868. His schedule failed to mention his interest therein.. Tbe. assignee took no steps to correct the omission. In 1876, W. gave a deed to his fatber as trustee. The trustee took possession, and the deed Was recorded. Held, that this was not such a fraud as prevented the statute oUimitations.from running, since the essential element of concealment was wanting, the deed having lJeen placed on record.! '. ,
lAs to the effect of fraud and fraudulent concealment on the running of the statute, llee Manufacturers' Nat. Bank v. Perry. (Mass.) n N·. E. Rep.8i. '
V. BA,:YN1\.RD.
533
In Equity. Bill to \lOll firm sale ,by. trustee, and general relief. Certain plantations, (Yonges island and Anna Vista,) held in oommon by adults and infants, were sold, for partition under an order of court. They were bid in by W. C. Simmons, who acted in the intlJrest of all parties to the suit, at the request of the adults. His purchase was reported by the special master, and was confirmed by the court on certain conditions. Thereupon a conveyance of the lands was executed to 'W.. C. Simmons, as trustee, among other things in trust to sell. He did sell, and the purchaser failed to comply with his bid. Some months afterwards he sold again. The purchaser at the second sale raised certain objections,amongother things as to the validity of the proceedings qnder which the trustee was appointed. and held. The bill was filed to remove these doubts. Barkr:r, Gilliland & .JiIitz Simons, for corpplainant. H. E. Young, Inglesby.&.il{iller, Smythe & Lee, anq,T. M. Mordecai, ,for ' qefendants.. SIMONTON,J. The first question which presents. in this case· is as. to the validity and effect of.the proceedipgs in .cause of Baynard v· MikeU.., All of the parties inteJ,'ested .in the p:r<lp,ertY' sought to be partitioned. were mentioned in these proceedings, either as pl"intiffs or defendants. All oOhe defendants, adults and infa,nts, were served with subprena, the lat41r:rpersonally. Of ,the adults so served, E. S. Mikell, trustee, Thomas. S.. Waring, Josephine, G. Waring, and Mrs,. Sarah G. Simn,1Ous, perhaps otbers, filed ]no answer to the bUl.They were all represellted by attorneys, but no formal appearance W/lsen,terad, and no notice of appearance was filed. These attorneys. consentea in writing to all orders in the cause, without stating for whom they consented. The proceedings were irregular. Are When a bill is filed, and defendants are served" thecolllplainant is entitled to an answer, for he. has a right to discovery. This right, however,he D;lRy waive. So,a180, the defendant has a right to answer,if he es:ercise. it in proper tim,e. But. he or.waj'le the exercise of this right. In this case the defendants dill not, answer. The complainants made no objections. When the orders were taken, the parties in person, or their .attorneys in court, assented to, the orders passen. They are. bound. (Japel v. Butler, 2 Sim. & S. (1 Cond.E. C. 457;) Finley 17 S. C.440. . All of the minors but th!3 Grace infa,Ijlts, were represented by guardians ·00 litem, regularly appointed and answering.. No petition for litem for the Graces was filed, and none was appointed by the .court. Their father, James W.Grace, filed an answer as guardian adlitem for them, with a formal consent to act as such guardian. This is irregular. bouna ? The subpama made them p!lrties, and brought Are these them before.lhe court. . . . "Whenever [says Story, Eq,. Jur. § 1352] a suit is instituted in the oourt .of equity relative to the person or property of an infant, although he is not under any geij,eral guardian appointed by the court, I
584
rEDERA!J REPORTER.
as a ward of the court, and as being under its· special cognizance and protection." The formal answer of the guardian ad litem, submitting the rights of the minor to the protection of the court, is the practical recognition of this doctrine. As soon as the court is judicially informed that the parties are infants, their are protected by the court, and the decree binds them. In Bulow Y. Buckner, Rich. Eq. 401, realty in which infants were interested was sold, and the sale sustained, although the infants themselves were not before the court. ;In Bulow v. Witte, 3 S. C. 318, the infants were not served with process in proceedings involving their rights to realty, yet they were held to be bound, because the attention of the court was called to the fact, and on its motion a guardian ad litem had been appointed for them; thatis to sa.y, the court saw that they were represented. In the case we are examininp; the father of the infants came into court, called the attention of the court to the minority of his children, and submitted their rights to its protection; if, as is said in Bulow v. Witte, "the sole purpose of the service of the subprena on infants is to attract the 'attention of their friends, that a due regard may be had to their rights, and that the mind of the court may be directed to them." Bulow v. Witte, aupra, 321. All of this was accomplished. The father was notified of their righ11s. He acted on the notification.· He craved for them in formal answer the protection of the court. As between the parties to that suit, adults and minors, the proceedings are binding. But, if this be so, it may be asked, where is the necessity for the present proceedings? W. C. Simmons, the complainant in this case, was but a nominal party in the first case. He was selected to buy in the property in the interest oiall the parties thereto, hold, lease, and sell the same. He accepted the trust, paid the cash required, and took a conveyance of the property in which the trusts were distinctly declared. Of course he was bound to protect his title. In an attempt to sell the property in the strict exercise of his power, he met with a grave doubt, and denial of the quantity of land conveyed to him. In attempting to get possession of the property, he met with resistance which was so pronounced as to require the aid of this court. He held in himself the entire legal title. The was not and could not have been executed in him, for certain specific charges were laid on the property in his hands, and certain duties were to be performed by him. It was alleged that the proceedings under which he held were irregular and invalid. As we have seen, this is not so, as between the parties. But the validity oithe proceedings depends on matters then not of record, but existing in parol. The defendants who had not answered were represented by coun!'el. The record does not show whom these gentlemen rep!esented. Third parties oould very well refuse to treat as final the result of these proceedings, or accept title under them, 80 long as proof of these important points was in parol only. Thus we see that he held the property upon certain active
SIMMONS V. BAYNARD.
535
trusts. He could not convey, even if he had the power to convey, be· cause his authority to convey depended upon mattere not of record. He could not fulfill his trusts without conveying, and, if he had no power to convey, he must get such power from this court. In every event, therefore, these proceedings were necessary. Upon whom must the cost of the proceedings be cast? One essential irregularity of the former case was the failure of parties to enter regular appearance, and to answer. In assenting to the orders, their attorneys did not state for whom they consented. ,No objection was taken to this by any party in the case. It is the duty of every party, in a cause for partition, to see to it that, in every step taken, there should be full protection to the title, to be made under the proceedings. Whatever may be the decree, whether by way of allotment or partition, or for a sale, the successful conclusion, in whiCh every party is interested, depends upon the validity and regularity.of each step. If, therefore, anyone party fail to enter an appearance, or to file his answer, or to put on record his consent, if .this be it is the duty of every other party to see that .the omission is corrected in proper time. If he does not do so, -does not exercise his right to do so,-hemust share the result. Itwould not be proper to make any discrimination between the parties. The fund must. ,bear the costs. The court next decide a question of fact, as to the quantity of land coV'ared by the deed, and then go on. We ecme now to the most important question in this case.'rhe tee sold the" plantations, .Yonges island and Anna Vista, on fifth Npvember, 1883, at public auction, in the city of Charleston" to H.E. Yo.v.J;lg, attorney. . The purchaser declined to accept. the title of Yonges island, because the parties in the cause denied that a tract called "13ig ·Fieldl'J', was sold with it. Instead of compelling, him to take the title, ·W. C. Simmons, trustee, again advertised the plantation for sale, declaring in the advertisement that it included Big Field; BAd on eighth May, 1884,sold it at auction, in Charleston. One Bart ,was the purchaser' at this sale, and he has transferred his bid to I. T. and II F. Hart, who are parties hereto. The Harts, in the exami,qation of the title, found certain objections, and One of the purposes of these proceedingsis to cure these. ,'irhequestion, however, is, did the. have the power to make this second sale? As we have seen, the court confirmed the report of the· master recoIPmend1ng that thepurcnase made by Simmons, in the interest of all the pa.rties to the suit, be recognized and approved. Thereupon the master made conveyance of the to Siinmons in fee, he paying the costs of the case, 81)me 8350. 'I'he trusts ·of the deed are as follows: "To hold the same .charged with the payment of. such costs and counsel feElS as are paid out.of the cash, as above providep" and, after such ment, for the use, benefit, and behoof of the parties reported by the master in ·the maip. report in the .case aforesaid, as entitled to the said property in the . proportions therein specified, ':with power to the said W. C. Simmons to lease out or sell the said property- foL' the benefit of the said oestuisque trl1l8tent: provided,;,that the said property shall not be sold at private sale
536
FEDERAL REPORTER.
thousand ($6,000) dollars, and if not so sold by tbe sale's day in Noveml r. 1883, then to besold on that day, ,at public outcry, in the city of .Charlestl n, , to the highest bidder." This is nota: mere naked power. It is a trnst accompanied by a power. Powers, as Chief.Justice WILMOT observed, are never imperative. They "ltave the act to be done at the will of the party to whom they are given. Trusts are always imperative, and are obligatory upon the conscience of the party intru:"ted." Stanley v. Colt, 5 Wall. 168. has a power to lease and sell; but this Under the trust, the power, expressed in these general terms, is limited. He has no discretion, except as to the terms of$ale. If he sells at private sale, he must get at least $6,,000. He canaotsell at private sale after sale's day in November.' If he fails to get the price by the said day, on that day he must sell atipublic outcry, in the city of Charleston.' This qualifica.tion is n(}t repugnant to 'the powerQf sale given in the deed; nor is it inr consistent with it. It explains how, when, under what 'restrictions, the power is to be exercised. 'The proviso works no forfeiture· of the estate of the trustee. Notwithstanding any omission orfa:ilure to sell on the day named,he would still bell, trustee to hold, etc.: To use the language , ofthe case'above quoted, "itexpr.esses simply a limitation in the The trustee then had 'power to :&3eli at private sale until the sale's day in November, and, if not so sold, then to sell on that day at public outNo one will deny that he could sell only cry, in the city of at public' outcry, and that the only place of sale was the City of Charleston. Why,then, is notthe other provision) "sellon that day," equally peremptory? It will be observed that he did sell on that daYi that he completed all that he had to do; and that he had a purohaser under a completed sale. If, notwithstanding this, he could sell again on some other day,he must have the power, either from the words of the instrument creating his office, or from the plain intendment of the deed. There are no express words; , Does this intention appear in the deed? He was selected and confirmed trustee; as the substitute or representative of all the' parties in interest, ana the first purpose was that he should hold the property charged with certain claims for the use, benefit, and behoof of these parties. That was the main purpose. There was a superadded qualified power of sale,.....-not to sell at discretion, but, if the sale was private, he was limited in price; if he sold at public sale, he was to 'time,-a time and day of which the deed advertised all limited parties. In RichardJJ:v. Holmes; 18 Row. 147, (on which case the purchaser lays great stress,) the trustee had authority to sell at public auction to the highest bidder, or at private sale for cash or credit, according to his discretion, after 'having given at least 30 days' notice 'by advertisement. lIe put up the property, but did not sell. He adjourned the sale. The court held that he could. do this under the ct1stbm of auction. "A sale regularly adjourned, so as to give notice to altpersons present ortbe time and place to which it is adjourned, is, when made, in effect the sale of which previous notice has been given." This is not the case
as
SIM1>WNS 'V. BAYNARD.
537
here. 'The sale in November, and the subsequent sale, cannot, even by the straining of language, be the same sale.. In Olcott v. Bynum, 17 Wall. 46, the trustee had a full and unlimited power to sell at his discretion. In Markey v. Langley, 92 U. S. 148, the sale was made under order. of court. In Creighton v. Pringle, 3 S. C. 95, property was held under marriage; settlement by trustees. One of the things declared of this property was that the trustee could sell or dispose of the property settled on the written request of the husband and wife, or the survivor of tr.em, and hold the proceeds subject to the same declarations and limitations, etc. The trustees sold on request of the husband and wife. The question was, this: Were they, in all subsequent changes of investment, s.llbjectto the condition, or was it exhausted by its tirste:x;ercise? not wp,ether,tpe power of the trustees was exhausted. The court held that the consent of the cestuis que truat was necessary in changes of investment. If the property reinvested was to be held to the same uses, intents, trusts, and purposes, and subject to the same declarations and limitations, this conclusion was inevitable. . An examination of the cases quoted by the counsel for the purchasers has not enabled me to discover in which way the trustee under this deed can be excepted from the rule. "A power of sale, like all other'powers, can be exercised only in the mode, and upon the ,exact conditions, terms, and occasions, prescribed in the instrument of trust." Perry, Trusts.,§ 783. "The generaf rille'is rigidlya,dhered to; that be executecl.only in the mode, and at the and upon the prescribed in the instrument creating the power or the trust."·,perry, Trusts, § 511. The power of sale permitted in the deedoftrU'Stwasexhausted by the sale on fifth November, 1883; and could n6t 'be again except under decree. But one, :other question remains. Waring became a bankrupt',in 1868. His schedule did not contain any mention of his interest,-a vested inthese lands. No steps were taken by the assignee to correct this omission. Without doubt, he knew nothing about it; nor 'Was there anything to call his attention to it. But, in 1876, T. S. Waring executed and delivered a deed to his father, as trustee, in consideration of $1,000. By this deed he conveyed his.interest in these lands iufee, in trust for Josephine G. Waring, for life, remainder in fee to his two daughters. The trustee had possession. The deed was placed on record in the proper office. It gave notice to the world of an adverse claim. It also gave a right of action to the assignee against the claimant. Under ordinary circumstances, a failure to prosecute this right would bar the assignee after the lapse of two years. Rev. St. U. S. 5057. Bailey v. Glove:r, 21 Wall. 346. . This was a fraud upon the assigned estate, and it is maintained that the statute did not begin to run until discovery of the fraud j that is to say, until assignee was actually informed of it. The geneJiaJ. ,doctrine is recognized in this court. Baileyv.Gwve:r, 8Upra. The rule,
538
FEDERAl" REPORTEH.
a party to avail himself of the statute when, by his own fraud, he has pre· vented the other party from knowing or asserting his rights within the pre--scribed period. "
however, proceeds upon the idea of concealment by the party setting up the statute, and seeking an advantage therefrom. Massachusetts Tumpike Co. v. Field, 3 Mass. 201. The rule, and the reason for the rule, are stated forcibly and tersely in Beattie v. Pool, 13 S. C. 383: "It has been placed on the ground that it would be against conscience for
In this case the parties now claiming-that is to say, the trustee, and those for whom he held-made no concealment. They put their deed on record, and published their claim. The rule does not apply. The assignee is barred by the statute. Let a decree be entered in accordance with this opinion.
CHANDLER, Receiver,
11.
BACON and others.
(No. 1,992.) (No. 1,790.)
BROWNE v. NATIONAl, COLOR PRINTING Co. (Oirouit Oourt,
n. Ma88aoku8etta.
March 28, 1887.)
1.
ColtPORATIO!'fIl-PROMOTERS-STOCK-F:aAUD.
I.
B. and C., as promoters of a projected corporation, negotiated an agreement between the' owners of cerlainpatents, and the corporation to be formed, by which B. and C. were to receive 8,750 shares of the capital stock of the new company, less 625 shares, which they were to assign to P. B. and C. o1Iered the public an option to take stock in the new company, disclosing the purchase of the patents, and that a portion of the stock was to be issued to the former owners in part payment, but not informing purchasers that they were to have jltock on any different terms or conditions. It was further agreed that B. should be president and C. treasurer of the corporation, and they were so elected, and placed a large amount of stock at seven dollars a share. obtaining their own stock for nothing. Held that, as promoters of the new com· pany. they occupied a fiduciary relation towards It, and had no right to de· rive any advantage over other stockholders without a full and fair dis· closure of the transaction, and that any secret profits made must be refunded to the company
SAME-RIGHTS OF CORPORATION.
In such a case, the corporation 'has aright to elect (1) whether the shares should be transferred back to it; or, (2) if the shares have been sold, their entire profits made by the sale should be turned over; or (3) that it should be paid the sU,m lost by reason of being deprived of the right to place such shares with other persons at seven dollars per share.
SAME-PARTNERSIIIP.
B. and C., as promoters of the new corporation, signed the secret agreement as parties of the second part. and acted in concert to promote a common purpose for their common benefit. they became jointly and severally liable to account, as partners, whatever may h-ave been their private intention.
In Equity. Intervening petition of E., ErnestCaduc. R. M. Mor86 and A. D. Chandler, for Chandler t receiver. J. R. Bullard, for Bacon and Caduc.