Michoud et al. v. Girod et al.

od which would bar a legal estate or right of entry would be permitted to operate in equity as a bar of the equitable estate." Judge Story, in Baker v. Whiting, 3 Sumner's Rep. 486.

It has been seen that no other prescription but that of thirty years would, by the law of Louisiana, bar the action of revendi cation.

Nothing is better settled, in the law of chancery, than that, in cases of fraud, the statute of limitations does not begin to run until a full discovery of the frauds practised. Boone v. Chiles, 10 Peters, 223; Aylward v. Kearney, 2 Ball & Beat. 476; Murray v. Palmer, 2 Sch. & Lef. 486; Hovenden v. Lord Annesley, 2 Sch. & Lef. 632; Bond v. Hopkins, 1 Sch. & Lef. 413; 1 Hovenden on Frauds, 480; Croft v. Adm'rs of Townsend, 3 Dess. 239; Wamburzee v. Kennedy, 4 Dess. 474, 485, 489; Randall v. Errington, 10 Ves. 423.

And vague rumors and reports do not constitute that kind of knowledge of the fraud which will give course to the statute of limitations. Flagg v. Mann, 2 Sumner, 491, 551, 563; Irby . M'Crae, 4 Dess. 431; Randall v. Errington, 10 Ves. 423; 11 Louisiana R. 139; Conway v. Williams's Adm'r, 10 ibid. 568; Tyson v. McGill, 15 ibid. 145.

The acquiescence and ratification of two of the complainants is attempted to be inferred from their receipts. These parties as suredly knew nothing of the frauds of the executors when they signed the receipts, and acted with blind confidence. In equity, as long as the injured party does not know the full extent of his rights, and that the transaction is impeachable, any act done by him subsequently will not amount to a ratification or confirmation. As long as the dependence of the cestui que trust upon the trustee and the fiduciary relation continues, an alleged ratification will always be scrutinized with the utmost jealousy; and a party possessing only imperfect information cannot be held guilty of laches. 1 Story's Equity, § 345; Butler v. Haskell, 4 Dess. 651, 709 (where the principal cases are reviewed); Murray v. Palmer, 2 Sch. & Lef. 486; 1 Hovenden on Frauds, 152, 484; Purcell v. McNamara, 14 Ves. 107, 120; Cole v. Gibbons, 3 P. W. 293; Brooke, Ex'r, v. Gally, 2 Atkyns, 34; Cole v. Gibson, 1 Ves. sen. 507; Taylor v. Rockfort, 2 Ves. sen. 281; Roche ↑. O'Brien, 1 Ball & Beat. 230; Morse v. Royall, 12 Ves. 364; Wood v. Downes, 18 Ves. 120.

Mr. Justice WAYNE delivered the opinion of the court. The conclusions to which we have come in this cause do not require from us any comment upon its facts.

We concur with the learned judge in the Circuit Court, in setting aside the purchases by which Nicholas Girod and Jean Fran çois Girod became the possessors of their testator's entire estate.

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But the morality and policy of the law, as it is administered in courts of equity, induce us to add, that those purchases were fraudulent and void, and may be declared to be so, without any further inquiry, upon the ground that they were made by the intervention of persons who were nominal buyers of the property for the purpose of conveying it to the executors. Such a transaction carries fraud upon the face of it. Lord Hardwicke v. Vernon, 4 Ves. jun. 411; 14 Ves. jun. 504; 2 Bro. C. C. 410, note. It matters not, in such a case, whether the sales are made with or without the sanction of judicial authority, or with ministerial exactness. The rule of equity is, in every code of jurisprudence with which we are acquainted, that a purchase by a trustee or agent of the particular property of which he has the sale, or in which he represents another, whether he has an interest in it or not, interpositam personam, carries fraud on the face of it. In this instance, Laignel and St. Felix were the instruments of the executors. They bid off the property, paid nothing, received ti tles, and conveyed what they nominally bought to the executors. In this way Nicholas Girod became the purchaser of all the testator's property in New Orleans, and himself and his brother Jean Franoçis, the other executor, were joint purchasers of the lands and slaves in the parish of Assumption, and of the testator's lands elsewhere. Jean François, some years afterwards, sold out his half of their joint purchase to Nicholas, for seventy thousand dollars. Thus the latter became the possessor of the entire estate, and held it until he died, to the exclusion of all the other testamentary heirs. Some of those heirs, and the representatives of others of them, now sue the representatives of Nicholas Girod, and seek to set aside the purchases of the executors. They allege that they were fraudulently made, ask that they may have assigned to them their respective portions of the estate, with an account of rents and profits, excepting from their claim for the latter the moiety which had been received by Jean François Girod. The defendants reply, and deny fraud in fact or in intention on the part of the executors. They declare, that the sales were judicially ordered and conducted, that the purchases were rightfully made, for a fair price, at public auction, that the complainants have no standing in a court of equity by reason of their long silence, laches, and acquiescence in the acts of which they complain, and that their rights are barred by lapse of time, under the laws of Louisiana. They also say, that receipts or acquittances were given to the executors by two of the complainants, which are valid and obligatory upon them. The bill and answers, and the arguments of the learned counsel for the appellants, then, involve the question of the right of executors to purchase any part of the estate which they administer, for a fair price, at a public sale judicially ordered and conducted. Remarking, first, that an executor or administra

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Michoud et al. v. Girod et al.

tor is in equity a trustee for heirs, legatees, and creditors, we proceed to give our opinion of the law in respect to purchases of the estate represented by them, and of purchases made by other trustees and agents, and all persons qui negotia aliena gerunt. The rule as to persons incapable of purchasing particular property except under particular restraints, on account of the rules of equity, is compendiously given by Sir Edward Sugden, in his second section of purchases by trustees, agents, &c. It has been adopted by almost every subsequent writer, and we cite the passage with confidence, having verified its correctness by an examination of all the cases cited by him; by an examination, also, of other cases in the English courts, and of cases in the courts of chancery of several of the States in our Union, sustaining the doctrine, to the fullest extent, of the incapability of trustees and agents to purchase particular property, for the sale of which they act representatively, or in whom the title may be for another. He says, "It may be laid down as a general proposition, that trustees, unless they are nominally such to preserve contingent remainders, agents, commissioners of bankrupts, assignees of bankrupts, solicitors to the commission, auctioneers, creditors who have been consulted as to the mode of sale, or any persons who, by their connection with any other person, or by being employed or concerned in his affairs, have acquired a knowledge of his property, are incapable of purchasing such property themselves, except under the restraints which will shortly be mentioned. For if persons having a confidential character were permitted to avail themselves of any knowledge acquired in that capacity, they might be induced to conceal their information, and not to exercise it for the benefit of the persons relying upon their integrity. The characters are inconsistent. Emptor emit quam minimo potest, venditor vendit quam maximo potest.' 2 Sugd. Vendors and Purchasers, 109, London ed., 1824. The principle has been extended to a purchase by an

Trustees. Fox v. Mackreth, 2 Bro. C. C. 400; 4 Bro. P. C (Tomlins's) 258; Hall. Noyes, 3 Bro. C. C. 483, and see 3 Ves. jun. 748; Kellick v. Flexny, 4 Bro. C. C. 161; Whitcote v. Lawrence, 3 Ves. jun. 740; Campbell v. Walker, 5 Ves. jun. 678, and Whitackre v. Whitackre, Sel. Chan. Cases, 13.

Remainders.

See Parks & White, 11 Ves. jun. 226.

Agents.-York Buildings Company v. Mackenzie, 8 Bro. P. C. 42; Lowther v. Lowther, 13 Ves. jun. 95; see Watt v. Grove, 2 Sch. & Lef. 492; Whitcomb v. Minchin, 5 Madd. 91; Woodhouse v. Meredith, 1 Jac. & Walk. 204.

Commissioners of Bankrupts. - Ex parte Bennet, 10 Ves jun. 381; Ex parte Dumbell, Aug. 13, 1806, Mont., notes, 33, cited; Ex parte Harrison, 1 Buck, 17. Assignees of Bankrupts.· Ex parte Reynolds, 5 Ves. jun 707; Ex parte Lacey, 6 Ves. jun. 625; Ex parte Bage, 4 Madd. 459; Ex parte Badcock, 1'Mont. &

Mac. 231.

Solicitors to the Commission. - Owen 7. Foulkes, 6 Ves. jun. 630, note b; Ex parte Linwood; Ex parte Churchill, 8 Ves jun. 343, cited; Ex parte Bennet, 10 Ves. jun. 381; Ex parte Dumbell, Aug. 13, 1806, Mont., notes, cited; see 12 Ves. jun. 372; 3 Mer. 200.

Auctioneers, creditors consulted as to mode of sale, or any persons who by their connection with, or concern in, the affairs have acquired a knowledge, &c. See Ex parte Hughes, 6 Ves. jun. 617; Coles v. Trecothick, 9 Ves. jun. 234; 1 Smith's Rep. 233; Oliver v. Court, 8 Price, 127.

Michoud et al. v. Girod et al.

Bellew v.

attorney from his client whilst the relation subsists. Russell, 1 Ball & Beatty, 96; 9 Ves. jun. 296; 13 Ves. jun. 133. As to gifts. Lord Selsey v. Rhoades, 2 Sim. & Stu. 41; Williams v. Llewellyn, 2 You. & Jer. 68; Champion v. Rigby, 1 Russ. & Myl. 539. Nor can an arbitrator buy up the unascertained claims of any of the parties to the reference. Blennerhasset v. Day, 2 Ball & Beatty, 116; Cane v. Lord Allen, 2 Dow, 289. Where a person cannot purchase the estate himself, he cannot buy it as agent for another. 9 Ves. jun. 248; Ex parte Bennet, 10 Ves. jun. 381.

The general rule stands upon our great moral obligation to refrain from placing ourselves in relations which ordinarily excite a conflict between self-interest and integrity. It restrains all agents, public and private; but the value of the prohibition is most felt, and its application is more frequent, in the private relations in which the vendor and purchaser may stand towards each other. The disability to purchase is a consequence of that relation between them which imposes on the one a duty to protect the interest of the other, from the faithful discharge of which duty his own personal interest may withdraw him. In this conflict of interest, the law wisely interposes. It acts not on the possibility, that, in some cases, the sense of that duty may prevail over the motives of selfinterest, but it provides against the probability in many cases, and the danger in all cases, that the dictates of self-interest will exercise a predominant influence, and supersede that of duty. It there fore prohibits a party from purchasing on his own account that which his duty or trust requires him to sell on account of another, and from purchasing on account of another that which he sells on his own account. In effect, he is not allowed to unite the two opposite characters of buyer and seller, because his interests, when he is the seller or buyer on his own account, are directly conflicting with those of the person on whose account he buys or sells. 2 Burge's Comm. 459. Cases have been frequently decided in the courts of Louisiana, which maintain the rule in all its integrity. In Pennsylvania it is enforced, though, on looking over its reports, we find a case, but unsustained by any reference to adjudged cases, in which it is said that an executor might buy at a sale of the testator's effects, if he did so for a fair price, at public auction. In Maryland, the courts of chancery carry out the rule to the fullest extent of the principles upon which it is founded, and as they have just been stated by us. In the case of Wormley v. Wormley, 8 Wheat. 421, this court declared, that no rule is better settled, than that a trustee cannot become the purchaser of the trust estate. He cannot be, at the same time, vendor and vendee. It had been previously ruled, in the case of Prevost v. Gratz, 6 Wheat. 481, and this court afterwards, in Ringo et al. v. Binns et al., reaffirmed the rule, by its application to an agent who had bought land to which

Michoud et al. o. Girod et al.

his principal was in equity entitled. It said, "The proposition laid down by this court is, that if an agent discovers a defect in the title of his principal to land, he cannot misuse it to acquire a title for himself; and if he does, that he will be held as a trustee holding for his principal." 10 Pet. 269, 281. See also the case of Oliver v. Piatt, 3 How. 333. It is also affirmed, in Church v. Marine Insurance Company, 1 Mason, 341, that an agent or trustee cannot, directly or indirectly, become the purchaser of the trust property which is confided to his care. We scarcely need add, that a purchase by a trustee of his cestui que trust, sui juris, provided it is deliberately agreed or understood between them that the relation shall be considered as dissolved, "and there is a clear contract, ascertained to be such, after a jealous and scrupulous examination of all the circumstances, and it is clear that the cestui que trust intended that the trustee should buy, and there is no fraud, no concealment, and no advantage taken by the trustee of information acquired by him as trustee," will be sustained in a court of equity. But it is difficult to make out such a case, where the exception is taken, especially when there is any inadequacy of price, or any inequality in the bargain. Coles v. Trecothick, 9 Ves. 246; Fox v. Mackreth, 2 Bro. Ch. R. 400; Gibson v. Jeyes, 6 Ves. 277; Whichcote v. Lawrence, 3 Ves. 740; Campbell v. Walker, 5 Ves. 678; Ayliffe v. Murray, 2 Atk. 59. And therefore, if a trustee, though strictly honest, should buy for himself an estate from his cestui que trust, and then should sell it for more, according to the rules of a court of equity, from general policy, and not from any peculiar imputation of fraud, he would be held still to remain a trustee to all intents and purposes, and not be permitted to sell to or for himself. 1 Story's Com. on Equity (2d ed.) 317; Fox v. Mackreth, 2 Bro. Ch. R. 400 ; S. C., 2 Cox, 320, 327.

In New York there has been no relaxation of it, since the decision in the case of Davoue v. Fanning, 2 Johns. Ch. 252. It is a critical and able review of the doctrine, as it had been applied by the English courts of chancery from an early day, and has been received, with very few exceptions, by our State chancery courts, as altogether putting the rule upon its proper footing. Indeed, it is not too much to say, that it has secured the triumph of the rule over all qualifications and relaxations of it in the United States, to the same extent that had been achieved for it in England by that great chancellor, Lord Eldon. Davoue v. Fanning was the case of an executor for whose wife a purchase had been made by one Hedden, at public auction, bona fide, for a fair price, of a part of the estate which Fanning administered, and the prayer of the bill was, that the purchase might be set aside, and the premises resold. The case was examined with a special reference to the right of an executor to buy any part of the estate of his testator. And it was affirmed, and we think rightly, that if a trustee, or person acting for others, sells the