The

Nor can the trustee purchase as agent for another.1 cestui que trust is not estopped to avoid such sales, although he has taken a legacy under the will of the trustee, if such legacy is not a charge upon the trust estate and is not otherwise connected with the trust fund.2 If such sales are avoided, upon a reconveyance the trustee is entitled to receive back all the purchase-money and all other claims which he may have against the estate. And he may purchase of the cestui que trust property not embraced in the trust fund, care being taken that the influence of the relation does not affect the transaction. Sometimes the trustee is allowed, by decrees of sale, to be a bidder for the property at his own auction; in such case the trustee must show the utmost diligence and good faith for the interest of the cestui que trust.5

§ 196. If among the assets of the trust estate there are leases, the trustee cannot renew them in his own name; and, if he renews them in his own name, he must hold them by a constructive trust for the same persons beneficially interested in the old leases. Even if the lessor refuse to renew the lease for the benefit of the cestui que trust, and the trustee takes it in his own name, he is still a constructive trustee, and he must account for all the income and profits. This is on the ground that a trustee should be under no temptations 1 North Baltimore, &c. Association v. Caldwell, 25 Md. 420; James v. James, 55 Ala. 525.

2 Smith v. Townshend, 27 Md. 368. 8 Elliott v. Pool, 6 Jones, Eq. 42. Eldredge v. Smith, 34 Vt. 484.

5 Cadwallader's App. 64 Pa. St. 293; Colgate v. Colgate, 23 N. J. Eq. 372. Keech v. Sandford, commonly called the Rumford Market Case, Sel. Ch. Ca. 61; 1 Lead. Ca. Eq. 36, Eng. and Am. notes; Griffin v. Griffin, 1 Sch. & Lef. 354; Pickering v. Vowles, 1 Bro. Ch. 198; Pierson v. Shore, 1 Atk. 480; Nesbitt v. Tredennick, 1 B. & B. 46; Turner v. Hill, 11 Sim. 14; Whalley v. Whalley, 1 Vern. 484; Holt v. Holt, 1 Ch. Ca. 190; Abney v. Miller, 2 Atk. 597; Killick v. Flexney, 4 Bro. Ch. 161; Luckin v. Rushworth. Finch, 392; Anon. 2 Ch. Ca. 207; Mulvaney v. Dillon, 1 B. & B. 409; Fosbrook v. Balguy, 1 M. & K. 226; Owen v. Williams, Amb. 794; Fitzgibbon v. Scanlan, 1 Dow, 261; Bradford v. Brownjohn, L. R. 3 Ch. 714.

to make any contracts in relation to the trust property, even collaterally, on his own private account.1 The same rule extends to all persons who have only a partial interest in property they shall not take advantage of their situation to renew leases in their own names; as, tenants for life,2 mortgagees,3 devisees subject to debts, legacies, or annuities, joint tenants, or partners; and where there was a mere tenancy at will, it was held that the tenant could not renew in his own name, and deprive the remainder-man of what might come to him. And if, instead of renewing, the trustee or other person sell the right to renew for money, he must account for the price to the persons beneficially interested. agent acting for the trustee renew in his own name. The same rule applies when the trustee of an equity of redemption becomes the purchaser in a foreclosure suit,10 and to the purchase by a trustee of any property, not a part of the trust fund, which has the necessary effect to diminish the trust fund.11

Nor can an

1 Keech v. Sandford, Sel. Ch. Ca. 61; Griffin v. Griffin, 1 Sch. & Lef. 353. 2 Eyre v. Dolphin, 2 B. & B. 290; Rawe v. Chichester, Amb. 719; Coffin v. Fernyhough, 2 Bro. Ch. 291; Taster v. Marriott, Amb. 668; James v. Dean, 11 Ves. 383; 15 Ves. 236; Kempton v. Packman, 7 Ves. 176; Giddings v. Giddings, 3 Russ. 241; Crop v. Norton, 9 Mod. 233; Buckley v. Lanauze, Llo. & Goo. t. Plunk. 327; Tanner v. Elworthy, 4 Beav. 487; Waters v. Bailey, 2 Y. & C. Ch. 218; Yem v. Edwards, 3 K. & J. 564; 1 De G. & J. 598; Brookman v. Hales, 2 V. & B. 45.

3 Rushworth's Case, Freem. 13; Nesbitt v Tredennick, 1 B. & B. 46. Jackson v. Welch, Llo. & Goo. t. Plunk. 346; Winslow v. Tighe, 2 B. & B. 195; Stubbs v. Roth, ib. 548; Webb v. Lugar, 2 Y. & C. 247; Jones Kearney, 1 Conn. & Laws. 34.

v.

5 Palmer v. Young, 1 Vern. 276.

• Fetherstonhaugh v. Fenwick, 17 Ves. 298; Ex parte Grace, 1 Bos. & P. 376; Clegg v. Fishwick, 1 Macn. & G. 294; 299, Am. ed. Perkins, note 1; Clegg v. Edmondson, 8 De G., M. & G. 787.

118.

James v. Dean, 11 Ves. 383; 15 Ves. 236; Re Tottenham, 16 Ired. Ch.

* Owen v. Williams, Amb. 734.

Edwards v. Lewis, 3 Atk. 538.

10 Hubbell v. Medbury, 53 N. Y. 98; Terrett v. Crombie, 6 Lansing, 83. 11 Fulton v. Whitney, 67 N. Y. 548.

§ 197. It is thus seen that the rule against purchasing by trustees, of the cestui que trust, amounts almost to prohibition; for if a trustee purchases the property, and sells it at a profit, he must account for it as a trustee; not because there was any fraud in the transaction, but because it is against the policy of the law to allow such transactions. Nor is it material that there should be an advantage, or profit, arising out of a purchase by the trustee from the cestui que trust. It is not necessary to prove such advantage or profit: it is enough to show the relation and the purchase. The trustee can make no profit from his management of the estate, and he is bound not to put himself in any position where his private interests may conflict with the interests of the cestui que trust.2 In all cases where the trustee purchases the trust property, the cestui que trust may have the purchase set aside and the property resold.3

1 Hawley v. Cramer, 4 Cow. 117; Prevost v. Gratz, 1 Pet. 66, 367; 6 Wheat. 481; Edwards v. Meyrick, 2 Hare, 60; Hamilton v. Wright, 9 Cl. & Fin. 111; Fox v. Mackreth, 2 Bro. Ch. 400; 1 Cox, 310; John v. Bennett, 39 Barb. 237; Kent v. Chalfant, 7 Minn. 487; Tiffany v. Clark, 1 N. Y. Sup. Ct. Add. 9. An administrator who has bid in, in his own name, at a foreclosure of a mortgage belonging to his intestate, under the act authorizing him to do so, holds in trust, and cannot sell without the authority of the court. Rafferty v. Mallory, 3 Bissell, 362. But see Frouberger v. Lewis, 79 N. C. 426, where an exception to the rule is said to be in case the trustee has a personal interest in the property, when he may bid at the sale to protect that interest; but then he ought to obtain the sanction of the court.

2 Ex parte Lacey, 6 Ves. 625; Chesterfield v. Janssen, 2 Ves. 138; Campbell v. Walker, 5 Ves. 678; 13 Ves. 138; Cane v. Allen, 2 Dow, 289; Slade v. Van Vechten, 11 Paige, 21; Davoue v. Fanning, 2 Johns. Ch. 252; Michoud v. Girod, 4 How. 503; Dobson v. Racey, 3 Sandf. 61; Morse v. Royal, 12 Ves. 355; Ex parte James, 8 Ves. 337; Ex parte Bennett, 10 Ves. 381; Saagar v. Wilson, 4 S. & W. 102. Such transactions are fraudulent per se. Nelson v. Hoyvner, 66 Ill. 487. The attorney of the trustee comes equally within the prohibition, and it makes no difference in the application of the rule that a third person has conducted the business and shares in the profits. Cox v. John, 32 Ohio St. 532.

8 Sypher v. McHenry, 18 Io. 232. After the trust is ended and the trustee has made a sale under his power, the trustee, acting in good faith,

§ 198. The cestui que trust alone can avoid such conveyances. They are at his option. And if they are found to be beneficial to him or otherwise, he may compel the trustee to complete a purchase and take the estate and pay the purchase-money.2

4

§ 199. The above rule does not apply to mere naked or dry trustees who practically have no interest in or power over the estate, as trustees to preserve contingent remainders.3 Where the trustee has no duty to perform, as where one is trustee in fee for another in fee, having no authority over the estate, and standing in no relation of influence over the cestu que trust, the person named as trustee may purchase; and if the cestui que trust make all the arrangements for the sale, such as plans, notices, choice of auctioneer, terms and conditions, and the trustee is in no situation to obtain any exclusive information, the court will deal with the contract as with contracts between other parties.5 A mortgagee may purchase of the mortgagor under a decree of foreclosure or otherwise,

may deal with the property and become the owner of what was trust property by purchase or otherwise. Bush v. Shearman, 80 Ill. 160. But the court will carefully see that good faith is observed, and a settlement of guardian's account and conveyance of minor's property on the day he becomes of age, and while he is unadvised of his rights, under the influence and control of others, is not binding, and can only be upheld by clear proof that it is just and equitable. Berkmeyer v. Kellerman, 32 Ohio St. 239. See Sugd. V. & P. (8th Am. ed.) 685 et seq., where the rules are clearly stated by Lord St. Leonards, and the American cases are all collected and arranged by Hon. J. C. Perkins.

1 Rice v. Cleghorn, 21 Ind. 80.

2 Thorp v. McCallum, 1 Gilm. 624; McClure v. Miller, 1 Bail. Ch. 107; Lister v. Lister, 6 Ves. 631; Ex parte Reynolds, 5 Ves. 707; Sanderson v. Walker, 13 Ves. 603; Larco v. Casaneuava, 30 Cal. 560.

3 Parker v. White, 11 Ves. 226; Naylor v. Winch, 1 S. & S. 567; Sutton v. Jones, 15 Ves. 587; Pooley v. Quilter, 4 Drew. 189.

4 Pooley v. Quilter, 4 Drew. 189.

5 Coles v. Trecothick, 9 Ves. 248; Monro v. Allaire, 2 Caine's Ca. 183; Salmon v. Cutts, 4 De G. & Sm. 131.

6 Iddings v. Bruen, 4 Sandf. Ch. 223; Murdoch's Case, 2 Bland, 461; 16

VOL. I.

but if the mortgage contains a power of sale, the mortgagee becomes a trustee of the power of sale for the mortgagor, and neither he nor his agents, attorneys, or auctioneers, can purchase for themselves or others; or, if they do, they become constructive trustees. And so the pledgee of stock cannot buy the same even at the broker's board. Where land is devised to one charged with the payment of an annuity to

Knight v. Majoribanks, 2 Mac. & G. 10; 2 Hall & T. 308; Rhodes v. Sanderson, 36 Cal. 414.

1 Dobson v. Racey, 4 Selden, 216; Waters v. Groom, 11 Cl. & Fin. 684; Mapps v. Sharpe, 32 Ill. 13; Murray v. Vanderbilt, 39 Barb. 140; Blackley ». Fowler, 31 Cal. 326; Olcott v. Tioga R. R. Co. 27 N. Y. 546; Elliott v. Wood, 53 Barb. 285; Thornton v. Jarvin, 43 Mo. 153; Wall v. Town, 45 Ill. 493; Robinson v. Cudwin, 41 Ala. 693; Allen v. Chatfield, 3 Minn. 435; Montague v. Dawes, 14 Allen, 369. See Bailey v. Etna Insurance Co. 10 Allen, 286; Fowle v. Merrill, 10 Allen. 350; Montague v. Dawes, 12 Allen, 397; Smith v. Provin, 4 Allen, 516; Woodlee v. Burch, 43 Mo. 231; Dyer v. Shurtleff, 112 Mass. 165. See Scott v. Mann, 33 Tex. 721. But a second mortgagee may purchase under a power of sale contained in a prior mortgage. Parkinson v. Hanbury, 1 Dr. & Sm. 143; 2 De G., J. & S. 455; Shaw v. Bunney, 34 L. J. Ch. 257; 11 Jur. (N. s.) 99; 2 De G., J. & S. 468; Kirkwood v. Thompson, 11 Jur. (N. s.) 385; 2 De G., J. & S. 613. And it is said that the administrator of the mortgagee may purchase. Woodlee v. Burch, 43 Mo. 231. And so a trustee may buy the equity of redemption in property on which he holds a mortgage as trustee. Britton v. Lewis, 8 Rich. Eq. 271; Eldridge v. Smith, 5 Shaw, 484. The power of sale is a power coupled with an interest, and is irrevocable. Capron v. Attleborough Bk. 11 Gray, 492. And can be executed after the death of the mortgagor. Varnum v. Meserve, 8 Allen, 158; Harnehall v. Orndorff, 35 Md. 340. As to form of notice, see Roche v. Farnsworth, 106 Mass. 509, and remarks of Endicott, J., upon this case in Dyer v. Shurtleff, 112 Mass. 165. Equity will aid the defective execution of a power of sale in a mortgage in favor of a bona fide purchaser who has paid his money for the estate. Beatty v. Clark, 20 Cal. 11; Rowon v. Lamb, 4 Green, 468. The whole matter of power of sale in mortgages, with the authorities, is stated in 1 Sugd. V. & P. 65-68. If a power of sale in a mortgage provides for the payment of the expenses of the sale, counsel fees may be paid. Varnum v. Meserve, 8 Allen, 158. But the mortgagee can receive nothing for his own time and trouble in executing the power. Imboden v. Atkinson, 23 Ark. 622.

2 Maryland Ins. Co. v. Dalrymple, 25 Md. 242; Baltimore Ins. Co. v. Dalrymple, ib. 269; Byron v. Rayner, ib. 424.