Pairo v. Vickery

Bartol, C. J., delivered the opinion of the Court. The facts of this case as disclosed by the record, so far as it appears material to state them, are as follows: On the 20th day of January, 1865, Samuel O. Edes made his last will; by the tenth clause of which ho devised “to Thomas J. Carson, his heirs and personal representatives, all his estate, effects and property real, ⁴⁸² personal and mixed, wheresoever situate, in trust and confidence, for the objects and purposes in this clause of his will declared concerning the same; that is to say: that during the natural life of his mother, his estate, and property of every kind, (excepting the money and property devised and bequeathed by the preceding provisions of his will,) shall be preserved and kept together by his executor,, hereinafter appointed; who was thereby fully authorized to collect and receive all the income, rents and profits of the same; and he thereby directed that his executor, out of said income, rents and profits, should pay to ■his (testator’s) mother, the sum of two thousand dollars per annum, so long as she shall live, in quarterly instalments, &c., accounting from the day of his decease.” The eleventh clause of his will was as follows : “Immediately after the decease of my said mother, I will and devise all the-rest and residue of my property, real, personal, and mixed, not hereinbefore devised and bequeathed, to my brother Richard Andrew Edes, my sister Mary Jane Pairo, and my sister Elizabeth "W. Long, in equal proportions, share and share alike, to them and each of them, their heirs and personal representatives ; excepting only, and provided, that if my said brother shall marry within three years after our mother’s death, then and in that case, I bequeath to him the sum of-three thousand dollars, to he allowed to him out of the principal amount and interest'due me on certain promissory notes of my said-brother, now held by me,-(and which are not to he collected until- a general division is made of iny estate,) over and above what, by this section, is devised to my two sisters aforesaid. The property and money devised and bequeathed by this section to my said brother and sisters, are to vest in them, discharged from the trust created in item ten of this will.” He appointed Thomas J. Carson executor, who took out letters testamentary on the 26th day of January, 1865. ⁴⁸³ At that time Mrs. Pairo, the appellant, who was one of the devisees in remainder, was absent from the State, having been sent South by the military authorities in 1863. She returned to her home in Baltimore in April, 1885 ; and on the 27th day of the same month executed and delivered to Thomas J. Carson the mortgage which she now, by her bill of complaint, prays to have annulled and set aside.

The mortgage, in which her husband, Charles W. Pairo, united, conveyed to Thomas J. Carson, his heirs, executors, &c., “ all the estate and interest, right, title, property, claim and demand, whatsoever, of Pairo and wile, and each of. them, of, in, into and out of all the estate, real, personal and mixed, whereof the late Samuel C. Edes, died seized, or possessed, or was in any manner entitled to, interested in, or could claim.” The consideration stated in the mortgage was a debt of $16,864.86, recited therein, to be due and owing by Chas. W. Pairo to Thomas J. Carson; and its purpose was to secure the payment thereof with interest from the 24th day of April, 1865. By the condition in the mortgage the debt and interest were payable on demand; and the instrument contained an assent to the passing of a decree for the sale of the property. The appellant charges in her bill of complaint that the mortgage was extorted from her by Carson, by cruelty, and by means of threats that, unless his demands were complied with, he would dismiss her husband from his place in his (Carson’s) banking house; and destroy his business position and prospects.

These grave charges have not been supported by legal proof; the testimony of Mrs. Long on that subject, being merely a repetition of the statements made to her by the appellant herself, are of course, inadmissible. We do not consider it necessary to advert to the state of mental excitement under which Mrs. Pairo was suffer ⁴⁸⁴ ing at the time the mortgage was executed, as described in the testimony of Mrs. Long; and which has been referred'to by her counsel as furnishing ground for impeaching the mortgage. In our opinion, there is a fatal objection to its validity, growing out of the fiduciary relation of Carson, with respect to the mortgagor, and to the property conveyed, which existed at the time of the mortgage, and which, under the circumstances of this case, entitles the appellant to equitable relief. Under the will of Samuel O. Edes, Carson was charged with the two-fold duty of trustee and executor.

The will vested in him the legal estate for the purposes of the trusts; it required him to keep the property together during the life of testator’s mother, to collect the income, rents and profits, and out of them to pay Mrs.'Edes her annuity of $2,000 per annum ; and at her death, to turn over the whole estate, real and personal, to the legatees and devisees in remainder, with the accumulations unim-. paired, except by the payment of the annuity. The appellant, as one of.the devisees in remainder, had a vested interest or .equitable estate under the will, which could not come into possession until after the death of Mrs. Edes, the life annuitant. During her life the legal estate was held by Carson, as trustee both for the life annuitant and the devisees in remainder, who were interested in the faithful performance of his duties, both as trustee and executor, When the mortgage was executed Mrs. Edes was living, and Carson held the property as trustee. The transaction, therefore, falls within the established rules of equity, which govern dealings between trustees and cestuis que trust, with respect to the trust property, and conveyances of the same to the trustee.

Upon principles of public policy, for the prevention of fraud, and to remove from trustees all temptation to violate their duties, by securing to themselves profit and ⁴⁸⁵ advantage at the expense of those whose property and interests are confided to their charge, they are not allowed to purchase the property from the cestuis que trust, or acquire rights therein which may bring their personal interests in conflict with the discharge of their official duties. It has been held in numerous cases, and is well settled, that while such transactions are not absolutely void, they are discountenanced by Courts,of Equity; the presumption is against their validity, and they are never-upheld unless it clearly appear .that they are free from all taint or suspicion of unfairness. The onus of showing their perfect bona Jides is cast upon the party who sets them up, and not upon the cestuis que trust who assails them. In support of this proposition many authorities might be cited; but it is sufficient to refer to Smith vs. Townsend, 27 Md., 388 , and the authorities there cited, and those collected in Hill on Trustees, 247, note 2, (4th Ed.,) and in 1 Story’s Eq. secs. 321, 322, and notes.

In view of this well settled rule, it seems to us that the mortgage in this case cannot be supported. It has been arguéd by the appellees’ counsel, that being amere charge or security, and not an absolute conveyance of the property, it does not fall within the rule above stated. But we think, when we look at the facts and circumstances as disclosed by the record, and apparent on the face of the mortgage, that there is no ground for such a'distinction. The effect of the instrument was to divest Mrs. Pairo of her whole interest in the trust estate as completely as if., it had been an absolute conveyance.

It is stated in the answer that the whole property conveyed is insufficient to pay the debt it was intended to secure ; the equity of redemption therefore was of no substantial value. Pairo, the debtor, was insolvent; the debt was by the terms of the mortgage payable on demand, and was liable to be foreclosed immediately. Certainly no more effectual instrument could have been devised to divest the appel ⁴⁸⁶ lant of her whole trust estate. It is, therefore, obnoxious to the same objection, as if it had been an absolute conveyance ; and under the rule we have stated will not be supported as valid in a Court of Equity, in the absence of complete and satisfactory proof on the part of the mortgagee, or those.claiming under him, that it was freely and voluntarily made by the appellant, with full information as to her rights, and that no unfair advantage was taken of her condition and circumstances.

We consider it perfectly clear upon the authorities and for the reasons