Although a bank by statute, or the trustees, on the expiration
thereof, who liquidate its affairs, may be deprived of power to
take or hold real estate, this does not prevent either's making an
arrangement through the medium of a trustee, by which, without ever
having a legal title,
Page 86 U. S. 33
control, or ownership of such estate, they yet secure a debt for
which they had a lien on such estate, and have the estate sold so
as to pay the debt.
2. A bill against a trustee for an account dismissed on a case
stated.
In the year 1844, the charter of the Bank of Washington, in the
city of that name, being about to expire, and its affairs to pass
into the hands of William Gunton, its late president, and certain
other persons as trustees, to wind them up to the best advantage,
and the bank having a debt of some amount due to it from Daniel
Carroll, for which it had a lien on several lots in Washington
already previously encumbered, Gunton, in behalf of the bank,
requested a certain William Fisher there, with whom he was on terms
of much intimacy, to become the purchaser, as agent of the bank, of
the lots; Gunton promising to save him from any loss. Fisher
consented to become the purchaser in the way mentioned. The bank
accordingly furnished the requisite funds, about $6,065.84, to
Fisher, who gave his note therefor, and he bought the lots, a
conveyance of them being made to him. Subsequently to this, the
charter of the bank having now expired, Fisher and wife made a
conveyance of them by deed to Gunton. This conveyance was declared
to be in trust to secure the payment of the note of William Fisher
for $6,065.84 at sixty days, payable to his own order; and it
authorized a sale of the property for that purpose, and directed
the trustee to pay the balance, if there should be any, as the
grantor might by further instrument in writing direct. Fisher
afterwards did by a formal instrument, under seal, direct that
after the sale of all the lots, and the payment of the note and
interest and the costs of the trusts, including compensation to the
trustee, any remainder should be paid to the trustees of the
bank.
In this state of things, certain persons of the name of
Zantzinger, related to Fisher, and who had become through
Page 86 U. S. 34
the dispositions of his will owners of all real estate which he
left at his death, filed a bill against Gunton setting forth that
Fisher had given a note for $6,065.84 to the bank, and had conveyed
these lots to Gunton, the president of its trustees, to secure it;
that Gunton had never settled any account, and that they had no
knowledge whether the note had been paid or what disposition had
been made of the lots conveyed as security, and praying an account
&c.
The bill made no kind of reference to the instrument of
appointment above-mentioned as having been executed by Fisher, by
which he directed that after the sale of the lots and payment of
the note &c., any remainder should be paid to the trustees of
the bank.
The answer set up as defense the history of the matter as above
given, and especially that Fisher had by formal instrument of
appointment, produced, directed that any surplus left after paying
his note should be paid to the trustees.
Proof was taken, including testimony of Gunton himself, which if
believed established, of itself, the defense. The court below
dismissed the bill, and from that, its action, the complainants
took this appeal.
MR. JUSTICE MILLER delivered the opinion of the Court.
The complainants in their bill, omitting any statement of the
formal instrument of appointment made by Fisher, and treating the
deed of trust as a mere security for his note,
Page 86 U. S. 35
allege that there is a balance in the hands of the trustee,
Gunton, to which they are entitled, and call upon him for an
account.
The answer of the defendant, which is fully sustained by the
proof, sets up two defenses, either of which is in our opinion
sufficient:
1. It sets up and relies upon the instrument which appointed and
directed that he should pay any balance remaining of the proceeds
of the sale of the lots, after satisfying the note, to the trustees
of the Bank of Washington.
As these instruments are all under seal and by the common law
imply on their face a good consideration, they show that the
grantor had parted with all his interest in the property. The legal
title was in the trustee, and the equitable interest in the
trustees of the bank. His direction to the trustee to sell, and his
subsequent direction to pay the proceeds to these trustees, carried
all the interest he ever held. Of course no interest in these lots
or in the proceeds of their sale passed either by his will or by
inheritance to the complainants.
2. But the answer and the evidence further show very fully that
William Fisher only held the legal title as naked trustee without
interest, for the use of the trustees of the Bank of Washington.
About the period of the expiration of the charter of that
institution, it became necessary, in order to secure payment of a
debt due to it from Daniel Carroll, to have the lots in question,
on which they had a lien, placed in a situation where the money
could be realized. The lots were accordingly purchased by Fisher,
at the request of the trustees of the bank, who furnished the
money, and the note and trust deed to Gunton (who was one of the
trustees of the bank) were devices by which the lots were divested
of other liens and placed in the hands of Gunton, so that on sales
to be made, at convenient times and fair prices, the proceeds in
the shape of money could be paid to the trustees who had the
management of the bank. Fisher never paid any money, nor was it
intended that he should. His note was placed in the bank, and was
by it protected and
Page 86 U. S. 36
cancelled in due time. It was on his part a mere act of
friendship to accept the trust and confidence reposed in him by the
trustees of the bank, and he carried out faithfully the
requirements of that trust. The efforts of the present complainants
to take advantage of this confidence, and to assert an interest
which he never thought of claiming, do not commend themselves to a
court of equity, and the technical rules of the law on which they
are based should be very clearly in their favor to enable them to
succeed. We are of opinion they have no place here.
It is said that neither the bank, whose charter had expired, nor
the trustees who were authorized to wind up its affairs, could
purchase or hold real estate.
As a general propositions, this may be true. And if the
transaction here was in its effect to vest in the bank the real
estate in question, either by its legal title or the absolute
equitable ownership and control of it, the question presented and
argued by counsel would arise if complainants were in position to
raise it. But it is very clear that no such effect can be given to
the transaction we are considering. The bank had a debt due to it
and a lien on this property. The right of the bank, or its
liquidating trustees, to have this property so sold as to pay this
debt is undoubted. If in doing this they were compelled, for their
own protection, to buy off other encumbrances, so that when sold
and converted into money all of it should be paid to them, no
principle of law or justice was violated. Neither the bank nor the
trustees of the bank ever had the legal title, or the power of
sale, or the right to control the time or the terms of the sale. If
Gunton, the trustee, had failed or refused to sell, or died without
a sale, no power lay in the trustees of the bank to make a sale or
to receive the title. Their only remedy would have been to assert
their right to a sale and to the proceeds of it in a court of
chancery.
It cannot be said, then, that the trustees of the bank ever had
the legal title, the control, or the ownership of the land, and
their only interest was a right to the proceeds when the lots
should be sold under the deed of trust. This was not
Page 86 U. S. 37
in our opinion forbidden by any law of the District, statutory
or otherwise. Nor do we think it worth any consideration that
Fisher's note was given in the transaction. He incurred no risk; he
acquired no real interest in the property and claimed none, and if
he ever had a technical legal interest he parted with it when he
gave the deed of trust and the subsequent authority to pay the
proceeds of the sale to the trustees of the bank.
Decree affirmed.
