Atkins v. Stacy-Nolan Home Bldg. Co. , 217 Ala. 167 ( 1928 )

The trust deed of April 30, 1912, executed by W. A. Snow and wife to W. H. Snow, as trustee, for the use of Snow's wife and children, named in the deed as the beneficiaries of the trust, imposed on the trustee active duties in respect to the management and care of the property, the collection of the rents, incomes, and profits arising therefrom, the making of improvements, and the discharge of liens arising from legal assessments for improvements.

The deed also provides that:

"The said trustee shall have the power to sell or mortgage said property, or trade all or any part of said property for other real estate or personal property or choses in action, orin any way handle said property in a business like manner thatwill be of advantage to and accrue to the benefit of those forwhom the said trustee is holding this property," etc.

The deed also provides:

"That the said trustee shall be the sole judge as towhen, how, and in what manner he will exercise the powers and duties given to him under the deed of trust."

The trust created by the deed was not a mere naked or dry trust, but an active trust in which the trustee was invested with power to dispose of the entire title of the trust estate, at his discretion, and under the deed he took the title in fee. Robinson et al. v. Pierce et al., 118 Ala. 273, 24 So. 984, 45 L.R.A. 66, 72 Am. St. Rep. 160; Owens v. Gachet et al.,207 Ala. 565, 93 So. 509; You v. Flinn, 34 Ala. 409; McBrayer v. Cariker, 64 Ala. 50.

This title in fee passed to the American Finance Bond Company through the warranty deed executed by W. H. Snow, as trustee, and others, on June 21, 1913, and to the subsequent grantees into the respondent. If the first of these conveyances — that of June 21, 1913 — was made by the trustee in contravention of the trust, and all of the subsequent grantees, including the respondent, took title with notice or knowledge of the fact that the conveyance by the trustee was not in conformity with, but in contravention of, the trust, then the respondent is chargeable in equity, at the instance of the cestui que trust, as a trustee in invitum. Robinson et al. v. Pierce et al., supra; Kent v. Dean, 128 Ala. 600, 30 So. 543; Smith v. Smith et al., 153 Ala. 504, 45 So. 168; Randolph v. East Birmingham Land Co., 104 Ala. 355, 16 So. 126, 53 Am. St. Rep. 64.

The deed from the trustee to the American Finance Bond Company, on its face, recites a consideration of $8,000, cash in hand paid, and carries no evidence that it was made in contravention of the trust, but appears to have been made in conformity with the powers granted in the trust deed. The bill shows that the respondent claims through W. A. Haley and wife, and while it charges the respondent with "actual or constructive knowledge of all the facts hereinabove stated, and that it acquired said real estate subject to the interests" of complainants, it does not bring to Haley and wife any knowledge of the violation of the trust.

If Haley and wife were purchasers for value and without notice, and on demurrer this will be assumed, in the absence of averments charging them with notice, the title conveyed by them to the respondent passed discharged from the claim of complainants arising from a breach of the trust by the trustee in conveying the property to the American Finance Bond Company, for worthless stock in that corporation. Abney v. Kingsland, 10 Ala. 355, 44 Am. Dec. 491; Lebeck v. Ft. Payne Bank, 115 Ala. 447, 22 So. 75, 67 Am. St. Rep. 51; McKee v. West, 141 Ala. 531, 37 So. 740, 109 Am. St. Rep. 54; 12 Rawle C. L. 607, § 118; Edmondson et al. v. Jones, 204 Ala. 133,85 So. 799. The demurrers to the bill as amended specifically pointed out this defect, and the decree of the circuit court sustaining the demurrer was free from error.

Affirmed.

ANDERSON, C. J., and SOMERVILLE and THOMAS, JJ., concur.