would have given him knowledge of the trust, its extent and provi. sions: Graftlin v. Robb, 84 Md. 451. See Union Pac. Ry. Co. v. McAlpine, 129 U. S. 305. One is protected against the cestui in a trust deed, when he is induced to purchase the land covered thereby, by a release entered of record by the person having apparent authority to do so: Livermore v. Maxwell, 87 Iowa, 705; Bank v. Anderson, 14 Iowa, 544; 83 Am. Dec. 390. Such a release is prima facie valid, and the mere fact that the debt secured thereby is unpaid, does not raise a presumption of fraud, accident, or mistake: Battenhausen v. Bullock, 8 Ill. App. 312; Cornog v. Fuller, 30 Iowa, 212. Unless given authority to do so, the trustee in a trust deed may not receive payment of the debt before it is due: Livermore v. Maxwell, 87 Iowa, 705; and where the record which shows a release of a mortgage by the mortgagee, also shows that the debt secured thereby has not yet matured, a purchaser is held to have notice of the existing trust and is charged with it: McPherson v. Rollins, 107 N. Y. 316; 1 Am. St. Rep. 826; Kirsch v. Tozier, 143 N. Y. 390; 42 Am. St. Rep. 729. A release of a trust deed by the trustee without payment and without authority from the cestui is void: Lakeman v. Robards, 9 Mo. App. 179; and one purchasing with notice takes of course, as trustee: Insurance Co. v. Eldredge, 102 U. S. 545. But where a release, though executed before the notes secured by a trust deed were due, was executed by the trustee and certified to by the original holder of the notes, one who in reliance upon such release, and after the exercise of reasonable caution and inquiry, loans money which is secured by a trust deed of the same lands covered in the first deed, has equities superior to those of assignees before maturity of the notes secured by the first deed, though the release was executed subsequent to the assignment: Williams v. Jackson, 107 U. S. 478. Justice Gray in delivering the opinion in that case said: "Williams took every reasonable precaution that could have been expected of a prudent man before advancing his money to Charles T. Davis for Sweet and wife. He declined to lend his money until after he had been furnished with a conveyancer's abstract of title, showing that the deed of release from the trustees under the first deed of trust, and from the original holder of the notes secured thereby, as well as the second deed of trust to secure the repayment of the money lent by Williams, had been recorded, and that the land was not subject to any encumbrance prior to the second deed of trust. It was suggested in argument that as the first deed of trust showed that the notes secured thereby were negotiable and were not yet payable, and that the land was not intended to be released from this trust until all the notes were paid, Williams was negligent in not making further inquiry into the fact whether they were still unpaid. But of whom should he have made inquiry? The trustees under the first deed and the original holder of the notes secured thereby having expressly asserted under their own hands and seals that the notes had been paid, and Sweet and wife having apparently concurred in the assertion by accepting the deed of release and putting it on record, he certainly was not bound to inquire of any of them as to the truth of the fact; and there was no other per son to whom he could apply for information, for he did not know that the notes had ever been negotiated, and he had no reason to suppose that they had not been cancelled and destroyed. To charge Williams with constructive notice of the fact that the notes had not been paid in the absence of any proof of knowledge, fraud, or gross or willful negligence on his part, would be inconsistent with the purpose of the registry laws, with the settled principles of equity, and with the convenient transaction of business." The case of Abell v. Brown, 55 Md. 218, is interesting, but the facts were too complex for recital here. In it there was an unauthorized release of a mortgage as to part of the premises mortgaged, executed and recorded by the trustee of the estate of which the loan secured by the mortgage was a part. The question arose from an attempt by the trustee's successors, to impress the original trust upon the released premises in the hands of a purchaser to whose hands they had come by mesne conveyances. The purchaser defended upon his reliance upon the records, in which it appeared that the release was by the trustee. In granting the relief prayed for, it was held that the record reference to the trust put the purchaser upon inquiry as to the terms of the trust, and charged him with notice of what such inquiry would have revealed, namely, that the release was in contravention of the trust and without the order or sanction of the superior court, a reference to the records of which was incumbent upon the purchaser: See Leake v. Watson, 58 Conn. 332; 18 Am. St. Rep. 270. A purchaser of chattels in one state from one having apparent complete ownership, is not charged as trustee by the registration in another state of a trust deed thereto, or which he had no actual notice: Wyse v. Dandridge, 35 Miss. 672; 72 Am. Dec. 149. Reliance upon the Face of a Trust Deed or instrument of trust by a purchaser from the trustee, is sufficient to protect him, where the sale is made in strict conformity with the directions of the instrument. Where a trustee's deed recites a compliance with all the requirements necessary to a valid sale, an innocent purchaser need not go behind the face of the deed to ascertain if its recitals are correct: Wilson v. South Park Commrs., 70 Ill. 46. See Field v. Schieffelin, 7 Johns. Ch. 150; 11 Am. Dec. 441. Thus a purchaser is not required to examine into a trustee's accounts to see if his sale is necessary: Thompson v. McKay, 41 Cal. 221. And where a sale was conducted conjointly by a trustee in a trust deed and the trustor's assignee in bankruptcy, a purchaser was justified in relying upon the recitals in the trust deed, though an inspection of the assignee's schedule would have given him notice of a defect in the title: Atkinson v. Greaves, 70 Miss. 42. But notice actual or constructive of irregularities in the sale binds the purchaser: Harris v. Smith, 98 Tenn. 286; Smith v. Burgess, 133 Mass. 511. And where an executor has no power to sell, a purchaser at his sale acquires no title: Williamson v. Williamson, 3 Smedes & M. 715; 41 Am. Dec. 636; Chicago etc. R. R. Co. v. Kennedy, 70 Ill. 350; Gunnell v. Cockerill, 79 Ill. 79. The payment of the debt secured by a trust deed terminates the power of sale conferred thereby: Penny v. Cook, 19 Iowa, 538, and the same effect has been given a tender of the debt: Welch v. Greenalge, 2 Heisk. 209, though in neither of these cases were the rights of innocent purchasers brought in question. Conferring Indicia of Title upon Trustee—When Binds Cestui que Trust.-Following the rule that where one of two innocent persons must suffer, he must suffer who placed the party doing the wrong in a position to do it, beneficiaries have frequently, as in the principal case, been held bound by unauthorized acts of trustees, because by clothing the trustees with indicia of title or power, they have enabled them to deceive innocent purchasers. Such cases usually arise over trust deeds. "In such cases," said Walker, J., in Wilson v. South Park Commrs., 70 Ill. 46, "the person executing the trust deed, selects his trustee, and usually conveys to a person in whom he reposes confidence, both as to his integrity and business capacity, and having reposed the confidence, and conferred the power on him to act, if it is abused, he must be held responsible for the improper selection. Even where he authorizes the assignee to execute the power he must be equally responsible, as he confers the power, and if improvidently done, the innocent must not suffer for his want of prudence, unless they can be charged with notice of the abuse of the power": See Roy v. McPherson, 11 Neb. 197. Thus, where the beneficiary in a trust deed fails to have it acknowledged and recorded, he has no rights as against an innocent purchaser of the property, for value and without notice: Whittle v. Vanderbilt Min. etc. Co., 83 Fed. Rep. 48. So, transferees of corporate stock from one upon whom the real owners thereof have conferred the apparent right of property, will be protected against a secret trust of which they have no notice: Crocker v. Crocker, 31 N. Y. 507; 88 Am. Dec. 291. Under similar circumstances purchasers of overdue negotiable paper or non-negotiable paper are given similar protection: Neuhoff v. O'Reilly, 93 Mo. 164; Lee v. Turner, 89 Mo. 489. Recording a trust deed, without recording the defeasance, makes the grantee apparent absolute owner, and an innocent purchaser from him takes complete title: 1 Jones on Mortgages, 4th ed., secs. 548, 549. So, the failure of a mortgagor to have the discharge of the mortgage properly recorded may lose him his property in a similar manner and for like reason: Bausman v. Eads, 46 Minn. 148; 24 Am. St. Rep. 201. Beneficiary's Right of Election.-When a trustee commits a breach of his trust by selling the trust property, the cestui que trust may elect to hold him responsible personally, or to proceed to impress the trust upon the property in the hands of the purchaser. The latter course is ineffectual, we have seen, if the purchaser be bona fide, for value and without notice. In general it is ineffectual if the property is incapable of being traced or distinguished. But the right of election exists: Vance v. Kirk, 29 W. Va. 344; Parker v. Straat, 39 Mo. App. 616; Isom v. First Nat. Bank, 52 Miss. 902; Indiana etc. R. R. Co. v. Swannell, 157 Ill. 616. This right is alternative however: 2 Perry on Trusts, sec. 828, Indiana etc. R. R. Co. v. Swannell, 157 Ill. 616; and is governed by the ordinary rules regarding election between remedies. The cestui que trust cannot occupy contradictory positions. He cannot retain the proceedings of the sale and, at the same time, follow, and recover the property itself: Bonner v. Hol land, 68 Ga. 718; although it has been held that while accepting such proceeds he might make a valid reservation of his right to contest: Boerum v. Schenk, 41 N. Y. 182; and by protracted litigation on his part, attacking a purchase by his trustee, he may be estopped to claim that it was made for his benefit: Wiswall v. Stewart, 32 Ala. 433; 70 Am. Dec. 549. Laches. This right of election must be exercised within a reasonable time or the cestui will be held guilty of laches and estopped to assert that the act of the trustee in question is invalid or unauthorized: Hammond v. Hopkins, 143 U. S. 224; Wiswall v. Stewart, 32 Ala. 433; 70 Am. Dec. 549; Am. & Eng. Ency. of Law, 27, 269. If he would disaffirm the act he must do so before innocent third parties have invested money and labor upon the faith of its validity, and if he does not do so, he will be barred from setting it aside: Jenkins v. Pierce, 98 Ill. 646; Dean v. Dean, 9 N. J. Eq. 425. The period of delay necessary to constitute laches in such a case depends largely upon the circumstances of any given case: Twin Lick Oil Co. v. Marbury, 91 U. S. 587. A delay of several years for speculative purposes after full knowledge of the invalidity of a transaction is sufficient: Hoyt v. Latham, 143 U. S. 553; Follansbe v. Kilbreth, 17 Ill. 522; 65 Am. Dec. 691. In holding a delay of five years insufficient, the court, in Spurlock v. Sproule, 72 Mo. 503, said: "In cases where a party comes before the court with a clear right entitling him to relief, there being no remedy at law, something more than mere delay must be shown before the relief asked can be refused, such as that the party has slept upon his rights till the property sought to be regained has been enhanced in value by improvements made, or that some other matter has intervened which would give to the party who has thus lain idle, an unconscientious advantage over the other party if the relief asked were granted him." Laches in such case is not a question of time but of circumstances, "and while there are cases of this class where equity has granted relief after a great length of time, even fifty years, yet there are others in which it has refused it after only a few months":Etting v. Marx, 4 Fed. Rep. 673. See Badger v. Badger. 2 Wall. 87. For various periods which have been considered sufficient delay to constitute laches on the part of a cestui que trust, see Williams v. First Presbyterian Soc., 1 Ohio St. 478; Hume v. Beale, 17 Wall. 336; Connolly v. Hammond. 51 Tex. 635; Hammond v. Hopkins, 143 U. S. 224; McHaney v. Schenk, 88 Ill. 357; Gibson v. Herriott, 55 Ark. 85; 29 Am. St. Rep. 17; Hamilton v. Lubukee, 51 Ill. 415; 99 Am. Dec. 562; McLaflin v. Jones, 155 Ill. 539. A cestui que trust cannot be held to have slept upon his rights, until his trustee has assumed some attitude antagonistic to those rights: Dyer v. Waters, 46 N. J. Eq. 484. Statutes of Limitation.—Courts of equity are not required to apply statutes of limitation except in cases wherein their jurisdiction is concurrent with that of the law courts. It is a familiar rule that the statute of limitations does not apply to express trusts: Dyer v. Waters, 46 N. J. Eq. 484. It begins to run against an express trust from the time it is repudiated: Talbott v. Barber, 11 Ind. App. 1; 54 Am. St. Rep. 491; but in equity the statute is not, as such, a good defense. In such a case the only defense in a court of equity of the United States is laches in the pursuit of the party's remedy: Lakin v. Sierra Buttes Gold Min. Co., 25 Fed. Rep. 337. Under some circumstances a purchaser of trust property from a trustee, as where he pays a valuable consideration, under order from the proper court, with written evidence of title, and has seven years' possession, takes prescriptive title: Varner v. Gunn, 61 Ga. 54. Estoppel of Beneficiary by Release, Confirmation, or Acquiescence.-A beneficiary may, by formal release, discharge his trustee from liability for a breach of trust: Corks v. Barlow, 5 Redf. 406. To validate such a confirmation or release it must appear that the party confirming labored under no disability, acted deliberately and with complete knowledge of all material circumstances of the transaction: Luers v. Brunjes, 5 Redf. 33; Boyd v. Hawkins, 2 Dev. Eq. 195. Acquiescence by a cestui que trust in an unauthorized act of the trustee may make it binding upon him and release the trustee; but in order to do so the acquiescence must be complete and free and with full knowledge: White v. Sherman, 168 Ill. 589; 61 Am. St. Rep. 132. It must be established by the same measure of proof as is usually required in dealings between a trustee and a cestui que trust: Zimmerman v. Fraley, 70 Md. 562. Thus an unauthorized substitution of other property for trust property may be validated by the acquiescence of the cestui que trust: Brazel v. Fair, 26 S. C. 370. And beneficiaries of trust property sold under an invalid order of court, who stand by and allow the purchasers to erect valuable improvements thereon, without objection, will be held to have acquiesced in the sale and will be estopped from setting up title thereto: Iverson v. Saulsbury, 65 Ga. 724. For similar holdings, see Storrs v. Flint, 46 N. Y. Sup Ct. 598; North Carolina R. R. Co. v. Drew, 3 Wood. 691; Warner v. Blakeman, 36 Barb. 501; Dykes v. McVay, 67 Ga. 502; Sloan v. Frothingham, 65 Ala. 593. A purchaser of trust property with notice takes a good title where he buys at the request, and with the consent of the cestui que trust: Page v. Page, 8 N. H. 187; but he will not do so in case fraud in the transaction is shown: Kent v. Plumb, 57 Ga. 208; or he has notice that a breach of trust is being committed: Salinas v. Pearsall, 24 S. C. 179. Thus where a trust was for a wife, free from her husband's debts, and empowered the trustee to sell at the request of the wife, a sale with such consent and for the husband's benefit was held void: Hart v. Bayliss, 97 Tenn. 73; and a purchaser with notice at a void executor's sale, cannot plead an estoppel of the heirs by acquiescence: Huse v. Den, 85 Cal. 390; 20 Am. St. Rep. 232. Acquiescence in one thing does not validate another: Rabb v. Flanniken, 29 S. C. 278; Salinas v. Pearsall, 24 S. C. 179. In order that the acquiescence of the cestui que trust may empower a trustee to make a valid sale, there must be no limitations over to children or third persons: Arrington v. Cherry, 10 Ga. 429; First Nat. Bank v. National Broadway Bank, 22 App. Div. (N. Y.) 24: for it is a general rule that acquiescence of a tenant for life, or by a cestui que trust for life, will not bind the person entitled to the remainder: White v. Sherman, 168 Ill. 589; 61 Am. St. Rep. 132; Zimmerman v. Fraley, 70 Md. 561; Ryder v. Sisson, 7 R. I. 341. |