trustee of the parties; and whether, if agent, eo instanti that the conveyance under the tax sale was made to him, the law did not attach the trust to the lands in his hands. If it did, then the conveyance of Stimpson to Baker was valid. If it did not, then it was void, as falling within the reach of the doctrines respecting maintenance, champerty and pretended titles. Those doctrines do not apply to trusts created in privity of estate, but to adverse and independent titles between strangers. It is quite a mistake to suppose that a controverted trust may not be assigned by the owner, when it is clearly and unequivocally attached to property. If a contract is made for the sale of lands the contractee may sell and assign the whole, or a part, or make a binding subcontract respecting the same, whether there be a controversy respecting the specific performance of the original contract or not. The case of Wood v. Griffith, 1 Swanst., 55, 56, is fully in point upon this doctrine, even when the assignment or sale is made during the pendency of a suit for a specific performance. I repeat it, therefore, that the whole question, whether the deed from Stimpson to Baker was a valid conveyance or not, depends upon the point whether, at the time, the defendant was actually or constructively a trustee of the premises for Stimpson.

§ 299. From the evidence it appears conclusive that Whiting was acting as agent.

And, in my judgment, notwithstanding the stern denials of the answer of Whiting, the fact of the agency of the defendant, at and before the time of the tax sale, for Stimpson, as well as for the heirs of Jacob Tidd, and other proprietors, is completely established by evidence altogether unexceptionable and conclusive. It is proved by acts done, which in no other way could be lawful, or indeed could be fairly accounted for. And it is also proved by written documents and receipts, which admit of no reasonable doubt. It appears that as long ago as 1815 the defendant Whiting became a purchaser, and, as such, a tenant in common with the other proprietors of these undivided lands. He undertook, at various times between 1815 and the sale in 1821, as well as afterwards, to grant written permits to different persons to go on the premises, and to cut down timber thereon for their own use, for a compensation called, in the expressive language of the country, "stumpage;" and, for this compensation, he also at several times gave receipts. Now, as a tenant in common, he had no authority whatsoever, without the consent, express or implied, of his co-tenants, to grant any such permits, or to authorize any such acts. They are expressly prohibited, not only by the common law, but by the positive penalties of the statute of the state upon this subject. These penalties are severe, and the law will never presume that a party does an unlawful act unless it is shown by some competent evidence. The presumption in the absence of counteracting evidence is that it.is done under lawful authority if it might have been so done.

§ 300. All acts done by one tenant in common are presumed to be done for the interest of all the co-tenants until adverse claim is notoriously set up and established by competent proof.

A court of equity would, a fortiori, indulge in such a presumption in favor of a party who is a tenant in common, that he acted as a common agent for the common benefit of all the proprietors, since in that way he may promote the true interests of all. Indeed, all acts done by one tenant in common are presumed to be done for the interest of all the co-tenants and in conformity to their rights until an adverse claim is notoriously set up and established by

competent proofs. In the present case, upon this sole ground, in the absence of all counter-proofs, the acts of the defendant Whiting up to the tax sale in 1821 ought to be deemed to be done by him as a tenant in common, acting for the benefit of all, and therefore acquiesced in by all.

But the case does not rest upon this sole ground, either of fact or presumption. The very permits, and receipts afford satisfactory evidence that the defendant Whiting did not act solely for himself, but that he acted for the other proprietors. It is true that in one case only does he give a receipt in terms for the proprietors of the undivided lands for stumpage. But in all the other cases, and they are numerous, his receipts always purport to be "for the undivided lands," and never, in any instance, purport to be on his own individual account. This is very strong evidence to establish the real nature of the transactions. If he was acting for himself alone his silence on this point is wholly unaccountable. If he was acting for himself and other proprietors, then the language is clear and intelligible and has its appropriate effect. In this way, too, the acquiescence of his co-tenants would be easily explained. In any other view it would be utterly unaccountable. I have, therefore, no doubt whatever on this point that the defendant Whiting was agent for Jacob Tidd during his life (and he died in March, 1821), and afterwards for his heirs (some of whom were, as it is said, at that time infants), as well as for Stimpson and other proprietors. If so, the purchase by him at the tax sale became immediately by operation of the principles of a court of equity a trust for the benefit of the principals.

§ 301. The statute of limitations never runs against a fraud, and no length of time will bar relief where it can be established.

Then it is said that the plaintiffs are barred from any right in equity by the mere lapse of time. It does not appear what were the respective ages of the heirs of Tidd at the time of the tax sale, nor what was the age of Stimpson; and all of them were at that time (as it should seem) citizens of another state, and of course came within the common exceptions of the statute of limitations. But what is more particularly applicable to the present case, twenty years had not elapsed before the filing of the bill, and I apprehend that, in the case of a trust of lands, nothing short of the statute period, which would bar a legal estate or right of entry, would be permitted to operate in equity as a bar of the equitable estate. This doctrine seems to be admitted by the authorities ever since the great case of Cholmondeley v. Clinton, 2 Jac. & Walk., 1, and it has been repeatedly acted upon in the supreme court of the United States. Indeed, in the case of Prevost v. Gratz, 6 Wheat., 481, it was broadly laid down that, in equity, length of time is no bar to a trust clearly established, and that in cases where fraud is imputed and proved length of time ought not upon principles of eternal justice to be admitted to repel relief. This doctrine is regularly true when it is received with the proper accompanying limitations that no circumstances exist to raise a presumption from lapse of time of an extinguishment of the trust, and no open denial or repudiation of the trust is brought home to the knowledge of the parties in interest which requires them to act as upon an asserted adverse title.

Upon the whole, I am of opinion that the purchase by the defendant must be deemed to be a trust for the benefit of the plaintiffs to the extent of their interest; that the defendant ought to be decreed to convey the legal title to them, after being satisfied of all just claims which he has against the lands for taxes, for purchase money paid at the tax sale, for his expenditures and im

provements upon the land, and also for his reasonable services as agent in the premises, deducting all sums of money received by him in the premises for stumpage or otherwise. And it ought to be referred to a master to take an account in the premises, and to make report thereof to the court according to the principles of this decree.

As to the other defendants, Peavy, Morse and Talbot, no case has been made out against them of any fraud or misconduct calling for the interposition of the court. The bill will, therefore, be dismissed against them, with costs. But the plaintiffs are entitled to costs, upon the cross-bill, against the parties thereto, namely, Whiting, Morse and Talbot, and may set them off pro tanto against the costs of the original bill decreed to Morse and Talbot.

The district judge concurs in this opinion, and a decretal order will be drawn up accordingly.

§ 302. To follow trust property.- Where a trustee disposes of trust property the cestui que trust may claim the thing received, if it can be identified, although the property received may have become greatly increased in value. Piatt v. Oliver, 3 McL., 27.

§ 303. As long as trust property can be traced and followed it remains subject to the trust; and where trust funds and individual funds have been mixed it is all primarily liable to the trust. National Bank v. Insurance Co., 14 Otto, 54.

§ 304. Where a trustee now insolvent has deposited in a bank trust funds and funds of his own together, in his own name, his cestuis que trustent or he, as representing them, may have a trust declared in such moneys, either before or after his bankruptcy, though no separation had been made before that time. Ex parte Hobbs, 2 Low., 491; 14 N. B. R., 495.

$305. The city of St. Louis drew a check on the bank of M., indorsed and delivered the same to the bank with written instructions to remit the amount to the bank of R. to meet maturing bonds and coupons of the city. The amount was sent by the bank of M. to the bank of R. with instructions to pay, and charge to the general account of the bank of M., the bonds, etc., of the city of St. Louis, and forward the same, canceled, to the bank of M. This was the customary method. The city paid the bank of M. exchange on the sum remitted, and the bank of R. always charged a commission for paying the coupons to the bank of M., which was, in turn, charged to and paid by the city. Held, that money thus deposited by the bank of M., in its name, with the bank of R., was, as between the former bank and the city, trust money, which, in equity, belonged to the cestui que trust, the city, which had the right to pursue and claim it as against all persons not standing free of the trust. City of St. Louis v. Johnson, 5 Dill., 241.

$306. Although the relation between a bank and its depositor is that merely of debtor and creditor, and the balance due on the account is only a debt, yet if the money deposited belonged to a third person and was held by the depositor in a fiduciary capacity, its character is not changed by being placed to his credit in his bank account. National Bank v. Insurance Co., 14 Otto, 54.

§ 307. Wherever a trust fund is converted into another species of property, if its identity can be traced, it is liable in its new form to the cestui que trust. In such a case the cestui que trust may exercise his option either to take the property or pursue some other remedy. Piatt v. Oliver, 2 McL., 267.

§ 308. Where a partner fraudulently, without the consent of his copartners, applies the partnership funds to his own private purposes and profit, or invests the same in his own name and for his own use, his copartners may, if they can distinctly trace the investment, follow it and treat it as trust property held for the benefit of the firm by the partner or by any person in whose hands it may be, except a bona fide purchaser without notice. The same rule applies to trustees and agents, and exists not only in equity but at law, wherever the right is of a legal nature. Kelley v. Greenleaf, 3 Story, 93.

§ 309. Where property held upon any trust to keep or use or invest it in a particular way is misapplied by the trustee and converted into different property, or is sold and the proceeds are thus invested, the property may be followed wherever it can be traced through its transformations, and will be subject, when found, in its new form, to the rights of the original owner or cestui que trust. Cook v. Tullis, 18 Wall., 332.

§ 310. Where money was paid by one insurance company to another in trust to be paid to the customer of the latter, and the latter became bankrupt before the money was paid as directed, held, that such money, if earmarked, or separately kept and retained as trust property, to be delivered or paid over in the same bills or coin in which it was received by the bank

rupt, would not pass to the assignee in bankruptcy, but would be considered as trust property; but that an amount of money due from the bankrupt as a trustee, and which could not be distinguished from any other moneys in his possession or under his control, could not be considered as "property" held by the bankrupt in trust. Hosmer v. Jewett, 6 Ben., 208.

§ 311. A creditor of a land company obtained a judgment against the company in the state in which the land was situated, but in which the members did not reside, without notice to the company, and levied on the lands of the company, to which, however, it had only an equitable title, and purchased the same. By collusion with the trustee of the company he procured from such trustee, without notice to the company, the means of procuring the legal title, and, availing himself thereof, took the legal title. Held, that the title thus procured was void. Oliver v. Piatt,* 3 How., 333.

§ 312. It seems that if a bankrupt holds property in trust the beneficiary may follow it into the hands of the assignee. Engstroin v. Livingston,* 11 Fed. R., 370.

$313. A trustee who held stocks, issued to him as trustee, pledged them as collateral security for loans under circumstances which were sufficient to put the pledgees on inquiry, and used the proceeds for his own purposes. The loans not being repaid the stocks were sold. The whole transaction being without the knowledge or consent of the beneficiary, it was held that not only the trustee but the pledgees were liable for the value of the stocks sold and accrued dividends thereon, Jaudon v. National City Bank,* 8 Blatch., 430.

§ 314. The ratification by a cestui que trust of a substitution of stocks not allowed by the terms of the trust does not imply an assent to a future violation of duty by the trustee, and is no bar to the right of the cestui que trust to recover for an illegal disposition of the stocks thus substituted. Duncan v. Jaudon,* 15 Wall., 165.

$314a. A person taking stock as collateral security for the individual debt of the trustee, which on its face shows that it was held by him as trustee, is chargeable with notice of the trust, and is liable to the cestui que trust for the value of the stock where it has been sold to satisfy the loan. Ibid.

$315.

· into hauds of partnership of which trustee was a member.- Where funds held by one member of a copartnership as trustee are received and used by the copartnership with full knowledge of their character on the part of the other members of the firm, the beneficiaries under the trust may prove their debt against the firm, although they have also proved the same against the individual estate of the trustee. In re Tesson,* 9 N. B. R., 378. § 316. A trust fund may be followed by the cestui que trust into the hands of any one who receives it with notice of the trust. Ibid.

§ 317. Where a trustee who is a member of a partnership firm wrongfully uses trust funds in the business of the firm, and the other members have notice of such use, the partnership and its members become liable to the cestuis que trust, and a joint and several claim is thereby created against the joint and several estates of the firm and its members. In re Jordan, 2 Fed. R., 319.

$318. bona fide purchasers.- Where a trustee has been guilty of a breach of trust in transferring trust property to a third person the cestui que trust has full right to follow such property into the hands of such third person, unless he is a bona fide purchaser for value without notice, or to take the proceeds, and this right cannot be destroyed by the repurchase of the trust property by the delinquent trustee. Oliver v. Piatt,* 3 How., 333.

§ 319. If a deed of bargain and sale be made by a trustee the legal estate passes, whether the terms of the trust are complied with or not; for if the bargainee takes with notice and for a valuable consideration, he himself stands as trustee in place of the bargainor; if without notice, and for valuable consideration, he takes an absolute title; for a trustee conveys by virtue of the legal estate vested in him, and not by virtue of a power. Bank of United States v. Benning, 4 Cr. C. C., 81.

§ 320. Full notice of a trust is equivalent to an express declaration thereof as to persons chargeable with notice. Mechanics' Bank of Alexandria v. Seton, 1 Pet., 299.

§321. When a trustee delivers, in payment of his individual debts, property which is stamped with the insignia of ownership as trustee, the creditor takes the property with notice of the trust, and if it is received without making suitable inquiry as to the right of the trustee thus to dispose of the property of the cestui que trust, the recipient takes it at his peril. United States v. Polhamus, 13 Blatch., 200.

§ 322. But the fact that the property bears upon its face the evidence that it is owned by the seller or the payer as trustee is not conclusive upon the party becoming payee, who is always at liberty to show that he made suitable inquiry. And whether he did or not is a question for the jury. Ibid.

§ 323. An individual who has an interest in certain real estate, for the management and sale of which a trustee is appointed, must be presumed to know the nature of his title and the

acts of the trustee. He cannot, having purchased the estate from the trustee, set himself up as an innocent purchaser without notice. Piatt v. Oliver, 2 McL., 267.

§ 324. Duty of purchaser from trustee to see to application of money. If a trustee under a marriage settlement has a power to sell, and the purchase money from such sale is to be re-invested upon trusts that require time and discretion, or the acts of sale and re-investment are contemplated to be at a distance from each other, the purchaser is not bound to look to the application of the purchase money. But where the purchaser is affected with notice of the facts which in law constitute the breach of trust, the sale is void as to him; and a mere general denial of all knowledge of fraud will not avail him, if the transaction is one that a court of equity cannot sanction. Wormley v. Wormley, 8 Wheat., 421.

§ 325. The court of chancery has established it as a rule, that where the charge is general the purchaser is not bound to see to the application of the purchase money; but if a trustee sells with the avowed purpose of excluding the debts of him who created the trust, the purchaser voluntarily assisting him in it would not be secure. And if he have notice of a debt before he pays the money, he may be affected if he proceeds with the purchase. Garnett v. Macon, 2 Marsh., 185.

§ 326. Good faith required of parties purchasing trust property.- Where in a contract between private individuals and a county for the sale of lands granted by congress to the state, and by the state to the county, said lands being a trust fund for the purpose of reclaiming swamp lands and building bridges, etc., if the parties know that they are dealing with a trust und, devoted to a specific purpose, the utmost good faith is required. Emigrant Co. v. County of Wright. 7 Otto, 339.

§ 327. Gross inadequacy of consideration, the diversion of funds from their prescribed trust, and fraudulent conduct of agents, warraut the rescission of such a contract. Ibid.

§ 328. A purchaser of trust property from a trustee authorized to sell, charged with fraudulent collusion with the trustee in the purchase, is not liable to the cestui que trust for the proceeds of such property on the ground of inadequacy of consideration, there being no other evidence of fraud, unless such inadequacy be clearly proven and be so gross as to be itself an indication of fraud. Carpenter v. Robinson, 1 Holmes, 67.

$329. Presumptions as between cestui que trust and trustee.— Whatever acts are done by a trustee are presumed to be done for the benefit of the cestui que trust and not for the benefit of the trustee. Piatt v. Oliver, 2 McL., 267.

§ 330. Profits gained by trustee.- Where a trustee has abused his trust the cestui que trust has the option to take the original or the substituted property, and if either has passed into the hands of a bona fide purchaser without notice then its value in money. If the trust property comes back into the hands of the trustee, that fact does not affect the rights of the cestui que trust. The cardinal principle is that the wrong-doer shall derive no benefit from his wrong. The entire profits belong to the cestui que trust, and equity will so mold and apply the remedy as to give them to him. May v. Le Claire, 11 Wall., 217. § 331. Profits gained by a trustee in the sale of trust property belong to the cestui que trust. Prevost v. Gratz,* Pet. C. C., 364.

§ 332. Interest of, when exempt from execution.- Where a deed of trust directs the trustee to permit the cestui que trust to enjoy the rents, issues and profits arising from the trust estate during his life, and to apply the same to the support, maintenance and education of his children, the interest of the cestui que trust is not such as a court of equity will apply to the satisfaction of a judgment debt. Pickrell v. Zell,* 2 MacArth., 65.

§ 333. Cestui que trust, when preferred creditor.- A deed of settlement conveyed to one of the signers, in trust, certain moneys, to be kept invested on real estate security for the benefit of H. The trustee neglected to make the investment required by the deed, and, his estate being insolvent, it was held that the debt of the cestui que trust arising from the misappropriation of the trust fund was a special debt and entitled to priority of payment. Burton v. Smith,* 4 Wash., 522.

§ 334. Power of with respect to trust and trust property.— A cestui que trust may dispose of his trust estate, notwithstanding his title is contested by the trustee. Baker v. Whiting, 3 Sumn., 475.

§ 335. A certain sum was devised to A. in trust for the use of B. during her life, and on her death to the use of others, and the sum was, until paid, made a charge on certain lands of the testator. Held, that a paper signed by B. alone, in which she recited that the money had been invested to her satisfaction, and that she released the land and the trustee from all liability, had no effect to discharge the land. Dickinson v. Worthington, 4 Hughes, 430; S. C., 10 Fed. R., 860.

§ 336. To compel performance of trust.- Where there is an absolute discretion in the trustee, a discretion which, by the express terms of the will, he is under no obligation to exercise in favor of the cestui que trust, who, by bankruptcy, has forfeited his absolute right