Trust, Personal liability of trustee. Guaranty. Contract, What constitutes. If one who is a trustee signs a contract in writing and adds after his name the words, "as Trustee," he is bound by the contract personally unless he stipulates, otherwise than by such a signature, that he intends to be bound only as a trustee.
If one of the shareholders of a real estate trust, who personally owes $4,840 under the terms of a lease of land, his interest in which, after the lease had been executed, he had conveyed to the trustee to become a part of the real estate trust, makes an agreement in writing with the lessor providing that the lease shall be cancelled, and that, upon payment by the lessee to the lessor of $2,500 on or before a certain date, the lessor's claim against him shall be discharged, but that, if the payment is not so made, the full sum of $4,840 shall be due and payable to the lessor, and the trustee of the real estate trust makes the following indorsement upon the agreement, "I hereby guarantee the payment of money specifically set forth in the above instrument," and signs it with his own name "as Trustee" of the real estate trust, and thereafter the lessee fails to pay the $2,500 on the date specified, the trustee is liable personally for the full sum of $4,840.
HAMMOND, J.
The rule upon which the decision of this case depends is well settled. It is stated by Story, J., in Duvall v. Craig, 2 Wheat. 45, 56, as follows: "A trustee, merely as such, is, in general, only suable in equity. But if he chooses to bind himself by a personal covenant, he is liable at law for a breach thereof in the same manner as any other person, although he describes himself as covenanting as trustee; for, in such case, the covenant binds him personally, and the addition of the words `as Trustee' is but a matter of description to show the character in which he acts, for his own protection, and in no degree affects the rights or remedies of the other party. The authorities are very elaborate on this subject."
"If a trustee contracting for the benefit of a trust wants to protect himself from individual liability on the contract, he must stipulate that he is not to be personally responsible, but that the other party is to look solely to the trust estate." Woods, J., in Taylor v. Davis, 110 U.S. 330, 335. This doctrine has been recognized by this court. Hussey v. Arnold, 185 Mass. 202. Dunham v. Blood, 207 Mass. 512, 513. In Hussey v. Arnold, Knowlton, C.J., says (page 203): "Ordinarily, in the absence of special limitations, trustees bind themselves personally by their contracts with third persons. Actions at law upon such contracts must be brought against them, and judgments run against them personally." See also the remarks of Holmes, J., in Odd Fellows Hall Association v. McAllister, 153 Mass. 292, at page 297.
In the present case there is no stipulation express or implied that the trustee shall not be personally liable, and there is therefore nothing to take it out of the general rule. He is personally held.
It is contended by him that even if he is held the liability extends only to the sum of $2,500. But we cannot agree with this contention. He guarantees "the payment of money specifically set forth in" the instrument to which the guaranty is annexed. The "money specifically set forth" is only one sum depending in amount upon the time of payment, — $2,500 if paid on or before July 1, 1911, and $4,840 if not so paid. Whenever paid it is only one sum, and there is to be only one payment. For this payment of whatever may be due at the time of payment the defendant is liable.
Exceptions overruled.