Estate of Armstrong ( 1883 )

COFFEY, J.

In the matter of the application for the settlement of the account of Robert Stevenson, as special administrator of the estate of Margaret Armstrong, deceased, the special administrator had no right to use the funds of the decedent as his own, nor to mingle them with his own funds, without clear authorization from her. It was his duty to keep them separate and intact and free from any liability such as he incurred in the use of his own moneys. He should have pursued with exactitude the instructions given as to them, or show that his act was ratified, with full knowledge on the part of the decedent of the nature of that act. The evidence shows that the authority was to “loan out” the money, which seems to me to mean that he was to invest for her and to account therefor, and not to borrow it for his own purposes. Mrs. Armstrong reposed confidence in him to judiciously invest her funds, and this confidence was abused when he placed himself in the position of a debtor to her, without fully advising her of the risk she ran, and affording her an opportunity of knowing that he was subjecting her funds to hazard, and depriving her of the means of averting catastrophe to her fortune. He should show that he did so, in order to avoid responsibility for the loss his conduct caused to her. Occupying a fiduciary relation, the statute of limitations cannot avail as a defense; at least, not unless or until a demand and refusal are shown.

Lapse of time is no bar to a trust clearly established. Prevost v. Gratz, 6 Wheat. 481, 5 L. Ed. 311. Is this trust clearly established! I think so. See extract from letter, page 48, transcript:

“It leaves a balance in your favor of $15,000, besides what has accumulated since the estate was fixed up, which I will loan out at about 9 per cent, being the best I can do at present.” -:i

Clearly, the ordinary meaning of language will not bear the strain that “loan out” means he will borrow for himself, appropriate to his own use, treat as a personal account. It must be interpreted that he will invest it for her account. He was to “loan out,” not to borrow. He had no other instructions. He did not advise her of the risk to .which he was subjecting her funds, nor of his mingling the funds with his own indiscriminately: See vol. 2, Trans., p. 70. Mrs. McLean testifies that her sister, Margaret, wanted her brother, Robert, to “lay out” the money. She reposed in him great trust and confidence, which he was bound to use with the utmost discretion. He did not advise her of the hazardous nature of his use of the money, nor of his own failing condition (vol. 2, Trans., pp. 62, 69-70,77, 78, 80, 85, 86). The evidence is by no means clear, is very vague and unsatisfactory, as to the extent of Mr. Hunter’s or of Mrs. Armstrong’s knowledge of the facts in time to retrieve consequences of Robert’s conduct (vol. 2, Trans., 89, 87%, 103, 104). Altogether, he failed in his duty to protect her interest.

Robert Stevenson was the trustee of Margaret Armstrong; his trusteeship has never been revoked; and the statute of limitations cannot operate in his favor. He is clearly liable for loss. His account should not be allowed as rendered, except the item for attorney’s fee, a charge properly and necessarily incurred. Let findings be prepared in conformity with the text of this opinion.

The Decision in the Principal Case was affirmed by the supreme court of California in 69 Cal. 239, 10 Pac. 335, where it is held that a special administrator, who is individually indebted to the decedent, must charge himself in his account with the amount of such indebtedness.