Glenn v. McKim , 3 Gill 366 ( 1845 )

Magruder, J.,

delivered the opinion of this court.

A decree of the Court of chancery, brought into that court a large sum of money, the proceeds of sale of the real estate of Samuel McKim, in order there to be distributed among the persons to whom the real estate descended. Before distribution was made, the title of some of the claimants to any share of the estate, and, of course, of the purchase money, was denied by others, who were admitted to be heirs of the intestate. Thus arose a controversy in chancery, about a considerable part of the fund, and the Chancellor having, by his order, excluded some of the claimants, an appeal was taken by them to the Court of Appeals. Shortly after this appeal, the parties litigant, by their counsel, entered into an agreement, (which it is admitted, had the sanction of the Chancellor,) “that John Scott and John Glenn, be constituted trustees, to receive and to invest that portion of the fund which was in controversy;” that a check, payable to their order, be drawn by the proper officer, and that “upon the final hearing of the said appeal, the said John Glenn and John Scott, shall pay into the Court of chancery, the said sum of money, and all interest and profit which may accrue thereon, subject to the said order and decree, which may be passed on said appeal.”

In pursuance of this arrangement, Scott and Glenn, on the 27th July 1836, received the money, and the manner in which they disposed of it, is fully set forth in the proceeding. It has never been alleged, that they did not invest it judiciously, and within a reasonable time.

At June term 1838, the Chancellor’s order was affirmed by the Court of Appeals. No application, however, was made to the Chancellor, in regard to the distribution of this fund, by those to whom his order, (affirmed by the Court of Appeals,) gave it, until March 1843, when a petition was filed, by persons having an interest in the fund, requiring the trustees to account for the same. Thereupon, each of the trustees filed an answer, and by these answers it appeared, that Scott had misapplied a part of the fund; but, that with respect to Glenn, a payment, which he made into court, in compliance with the order, discharged him, unless he could be made responsible for the default of his co-trustee And, whether Glenn, the plaintiff in error, is responsible for such default of his co-trustee, is the principal enquiry upon this appeal ?

The uncontroverted facts in this case, furnish all the answer that need to be given to very many of the authorities, on which reliance seems to have been placed. We need not remark upon the cases which instruct us, that a trustee is answerable for the default of his co-trustee, if, with a knowledge that the trust fund is in a course of abuse, that his co-trustee is making an improper use of it, he remains passive, refuses or declines to interfere. The case before us, is not one of that character. We need not notice the adjudications, which tell us, that if there be some mal-practiee, fraud or evil dealing, then the one shall be answerable for the default of the other. To any of these, or such like cases, we have no occasion to refer, because, in the case before us, the trustee, whom it is attempted to make responsible for the default of his co-trustee, is nowhere charged with anything like fraud or collusion, or culpable omission of duty. Glenn denies, upon oath, all knowledge of the receipt by Scott; of the money, afterwards wasted, and there is no statement or allegation, or intimation, from which it can be inferred, that he knew, or had any reason to suspect, that his co-trustee had abused, or was capable of abusing the trust reposed in him, and reposed in him, too, by the parties to whom the trust fund belonged, and most, if not all of whom, had confided their interests to him, as their solicitor.

The Chancellor, as a reason for making Glenn answerable, observes, that Glenn and Scott were, by the act of the court, founded on the agreement of the parties, judicially constituted joint trustees, and as such, jointly liable for the whole amount of the money so committed to their disposition,

It is apprehended, that whether this be considered a judicial appointment, or one made by the parties themselves, there is nothing in the case, or in the circumstances connected with this trust, which would authorise us to say, that Glenn was answerable for the default of Scott. Security might have been required of these trustees. It might have been insisted, that before the money was placed in their hands, they should give a joint bond with security, and thereby become security, each for the other; or, several bonds, the bond of each to be liable for the misconduct of the principal obligee in it. But, no bond at all was required by those who could have required it, and, surely, it does not follow, that each is answerable for the fidelity of the other, because, those who might have exacted security, think proper to dispense with it.

It is not perceived, that the case would be essentially different, if this was, strictly speaking, a judicial appointment; but, the order of the Chancellor, is in execution of the agreement of the parties, naming to him the persons who are to be entrusted with their funds. Scott was not selected by Glenn as his associate. In him, the parties who owned the fund, chose to repose confidence, and agreed to dispense, with security, for his good conduct. In the case of Townley against Chalenor, as reported in Cro. Charles, 312, it was resolved, that Townley, being but a party entrusted, shall not be answerable for more than came to his hands, and the reason assigned for this resolution, was, “it was the default of him, who put them in trust, to repose trust in one who was unable to pay, and he being the party trusted, as well as Townley, Townley shall not be compellable to satisfy his defect.” We have a more full report of the same case, (though the name of defendant is different,) in Bridgeman’s Reports. There we are told, that in order to charge one trustee, for the defaults and deficiencies of their co-trustees, there must be proof, or circumstances to satisfy the court, that there had been dolus malus, or evil practice, fraud, or evil intent in him. It is true, indeed, as the lord keeper observed, that care should be taken, that trustees be not emboldened to break the trust imposed on them. It must be equally true, that parties trusted, ought not to be too much punished, lest it should dishearten men to take any trust, and all would be deterred from undertaking any trust; those only excepted, whose ignorance or knavery, render them unworthy of trust. Scott, the defaulter, was the trustee of the parties interested, chosen by them, and not by his co-trustee.

If we look at the circumstances comiected with this trust, there is nothing to be found in them, which can operate at all to the prejudice of the plaintiff in error. Scott was a solicitor in the Court of chancery, and had the conduct of the original suit. He appeared in chancery and the Court of Appeals, for the successful parties, with power, it would seem, to secure such professional assistance as he might deem necessary; he was the agent of several, administered upon the estate of one of the owners of the fund, and had the orders of some of them, to receive the money to which they were entitled. It would be difficult, indeed, to prove, that if Scott had brought into court, all the money which he received, and there had been an order for the distribution of the fund, he had not undoubted power, to receive a larger portion of the fund than he wasted; that the solicitor and agent of the parties interested, could not have claimed more than is due from him, as trustee. Why, in such a case, should the plaintiff in error, be dealt with more severely than the trustee, was, in the very many cases, to be found in the authorities, wherein, the attempt to make one trustee or executor, answer for the default of the other, was unsuccessful?

In this case, the petition, let it be remembered, does not charge the plaintiff in error with fraud, collusion, or criminal .remissness, and the parties to that petition, by submitting the case upon petition and answer, put it out of the power of the plaintiff, in this court, to deny or refute any specific charge. The question, in truth, is, whether there be in the answer itself, any admission or statement, which will authorise a Court of chancery, to make him responsible for any portion of the trust fund, admitted by his co-trustee to have been received by him, and for which he does not deny, that he is exclusively answerable?

The petitioners set forth their claim in these words: “But they are advised, that the said trustees are jointly accountable to them, as well for what they have actually made, by the employment of said funds, as also for what they might have made, but for any negligence or default committed by them, or either of them.”

It would seem, that as the money, when received, and almost as soon as received, was judiciously invested, nothing more need to be said in regard to the claim, as stated by the petitioners themselves.

In the course of the argument, however, we have been referred to the receipt given to the register of the Court of chancery, which is proof positive, that the whole fund was, at the date of the receipt, in the hands of the plaintiff in error, and, therefore, it is contended, that he must be answerable for the whole. The argument would be entitled to much weight, and the authorities cited would be in point, if, after receiving the money, the plaintiff in error, had put it into the hands of his co-trustee, to malee the investment, and instead of investing it, the co-trustee had applied it to his own uses. No doubt, the plaintiff in error, is bound to account for the money he received from the register, and he does give the most satisfactory account of it. He invested it, as he was bound to do. He parted with it, because it was his duty to part with it,, and the case now is, precisely what it would have been, if the register had been directed not to pay the money to either of the trustees, but to the persons to whom it was loaned, upon such persons securing, by mortgage, its repayment to the trustees. If the enquiry was, what the trustees did with the money, which was taken out of the Court of chancery, it is easily answered, and both of the trustees would be found to be blameless. The case before us, would not be different, if only one, and either of the trustees, had been allowed by the court to receive and invest the money. The money in controversy, was money due from Tiernan, tire payment of which was secured by a mortgage, executed to the two trustees. Thus far, undeniably, the plaintiff in error, was not responsible for any part of it. But Scott, in the course of time, received and misapplied it. Of the receipt of it, the plaintiff in error, swears, (and it is not controverted,) that he was entirely ignorant. He did no act whatever, by which his co-trustee got the money, and left undone 'no act, which, if done, would have prevented the co-trustee from receiving it. Surely, if in such a case, the innocent trustee is to to be made answerable, it would be unreasonable to expect, that any prudent person could be prevailed upon to become one of two or more trustees.

It has been said, however, that by the terms of the loan, the money was due, and ought to have been collected; and, moreover, the appeal had been decided, and for that reason, the plaintiff in error, ought to have been prepared to pay it into chanceiy. There would be some plausibility in this, but for a fact which the record discloses, and which has not yet been noticed. The Chancellor, at the instance of a person, who claimed to be a creditor of the deceased, (S. McKim,) and for whose claim, if established, the land might be responsible, had passed an order, directing the trustees to retain the fund. How retain it? To be sure, they received the money, to invest it, pendente lite, between the real and pretended heirs, and the strict letter of the agreement, which placed the money in their hands, did seem to require, that they should be ready to bring it into chancery, upon the determination of that appeal. But, what was the obvious meaning of the agreement, upon which all parties acted? The money was to be invested, not to lie idle and unemployed in chancery, until chancery could distribute it. The appeal pending in the higher court, was spoken of, because, at the time, it was the only obstacle to the distribution of the fund. It was not the duty or the right of the trustees, to prevent the money from yielding interest, while the court had not., from any cause whatever, the power of distributing it. The order of the Chancellor, passed at the instance of an alleged creditor of Samuel McKim, put it out of the power of that court to distribute it; and the obvious intent of the parties required, that the investment, for the sake of interest, should continue, until that order was revoked. After the petition was filed, and the answers were put in by the trustees, the auditor reported to the Chancellor, that the fund could not yet be distributed, because of the last order of the Chancellor. We thus ascertain, that up to the date of Glenn’s answer, the money was, properly, bearing interest.

If there was any want of due diligence, in procuring a revocation of the order, who is to bear the blame of it? Surely not Glenn. With the creditor’s suit, he had no concern, and over it could exercise no control. It may be, that the petitioners, themselves, who must have been parties to that suit, might have procured its revocation at an earlier period, and might have prevented a delay in the settlement of this trust, until the defaulting trustee was no longer able to bring into court, the trust money, which he had received.

It has been said, (and m many cases of trust, it should be remembered,) that co-trustees are bound to watch the conduct of each other; and in a former case in this court, it was stated to be the received doctrine, that if the trustee, “who wasted the estate, was in any degree facilitated therein, by the acts and omissions of the other, they are both equally liable.” This doctrine, however, cannot prejudice the plaintiff in error. He, certainly, neither did, nor omitted to do anything, by which his co-trustee was, “in any degree, facilitated in wasting the estate.” But, may there not have been, in the conduct of the defendants in error, something of which the plaintiff in error, may justly complain? May he not claim the benefit of the maxim, vigilantibus non dormienbihus leges subserviunt ? So far as we can judge, it was owing to them entirely, owing to their remissness, in procuring a revocation of the Chancellor’s order, before spoken of; that the default of Scott remained a secret, until he became insolvent, and it may be until his death, gives to others a right to claim the portion of the fund to which he was entitled, as administrator of one of the claimants, if in no other character. Add to this, the statement in Scoffs answer, relative to the fees, which were justly due to him, for his services in these suits, and it must be believed, that while the plaintiff in error, has possibly been injured, it is by no means clear, that the defendants in error, or some of them, will not profit by sleeping upon their rights.

The money was lent to Tiernan, it is said, upon a short credit, and ought, when it became due, to have been collected by plaintiff in error. To this an answer may be given in a few words : The credit was necessarily for a short period, because, in a short time, the Chancery court might have been, and it was supposed would have been, able to distribute the fund. But the money was to be invested, and to bear interest, until it could be distributed, and it was an advantage to all parties, that another investment should not be necessary. The debtor might insist on paying the debt, andif he' had, the trustees would have been bound to receive it, and again incest it. If therefore the debtor did not offer to pay it to the trustee, there was no want of due diligence, in his forbearing to ask for payment.

We do not think that the plaintiff in error, ought to be charged with the money, which his co-trustee received from Tiernan, and his representatives.

Other questions were argued in connection with this, in which persons, not parties to this suit, are interested. Upon these we cannot intimate an opinion. We can only say, that the plaintiff in error, is not responsible for the money in dispute; of course he is not chargeable with interest on it.

With respect to the sum of $170.86, paid into chancery by the plaintiff in error, over and above the sum with which he was chargeable, the court can perceive no reason for refusing to return it. It cannot be retained on the assumption, that it had been received “on some investment not specified.’' This also is error.

The sum allowed to R. Johnson, Esq., has not been objected to, and of course must be allowed, without interest.

With respect to the credit of $300, which' is claimed as so much paid to Scott for professional services, and also the credit of $1350, which is claimed, it does not appear to this court that the plaintiff in error had authority to pay them out of the trust fund, or that he can claim a credit for them in the settlement of his account as trustee. The commission allowed to this trustee is correct.

The order of the Chancellor, dated 26th January 1842, will be reversed, with costs, and the case to be remanded to chancery, in order that the account of John Glenn, as trustee, may be stated as herein directed, and that such further order be taken in the case as any of the parties interested may apply for.

decree reversed and cause remanded.