Comegys v. State ex rel. Dyckes , 10 G. & J. 175 ( 1838 )

Archer, Judge,

delivered the opinion of the court.

It is contended, that the bond upon which this suit has been brought, is void for want of jurisdiction in the Chancery court, t,o decree in the cause, or to appoint a trustee in the place of the former trustee, Mr. Schroeder.

As to the decree, it is contended, that the Chancery court had not jurisdiction of the persons of the infant defendants, as they had not been summoned. In answer to this objection, it is only necessary to say, that the infant defendants appear from the records to have been non-residents, and the acts of assembly have substituted the publication in place of the summons, at the discretion of the chancellor, and give the former all efficacy of the latter, without any appearance by guardian.

It is secondly objected that, the chancellor had no jurisdiction, because no bond was taken, to refund to the infants the amount of the purchase money, in case of a sale, should the infants within one year after arrival at age, make appear to the chancellor, that the mortgage was obtained by fraud, or that no deed was executed, or that the money secured by it, or so much as was claimed, was not due, in compliance with the act of 1785, ch. 72, sec. 2. The jurisdiction of the chancellor was clear and undisputed, to decree upon the subject matter of the bill, and upon its being filed, and parties made, his jurisdiction at once attached, and if this were a case requiring a refunding bond, the failure of that officer to comply with the requisition of the law, would have been error, for which the decree might have been reversed, but in no manner affected the jurisdiction of the court.

Again, it is urged against the jurisdiction, that no proof whatever was taken of the claim; whether there is any proof, or sufficient proof to support the allegations of a bill, is always a question to be decided, on appeal taken by some of the parties in the suit. It is not the proof which gives jurisdiction, but the subject matter of the bill, and nature and character of the claim. The jurisdiction of the Chancery court appointing the trustee, and in taking and approving the bond, has been questioned on account of the character of the proceedings in which the appointment was made.

Trustees are generally removed and others substituted by original proceedings, filed for that purpose. Cases may often occur where they may be removed without such special proceedings, and in the record of chancery proceedings offered in evidence in this cause, there being proper parties before the court, and all the cestui que trusts before the court, circumstances might occur where it would be clearly the duty of the court to substitute a trustee. As if it had been proved, after the trust fund had been converted into money, that the original trustee had removed from the jurisdiction of the state, or the United States, that he was entirely unworthy of trust, and to make a stronger case, had become so, after the execution of the grantor’s deed, creating the trust. Such a case would have imperiously demanded the substitution of a new trustee. The existence of such possible, nay, probable cases, and the nature and character of the redress sought, clearly demonstrates the jurisdiction of the court. It is true there is no proof in the record, that such a state of facts did exist, but the absence of proof does not affect the question, and if in the case before - the court, there was error in substituting a trustee, which we do not mean to assert, still the remedy was by appeal alone.

Whether it was competent for the defendant, who represents one of the' su'reties in the bond, which on its face recites the appointment of his principal as trustee, by a decree, of the court of Chancery, to make such objections, it is unnecessary for us to determine, as we think- there is clearly nothing in any of the objections taken to the-jurisdiction of the court of Chancery, either in passing the original decree, or in appointing a substituted trustee, or in his taking, and approval of the bond.

It is further objected to a recovery on this bond, that the money was received by the principal in the bond, before its approval by the chancellor, and before he was clothed by its approval, with the character of a trustee. If the trustee had in his hands the trust money, at the time of the approval, the bond immediately operated upon it, for by its condition, he was bound to take care of the fund committed tó his care, and as it was paid to him before, wp must presume in the absence of evidence to the contrary, that it still remained in his hands at the approval of the bond.

That no order was ever passed to pay the money over to the trustee, cannot affect his responsibility, if in fact it was paid. The object of the bond was to secure to the cestui que trusts, the very sum which was paid, and whether he received it in virtue of the chancellor’s order, or the voluntary act of the trustee who made the sale, he is equally responsible upon the trustee’s bond. An order for the payment of the fund, in court to him, was a matter of course, and its payment, as is apparent from the chancellor’s orders, was only delayed until the execution of the bond.

We by no means think there is a controlling analogy between the case of 7 Ear, and Jo, 444, and the present.

In that case, the duty of the trustee was to sell the land, and receive the purchase money, unless before a given day the mortgage debt was brought into chancery. The trustees never sold the land, but the mortgagor instead of bringing the money into court, as he had liberty to do, paid to the trustee the money, who would acquire no right to receive it, until the event had happened directed by the decree, the sale of the land. But in the cause now before the court, by the express terms of the bond, the trustee was responsible for investing or holding the property in money, committed to his care in trust, for Ellen Dyckes, during her natural life, and for her children, &c. after her death; and it is apparent from the proceedings, that at any time after the payment to him of the trust money, by Donaldson, when the bond was approved, that the chancellor would have ratified what was done, and the case would then stand, as if at the moment the bond had been approved. The chancellor’s confirmatory order had passed, and in such a case, the fund being in the hands of the trustee, (and we are bound to believe, there being no evidence to the contrary, that it remained in his hands,) the bond would stand as a security for its faithful administration.

The right to take the bond in the name of the state grows out of the character of some of the possible cestui que trusts, who could in no other manner have been so well secured.

The last question submitted is, whether interest is chargeable, and if so, in what manner.

The liability of the trustee to pay interest must be determined from the character of the trust, and the circumstances attending its administration. The trust money came into the hands of the trustee in the year 1818,, fifteen years before the institution of this suit, and was by the terms of the trust, to be held or invested for the use of Ellen Dyckes, the plaintiff, for life, and after her death for the use of her children, born or to be born. As a faithful trustee, bound to carry out the intention of the trust, it was his duty to have sought the aid of a court of chancery and its directions with regard to the disposition of the trust money, and not have permitted it to lie in his hands for a period of fifteen years, only serving to benefit the trustee himself, by giving him, additional credit in proportion to the extent of the trust fund, while in the mean time, the life of the cestui que trust, who-during the whole period would' have been entitled to the fruits of the fund, was wearing out without deriving any benefit from her life estate. If such a course eould be sanctioned in a court of equity, the office of trustee would be greatly sought after, the benefits of trusts enuring to the trustee’s advantage, and not that of the cestui que trusts, No evidence whatever was offered by the defendant to shew what disposition the trustee had made of the trust money. Under such circumstances the conduct of the trustee is left open to the most unfavourable presumptions, and if contrary to his duty, he had the funds in hands for so long a time without causing it to produce any fruits, or has used the fund, he is equally liable to the cestui que trust, for the interest which the fund would have yielded, and for interest on that sum according to the terms of the plaintiff’s prayer, which was granted by the court. By the terms of the trust, Ellen Dyckes was clearly entitled annually to the interest. As the principal was reserved for the use of her children, the trust could in no other manner have been carried out so as to be beneficial to her, and subserve the purposes and intentions of the trust, nor could she in any other manner be indemnified.

In Newson and Douglass, 7 H. & J. 453, this court say, that the question of interest according to the long settled practice of the courts, is referrible to the jury, but they at the same time designate certain exceptions to that general ?ule, within which, as we apprehend, this case falls. And 'the case of bonds, contracts in writing, to pay money on a day certain, or contracts for the payment of interest, or when Hioney claimed has been actually used, are pointed out as cases illustrating the exceptions to the rule. The trustee in this case having retained the fund claimed for so long a period of time, and furnishing no account of the same, he is to be treated as if he had actually used the fund claimed; and so w’ould be chargeable as a matter of right with interest. The case in 2 Gill and John. 430, will not be found to conflict with these views. That was a suit instituted on an appeal bond, and the plaintiff sought to recover the amount of costs on the judgment appealed from, and the value of the goods replevied, for which in the County court he had obtained a judgment for a return irrepleviable, and which was affirmed in the court of Appeals. The question of interest on the costs and on the value of the goods was left to the jury. There was nothing in the terms of the judgment which gave the plaintiff interest, either on the costs or on the value of the goods, nor any imperative obligation of law to pay interest, and that case was therefore properly put to the jury, to allow interest or not, according to the equity and justice of the case on consideration of all the circumstances attending it.

Finding no error in the opinions of the County court expressed in this case, we affirm their judgment.

JUDGMENT AFFIRMED.