81 N.J. Eq. 38 | New York Court of Chancery | 1912
The bill sets forth that the defendant the Paterson Safe Deposit and Trust Company holds as trustee for the complainant and others certain bonds and stock under the provisions of the will of Sarah A. Cooke, deceased; that these securities were investments made by the testatrix in her lifetime, and after her death, in May, 1905, passed to the defendant in trust as aforesaid, the complainant being entitled to the Income of an equal one-fifth share, the principal upon her decease passing to her children or next of kin. The exact date when the trustee received the securities in quéstion does not appear, but under the form of the notice this matter may he disregarded.
The hill alleges that the securities have with some little fluctuations steadily declined in market value from the date of the death of the testatrix down to 'the time of the filing of the bill. The percentage of loss from this depreciation is very great. Certain of the bonds have lost over nine-tenths of their value; • other of the bonds have lost about three-quarters of their value, and the third class of securities, certain stocks, have lost nineteen-twentieths of their value, all by this steady depreciation during this period of about seven years during a substantial portion of which period it may he assumed the trustee has been in possession of the securities charged with their care.
Apart from all general equitable rules controlling this situation, our statute (P. L. 1899 p. 286) provides that when a decedent has made an- investment in bonds or stocks like these now in question, and the securities come into the hands of a trustee under the will of such decedent, the trustee shall not be accountable for any loss by reason of his continuance of the investment, provided he so act “in the exercise of good faith and reasonable discretion.”
The hill charges that the defendant continued these investments of the testatrix “negligently and not in the exercise of good faith and reasonable discretion, and that great loss has been occasioned” to the complainant “by reason of such negligent continuance of said investment.”
The object of the bill is to compel the trustee to account for the above mentioned loss.
The sole objection to the bill presented by the oral and written arguments for the defendant is that it does not set forth any facts or circumstances from which the inference must be drawn that the defendant trustee has been guilty of negligence or bad faith. In brief, the objection is that a general allegation of negligence like a general allegation of fraud is a conclusion of law and is not adequate in a pleading in equity. As a demurrer, to which this motion to strike out the bill is an equivalent, only admits the well pleaded allegations of the bill, it is insisted that this bill must be condemned on the general grounds stated in the notice which with sufficient accuracy may be deemed “want of equity.”
It may be that there is room to argue that the steady and substantial loss upon these securities while the defendant trustee has had them' in charge, casts the burden upon such trustee of vindicating its management. The reasons why the trustee has retained these securities are certainly better known to the trustee than they are to the complainant. I do not, however, deem it necessary to determine the exact force of this suggestion.
I think this motion must be denied on the ground that the objection to the bill specified in the notice relates not to the substance of the charge which the complainant makes, but to the form in which that charge is made — to a mere matter of pleading and the character of the objection is not even indicated in the notice. If the defendant had a right to a specification of the circumstances during this period of five, or six or seven years from which the inference is warranted that the trustee acted negligently or in bad faith, it was very easy to specify this objection to the bill as. a pleading, and thereupon the complainant might have promptly amended her bill. The form of this notice conceals the real objection. A complete cause of action undoubtedly is alleged against the defendant trustee. The objection to the setting forth of such cause of action is merely that it
Without stopping to determine whether the objection to the . complainant’s bill would in this case have been fatal if the same had been specified in the notice of this motion, I confine my ruling to the single point that in the absence of such specification the bill will not be stricken out for want of equity. It seems to me that to strike out this bill for the reason assigned on behalf of the defendant in this notice would, to a large extent, emasculate the well-settled rules which are established limiting the force and effect of mere general demurrers. Demurrers at the present time are discouraged. It might be well, in my judgment, to abolish the demurrer in equity except when filed by leave of the court. In this case while the defendant’s brief sets forth the sharp and technical objection to the bill of complaint as a pleading, which I have discussed the complain
The conclusions above stated, I think, axe sustained by the following authorities: Essex Paper Co. v. Greace, 45 N. J. Eq. (18 Stew.) 504; Van Houten v. Van Winkle, 46 N. J. Eq. (1 Dick.) 385; Bishop v. Waldron, 56 N. J. Eq. (11 Dick.) 484; Goldengay v. Smith, 62 N. J. Eq. (17 Dick.) 354; Demarest v. Terhune, 62 N. J. Eq. (17 Dick.) 663, 665, 666; Stafford v. Barber, 74 N. J. Eq. (4 Buch.) 352; Central Railroad Co. v. Van Horn, 38 N. J. Law (9 Vr.) 133, 139, 140; Race v. Easton and Amboy Railroad Co., 62 N. J. Law (33 Vr.) 536, 539.
In considering the force of the authorities above cited, and particularly the two last cited cases decided at law upon demurrers to declarations, it must be borne in mind that this motion under rule 213 to strike out a bill of complaint is the exact equivalent of a. demurrer and was expressly provided by Chan.cellor Zabrislde, as the rule on its face demonstrates, as an elective substitute for a demurrer. As our rules (209 and 213) now stand regulating demurrers and notices of this character, the requirement is the same in regard to each mode of objecting to the sufficiency of a bill. The demurrer' must “distinctly specify the ground or several grounds of demurrer,” and the notice must “state the particular ground or grounds of objection.”
The policy of strictly confining the force of objections to