108 S.E. 407 | S.C. | 1921
September 27, 1921. The opinion of the Court was delivered by The amount involved in this case is large; the record is large, and the arguments are strong and extended; but, in *212 view of the full statement of facts set forth in the Master's report (let it be reported), it will be necessary only to write in general terms.
William James Murray, a British subject living abroad, was entitled to a fund of $125,000 that was under the control of the Courts of South Carolina. He made a conveyance of the fund to the two trustees, one a resident of Charleston, S.C. and the other a resident of the United Kingdom of Great Britain and Ireland, living on Jersey Island. From time to time there was a change of trustees, until T. Moultrie Mordecai, of Charleston, S.C. and Cyril V. Hawksford, of Jersey Island, were appointed, and administered the trust for a while. The funds of the trust estate were invested in South Carolina securities and lands located in Charleston. T. Moultrie Mordecai, the resident trustee, had actual possession of the property. He collected the income and forwarded it to the English trustee for payment to the cestui que trust. Under an order of the Court here, the trustees gave bond in the sum of $100,000 with the American Bonding Company, of Baltimore, as surety. In this matter Mr. Mordecai occupied a threefold position. He was the resident trustee, the attorney in fact, and also the attorney at law for the bonding company. The bonding company put the whole thing in Mr. Mordecai's hands to do with as he pleased. The thing that he did do was to appropriate all the securities to his own use and abscond.
This action is brought for an accounting, for the judgment for any deficiency, and to remove the trustees and to move the fund to England. The case was referred to the Master, who found that the foreign trustee was not liable, but that Mr. Mordecai was liable as principal and the bonding company was liable as surety. On appeal to the Court of Common Pleas, the trial Judge reversed the Master as to the foreign trustee. This appeal is from the Circuit decree, and raises two general questions: (1) Is the foreign trustee liable for the default of the resident trustee? (2) Is the bonding company liable? *213
I. Is the foreign trustee liable for the default of the resident trustee? The answer is, He is not. The rule is laid down in Miller v. Sligh, 10 Rich. Eq. 247:
"When there are joint trustees, the general rule is that each is liable for his own acts alone, and not for the acts of his cotrustees, except where he has contributed to them."
The terms of the trust contemplated the use of the fund for the support of the cestuis que trustent as their respective interests might appear. The fund was to be held in South Carolina, interest collected here, and sent to England for the support of the party entitled. The foreign trustee never had possession of the corpus. The record shows that it was never in the contemplation of any of the parties of the trust deed or any proceeding in Court that the foreign trustee should get possession of the corpus. The resident trustee was permitted to receipt to the former trustees for the corpus in his own name and also in the name of the foreign trustee. When the income was past due and unpaid, the foreign trustee began promptly to urge payment of the income, and notified the bonding company of the default, and did all he could to protect the trust estate. The foreign trustee could not have acquired possession of the fund and taken it out of the jurisdiction of the Courts of this State without the proper and well-recognized procedure for the transfer, and this would have taken more time than was allowed by the resident trustee. There is no testimony to show any want of diligence on the part of the foreign trustee, Mr. Hawksford, and there is no basis for finding him liable for the defalcation of the resident trustee.
II. Is the bonding company liable for the default? It is liable. The Court gave to the bonding company ample protection. The Court allowed the bonding company to secure a joint deposit, in bank, of the funds of the estate in the joint names of itself and the trustees. *214 It did not avail itself of the protection. The bonding company made it possible for Mr. Mordecai to do just what he did do. Even when the foreign trustee notified the bonding company that the resident trustee was not performing his duty, the bonding company notified Mr. Mordecai of the complaint against him; that pressure would be brought to bear on him; and practically notified him to make a clean sweep, if he had not already done so, and get away. A large part of the income was from municipal bonds of the city of Charleston (this the bonding company knew), and a failure to pay over an income so derived demanded prompt investigation. The bonding company could not escape liability even if it were liable only for gross negligence.
The bonding company complains that there was error in holding that the bonding company waived the joint control of the trust fund. This holding is abundantly sustained by the record, and there is no evidence that the cestui que trust waived anything.
The judgment of the Circuit Court is reversed as to the liability of the foreign trustee, Hawksford, and affirmed as to the liability of the bonding company. Cyril V. Hawksford is not liable, and the American Bonding Company of Baltimore is liable.
