90 Mass. 427 | Mass. | 1864
There is nothing in the facts agreed which leads us to doubt the good faith of the guardian in making the investment which has resulted in a loss to his ward’s estate. Nor do we question the rule for which his counsel contendí, that if a trustee acts with good faith and a sound discretion in the investment of trust funds, he is not to be held responsible for
But the facts show that the guardian invested a considerable sum belonging to his ward’s estate in a note of his son, which he held, and which was wholly unsecured. In payment of this note he took the note of a manufacturing firm, who were at the time in perfectly good credit, but without taking any other security, not even the indorsement or guaranty of his son, from whom he received it. The question is, was this the exercise of a sound discretion ? We can have no doubt that it was not; and no case has been cited in which such an investment was ever sanctioned by a court. We think that to allow it would furnish a precedent of the most dangerous character, and would open a wide door to fraud. Such a note would not be taken by any bank of discount, much less by any savings bank; though the investments of savings banks, being regulated by statute, do not afford a precise standard of comparison. The transaction- puts the property of the ward at the risk of the business of the partnership, without any corresponding chance of profit.
We do not mean to decide that personal security is of itself insufficient; nor even that in no possible case could the promissory note of a single person be taken by a trustee. But under the circumstances which this case discloses, involving a sum large enough to require secure investment, and where there was nothing apparently to prevent the taking of other security, to put the property of a ward at the hazard of the solvency of a single individual or firm engaged in active business cannot be considered the exercise of due caution or of a sound discretion oi: the part of a guardian; and, a loss having ensued, he must be held responsible for it.
Decree of the judge of probate reversed.
