39 Pa. Super. 445 | Pa. Super. Ct. | 1909
Opinion by
David Morrison was appointed guardian of Robert, Samuel and Theodore Clark, minor children of Richard Clark, deceased, on December 10, 1897, and continued to act in that capacity until September 27,1907, when he died. He opened an account as David Morrison, guardian, in the Enterprise National Bank of which he was a director. His first deposit was on February 3, 1898. The account was, at all times, subject to check without notice, and bore four per cent interest on balances. The guardian also kept a book account, exclusively for said guardianship fund. The entries in this book, as well as the bank book, show that the items of receipts, expenditures and deposits were all promptly and correctly entered. No other funds were mixed with the trust moneys. The receipts chiefly consisted of pension and rents and the disbursements were for taxes, repairs, insurance and personal expenses of his three wards. The receipts from the estate exceeded the disbursements.
On March 7, 1903, the guardian invested $2,000 of the trust funds in a mortgage on the property of one Edward Williams. On January 9, 1905, there was to his credit in the Enterprise National Bank, $819.99, and on October 18, 1905, there was $1,110.81 credited to this account. On the latter date the bank was closed by the proper authorities, and by reason of the defalcation and death of the cashier, said bank went into the hands of a receiver. He afterwards credited $75,76 to said ac
The receiver paid two dividends on account of said deposit, leaving a balance due the guardian of $957.26. We have stated the above facts from the appellant’s history of the case, at length, because we understand that they are substantially correct and that the appellee agrees therewith. The question involved is the liability of the guardian for the loss of $957.26 because he did not invest it in a mortgage or other good security, but allowed it to remain in the bank to the credit of his account as guardian from January 1, 1905, to October 18, of the same year, when the bank failed. The account filed by Anna S. Morrison, executrix, came before Judge Over, auditing judge, who allowed the credit for said $957.26, and the new guardian excepted to this allowance and on consideration, Judge Over dismissed said exception. The new guardian renewed the exceptions and on hearing before the court, Hawkins, P. J., vacated the former decree and surcharged the accountant with the said sum in bank and entered a final decree accordingly. To this decree Judge Over filed a vigorous dissenting opinion. It is from said decree of the court that this appeal comes before us.
The opinion of the court by Hawkins, P, J., says: “The prin
Judge Hawkins next cites his own case of Noble’s Est., 178 Pa. 460, which was affirmed by the Supreme Court on his opinion. But in that case the guardian mingled his ward’s money with his own so that it was impossible to trace the investments made for his ward. Therefore, he was surcharged with interest on the principal, etc. We are unable to see that that case has any bearing on the present one. David Morrison did not mingle his ward’s funds with his own nor with any other fund; he kept an accurate account of all receipts and disbursements on account of his wards and he kept a separate bank account of their funds in his name as guardian. The learned counsel for appellee states in the first sentence of his argument: “The only question in this case is whether or not the deceased guardian left the balance on deposit belonging to his wards in bank on an account hearing interest at the rate of four per cent per annum for a period of time longer than was necessary to secure a good and legal investment for the amount of this balance.” It must be borne in mind that it is a conceded fact that this account was subject to check on any date and therefore it was not an investment made at the risk of the guardian. It is expressly decided in Law’s Estate that the allowance of interest on such an account will not change the transaction into an investment.
A weak attempt was made to show that the guardian might by diligence have found an investment of this money on a mortgage during the eight months it remained in the bank. It is not shown, however, that the guardian had any knowledge of an opportunity to safely invest the money in a mortgage. The fact that this guardian made several other investments in good mortgages for his wards indicates that he was not negligent. The language of the learned auditing judge applies with much force to this phase of the case. “As he is dead, we cannot know certainly what efforts he made; but judging from the faithful and methodicál manner in which he managed his ward’s es
The testimony offered by the exceptant to show that a certain trust company could have furnished a mortgage for $800 to $1,000 while the fund in question lay in the bank is not very material. It is not shown that the guardian had any knowledge of this and if he did he may have had good reason for rejecting the mortgage. Counsel for appellee contends that the authorities cited by appellant’s counsel are not applicable to the facts in this case, and he especially refers to Neff’s App., 57 Pa. 91, and Fahnestock’s App., 104 Pa. 46, and Eyster’s App., 16 Pa. 372, but we think the principle considered and discussed in those cases does apply. In Neff’s Appeal it is stated in the syllabus: “All that a court of equity requires of trustees is common skill, prudence and caution. Executors, administrators or guardians are not liable beyond what they receive unless in case of gross negligence; when they act as others do with their own goods and in good faith, they are not liable.”
In Fahnestock’s Appeal the same principle is recognized. In it, Mr. Justice Clark said: “A reasonable degree of vigilance and the exercise of good faith is the standard of the trustee’s duty. The office is often a thankless one, and if, as we said in Eyster’s App., 16 Pa. 372, guardians or trustees are to be held responsible for all negligence, and are not allowed the exercise of a reasonable discretion and prudential care in the management of their trusts, it will deter prudent men from assuming the office which in itself is sufficiently onerous and already undertaken by such men with reluctance.”
In Bartol’s Est., 182 Pa. 407, it was held as stated in the syllabus: “A trustee will not be surcharged for a loss which has occurred to the trust estate if he has exercised common skill, common prudence and common caution: but, he will be held responsible for supine negligence or for wilful default.” To the same effect is Semple’s Est., 189 Pa. 385.
But there is another consideration which admonishes us to
But the learned court attached some importance to the fact that the guardian was a director in the bank and he presumptively knew of its insolvency. We think this inference was well answered by Judge Oveb in his dissenting opinion as follows: “Had he known of it would he not have withdrawn his own, the firm’s and the Allegheny Commandery accounts? And that he did not, rebuts any presumption against his integrity that might arise because he was a director, and it is also rebutted by the character of the man as shown by his faithful administration of his trust.
“There has surely been no wilful default by the guardian in this case, and as it seems clear that he has exercised the care, diligence and discretion in managing this estate that any ordinary man would in the conduct of his business, he cannot be charged with supine negligence, and he should not be held liable for the loss on the deposit in bank.”
The decree of the orphans’ court is reversed and record remitted with instructions to restate the account by allowing credit to the accountant for the money in the Enterprise National Bank; the costs of this appeal to be paid by the appellee