Cline's Appeal

106 Pa. 617 | Pa. | 1884

Mr. Justice Paxson

delivered the opinion of the court,

The error of this ease consists in the misapplication of well-understood principles of law. It is undoubtedly true that the measure of diligence and care required of a trustee is precisely that which a man of ordinary prudence would practice in case of his own estate: Fahnestock’s Appeal, 41 Leg. Int., 46. So, where an executor or administrator sells the goods and chattels of his decedent, the general rule is that he must take security or the sale is at. his own risk: Konigmacher v. Kimmel, 1 P. & W., 207; Johnston’s Estate, 9 W. & S., 107; Swoyer’s Appeal, 5 Barr, 377.

In the case in hand the testator directed that his tan yard and farm “ be controlled by my executor until such time as my son John shall have become twenty-one years old. Then my executor and my turn sons, Henry and John, to carry on the tanning business (the yard to be stocked out of the funds of my estate), half of the profits of the tan yard &e. for the use of my two sons, Henry and John; the other half to go into the hands of my executor for the use of the other members of my family, to wit, my wife and my other children; my sons, John and Henry, to be at an equal expense with my executor in conducting the business of tan yard and farm. I also wish and will that John C. Danner may and will still continue in the yard, and direct affairs under and with the approval of my executor until such time as circumstances may require a change.....My friend, Andrew Cline, I appoint my executor.”

The said Cline took upon himself the execution of this trust. He appears to have been an old man, and there is nothing to show that he had any knowledge of the tanning business. In 1877 lie filed an account in which was included the administration of his trust for the first five years. The present account was filed by his administrators after his death. This contention grows out of an attempt to surcharge his estate with the amount of a bill of leather, $1,304.52, which in 1873 he sold to the firm of J. W. Lescure & Co. oil account of Samuel Grove’s estate. It was urged on behalf of the widow and children of Samuel Grove that the sale was improvident; that Lescure & Co. were at that time insolvent, and that with reasonable diligence and proper inquiry on the part of the executor he would have ascertained that fact; and that he should have sold the leather for casli or taken security for the payment of the money.

The auditor’s finding of facts was meagre and not entirely satisfactory. He finds, however, that the firm of J. W. Lescure & Co. were insolvent in August, 1873, at which time the real estate of one member of the firm was sold by the sheriff. He finds further that “about December, 1872, Clinton Keister, a witness before the auditor, who had been selling leather to said firm, discovered on inquiry that they were not responsible, that their real estate was incumbered to its full value, and that the firm was insolvent.”

This bill was sold in March, 1873. There was no finding that at that time the credit of the firm of Lescure & Co. was not as good as during the lifetime of the testator. It does not appear to have been at any time a firm doing a large business, or having a large capital and credit. Yet the testator, shortly before his death, appears to have dealt with it. Andrew Cline, the executor, charges himself in his first account with $544.35 received for leather from the firm. There is no direct proof that this leather was sold by the testator, yet, as it was not pretended that it had been sold by the executor, we have a right to assume, what all the probabilities of the case indicate, that this sale was made by the testator. If the leather sold by the executor in March, 1878, had been manufactured by the testator, and had come into the hands of his executor for the purpose of closing up his estate, there would have been more reason for holding the estate of the executor responsible for the loss upon the sale. In such case it might have been his duty to take security. But the testator directed his business to be carried on for an indefinite period for the benefit of his estate. He may have thought he was acting wisely in doing so. As a general rule, such provisions in wills result disastrously, and this case is not an exception to the rule. It has certainly impaired the estate. But we must be careful not to throw the consequences of the testator’s folly upon the executor unless it clearly appears that he deserved to be so punished.

The position that the executor should have taken security for the leather is not worth discussing. With the sharp competition of business it would be unreasonable to require security from every customer. There would be no sales upon such terms. This executor was to carry on the business in the same way the testator had been carrying it on, and in no other manner., If it resulted in a gain the estate would have the benefit of it; if in a loss, such loss must fall upon the estate. It would be a harsh rule to put the losses Upon one who had no possible participation in the profits.

This loss was a business loss. Looking at it from the light we now have the sale was unwise. Yet we cannot doubt that it was made in perfect good faith. The executor found that his testator had sold the firm leather, and, as before stated, he received the money for one bill of several hundred dollars which had been sold by him. This was about the time the executor sold the bill of March, 1873. Other tanners were then selling the firm, and its general credit and reputation had not been seriously impaired.

Aside from this, it is plain from Samuel Grove’s will, that his executor was to have merely a general supervision over the business. It provides that John C. Danner, who appears to have been a brother-in-law of the testator, was to remain upon the premises and direct the business. Danner was there when testator died, and was to remain and manage the business. The testator no doubt had entire confidence in him, and it was this confidence in all probability which influenced the testator to make the provision for continuing the business. That he relied upon his executor, an old man, unacquainted with the tanning trade, to enter into the details thereof, is hardly among the possibilities. The executor had a general supervision, nothing more. And nothing more was possible under the circumstances. Without the constant personal care of a practical tanner, no profit could be expected. This the executor could not give without relinquishing entirely his own affairs, and wore he disposed even to do that, there is nothing to show that he was competent.

We have no information as to what care, if any, was exercised in making this sale. It may have been made by the executor, or it may have been made by Danner. The executor is now dead. If he were living he might possibly explain the transaction. He may have made inquiries in regard to the standing of Loscure & Go., which to him were satisfactory. No attempt was made to cast this burden upon him until after his death, although there was abundant opportunity to do so before. It would be a harsh rule to charge his estate with the loss of this money now, and the law does not require us to do so.

Under the circumstances, we do not attach much significance to the fact that the note was taken in his individual name. Pie was carrying on business for an estate, and, to some extent, upon iris own credit. Nor is it materia] that no suit was commenced upon the note. If nothing could have been recovered by means of a suit, it wouid have been a waste of money. There is nothing to show that the money could have been collected, and the renewal of the note was within the executor’s discretion. And his discretion appears to have been exercised in good faith.

We are of opinion that the court below erred in surcharging the estate of Andrew Cline, deceased, with the sum of $2,183.23, and in imposing the costs of the audit upon said estate.

The decree is reversed at the costs of the appellees. and it is ordered that the record be remitted for further proceedings in accordance with this opinion.