273 Pa. 341 | Pa. | 1922
Opinion by
These cross appeals are from the same decree and will be considered together. Christian H. Detre, late of Philadelphia, died on January 6, 1895, leaving a widow, one son and two daughters, and a last will which pro
No. 1. “$5,000 Aurora, Elgin and Chicago R. R. Co. 1st and refunding gold coupon 5’s, due 7-1-1946, purchased in July and August, 1912, at $94%, and now worth about $12.”
No. 2. “$3,000 Jacksonville Gas Company 1st Mortgage S. F. Gold Coupon 5’s, due 6-1-1912 to 1942, purchased Aug. 12,1919, at $94.50, and now worth $65.50.”
No. 3. “$5,000 Philadelphia Rapid Transit Company 50 yrs. S. F. Gold Coupon 5’s, due 3-1-1917 to 1962, purchased September 17,1912, at $99, and now worth $65.”
No. 4. “$5,000 Georgia Railway & Electric Co. Ref. & Imp. Mtg. S. F. Gold Coupon 5’is, due 7-1-09 to 1-1-1945, purchased on Dec. 3,1915, at $98.12, and now worth $70 to $72.”
No. 5. “$5,000 Terre Haute, Indianapolis & Eastern Transportation Company 1st & Refunding Mortgage S.*345 F. Gold Coupon 5’s, due 4-1-1910 to 1945, purchased Nov. 12,1912, at $98.25, and now worth $42 to $45.”
The beneficiaries excepted to the credit claimed for those five investments and the auditing judge, after a full hearing, dismissed the exceptions as to all the bonds except No. 5, which we will call the Terre Haute bonds; with the cost of which he surcharged accountant. From a decree of the orphans’ court dismissing all exceptions and confirming the adjudication the accountant brought an appeal, as did Annabella L. Headly, a beneficiary.
The trust, as stated in the will, was created to carry out an antenuptial agreement between testator and his wife, which necessitated its continuance until her death, and as to the son’s share of the estate the will provides for a continuance of the trust until his death, which naturally might not have been expected until long after that of the widow; so the testator doubtless had in mind the probability that some day another trustee would be necessary, which may account for the language, “his heirs, executors, administrators and assigns,” when referring to the trustee. Moreover, the individual testator appointed executor is not referred to by name in the paragraph creating the trust, nor is there anything to show an intent to deprive a succeeding trustee of the broad discretionary powers necessary to such management of the estate as the will directs. We conclude, therefore, that the lower court was right in holding the discretionary powers belonged to the office and not to the individual, and that accountant when appointed, under the Act of April 22, 1846, P. L. 483, succeeded to the discretionary powers of the former trustee: see Cresson et al. v. Ferree, 70 Pa. 446; also Wilson v. Pennock, 27 Pa. 238; De Silver’s Est., 211 Pa. 459.
Where, as here, a trustee is clothed with discretionary powers as to investments and reinvestments, neither the state constitutional provision as to trust funds, nor the rule as to legal investments, applies: Barker’s Est., 159 Pa. 518; Cridland’s Est., 132 Pa. 479, 484. In fact, the
When the investments in question were made, the beneficiaries were sui juris and consulted with reference thereto and in advance approved of purchases Nos. 1, 2 and 3, except as to the Aurora bonds (No. 1), which were bought $2,000 in July and $3,000 in August, 1912; it is. not clear that appellant, Mrs. Headly, approved of the former purchase in advance, while she did of the latter, which would indicate a tacit approval of the earlier purchase of the same issue. Moreover, much hereinafter said as to the Terre Haute bonds (No. 5) applies to the Aurora bonds, with the added fact that as to the latter the trustee had its agent make an advance investigation ¡upon the ground. As to the effect of the prior approval the court below aptly says: “Where all parties, of full age, with a vested interest, possession only being postponed to a future time, request the investment of that fund in certain securities, they cannot be heard nearly eight years thereafter, during all of which time they received the income from said securities, to question the propriety of making such investments, and charge responsibility upon the trustee for any shrinkage in value thereof.” And see Armitage’s Est., 195 Pa. 582.
Furthermore, the beneficiaries ratified these purchases (Nos. 1, 2 and 3) promptly after they were made and accepted the interest thereon for many years. The bonds were bought at current rates and, had they proved unsatisfactory to the beneficiaries, doubtless could have been resold without loss; so, such ratification, even if not conclusive, is a circumstance favorable to the trustee.
The exception to the Georgia Railway & Electric Company bonds (No. 4) was properly dismissed. They were, when bought in 1915, and yet are, good bonds. Referring thereto, the auditing judge says, inter alia: “In Moody’s Manual for 1914 these Georgia railway bonds are rated: ‘Security, very high; Salability, good; net rating, “A.’ ” His manual gives the facts from which this conclusion is
The surcharge of accountant with the cost of the Terre Haute bonds (No. 5), sustained by the majority of the lower court, in our opinion was error. They were issued by an electric railway company with five hundred and eleven miles of excellent track in and radiating from Indianapolis, connecting it with Terre Haute, Richmond and other cities and populous centers; serving in all over half a million people in steadily growing communities. It has an extensive power plant and one of the best interurban electric car stations in the United States. In discussing this branch of the case, the auditing judge said, inter alia: “It further appears that these bonds [were] issued by a syndicate of Lee-Higginson & Company of Boston, and Drexel & Company of Philadelphia,
The case must be judged as it appeared at the time of the investment (Wood’s Est., 272 Pa. 8), when electric railways and power companies were sharing in the general prosperity of the country, and before the great war (the most shocking calamity of modern times) had upset values, more than doubled the cost of labor and material, greatly increased the rates of interest, thereby tending to reduce the value of outstanding corporate securities; as did also the issue of vast quantities of government bonds. These conditions proved especially disastrous to public service corporations whose rates, possibly, could not be
All that a court of equity requires from a trustee is common skill, common prudence and common caution, and he is not liable when he acts in good faith as others do with their own property: Semples’ Est., 189 Pa. 385; Wood’s Est., supra; Neff’s App., 57 Pa. 96. Furthermore, a trustee will not be held personally liable for an honest exercise of a discretionary power, in the absence of supine negligence or wilful default (Bartol’s Est., 182 Pa. 407; Chambersburg Saving Fund Association’s App., 76 Pa. 203, 227), nor for the result of an intervening world calamity, beyond his power to foresee or prevent. In Pleasants’ App., 77 Pa. 356, 369, we said: “Under the powers given to the executors to invest, and an honest exercise of that power, we think it would be a very harsh application of law to their sound discretion, after this great lapse of time, to hold the executors personally liable for the loss of the bank stock. They should not be held responsible for not possessing a knowledge, and not exercising a forethought, superior to the great body of intelligent and prudent business men.” And see Fahnestock’s App., 104 Pa. 46, 52.
Hart’s Estate (No. 1), 203 Pa. 480, relied upon by the court below, is easily distinguishable from the present case. There the trustee invested $10,000 in the stock of a foreign manufacturing company in ignorance of its property, standing or prospects, but with knowledge that its earnings were not satisfactory, and it defaulted in less than two years. That case properly falls within the rule of supine negligence or wilful default.