79 W. Va. 233 | W. Va. | 1916
By a deed dated December 23, 1910, Hannah C. Keeney and husband conveyed to C. C. Lewis, Jr., the real estate owned by her, in trust for the payment of her indebtedness. Parcels of the lands then were encumbered by prior liens. The trustee sold some of the tracts. Others remain unsold. The money received from sales made under authority of the deed he had not distributed to the general creditors secured when this suit was brought, except that part thereof required to discharge specific prior liens. These he paid out of the proceeds derived from the sale of each tract encumbered. To enforce an accounting and distribution of the money in his hands to the pro rata satisfaction of the several debts secured, and for general relief, Elk Milling & Produce Company and others, creditors of Mrs. Keeney, brought this suit in the court of common pleas of Kanawha county.
The commissioner • to whom the cause was referred to ascertain and report the property conveyed and state an account with the trustee, ascertained a balance of $2452.65 in his hands, without regard to commissions or interest, the commissioner treating the one as an offset against the other. The court sustained plaintiff’s exception to the report, because it did not charge interest after thirty days from the receipt of the money to the date of the report, and by its decree required Lewis to account for the amount of interest reported to have accrued within the time stated. This decree the circuit court, on appeal, reversed; and plaintiffs have appealed to this court.
Section 6a, eh. 72, Code, in express terms says “all such trustees” in assignments for the benefit of creditors “shall appear before some one of the commissioners of the county court before which he qualified as such trustee, and lay before such commissioner a report of his receipts and disbursements, and his vouchers for the same, in all respects and with like effect as is provided for fiduciaries generally by chapter 87 of the code”. This provision, introduced into the statute in 1905, evidently was intended to classify trustees in assignments for the benefit of creditors among- personal representatives of decedents and other fiduciaries, and to subject them to the same rules and regulations in the administration of the property or funds entrusted to them.
While neither that section nor any of those contained in chapter 87 expressly require the payment of interest by trustees or fiduciaries, they do, when read together, as clearly they must be, govern the administration of the property of insolvent debtors in like manner and with the same effect as they do the administration of the estates of deceased debtors. So construed and .interpreted, they require trustees in an assignment for the benefit of creditors of an insolvent debtor, or in one that operates as such security under the laws of this state, to enter into bond “in the manner and with the effect as a personal representative of the estate of a decedent is
Lewis doubtless inadvertently failed to comply with the material provisions of these sections, and did not resort to any method, by suit or otherwise, to abbreviate the delay caused, as he contends, by the controverted liabilities to which we have referred. He did not lay before a commissioner of accounts for settlement an account of moneys received or disbursements made by him. .He did nothing to consummate the purposes of the conveyance further than to convert the major portion of the property into cash, or notes thereafter reduced to cash, which, so far as disclosed, still remained in his hands when this suit was brought, except that part thereof applied to the satisfaction of liens recorded or docketed prior to the assignment. He did nothing in compliance with any material command of the statute. In the meantime, interest on the debts secured was accumulating, without any corresponding increase in the fund set apart for their payment.
While, as observed, there is no express statutory direction for the payment of interest bj^ a trustee or fiduciary, such payment is required impliedly in section 5, chapter 87. For therein it is’ provided in substance that if a trustee, as well as any other fiduciary included within its terms, shall, by negligence or improper conduct, lose any debt or money he shall be charged with the principal thereof and interest thereon, in like manner as if he had received such principal. That is, whether the fund suffers diminution when readily avoidable, or he retains it intact by proper management, he is, under
Payment of interest will not be required of a fiduciary who is enjoined from distributing the funds in his hands ready for distribution'to those entitled thereto. Darby v. Gilligan, 37 W. Va. 59. Nor will he be chargeable with interest except where special circumstances seem to require. Crawford v. Fickey, 61 W. Va. 544. But interest is a proper charge against a trustee in an assignment, whose settlement shows a balance in favor of the fund in his hands, although the charge may not properly enter into the account as part of the interest bearing principal for subsequent years. It then is to be carried as a separate item until final settlement, except where the fund or a sufficient part of it has been applied to the liquidation of debts secured. In that event, his accounts will be settled upon the same basis as accounts between ordinary debtors and creditors. Van Winkle v. Blackford, 54 W. Va. 621, 652. That rule must be applied here, because virtually the final settlement necessarily must be between the trustee and the creditors of the grantor.
As observed, Lewis did not lay his accounts before a commissioner except as ordered in this cause. While it may be he did not at any time theretofore have in hand assets sufficient to discharge the indebtedness, for the payment of which that fund was pledged, a condition not disclosed, he did have enough to make a pro rata distribution to the creditors, taking into consideration the two controverted notes as probable charges. Payment of any part of these he could properly withhold until their validity as unpaid liabilities finally was determined. But he took no steps whatever to expedite an adjustment of the claims of the creditors, or place himself in a position where no default could be charged against him, except to notify other creditors of the contested claims and offer 'to submit to their direction. This does not furnish a sufficient cause to excuse the nonpayment of interest. A trustee is the intermediary between the debtor and creditor, and charged with the duty to be active and' diligent in the
But the basis assumed by the common pleas court for the computation of interest is not, as we conceive, the correct one. Thirty days after recepit of the money is too brief as the date from which to make such computation in cases of this character. A greater delay after cash payments were made should have been allowed as an opportunitj to permit a pro rata distribution to creditors or to make some other disposition of the fund paid for their benefit. The proper method of settlement of fiduciary accounts except in the case of guardians, the method apparently contemplated by chapter 87, is to compute interest on each item, where there are several, from six' months after the date of the receipt thereof to the date of the first succeeding annual settlement made as required by that chapter.
From what has been said, the conclusion readily deducible is that the common pleas court erred only in requiring the payment of interest from thirty days instead of six months after receipt of the items composing the fund in the hands of the trustee, and that the circuit court erred in exonerating
The objection that, as the bill is silent on the question of interest on the funds controlled by Lewis, none can be allowed is made and urged, evidently under a misconception of the proper procedure applicable to such cases. The bill prays an accounting, and the ascertainment of interest necessarily enters into that process. The settlement of an account implies consideration of all the elements and 'factors essential to its complete adjustment, one of these factors being the computation of interest.
Decrees reversed and cause remanded.
Reversed and remanded.