134 Pa. 67 | Pa. | 1890
Opinion,
The testator died in May, 1873. He directed his executors to convert his estate, real and personal, into money, and, as to one third of the proceeds, to invest the same in “good real-estate securities,” aud pay the income thereof semi-annually to his wife, Jane Fesmire, during her natural life, and after her death then over to his children, or their representatives absolutely. He named his executors in these words: “ I nominate
The trust funds in this case were invested in three mortgages. One of these was for $4,000, one for $2,500, and one for $806.12, to which we will refer as Nos. 1, 2, and 3, respectively.
In October, 1883, Kerper represented to his co-trustees that the land covered by mortgage No. 1 had been sold by the owner, who wished to pay the money, and have the mortgage satisfied to enable him to make title to the purchaser. He stated at the same time that he had an opportunity to loan the
An examination of mortgage No. 2 disclosed the fact that Kerper had received the money due upon it, and attempted to satisfy it by his individual receipt. He never consulted his co-trustees in regard to the satisfaction of this mortgage, and when they discovered what he had attempted to do, they promptly disavowed his act, and began proceedings for the enforcement of the lien and the collection of the money, which are still pending. If the money is collected, it will be their duty to see to its investment at interest, as required by the will. If it is not collected because of the fraud of Kerper, they have neither done, nor omitted to do, anything which has contributed to render that fraud possible, or which can make them responsible for its consequences.
Precisely the same thing is true of mortgage No. 8. The appellants knew nothing of Kerper’s effort to get the money due upon it into his hands, until they learned it in the course of their investigations in the fall of 1885. It was a circumstance they had no reason to anticipate, and they are charge
The wrong that has been done has been the work of Kerper alone, so far as mortgages Nos. 2 and 3 are concerned. As to No. 1, the appellants put it in his power to satisfy the mortgage, and take the proceeds into his own hands; and then they neglected to perform the duty which the will imposed, viz., to see to its investment in good real-estate securities. Because of this neglect, they are liable for the amount of mortgage No. 1. Their duties as trustees require them to be vigilant and active in their efforts to recover on mortgage No. 2, and to convert into money the securities received from Kerper for the purpose of indemnifying them against his embezzlements. They must use due diligence to restore the trust funds, and provide an income for the widow; but they cannot be compelled to pay out money which they never received, and for the loss of which they are not accountable.
A question is raised over the contract between Kerper and the appellants bearing date March 31, 1886. When charged with his embezzlements, Kerper put such securities as he had in the hands of his co-trustees; and, by the contract between himself and them, he directed in what manner the money obtained on the securities should be applied. The order of application was, first, to the payment of the 14,000 received on mortgage No. 1, which was wholly lost to the trust unless it could be realized from the securities which he turned over under the terms of this contract; next, to the payment of the amount of mortgage No. 3, which had been received by him as the result of legal proceedings taken for its collection; last, to the payment, either to the trustees, or to the mortgagor, if
The decree is reversed, and record remitted, with directions to re-state the account in accordance with this opinion.