174 Ky. 200 | Ky. Ct. App. | 1917
Opinion ok the Court by
Affirming upon original appeal and reversing upon cross appeal.
The Paducah Building Trust Company was incorporated on the 12th day of January, 1893. It embraced the features of an ordinary building and loan association with those of an investment company. It engaged in the business for which it was organized upon the date of its incorporation and continued until the 27th day of June, 1899, when it made a voluntary assignment for the benefit of its creditors. On the day of the execution of 'the deed of assignment, the assignee, named in the deed, accepted the trust, and was permitted to and did execute a bond, with the Fidelity & Deposit Company of Maryland, as his. surety, in "the sum of ten thousand dollars, conditioned that the assignee would well and faithfully and in proper time discharge all of the duties imposed upon him by the deed or by the laws of the land. The bond was executed in the county court, and iby an order of the court was duly accepted and approved. The assignee entered upon his duties, and at once took into his custody and control all the assets of the company, which he proceeded to convert into money. The assets consisted principally of loans made upon real estate security; and loans, the security for which was stock in the corporation. The corporation, also, owned real estate, office furniture, certain choses in action, book accounts, and a small amount of cash on hand. The assignee made ¿two partial .settlements with the county court, one of which was-made on May 7th, 1900, and another on November 30th, 1900, which purported to show the receipts and disbursements made by him between the two settlements, and up to the date of the last settlement. On the 11th day of March, 1901, the appellant, Fidelity & Deposit Company of Maryland, entered a motion in the county court, of which it gave the assignee -due notice, to require him to execute a further and addi
On the 23rd day of August, 1901, the assignee instituted an action in the circuit court for a settlement of the affairs of the assignor, and for a final settlement of his' trust. In December, 1903, orders were made in the circuit court removing the assignee from the further administration of the trust and appointing the appellee, Gip Husbands, as a receiver of the funds and assets of the assigned corporation, and directing the removed assignee to pay over and deliver to the receiver all the property of the corporation, which he had not theretofore distributed to its creditors and for other proper disbursements. The trustee having failed to comply with the orders of the court, the court, by proper orders, directed the receiver to institute an action against the trustee and his sureties to recover from them the assets and property of the corporation, which the trustee had received, converted to his own use and failed to account for. This the receiver did by the institution of the present action on the 23rd day of December, 1903, against the assignee and the sureties in the two bonds, and in which it was alleged that the assignee had received assets to the value of $117,915.17, and had distributed and accounted for only a portion of the assets received by him, and had converted the sum of $88,237.04 of the assets, to his own use, and prayed a judgment against him for that sum and a judgment against each of the sureties for ten thousand dollars, the amount of the liability of each upon the bond, upon which it was surety. The petition sought a surcharge of the partial
“The case should be referred to a commissioner to report the assets that came into the hands of the assignee and the disposition made of them; giving each party the right to file such additional pleadings as they may deem necessary, and take such evidence in support of their respective contentions as they may desire.”
Upon the return of the case to the circuit court, the parties agreed upon a commissioner and an order of reference, and the commissioner made and filed a report. Exceptions were filed to the report, to the effect,
The appellant, in its brief, fails to point out any inaccuracy in the report, <m to indicate any reason why it is not correct, but contents itself with the general assertion, that all the findings of the report are incorrect. Without referring to any reason or citing any evidence in support of its contention, it contends that each of the items of debit are incorrect and erroneous. The items specifically excepted to are only eight in number. The item of $8,546.60, on account of loans made upon stock, can not be complained of by the appellant, because the assignee is given credit by all of it. The amount colleqted from the sale of real estate is not charged as $13,752.99, as appellant claims, but $10,780.00. The
The general rule, which is applied in an action against a trustee of any kind for an accounting, is, that when assets are shown to have been received by him, the burden rests upon him to make a satisfactory accounting of them, and if he does not do so, the doubts and obscurities in his accounts are to be taken adversely to him. In the absence of evidence of the actual value of property, which goes into the hands of an assignee for creditors, he may be properly charged with the inventoried value. These principles are founded in the rules of evidence and common sense. The assignee must be presumed to know what he has done with the assets of the estate, which came into his hands for distribution, and what amounts he has realized from the sale of them, and what disbursements he has made, and this knowledge may be his, alone. The assignee must take the burden of all affirmative defenses to an action for an accounting against him, because otherwise it would devolve upon the beneficiaries of the trust to prove neg-atives, about which they may possibly know nothing and have very ill-convenient means of discovery, while the dispositions he has made of trust property and the disbursements made by him are directly within his knowledge and easy of proof by him. The commissioner allowed the appellant all the credits, which it or its principal claimed to be entitled to, 'except three, and they are the subject of exceptions. The first item claimed as a credit and disallowed is $119.94, which the assignee claimed as expenditures for expenses, which was denied, and no evidence was offered to sustain it. The second item claimed as a credit, but disallowed, is the difference between the sums of $3,767.20, which the assignee claimed that he had paid for attorney’s fees, and the amount of $2,684.00, which the commissioner allowed him, being $683.20. It appears that the sum of $2,684.00 is all that there is any proof tending to show that the assignee ever paid for attorney’s fees, properly chargeable to the estate. The third item, claimed as a credit and disallowed, is the sum of $3,084.10, which was allowed as a credit in the two county court settlements under the head of “bills receivable.” It appears that these were simply promissory notes, which the assignee
(2) The further contention is, that it is not liable for any act of the assignee after the 25th day of March, 1901, and that the settlements made by the assignee with the county court being prima facie correct, that they show that no conversion of the assets was made by the assignee until after that time, and hence there is no liability attaching to it, as a surety. This is based upon the fact, that upon its motion an order was made upon that date requiring the assignee to execute an additional or new bond. This bond was not executed, however, until the 15th day of April, 1901. Assets to the amount of $86,302.86 went into the hands of the assignee on June 27th,' 1899, and $2,000.00 as rents collected, thereafter, but at what times does not appear. The county court settlements do not show that he was charged with all of the assets or that he paid out all of same, which were in his hands, following each of the settlements; or that all of the assets, which he had received up to April, 15th, 1901, were intact, éxcept what had been properly disbursed up to that time. The settlements only show a portion of the assets received, and the distribution of the portion reported by the assignee as having been received. The fact that he failed to report and charge
“If a new bond is given, it shall operate a discharge of all the sureties making the motion from all liability for the acts of the principal thereafter done, and if the object be so specified, the bond shall contain a stipulation or covenant to indemnify the said sureties against any loss, cost or damage legally incurred by reason of said suretyship;” •
Hence, it does not appear, that under the provisions of these statutes, a surety, by requiring his principal to execute a new bond, can be released from any liability upon the bond upon which he is surety, except such as may be incurred by the principal after the execution of the new bond. If a covenant of indemnity, for the surety, who makes the motion, is inserted in the new bond, as ¡between the surety making the motion and the obligors in the new bond, the obligors in the new bond would' doubtless be liable for the entire defalcation, but this would not affect the liability of the surety in. the old bond to the beneficiaries of the assigned estate, except as to the acts of the assignee after the execution of the new
“In our opinion, the law requires the appellee (the surety in the old bond) to show what became of the money of appellant, which was received by the guardian while he was bound as surety upon his bond, and in the absence of proof showing clearly that at the date of the execution of the new bond the fund was intact in the hands of the guardian, he should be held liable for the balance shown by the proof to be due. ’ ’
In the instant case, the appellant was surety for nearly two years upon the bond of the assignee, after he had received all the assets of the trust estate, and before the execution of the new bond. The appellant does not pretend by any proof to show that at the execution of the new bond the undistributed portion of the assets was •intact in the hands of the assignee, or when the conversion of the assets took place, or what has become of them, and it can not escape liability until it shows by proof that the maladministration of the estate occurred after the execution of the new bond.
The cross-appeal of apipiellee is, because the court failed to adjudge that he was entitled to recover interest at the rate of six per centum per annum upon the amount of the recovery against the appellant, from the filing of the petition, instead of from the rendition of the judgment, only. There seems to be no reason why the contention of appellee is not just, and he is entitled to recover the interest from the filing of his petition upon the amount of the recovery.
It is, therefore, ordered that the judgment upon the original appeal be affirmed, but upon the cross-appeal, that it be reversed and remanded for a judgment consistent with this opinion.