203 Pa. 480 | Pa. | 1902
Opinion by
Samuel Hart, the testator, died June 2, 1885, leaving an estate, approximately, of the value of $170,000, consisting of land in Philadelphia and Montgomery counties, also a large amount of personal property made up of stocks and bonds in many corporations. Julia Hart, his wife, and Charles Henry Hart, his son, the latter this appellant, were appointed executors and trustees under the will. In May, 1886, less than a year after the death of testator, his widow, Julia Hart, died and thereupon, all the duties of executor and trustee devolved upon the survivor, this appellant. No inventory of the personal property had been filed by the executors, and none had been demanded by the beneficiaries. Fifteen years thereafter, when directed to do so by the orphans’ court, the surviving executor filed an account both as executor and trustee. The auditing judge, after testimony taken, directed a restatement of an account, and on the restated account distributed the balance. Exceptions to his adjudication were filed, and after hearing, several were sustained, but the conclusions of the auditing judge were in the main not disturbed. Tins appeal is from the final decree of the court below. Appellant’s first assignment of error alleges' that the court erred in surcharging the executor with the principal of an investment of $10,000, iEtna Iron Company bonds, with assessments thereon of $1,200, and interest amount*' ing to $9,603.33.
The duties imposed upon the executors and trustees are
As already noticed, the widow died in May, 1886. On January 3,1887, appellant purchased as an investment for the estate, $10,000 six per cent mortgage bonds of the .¿Etna Iron Company at par. Four semiannual payments of interest were made; afterwards assessments were made upon them which appellant paid out of other money of the estate ; then the mortgage was foreclosed and a reorganization had ; under the reorganization plan, appellant accepted for the original investment, $10,000 Ironton Coal Company stock and $1,200, Ironton Coal and Iron Company bonds. The property of the company, on which the original mortgage was given to secure the bonds, was at Ironton in the state of Ohio ; it consisted of land and furnaces for the manufacture of iron ; the character and value of the property are not otherwise stated; the whole issue of bonds secured originally by the mortgage was $350,000 ; appellant purchased the $10,000 from brokers in Philadelphia ; so far as appears, he never saw the mortgaged property; he did not know the capitalization of the company, whether it was paid, nor its earnings; he says he did know the earnings were not satisfactory. The purchase was made under the advice of a person who had guided
The express authority given the executors and trustees by the will is found in the twelfth clause, as follows:
“ I make, constitute and appoint my dear wife Julia Hart and my son Charles Henry Hart executors and trustees of this my last will and I give to them,, and to the survivor of them, full power to sell or exchange any real estate, either for cash or on mortgage or upon ground rent, without liability on the part of any purchaser to see to the application of the purchase money, of which I may die seized and I appoint them guardians of the estates of any minor children entitled to any part of my estate, and I also authorize my said executors and trustees to continue to hold as part of my said estate herein created any stocks or bonds forming part of my estate at the time of my death, and to sell any part thereof and to invest tire proceeds in such other securities as may in their judgment be best.”
The last words of the clause, “ To sell any part thereof and to invest the proceeds in such other securities as may in their judgment be best,” are relied on as authority for this investment. Taking these words by themselves, they would seem, as argued by appellant’s counsel, to give authority almost unlimited ; in any review of an act of investment, the trustees might simply answer, “ the investment was according to my best judgment; ” and that would be the end of the matter in the absence of fraud. But appellant’s duty as trustee is not to be interpreted solely by this clause, but by the intention of the testator as manifested in the whole will. Except as to comparatively small bequests and the share of his son, Charles Henry Hart, the income, alone, during a life or lives, is to be paid out and then as contingencies happened the principal was to be distributed. The duty of preserving the principal for the remoter beneficiaries was just as clearly imposed,, as that of paying to the immediate ones the income. Except as to testator’s sister, Bluma Hart, who was to be paid an annuity of $600, and as to his wife annually $15,000 for the support
Here, it is proper we should discard an idea, which is suggested by a looseness of statement in some of the authorities. For example, in Cridland’s Estate, 132 Pa. 479, occurs this language : “ A trustee is not required to be infallible in his judgment nor to possess the power of anticipating events not generally looked
A careful scrutiny of accountant’s own testimony throughout fails to show in view of his duty to others, the exercise of judgment or prudence as to this investment. The mortgage was on a manufacturing plant in another state; he did not know its value, whether estimated by what it would bring at a sale in the market, or by its income from operation; estimating it at the amount of the mortgage he invested in, a one thirty-fifth interest at par, it was such a small fraction as gave him practically no influence in the control of the property, and but little as a purchaser or as party to the reorganization. The very fact that within less than two years the company defaulted on the mortgage interest, while far from conclusive, is some indication that it was an imprudent investment by a trustee of the money of others. His testimony shows he did not know, approximately, the value of the property then and does not know now. He consulted, before purchasing, one who had “guided” his father in investments, and presumably the brokers whose interest it was to sell the bonds; he does not state what opinion either gave to him, nor what statement he made to them. If he had said to them, the $10,000 was the money of his sisters and their children, given him as trustee to be safely invested, their opinion, if they were men of probity, might have been very different from that they would have given him if they believed he was investing his own money. But however this may be, whatever they may have said, he was not relieved from the duty of exercising his own “best judgment.” When his conduct was questioned, the burden was on him to show that under the.circumstances it was dictated by, at that time, a reasonably sound judgment, even though it had turned out an unfortunate one. He wholly fails to do so. At best, admitting that the twelfth clause of the will takes him out of the operation of the
The extent of the power in the Pray will was even less restricted than the one before us, for the testator says: “ It being my will and intention to vest in my said executor all the power and authority necessary for the management and settlement of my estate in such manner as he in his discretion shall find requisite and see fit to exercise as fully and effectually as I myself could lawfully have and exercise if living.” We do not say, that a trustee under a power given in such a will as the one before us, cannot lawfully invest trust funds in the mortgage bonds of a manufacturing company except at the risk