In re Estate of McQueen

44 Cal. 584 | Cal. | 1872

Lead Opinion

By the Court, Crockett, J.:

The intestate, at the time of her death, left on deposit with the Hibeniia Savings and Loan Society a considerable sum of money, which was drawing interest, and on which interest would have continued to he paid so long as the money remained on deposit. But the administrator, soon after his appointment, withdrew the fund from the bank, and on rendering his final account for settlement charged himself with the principal sum, hut without interest. On the settlement of the account the Probate Court decided that the administrator was chargeable with interest on this sum from the time of its withdrawal from the hank, and ordered the account to he amended in this particular. The only-question on this appeal is whether or not this ruling was correct. The Court finds the facts to be:

“ That the administrator had, at all times, sufficient money in his hands to make all payments made by him without withdrawing said sum of four thousand nine hundred and thirty-four dollars and seventy-nine cents, or any part thereof, from said Hibernia Savings and Loan Society, and did not require to have said money, or any part thereof, in hand to pay off debts or expenses, and that by said sum being withdrawn the estate had been deprived of dividends which would have accrued thereon.

“ That the amount of the debts and expenses could not be known to the administrator before the expiration of ten months.

“ That the said Hibernia Savings and Loan Society, for many years prior to the withdrawal of said sum, had been and ever since has been a corporation formed for the purpose of receiving deposits and loaning the same for interest on real estate security, paying semi-annual dividends to depositors at the rate of from nine to twelve per cent per annum, and of universally recognized solvency.

“That the place of deposit of said sum was a proper one and of acknowledged safety, and that a man cautious and prudent in his own business could have permitted it to remain in said society.”

The correctness of the findings of fact are not questioned; hut it is insisted that on these facts the administrator is not liable for interest. The Court does not find that the administrator used for his own profit the fund withdrawn from the hank, nor that he mingled it with 1ns own money; and in the absence of a finding to that effect, the presumption is that he did his duty, and neither used the money for his own advantage or mixed it with his own. The Probate Court evidently proceeded on the theory that by withdrawing the fund from the bank where it was drawing interest, when there was no apparent necessity for doing so, for the payment of debts, or the expenses of administration, the administrator had prevented the accumulation of interest, and should therefore pay the interest himself. The authorities are uniform to the effect that an executor, administrator, or other person acting in a fiduciary capacity, will not be allowed to traffic, for his own advantage, in the trust fund under his control. But, as if for the purpose of putting that question beyond controversy, section two hundred and seventeen of our Probate Act p2'0vides that “he shall not make profit by the increase * * * of any part of the estate.” If it had appeared that the administrator had received interest on this money, it is clear he should have been made to account for it. But the rule goes further, and it is now well settled that a trustee having the control of a trust fund will be liable for interest, “if he mingles the money with his own, or uses it in his private business, or deposits it in bank in his own name, or neglects to settle his account for a long time, orto distribute or pay over the money when he ought to do so.” (Perry on Trusts, Sec. 4G8, and authorities there cited.)

And if it appear that the trustee has made a profit by the use of the fund, exceeding the legal rate of interest, he will be chargeable with the profit actually realized. But, as already stated, we are not at liberty to infer from this record that the administrator has abused his trust in this respect, and it is not pretended that the settlement of his accounts has been unreasonably delayed. If he is liable for interest, as the facts are here presented, it is solely on the ground that he withdrew the money from the bank under the circumstances already stated. Section one hundred iunl ninety-four of the Probate Act provides that “the executor or administrator shall take into his possession all the estate of the deceased, real ami personal, and shall collect all debts due to the deceased.” Money on deposit in a bank to the credit of the deceased may not constitute a “ debt,” in a strict, technical sense. But whether it be so or not, the statute contemplates that the executor or administrator shall reduce into his possession, with all reasonable dispatch, the property of the estate; and if he find money on deposit, even though the bank be one of admitted safety, and of undoubted credit, he must be allowed to exercise his discretion in good faith as to the propriety of reducing the money into his actual possession, so as to be ready to meet any exigency in the affairs of the estate. If he had permitted the money to remain on deposit, under the circumstances stated in the findings, the administrator may not have been liable, even though the money had been lost by a sudden failure of the bank, through some unforeseen calamity. But if he decided in good faitii, and in the exercise of his discretion, that the interests of the estate demanded that the money should be reduced into his actual possession, we are not prepared to say that he thereby became liable for interest, merely because the money was withdrawn from the bank, in the absence of any showing that he acted in bad faith, or used the money in his private business, or mingled it with his own, or deposited it in bank to his own credit. "We are not inclined to relax, in any degree, the stringency of the rule by which executors, administrators, and others, holding money in a fiduciary capacity, are forbidden to make a profit out of the trust fund, or to mingle it with their own property, or to deposit it in bank in their individual names, and to their private credit. It is their duty to preserve the trust fund intact, and to keep it separate and apart from their private funds, on pain of being held áceountable for interest, or for such greater profit as they may have realized from the use of "the money. It is only in this method that trust funds can be safely preserved, and great abuses prevented.

Judgment reversed, and cause remanded for further proceedings.

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Dissenting Opinion

Rhodes, J., dissenting:

In my opinion the Court did not err in charging the administrator with interest—there being not even a plausible reason for his withdrawal of the funds from the bank.