269 A.D. 128 | N.Y. App. Div. | 1945
The decedent died on March 8, 1925, leaving a last will and testament appointing George Spicer, Sr., and Gardner G. Winship, as executors and eotrustees- of a trust created by his will for the benefit of his son, Borneo Felix Chabert Loomis, for his life with the remainder over to the testator’s other children then surviving. The trustees were directed to invest upon such security as savings banks are permitted to invest “ upon under the laws of the State of
It is conceded by the remaindermen and the bank that the certificates were worth par at the time of each redemption and, while the investment was illegal, no loss was sustained by the trust at the time.of cotrustee Spicer’s death. His estate may not be held liable for the acts of his cotrustee, Winship, after
Under the practice adopted in this case, it is clear that the Surrogate’s Court had jurisdiction of the respondent bank in-this proceeding. Under section 40 of the Surrogate’s Court Act, the court possessed full power to make a complete disposition by its decree. (Matter of Raymond v. Davis, 248 N. Y. 67.) The order of the Surrogate’s Court made the bank joint depositary of the securities involved arid directed that the securities should remain on deposit in the bank at all times, withdrawable only upon the order of the court. This was pursuant to the terms of section 106 of the Surrogate’s Court Act. This section further provides that an order of withdrawal can be made only when an additional bond is given. The custodian was the only one authorized to collect or receive either the principal or interest or any payment on account of these securities (Ditmas v. McKane, 92 App. Div. 344) and could not surrender the securities or pay over the moneys to the fiduciary without first obtaining permission from the court. (Matter of Butman, 130 App. Div. 156.)
The bank alleges in its answer that when the certificates wen-surrendered to the mortgage company the certificates were paid. The fact that the proceeds were immediately invested in other certificates does not exculpate the bank. Nor- can the acts performed by Winship, as an officer of the bank, be divorced from his acts in his capacity as trustee. We find that Winship V actions were of a dual nature and in a dual capacity, whereby he made himself liable as trustee and the bank liable for the breach of its duty. The bank may not be relieved because its system permitted Winship to obtain possession of these certificates without the knowledge of any other officer of the bank.
The decree, therefore, must be further modified by - holding that the bank is liable, together with Winship, as trustee, for the full amount of the surcharge.
We are of the opinion that the order reducing the obligation of the surety on the trustees’ bond was valid, and the decree should be further modified accordingly. It is claimed that this order was invalid because of failure to serve notice upon either the life beneficiary or the remaindermen. Section 106 of the Surrogate’s Court Act contains no direction requiring notice to be given. Under the provisions of that section the trustee is deprived of all individual control over the securities, and
The decree should be modified.on the law, as indicated herein, and as so modified should be affirmed, without costs, and matter remitted to the Surrogate’s Court to enter a decree in conformity with this opinion.
Close, P. J., Hagaety, Caeswell, Adel and Aldbich, JJ., concur.
Decree of the Westchester County Surrogate’s Court modified on the law (1) by eliminating therefrom the surcharge imposed on the estate of George Spicer, Sr.; (2) by determining that the bank is liable for violating the order of July 2, 1927, together with Gardner G. Winship, as trustee, for the full amount of the surcharge; and (3) by determining that the obligation of the surety on the trustees’ bond was validly reduced by the order of July 2, 1927, from $25,000 to $7,500. As thus modified the decree is unanimously affirmed, without costs, and the matter is remitted to the Surrogate’s Court for the entry of a decree accordingly.