In re the Estate of Young, 97 Iowa 218

In re the Estate of Young

97 Iowa 218 | Iowa | 1896

Granger, J.

*2201 *219I.Appellant presents two ques•tions for consideration, as follows: “First, as to whether the administrator should be charged with interest upon the money in his hands; and, second, should he receive any compensation, other than the percentage upon the estate allowed by law, being five per cent, for the first $1,000, two and one-half per cent, for the overplus, between $1,000 and $5,000, and one per cent, for the amount over $5,000?” The facts *220above found, by the district court, are not questioned, and, hence, we have a case in which the administrator had in his hands, for about twenty years, a large amount of money. By the terms, of the will, except as to a few bequests, the money must be retained, for distribution until 1890. This money was in no way invested for the benefit of the estate, but it was, as found by the district court, used by the admin - . istrator, in his private business. The district court held, under this state of facts, that interest, at the rate of six per cent., should be paid, and we will notice the reasons urged, why the holding should be disturbed.

II. It is said that the will itself did not direct that the funds should be invested. Nor did it direct otherwise. The testator might well suppose a plain requirement of the law would be observed. It did require that the estate should be converted into money as soon as practicable, which was done. It then provided, in effect, that most of the money should be held by the administrator until 1890, before distribution. The law determines that such funds shall be invested, if it can be prudently done in the interest of the estate. The rule seems to be well stated in Perkins Estate v. Holister, 59 Vt. 348 (7 Atl. Rep. 605), as follows: “It is a fundamental principle that it is the duty of a trustee, whether an executor or administrator or guardian, or as in the case of an ordinary nature of trusteeship, to keep the trust funds separate from all other funds, and also, when they are not to be primarily paid over, to keep them securely invested, and as profitably as he can, in the exercise of that degree of prudence which a prudent man would exercise in regard to his own funds; and that he shall derive to himself no gain or advantage by use of the trust funds; and that he shall neither make nor lose by his management of the *221funds, and for Ms lawful management thereof he shall receive a reasonable compensation.” It is not an unreasonable rule, that requires an administrator to do with such a fund, what a reasonably prudent man would do with his own money under the same circumstances. No prudent man would have held that money for all those years without investment if the way was open to do so with profit. The testimony shows that, during most of the time while the administrator had this money, it was worth ten per cent, per annum, and at no time less than eight per cent. 1

It is said that the general monetary situation, excused the administrator from depositing the money in banks. There was nothing to require such a deposit. If the record showed a reasonable effort to invest it, and a failure, because it could not be safely done, the situation would be different. No such effort was made, and, it appears, from the record, that, during all the time, the money could have been loaned safely, and with a profit greater than six per cent., to the estate. It is plainly apparent, that the administrator desired it for his own use, and the money was so employed. Schieffelin v. Stewart, 1 Johns. Ch. 620, supports a rule, as follows: “An executor, administrator, or trustee, is not allowed to make any gain, profit, or advantage, from the use of the’trust funds. If he negligently suffer the trust money to lie idle, he is chargeable with interest. If he converts the trust moneys to his own use, or employs them in his business, or trade, he is chargeable with compound interest.” See, also, Bond v. Lockwood, 33 Ill. 212; Merrifield v. Longniere, 66 Cal. 180 (4 Pac. Rep. 1176); Hook v. Payne, 14 Wall. 252; Eliott v. Sparrell, 114 Mass. 404; Lommen v. Tobiason, 52 Iowa, 665 (3 N. W. Rep. 715). It is said that the reports, filed from time to time, showed that he was not investing the money. Without saying, that such facts would excuse a failure to *222exercise proper diligence to invest the money, it is sufficient to say that the reports do not show that he was using the money, for which reason, under all the authorities, he would be chargeable with interest. The same considerations apply to a claim, that the parties knew that the funds were not being invested. If they even knew he was using them, it would reasonably bo expected that he would pay for the use.

It is said that the child might have died before reaching its majority, in which case a distribution would have been required, ' for which reason the administrator is excused for not investing the funds. The will fixed the time for distribution, when he attained his majority. It was the duty of the administrator to be guided by that provision, in which case the law would excuse him for not being prepared to meet an emergency, not contemplated by the testator. While, of course, such a death might occur, there was no such expectancy of it, as that it should in any way influence his course in the administration of the estate. The case is a remarkably clear one, authorizing the allowance of interest.

2 III. It is thought that the administrator is entitled to compensation other than that allowed by law, for his services, and especially so, if he is to be charged with interest on funds not invested. He received on account of the personal estate, four hundred dollars, that being the percentage prescribed, and also commissions on the sale of real estate; so that, in all, his compensation allowed is over seven hundred dollars. Had the estate been settled in the usual time for collecting and paying it over, he would have been entitled to the same compensation. The statute provides for extra compensation for actual, necessary, and extraordinary expenses or services. Code, section 2495. Services may be out of the ordinary class, either as to the kind *223or amount. The services in this case covered an unusual period of time because of the provisions of the will. The record shows receipts and expenditures extending over the whole period of the time. Such a service, "because of the length of time it was continued, may be said to be extraordinary.

3 The authorities are quite uniform to the effect that, where such an officer uses funds for his own benefit, he may be charged with interest with annual rests. The authorities cited, supra, are to. that effect. Notwithstanding this rule, the district court declined to allow interest with such rests, but allowed simple interest, and we assume that it took into consideration the facts of such service.

The legatees appeal also, and present the question of their right to interest with annual rests. In view of the situation, we are not disposed to disturb the judgment below, regarding it as approximating, as near as may be, substantial justice between the parties. The judgment is on both appeals affirmed.