212 A.D. 417 | N.Y. App. Div. | 1925
While from the record before us we are convinced (and the special guardian concedes) that the trustees acted in good faith and for what they regarded to be the best interests of the estate in all these transactions, we are agreed that the investment^ made by the trustees in the securities enumerated under the heading “ Sales of reinvestments of proceeds of sale of Brighton Mills stock ” in Schedule A, section 2, of the account, and those enumerated in Schedule C of the account, are unauthorized either by law or by the will of the testator, and likewise, that the formation of the Scotia Realty Co., Inc., and the holding and handling by it of the property of the estate were unauthorized. The ruling of the surrogate as to these matters was proper.
The decree properly provided that if the trustees fail to convert the investment in the unlawful securities into legal investments
The trustees are entitled to a decree authorizing them to transfer to themselves individually all of the claims of the estate against the Scotia Realty Co., Inc., when they shall have complied with the decree and paid the surcharges.
Where a trustee has invested the trust estate in unauthorized securities a decree charging him with the amount so invested should transfer such securities to him to enable him to make payment out of the proceeds, as otherwise he might be rendered incapable of complying with the decree.
So also where a trustee invested an estate in mortgages or real estate without any authority in the will,' a decree charging him with the cash amount of such investment should vest title to it in him individually so that he may, if necessary, make use of the mortgages in order to comply with the decree. (Matter of Ryer, 94 App. Div. 449, 451, 452; affd., 180 N. Y. 532; Matter of Maitland, 81 App. Div. 633; affd., 178 N. Y. 612; Matter of Niles, 113 id. 547, 553, 554; Furniss v. Zimmerman, 90 Misc. 138, 141, 142.)
The decree should be modified by inserting a clause therein as follows: “ The trustees are authorized and empowered to transfer to themselves individually all of the claims of the estate against the Scotia Realty Co., Inc., upon compliance by said trustees with all of the directions and requirements of the decree and paying the amounts surcharged against them under the terms thereof,” and, as so modified, the decree should be affirmed, with costs to both parties payable out of the trust estate.
Dowling, Merrell, McAvoy and Martin, JJ., concur.
Decree affirmed, with costs to both parties payable out of the trust estate.