53 N.Y.S. 25 | N.Y. App. Div. | 1898
In refusing to exonerate Thomas Rogers from liability for the devastavit of the estate by his co-trustee Cauldwell, the learned surrogate held that the decree of. March 16,. 1897, conclusively established the liability of' Thomas Rogers to account for the assets then shown to have been in the possession of the trustees. The verified petition which accompanied the account stated that the trustees had possession and control o.f such assets, and the decree being founded upon such petition and account concluded Thomas Rogers from being heard to question the same. We agree with the learned surrogate that the decree had the effect of establishing the liability of Thomas Rogers to account as therein directed, and so long as the decree stands he may not be heard to question it or his liability under it. (Code Civ. Proc. §§ 2552, 2743; Matter of Waring, 1 App. Div. 29; Matter of Underhill, 117 N. Y. 471.) While this law is sound, it by no means follows that Thomas Rogers was liable on account of such decree for the devastavit which had taken place, subsequent to the rendition of such account, by the act of his co-trustee, even though the whole sum of the devastavit was known to Thomas Rogers at the time of the entering of the final decree on March 16, 1897. The account was a joint account. The decree entered thereon did not purport to charge or find that the fund was in the possession of one to the exclusion of the other; it did establish a joint- possession and liability therefor for the fund
The learned surrogate, in addition to holding that the decree, entered in March,'1897, is a binding adjudication as to the joint
“Between 1876 and June 7th, 1886, Thomas Rogers was,to some extent, excluded .from control of the funds and securities of the estate by Columbus B. Rogers and against his own will,” and, “after 1876 and until June 7th, 1886, all checks drawn upon the bank accounts of the estates were signed by Columbus B. Rogers alone. At about the same time, when he deposited the cash in the Hanover Rational Bank, as aforesaid, Columbus B. Rogers placed the securities of the estate in the safe deposit vaults of the Rew York Stock Exchange and kept them there during his administration, during which time Thomas Rogers did not visit said vaults.”
The surrogate was requested to find that Thomas Rogers’ exclusion was absolute as to the cash and securities of the estate and against his will.. This request .was refused. ' We think it should have been found. After 1876, Thomas Rogers, for a period of ten years, and until 1886, when Columbus B. Rogers resigned as trustee, had no charge of the funds of the estate nor the control of its securities; he signed no cheeks, and did few acts in connection with the estate. The letters which he wrote, one of which appears in the record under a date as early as June, 1877, show that he then complained of his exclusion from the management of the estate to Columbus B. Rogers, and this was followed by other letters, the last of which was dated June 9, 1886. In these letters he asserts that he had faithfully discharged his duties as trustee so far as he had been permitted to act, and requests of his co-trustee an interview in respect to the trust property. To some of these letters Columbus B. Rogers replied; as to others, the attorney for the trustees- employed by Columbus replied, and directed Thomas that if he had anything to communicate he could do so with the attorney, who was authorized by Columbus to see him. Upon one occasion he suggested a change in a tenant who occupied a small property of the estate; the matter was promptly decided, and probably for good reason, against the suggestion, by Columbus. At another time
It is not contended but that the, management of the estate by Columbus B. Rogers was prudent and successful, and at no time was there any .reason to suppose that it was otherwise. Under such circumstances, the only right that Thomas Rogers would have had was to see and examine the books, securities and the cash account. He could not have obtained possession either Of the securities or the cash. If he had attempted to resort to legal remedy, and haled his
Such was Thomas Rogers’ relation to this estate down to the time when Columbus Rogers sought to be relieved as trustee. Thomas Rogers then desired, as the proof shows, to. be admitted to the activé management of the estate. It is evident that his desire in this respect was not approved by Columbus, and was resisted by the petitioners themselves. In this matter Thomas was powerless. By the terms of the will the right to appoint a trustee was vested in the widow of Jason Rogers, and the selection of the successor to Columbus Rogers became the subject of serious consideration. It does not seem that
It is, therefore, evident that the purpose of all the parties was to vest in Oauldwell the control of the securities and funds and the active management of the estate and to continue in this respect the same course that had been previously adopted by Columbus B. Rogers. The checks drawn by the Rogers Locomotive Works were delivered to Oauldwell, who deposited the same in his account and receipted for them in his own name; and this method was continued during the period of Cauldwell’s administration down to the Stir day of December, 1895. During this period the amount of dividends paid to Oauldwell by the Rogers Locomotive Works was upwards of $170,000, and during this time Oauldwell paid to the petitioners by his check as trustee the income to which they were entitled from the estate, and this involved upwards of forty payments. The petitioners also communicated with Oauldwell personally in respect to the payment of income, and several letters from both appear in the record. It does not appear that they ever at any time applied to Thomas Rogers or held any consultation with him upon this subject or any other connected with the estate. It, therefore, satisfactorily appears that, so far as the adult cestuis que trust are concerned, as well as Oauldwell, the co-t-rustee, it was. known by a uniform course of dealing for a period of fourteen years that Thomas Rogers neither had the funds of the estate nor control of its securities and did not receive or disburse its funds.
The surrogate has found most of these facts, and, as to those not found, the evidence satisfactorily establishes them. In 1888, as tire surrogate has found, William Oauldwell began drawing from the account, upon checks signed by himself, moneys which he applied to his own use. These withdrawals of"money were not entered in the ordinary books of account kept by him as trustee, but were indicated on the stubs of the bank check books, either as payments, to Oauldwell or as “ call loans.” As to most of these transactions, the monéys thus withdrawn were paid back by Oauldwell into the trust fund. But on September 1, 1893, when the account of
It does not appear that in any of these transactions Thomas Rogers was actuated by any dishonest motive, and evidently intended to secure the estate from loss on account of the misapplication of the money by Cauldwell. He took no steps that he was not advised by counsel to take, and the advance of the moneys and the securities which were taken were the result of advice received. It is doubtless the fact that Rogers was not only actuated by a desire to save the estate, but at the same time was willing to do all in his power, which he might legitimately do, for the protection of Cauldwell. . .
It is upon substantially these facts that Thomas Rogers’ liability has been determined to be co-extensive with the amount fixed by the decree of March 16, 1897, the misapplication of the funds by Cauldwell, and the subsequent advances made to him and paid out in and about securing the hotel and other properties, which sums amount in the aggregate to about $254,000. We 'are, therefore, brought to consider whether the legal relation which Thomas Rogers bore to
The further ground upon which he has been held liable is that he was guilty of gross negligence in the management of the trust estate, This only has practical force in the present application when applied to his acts after the appointment of Cauldwell as trustee. As we have already seen, it was the purpose of all concerned, except Thomas Rogers, that Cauldwell should step into the shoes and occupy the place and perform the duties which had theretofore been performed by Columbus B. Rogers. And we think it a necessary presumption, based upon the proof, that it was the expectation of the new trustee and of all the persons interested that Thomas Rogers should perform no other or different acts in connection with the estate than he. had been permitted to perform since 1876. It is quite as evident that he could have enforced no more legal remedies against Cauldwell prior to his deficits than he could have enforced
‘One other circumstance requires attention. In 1892. Thomas Rogers, desiring money,, applied to Oauldwell to obtain it¿ and Oauldwell consented to the sale of certain United States bonds, which were taken from securities belonging to the estate of Flora E. Rogers and sold, producing the sum of $26,000. This sum was delivered to Thomas Rogers and in return he gave a mortgage upon his share of' the estate for a corresponding amount. This transaction was not entered' in the books and was treated practically as a .substitution of securities. There was no attempt at concéalment'of the matter, as the mortgage was reported in the. account of 1893 and .received the sanction of the parties interested, and the decree of the. surrogate confirmed the transaction. It was an undoubted security, for the amount drew five per cent interest, as against a lesser sum for •the bonds, and the parties interested were quite willing it should remain. The inference, however, which is sought to be drawn from this transaction is that as it was an improper use of the securities of Flora E. Rogers it should have put Thomas Rogei-s upon his .guard against, the administration of the estate by Oauldwell. While it was not a prudent act upon Oauld well’s part, yet no amount of reasoning can produce a condition from which it may be said that the estate was less secure after the transaction than it was before, and we ;are not able to see that thereby Thomas Rogers ought to have taken notice that Oauldwell was abstracting money from the estate without
The learned counsel for the respondents relies upon Earle v. Earle (93 N. T. 104). In that case there was no exclusion of the executor, sought to be charged, from the management of the estate. He simply chose to permit his co-executors to. manage the same, collect' the assets and disburse the moneys, and by so doing constituted such co-executors his agents. This he did voluntarily, making no effort to inform himself of the acts of his co-exécutors, or in any manner to look after the estate, and it was held that he could not accept ' such a trust and remain supinely indifferent to the duties which it imposed, but that he. must act with due. caution and vigilance. There was no circumstance in that'case showing or tending to show that, by the common consent of all the adult parties in interest, a trustee ha'd been selected who was expected to manage the whole estate. Indeed, the case was disposed of upon the assumption that the trustee might have acted in respect to all the matters connected with the estate as freely, fully and without hindrance as could any other executor'. His indifference to the trust estate matters was, therefore, held, to constitute gross negligence, as thereby the estate was lost. The rule, however, was therein' recognized that an execu- ' tor is not. liable for acts of a co-executor' which he has not the means. of preventing or guarding against, or from which lie has no reason to fear a loss to the estate: Under such circumstances, he is only required, where he may exercise the means, to observe some degree of watchfulness and care over the acts of his có-executor. It is evident that we have quite a different case now before us than the. court was considering in the Earle Case. The points of difference are readily apparent from the facts which we have before recited, and do not call for further comment. We shall be quite ready to • uphold the doctrine in the Ea/rle case upon facts warranting its application, and we do not now, by this decision, extend the rule a
It is also asserted that liability attaches to Thomas Rogers by reason of his having joined in the accounts rendered, and accepting commissions for administration. As to the first consideration, we have seen that in fact Thomas Rogers knew nothing about the matters stated in the account except as he.was informed. It was not expected that he should, and while he was bound by the decree, he is not precluded from showing facts in exoneration, upon the same being opened for that purpose. In addition to this, he did look after some small matters connected with the real estate, and the case presented was, therefore, in some sense, a division of duty in administration, and where such condition exists, one trustee is not liable for the acts of the other, under circumstances involving no neglect of duty (Nanz v. Oakley, 120 N. Y. 84), and while bound by the decree, as we have seen, he may be permitted to establish exoneration.
The trustee is entitled to his fees as a matter of right, and he is not deprived of such fees by reason of the fact that his co-trustee does the greater share of the work while he remains passive. The basis of liability is founded in a wrong done or a dirty omitted, and this must be in respect of some act of administration. The mere acceptance of commissions does not establish either; liability must lie in other considerations ; and, when found to exist, charges the party, but he is not even then deprived of his commissions, as appears from allowances made in Bruen v. Gillet (supra) and Adair v. Brimmer (supra). We are, therefore, unable to find in any act sufficient from which it may be said that Thomas Rogers was guilty of any wrong or neglect sufficient to make him liable for the misapplication of funds by Cauldwell. A different condition at once arose when Thomas Rogers was informed by Cauldwell of his dereliction of duty'. That moment he became charged with an active, affirmative duty which he was required to discharge. This imposed upon him immediate action to prevent Cauldwell from, further continuing in the management of the estate. It was then, the duty of Thomas Rogers to communicate with his eestuis que trust; and while his failure to so communicate does not have the effect of charging him with the prior misappropriation of moneys
We come now to the proceedings by which Thomas Rogers was punished for contempt and committed to jail. It seems incongruous that the motion to punish Caüldwell, confessedly the person who has caused all the trouble, should be denied, and that Rogers should be made subject to the extreme rigor of the law. However, Thomas Rogers may not complain, as he is only to answer for his own wrong,
The order removing the trustees was proper and was a just exercise of power. Such order does not rest upon any of the decrees especially, but upon the facts appearing in the'record. '
Our conclusion, therefore, is that the order denying the motion to open the decree of March 16, 1897, be reversed, and said decree be opened so far as to permit Thomas Rogers to give proof in exoneration of his liability for the $20,000 ; that the decree of February. 21, 1898, so far as it charges Thomas Rogers with liability for the misapplication of funds -of- the estate by William Cauldwell, prior to the 8th day of December, 1895, is reversed, and in all other
Order reversed and motion granted, so far as to permit the appellant, Thomas. Rogers, to give ■ proof in exoneration of his liability for the misappropriation" of the sum of $20,000 by his co-trustee, William Cauldwell.
Order reversed, so far as it charges Thomas Rogers with liability for the misapplication of funds of the estate by William Cauldwell prior to the 8th day of December, 1895, and in all other respects affirmed:
Decree punishing appellant for contempt reversed, and appellant discharged from imprisonment, with leave to renew the-application in case there be any deficiency for which the said appellant, Thomas Rogers,' is personally. liable after a sale óf the property transferred to the estate by-his co-trustee, William Cauldwell. '
Decree of the surrogate affirmed.