142 Mass. 422 | Mass. | 1886
The trust estate of which James W. Rollins was trustee was intended for the benefit of three children, a daughter and two sons, of the testator, by whom it was originally created in equal proportions of one third part to each. The income was to be added to the principal until the marriage or majority of the daughter, who was the eldest of the children. Upon the marriage of the daughter or her majority, the proportion of the trust estate intended for her benefit, together with its proportion of the accumulated income, was to be held in trust for her benefit during life, and the income thereof paid to her quarterly. Upon the arrival of each of the sons, respectively, at majority, the trustee was authorized, with the approval of the testator’s widow, to pay to each his proportionate one third of the trust estate, with its proportion of accumulated income. But if, in the opinion of the trustee and widow, if living, it would not be for the advantage of either of the sons to receive his proportion with its accumulation, the income thereof was to be paid to him during life, or until such time as, in the opinion of the trustee and the widow, if living, it would be for his best interest that he should receive his proportionate share, it being held in the mean time by the trustee. Upon the decease of each of the sons, the proportion of the trust estate held for his benefit was to be paid to his children, and, if he died leaving no
On January 31, 1866, Rollins, as trustee, filed an inventory of the estate thus held in trust by him. The daughter, Anna D. Bars tow, became of age on January 26, 1868, when the trustee, as he testified, set off to her “theoretically and in his mind,” but without any actual division, a third of the trust estate. On December 6, 1869, he presented his first account, by which it appeared that no income had been paid to the sons since the commencement of his duties under the trust, but that there had been paid to the daughter, from income received after her majority, $849.88. The trustee rendered no subsequent account to the Probate Court, and, failing to comply with the order of the court in relation thereto, this suit was brought upon his bond, on November 30,1881. No property was at that time held by him for the trust estate, and none has been delivered over by him to his successor, but certain amounts had been paid over from time to time by him to the different children, and accounts had been rendered to them severally, in which he represented himself as still holding in his hands the property, or a large portion of the property, as stated in the inventory returned to the Probate Court, except certain Concord Railroad shares, concerning the disposition of which no question now arises. All the trust property had been squandered by him in speculations as early as 1875, but the condition of the trust fund was not known until June, 1880.
Charles F. Barstow, the elder son, became of age on May 16, 1873, and on November 17, 1875, the trustee made up and
Henry T. Barstow, the younger son, became of age on November 11, 1879. In April, 1880, the trustee rendered to him an account based on that of May 16, 1873, (when Charles F. Barstow became of age,) purporting to show the net income on his share as it stood on May 16, 1873, and from that date the investment of principal and income, and reinvestments, as they stood in April, 1880, together with certain payments, &c. made.
The report of the assessor, included in the reservation of the case, gives fully the facts connected with the maladministration of this trust estate, and also the methods the assessor has adopted in determining the liabilities of the trustee. It will not be necessary to recapitulate them, except as we may do so in considering the exceptions thereto filed by the plaintiff and the defendant.
We consider those of the defendant, as those of the plaintiff may be incidentally dealt with.
1. The defendant objects that certain shares of the Philadelphia, Wilmington, and Baltimore Railroad, which were sold by the trustee, the proceeds being appropriated to his own use, have been charged to him as of their inventoried value, although it appears that their market value on July 10, 1871, when they were transferred on the books of the corporation, was $2.50 less on each share. The trustee wholly failed to show what he actually received for them, or when he sold them, and, in the absence of this evidence, the assessor was fully justified in holding him liable for the inventoried value. Where an actual loss properly sustained is shown, a trustee is not liable; but no such actual loss was shown, nor was the stock sold by the trustee in the discharge of any duty. Whatever the market price, he is properly chargeable with the inventoried value, certainly when he fails to show what he actually obtained. But while we have passed upon this question as presented by the exception, it is apparently not now of importance, if it shall be found that the
2. The assessor has held, both as to the shares of the Philadelphia, Wilmington, and Baltimore Railroad, and other shares in certain railroad companies (except the Concord Railroad shares) which were included in the trustee’s inventory, and which he has constantly represented in all accounts rendered by him as being in his possession, that the trustee is liable for the value of the same as that value was on November 30, 1881, the date of the writ; and, further, that the trustee is properly chargeable for all the dividends that were payable on the same up to that time. The defendant contends, by his second and third exceptions, that he can only be held liable for the market value of the shares when they were sold by the trustee, together with interest from that time, and for such dividends as were payable up to that time.
Under the power given by the will to the trustee, to sell and dispose of the trust property, to reinvest the proceeds, and to change investments as he might deem advisable, the defendant contends that the trustee should be charged with the. market value of the stocks at the time of sale, with interest thereon, as the wrong done consisted, not in the sale, which might lawfully have been made, but in the misappropriation of the proceeds. If the trustee had sold the securities for the honest purpose of reinvesting the proceeds, and subsequently, yielding to temptation, had misappropriated the funds, some force might be attributed to this argument. In Fowle v. Ward, 113 Mass. 548, it was held that, where one to whom shares had been pledged as collateral security sold them wrongfully, but for the full market price at the time, the plaintiff was entitled, on. a bill in equity to redeem the shares, to be placed in the same position as if the sale had not been made; and that, if he could not replace them, the defendant might be charged with the value of the shares at the time of filing the bill. To the same effect are Sewall v. Boston Water Power Co. 4 Allen, 277, and Emory v. Parrott, 107 Mass. 95. The sales in each of the cases cited were wrongful and illegal, but they are not therefore distinguishable from those made by the trustee in the case at bar. These sales were equally wrongful and illegal; ■ they were not a
3. On May 16, 1873, when Charles F. Barstow, the elder son, became of age, the trustee rendered an account of the trust property held by him for the benefit of the two sons, including accumulations, real or pretended, to the amount of $3148. This account treated the property which he had previously disposed of as still in his hands. On November 17, 1875, a settlement was made between the trustee and Charles F. on the basis of this account, and the income of his proportionate share, with its proportionate accumulation from May 16,1873, the date of his majority, to November 17, 1875, was paid to him, together with $2000 out of his share of the principal as accumulated, with the approval of his mother. The defendant by his fourth exception
In this connection, it may be proper to deal with the defendant’s sixth exception, which is, in substance, that the. settlement with Charles F. Barstow on February 16, 1876, which was on the same basis as that of November 17, 1875, already adverted to, and a previous one with Anna D. Barstow on January 27, 1873, were erroneously upheld by the assessor. Anna D. Barstow became of age in 1868, and the trustee “ theoretically and in his mind set off to her ” a certain share of the property. In 1869, he rendered a probate account, which was allowed, and he then had the trust property. The settlement with Anna D. of January 27, 1873," was a settlement of the income on her share from her majority to that time. The accounts then rendered were not treated by the assessor as conclusive, but as evidence. That there should be a rest, having relation to the time when each child became of age, that thereafter it might have the interest or income of the accumulated principal, we have already stated. The defendant contends that the statements made by the trustee in these settlements were false; that he had disposed of all the trust property at the time; and that therefore they- should be disregarded. These statements were made by the trustee in the discharge of his duty, and they do not embrace more than the trustee was bound to account for in the way of interest or dividends, and by them the sureties must be bound. McKim v. Blake, 139 Mass. 593. Apparently, if these settlements were
4. The fifth exception of the defendant is to the allowance of interest on Henry T. Barstow’s share from May 16, 1873. The trustee on that date had made, rendered, and settled his account to that date with Charles F. Barstow. The account was made of the estate of both sons. It included the income, which from that time, so far as the share of the elder son was concerned, was to belong to him, while that of the younger was to be accumulated still, as his minority had not expired. Hot only was no injustice done the trustee in compelling him to account for interest on this sum from that time, but, on this point, we think that the contention of the plaintiff is correct, and that, instead of computing the income from May 16, 1873, without a rest, one should be made on Hovember 11, 1879, adding, at the date of Henry T.’s majority, the then accumulated interest; and that, in this respect, the report of the assessor should be modified.
We have already passed on the defendant’s sixth exception; and his seventh exception was waived.
5. The defendant’s eighth exception is to the failure to allow commissions, or a sum equal to commissions, to the trustee. If the defendant is to be charged with the property and the income, whether from interest or dividends, in full, there should be such deductions as would have been made if the estate had been properly administered. While commissions, eo nomine, have not been earned by the trustee, yet, as he is to be treated as if be had faithfully administered the trust, and is to be held to the fullest responsibility, a sum equal to them may properly be deducted. Up to the dates of the settlements made with Anna D. Barstow and with Charles F. Barstow, commissions are included in the settlements, as made with them. The trustee is not to be allowed in any form such deduction more than once, but his wrongful
6. The defendant, by his ninth exception, further contends that the assessor has erroneously computed interest up to the date of the writ, and then made a rest, whereas interest should have been computed and charged to the date of the execution, no rest being made at any previous time. This, the defendant urges, is in violation of the rule laid down in McKim v. Blake, ubi supra. The contention of the plaintiff in McKim v. Blake was, that interest upon the principal found by the assessor to be due should be computed to the date of the judgment, and the amount then due thus ascertained; and that interest on that amount should be computed therefrom to the day of issuing the execution. But it was held by the cqurt, that interest on the amount converted by the trustee should be computed from the day the assessor found it to be due up to the day of issuing the execution, without any intervening rest. We do not understand from the assessor’s report that he proposes to make a rest at the date of the writ, and then compute interest upon the sum found due at that time. As a matter of convenience, he has carried his computations of interest to the date of the writ, but his report contemplates that they should be carried to the date when execution is awarded. That they should be thus continued seems to us clear, as the trust estate can in no other way be indemnified. As further claim for dividends on the stock would cease at the date of the writ, when the plaintiff is to receive their value as of that time, there should be interest on this value from that date to that of issuing the execution, and the interest also on the sums of money which the trustee held, or should have held, should be continued up to that time, without making a rest at the date of the writ.
From any amount which the plaintiff would otherwise be en- • titled to recover, certain deductions are to be made by reason of payments since the suit was brought, but we have not thought it necessary to enter into the computations which will be required to determine the precise sum for which execution should issue, as we have fully indicated the rules according to which they should be made.
The result is, that we adopt the theory set forth by the assessor in settling the account of the trustee, with the following modifications :
1. That, in computing interest, a rest should be made in the account of Henry T. Barstow when he became of age, on November 11, 1879.
2. That the defendant' should be allowed a sum equal to the usual commissions for services not included in the accounts rendered and settled by the trustee; such allowance to be as of the date of the writ.
Ordered accordingly.