| U.S. Circuit Court for the District of Southern Alabama | Dec 15, 1874
The complainant bases her claim for relief substantially on two grounds: 1. .That the defendant did not keep the trust estate separate from his own, but mingled it with his own money, and thereby made himself the debtor of complainant and liable to pay absolutely the trust money with interest. 2. That the defendant was not justified. in receiving Confederate money worth less than thirty cents on the dollar, and then retaining that without investment until it became entirely worthless.
As to the first ground, it is obvious to remark that the evidence of the defendant himself shows that he treated the trust fund as his own, and. mingled it with his own. He kept, no account and could render no account. He cannot state at what rate of interest the trust money was loaned, and with the exception of Simmons Harrison, he does not name any person to whom it was loaned. When the loan was returned to him in Confederate money by the representatives of Harrison, he makes no pretense of keeping the funds separate from his own. ' In fact they had before that time been mingled with his own, so as to be indistinguishable. It seems evident from defendant’s own testimony that he thought he would discharge his trust by paying over to complainant the interest yearly, and then upon the death of her husband, paying over to her the principal. He therefore kept no account of the trust funds, but mixed and loaned them with his own. It does not appear that he ever took a note payable to himself as trustee, or that the evidences of debt received by him for the loan of trust funds had any ear mark by which to distinguish them from his own. In fact he states • distinctly that he mixed his own funds with the trust funds, in making his loans. . A trustee is not permitted to so treat the trust property. When he does so, he becomes debtor to the trust, and if there is a loss, it .is his loss and not the loss of the trust estate. • '
It has been held that where the subject of a trust is money, the trustee, in making a deposit of it in the bank, should be careful to do it io the account of the trust estate and not to his own account; for should he deposit it to his own account, he would render himself liable for it on the failure of the bank. Wren v. Kirton, 11 Ves. 377; In re Stafford, 11 Barb. 353" court="N.Y. Sup. Ct." date_filed="1851-07-07" href="https://app.midpage.ai/document/in-re-stafford-5458092?utm_source=webapp" opinion_id="5458092">11 Barb. 353; McAllister v. Com., 30 Pa. St. 536. If the trustee deposits the.trust funds in his own name, he thus mixes thém with his own private funds which always .renders him liable in case of loss. Lupton v. White, 15 Ves. 432; Chedworth v. Edwards, 8 Ves. 46; Duke of Leeds v. Earl of Amherst, 20 Beav. 239; Fellows v. Mitchell, 1 P. Wms.
2.But suppose the defendant had kept the trust funds distinct from his own, that he had loaned them separately and taken evidence of debt to show that the money loaned belonged to the trust, was he justified under the circumstances detailed in the evidence in receiving repayment of the loan in Confederate notes? When Harrison’s representatives paid up the money borrowed by their intestate in March, 1803, Confederate notes were worth less than thirty cents on the dollar, according to the statement of the answer. According to the same authority, It was impossible to invest them in any permanent or valuable property. A trustee who lends good rponey and receives it back in such a pretense for a currency ought to be able to show good reason for so doing. No stress of public opinion, no odium or unpopularity arising from a refusal to take such currency would justify him in thus dissipating the trust es- ' tate. Nothing but compulsion would justify a trustee in such a course. Horn v. Lockhart, 17 Wall. [84 U. S.] 581.
There was no law of the Confederate States obliging the defendant to receive Confederate treasury notes. They were not even made a legal tender. No law of the state of Alabama compelled the defendant to receive such currency. And the testimony fails to satisfy me that a trustee, refusing to receive funds of the trust estate in such a depreciated currency, would have been subjected to any injury of person or property, and nothing short of such compulsion would have justified the trustee in thus administering the trust estate.
The defendant claims, however, that by a verbal understanding with his father, the testator, he agreed to receive no compensation for his discharge of the duties of the trust, and that he was to manage the business of the trust with the same care as he did his own, and that having done that, he is discharged from liability, notwithstanding the loss. In reply to this, it is sufficient to say that the trust is created by will, and cannot he modified by verbal understanding had between the trustee and the testator. Nor does the fact that the trustee agreed to manage the trust without compensation relieve him from the consequences of his mismanagement. Under the will by which the trust was created, the defendant was entitled to compensation. He cannot relieve himself from liability for mismanagement by now saying that ne did not charge or expect compensation.
Finally, it is insisted that under the will by which the trust is created, the trust money was to be kept in the hands of the trustee until the death of the husband of the complainant. and then paid over to complainant, that the bill prays, among other things, that the trust fund be paid over to complainant, ner said husband being still in life; that this prayer is contrary to the terms of the trust, and ought not to be granted, and that no other relief than that prayed for can be administered, even though there is a prayer for general relief. I cannot yield assent to this proposition. “The usual course is for the plaintiff, in this part of his bill, to make a special prayer for the particular relief to which he thinks himself entitled, and then to conclude with a prayer of general relief at the discretion of the court. The latter can never be properly or safely omitted, because if the plaintiff should mistake the relief to which he is entitled in his special prayer, the court may yet afford him the relief to which he 1ms a right under the prayer of general relief, provided it is such relief as is agreeable to | the case made by the bill.” Story, Eq. Pl. § 40, and cases there cited.
My conclusion is, therefore, that there should be a decree for complainant, establishing the trust, removing the trustee, and decreeing him to pay over the trust fund with interest, to a suitable person to be appointed trustee in his stead, and referring the cause to a master to ascertain and report the amount of the trust fund, including the interest, which has not been already paid by the trustee.
[The defendant appealed to the supreme court, where the decree of the circuit court was affirmed. 95 U.S. 587" court="SCOTUS" date_filed="1877-12-18" href="https://app.midpage.ai/document/mitchell-v-moore-89638?utm_source=webapp" opinion_id="89638">95 U. S. 587.]