107 Ky. 88 | Ky. Ct. App. | 1899
delivered the opinion of the court.
John A. Burton died in 1874, leaving a widow and two sons and three daughters. He made a will by which, in effect, the children took portions! to which they were entitled under the laws of descent and distribution; and the only apparent reason for making the will was because the testator desired, seemingly, to give the widow something additional, and further desired to annex some restrictions to the devise to one of his daughters because her husband was not transacting business in Ms own name. The present controversy grows out of the provision for this daughter, and the clause as to her is as follows:
*90 “Fourth. That portion of my estate that falls to my daughter, Eusebia Phillips, wife of J. G-. Phillips', I wish placed in the hands of a trustee for her separate use and benefit, not subject to
The chancellor approved of the trustee’s conduct in the management of the trust, and allowed him the compensation asked.
From this judgment Mrs. Phillips appeals.
Briefly stated, the grounds of her complaint are that the chancellor has accepted as correct, and has -approved in
As to the first complaint, it is to be observed that with respect to trustees there is no statutory provision in this State requiring the compounding of interest either annually or biennially. Nor is there any judicial decision establishing any fixed rule to that effect. On the contrary, a trustee is chargeable only with such interest as “he actually receives, or, as a faithful and prudent fiduciary, he ought, and therefore should be presumed, to have received.” (Maupin’s Ex’r v. Dulany’s Devisees, 5 Dana, 594, [30 Am. Dec., 699].) The rule of a trustee’s accountability for interest is stated in Clark v. Anderson, 10 Bush, 108, to be “that he is chargeable with the interest actually received, or with such as, in the prudent and faithful discharge of his duties, he ought to have received.” It is stated in the text of the American & English Encyclopedia of Law (volume 27, p. 179), and supported by the authorities there cited, that “a trustee who exercises diligence and good faith in the custody of the trust funds is not chargeable with interest unless he has used them for his own profit, or has invested them so as to produce interest, or has suffered them to lie idle when they might have been invested, or hasi needlessly delayed settlement and surrender of the property.” And further (Id. p. 190): “Good faith is at once the duty of a trustee arid his protection. A trustee who acts in good faith is
When the fiduciary mixes the trust fund * with his own, neglects to settle his accounts, and when called upon, fails to show what disposition is made of the fund, a decree is proper requiring him to pay interest, and allowing annual rests in the computation of interest. Asay v. Allen, 124 Ill., 391, [16 N. E., 865].
When the trustee uses the fund in hi® own business, or so mixes it with his own as not to be able to show the profits of the trust fund, or is otherwise negligent in the execution of the trust, then interest at- rests of a shorter or longer period, in the. sound discretion of the chancellor, may be charged as a punishment for a viola tion of his duty, and as a measure of damages for undisclosed profits. A trustee, therefore, who is faithful and diligent, and who executes the trust in accordance with the principles adverted to, has -done nothing for which he may be punished; and such a trustee is-chargeable only with the interest, be it simple or compound, which he actually receives, or which he might have received by the exercise of reasonable diligence. He may not bury the talent committed to him, and render unto his master only his own without its legitimate gain.
It is conceded in the case at bar that the trustee has accounted for large sums of interest. Whether he is to be charged with additional interest, and which he insists he did not receive, depends upon the fidelity, honesty, and diligence displayed by him in the conduct of the business, for the twenty-three years it was in his hands. It appears that the total estate belonging to his sister which came to
When we consider the financial condition of the country during a portion of this time, we think this showing by the trustee is a remarkably successful one.
It appears, further, that, beginning in 1876, the trustee made eight statements, or partial settlements, which he submitted to his sister for her inspection, and which she examined and approved. The material parts of the last settlement submitted to her, and which, after an examination, she approved in writing, are as follows:
“A Settlement of the Accounts of R. A. Burton as Trustee for Mrs. J. G-. Phillips, made on the 1st day of April, 1895. Amounts paid out by him since last settle*95 ment, made January 2nd, 1892: Vouch. No. 1. Alberts & Lusk, Louisville, $16. [Here follows a list of 77 vouchers, aggregating the sum of $5,114.81.] Settlement of accounts paid out for Mrs. Phillips: ... I still hold 30 shares in Citizens’ National Bank, cost $4,500. I still hold two Taylor county bonds, face value $2,000. I hold deed for real estate bought, by me in Wichita, Kansas, cost $5,100, one-half of which was paid for by me, as trustee for Mrs. Phillips, Is an investment, with her approval, $2,550. I hold deed for Lebanon Home property, cost $5,605.55. I hold cash notes, with interest counted to April 1st, 1895, amount to the sum of $18,549.19. T have to my credit in bank April 1st, 1895, $454.55. Total, $33,659.29. Recapitulation:
Amount paid Mrs Hundley .................$ 5,285 00
Voucher No. 77, amount paid J. B. Phillips.... 3,000 00
Amount paid since last settlement, as shown by list of vouchers filed, from 1 to 76, in-
clusive, made January 1, 1892 ........... 2,114 81
Amount in my hands, as shown above........ 33,659 29
$44,059 10”
The items as to Mrs. Hundley and J. B. Phillips represent the home bought for Mrs. Phillips’ daughter, and the drug business bought for her s*on. The former statements or settlements submitted to Mrs. Phillips were equally explicit, and we have no sort of doubt that she fully understood them, and was gratified, as the proof indicates, at the fine showing made of the profits of her estate. The competency of Mrs. Phillips to comprehend these settlements, and to approve them and the manner in which her business was being conducted, is not seriously denied. Bbe was 33 years of age when the trust was undertaken; was a
The beneficiary certainly is late in complaining of the way these books were kept or the business transacted. We are entirely satisfied that the trustee has accounted for all the interest he received, and that he has been diligent in keeping the trust fund at interest, and has collected as much as any diligent, prudent man could have collected, and has in all respects been faithful to Ms sister’s interests.
As to the compensation of the trustee, it is shown that the amount he asks for — $300 per year — is entirely reasonable. No interest was allowed him on this, but credit was given him as of the date of the judgment below. It is
We think, further, that the proof conduces to show that Mrs. Phillips consented to the Wichita investment, now complained of, when it was made, and approved of it after-wards. Her consent to it, approval of it, and long acquiescence in it without complaint preclude her from complaining now. Mitchell v. Berry, 1 Metc. (Ky.), 602-619; Story, Eq. Jur., sec. 322; Blair v. Com., 93 Ky., 493, [20 S. W., 434]. The judgment is affirmed.'