74 Wis. 633 | Wis. | 1889
M. W. Simmons, as trustee, received the funds mentioned in his account from the former trustee, Smith, to invest and to keep invested for the benefit of the beneficiaries named. The income was to be paid to the widow during her life, and $1,000 was to be paid the children in equal portions when the youngest should arrive at age. No directions were given in the order appointing Simmons as to how the trust funds should be invested. It appears that in 1883 the trustee loaned to the McDonald Manufacturing Company a portion of the fund, taking its indorsed note, which note was taken up in February, 1884, by a new note for the amount of the loan unpaid, such note running one year, which was indorsed by the president and secretary of the company. The company at this time was in good financial standing, and the indorsers were reputed to be perfectly responsible and men of ample means. In a
We think the circuit court was clearly right in holding the trustee liable for the loss of the trust funds under the circumstances. lie made a loan to a manufacturing company upon its note and the personal security of two indors-ers. It is true, when the note for the amount of the loan unpaid was given in February, 1884, in addition to the security of the indorsers the company had assigned to the trustee, as collateral for the payment of the note, a bond which was supposed to be a lien upon real estate, but which was afterwards held by this court to be invalid and not a lien upon its property. So it eventually turned out that the loan was made to a private business corporation upon
The learned counsel on behalf of the trustee candidly admits that is the rule of the earlier decisions, and the one which is laid down in some of our elementary works on this subject, which say that the trustee is personally liable in case of any loss from investments in personal securities, no matter how safe they may, at the time, seem to be. The concession is according to the fact, as an examination of the authorities will show. But he insists that this well-established rule shall be changed to meet the conditions and needs of present business and methods of investment. Investments, he says, in personal securities are deemed quite as safe and reliable, by good business men, as loans upon real estate, which is subject to great changes in value from one cause or another. This remark may be true when applied to new towns or cities where there is more or less speculation in real estate; but as a general rule the commercial world regards loans made upon adequate real estate security as more safe and desirable than upon personal security. Of course it is not practicable for a trustee always
It follows from these views that the judgment of the circuit court must be affirmed.
By the Court.— Judgment affirmed.