48 Conn. 207 | Conn. | 1880
Henry Ward, of Orange, died prior to May 15th, 1857, leaving a will, in which was the following paragraph:
“The balance of my estate, if any, over and above the foregoing legacies and specific devises and bequests, I direct my executors to invest safely at their discretion, and to hold the samé with the interest thereon accruing until the interest shall be equal to the principal; and thereafter to pay and appropriate the interest and income of the whole fund thus accumulated for the support of the gospel ministry in said Episcopal society, provided the same shall be approved by the bishop of the diocese, or in his absence by the standing committee. I nominate, constitute and appoint Enos A. Prescott, of New Haven, and Isaac Hiñe and William N. Barnett, of Orange, executors of this my will, hereby revoking and annulling all former wills by me executed.”
This will was duly proved before and approved by the probate court for the district of New Haven, having jurisdiction thereof.
Of the persons named as executors Isaac Hiñe and William N. Barnett qualified as such, and continued to act in that capacity until July 3d, 1862, when Hine tendered his resignation as executor and trustee under-the will; which resig
A few days prior to the execution of this last-mentioned bond Barnett presented to the probate court an account, in which he charged himself with the following items as constituting the principal of the fund then in his hands:
“Note of G-. it. & E. A. Hotchkiss, 1727.71
K a a a 500.00
« a a a 1,250.00
New Haven Bond, - 500.00—1482.50
••Connecticut Savings Bank, 1,000.00
New Haven Bank, - 1,000.00
National Bank, 500.00
Cash, &c., - - - 103.74
$6,563.45”
Between the date of the presentation of this account and July 15th, 1876, he appropriated to his own use the bond, the bank deposits, and the cash therein mentioned. On December 15th, 1877, he was removed from his office and trust as executor. On January 5th, 1878, John C. Hollister, Esq., was duly appointed by the probate court to execute the trust created by the will; he qualified as such trustee to the acceptance of the court, and now acts as such. Shortly after his appointment he made demand upon Barnett for the amount of the Ward fund; but the latter has never delivered to him any money or other assets, and none have ever come to his hands as such trustee.
In his account Barnett stated that the sum of $727.21 was then invested in a note signed by G-. R. Hotchkiss, endorsed by E. A. Hotchkiss. Concerning this note it is found that it was dated in February, 1871, and was payable February 4th, 1876; that on or about October 20th, 1875, it was paid by the substitution therefor of a new note of $753.78, made and endorsed by the same parties, payable at four months from date; that on November 1st, 1875, Barnett procured this last note to be discounted for his individual account and received the avails thereof; and that it was subsequently taken up by him and presented as a claim due to himself from the assigned estates of the maker and endorser.
He also stated in that account that a portion of the trust fund had been invested in a note for $1,250, dated November 4th, 1875, payable nine months from date, and a further portion in a note for $500, dated January 25th, 1876, payable four months from date, both signed by G. R. Hotchkiss and endorsed by E. A. Hotchkiss. These notes were made, endorsed, and placed in the possession of Barnett, only as collateral security for his accommodation endorsement upon the notes of G. R. Hotchkiss.
From this. it results, therefore, that at a certain time he
When Barnett presented this statement to the probate court, the cestui que trust, the society of Christ Church of West Haven, was present by members of its vestry and by counsel, and objected to the reception thereof for the reason that the notes were not endorsed to the order of Barnett as trustee, and that it had no interest in them; also that both maker and endorser had gone into insolvency and they were worthless. Thereupon he endorsed them to himself as executor, and said that if he was allowed a little time he could make them good. The church still objecting to the allowance of the account, the probate court ordered it to be recorded. Subsequently Barnett instituted suits as executor against the endorser of these notes and made attachments in the actions. After his removal application was made to his successor to furnish bonds and funds for the prosecution of the suits, which he declined to do, assigning as reasons that the cestui que trust did not recognize that it had any interest in the notes or that they constituted any part of the trust fund, and that it had recently for the first time learned that the note for §727,21 had been exchanged for the note for §753.78, and that the notes for §500 and §1,250 were pledged to Barnett as collaterals; whereupon' the suit was discon
But it was the right and duty of Barnett to hold the principal of the fund until the termination of his trusteeship; if therefore he at any time retained any part of it in his own hands he became a debtor to the fund, with the continuing duty either of investing it or upon his removal of delivering it to his successor. His failure to do this is the completed default shown by the record and is within the time and terms of the defendant’s undertaking.
It is furthermore the claim of the defendant that the cestui que trust has relieved him from all responsibility upon his bond by its failure to repeat to him the protest entered at the probate court against the acceptance of the trustee’s account; by its delay in moving for his removal; by its omission to inform the defendant that the management of the fund was improper; by its omission to protect him, by commencing suits against the trustee, the maker and the endorser of the Hotchkiss notes; and by its omission to continue at its own cost the suits which had been instituted. And in support of this claim he cites numerous oases which may be represented by a selected few.
These are suretyships required by individuals or private corporations for protection against loss by reason of the unfaithfulness of clerks or servants; the nature and extent
In the testamentary trust before us the acts and accounts of the trustee being matters of record in the probate court, accessible to all persons interested in knowing what they were, the cestui que trust might well presume full knowledge on the part of the defendant in the absence of any application to it by him for information. In the cases cited the person for whose benefit the surety assumes a risk is absolute master of the servant, and can at the moment of discovering his unfaithfulness put an end to his service, and thus make the resulting loss as small as possible. But a testamentary trustee is neither the agent, nor under the power of the cestui que trust; the latter can only petition for his removal; it is for the probate court to act upon hearing after notice and consequent delay; during this delay the trustee may complete the conversion of the fund in spite of the most diligent effort to prevent it.
Again, ecclesiastical and charitable corporations, females, minors, infants, and insane persons, may be and often are beneficiaries under testamentary trusts; for the protection of these the statute commands the probate court to require of the trustee a probate bond, and makes his refusal to give it a refusal to accept or perform the duties of the trust. The procurement of a surety is the act of the trustee, performed in obedience to the law; it is not at the request of the cestui que trust; need not be with his knowledge; may be against his will and in spite of his protest. He is the ward of the state; the passive recipient of its protection; he can neither terminate the duties of the trustee nor diminish the risk of the surety by any act or declaration; these are determined by the law administered by the probate court.
The cestui que trust is under no obligation to determine for him what acts or investments on the part of his principal may or may not put him in peril; is not .bound to institute or continue legal proceedings for his protection; not hound either to obtain information for his benefit, or to provide against or foresee possible loss to him. The purpose of the statute is to compel the surety to insure the cestui que trust, not that the latter shall defend him.
Moreover, upon the facts the case before us furnishes no opportunity for the application of the principles established by the cited cases. Concerning the transactions of Barnett in the Hotchkiss notes, it is not found that the cestui que trust had any information other than that given in his annual reports to the probate court. The defendant knew that he had long acted as trustee; that he was himself undertaking a suretyship which another had borne and desired to lay down; knew that the cestui que trust was accessible to him, but refrained from asking for any information. The cestui que trust might well presume that he had by way of precaution exhausted all means of knowledge, and had learned all facts known to itself.
It is not found that the cestui que trust had either knowledge or suspicion as to the conversion of any part of the fund until after the conversion of the. whole; its knowledge came too late for any effort to save any portion from the trustee; and s®on after knowledge came its petition for his removal. The case does not find negligence in fact on its part in not sooner knowing or suspecting the misappropria
It was the right of the trustee to keep possession of the principal, the right of the cestui que trust to receive the income only; that was paid to it up to, but not beyond, the time when the defendant became surety. The trastee might fail to receive and consequently fail to pay over income without fraud or fault on his part; the cestnd que trust was not of legal necessity bound to suspect either simply from the fact of non-payment; when upon enquiry it was in effect assured by the trustee that the fund, had earned interest as before, but that he had expended it in the protection of the principal.
In reference to interest the rule is, that if the trustee refuses to account for the profits arising from his use of the money, or if he has so mingled the money and the profits with his own money and profits that he cannot separate and account for the profits that belong to the cestui que trust. the latter may have legal interest computed with annual rests. This rule is especially applicable to cases involving a willful breach of duty. 1 Perry on Trusts, § 471, and cases there cited.
We advise the Superior Court to render judgment for the plaintiff for the sum of 16,563.45, as the principal of the' fund, with the interest remaining unpaid computed with annual rests.
In this opinion the other judges concurred.