Case ID: mass_26/html/0454-01.html
Source: Caselaw Access Project
Author: {"author": "Putnam J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Harvard College and Massachusetts General Hospital versus Francis Amory.
    Devise of $ 50,000 to executors, “ in trust to loan the same upon ample and suffi cient security, or to invest the same in safe and productive stock, either in the public funds, bank shares or other stock, according to their best judgment, and to pay over the profits and income thereof to the testator’s wife during the term of her natural life,” and after her decease to deliver one half in actual value of the entire fund to a college for the foundation of a professorship, and the other half to a hospital. Held, that the trustees were authorized to make investments in stocks of an incorporated manufacturing company, and of an incorporated insurance company.
    An insurance company, in whose stock the trustees invested part of the fund, made a dividend of money received by virtue of a treaty with a foreign government, for claims existing at the time of the investment, for illegal captures of property insured by the company. It was held, that the money so received was not a part of the capital stock of the insurance company, and that the dividend was rightly paid to the widow, instead of being reinvested by the trustees.
    So a dividend of the proceeds of patent rights and patterns belonging to a manufacturing company and sold by them, was held not to be a part of the capital stock, but to have been rightly paid over to the widow.
    The executors having offered an account in the probate court, in which they charged themselves with the value of certain stocks belonging to the testator, and credited themselves with the same sum as the value of the same stocks appropriated by them as the trust fund, and the judge of probate having allowed the same, it was held9 that the college and the hospital, not having appealed from the decree, were precluded from objecting to the investment of the trust fund.
    John M‘Lean died on October 23d, 1823, and his will and codicil were proved and allowed in the court of probate for the county of Suffolk, on the 3d of November, 1823.
    After an absolute gift to the wife of the testator, of a dwellinghouse, certain specified personal property, and $35,000, the will proceeds : — “I give and bequeath to Jonathan Amory, &c. and Francis Amory, &c., jointly, the sum of 50,000 dollars, m trust nevertheless to loan the same upon ample and sufficient security, or to invest the same in safe and productive stock, either in the public funds, bank shares or other stock, according to their best judgment and discretion, hereby enjoining on them particular care and attention in the choice of funds, and in the punctual collection of the dividends, interest and profits thereof, and authorizing them to sell out, reinvest and change the said loans and stocks from time to time, as the safety and interest of said trust fund may in their judgment require. And this bequest is upon the further trust, that the said sum of 50,000 dollars so invested, shall constitute a separate and distinct fund, the profits and income thereof to be received and collected by the said trustees and paid over to my said wife, Ann M‘Lean, in quarterly or semi-annual payments, as shall be most convenient for said trustees, for and during the term of her natural life. And this bequest of 50,000 dollars is upon the further trust, that the trustees will, after the decease of my said wife, pay over, transfer and deliver one half, in actual value, of the said entire fund, to the President and Fellows of Harvard College, the income and profits whereof shall be exclusively and forever appropriated to the support of a professor ,of ancient and modern history, at that college.” — The trustees are directed to pay over the other moiety (after the decease of the wife) to the Trustees of the Massachusetts General Hospital, to be by them held and appropriated to the general char ¡table objects of that institution.
    The testator further says, — “ And reposing full and entire confidence in the ability, fidelity and diligence of the said Jonathan Amory and Francis Amory, and not doubting that they will faithfully and conscientiously discharge and execute the trusts hereby reposed in them, and being desirous of relieving them from the burden of procuring sureties for large sums, — I do request and direct that they may not be required to give any other than their own bonds respectively, without sureties, conditioned for the performance and execution of the said trusts ; and I do order and direct, that they shall not be held responsible for the acts, doings and defaults of each other, but shall simply be accountable respectively each for his own acts, doings and defaults, as such trustees.”
    In addition to the foregoing bequests the testator gave pecuniary legacies, amounting to $ 27,500, and by a codicil he gave tile residue of his estate to the Massachusetts General Hospital.
    Jonathan Amory and Francis Amory were appointed executors.
    The testator’s estate was inventoried at $ 228,120 ; — of which, $ 100,800 consisted of manufacturing stock, — $ 48,000 of insurance stock, —and $ 24,700 of bank stock.
    
      In the beginning of December 1823, the executors addressed a jetter t0 t;)e trustees of' the hospital, suggesting that it would be expedient for them to choose a committee with full power to treat with the executors, and to represent the hospital in all cases concerning the estate ; more especially to determine what portion of the property should' be selected as a capital to afford interest or income to the widow during her life.
    The college and hospital thereupon proposed to receive the $ 50,000, and give security to Mrs. M‘Lean to pay her $3000 annually.
    On December 13th, 1823, the executors wrote to the two corporations, that the testator enjoined upon the executors to pay his widow the income and profits of such stock as they might select; that the testator, having within the three preceding years invested nearly half of his property in manufacturing stocks, thereby indicated that he had great confidence in those stocks ; that in the opinion of the executors, he intended that his widow should enjoy her fair share of income and profits of his estate ; that the present income of the stock selected was far greater than the interest of the money would be ; but that as the two corporations bad less confidence in manufacturing stock than the testator had, the executors would transfer the property to them, on condition that they would pay the widow annually six per cent interest on $25,000, and sums equivalent to the dividends which should be made on nine shares in the Boston Manufacturing Company and nine shares in the Merrimack Manufacturing Company, during her life.
    On December 20th, 1823, the trustees of the hospital de cline the foregoing proposition, and state that they have full confidence, “ that the executors will, in conformity to the testator’s injunction, keep the capital entire ; ” and they add, “that in their opinion, any investment of this capital in trade or manufactories cannot be considered by them as a safe and discreet investment. They are therefore necessitated to disapprove of any such investment.”
    On December 27th, 1823, the executors write to the two .corporations, that they do not concur in the opinion that the testatoi enjoined upon them to keep the $ 50,000 entire, but that distrusting their own opinion, they intended to pay over nothing except pecuniary legacies, without a decree of the Supreme Court of Probate ; and that when their accounts should be presented for allowance, the corporations would receive notice and might object to any arrangement that the executors should have made for the capital of $ 50,000.
    The executors proceeded to make the investment for the trust fund, and prepared an account to be offered in the probate court, which they first submitted to the residuary legatees. In this account they charge themselves as follows : —
    u Received of Jonathan Amory and Francis Amory, executors &c., trustees for Mrs. Ann M'Lean, &c. for
    78 shares in N. E. bank stock 8333*33
    247 ditto F. and Marine Ins. Co. 16466*67
    9 ditto in Boston Manufacturing Co. and 9 do. )
    in Merrimack Manufacturing Co. —say 18 > 25200*00
    shares of $ 1000, at 40 per cent advance '-
    $ 50000.-00”
    and they pray allowance for the same sums as paid for the same shares, —“ the above constituting the trust fund for Mrs. Ann M‘Lean, &c.”
    In a letter to the executors, dated January 29th, 1824, the trustees of the hospital state, that the account, to which they have been cited to show cause of objection, has been laid before them ; that they “ acquiesce in the decision of the executors, to obtain a decree of the Supreme Court of Probate, and will not object, unless the executors request it, to the judge of probate’s decree on the account offered, but appeal from his decree, with a view to cooperate with the executors in obtaining the decision of the Supreme Court of Probate.”
    The account was allowed by the judge of probate on February 9th, 1824, after public notice for all persons interested to appear, “ and after hearing the several objections offered by the Massachusetts General Hospital and duly considering the same.” No objection was made to the investment of the $ 50,000, and no appeal was claimed from this decree.
    On October 27 th, 1824, the stockholders of the Merrimack Manufacturing Company having voted to double their capital and to allow each stockholder to subscribe for as many shares as he already held, the trustees offered to pay to the hospital $ 50,000 in money, or in certain bank and insurance stocks at the market value, upon condition that the hospital would come under an obligation to pay Mrs. M‘Lean $ 3000 per annum during her life, and at her decease, $25,000 to the college ; but this proposition was declined.
    At a probate court in October 1828, Francis Amory, the surviving trustee, presented his account as trustee, for allowance, and tendered his resignation of the trust ; of which the college and the hospital received due notice. These corporations objected to any settlement of the accounts which should leave upon the fund the loss of capital arising from the investments in trade or manufactories, and at the same time give to the annuitant the whole amount of the dividends thereof. They stated that the shares in insurance stock were then worth about $ 12,350, the shares in the Boston Manufacturing Company about $8100, and those in the Merrirnack Manufacturing Company about $ 9000.
    They further stated, that the amount received by the trustees, as dividends, in 1824, was $6176 ; which sum included two dividends on the insurance stock, of six and eight per cent, declared in March and September, the usual periods, and a third made in June, at the rate of fourteen per cent; that this last dividend arose from a division of money received under the treaty with Spain of 1819, for claims for spoliations ; that the allowance of the claims under the treaty was well known at the time when this stock was appropriated by the trustees as part of the trust fund, and that this was one of the reasons of the /high valuation of this stock, in the inventory of the testator’s estate.
    They further stated, that the amount of dividends received by the trustees in 1825, (being $ 4685,) included three dividends of the Boston Manufacturing Company ; that that company had, on February 1st, 1822, contracted to make for the Merrimack Manufacturing Company a large quantity of machinery, to. be delivered at different times between that day and April 1st, 1824 ; that those two companies made a further contract in August, 1823, for the sale and transfer to the Merrimack M. Company of all the patent rights belonging to the Boston M. Company, and all their patterns for castings, &c, for the sum of $75,000, to be paid in October 1824; that this last mentioned sum was brought into the account of profit and loss of the Boston M. Company in January 1825, and in February following the sum of $ 66,052 was brought into the same account, being chiefly the profit on the machinery made for the Merrimack M. Company ; that at the time last mentioned there was also brought into the same account of profit and loss the sum of $47,000,. for profits on the manufacture of cotton ; that the Boston M. Company had always made their dividends twice in the year, namely, about the 1st of April and the 1 st of October ; that in 1825 they made a dividend in March, of fifteen per cent, another in April of seven and a half per cent, and a third in October of seven and a half per cent; that the facts above stated were well known to all who were in terested in that company at the time when this stock was appropriated as part of the trust fund, and these circumstances constituted one of the reasons of the high valuation of this stock in the inventory of the testator’s estate.
    They further urged, that the income of the trust fund for five years amounted to $ 20,493 ; that during that period the common rate of interest was five per cent; that the capital stock should be made good before it passed into other hands, or that at least the surplus amount received as dividends, over the common rate of interest, should be applied towards making good the loss, and that the fund thus made good should be invested in the public funds, bank shares or other stock where the principal should be considered safe.
    Afterwards, on January 12th, 1829, the account was allowed by the judge of probate, and the college and the hospital appealed from his decree, for the following reasons.
    1. Because the trustees did not loan the $ 50,000 upon ample or sufficient security.
    2. Because they did not invest that sum in safe and productive stock, either in the public funds, bank shares or other stock, but on the contrary invested the greater part thereof in trading companies, whereby the principal sum was exposed and still continues to be exposed to great loss.
    3. Because in the choice of funds they have solely regarded the interest of the annuitant, for the purpose of giving her large dividends, and have wholly disregarded the interest of the ieSpondents, in exposing the greater part thereof to total loss.
    4. Because the trustees, after consulting with the respondents as to the investment of the principal sum, and having obtained their opinion thereon, went contrary to their judgment therein, and invested the same, at their own risk, in such unsafe and improper stock, that a part of the same is now actually lost.
    5. Because the trustees, for the sole purpose of giving largo dividends to the annuitant, invested the greater part of the principal sum in manufacturing and insurance companies, at a very high rate of advance, and far above what might reasonably be judged to be a fair permanent value.
    6. Because they have not only paid out the profits and income of the funds so invested to the annuitant, but have also paid out to her a certain part of the capital thereof, instead of reinvesting the same.
    7. Because the judge erred in passing this account, by which the trustees are wholly exonerated from accounting for the deficiency of the principal sum, amounting to $ 12,000 and upward.
    8. Because the entire fund cannot be paid over at-the decease of the annuitant, on account of the loss occasioned by the injudicious and improper investment.
    9. Because the judge erred in allowing as interest a certain portion of the capital itself.
    10. Because the judge erred in not reforming the account by applying the surplus amount received, over and above the common dividends on the stock purchased, and over and above the common rate of interest on the fund, to the making good the loss on the capital.
    11. Because the judge passed the account without directing that the trust fund should be made good before the present trustee is discharged and a new one appointed.
    12. Because the judge passed the account without directing that the principal sum shall now be invested in the public funds, bank shares or other stock, or that the same shall be lent upon ample security.
    To these reasons the appellee filed answers.
    
      With respect to the first, second and third reasons, he answered, that the testator intended that such investment should be made, as would produce income for the benefit of the widow ; that the investment actually made was by taking parts, in due proportion, at the market value, of that property wherein the testator appeared to have the greatest confidence ; that all the property selected is known in the acts of incorporation, as well as in common parlance, by the name of stock; that the testator did not give to the widow, for life, the interest of $ 50,000, nor did he give that sum to the residuary legatees after her decease, but he gave to her the income and profit of a separate and distinct fund, of the value of $ 50,000, and he gave that fund to the residuary legatees after her decease ; that two years after the appropriation, the market value of the stock of the Merrimack Manufacturing Company had advanced twenty per cent, while that of the Boston Manufacturing Company had depreciated only five per cent, and if the widow had died at that time the increase in value would have been to the use of the residuary legatees.
    To show that the stock appropriated for the fund had not been liable to greater fluctuations than other stock which might have been selected, the appellee referred to certificates of stock-brokers, of the value of stock of various descriptions within the' period of time affecting the present inquiry.
    To the fourth reason the appellee answered, that the trustee;, were not bound to follow the advice of the appellants ; that the residuary legatees had an obvious and direct remedy for any error in making the investment, at the time when the executors’ account was settled in the probate court, but they did not at that time make any objection to the investment.
    The objection in the fifth reason was considered by the appellee to be contained in the three first reasons.
    To the sixth he answered, that the annuitant had not received any part of the capital invested ; that with respect to the dividends by the Bostón Manufacturing Company, the acquisition from the sale of the patent right was profits, and divisible as such, in like manner as if it had been obtained by the manufacturing of cotton, or any other profitable use of capital and industry ; that it is a rule with that corporation, not to divide profits nor make dividends, until the capital is entire, if by liny ardent ¡t shall have been impaired ; and with respect to the sum of money received by the insurance company under the treaty with Spain, that the claim of that company arose firm having paid losses to owners of vessels and cargoes insured by the company ; that the losses were paid out of profits or premiums of insurance, which would have been divided among stockholders if such losses had not occurred ; that when the losses were compensated for under the treaty, the money received took the place of income or profits, and was properly divisible among stockholders, and was paid to them expressly as a dividend.
    To the seventh and eighth reasons the appellee answered, that the fund is at present depressed below the market value at which it was originally appropriated, but that it may have risen above that value when the annuitant’s life shall determine ; that if the market value of the fund should be made up, at the present time, to $ 50,000, and should be of increased value at the time of the annuitant’s decease, the appellee would be entitled to this increase of value, otherwise the appellants would be gainers to that amount ; that the appellee ought not to be subjected to the charge of making up the value of the fund, at its present accidental and temporary depression, nor ,be referred to a distant time and to uncertain events, for his remuneration, unless it should clearly appear that the investment, as originally made, was a breach of trust ; that if the appellants can be justified in interfering in regard to the fund, during the life of the annuitant, they should have done so when the fund was originally established, when the errors, if any, could have been cor reeled without loss to any party. The appellee further states, that the trustees sold the right to increase the number of shares in the Merrimack Manufacturing Company for $ 3120, which sum has been invested as part of the capital of the trust fund.
    The ninth, tenth and eleventh reasons, the appellee said had been already answered.
    To the twelfth he answered, that the fund was now rightfully invested in conformity to the will of the testator, and that no change ought to be made in the investment thereof, to the prejudice of the annuitant; and he repeated the proposal made to the residuary legatees by the trustees in December 1823.
    
      S. Hubbard, for the appellants.
    In investing part of the $ 50,000 in manufacturing and insurance stocks, the trustees have not acted in legal conformity to the will. The fact that a large amount of the testator’s property consisted of such stocks, did not authorize the trustees to invest in them. He was at liberty to speculate ; but they were directed either to lend on sufficient security, or invest in stock which should be safe as well as productive. They were not bound to give the widow more than six per cent per annum, and in their construction of the bequest they erred, to the injury of the residuary legatees. The first direction in the will is to lend the money; which could not legally be done at a greater interest than six per cent. The testator had a particular object in view after the death of his widow, namely, the foundation of a professor ship, for which the sum of $ 25,000 was considered to be necessary ; and for this reason the capital should have been kept entire. It was also an object with him, that the $ 50,000 should be a permanent fund for the support of his widow, inasmuch as the property given to her outright might be lost. Insurance and manufacturing stocks are not safe, because the principal is put at hazard. It is otherwise with bank stock, the money being lent on good security ; and the fact that the principal is not at risk, is the ground of the prohibition to take more than lawful interest on money lent. A manufacturing corporation is a trading company, and as the law stood before the statute of 1829, c. 53, an individual corporator was responsible for all the debts of the corporation : whether this responsibility, however, would rest on the whole trust fund or on the trustees personally, admits of question. The discretion to be exercised by the trustees was a sound discretion, and not an arbitrary power. He cited Trafford v. Boehm, 3 Atk. 444 ; Hancom v. Allen, 2 Dickens, 498, and notes ; Adye v. Feuileteau, 1 Cox, 24 ; Piety v. Stace, 4 Ves. 622 ; Hart v. Ten Eyck, 2 Johns. Ch. R. 117 ; Quarles's Executor v. Quarles, 2 Munf. 321 ; Smith v. Smith, 4 Johns. Ch. R. 281 ; Be Wanneville v. Crompton, 1 Ves. & Beames, 359 ; Thompson 
      v. Brown, 4 Johns. Ch. R. 629 ; Milsington v. Mulgrave, 3 Madd. Ch. R. 491.
    The advance on the insurance stock was owing in part to the claims against Spain, and the sum received by the trustees on account of those claims, ought to have been reinvested as capital.
    So the patent rights and patterns constituted a part of the capital of the Boston Manufacturing Company, and the trustees’ share of the proceeds should have been reinvested.
    The appellee, having taken the trust, is not entitled to be discharged at pleasure ; before he is discharged, his account ought at least to be so reformed, as that the annuitant should have no more than six per cent.
    
      Sullivan and Shaw, for the appellee,
    said that in England, by a long course of practice, one kind of stock (the three per cents) is considered safe, and other stocks not safe, but that we have no such rule in this country, and the terms of the will must be taken in their natural sense ; and that these trustees were authorized to invest in insurance and manufacturing stocks, being answerable for good faith only in the exercise of their discretion. Brown v. Campbell, Hopkins, 233 ; Ex parte Belcher, Ambl. 219 ; Trafford v. Boehm, 3 Atk. 443 ; Allen v. Hancorn, 7 Bro. Parl. Cas. 375 ; Howe v. Earl of Dartmouth, 7 Ves. 150 ; Holland v. Hughes, 16 Ves. 111; S. C. 3 Meriv. 685 ; Jackson v. Jackson, 1 Atk. 513. The trustees acted with advice of counsel ; which operates in some degree as a protection to them. Vez v. Emery, 5 Ves. 144. As to a difference between executors and trustees, they cited Powell v. Evans, 5 Ves. 839 ; Pybus v. Smith, 1 Ves. jun 193 ; Adams v. Claxton, 6 Ves. 226 ; Rowth v. Howell, 3 Ves. 565. As to authority derived from the practice of the testator himself in making investments, they cited Thompson v. Brown, 4 Johns. Ch. R. 619, 628, 629 ; Osgood v. Franklin, 2 Johns. Ch. R. 27, 28 ; 4 Dane’s Abr. 270.
    The settlement of the executors’ account in the prot/ate court is conclusive upon the college and the hospital, as these corporations did not claim an appeal. Trafford v. Boehm, 3 Atk. 447 ; 1 Stark. Ev. 190; Hoyt v. Gelston, 3 Wheat. 24 G ; Meadows v. D. of Kingston, Ambl. 760 ; Blackham's case 
      
      l Salk. 290 ; Judson v. Lake, 3 Day, 326 ; Bush v. Sheldon, 1 Day, 170; Jennison v. Hapgood, 7 Pick. 1 ; Blount v. Barrack, 4 Wash. Circ. C. R. 657 ; 1 Sand: on Pl. and Ev. 56, 57; Brice v. Stokes, 11 Ves. 319 ; Langford v. Gascoyne, ibid. 333 ; Parkes v. White, ibid. 226; Clark v. Perrier, 2 Freem. 48; Randall v. Errington, 10 Ves. 426.
    
      Hubbard, in reply,
    said that the appellants were not concluded by the settlement of the executors’ account. The question now before the Court came up only collaterally. The account was settled by the executors as such, and not as trustees. The hospital was obliged to give attendance as residuary legatee, but not as being interested in the trust fund. The executors prayed allowance of $ 50,000 for this legacy; it was not for the judge to inquire then in what manner they had, as trustees, invested that sum. That question comes up now, when the trustees’ account is presented for settlement. So far as the college is concerned, there was no notice and no acquiescence ; and the correspondence in the case shows that there was no acquiescence on the part of the hospital.
   Putnam J.

delivered the opinion of the Court. The confidence which the testator reposed in his executors, whom he also constituted his trustees, was unbounded. He directed that they, as trustees, should not be required to give any other security than their own bond, without sureties, and that each of them should be accountable “ simply for his own acts, doings and defaults as such trustee.”

The general question is, whether the trustees have abused the trust.

The testator made provision for the support of his wife mainly from the proceeds of the trust fund. He speaks of the profits, income, dividends, which were to come from it through their hands. They were to lend the $ 50,000 upon ample and sufficient security, or invest the same in safe and productive stock, either in the public funds, bank shares or other stock, according to their best judgment and discretion.

It is very clear that the testator did not intend to limit the income to the simple interest of the fund ; for if he had so intended, he would not have spoken of dividends and profits

but would have given an annuity of three thousand dollars a year.

It has been argued that the testator gave the sum of fifty thousand dollars as the trust fund, and that the trustees could only have demanded that sum of the executors. But we think that no important inference can be drawn from that fact. It would not follow from thence, that there should have been a sale of the personal property or stocks of the testator and a reinvestment. The trustees and the executors were the same persons, and instead of going through the useless formality of a sale and investment, it was clearly competent for them to select from the ample funds of the estate, those stocks which should form the capital of the trust fund. And in making that selection, it is very clear to us, that they should have preferred that stock which would probably give her the most profit, and at the same time preserve the value of the capital sum. It would not, for example, have been the exercise of a sound discretion, to have appropriated the trust fund in the stock of an incorporated company which gave great dividends for the time being, but which would, according to the terms of its charter, expire as soon as the death of the wife could be calculated to happen. In such a case nothing would be left of the capital for those in remainder. On the other hand, if the investment of the trust fund were in stock which made large dividends, and which had acquired its value by the prudent management of its proprietors, and might be reasonably calculated upon as a safe and permanent capital, such an investment would seem to be according to the manifest intent of the testator.

It is somewhat remarkable that the testator did not himself appropriate the stock of which the trust fund should consist, but that he should have left the selection to his trustees.- But as it would have been necessary to empower them to change, sell out and reinvest, perhaps it was wise in the testator to leave the whole matter, the selection as well as the management, to them. Be that as it may, he has given them that authority.

But it has happened that the value of the capital stock in which the trust fund was invested, has fallen, and those in remainder call upon the trustees to make up the deficiency.

It was said by Lord Hardwicke in Jackson v. Jackson, 1 Atk 514, that “to compel trustees to make up a deficiency not owing to their wilful default, is the harshest demand that can be made in a court of equity.” The statute of Geo. 1. for the indemnity of guardians and trustees, provides that if there be a diminution of the principal, without the default of the trustees, they shall not be liable. If that were otherwise, who would undertake such hazardous responsibility ?

It is argued for the appellants, that the trustees have not lent the money on good security. The answer is found in the authority which the testator gave to them. They were Lc lend, or to invest the fund in stocks. They preferred the latter.

But it is argued, that they did not invest in the public funds, bank shares or other stock, within the true intent and meaning of the authority, but in trading companies, and so exposed the capital to great loss. And we are referred to Trafford v. Boehm, 3 Atk. 444, to prove the position, that such an investment will not have the support of a court of chancery. The chancellor seems to suppose that funds or other good securities, must be such as have the engagement of the government to pay off their capital. Bank stock, as well as South-sea stock, which were in the management of directors, &c. were not con sidered by that court as good security. But no such rule has ever been recognized here. In point of fact, there has been as great fluctuation in the value of the stock which was secured by the promise and faith of the government, as of the stock of banks. And besides, the testator himself considers that bank shares might be a safe object of investment, — “safe and productive stock.” And yet bank shares may be subject to losses which may sweep away their whole value. Lord Hardwicke considers that South-sea annuities and bank annuities stand upon different footing, because the directors have nothing to do with the principal, and are only to pay the interest, until the government pay off the capital, and therefore that they only are - roperly good securities.

This reasoning has very little or no application here ; for, in the first place, the stocks depending upon the promise of the government, or, as they are called, the public funds, are exceedingly limited in amount, compared with the amount of trust funds to be invested ; and, in the second place, it may wed be doubted, if more confidence should be reposed in the engagements of the public, than in the promises and conduct of private corporations which are managed by substantial and prudent directors. There is one consideration much in favor of investing in the stock of private corporations. They are amenable to the law. The holder may pursue his legal remedy and compel them or their officers to do justice. But the government can only be supplicated.

It has been argued, that manufacturing and insurance stocks are not safe, because the principal is at hazard. But this objection applies to bank shares, as well as to shares in incorporated manufacturing and insurance companies. To a certain extent, each may be considered as concerned or interested in trade. The bdnk deals in bills of exchange and notes, and the value of its capital depends upon the solvency of its debtors. It may, for example, very properly discount upon the responsibility of merchants of good credit at the time, but who, before the maturity of their notes, become bankrupts from unavoidable and unforeseen mercantile hazards. In this way a bank becomes indirectly interested in navigation, trade and merchandise, to an extent very little, if any, short of the trade in which manufacturing companies engage. The capital in both cases may be lost by the conduct of those who direct their affairs, notwithstanding the exercise of reasonable prudence and discretion.

In regard to insurance companies or incorporations, the capital seems, at first view, to be exposed to greater risk, but it is believed that there has not been much, if any, more fluctuation of the capital in those investments, than in incorporated companies for banking or manufacturing purposes. If the insurance be so genera] as to embrace a fair proportion of all the property at risk, it will generally yield a reasonable profit, and preserve the capital entire.

It will not do to reject those stocks as unsafe, which are in the management of directors whose well or ill directed measures may involve a total loss. Do what you will, the capital is at hazard. If the public funds are resorted to, what be comes of the capital when the credit of the government shall be so much impaired as it was at the close of the last war ?

Investments on mortgage of real estate are not always safe. Its value fluctuates more, perhaps, than the capital of insurance stock.

Again, the title to real estate, after the most careful investigation, may be involved, and ultimately fail, and so the capital, which was originally supposed to be as firm as the earth itself, will be dissolved.

All that can be required of a trustee to invest, is, that he shall conduct himself faithfully and exercise a sound discretion. He is to observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the.probable safety of the capital to be invested.

But in the case at bar, the testator referred the management of this trust especially to the judgment and discretion of the trustees whom he appointed ; one of whom is the brother, and and the other was the cousin of his wife, for whose support this provision was made. These trustees are not to be made chargeable but for gross neglect and wilful mismanagement.

The testator expressly authorized the trustees to invest m “ other stock ” than bank shares or the public funds; so they might as well select other stock as that which the testator named.

There can be no doubt but that shares in manufacturing and insuring incorporations are and were commonly called and known by the name of stock. The investment would therefore be clearly within the letter of the authority.

It has been argued, “ that the trustees should have invested in safe and productive stock, at their own and a sound discretion, without being governed by the known opinion of the teslatr,- >’ “that he was at liberty to speculate, but the trustees were not.” If these positions should be granted, the desired inference would not follow. If the testator, for example, had been in the habit of dealing largely in lotteries .and games of hazard, it would undoubtedly not have justified the trustees in making such investments, notwithstanding the testator had been the favorite of fortune. But if the testator had invested his funds to remain permanently in any stock, that circumstance might well be taken into consideration by the trustees when called to exercise their own best skill and discretion. They might reasonably and properly inquire and consider what their testator would do in the circumstances in which they were placed. Would he recommend an investment that should give -simple interest on a loan, or in stock that would probably give much more, and yet have the principal sum reasonably safe P

The circumstance of the trustees’ reposing confidence where the testator had, is one which is always to be considered as tending properly to their discharge. Thompson v. Brown, 4 Johns. Ch. R. 628. The case of Rowth v. Howell, 3 Ves. jun. 565, has a strong bearing upon this part of the case. There the testator, having great confidence in his banker, recommended it to his executors not to be in a hurry to withdraw the funds from him. But after the death of the testator, the banker misapplied them, and probably stung by remorse on account of his fraud, he committed suicide. It was urged against the executors, that they might have withdrawn the securities from the banker ; and they had time enough to do so ; but it was considered that the loss arose from the confidence originally reposed in the banker by the testator, and the executors were not subjected to the loss.

In the case at bar, the testator was a man of extraordinary forecast and discretion, in regard to the management of his property. His vast accumulation could not be ascribed to accidental causes, but to calculation and reflection. The fact that he had within three or four years invested nearly half his property in manufacturing stock, was entitled to great consideration and respect, and would, without any change of circumstances, have a strong tendency to justify the selection of the manufacturing stock as part of the trust fund.

We cannot think with the counsel for the appellants, that the dividend of fourteen per cent arising from the recovery of the claim against the Spanish government, can be considered as part of the capital. It was received in the nature of salvage which is always divided as profits, and not treated as part of the capital stock.

And we do not think that the negotiations between the Boston Manufacturing company and the Merrimack Manufacturing company, in relation to making a large quantity of machinery, and the sale of patents and of patterns for castings, by the Boston Manufacturing company to the Merrimack Manufacturing company, should be considered as part of the capital stock. We have seen no evidence that they were ever treated as such by the proprietors. We think the sums arising from those causes were properly considered as the fruits of their industry, and placed to the account of profit and Joss of the Boston Manufacturing company.

It is proved or admitted, that the stock which the trustees selected to constitute the trust fund of $50,000, was of that value when it was taken by them.

We are of opinion that they had a right to select the stock which they did for that purpose, and that they acted in the premises according to their best skill and discretion. And we have not seen any evidence which would satisfy us, that under all the circumstances of the case, they did not act-with a sound discretion in making the selection and investment.

But if we were less clear than we are upon that point, we are of opinion that this whole matter has been settled in the court of probate, where the appellants had notice to attend, and where all objections were raised and considered. The judge thereupon made a decree, from which there has not been any appeal.

. We say the whole matter, because the executors and the trustees are the same persons. On February 9th, 1824, the executors, after due notice to all persons interested, presented their account with the estate, and appropriated thé stock which should constitute the fund of $50,000 selected by them as trustees for Mrs. M‘Lean. The Massachusetts General Hospital was heard in fact, and (as has been said and not denied) the objections were made by the same able and learned counsel who now appears in their behalf. And upon the hearing, the judge of probate allowed the account. There was no appeal from that settlement. By the legal operation of that settlement, the trustees became chargeable with that selected trust fun(j} an(] ¡t js not now competent for the appellants to contend that those stocks were not legally appropriated by the executors and received by the trustees, as the fund of $ 50,000 given by the testator. If the college had any objections, they should have made them. Probably every objection to the account which could have been made by the college was in fact made by the hospital.

It has been argued that the account which was settled and acquiesced in, was rendered by the executors and not by the trustees, and ought not to bar this process, which.is against the surviving trustee. But it was a settlement of the very root and substance of this controversy. The executors announced their selection and appropriation of the stock for the fund. The trustees (being the same persons) became instantly chargeable with the management of it. It is the original mis-appropriation and selection which is the subject of complaint. Suppose the trustees had not been the executors, and that the college and the hospital had requested the executors to deliver to the other persons as trustees the particular stock to consti tute the trust fund ; could those • institutions object against the trustees, that those stocks did not constitute a proper fund ? It would seem clear that the trustees might justify. They would say to the two institutions, “ you acquiesced in the appropriation by the executors, and we also thought it advisable, safe and expedient.” We think that that matter having been settled by a court of competent jurisdiction, without appeal, the decree is final and conclusive.

The college and the hospital were especially put upon their guard ; for the executors, in their letter of December 27th, 1823, informed their committee, that they should be duly notified when these accounts should be presented for allowance at the probate office, that they might object to any arrangements which the executors might have made for the capital of the $ 50,000. As no appeal was made from the decree of the probate court, all parties in interest must be presumed to have acquiesced in the arrangements which were then made for the capital of the trust fund of $ 50,000. If there had been an appeal, it would probably have been heard and determined before there was any depreciation upon the whole investment. Indeed it appears from the evidence, that the stock óf the Merrimack Manufacturing company advanced twenty per cent from the time when the stock was selected in February 1824, to December 1st, 1825.

The claim now made upon the trustees, to make up the subsequent depreciation, would seem to be justified only on the ground of gross abuse of their trust, even if it were not barred by the decree in the probate court from which no appeal was made. But upon examining all the documents and evidence, it seems to us that there is no reason whereon to ground that imputation.

Trustees are justly and uniformly considered favorably, and it is of great importance to bereaved families and orphans, that they should not be held to make good, losses in the depreciation of stocks or the failure of the capital itself, which they held in trust, provided they conduct themselves honestly and discreetly and carefully, according to the existing circumstances, in the discharge of their trusts. If this were held otherwise, no prudent man would run the hazard of losses which might happen without any neglect or breach of good faith.

The judgment of this Court is, that the decree of the probate court, from which the appellants appealed, be, and it is hereby affirmed ; and that the record be remitted to that court for further proceedings according to law to be there had; and that the appellee recover his costs. 
      
       See Hall v. Cushing, ante, 395
     
      
       See Bryant v. Allen 6 N. Hamp. R. 117