Case ID: va_30/html/0675-01.html
Source: Caselaw Access Project
Author: {"author": "TUCKE5R, P.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Garrett Ex’or of Allen v. Carr and Wife and Another.
    February, 1832.
    (Absent Carr, J.)
    Executors — Settling Accounts— Interest — Case at Bar. —Testator devises, that his lands shall be sold, and the proceeds invested in bank stock, or in such other property as his ex’ors shall think most advantageous to his children; the ex’ors sell the land, but do not invest the proceeds in bank stock, and afterwards account for the proceeds in money: Held, they ought to be charged with interest on the balances in their hands annually, and their disbursements for the maintenance of the children, and on all other accounts, ought to be defrayed out of the interest accruing on the balances.
    Same — Accounts—Bill to Surcharge and Falsify — Presence of Legatees at Settlement No Objection to Bill.— Ex’ors’ accounts are audited before commissioners of the county court, the legatees being present at such settlement thereof; these accounts are returned to the court, approved and recorded: Held, the presence of the legatees at the settlement, is no objection to a bill in chancery to surcharge and falsify the accounts so settled.
    Same — Same—Same—Specification of Items — When Not Necessary. — Upon a bill to surcharge and falsify an ex’or’s account, though plaintiff is held to specification of items of surcharge and falsification, yet it is always competent to him to shew that the account is erroneous upon its face, and (without controverting the items themselves) to shew, that they have been so arranged as to produce results injurious to him.
    Appellate Practice — Bill against Two Executors — Decree against One — Correction of Error in Both Accounts. — upon a bill and supplemental bill against two ex’ors there is a decree against oue of them, on one of the grounds of complaint in the original bill, and the original bill as to all things else dismissed, and the supplemental bill reserved for future consideration; the ex’or against whom the decree is, appeals: the plaintiff does not appeal from the residue of the decree dismissing the other ex’or from the court as to the matters in the original bill: the court of appeals, finding errors in the decree, injurious to the appellee, both as to the ex’or who appealed, and as to the ex’or as to whom the original bill was dismissed, and that the transactions of the two ex’ors are indissolubly blended with each other, will correct the errors as to both ex’ors, especially as the decree is interlocutory.
    Richard Allen, late of Albemarle, died in 1805, and by his last will and testament directed, That all his land and other property, except slaves, should be sold at auction, on twelve months credit, and the proceeds of sales laid out in stock of the bank of Virginia, or in such other property *as his executors should think most advantageous to his children; that as his children should marry or come of age, such of them as should marry or come of age, should, at that time, have his or her part allotted off, until which his estate should be kept together; and that his debts should be paid out of the proceeds of the sales. He appointed three executors; two of whom Dabney Minor and Alexander Garrett proved the will in the county court of Albemarle, and took upon them the execution thereof. The testator left two children Mary and James, both in early infancy: Mary afterwards married James Carr; and after the marriage, Carr (it seemed) was appointed guardian for James, who was still an infant. It appeared, that no guardian had been before appointed for either of them, but the executor Minor had acted as guardian for both.
    The executors made sale of the testator’s estate in pursuance of his will. But they did not invest the proceeds of the sales in stock of the bank of Virginia, because (as they said) they thought such an investment injudicious: they collected part of them, as they fell due, and part they suffered to remain in the hands of the purchasers, upon interest, for several years, and finally accounted for the whole of the proceeds in money.
    After the marriage of the testator’s daughter Mary with Carr, and after the appointment of Carr guardian for the son James, the executor’s respective accounts of administration were audited and settled by commissioners appointed by the county court for the purpose. Carr and his ward James were both present during the settlement of the accounts by the commissioners, and were repeatedly desired to state any objections that occurred to them, to any part of the accounts, but they made none: however, neither of them was present when the accounts were closed, and the results ascertained and stated. The accounts of both executors, thus audited and settled severally, were reported to the county court; and, no exception being taken to them, wer§ approved and ordered by the court to be recorded.
    *It appeared by these accounts, that the testator owed only one debt. In the account of the executor Garrett, he was credited with the sum of 2000 dollars paid to Cair after his marriage, the justice of which credit was afterwards contested, but the controvers3T in respect to it, depended on the peculiar circumstances of the transaction, and involved no question of law. In the accounts of both the executors, balances were struck on the 31st December in every year; each executor was debited with the funds of the estate that came to his hands during each year, and credited with the disbursements of the same year for the expenses of administration, against the principal by him * accounted for. In the account of the executor Minor, who (as has been said) acted as guardian of the infant legatees, the disbursements made by him for their maintenance and education, during each year, were in like manner credited to him against the principal by him accounted for. So that, in the accounts of both the executors, the annual balances due from them, respectively, (and they were considerable), were balances of principal. And at the close of the transactions, interest.accounts were stated, in which the executors were charged with interest on the annual balances found due from them, respectively. In the course of the transactions, it appeared, that the executor Garrett sometimes transferred moneys of the estate, which had come to his hands, to his co-executor Minor; which of course were debited to Minor, and credited to Garrett: One of the sums thus transferred by Garrett to Minor was 2000 dollars; and this sum was. credited to Garrett, as having been so transferred to Minor, on the 31st December 1810,. so as to reduce the balance due from Garrett at the end of that year, by that amount but the same sum was debited to Minor on the 2nd January 1811, and so compose part of the balance struck against Minor at the end of the year 1811; from which last date,. Minor was charged with interest on the balance then struck: the consequence was, that one year’s interest of this sum of 2000 dollars was lost to the estate. It did not appear whether *Garrett was credited for this transfer to Minor too early, or Minor charged with it too later Garrett insisted, that the credit was given to him at the proper date: Minor said, he did not recollect the date, and could not explain the inconsistency between the account of his co-executor and his own.
    About six months after the executors’’ accounts settled by the commissioners of the county court, had been returned, approved and recorded by that court, Carr and' wife and James Allen (who was now of full age) exhibited their bill against the executors Minor and Garrett, in the supe-riour court of chancery of Staunton, to surcharge and falsify the accounts settled by the commissioners, and to have them corrected. In this bill, they complained of the neglect of the executors to invest the proceeds of the sales made by them, in bank stock; whereby, they said, considerable loss had been sustained, which, they insisted, the executors ought to make good. They alleged, that the accounts of the executor Minor were incorrect in several particulars; over charges, improper charges, and omissions of just credits to the estate: and they complained, especially, of the loss of one year’s interest of the 2000 dollars transferred by Garrett to Minor, in consequence of the credit therefor being given to Garrett at the end of the year 1810, and of the sum not being brought to Minor’s debit till the beginning of 1811. And, as to Garrett’s accounts, they complained, that the credit allowed him for the 2000 dollars paid to Carr after his marriage, was unjust (and this, indeed, was the main point of the controversy). They made no objection to the general principles on which the accounts were settled by the commissioners of the county court, to the manner in which the interest account was stated, and interest brought to the debit of the executors at the close of the transactions, or to the application of the executors’ disbursements to the principal of the moneys by them received respectively and accounted for. *The plaintiffs afterwards filed a supplemental bill, touching matters not mentioned in the original bill, and not necessary to be further noticed here, since they were not a subject of inquiry in this court.
    The executors answered severally, each setting up such matters of defence as appertained to his own part of the case.
    And upon the hearing, the chancellor was of opinion, that the plaintiffs had no just ■ground of complaint against the executors, for their failure to invest the proceeds of their sales in bank stock; that the plaintiffs had failed to establish any of the errors they complained of, in the executors’ accounts settled by the commissioners of the county court, excepting the credit allowed to Garrett for the payment of 2000 dollars to Carr; that that credit ought not to have been allowed Garrett: therefore, he decreed that Garrett should pay the plaintiffs, the 2000 dollars with interest, and all their ■costs of suit, and he dismissed the original bill as to all other matters therein alleged; but he retained the supplemental bill for future consideration, so that this decree was interlocutory.
    Garrett appealed from the decree to this court; but the plaintiffs did- not appeal from so much of the decree as dismissed their bill as to Minor.
    Johnson and Leigh, for the appellant.
    Stanard, for the appellees.
    
      
       He was related to one of the parties.
    
    
      
       Executors — Settling Accounts — Interest.—In H andly v. Snodgrass, 9 Leigh 490, and note, it is said, by TUCKER, p.. in the discussion of the question of charging the executor interest; “As to the charge of interest upon interest from 1827. If this charge were wrong, still it is obvious that had the account been properly settled, the balance against the executor would exceed the sum now reported to be due. Carter v. Cutting and Wife, 5 Munf. 238; Burnley v. Duke, etc., 1 Rand. 108. For by the will the estate was directed to be put out at interest, and according to the decision in Garrett, etc.* v- Carr, étc.* if the executor did not choose to do so, he is to be considered as a borrower, and should be annually charged with interest, and the interest and not the principal should be applied to the disbursements. A settlement upon this principle, even without holding him to strict account for his large profits made' by usury, would have made the balance much larger; and moreover, that balance would have been principal, as the interest and not the principal would have been absorbed by the disbursements. Moreover, the transactions of the estate were closed in 1827, at latest. They should have been considered as closed soon after the testator’s death. According to the case of Garrett, etc.* v. Carr. etc., the balance should have been struck after a reasonable time allowed for payment of the debts. The balance should then have been charged against him as a borrower; and from that time until the distribution, the account should have been adjusted as an account between ordinary debtor and creditor.”
      Also on the question of the settlement of the accounts of executors, the principal case is cited in Anderson v. Thompson, 11 Leigh 458; Garrett v. Carr, 1 Rob. 196, and note\ Strother v. Hull, 23 Gratt. 663; Martin'v. Fielder, 82 Va. 460, 4 S. E. Rep. 602; Anderson v. Piercy, 20 W. Va. 301, 327.
    
    
      
       Same — Accounts-—Bill to Surcharge and Falsify.— For the proposition that, in a bill to surcharge and falsify an executor’s account, though the plaintiff is held to the specification of items of surcharge and falsification, yet he may show that the account is erroneous on its face, and without controverting the items themselves, show that they are so arranged as to be injurious to him, the principal case is cited in Seabright v. Seabright, 28 W. Va. 438. Also on this question, the principal case is cited in Radford v. Fowlkes, 85 Va. 848, 8 S. E. Rep. 817; Green v. Thompson, 84 Va. 394, 5 S. E. Rep. 507; note to Backhouse v. Jett, 2 Fed. Cas. 322.
      See monographic note on “Executors and Administrators” appended to Rosser v. Depriest, 5 Gratt. 6.
    
   TUCKE5R, P.,

after examining the question, upon the evidence, as to the credit claimed by Garrett for the 2000 dollars paid by him to Carr, and shewing the reasons why this court held the chancellor’s decree clearly erroneous, in disallowing that credit and adjudging that Garrett should pay that sum to the legatees, proceeded—

With respect to the other part of the case, I think there is yet less doubt, that the decree is erroneous. The bill was filed by the children of Richard Allen against his executors, 'x'for the purpose of scrutinizing before the court of chancery, one of those ex parte accounts, which, instead of settling disputes among the members of a family, most generally prove the proximate cause of discord and litigation. It charged the accounts with incorrectness, and surcharged and falsified them, in several particulars. It was not a stale and antiquated transaction, raked from oblivion by some specula ting busy body and maintainer of suits, but an appeal for redress of their supposed wrongs, by two young people but recently arrived at maturity, and within six months after the recording of that account, which they assailed as derogatory from their rights. They were then entitled to be heard, if they could shew any just ground of complaint. It is proved, indeed, that Carr, the husband of one and the guardian of the other infant, attended the settlements, and was repeatedly invited to object to what he thought amiss. In answer to this, it is sufficient to say, that that attendance, if it had continued during the whole of the settlement, would not have been conclusive of the rights of the parties. But it may be added, that neither of the distributees nor the plaintiff Carr were present during the whole time, and particularly at the last meeting which was most important, and presented the results of the examinations of the commissioners; and moreover, though present, if they were without counsel, this court would not necessarily infer, that they were competent to the detection of the errors, which, in the settlement of an executor’s account, may escape even the most practised eye.

The question before the chancellor as to this matter, was, Whether the proceedings in the cause presented a case for the reference of the accounts to a commissioner for settlement, upon the ground, that they were surcharged or falsified, by the bill and the evidence adduced by the plaintiff. The chancellor thought not. Let us inquire into it.

Passing by the small items for managing the estate, and for board, in which the plaintiffs have not succeeded, there is one item in the account obviously misstated, besides the *2000 dollars for which Garrett claimed credit which was rejected (improperly as I have already shewn) by the chancellor. I speak of the 2000 dollars paid over by Garrett to Minor in December 1810, and not credited by Minor until January 1811. By this means one year’s interest was lost, as interest was not calculated upon that sum but from December 1811. Por this interest the executors are beyond question liable: but who can say upon which of them the burden ought to fall? To the plaintiffs, indeed, it is immaterial, provided they get their right; but the chancellor has not given it to them, although the falsification was distinctly set forth in the bill, and palpable upon the accounts of the parties. This error so undeniable, and 3ret so inexplicable that Minor frankly says he cannot explain it, of itself demanded that the accounts should be remodeled. Occurring as early as 1811, it affected the results of the subsequent transactions, and moreover it was a matter which ought to have been settled before the bill was dismissed as to Minor.

But the account was not only erroneous in this glaring particular, but it was grossly erroneous upon its face, in its principles and its details. In examining it, it must be observed we exercise no other than our legitimate appellate jurisdiction. The chancellor has said no new account was necessary. In reviewing this opinion, we must place ourselves in his situation, and do what he should have done. Now, I take it, wherever a. case is presented before a court of chancery to surcharge and falsify an executor’s account, though the plaintiff is held to a specification of items of surcharge or falsification, yet it is always competent to him, or to his counsel, to shew to the chancellor, that upon its face the account is erroneous; that it is stated upon principles in conflict with the rules of the court, and subversive of the rights of the parties. Not controverting the items themselves, he may shew that they have been so arranged, as to produce by the magic of figures, results the most fatal to his rights. In this case, I think, we find an instance of x'such an operation. But to understand the injury done to the plaintiffs in its full extent, we must advert first to the will of the testator.

Richard Allen by his will directed his lands and other property, except slaves, to be sold, and the amount of sales to be laid out in Virginia bank stock, or in such other property as his executors should think most advantageous to his children. Admitting the discretion here vested in the executors, in its largest scope, and admitting (what, by the way, the evidence decidedly negatived) that the investment in bank stock as directed, would not have been judicious, the question recurs as to the course the executors ought to have pursued. Their great and avowed anxiety to meet the wishes of the testator, to do what they think he would have done, was highly meritorious. They have speculated, in their answers, on the different modes of employing the capital in their hands, but have not succeeded in shewing what, besides the bank investment, the testator probably wished. But though it may be difficult to devine what he did wish, except so far as that wish is evinced by directing a bank investment, there can be no difficulty in saying what he did not wish. He could not have wished, to sell his lands and other property, the natural fund for the support and education of his children, and to invest the proceeds in such a way that the maintenance and support of those children should, like a consuming moth, eat up the principal of his estate, and leave the interest, during a long minority, a barren fund in the hands of his executors, producing no profit and meeting no expenditure. He could not have wished to pursue a system, the inevitable effect of which was to sink a great part of an estate, the annual profits whereof would have amply met all demands for maintenance and education, and left an accumulating balance. Why did he sell the land, in the stability of which he might safely have confided? Because he'confided not less in the faithful promotion of his views by his executors; and because those views were to convert a sluggish into an active *capital. Hence he directs an investment into' bank stock, the dividends of which would be applied, with the hires of his slaves, to the maintenance and education of his children, and the balances to reinvestments. The effect of this operation would have been, to have accumulated, at this day, no trifling sum, instead of that which they have received. But the executors, in the exercise of their discretion, have declined taking bank stock, and the chancellor has considered them as justified in that course. If, however, they did not choose to pursue the direction of the testator, it was proper that they should come as near to it as might be, and that the court at least should take care, that, in the exercise of their discretion, the testator’s views and intentions shall not be utterly frustrated. They might have vested the funds as they were received (and it was the natural course of things) in loans to good borrowers, securing the payment of interest regularly, to meet the expenses of the children, and to be reinvested as occasion might serve. They have not done this, except as respects that portion of the funds which were permitted to remain in the hands of Watson (the purchaser of the lands) who sometimes paid the interest, which was then converted into principal. A similar course as to the residue of the estate, would have produced very different results from those now exhibited. Indeed, it would seem by Garrett’s answer, that they deemed it best, that the money should lie in the hands of responsible and punctual men upon simple interest. If this, then, was the course to be pursued, it should appear that the money was so let out upon loan; unless we are to understand them as meaning, that it was safer for them to retain the money themselves. If they did so, then they must be considered as retaining it as borrowers; and not holding it as executors merely, chargeable with interest upon the principles applicable to such fiduciaries. In this view, they should, in this account, have been annually charged with interest, for such would have been the effect had the money been lent to 'others; and that interest should have been applied to the ^disbursement of expenses, and the excess reinvested in an interest bearing capital. For, in this case, the ordinary principles which govern the accounts of executors, do not apply. Quoad this matter, they are not to be treated as executors. They are ordinary debtors-— borrowers of this money — which they admit should have been put out and improved at interest in the hands of punctual men. The case of Granberry v. Granberry, 1 Wash. 246, does not govern their case. The court, there, forbad a certain mode of stating executors’ accounts, because it said, “though right in the ordinary case of debtor and creditor, it would be hard in the case of an executor.” Here, the executors substituting themselves as borrowers, the ordinary principles of debtor and creditor, have strict application.

But it is not for these reasons only that the account should be otherwise stated. In this case the estate owed but a single small debt. Did that justify the protraction of the executorial account from 1805 to 1824? By no means. Executorial accounts should always be brought to a close as soon as the debts are paid, and the transactions permit. Payments to legatees, and advances to children or other distributees, should never enter into the general account, both to prevent confusion, and because the accounts with them are not to be adjusted upon the principle of the general account. For, after the balance of the general account is struck, and the portions of the several legatees or distributees ascertained, the account between them and the executor is strictly an account between debtor and creditor. When such balance is struck, the portion of each should be carried to a separate account with-him individually. The executors in this case, indeed, would still have held the funds in their hands by virtue of the will, until the marriage or maturity of the children. But the accounts of the fund so held by them, would not have been adjusted on the principle of an executor’s account. They, would have been treated rather as guardians, who are never permitted to pay the infants’ expenses out of the principal of their estate. *One of the parties seems to have been the actual, though not indeed the legal guardian of the children ; and he who so acts, ought to be charged as such. Whoever enters upon an infant’s estate, is treated as his bailiff or guardian, and charged accordingly. Bennet v. Whitehead, 2 P. Wms. 644; Dormer v. Fortescue, 2 Atk. 288; 3 Id. 124, S. C. Much more, where an executor undertakes to fulfil the duties of guardian, instead of having a guardian appointed according to law, he must be treated as such, in his transactions with the infant. Indeed, even were it otherwise, it is absurd to suppose, that he can be justified in doing that which ever the legal guardian cannot do. It is absurd to suppose, that he can lawfully waste the principal of the infants’ estate, when the lawful guardian would not be permitted to do it. Nay, it is for his own benefit to consider him as sustained in his acts, as quasi guardian. If he be not, then all these payments and disbursements for the wards would be in his own wrong. Hence, in tenderness to him, and because he has only done that which benevolence required for an unprotected child, he is justified in doing what the guardian might do ; but upon no principle is he justified in doing more. His disbursements, therefore, must be charged to the interest, and not to the principal, of the wards’ estate. And herein this account is wrong ab ovo usque ad mala.

If the executors were themselves fairly borrowers of the funds, in the execution of their trust, I do not know that the dis-tributees could complain of any profit they may have made. If they were borrowers of the funds, substituting themselves for, and to account as, other borrowers would, if they held the funds as debtors of the estate, and were accountable as ordinary debtors, then they had a right to make what profit they could from those funds.

It is unnecessary to pursue this subject farther. I will only add, as to the dismissal of the bill, that the original bill was dismissed as to both the parties, in relation to all matters except the sum of 2000 dollars decreed against Garrett. *Garrett having appealed from the decree for the 2000 dollars, and the decree as to that being reversed, and the court perceiving also error in the record against the ap-pellee, is bound, according to its rules, to consider the whole record, and to correct that error also, as if the appellee had appealed. It struck me, at first, that as Minor was out of court by the dismissal of the bill, this court could only correct errors as against Garrett. But one of the errors is the dismissal of the bill as to all other matters except the 2000 dollars. This dismissal, therefore, as to Garrett, must be set aside. But as the order of dismissal was intire, embracing both, — the reversal of that order must be a reversal as to both. Indeed, the two executors are so connected in the transactions, that this seems inevitable : and the case thus comes within the distinction, as I understand it, taken by the court in Tate v. Liggat, 2 Leigh, 107, 8.

The other judges concurring, the decree was reversed, and the cause remanded, in order that the executors’ accounts might be remodeled and corrected, according to the principles indicated in the opinion of the president.