Case ID: monaghan_1/html/0188-01.html
Source: Caselaw Access Project
Author: {"author": "Per Curiam,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Harris v. Sheldon. Harris’s Appeal.
    Where the record, is regular and shows that a writ of ca. sa. was issued on ¡a judgment for trust money in the hands of a trustee, the refusal of the common pleas to set it aside is not a subject of review on a writ of error.
    
      No appeal lies from a judgment entered upon a report of a referee, under the Act of 1836, in a common law proceeding in account render.
    
    Where a trustee has been surcharged with the amount of a ground rent, which he purchased from himself for his cestui que trust, and a ca. sa. has been issued against him, the court should see that the title to the ground rent is Teconveyed to the trustee.
    
      It seems, that, under the facts of this case, the trustee was properly deprived -of commissions and the costs imposed upon him.
    An appeal and a writ of error were both taken in these proceedings. The appeal was quashed and the court allowed the specifications of error, filed ■with the appeal, to he transferred to the writ of error.
    Jan. 18, 1889.
    Error, No. 145, July T. 1888, to O. P. No. 1 Pbila. Co., to review an order discharging a rule to quash a ca. sa., ¡and, by amendment, to review a judgment dismissing exceptions to report of referee; and Appeal, No. 141, July T. 1888, to review a ■judgment dismissing exceptions to report of referee, at Dec. T. 1884, No. 576.
    This was originally an action of account render by John M. Sheldon and Mary C. Sheldon, in right of said Mary Sheldon, ¡against Henry G. Harris.
    The master recited the proceedings as follows: The summons was issued Dec. 23, 1884, and was duly served on the defendant on -Jan. 5, 1885. On Jan. 10, 1885, defendant filed, in C. P. No. 2, an .account, as trustee for Mary C. Sheldon, the substantial plaintiff in this cause. Subsequently, by agreement of parties, this account was transferred to O. P. No. 1, and entered as of the same term and number as the action of account render. On June 8, 1885, a narr in account render was filed, alleging that defendant was the ¡agent or trustee of Mary Sheldon from Jan. 1, 1880, until Dec. 1, 1884, and during that time collected and received divers sums of money and had failed to render a reasonable account thereof. Defendant pleaded plene computavit. On July 6, 1885, the whole ■matter was referred to George Junkin, Esq., as referee under the Act of June 16, 1836, who filed a report setting forth substantially the following facts: In 1881, Sheldon, who.was the owner of a .store in Danville, executed a judgment note for $8,000 to Harris as trustee for his wife. Judgment was entered on this note and -execution issued, the stock in the store was sold and bought in by Harris, as trustee. Harris appointed Sheldon as his agent to seil "the goods. "While Sheldon was in possession as agent, judgments ■were recovered against him and these goods were taken in execution. An interpleader was framed and Harris gave bond and kept possession of tbe goods. Yerdict was rendered in favor of tbe trustee iu tbe feigned issue. Harris’s agent continued the sale of the goods and realized about $7,000. Up to July 18, 1882, Harris. had received $1,320.90. On this sum he claimed commissions in his accounts filed, at five per cent., or $66.04; also $200 for professional services as trustee. At a later date in July, 1882, he received the balance of the moneys. After making payments on account, there were left in Harris’s hands $4,150, invested in a mortgage for $3,500, and a ground rent for $650. He claimed to hold this balance as security to indemnify him on the interpleader bond, until after the time for taking out a writ of error in the feigned issue had elapsed. After the two years had expired, Mrs. Sheldon applied for the balance due her, and requested to be paid in cash. This not having been done, Mrs. Sheldon brought this action of account render.
    In the account in this case, Harris claimed credit for commissions at 5 per cent, on principal and income; also for counsel fees; expenses of filing account, $10; costs paid; costs for conveyancing in collecting $3,500 mortgage; and assignment of ground rent.
    The master, after reciting the pleadings and finding the facts, inter alia, as above stated, continued :
    “ When the accounts were submitted to Mr. and Mrs. Sheldon, containing the charges of $200 and $66.04, they objected to the amounts, and also to some expenses he had paid, claiming, also, that a very large amount had been paid to the three or four attorneys employed, and who tried the case. Finally, Mr. Harris agreed to throw ofE $30 of the expenses claimed by him, and [they agreed to the other charges made by him, upon the distinct understanding that Mr. Harris would make no other charge of any kind in the matter, either for his services, or for the securities or their collection.] [2] [“And he also said to them that, when the two years had expired, if she was then not willing to take the securities, in which he had invested the money, he would pay her the money instead, without charge or expense,] [3] as he would get some of his relations to take them and pay the money.
    [“They both testified to these matters very distinctly and emphatically; whilst he did not deny them in terms,] [4] but, in argument, he suggested that, if there was such statement or agreement made, it was merely a nudum pactum.
    “ When he received the bulk of the moneys in July, 1882, Mrs. Sheldon wanted part of it put in a ground rent she was offered through Mr. W. F. Snyder; but Mr. Harris objected, because he, and Mr. Angle, as his surety, required to be protected; and he undertook to get securities equally good. He owned a ground rent of $650, and he had been, [or was then,] [5] engaged in some building operations, and he had caused the titles to five houses and lots in the lower part of the city, which were assessed by the city assessors at $700 each, to be put in the name of a third party who executed a mortgage upon them, which subsequently he caused to be assigned in July, 1882, to himself as trustee for Mrs. Sheldon for $3,500 at 5 per cent, interest, and the title was conveyed tó his brother subject to the mortgage. He considered this a good investment of the :$3,500 and he then used the money in his own business, and subsequently paid the interest to Mrs. Sheldon as before stated. He also ■caused the ground rent which he individually owned, to be conveyed to him as trustee; and the mortgage and ground rent he delivered to Mr. Angle as his security until the two years had ■expired. And from him they were subsequently received.
    “ Mrs. Sheldon seems to have had some knowledge, in a general way, of these transactions, [whilst not wholly approving them.] ■ [6] [It does not seem that she knew that the properties were really those ■of Mr. Harris.] [I] The result of the arrangement was that Mr. Harris used the money for his own purposes, and gave his own property to himself, in the way described, as security. When at a later period she sought accurate information as to the location of the properties, he gave her incorrect information as to the same, though the referee is inclined to think this was not intentionally done, but was a mere mistake. When she insisted upon the payment to her of the balance of her moneys, after the two years had expired, [there were delays in furnishing the account which ■ought not to have occurred.] [8] And when it was furnished, he refused to settle with her unless she agreed to the additional charge for commissions, and gave him a receipt in full.
    “It was objected to his claim for commissions, in addition to the agreement mentioned as to the same, that he was not a trustee, gave no security, put Mrs. Sheldon to large expense in getting Mr. Angle to become security in the interpleader, and that the expenses ■of counsel were very great, being at least $900, and he used the moneys in his own business.
    “ But he certainly was her trustee, and he acted and was recognized by her as such, and, so far as the recovery of the money was concerned, certainly did his duty faithfully. He, not living in Mon-tour Co., could not very well give security there in the interpleader suit; and the arrangement to get Mr. Angle to become the security, and at the same time to sell the goods for a compensation of 5 per •cent, was a fair one,' and one approved of by the parties at the time. And whilst it is true that he claimed title to the goods under a sheriff’s sale, it is not at all likely that the court would have allowed him to enter his own bond without security, under the peculiar circumstances of the case. The counsel employed were those selected upon conference with Mrs. Sheldon, if not suggested by her or her husband, and their fees have been agreed to by her; and, in view of the result, the legal expenses may not be considered out of the way.
    “ Under all the circumstances of the case, however, the referee is of opinion that Mr. Harris should not be allowed any further compensation than the $200 and $66.04 [which he agreed to accept in full of all claims.] [9.] The income paid to her was really only paying 5 per cent, on the $3,500 of her money, which he was using in his business, secured by the mortgage on his own property, and 6 per cent, on the ground rent, which was another piece of his own property. The claim for conveyancing expenses, etc., in collecting the $3,500 mortgage, are disallowed, as well as those for the transfer of the ground rent. [It did not appear that he had paid them.] [10.] ....
    “ He was entitled to retain the moneys in his hands as his, and Mr. Angle’s, security against a writ of error; and [had he invested the moneys in good and unexceptionable securities,] [11] his course would have been easy and plain. He would merely have had to transfer them to Mrs. Sheldon and taken her receipt. It was not necessary to file an account. All the trouble in the case has arisen out of his using the moneys in the way he did, and in mixing up her affairs with his. . . .
    “According to Mr. and Mrs. Sheldon, Mr. Harris expressly agreed that, when the two years had expired, she would have her money without any further charges or expenses of any kind. And this, as has before been stated, he did not deny in terms, when ■examined as a witness. [Evidently he desired to use her moneys in his own building or other operations;] [12] and he did so use the moneys, securing its return in the way indicated, and there .is no reason why he should not be held to his agreement, under the circumstances disclosed in the case. [It nowhere appeared that Mrs. ■Sheldon or her husband knew that these properties, given as investments or securities, really belonged to him, or that the arrangement had been made so that he could get the use of the money for himself.] [13.] Indeed, [the evidence seems to show that they both .supposed that the mortgage and ground rent were both secured upon the property of persons, strangers to himself, and were independent ■securities held against others, and with which he had nothing to ■do.] [14]
    “ Eor the same reasons, the charge of $10 for filing the account must be disallowed. It was an unnecessary payment. And, besides, this suit had already been brought, and all matters in controversy between the parties could have been settled in it, even if an account ■could have been properly filed under the circumstances.”
    The master surcharged the defendant with commissions dis.allowed; surcharged him with $650, ground rent; imposed the costs upon him and found a balance due Mrs. Sheldon of $2,081.56.
    The defendant filed exceptions, alleging that the master erred, 1, in finding an award in the action of account render as if that action could be sustained, instead of awarding as auditor on the account presented to the cestui que trust and filed in C. P. No. 2, D. 84, 480; 2-14, in the findings or inferences of facts contained in his opinion, enclosed in brackets; 15, in taking meagre and insufficient notes of testimony; 16, in giving too much weight to the testimony of J. M. Sheldon; II, in placing on his notes only such portions of the testimony as agreed with his view and final determination of the case, and further distorting that, in his finding of fact; 18, in surcharging the trustee with commissions; 19, in finding that “ legal expenses ” included commissions of a trustee; 20, in the form of his report; 21, in disallowing the claims of the trustee for expenses of filing account, costs of conveyancing, costs paid, counsel fees, and assignment of ground rent; 22, in charging the trustee with the principal of the ground rent while the title to same was in the cestui que trust; 23, in placing the costs on the trustee; and, 2'f, in charging the trustee with interest after the tender of the balance to the cestui que trust.
    The court dismissed the exceptions, filing no opinion, and entered judgment on the report.
    Harris subsequently paid $Y50 on account of this award and afterward an execution was issued for the balance, which was returned nulla bona. A capias ad satisfaciendum was then issued. Harris took a rule to quash the capias, and, in support of his rule, filed the following affidavit:
    “H. Gf. Harris, being duly sworn, says, that the judgment in this case, entered upon the report of the referee for $2,081.56, consists of the following items: First, of the principal of a yearly ground rent of $39, being $650. That of this item, the title to said ground rent is in the plaintiff, and said H. Gf. Harris has no title to the same. That to charge the said H. Gf. Harris with the principal of said rent, while the plaintiff holds title thereto, would give the plaintiff $1,300, when she is entitled to the ground rent only, representing $650. The second item of the amount of said judgment, consists of the compensation and expenses of said H. G. Harris, as attorney, agent, or trustee for said plaintiff, which he deducted from the funds collected and accounted for. And the third item of said judgment, consists of some $Y50, which was a sum retained by said H. G. Harris, as attorney or trustee, as a balance for distribution in which to make an accounting, and pay the expenses of an'audit or final adjustment, when his accounts should be finally passed upon, and his claims for extra compensation, beyond that charge, determined. That, since the filing of the referee’s report, the sum of $Y50 had been paid the plaintiff. That the balance of the judgment consists therefore, practically, of the first two items named, that is, of the ground rent of $650, belonging to said plaintiff, and of said H. G. Harris’s reasonable charges, which, by the referee’s report, are disallowed him.
    “That the said H. G. Harris has not been heard upon his exceptions to the referee’s report, the same having been dismissed in the absence of his counsel, and the said H. G. Harris is about to file his appeal to the supreme court, where, if his exceptions are sustained, only the said $650, less costs and expenses, will be due the said plaintiff.”
    The court discharged the rule. Harris thereupon took a writ of error to review this action of the court. He also took an appeal to the judgment on the referee’s report.
    
      
      The assignments of error, on the appeal, without quoting the exceptions, but stating the substance, specified the action of the court in dismissing, I, exceptions 2, 3, 4, 9, and 19; II, exceptions 5, 7, 10, 12, 13, and 14; III, exception 6 ; IY, exception 11; Y, exceptions 15 and 17; YI, exception 8; YII, exception 18; YIII, exception 21; IX, exception 23 ; X, exception 24; XI, exception 22; XII, exception 1; and, XIII, exception 20.
    
      The assignment of error, on this writ of error, specified the action of the court in discharging the rule to quash the ca. sa.
    Counsel for appellee move to quash the writ on the ground that an appeal did not lie. Jan. 18, 1889, the appeal was quashed but the assignments of error on the appeal were allowed to be transferred to the writ of error, Williams, J., being then absent.
    
      Henry G. Harris, plaintiff in error, appeared p. p.
    A ca. sa. does not properly lie in this case, which is practically an audit of an account under an agreement. T. & H. Pr. 159. There was no refusal to account. The only question was whether the trustee should be allowed anything for his services. Even if a ca. sa. was a proper writ to issue in tins case, it should have been quashed. The ca. sa. issued for the principal of a ground rent, surcharged to trustee, and the balance was the trustee’s deduction for proper compensation.
    A trustee shall use such care and prudence as a man uses in his own affairs. Investing in securities thoroughly known to him is not want of care. Johnson’s Ap., 12 S. & R. 325; Konigmacher v. Kimmel, 1 P. & W. 207; Twaddell’s Ap., 5 Pa. 15. Arrangements of convenience are not prohibited; Duval’s Ap., 38 Pa. 112; Trotter v. Shippen, 2 Pa. 358.
    Where the trustee, by agreement, is permitted to retain funds for a number of years and pay over the income, he is entitled to reasonable compensation. Culbertson’s Ap., 84 Pa. 303.
    A trustee should not be deprived of compensation for an error of judgment. Myers’s Ap., 62 Pa. 104; Fahnestock’s1 Ap., 104 Pa. 46; Ogle’s Est., 5 Pa. 15. But in this case the full face of the mortgage was accounted for, á'portion of the cost of converting it before it was due being the only charge to the cestui que trust.
    The cestui que trust, having acquiesced in the investment, cannot complain. Duncan v. Lawrence, 24 Pa. 154.
    The referee’s report does not conform to the rules for such reports laid down in Butterfield v. Lathrop, 71 Pa. 229.
    The accountant, having furnished a full account, the case assumes the shape of an audit merely, and the action of account render would not lie.
    
      Joseph A. Abrams, for defendant in error.
    An account render lies m every case where one has received moneys to the use of another. 2 T. & H. Pr. 163. It lies by cestui que trust against his trustee. Dennison v. Goehring, 7 Pa. 175. It lies by a client against his attorney for moneys received foi; the client, or wherever one man has received money as the agent of another. Bredin v. England, 4 Watts, 420. The sheriff, being unable to find any property, was justified in issuing a ca. sa.
    The defendant submitted to arrest and gave an insolvent bond, and this amounts to a waiver of his privilege of exemption from arrest. Winder v. Smith, 6 W. & S. 424. The rule to quash was within the ordinary discretionary powers of the court, and this court will not judge of the regularity of the execution, where the question involves matters of fact which do not appear of record. Righter v. Rittenhouse, 3 Rawle, 272; Gordinier v. Billings, 1 W. N. C. 422. Or where there is nothing in the record to show irregularities. Neil v. Tate, 27 Pa. 208; Renninger v. Thompson, 6 S. & R. 1.
    A trustee who mingles the trust with his own and invests the same in his own property, sustains the relation of borrower, and is not entitled to commissions. Livingood’s Ap., 2 Penny 70; Farwell v. Steen, 46 Vt. 678; Norris’s Ap., 71 Pa. 106.
    Imperfect information from a trustee as to funds invested, if calculated to give a false impression, is concealment. Norris’s Ap., supra.
    A trustee who has been guilty of wilful misconduct in the execution of his trust, is not entitled to commissions. Berryhill’s Ap., 35 Ba. 245. "
    Compensation is allowed to trustees as a reward for the faithful execution of the trust. Clauser’s Est., 84 Pa. 51; Robinett’s Ap., 36 Pa. 174; Stehman’s Ap., 5 Ba. 413.
    An attorney who collects money and neglects or refuses to pay it over to his client until sued for it, is entitled to no compensation for his services. Breden v. Kingland, 4 Watts, 420.
    If an attorney does not offer to pay his client in a reasonable time all that he was bound to pay, he is not entitled to compensation'for his trouble. Fisher v. Knox, 13 Pa. 622.
    Butterfield v. Lotlirop was a reference under the special Act of 1870, extending to Susquehanna county. The reference in this case is under the Act of June 16, 1836, and the report is in conformity with that Act. There were no exceptions taken at the trial, or points submitted to the referee.
    The findings of a referee are to be taken as prima facie correct, and are not to be overturned except for some obvious mistake or unwarranted conclusion. Hibbs v. Woodward, 15 W. N. C. 338.
    Jan. 28, 1889.
   Per Curiam,

This was an action of account render in the court below and was brought by Sheldon and wife against ITenry G. Harris, trustee. There was also pending in the same court an account filed by Harris as trustee of Sheldon and wife'. This account appears to have been consolidated with the action of account render, and the whole matter was referred to George Junkin, Esq., as referee, under the Act of 1836. The referee awarded to Mary C. Sheldon the sum of $2,081.56. Numérous exceptions were filed, which were dismissed. A ca. sa. was then issued in the court below against Harris, and a rule taken by him to quash said writ, which rule the court below, after a hearing, discharged. A writ of error was then taken by Harris, in the action of account render, and the single error assigned, that the court erred in refusing to quash the ca. sa. At the same time, an appeal was taken from the award of the referee, and, upon that appeal, numerous assignments of error were filed. We quashed the appeal, when this case was reached, for the reason that no appeal lies under the circumstances, but we allowed the errors assigned in the appeal to be filed on the writ of error. We have thus the case consolidated here, and are enabled to dispose of all the questions in it. The thirteen assignments, transferred from the appeal to the writ of error, might be dismissed with the remark that they are not in compliance with the rule of court, and therefore not entitled to be considered. As, however, theré seems to have been an attempt at compliance, and the substance, at least, of most of the exceptions below is stated in the assignments, we have considered them with as much care as if properly assigned. We are unable to see any substantial error. On the contrary, the referee has, in our opinion, done full justice to the plaintiff. It is proper to say, however, referring to the eleventh assignment, that inasmuch as the trustee has been surcharged with the principal of the ground rent ($750) while the title thereto is in Mrs. Sheldon, we think it the duty of the court below to see that this ground' rent is properly reconveyed to the trustee.

There is nothing upon the face of the ca. sa. to show irregularity. It was said by Lewis, O. J., in Neil v. Tate, 27 Pa. 203: u Where there is nothing on the record to show that an execution is irregular, the refusal of the court of common pleas to set it aside is not the subject of review on writ of error. This has been repeatedly decided.” The record shows that the judgment or decree upon which the ca. sa. was issued was for trust money in the hands of a trustee. That this form of execution may be issued under such -circumstances is too obvious to require discussion.

Judgment affirmed.

Peh. 11, 1889. Motion for re-argument.

The plaintiff in error filed' the following reasons in support of his motion: . -

I. The court did not consider the rights of the parties as fixed at the time of the presentation of the trustee’s account.

II. The court did not consider fully the referee’s report of facts as to the investment of the $3,500 mortgage. The referee reports that the trustee considered the investment good. The cestui que trust received the full amount of principal and interest.

III. The trustee kept a separate account until all moneys were invested, when nothing remained except interest collections. 'This appears hy the evidence.

IY. The court did not consider that there was no evidence as to the alleged agreement by the trustee in 1881.

V. The court did not consider that, as to the ground rent, the referee’s report is entirely opposed to the evidence as well as the recorded title. The error in not decreeing a reconveyance justified this writ, and the plaintiff in error should not be saddled with costs in error.

VI. The court has not considered that this case, if a preceent, is a precedent for the following: 1. A trustee or attorney cannot sell anything which has been his own, to his client. 2. He cannot buy for a trust or client any security or interest in land from a partner or relative. Fisher’s Appeal, 34 Pa. 29, is opposed to this. 3. Where a trustee is sought to be surcharged, the presumptions are against the trustee’s intention faithfully- to execute the trust, and his testimony may be disregarded, if contradicted by his cestui que trust. This overrules the law as now laid down and followed in the English cases, and followed in Neff’s Ap., 57 Pa. 91, and in Myers’ Ap., 62 Pa. 109. 4. While it is the law that a trustee will not be held responsible or deprived of compensation for an error of judgment, yet if a trustee be also an attorney he will be held responsible for an error of judgment, even if his action be concurred in by his cestui que trust, and the error is only as to the source from which he shall take securities for the trust, and the securities cause no loss. This is opposed to Maloney’s Est., 27 Pitts. L. J. 193. 5. In this case, an attorney is treated with tenfold harshness, compared with trustees who have committed actual fraud or been guilty of gross derelicton, as in Norris’s Ap., 71 Pa. 106, and Robinett’s Ap., 36 Pa., 174.

Per Curiam, Feb. 18,1889.- — Re-argument refused.

W. M. S., Jr.