Case ID: sc-eq_25/html/0408-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Per Curiam.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

George W. Boggs and Isabella, his wife, vs. John Adger.
    
    In 1830 an administrator Raving in Ms hands funds of an infant, distributee of Ms intestate, invested the same in stock of the Bank of the united States : in 1835 a guardian was appointed for the infant, who received, from the admimstrator, the stock, in full of the infant’s share, &c. : the Bank was in Mgh credit until 1839, when the price of the stock sank suddenly and greatly in the market, — it finally became almost worthless: — Held, that the guardian was not liable for the depreciation in the value of the stock.
    There is no rule in this State prescribing the securities on which trust funds shall be lent or invested: and where a trustee, in investing funds, acts faithfully and with common diligence and sagacity, he will not be liable if the funds be lost.
    
      Defore Wardlaw, Ch. at Fairfield, July, 1851.
    William Adger¿ jun. died intestate in 1826, and bis father, William Adger, sen., became his administrator. The estate was converted into money, and the administrator, having paid the plaintiff, Isabella, who, as widow of the intestate, was one of his distributees, her share in full, made a return to the ordinary, in June, 1830, in which he charged himself, on one side, with the share of William Law Adger, an infant son of the intestate and-thejplaintiff Isabella, and a distributee of the intestate, and discharged himself, on the other side, with the purchase of a number of shares in the stock of the Bank of the United States, at $ 120 a share.
    The defendant was appointed by the Court of Equity, March 14, 1835, guardian of William Law Adger, and immediately after his appointment .received from the administrator of William Ad-ger, jun., the aforesaid shares in the stock of the Bank of the United States, in full of his ward’s interest in the estate of his father. This stock, for convenience of receiving dividends and making transfers, stood, at the timé, in the name of James Adger, a merchant of Charleston of high reputation for experience, intelligence and probity ; and so continued to stand until February 28, 1838, when James Adger, contemplating a trip to Europe, transferred the certificates to the defendant as guardian. James Adger testified, that soon after his appointment, defendant took the counsel of witness as to the policy of retaining for his ward the investment already made in the Bank of the United States, and of making further investments therein from accruing dividends, and other profits of the ward’s estate ; that witness highly recommended this stock as safe and profitable, but as the Bank of Charleston was about to go into operation, it was agreed that the defendant for his ward should.subscribe for shares in that institution, and accordingly, on May 30, 1835, defendant sold out 30 shares in the Bank of the United States, at $ 112.50, and subscribed for shares in the Bank of Charleston, but on the apportionment among the subscribers, from the extraordinary excess of subscriptions to the stock, received only 3 shares in the Bank of Charleston, as his allotment; and in October and November, 1835, under James Adger’s counsel, he again bought 30 shares in the Bank of the United States, at $108 and $109.
    The defendant in his first return as guardian, to the commissioner, made April 10, 1836, charged himself to his ward with 41J shares in the stock of the Bank of the United States, and with 3 shares in the Bank of Charleston. In his subsequent annual returns, he charged himself with dividends, and discharged himself by the purchase of a few additional shares in the Bank of the United States, and other investments.
    William Law Adger died June 11, 1842, aged about twenty years, intestate; and plaintiffs administered on his estate. This bill, which was for an account, was filed May 31, 1847.
    Waedlaw, Ch. The question submitted to me, is whether defendant as guardian must be responsible to the representatives of bis ward, for the depreciation in value of the stock of the Bank of the United States, in which a large portion of the ward’s funds •was invested. The defendant when appointed guardian, received such stock from the former trustee of his ward, and after an unsuccessful attempt to change the investment into stock of a Bank of the State, he continued the original investment; and the Bank of the United States became bankrupt, and the stock almost worthless.
    Much denunciation was uttered, in the course of the case, against the Bank of the United States, as a foreign, political and speculating institution. The only question, in which we are concerned, is whether investment in the stock of this bank, and the maintenance of the investment, can be regarded as judicious operations, under the circumstances of this case. In England, trust funds are usually required to be invested in consols ; but we have no rule prescribing the securities on which trust funds shall be lent or invested. A trustee, here, is required to act faithfully in the interests committed to him, but the general management is left to his discretion. It is well established by the copious evidence, that this bank was in high credit in this State, and its stock eagerly sought for investments by capitalists, trustees and bodies corporate until the fall of 1839, when the price of the stock sank suddenly and greatly in the market. Long after this time the hope was entertained by astute and practical men, that the stockholders would be finally re-imbursed; and few persons acted upon the policy of selling out at the prices so suddenly reduced. The result has been the sacrifice of about three millions of "capital to this State, falling even disproportionately, upon the prudent, and the circumspect. Some sagacious persons distrusted the bank long before its downfall, but they failed to infuse their suspicions into ordinary men of business.
    The office of trustee is onerous in itself, and the exercise of it commonly demanded in the affairs of society ; and to require from a trustee more than common sagacity and diligence, is against policy. In many of our cases, it has been laid down as a rule, that a trustee is answerable for those losses only, which are occasioned by such acts or omissions, as a prudent man would not do or omit in his own affairs. Taveau vs. Ball, 1 McC. Ch. 464; Bryan vs. Mulligan, 2 Hill Ch. 364: Glover vs. Glover, McMul. Eq. 153; Odell vs. Young, lb. 155. Upon this rule, the trustee in the present case must be excused from liability. He managed the funds of his ward as prudent men in the State managed their own affairs. In Ilext vs. Borcher, 1 Strob. Eq. 170, the liability of the trustee is placed generally upon his faithfulness ; and it is justly remarked that the rulé quoted above is subsidiary and illustrative. ' To the present defendant no intentional unfaithfulness is imputed in the discussion, nor could be imputed with any propriety according to the evidence. He has honestly endeavored to fulfil his duty. No negligence, no unusual mistake, has attended his management. I am of opinion, that the loss on the stock in the Bank of the United States must fall upon the estate of his ward.
    It is ordered and decreed, that the commissioner of this Court take the account between the parties, upon the principles stated in this opinion ; that the plaintiffs are entitled to charge the defendant with the funds received by defendant as guardian of Wm. L. Adger, on the settlement in 1835, with subsequent increment; and that defendant is entitled to be discharged as to his investment in the stock in the Bank of the United States, upon transferring the scrip, or paying its present value. Costs to be paid from the estate of William L. Adger.
    The plaintiffs appealed and moved to modify the decree, on the ground:
    That if the United States Bank stock, owned by Wm. Adger, sen., had been lawfully transferred, the defendant, as guardian, ought not to have received it in payment of the shares of his ward, William Law Adger, in his father’s estate, and ought not to have continued said funds in said bank, or to have re-invested the profits therein; and after the charter of the Bank of the United States had expired, March 1, 1836, defendant was especially at fault in re-investing bis ward’s funds in the Pennsylvania Bank, called the United States Bank of Pennsylvania, and further in continuing the funds in said bank.
    
      Boyce, for appellants.
    
      Boylston, contra.
    The Court of Equity has always treated trustees, acting in good faith, with great tenderness. In Knight vs. The Bari of Blymouth, a receiver had deposited money with a banker of good credit, who afterwards failed, and as he was not chargeable with any wilful default or fraud, he was not held responsible for the loss of it. “ Suppose,” said Lord Hardwicke, “ a trustee having in his hands a considerable sum of money, places it out, for the benefit of the cestui que trust, in the funds, which afterwards sink in their value, or on a security at the time perfectly good, and which afterwards turns out not to be so, was there ever an instance of the trustee’s being made to answer for the actual sum so placed out ? I answer, no! If .there was no mala fides, nothing wilful in the conduct of the trustee, the Court will always favor him. Eor as a trust is an office necessary in the concerns between man and man, and which, if faithfully discharged, is attended with no small degree of trouble and anxiety, it is an act of great kindness in any one to accept of it. To add hazard or risk to that trouble, and to subject a trustee to losses which he could not foresee, would be a manifest hardship, and would be deterring every one from accepting so necessary an office.” Dick.J120; S. C. 3 Atk. 480. - The same rule was followed in Bowth vs. Howell, 3 Yes. 565. In Wilkinson vs. Stafford, 1 Yes. jun. 41, Lord Thurlow held, that a trustee was not answerable for having applied the trust property, even to what turned out to be a losing adventure, if without fraud or negligence. Though an executor or trustee may be liable for negligence, it must, as Lord Keeper North observes, be very supreme negligence, 1 Yern. 144; it must be crassanegligentia, or gross negligence, 1 Madd.R. 290. When a' trustee acts by other hands, either from necessity or conformably to the' common usage of mankind, he is not to be made answerable for losses, Amb. 219. The following authorities were also' cited and commented upon: 2 Story Eq. § 1272; Taveau vs. Ball, 1 McC. Cb. 464; Bryan vs. Mulligan, 2 Hill Ch. 364; G-lover vs. Glover, MeM. Eq. 153; Odell vs. Young, lb. 155 ; Hext vs. Boreher, 1 Strob. Eq. 170 ; The Vestry, ¿•c., of Prince George Winyaio vs. The Prot. Fpis. Boo., &c., MS. Charleston, January, 1849.
    
      JDargan, same side, was stopped by the Court.
    
      Buchanan, in reply.
   Per Curiam.

This Court perceives no error in the decree appealed from. It is therefore ordered, that the same be affirmed, and' the appeal dismissed.

Johnston, DüNKIN, DARCAN and Wardlaw, CC., concurring.

Appeal dismissed.