# Barney v. Saunders

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United States Supreme Court
57 U.S. 535
Barney v. Saunders
THIS was an appeal from the Circuit Court of the United States for the District of Columbia, holden in and for the county of Washington.
The facts in the case are stated in the opinion of the court.
It was argued by Mr. Chilton and Mr. Linton, for the appellant, and by Mr. Lawrence and Mr. Bradley, for the appellees.
The points made by the counsel for the appellant were the following.
I. That the trustees should have been charged with the thirty. five shares of Bank of Metropolis stock and the dividends accruing thereupon, alleged to have been sold in 1836 by defendant, D. Saunders, to satisfy his commission as administrator de bonis non of Edward DeKraft, he not being entitled to such commission, and not having the right to sell the bank stock without the order of the Orphans' Court.
Dorsey's Testamentary Laws of Maryland, 90, §§ 3, 4; Hill on Trustees, 381; 4 Ves. 497; Pocock v. Reddington, 5 Ves. 799; 2 Story's Equity, 1263; Pierson v. Shore, 1 Atkyns, 480; 5 Peters, 562; 5 Gill & Johns. 60-64; Gist v. Cockey and Fendall, 7 Har. & Johns. 135; McPherson v. Israel, 5 Gill & Johns. 63, 64; 12 Id. 84.
II. That the trustees should not have been credited by the sums of money alleged to have been paid R. C. Weightman, as guardian of plaintiff in error. That the will of Edward DeKraft creating the trust did not give the trustees such power or authority, nor was the same warranted by the facts of the case. The trustees should have invested said moneys in bank or other stocks, or put the same out at interest upon good and sufficient security, as directed by the will.
Hill on Trustees, 395, 400, 402, 574; 1 Rop. on Leg. 568; Dorsey's Testamentary Laws of Maryland, 114, § 8, p. 115, § 13; Brodess v. Thompson, 2 Harris & Gill, 120; 3 Harris & Johns. 268; Hatton and Weems, 85-110.
III. That the trustees should not have been allowed and credited by 5 per cent. on the principal of the personal estate, and 10 per cent. on the income, as was done by the auditor. That they should not be allowed any commission at all, either upon the principal or income of the estate. That in any event they should not be credited by any commission upon the amount of principal never collected-upon the amount of the bank and other stocks. Winder v. Diffenderffer, 2 Bland, 207; Miller v. Beverly, Beverly v. Miller, 4 Hening & Munford, 420; Ringgold v. Ringgold, 1 Harris & Gill, 11, 109; Gwynn v. Dorsey, 4 Gill & Johns. 460; 3 Ib. 348; Harland's Account, 5 Rawle's Reports, 323.
IV. That the auditor did not charge the trustees upon the principle of six months' rest and compound interest. De Peyster v. Clarkson and others, 2 Wendell, 77; Schieffelin v. Stewart, 1 Johns. Ch. R. 620; Garniss v. Gardiner, 1 Edwards's Ch. 130; Harland's accounts, 5 Rawle's Rep. 323; 2 Story's Equity, 517-521; Tucker's Commentaries, 457; Raphael v. Boehm, 11 Ves. 92; Ringgold v. Ringgold, 1 Harris & Gill, 11; Wright v. Wright, 2 McCord, 185; Voorhees v. Stoothoff, 6 Halsted's Rep. 145; Tebbs v. Carpenter, 1 Mad. R. 305; Dunscomb v. Dunscomb, 1 Johns. Ch. Rep. 508; 5 Johns. Ch. Rep. 497.
V. That the trustees should have been charged by the auditor with all gains, as with those arising from usurious loans, unknown friends, or otherwise. 2 Story, §§ 1210, 1211, 1261; Holton v. Bern, 3 Stu. 88, (note); 1 Johns. Chancery Rep. 625; 4 Ib. 284, 308; 2 Kent's Commentaries, 230; Story on Contracts, 485; Hill on Trustees, 383; Walker v. Symonds, 3 Swans. 58.
VI. That the trustees should not have been credited by the loan to Fowler & Co. or any part thereof. Hill on Trustees, 368-378, 404; 2 Story's Equity, 509-516; Tebbs v. Carpenter, 1 Maddock's Rep. 305; 3 P. Williams, 100, (note); Ringgold v. Ringgold, 1 Harris & Gill's Rep. 12; 1 McCord's Ch. Rep. 250, 495.
VII. That the trustees, Saunders and Weightman, should have been dismissed, and others appointed in their place.
The points made by the counsel for the appellees were the following.
First. The court was right in not charging the trustees with the thirty-five shares of the Bank of the Metropolis, sold by Saunders, administrator de bonis non, to pay his commission.
1. Administration was necessary in order to pass the trust property to the trustees. This gave the right to commissions.
2. The maximum of ten per cent. can be exceeded.
3. The allowance to Saunders was in April 1836, and the final allowance to the administratrix, who did not settle the whole estate, was in 1846, and it should have been taken from that account.
4. The allowance of seven and a half per cent. to the administratrix enured to the benefit of the complainant, she being her only child.
5. The allowance to Saunders was made by the Orphans' Court before the money was paid over to the trustees, and is conclusive.
In addition to the authorities cited by the auditor, see Jones v. Stockett, 2 Bland's Ch. 416.
Second. The trustees were properly credited with the amount paid to R. C. Weightman, as guardian.
1. His accounts as guardian were not before the auditor for settlement and examination. The parties and their counsel were there, and the auditor certifies to the court, 'the guardianship trust of Mr. Weightman has been settled, as was admitted before me by the counsel of both parties.'
2. Under the will, the guardian had the right to receive the three fourths of the income.
3. The object of the trust was to provide for the maintenance and education of his daughter. If the accounts of the guardian are to be considered in evidence, they show that this was the only fund out of which these objects could have been satisfied. No charge is made in them for these objects.
4. His accounts, as guardian, are open for revision in the Orphans' Court.
Third. The allowance of five per cent. on the personal estate, and ten per cent. on the income, is right.
1. It is the rule in most of the States to allow commissions to trustees. Boyd v. Hawkins, 2 Dev. Eq. 334.
The cases on this point have been collected with care, and will be found in the Notes of American Cases-to the case of Robinson v. Pett, 2 White & Tudor's Equity Cases, 353 and the following.
2. The rule has been long settled in Maryland; and,
3. It has been fully adopted by the Circuit Court of the District of Columbia.
Fourth. The court has charged the defendants with interest, making annual rests. There is no appeal by the defendants; but if that point is open, they will insist that no interest ought to have been charged against them.
The liability of a trustee to pay interest depends upon the money being held or appropriated according to, or in violation of, the purposes of the trust. Sandford, 404; and the principle is, that he should be charged with what he did make or might lawfully have made. McNair v. Ragland, 1 Dev. Eq. 517, 524; Sparhawk v. Buel, 9 Vermont, 42, 82.
The general rule is to allow a trustee (having power to invest) a reasonable discretion, and for simple neglect to charge simple interest until the investment is made, and only for an intentional violation of duty, or a corrupt use of the money, to make rests, or, according to the circumstances, compound the interest as the measure of profits are undisclosed. 5 Johns. Ch. 517; 4 Barb. Sup. Ct. 649; 2 W. & S. 565; 1 Pick. 528, note; 10 Pick. 104; 1 Rob. Vir. 213; 5 Dana, 78, 132; 12 Ala. 355; 6 Geo. 271; 2 Dev. & Bat. 339; 4 Humph. 215; 6 Halst. 145; 1 H. & G. 80; 3 G. & J. 342.
The English rule is essentially the same.
Fifth. There is no exception upon which the complainant's fifth point can rest. If it is now open, the defendants rest on the view taken by the auditor.
Sixth. The trustees were entitled to credit for the deposit with Fowler & Co.
The facts in regard to this deposit will be found in the answers of the defendants Saunders and Weightman, in the evidence.
The substance is, that by the will the trustees were to invest the income in bank or other stocks, or good security, with power to sell the real estate and invest the proceeds in other real estate, bank, or other stocks, and if in real estate, that was to be in some of the cities north or east of the city of Washington. In 1838, the banks in the city had suspended specie payments. Their charters were about to expire, and the several laws were passed, to which reference is made.
The trustees had a discretion. They also had a right to retain a sum to meet the contingencies of the estate. One of the original loans was in part repaid, and the ordinary income was coming in. They consulted counsel. Acting under his advice, and exercising a sound discretion, they deposited the fund with bankers in good credit, on an agreement to allow the depositors six per cent. It was a deposit, not a loan-a deposit awaiting investment-a deposit where their own funds and those of other discreet business men was made-a deposit of funds received from accruing income of the estate in small sums, and in money not bankable, at a period of great irregularity and pressure in the money market; and a deposit where such funds were earning money instead of being idle. The auditor credited a portion only. The court allowed the whole sum.
If the trustees acted in good faith, exercised a sound discretion, kept the money, or deposited it from necessity or convenience, used ordinary care and diligence in the mode of keeping it, acted under the advice of counsel, and were actuated by a sincere desire to promote the interest of the trust estate, they are not to be charged with the loss.
They can only be charged in a case of clear negligence, perversion of the trust, or wilful default. Morley v. Morley, 2 Chan. Ca. 2; Knight v. Earl of Plymouth, 3 Atk. 480; Jones v. Lewis, 2 Vez. Sen. 240; 5 Ves. 144; Rowth v. Howell, 3 Ves. 564; Ambl. 419; Thompson v. Brown, 4 Johns. Ch. 628; 629; 10 Pet. 568, 569; 3 G. & J. 341; 11 G. & J. 208; 8 Gill, 403, 428-30, and cases therein cited.
Mr. Justice GRIER delivered the opinion of the court.

## Notes

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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