LIABILITY OF TRUSTEE FOR DEBTS CREATED BY HIM.

Court of Appeals for Lucas County.

#### Ernest H. Witker v. Henry H. Ellison et al.

Decided, May 27, 1918.

*Trusts and Trustees*— Estate *Not Liable for Indebtedness Incurred by Trustee, Unless*— Personal *Liability Arises Ayainst*Trustee— *In the Absence of Stipulation to the Contrary.*

One who acts as trustee of a merchant tailor for the purpose of receiving daily the proceeds from the business transacted and paying the accounts arising, in order to provide for the continuance of the business, is personally liable for the purchase price of goods bought on his behalf and used in carrying on the business, in the absence of a stipulation relieving him from such liability.

*Fell <& Schaal*and *E., E. Davis,*for plaintiff in error.

*Sail, Flowers & Cotter,*contra.

Richards, J.

Henry IT. Ellison and others, partners doing business as John B. Ellison & Sons, began an action-in the court of common pleas in which they filed a third amended petition against Ernest IT. Wither, claiming judgment in the amount of $669.49. A demurrer to the third amended petition was overruled and an answer and reply filed. The trial resulted in a verdict and judgment in favor of the plaintiff for the amount claimed.

The bill of 'exceptions shows that one August E. Ziegler, had been engaged in business as a tailor in the city of Toledo, and that in 1913 his business had become so unsuccessful that he applied to his relatives for assistance. The indebtedness which he was then owing was about $2,000 and various relatives, including Wither, executed notes for him to provide for the payment of his indebtedness. Thereafter the business was continued with the arrangement that" Ernest H. Wither should act as trustee *442for Ziegler and should receive the funds derived from the business and deposit the same in the bank in the name of Wither as trustee and should pay claims from this fund. Witker continued the business for a considerable period of time after this arrangement was made and accounts- were opened, using the same books that Ziegler had theretofore used, but leaving a blank space after the time when Ziegler had constituted Witker trustee. The monies were deposited in the bank as provided in the name of Witker as trustee, and from this account various payments were made. Among other payments that were made was the indebtedness represented by the notes amounting to some $2,000 which had theretofore been given for the prior indebtedness upon which Witker was liable.

While the business was being so continued, and while Witker was acting as trustee for Ziegler, goods were purchased of John B. Ellison & Sons and charged to Witker as trustee, the various items amounting to $1,341.73. Upon this account Witker as trustee made two payments, one of $500 and one of $172.24, leaving the balance claimed in plaintiffs’ third amended petition.

Ultimately Ziegler was taken seriously ill, and the business was closed up by Witker and the assets of Ziegler proved to be insufficient to pay the indebtedness of various creditors.

While several grounds of error are assigned in this ease, on which it is claimed that the judgment in favor of Ellison & Sons should be reversed, the real and only question of law at issue is whether Witker is personally liable for the claim of Ellison & Sons. After a careful examination of the authorities we have no doubt of this liability. The general principle is laid down in 39 Cyc., 333, in the following language:

> “Acting within the limits of his powers, a trustee may create contractual obligations enforceable against the trust estate, such as for goods, supplies, and services, where the trust contemplates the carrying on of the settlor’s business by the trustee, or where the trust is for the support and maintenance of the beneficiaries. To render the estate liable, however, it must be shown that the trustee acted within the scope of his poweis, and that the articles furnished were really for the use and benefit of the trust estate; *443•and that the trustee may and should, in making contracts, expressly stipulate that the trust estate, and not he shall be liable thereon, for, in the absence of such an express agreement absolving him from liability, a contract made by him is binding on, and enforceable against, him alone. ’1

•We suppose it to be well settled that the contracts of guardians, administrators and other trustees, though made in the execution of the trust, impose upon them a personal liability in the absence of a stipulation relieving them therefrom. It was manifestly contemplated by Ziegler and Wither that the business should be continued and that in the continuance of that business it would, of course, be necessary to buy additional goods. Ellison *&*Sons were justified in charging these goods to Wither as trustee, and on the claim so made Wither would be personally liable.

In addition to the authority already cited we call attention to *Truesdale*v. *Philadelphia Trust, Safe Deposit & Insurance Company,*63 Minn., 49; *McGovern*v. *Bennett,*146 Mich., 558; *Knipp*v. *Bagby,*126 Md., 461; *Taylor*v. *Davis, Admx.,*110 U. S., 330

In view of the authorities we reach the conclusion that Wither became liable for the goods sold by Ellison *&*Sons.

Independent of the fact of the sale to Wither as trustee, the record discloses that Wither as trustee, used the funds in the banh in his name as trustee, which were derived from the sale of goods made subsequent to the time that he became trustee, in payment of the pre-existing indebtedness evidenced by promissory notes on which he was personally liable, and this fact is of vital importance in determining the liability of Wither.

The judgment of the court of common pleas will be affirm^,

Kinkade, J., concurs; Chittenden, J., not participating.