#### *Garrett Ex’or of Allen v. Carr and Wife and Another.

August, 1842,

Lewisburg.

(Absent Stanakd and Baldwin, J.*)

Guardian and Ward—Guardian’s Account.—The decree of this court at the time the decision reported in 3 Leigh 407, having remanded this cause with directions that the account of the land fund and the hire of the slaves should he stated as a guardian’s account, question now whether those directions have heen complied with.

Same—Same—Construction of Statute.—Construction of the 7th section of the act in 1 R. C. 1819, p. 407, concerning guardians, which requires every guardian to exhibit to the court which appointed him. once in every year, “accounts of the produce of the estate, of the sales and disposition of such produce, and of the disbursements;’’ and of the9th section, which provides that the balance appearing against the guardian “may he put out to interest for the benefit of the ward, upon such security as the court shall direct and approve; or the guardian, if it remain in his hands, shall account for the interest, to he computed from the time his account was or ought to have heen passed.”

Same—Same—Interest—Balance.†—If, upon the first settlement by the guardian of his account, a balanee remain in his hands on which he is to account for interest, such interest must, in his second annual account, he credited to the ward, like other profits of the estate; and if the interest and other profits credited in this second account exceed the disbursements, the surplus, whether it arise from the interest aforesaid or from other profits, will constitute a balance against the guardian on which, if it remain in his hands, he must account for interest, which interest must, in the third annual account, he credited to the ward; and so on, toties quoties.

Same—Same—Same—Rents and Hires.—The case of a guardian indebted to his ward for the annual value of land occupied, and of a slave possessed by him, forms an exception to the general rule that interest is not to he allowed on estimated rents and hires. Such annual value must, in the annual account exhibited by the guardian, he credited to his ward, and the surplus beyond the .disbursements will hear Interest, like other profits of the estate.

*Same—Same—Same—No Account Returned— Effect.—Where a guardian has returned no account to the court which appointed him, and a hill In equity is filed against him, the court of equity will charge him with interest from the time and in the manner that he would have heen charged, if his account had heen exhibited annually to the court which appointed him; and will settle the accounts, in other respects, upon the principles that would have governed the settlements, if regular returns had been made to that court.

Same—Same—Termination of Relation—How Account Stated.—From the time that the guardianship ter*129initiates, tile account between the guardian and ward will be stated upon tbe ordinary principle that prevails between debtor and creditor. Sums paid after that time by the guardian to the ward will be credited at the respective dates of such payments, so as to stop interest pro tanto from those dates.

By the decree of the court of appeals in this cause, entered at the time of the decision thereof reported in 3 Beigh 407, the cause was remanded to the circuit court of Augusta, with instructions to reinstate the original bill as to all the matters thereof, and to refer the accounts to a commissioner of the court, to be reformed and restated; which commissioner was to be directed to keep the acounts of the personal estate distinct from the account of the land fund and the hire of the slaves; stating and treating the former upon the principles established by the court as to administration accounts, and the latter as a guardian’s account, in which the expenses of the ward were to be defrayed out of the annual interest of the fund and hires of the slaves.

A copy of this decree being produced to the circuit court of Augusta on the 4th day of June 1832, that court, in conformity therewith, reinstated the original bill, and referred the accounts to a commissioner, to be reformed and restated as thereby directed.

Under this order, a report was made by commissioner Francis B. Dyer. The commissioner reported, that he had proceeded to separate the accounts of the executor, according to the decree ; carrying into one the proceeds of the personal estate, and continuing it on the usual principal ' of an administration account; and carrying **into the other account the hires of the slaves and the interest of the monejr for which the land was sold, treating the subject as if the said hires and interest were punctually paid at the end of every year; and, after deducting the whole expenses of the two wards for each current year out of that fund, carrying the ‘ excess or balance into the principal, and charging interest on it accordingly. The commissioner stated, that this seemed to him to be after the fashion of compound interest; but he considered that he was required to state the accounts in this way, by the opinion of the court of appeals, a copy of which had been furnished him.

Although the commissioner reported that he treated the subject as if the hires and interest were punctually paid at the end of every year, yet the account which he stated shews, that credits for hires were not carried into the account of the year for which they accrued, but of the year in which they were received, and that interest was not computed on the same until the end of the year in which they were received. Thus, under the date of January 21st 1818, Alexander Garrett, one of the executors, is charged “part hire Buey 1817,” $20.SO. This forms part of a balance of $2671.85^ which was due the estate on the 31st of December 1818, and on which a year’s interest is charged as due the 31st of December 1819.

The defendant Garrett, in his own right, excepted to the report:

1. Because, in stating the account as to the land fund and hires of slaves, the commissioner had charged him with compound interest, which the said defendant insisted was not warranted by the decree of the court of appeals; that decree not requiring (as he contended) that the surplus interest should be converted into principal, and made to carr3r interest.

2. Because, if interest is to be charged on interest in arrear, as if it had been so much money actually received, *then it should be treated as money received from another debtor, and a reasonable time should be allowed for its collection and reimbursement, so that it should never be carried into the account of the year for which it is due, but should be carried into the account of the succeeding year.

3. For not giving the defendant credit for the payments made to the legatees after they came of age, at the respective dates of *130such payments, so as to stop interest on the sums so paid from those dates.

4. For carrying the credits for hire of slaves into the account of the year for which they accrued.

The said defendant Garrett, as executor of Dabney Minor, made exceptions similar to those made by him in his own right.

Before the decision of the court of appeals, a supplemental bill had been filed, which is mentioned in 3 Leigh 411, but the matter threeof is not there stated. It was as follows : .

David Yancey of Louisa county, by his will, made the following devise and bequest: “I give to the brothers and sisters of my beloved wife, and to the children of those who are dead, to be divided in the same manner as if my said wife had died unmarried and intestate, all that part of my estate now coming to me in right of my beloved wife, from the executors of her father James Minor. I also give them, to be divided in the same way, my negro man Bartlett, the money due me from DabneyMinor by bond for the purchase of negroes which I got by my wife,” &c. This will was duly admitted to record. The complainants Mary and James were children of a sister of the testator’s wife, and their mother had 'died before the- testator. They were therefore legatees under the said will; and one object of the supplemental bill was to recover what the were entitled to under the same. Another object of the supplemental bill was to assert the rights of the complainants as heirs of mrs. Yancey. *The supplemental bill set forth, that James Minor died seized of valuable real estate, to one seventh part whereof mrs. Yancey became entitled at the, death of the widow of James Minor; and mrs. Yancey having died without children, the complainants became entitled to one sixth part of her -share: that Dabney Minor, Garrett Minor and Launcelot Minor are the executors of James Minor: that from the time of mrs. Yancey’s death, Dabney Minordias had in possession her part of the said real estate (called lot no. 2), and has had in cultivation a large proportion of the same; and that the rents of the same would, the complainants believe, amount to a considerable sum, if properly estimated. Dabney Minor, in his own right and as executor of Richard H. Allen, and Dabney Minor and Launcelot Minor the surviving executors of James Minor, were made defendants.

Dabney Minor, by his answer, admitted that James Minor and his widow Mary left seven children, of whom mrs. Allen was one, and mrs. Yancey another. He stated, that upon a bill in chancery by Yancey and wife in the county count of Albemarle, a division was made of the real and personal estates of James and Mary Minor, and the proportion of Yancey and wife was allotted to them: that afterwards he purchased of Yancey, at the prices fixed on them by the commissioners, all the slaves except Bartlett (Yancey having removed him to Louisa) : that it was also agreed he should take of said Yancey, at the price fixed by the said commissioners, the lot no. 2, (160 acres of land), he Minor owning most of the other lots; but before any conveyance of the same was made, mrs. Yancey died without issue, and Yancey admitted he had only a life estate in the land, and could not make a conveyance of the same to him Minor: that after the death of Yancey, he proposed to all of those interested, except the complainants, who were infants, to take the boy Bartlett and the lot of land, at the valuation fixed by the commissioners, and interest on the *same, to which they readily agreed, and he had accounted with the respective parties interested for the same, crediting the estate of Richard H. Allen on account thereof; and that the balance appearing due on that account had been paid, without any dissatisfaction on their part in relation to this matter, till the filing of the supplemental bill: notwithstanding all which, the defendant is willing that the land and negro Bartlett be divided, and the part of each of the complainants allotted them respectively; they refunding him the money paid them for the same, with interest, and compensating him for his improvements on the land.

Under an order made upon the supplemental bill, commissioner Dyer took an account of the rents and profits of the lot no. 2, and of the slave Bartlett. Various witnesses being examined before the commissioner as to the annual value of the lot and slave, he took the average of their estimates, and put the annual value of the lot at 60 dollars 36 cents, and of the slave at 56 dollars 50 cents. He charged interest on the annual value of the lot and slave, from the end of the year from which the estimate was made, to the first day of July 1834, the day to which his account was made up. And after making such charges as seemed to the commissioner proper because of the credits previously given by Minor on account of the lot and slave, one sijth of the balance was reported by the commissioner to be0due the plaintiffs.

In the court below, the original bill and the supplemental bill were treated as two causes. On the 21st of November 1834, they came on to be heard together. In the first suit, the court, sustaining the defendant’s exceptions, recommitted the report to the commissioner, to reform and restate the same according to the decree of the court of appeals as understood by the circuit court, to wit: keeping the accounts of the personal estate distinct from the land and hire fund, and stating *it upon the principles applicable to administration accounts; and stating the land and hire fund upon the principles of a guardian’s account, in which the disbursements for the expenses of the wards 'are to be defrayed out of the annual interest of the fund and hires of the slaves, taking care pot to carry the surplus of interest to the principal, so as to subject the guardian to compound *131interest, as had been done by the commissioner incorrectly (the court thought) in his statement of that fund. In the second suit, the court also recommitted the report to the commissioner, to reconsider the same, and make two special statements according to the pretensions of both parties.

The account which was to be stated upon the principle of an administration account, having been pronounced by the circuit court, at the time of its decree of the 21st of November 1834, to be correctly stated, the commissioner did not, after that decree, make any change in that account. The other account in the first suit, to wit, of the land fund and hire of slaves, the commissioner proceeded to state upon the principles directed by the circuit court, in accordance with its interpretation of the decision of the court of appeals. In the second suit, special statements were made as directed.

The causes came on to be heard the 26th of November 1836, upon the report of the commissioner, and exceptions by Garrett, as executor of Minor, to so much thereof as related to the accounts in the first suit. Whereupon the court, sustaining the first and second of those exceptions, whereby the balance reported against Minor’s executor in the first suit was reduced to the sum of 20 dollars 483^cents as of the 9th of April 1822, decreed against Minor’s executor that balance, with interest from the said 9th of April 1822: and there being no exception in the first suit to the account of Garrett in his own right and as executor of Allen, the court decreed against him the balance of 319 dollars 93 cents *appearing due thereby, with interest on 229 dollars 69 cents, part thereof, from the 31st of December 1824. In the second suit, the court pronounced the opinion that the plaintiffs had never been divested of their right to one sixth of the lot of land and one sixth of the slave Bartlett, and were therefore entitled to a due proportion of the rents and hires of the same; but the court held the plaintiffs not to be entitled to interest on the rents and hires, as they were estimated and conjectural. A statement being made on these principles, shewing due from Garrett, as executor of Minor, the sum of 554 dollars 66 cents, with interest thereon from the first day of January 1811, and also the sum of 516 dollars 13 cents, with interest from the day of the decree, the same was decreed accordingly. The court further decreed, in the original suit, that the plaintiffs pay their own costs, and pay unto Garrett the costs expended by him about his defence in his own right; and in the supplemental case, that Garrett, as executor of Minor, pay to the plaintiffs their costs.

On the petition of the plaintiffs, an appeal was allowed them.

Cooke, for appellants.

The former decision of the court of appeals would have been proper, though the will had been less plain and explicit than it is. That decision is in accordance with the true intent and meaning of the statute concerning guardians, 1 R. C. p. 408, § 9, under which the annual balance on the guardianship account is to be ascertained, and if the same appear against the guardian, it is to be “put out to interest for the benefit of the ward; or the guardian, if it remain in his hands, shall account for the interest:” in other words, if the balance remain in his hands, he is to be charged with interest on it. With this statute, and with the former decree of this court, commissioner Dyer complied, in the report made by him under the *order of the fourth of June 1832; and the first exception to that report ought not to have been sustained. Neither ought the second; because, it being the duty of the guardian on the one hand to pay, and on the other to receive, the interest when it accrued, we are not to presume that he did not perform that duty. The third exception alone was properly sustained; the fourth not being founded in fact. With respect to the matters arising on the supplemental bill, it is as just, where the land of a ward is occupied or his slave possessed by the guardian, that interest should go oil the annual value, as it is, where the land is rented or the slave hired to another, that interest shall go on the rent and hire received.

Michie, for appellees.

The decree of the court of appeals directing the account to be settled on the principle of guardians’ accounts, does not contemplate its being settled on the principle of compounding the interest, but the reverse of that. The opinion delivered by the president declares that the guardian shall account on the principle of debtor and creditor. And in reference to debtor and creditor, it has been repeatedly decided that the interest shall never be compounded, so as to increase the principal and make the interest bear interest. Childers v. Deane &c., 4 Rand. 406. This case, and the cases cited by judge Carr in his opinion, shew the aversion of the courts to the compounding of interest. Even a contract by which interest in futuro is to be compounded will not be sanctioned. And under some circumstances, a bond for the interest which has accrued will be deemed usurious. If these be the principles in regard to the ordinary case of debtor and creditor, what is there in this case to induce a stricter rule? The decisions of this court in relation to guardians do not require it. Tabb v. Boyd, 4 Call 453; Carter’s ex’ors v. Cutting and wife, 5 Munf. 223. All that this court has said is, that the disbursements must be *out of the income, and interest calculated on the balance. It has never said that the principal and interest shall be compounded, so as to make the interest bear interest. There is no ground for compounding, unless the statute concerning guardians requires it. Does that statute require it? The ninth section relates entirely to the case of the *132disbursements exceeding the profits, and a sale to raise the deficiency; and when it speaks of “the balance appearing on the contrary side,” it means the balance of the proceeds of sale. How is this case stronger than the case of interest due on a debt which the guardian neglects to collect? Surely, in the case just supposed, the guardian would not be charged with interest on the interest. But the appellants go further. They claim interest on the conjectural rents of land and conjectural hires of a slave, against an adversary claimant. This claimant, we are told, stood in the relation of guardian. But this will not sustain the claim. In Colton v. Bragg, 15 East 223, the court decided that interest shall in all cases depend on the contract of the parties. The difference between the english courts and the american is, that the american more often imply a contract to pay interest. But there must be such contract, either express or implied, to authorize interest to be allowed. And here, no such contract can be implied. The statement on the other side, that the fourth exception is not founded in fact, is not admitted by us. In Hooper v. Royster, 1 Munf. 119, the time allowed the guardian was six months. Here, since the allowance of the 4th exception, the executor and guardian together have twelve. And this seems reasonable. Where a bond for *negro*hire is collected, though two or three months have elapsed, interest is not usually received. And then there must be time to invest.

C. Johnson, on the same side.

Upon the questiou'as to compound interest, regarding it as an original question, there cannot be much serious doubt; whether it be *considered upon the authorities belonging to the question of compound interest, or upon the authorities in relation to guardians’ accounts. But the question is presented at the outset, whether the point has been adjudged i>3r the court of appeals in the very case. To ascertain this, we must look, not to the opinion delivered, but to the decree. And when we look to the decree, we find no such point adjudged. The decree merely directs the account of the land fund and the hire of the slave to be stated as a guardian’s account. If we look into the opinion, to see the principles by which the court was guided, we find that those principles will not authorize ’ this compounding of interest. In the opinion, two modes of settlement are referred to, as more suitable than that of settling executors’ accounts; to wit, 1. the ordinary case of debtor and creditor; and 2. the case of guardian and ward. The appellees are willing to be guided by the ordinary rule of debtor and creditor, and say that under the opinion of the court of appeals, that rule ought to be applied. That the rule of debtor and creditor is the rule laid down in this case, is the interpretation of this court in Handly v. Snodgrass & others, 9 Heigh 484. Is it necessary to enquire what is the rule in the ordinary case of debtor and creditor? That has been long since perfectly understood. It is stated in 1 Rob. Prac. 257. Under it, it is not legal to charge compound interest. Lewis’s ex’or v. Bacon’s legatee, 3 Hen. & Munf. 89. But suppose the decree establishes that the accounts are to be settled on the principle of guardians’ accounts; does any case settle that interest shall be charged as contended for here? Not the case of Carter’s ex’ors v. Cutting & wife, 5 Munf. 240,—for that lays down that interest is not allowed on profits not received. The charging compound interest is, in truth, against the spirit and meaning of the statute of usury. And there is no ground on which it can be sustained, unless the statute concerning guardians authorizes *it. Does this statute mean that the guardian shall pay compound interest? The 7th section requires the guardian to deliver into court an inventory “of all the estate he shall have received,” and to exhibit, once in every year, 1 ‘accounts of the produce of the estate, of the sales and disposition of such produce, and of the disbursements.” We might here say, that outstanding interest is neither produce, nor sales of produce. But let us construe the act according to its spirit, and hold that any. thing which has been received is to be embraced; still it cannot extend to outstanding interest not received. That would not be included in the account. And not being included in it, interest would not go on it as part of the balance. But suppose the interest shall be received, be included in the account, and form part of the balance: to what time is interest to go on this balance? The answer is, till the guardian pays it. These views of the statute are just and proper, even supposing the latter part of the 9th section to stand by itself, in a separate section from the part which precedes it. With respect to the claim of interest on estimated rents and hires, it may be remarked, that the attempt to charge such interest has uniformly failed. M’Connico &c. v. Curzen, 2 Call 358; Shields adm’r &c. v. Anderson &c., 3 Heigh 729; Payne v. Graves, 5 Heigh 561; Roper &c. v. Wren &c., 6 Heigh 38; Cunningham v. Flournoy, 6 Johns. Ch. Rep. 1. There is no pretence that Minor interferred as guardian with this subject. He held as tenant in common and is only chargeable, as a tenant in common would be, with in-, terest on rents and hires actually received.

Cooke, in reply.

The opinion delivered by the president when this case was formerly before the court, was concurred in by the other judges, and is based essentially upon the will of Richard H. Allen. Accumulation during a long minority is the leading idea of the will. The testator intended that the annual balances ^should be reinvested. And the opinion declares that the executors were bound at least to loan to good borrowers, securing interest to be reinvested. The decree does not, in terms, direct what is to be done with the surplus of interest after *133deducting disbursements; but it directs the account to be settled as a guardian’s account. And under the act of assembly, the guardian’s account is to be settled on the principle of reinvesting the balance. Neither the opinion nor the decree justifies the conclusion that the principle of debtor and creditor is to be so applied as to prevent the surplus interest from bearing interest. If a loan were made, the interest accruing from the borrower would be ascertained on the principle of debtor and creditor: but then it would be the duty of the executor to invest the aggregate sum, and get interest on that aggregate. The executors would have a reasonable time allowed them to reinvest, if they chose to reinvest. But here they have not chosen, and are not entitled to the benefit of the rule allowing time to reinvest. The argument of Mr. Michie upon the ninth section of the statute is explained and answered by adverting to the history of our legislation on the subject. The original statute did not have the provision for a sale, that is now found in the 9th section. 12 Hen. stat. at large 196. That provision was made by the act of December 1794. Sess. Acts 1794-5, p. 11, *\*6. But before the act of 1794, all was contained in our statute that is now contained in the 9th section, except these words in the middle of it-- “and so much and such part thereof may, with the approbation of the court, be sold at public auction to the highest bidder, after reasonable notice of the time and place of such sale has been given, as shall be necessary for that purpose.” The cases cited respecting interest on estimated rents and hires, are not between guardian and ward, but are cases where there were adversary claims. Here, the statement of the guardian is, that he made ^himself purchaser. He admits that he had no right. As guardian, he should have returned an account of the rents and hires, and interest would have gone thereon. If he occupied and possessed, he cannot avail himself of his own wrong, either in claiming the property or otherwise, to diminish the rights of his ward.

*

They had heen counsel for the appellees.

†

Guardian and Ward—Death of Guardian—Interest-Balances.—It was held in McKay v. McKay, 33 W. Va. 737, 11 S. E. Rep. 218, citing the principal case, that when a guardianship terminates by the death of the guardian, simple interest only, and not compound, should he charged from the death of the guardian on the balance found due from him at his death. See *foot-note*to Cunningham v. Cunningham, 4 Gratt. 43; Crigler v. Alexander, 33 Gratt. 674. See monographic *note*on “Guardian and Ward” appended to Barnum v. Frost, 17 Gratt. 398, and mono-graphic *note*on “Interest” appended to Fred v. Dixon, 27 Gratt. 541.

Executors—Annual Balances—Interest. — Where a testator directs his executor to manage his farms and distribute the profits among his grandchildren when of age, the executor should not he charged with compound, hut only with simple interest upon the yearly balances left over in his hands, unless the testator directed that those balances should he invested in interest-hearing securities. Lovett v. Thomas, 81 Va. 258, distinguishing in this respect *Garrett v. Carr,*1 *Rob.*196, because In that case the testator directed that his lands be sold and the proceeds invested in stock of the Bank of Virginia, or in other property as the executors might think advantageous to nis children.

Same—Same—Same—Committees of Insane Persons. —In Crigler v. Alexander, 33 Gratt. 675, the court said: “The next question is, whether In stating and settling the accounts of the intestate as committee, he is to he charged with compound interest upon the balance in his hands. It is insisted this ought to he done, by analogy to the rule governing in the settlement of guardians’ accounts. It is sufficient to say, that the liability of guardians for compound interest *grows*out of the peculiar provisions of our statutes on that subject. See Code 1873, § 10, ch. 124, and *Garrett v. Carr,*1 *Rob.*196.

“These provisions have never heen considered as applying to other trustees.

“The accounts of the committee of an insane person are to he settled upon principles governing in the settlement of accounts of other fiduciaries having the control of trust funds. They are not chargeable with compound interest, except under very peculiar circumstances. Where there is an express trust for accumulating, and the trustee, instead of investing, retains the funds in his own hands, or where he employs the money in his own business, and refuses to account for the profits, he may he charged with compound interest as a punishment, or as a measure of damages for undiscovered profits. See 1 Perry on Trusts, §470-474; Barney v. Saunders, 16 How. U. S. R. 535; Hill on Trustees, 571, *note.*

“Much of the reasoning of Judge Allen in *Garrett v. Carr*(1 *Rob.*196), will apply as well to committees of insane persons as to guardians, and would seem to Indicate that iu some instances all classes of trustees, except executors and administrators, may he chargeable jvith compound interest, even upon a mere failure to invest. See page 215.

“All that can he said therefore is, that no Inflexible rule can he laid down on the subject which would apply to all cases. Generally, however, it is conceded that a trustee and other fiduciaries, except a guardian-, are liable for simple interest only. This doctrine seems to he settled by a great variety *129of authorities, both English and American. 1 Perry on Trusts, § 470-474; Barney v. Saunders, 16 How. U. S. R. 535; Hill on Trustees 571, *note.”*

The principal case is cited for these propositions in Knight v. Watts, 26 W. Va. 218, 210; Lovett v. Thomas, 81 Va. 259.

Same— Rule Where Beneficiaries Are Minors—Accumulation Ruling Intention—Compound Interest.—In Strother v. Hull. 23 Gratt. 662, the court said: “There can be no doubt, as a general rule, that executors and administrators are not to be charged with compound interest; but it is as well established that this general rule will be modified when required by the nature of the trust or the express terms of the- will. When the beneficiaries are minors, and accumulation for their benefit is the ruling intention of the will, compound interest will be charged, whether the fiduciary be an executor or guardian. He will be treated as having done what it was his duty to do, and his accounts will be settled as a guardian’s accounts. *Garrett v. Carr,*1 *Rob.*196; same case 3 Leigh 407. * * * YVe think there is no material difference between the will in this case, and that in case of *Garrett v. Carr;*that under each alike, it was the duty of the executors to improve the estate; accumulation for the benefit of minors being the ‘governing intention of the will.' ”

Infants—Debts of -Liability of Real Estate.—In Gayle v. Hayes, 79 Va. 518, the court said: “The third section, ch. 127, Code 1873, relied on by appellant, has been, in one form or another, the law since March, 1842, and it was intended to make real estate legal assets for the payment or all debts. Before that time it was only bound for the payment of specialty debts. When it was enacted, and long afterwards, till 19th March, 1873, the real estate of infants was not liable to the payment of any charges of his guardian, or *quasi*guardian, for his maintenance or education. 1 Minor's Inst. 442; *Garrett v. Carr, Rob.*209; Jackson v. Jackson, 1 Gratt. 150.” *See .footnote to*Jackson v. Jackson, 1 Gratt. 143.

ALLEN, J.

This court, by its former decree, merely decided that these executors, •under the will of their testator, were, in respect to the land fund and hires of slaves, to be treated as guardians, and their accounts to be settled on the principles of guardians’ accounts. The question still remains to be determined, how a guardian’s account is to be settled, where, as in this case, he has wholly neglected to return his annual settlements to the court to which he is amendable, according to law. This court, in Myers &c. v. Wade &c., 6 Rand. 444, determined, that in a suit by the awards against guardian for an account, the latter, having neglected to return annual settlements, and failed to procure the permission of the court to appropriate any part of the principal of the wards’ estate to their maintenance, should not be allowed 1 for disbursements beyond the annual interest or income. And in the case of Wormley’s adm’r v. Boswell, decided at the last term and not yet reported, the court held, in a suit by the guardian against the representative of the ward, to recover disbursements beyond the receipts, that it was not competent for the chancery court to allow for such disbursements beyond the income, the guardian having neglected for many years to settle with the proper court and procure an order allowing such disbursements. The effect of these two decisions is, to secure the principal of the estate against misapplication by the guardian. In the latter case, I had occasion to review the various provisions of the law respecting guardians, for the purpose of shewing the anxiety of the legislature to guard against abuse, *by enforcing annual settlements, and securing the controlling supervision of the proper court over the conduct of the guardian, whilst the transactions are recent. These cases having established principles which protect the principal of the estate against misapplication, it becomes necessary to decide in the present case, what principle shall govern in respect to balances of revenue which may remain after deducting the disbursements. This will depend in a great measure upon the terms of the act of assembly.

The 7th section of the law respecting guardians requires the guardian appointed by a court, at the first or second session after his qualification, to deliver into such court a.nd inventory, upon oath, of all the estate he shall have received; and, within two successive courts after the receipt of any other estate of the ward, an inventory of such other estate, to be entered of record in a separate book. This provision looks to the principal of the estate, and furnishes record evidence by which to charge the guardian for the amount thereof. The law then provides that he shall annually, and at the September term, if it be a county court from which he has received his appointment, exhibit accounts of the produce of the estate, of the sales and disposition of such produce, and of the disbursements. The 8th section provides for the mode of enforcing such annual settlements; and the 9lh, amongst other things, directs that the balance, after deducting disbursements, “may be put out to interest for the benefit of the ward, upon such security as the court shall direct and approve; or the guardian, if it remain in his hands, shall account for the interest, to be computed from the time hi's account was or ought to have been passed.”

If the guardian complies with the requisitions of the law, all difficulty as to the mode of settling is avoided. His inventory shews the estate received; his annual account, the income; and he is entitled to the aid and ‘^instruction of the court as to the disposition of the surplus. This surplus of any one year, not being required for disbursements, becomes a part of the principal, and, as such, cannot *134be expended by the guardian to meet disbursements of succeeding years, except by the permission of the court. As a general • rule, the court, looking to the benefit of the ward’s estate, would direct the surplus to be either invested in stock producing an annual return, or loaned out to punctual borrowers who would pay the interest. If under any circumstances a secure investment at simple interest should be deemed advisable, the guardian, acting under the advice of the court, would be justified in making it. The money being so invested, the guardian would be held to account annually for only so much of the interest as he received. But where the guardian is guilty of neglect; where he fails to make his settlements, and keeps the money of the ward in his own hands, using it for his own purposes, how is the account to be stated? The words of the law require annual settlements; its policy looked to the constant superintendence and control of the proper court; and no principle should be adopted, which, in the case of such failure to settle,' would place the guardian in a more favourable position, or hold out inducements to him to neglect his duty. Por this would be enabling him to profit by his own wrong. An account should therefore be raised against him annually, and the disbursements applied to the annual receipts. This is necessary to satisfy the requisitions of the law, which requires interest to be computed from the time the account ought to have been settled. But as to the mode of computing interest upon the balances thus ascertained, I was at first under the impression that the provisions of the statute would be satisfied by adopting the mode prevailing between ordinary debtor and creditor, and permitting the debt to stand as an investment at simple interest, until it was brought into the general *aggregate at the close of the account. Por as the court, I presume, could, in the exercise of a proper discretion, and under peculiar circumstances, authorize such an investment, it seemed to me that the same indulgence might properly be extended to the guardian; and that in consequence of his failing to settle, he wras to be treated as a borrower of the surplus, and •should be permitted to hold it on as favourable terms as the court might have directed. The cases in this court, too, seemed to lean against the principle of compounding interest. Thus in Childers v. Deane &c., 4 .Rand. 406, judge Carr, after reviewing the cases, states that the general rule, as settled by the later cases, is, that it shall not be allowed. And in the case of Carter’s ex’ors v. Cutting & wife, 5 Munf. 223, the court decided, that moneys directed to be invested by executors in government securities, should be accounted for as if invested, after a reasonable time for that purpose; but that the executors ought not to be charged with interest upon the dividends of stock, if such dividends had not actually béen received. The last was the case of executors; as to whom this court has established principles of great liberality. The peril which their office imposes on them; the necessity of disposing o£ the estate on a credit; the risk of loss from this source; the hazard of being subjected to a devastavit, by paying the assets to creditors of inferior dignity; their ignorance of the condition of the testator’s estate; the exposure to loss from agents, counsel &c.— all these considerations have induced the courts in this country to relax the more rigorous rule adopted in England with respect to this class of fiduciaries. But in reality, few of the considerations applicable to executors apply to the guardian. His duty is simple. He is to receive the estate, collect the rents, hires &c. and dispose of the produce. He is not required to keep funds in hand to meet possible claims.

His disbursements are generally confined *to the support and education of the ward, and the preservation of the property. The general principle is, that a trustee using the trust money must account .for all. the profit of it. But where that profit is not ascertained, some mode of computation must be adopted by which to arrive at it. In Raphael v. Boehm, 11 Ves. 82, the direction was, to take an account against the executor (who was a trustee) with a computation of interest on all sums received by him, while in his hands; and that the master do, in such computation, make half yearly rests. The object of the direction was to charge compound interest. Lord Eldon remarks in that case, that "where there is an express trust to make improvement of the money, if he will not honestly endeavour to improve it, there is nothing wrong in considering him to have lent the money to himself, upon the same terms upon which he could have lent it to others, and as often as he ought to have lent it, if it be principal, and as often as he ought to have received it and lent it to others, if the demand be interest, and interest upon interest.” And in another place, that "the court would shamefully desert its duty to infants, by adopting a rule that an executor might keep money in his hands without being answerable as if he had accumulated.” These remarks apply with great force to the case under consideration; where the estate was considerable, the wards young, and accumulation for their benefit is the governing intention of the will. But they apply with almost the same force to the case of every guardian who acts under our law, which has guarded the interests of wards with so much jealous caution. This case was reheard before lord Erskine, 13 Ves. 407, and he fully concurred with lord Eldon. The subject was very fully considered by chancellor Kent, 1 Johns. Ch. Rep. 620, who there held, that if an executor convert the trust moneys to his own use, or employ them in his business or trade, he is chargeable with compound interest. After shewing the injustice *which would be done to the infants by denying compound interest, he observes—"The *135fund, instead of accumulating for the 1 benefit of the infants, would accumulate | for his benefit. A man in trade could afford a large premium for letters of administration on a rich estate, especially if the infant heirs were young. What temptation would thus be held out for negligence and delay in rendering an account!” In the case of Childers v. Deane &c. judges Green and Carr both admit there are many cases in which the taking of compound interest is lawful. Judge Carr says, “There are still some special circumstances, under which compound interest is allowed; as where a settlement of accounts takes place after interest becomes due, and an agreement is then made, that interest due shall thereafter carry interest.” This is, in effect, the precise condition in which the guardian neglecting to settle under our law is placed by the law. He should have settled; and the law treats him as though he had settled. The balance in his hands is a debt then ascertained to be due to the ward, and is to be loaned out for his benefit. Being retained by the guardian, he is to be treated as the borrower, and is to pay interest. Borrowing from himself, he guaranties the punctuality of the borrower. It would be unjust to the ward, to permit the guardian to apply the current income of the year to defray his own disbursements, whilst at the same time he was a debtor to his ward for the interest then due on former balances. This is conceded by the decree in this case, which applies the disbursements to the interest. But the excess of interest is as much a debt as that which is so extinguished. As between debtor and creditor, the latter may permit it to remain a dead capital in the debtor’s hands: this is matter of contract between them. But the statute requires annual settlements; thereby, as it seems to me, requiring annual investments. A contrary principle would violate the spirit of the act, ] I which *not only for the purpose of investing these balances, but to ensure the constant superintendence of the court over the proceedings of the guardian, enjoins annual settlements, and even subjects the judge and justices to amercement for neglect in enforcing them. A premium would be held out to omit the performance of this duty. The contrary rule subjects the guardian to no hardship. When he settles his account, the balance due is invested under the order of the court, and all responsibility is avoided. Though, under special circumstances, the court might authorize an investment at simple interest, such cases would be rare in our country, where money is always in demand. Hittle difficulty would be found in lending, on good security, to individuals willing to pay the interest annually ; especially when, if they did so, they would be permitted to retain the principal in their hands for a long period. The guardian at least should not, by his election to retain the money, deprive the ward of the chances of such a profit.

1 | ] I think, therefore, that the chancellor I erred in sustaining the exceptions to the first report on this ground. That report, however, was erroneous in not crediting the payments to the legatees after the termination of the guardianship, as of their respective dates, so as to stop interest pro tanto at those dates. With that exception, it should have been confirmed.

As to the matters involved in the supplemental bill: The subject in controversy did not come into the hands of Dabney Minor as executor of Richard H. Allen. It was an increment to the estate of the wards, accruing after the death of their father, from a source distinct from his estate. I think the account should be kept separate from the accounts of Dabney Minor as executor of that estate. He held the land and slave under an arrangement with the other heirs and legatees of mrs. Yancey and her husband, by which he purchased their interests in the subject at a stipulated price; and *he charged himself, in his account with his wards, with their proportion of the same subject. It is admitted that he had no right, to do this; that it was not in his power, by a charge in his books, to appropriate to himself the estate of his wards. And the question arises, how his account respecting this subject is to be adjusted. In the opinion delivered in this case by the president of the court, he observes (3 Heigh 417,) that “one of the parties” (meaning Dabney Minor) “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. It is absurd to suppose that he can be justified in doing that which even the legal guardian cannot do. It is for his own benefit to consider him as sustained in his acts, as quasi guardian. In tenderness to him, he is justified in doing what the guardian might do; but upon no principle is he justified in doing more.” Treating this defendant then as actual guardian, his duty required him to deliver into court an inventory of any other estate belonging to his ward, and afterwards to settle his annual accounts of the produce. This he failed to do: but the court, upon the principles already adverted to, must settle with him as though he had performed his duty. In adjusting the account, it must treat him, as if he had returned an inventory of this additional estate, and in his annual settlements had charged himself with the hires of slaves and rent of land. The surplus of such rents and hires, upon the principles already discussed, must be brought into the account, and bear interest. Otherwise the defaulting guardian would be in a better condition than he would have been if he had complied with his duty. The rule which in most cases denies interest on conjectural hires and rents, ought not to be extended to such a case; for that would be to hold out an inducement to guardians to neglect their duty in rendering accounts. It therefore seems to me, that this account should *136be settled upon precisely *the same principles which govern the other; that annual rests should be made in the account, and the balances be added to the principal, so as to constitute an interest-bearing fund; and that the account should be so stated and settled until the wards respectively arrived at age or married, or the guardianship terminated, from which period the account should be stated upon the ordinary principles between 'debtor and creditor.

CABELL, P. The decree of this court, which remanded these causes to the court below for the purpose of reforming and restating the accounts, having directed that “the accounts of the land fund and the hires of slaves” should be stated and treated “as guardians’ accounts,” the question now arises whether those directions have been complied with; or in other words, whether those accounts have been stated and settled upon the principles which .ought to govern the statement and settlement of guardians’ accounts.

The appellants insist, that these accounts ■should be stated and settled annually;’that, at every annual statement and settlement, the excess of interest due from the guardian, over and above the expenses of the ward, should be so charged to the guardian, as that it may become an interest-bearing fund until the next annual settlement; that then, if the interest due from the guardian should again exceed the expenses of the ward, the excess of such interest should again be so charged as to become an interest-bearing fund as aforesaid; and so on, toties quotes, until the final settlement of the accounts.

I am of opinion that the claim of the appellants to have the accounts thus stated and settled is just in itself, and is sanctioned and required by the obvious spirit, if not by the express terms, of the act of assembly.

*The 7th section of the act concerning guardians and wards requires every guardian to exhibit to the court in which he qualified, “once in every year, accounts of the produce of the estate, of the sales and disposition of such produce, and of the disbursements; which accounts shall be examined by the court, or by such persons as the court shall refer them to.”

The importance which the law attaches to these annual settlements is manifested by the provisions of the 8th section, which declares that every guardian who fails to render such accounts as are required by the ,7th section, “shall, by order of the court to which he is amendable, be summoned, and if he remain in default, be compelled to perform his duty, or be displaced and, what is not a little remarkable, the act goes on to declare, that “every judge or justice of the court, sitting therein at any time during the term of session in which such process ought to have' been ordered, if it be not ordered accordingly, shall be amerced. ’ ’

Then comes the 9th section, which pro- [ vides, that “if the disbursements of such guardian, being suitable to the estate and circumstances of the ward, shall exceed the profits of his or her estate in any year, the balance, with the allowance of the said court, may be debited in the account of a succeeding year, and paid out of the personal estate of the infant. And the balance appearing on the contrary side may be put out to interest for the benefit of the ward, upon such security as the court shall direct and approve; or the guardian, if it remain in his hands, shall account for the interest, to be computed from the time his account was or ought to have been passed.”

It is clear, then, that the law requires annual settlements, on which a balance shall be struck, in order that that balance, if found in favour of the ward, may be made an interest-bearing fund for the benefit of the ward, either by actually putting it out to interest, or *making the guardian, if it remain in his hands, accountable for the interest.

Suppose, then, a guardian, honestly desiring to comply with the law, shall, at the first proper court, exhibit his accounts for settlement. At this first settlement no question can arise as to a charge of interest against the guardian, because no interest can as yet have become due from him as guardian. But all must admit that if on this settlement a balance shall be found in favour of the ward, the guardian becomes accountable for interest on that balance, if it remain in his hands, to be computed from the time his account was passed.

Let us next see what is to be done at the second regular annual settlement, when the guardian, as before, actually exhibits his accounts.

He will, of course, credit himself with all his proper disbursements; and he ought to debit himself with every item of “the produce of the estate;” an expression sufficiently broad to include not only the proceeds of crops, hires of slaves, &c. but all sums of money belonging to the ward and received by the guardian, from whatever source they may have come. It will clearly embrace money which he has actually received; as interest on a debt, from a debtor of the ward. It will also, in my opinion, embrace any interest due to the ward from the guardian, as guardian, at the date of the settlement. Such interest may emphatically be said to be, in the language of the 9th section of the act, a part of the “profits” of the ward’s estate; and being due from the guardian, and in his own hands, the policy of the law and the dictates of justice require that it should be charged to him in the annual settlement, in order that the excess of interest beyond the expenditures may be converted into an interest-bearing fund for the benefit of the ward. I can perceive no difference in principle between interest due from him as*guardian, and actually in his own hands, and interest which he may have received from a debtor of the ward.

*137The surplus of interest due from the guardian at the date of the second settlement, being thus converted into principal bearing interest, what disposition is to be made, at the third regular annual settlement, as to the interest which may have then accrued upon it? If we bear in mind that the law requires annual settlements at the hands of guardians, in order that each successive balance in favour of the ward (of whatever it may consist) may become an interest-bearing fund for the benefit of the ward, we cannot avoid the conclusion, that the interest which has accrued on the balance found due from the guardian at the date of the second settlement, must be charged to him in the third. It is in this way only, that the just and beneficient object of the legislature can be effected. And the same principles of justice and policy, which thus govern the second and third settlements, will apply to and must govern all succeeding settlements, until the termination of the guardianship, by the ward arriving to age, or otherwise.

If such be the principles which are applicable to guardians’ accounts, when the guardians settle regularly according to the requisitions of the law, what shall be done in the case of guardians who (as in the present case) disregarded the law, and exhibit no accounts until they are called upon by their wards, in a court of equity, for a final settlement of their transactions? It would indeed be a strange anomaly if a court of equity should treat such guardians with more indulgence than is extended to those who have faithfully and punctually obeyed the law. It would be to offer a premium for negligence, and something for dishonesty’. All that the courts can be expected to do in such cases, is to have the accounts stated with annual rests, and to have them settled upon the same principles as would have governed the settlement if the guardians had regularly and

^annually exhibited their accounts; always charging them with interest from the time when they would have been accountable for it if the accounts had been in fact settled. This is justice to the ward; and although it may operate with hardship upon the guardian, he has no right to complain of it; for it is the result of his own culpable violation of a positive duty. If he wishes to avoid the hardship of the operation, let him settle up his accounts, carry the balance due from him into court, and request that it may be put out to interest, under the direction of the court.

It will be observed, that my opinion has been formed by an exclusive regard to the provisions of our law concerning guardians and wards. It derives additional strength from the case referred to by judge Allen, which shew, that even in the settlement of executors’ accounts, interest due from them is sometimes converted into principal.

I am further of opinion that the accounts in relation to the estate or interests claimed by the appellants in their supplemental bill, ought also to be stated and treated as guardians’ accounts; Dabney Minor having, by his acts in relation to said interests, made himself guardian de facto.

I am farther of opinion that the case of a guardian indebted to his ward for estimated rents of land and hires of slaves, forms a just exception to the general rule, that interest is not to be allowed on estimated rents and hires. We have seen that even the surplus of interest due from a guardian, over and above the expenses of the ward, is to be carried into the accounts, so as to become an interest-bearing fund; and surely the guardian cannot claim to stand on higher grounds as to estimated rents and hires due from himself. They should be carried into the accounts at the annual settlements, and become thenceforward an interest-bearing fund, as in the case of other balances.

*BROOKE, J.,

concurring, the decree of the court of appeals was to the following effect:

The court is of opinion that the circuit court erred in sustaining the first, second, fourth and fifth exceptions of the defendant to the report of commissioner Francis B. Dyer, made in pursuance of the decretal order made in the first suit on the fourth day of June 1832; and also erred in the second suit, in considering that the plaintiffs were not entitled to interest on their share of rents and hires, but only to the principal money: Therefore decreed that the said decree be reversed, and that the appellee pay to the appellants their costs by them expended in the prosecution of their appeal here. And the cause is remanded to the circuit court, with instructions to recommit the accounts to a commissioner of said court, to be restated; who is to be instructed, in settling the account of the land fund and hires of slaves (in the first cause), to charge the defendants respectively with the hires actually received, or for which they were accountable, and with the interest due from them on the sums in their hands at the end of every year; and after deducting the disbursements properly chargeable to the wards, for each current year, out of that fund, the balance to be carried to the principal, and interest to be charged on it accordingly, to the period when *the wards arrived a,t age**after which the account is to be stated on the ordinary principles as between debtor and creditor: and in the second case, to state and settle the accounts with annual rests, upon the principles which apply to guardians’ accounts; carrying the interest of the money fund and estimated rent and hires due from the guardian, at each annual settlement, to the principal, and *138charging interest * *thereon thenceforward accordingly, until *the wards arrived at age*;† from which latter period the account is to be stated as between ordinary debtor and creditor.

*

The decree, as entered in the order hook, used the words in italics; hut the words “the guardianship terminated” would have expressed more correctly the meaning of the judges as indicated in their opinions.—Note in Original Edition.

†

See (*) on p. 137.