#### *John Duncan and others*vs. *Samuel Dent, administrator.*

An administrator keeping funds, after payment of debts, in his hands without profit, will not he excused from the payment of interest, merely because various persons claim the estate in different rights, and suits havo been instituted.

An allegation of defendant in his answer, made by way of defence to an ordinary bill for account, that he had kept tho funds in his hands without making interest, will not throw the onus of disproving it on the plaintiff — the onus is on the defendant.

*Before*Wardlaw, Ch., *at Richland, June,*1852.

This case came up on exception to the Commissioner’s report. The report is as follows :

*8“In obedience to the order of the Court, I have held a reference in the above case, and submit the following report with accompanying testimony. There is no difference of opinion as to the facts set forth and stated in the bill of complaint; both complainants and defendant, through their solicitors, concur as to the facts, and that the annual balance as appears by the return of the administrator is correct and proper; both complainants’ and defendant’s solicitors consent that the land should be sold, described in the bill. I therefore recommend that it is expedient to do so. The only question upon which there is a difference of opinion, or about which there is any dispute, is whether the administrator, Samuel Dent, is chargeable with interest on the annual balance in his hands under the circumstances of the case. After the payment of certain debts and deducting commissions, there was in the hands of the administrator $3,401 10, adding one year’s interest and cash received for land, leaving a balance in his hands of $3,149 55, 20th July, 1847. Shall the administrator pay interest on that sum up to the present time ? As a general rule all executors and administrators are chargeable with interest on annual balances, unless a sufficient excuse or justification is • offered to discharge them. What is the excuse offered by the defendant? On the 1st of April, 1846, A. Herbemont, escheator of Rich-land District, notified the administrator “ to hold the proceeds of the sale of the estate as well as all other monies which may come into your hands on account of said estate, subject to the claim of the trustees of the Academy of Columbia.” A similar notice was served upon the administrator, 20th February, 1847, notifying him that the trustees claim the funds as eschea-ted estate: signed W. F. DeSaussure, President of the Trustees Academy of Columbia. In addition there is evidence of different litigations, commencing 16th March, 1848, and continuing down to 1851, the period of the compromise agreement; and evidence of defendant’s answer, not contradicted by proof, that after the receipt of the notices, he held the money in his hands ready at any time to pay the same over to whoever *9should be entitled, not having used it. This is the extent of the proof offered by the defendant to discharge him from his liability. If the administrator imprudently neglected or omitted to lay out the monies in his hands he would be liable for the interest, or if he used the money, or committed any other misfeasance, or if he kept the money dead in his hands without any apparent reason or necessity, it would become negligence, and he would be chargeable with interest. An executor shall not be charged with interest under a fair apprehension of his right to it. Outstanding demands are not sufficient to discharge an executor or administrator from the payment of interest. These are well settled principles, and we have only to inquire, do the circumstances of the case and the proof justify the administrator in retaining the money in his hands ? I am satisfied that the evidence is sufficient to bring him under the protection of the principles laid down. An outstanding demand would be no excuse, but two or three branches of litigation, the escheator and President of the Columbia Academy all claiming the funds, it certainly was prudent for the administrator to retain the funds in his hands, not knowing at what time, or by whom, he would be called on for the money as legally entitled to it. There is no proof that he used or that he made profit out of it; but, on the contrary, that he retained it in his hands, ready at any time to pay it over to the legal and rightful owner. The administrator is willing to account tor the interest received upon notes not paid when due. I have therefore charged the administrator with the balance of interest so received, amounting to eighty dollars and fifty-four cents.

“ The account will stand thus :

Balance in hands of administrator ... ¡$3,149 55

Add eighty dollars and fifty-four cents interest - 80 54

Making the aggregate in the hands of the administrator .$3,230 09”

The complainants excepted to the Commissioner’s report on the following grounds:

*10Because the Commissioner ought to have charged the administrator with interest on the balance in his hands from the date from which the said administrator had declined to account for interest.

Wardlaw, Ch. This case is presented to me on an exception by the plaintiff to the Commissioner’s report on the defendant’s accounts, because the Commissioner has not charged the defendant, as administrator, with interest on the funds in his hands, beyond the interest which the defendant admits that he has actually received. The facts and reasons upon which the Commissioner acted are clearly stated in his report, to which I refer. The substance of defendant’s excuse from the payment of interest, is, that having been notified by the escheator in 1846 that the estate in the administrator’s hands was claimed as an escheat, he retained the funds without making profit, to meet the claim. No proceeding towards escheat was ever instituted. The only actual suits concerning the estate, were a bill filed 16th March, 1848, against the administrator, for account, by persons claiming to be next of kin of the deceased, which was compromised in 1851, (in connection with the proceeding next mentioned) and a suit, first in the Court of Ordinary and by appeal in the Court of Common Pleas, to set up a will of the deceased. This latter proceeding was instituted in April, 1850, and was terminated by compromise in October, 1851, according to which a verdict was to be found establishing the will propounded for probate, and the plaintiffs as legatees, were to receive one-third of the estate in full of their claims ; the verdict was so found, and the defendant promptly paid the portion of the principal of the estate to which the plaintiffs, by the compromise, were entitled. The exemption from interest begins in November, 1846, and April, 1847, at the expiration of a year, from the two sales made by the administrator; the securities for the proceeds of sale bearing interest from the dates of sales, respectively, made a year before. On the authority of *Ches-nut*v. *Strong,*2 Hill Ch. 150, I regard the fact as established *11by his answer in the absence of any countervailing proof, that the defendant did retain the funds of the estate in his hands without making interest. The question in the case is, whether he was guilty of negligence, amounting to such a breach of trust as to subject him to the payment of interest, in thus keeping the funds unprofitable.

In general, trustees to whom is committed the management of estates, are liable for interest if they keep monies in their hands, without necessity from the exigencies of the estates, to meet immediate demands; 2 Wms. on Exors. 1309 ; Ram. on Assets, *512; Newton*vs. Bennet, 1 Bro. C. R. 359, and Per-kin’s Notes; *Littlehales vs. Gascoyne, and Franklin vs. Frith,*3 Bro. C. R. 73 and 433 ; *Pace*vs. *Burton,*1 McC. Ch. 250 ; *Black*vs. *Blakely,*2 McC. Ch. 7 ; *Taveau*vs. *Ball, 1*McC. Ch. 459. Notwithstanding the report of the Commissioner, and the earnest and strong argument made for defendant, I am unable to conclude that any exigency of the estate under his management justified the defendant in keeping the monies *dead*in his hands, according to the phrase of Lord Thurlow. A mere notice to the defendant that the estate in his hands was claimed as escheated, amounted to little or nothing, when not followed by proceedings to escheat; especially when we remember that under the Act to regulate escheats (5 Stat. 46) such proceedings could not be consummated under eighteen months, if so soon. If, in this case, the actual litigation concerning the estate be held to protect the representative of the estate from interest, then every executor, administrator or other trustee, who is called to account by suit, must be saved from interest from the beginning of the suit to account. The two cases, principally relied upon in behalf of the defendant, depend on peculiar circumstances, not existing in the present case. In *Pace*vs. *Burton,*the administrator, without being under any trust as to lands, leased certain lands of his intestate to tenants, who were sued for the recovery of the lands and *mesne*profits, under what proved to be a better title. It was held, that the administrator prudently kept in his hands the rents for *12the lands, to meet the damages likely to be recovered, in pending suits, from tenants to whom he was responsible, and was not liable for interest while the suits were in progress. In *Ches-nut*vs. *Strong,*the executor was exempted from interest, not actually made, upon proof that by agreement with the testator, in consequence of which he accepted the trust, he was not to be liable for interest.

Cases are not to be brought within an exception to a general rule, which are not clearly within the reasons of the exception. If a trustee do not choose to use the funds in his hands, and there be probable demands against the trust estate, it is his duty to apply to the Court, as indicated in *Black*vs. Blakely, for leave to surrender or deposit the funds; otherwise, except in rare instances, it must be inferred that he has made, or ought to have made, profit from the funds, equivalent to interest. It is ordered and decreed, that the exception be sustained, and that the report be recommitted to the Commissioner for the consequent modification. I think defendant should be exempt from costs. 13 Yes. 402.

The defendant appealed and moved this Court to reverse the decree on the ground:

That the defendant is not liable for interest on the money retained in his hands as administrator of the estate of Dawson Wages from November 1846 and April 1847, to the termination ' of the proceedings instituted to establish the will of the said Dawson Wages. ^

Black, Arthur, for the motion,

cited 2 Mad. 116; Bail. Eq. 460, 487; 1 McC. Ch. 247 ; 2 Wms. on Exors, 1309 ; 12 Yes. 386; 1 B. & B. 191.

*Gregg, DeSaussure,*contra, cited 2 Hill, Ch. 377.

The opinion of the Court was delivered by

Wardlaw, Ch.

We are content with the general reasoning of the Circuit decree, and with the conclusion attained, that, granting the defendant kept the funds in his hands without profit, he must pay interest, since no exigency of the estate *13entrusted to his management rendered it prudent that he should so retain the funds. No debt of the estate remained unsatisfied, and there was a clear balance in the administrator’s hands, which was claimed by various persons in different rights. The obvious duty of the defendant, under such circumstances, was, to file a bill of interpleader against all the adverse claimants, and to pay the money into Court. If this course had been adopted, and the litigation had seemed likely to be of long duration, the Court, on the application of any of the parties, or *sua sponte,*might have ordered the investment of the money in securities bearing interest. Every man is presumed to know the law; and if trustees, who are in fact ignorant of the law, will act upon their blind judgments without consulting the expert, they must bear the consequences of their rashness. It may be remarked, that the answer makes no mention of the suit or suits in Equity, and *the*character of the litigation there was not otherwise brought to the attention of the Chancellor, than by a statement at the bar that the suits were for an account of the estate. If the fact be as now suggested, that these were suits by adverse claimants of the estate itself, this fact does not strengthen the defence, for such suits are necessarily dilatory, and if defendant did not wish to use the money, he should have paid it into Court.

The Chancellor, on circuit, in deference to some observations made in the case of *Chesnut*vs. *Strong,*2 Hill, Ch. 150, 1 Hill, Ch. 122, not necessary to the decision of that case, treated the allegation in the answer, that defendant had kept the funds in his hands without making interest, as throwing the burden of disproof of the fact upon the plaintiff. Such is not our opinion.

This allegation, made by way of defence from the payment of interest, is not responsive to an ordinary bill for account, so as to stand for proved until rebutted by two witnesses or equivalent evidence. To announce as the doctrine of the Court, that defendants to bills of account might thus by unsupported oath relieve themselves from the charge of interest, would be to tempt to peijury by the bait of lucre: and I fear we should *14have many answers from trustees alleging the retention of money without profit. Such defence is clearly matter in avoidance of the plaintiff’s case in the bill, and like every other independent defence, must be proved. The- negative nature of the statement may justify Courts in holding slighter evidence to be sufficient than is required as to most matters of defence, but certainly not in dispensing with all proof. If a trustee show to the Court that in ordinary prudence, from the exigencies of the estate, he should have kept money on hand, this is strong evidence in support of his answer that he did so retain money, and needs little, if any, corroboration. In the present case the answer was entirely unsupported. These views are consistent with every thing decided in *Chesnut*vs. *Strong,*although opposed to a train of reasoning there. In that case, the testator by his will in express terms allowed his executors to retain the legacies to his children, who were the plaintiffs, until the children attained the age of twenty-one years; although he did not give to the executors the interest accruing in the interval between his death and the maturity of the children. Parol evidence, (of doubtful competency,) established the existence of an agreement between the testator and executors, that they were not to be charged with interest, and that they accepted the executorship on that condition. There was also evidence, that the executors had in one instance lent money without interest, and in another had refused to accept full interest; and that they generally had the money on hand. Upon this strong evidence in support of their answer, the executors were excused from interest which they did not make, and were required to pay so much interest as they received.

It is ordered and decreed that the decree be affirmed and the appeal be dismissed.

Johnston, Dunkin and Dargan, CC., concurred.

*Decree affirmed.*