#### Laura A. W. Spear, et al., by next friend, *vs.*James E. Spear and Susan Wood. James E. Spear, et al., *vs.*Susan Wood.

It is a breach of trust, for a guardian or other trustee, to use, in his own ' business, the funds of his wards or *cestui que trusts.*He should invest them in public securities, or bonds secured by lien on real estate^ or at least bonds of third persons with proper sureties.(a)

The reasoning of the Court in *Sweet*vs. *Sweet,*Sp. Eq., 311, discussed and disapproved of.

BEFORE WARDLAW, OH., AT CHARLESTON, JUNE SITTINGS, 1853.

Wakdlaw, Oh. On November 11, 1840, in contemplation of a marriage, soon afterwards solemnized, between James E. Spear and Lanra Ann Wood, daughter of Susan Wood, an indenture of marriage settlement was executed by the three persons named, at Savannah, Georgia, where they all three resided; whereby, all the estate, real and personal, *185of the said Laura Ann, particularly that derived from and through her late father, was conveyed in fee to the said Susan "Wood, in trust, that she would hold the same for the sole and separate use of the said Laura Ann for life: and that from and after the death of the said Laura, she would convey the same in fee, free from any trust, to such children of said Laura as might be living at her death, &c., with a proviso, that the trustee, with the written consent of said Laura, might employ the money belonging to the said Laura in the purchase of any property to be held on the same trusts, or lend out the same, or employ it in merchandizing, using in all these matters a reasonable discretion.

Sometime after the marriage all the parties removed to Charleston, where the survivors of them still reside.

Laura Ann Spear died September 16, 1851, leaving surviving her said husband, James E., — and two infant children, the said Laura A. W. and Antoinette A. • •

The estate to which said infants are now entitled under the said settlement, seems to consist principally of the proceeds of sale of a slave in the hands of said James E. Spear, and *186,of certain stocks, cask, and notes in tke kands of said Susan Wood. Tke notes referred to are represented to be for tke sums of one tkousand five kundred and eigkteen dollars and thirty cents, and one tkousand one kundred and two dollars and ninety-two cents, and made by tke said James E. Spear witkout security, upon a loan to kim by tke trustee of so muck of tke trust money.

Soon after tke deatk of Laura A. Spear, Susan Wood commenced a suit in tke Common Pleas against tke said James E. Spear, for tke recovery of tke monies mentioned in said ,two notes. Afterwards, James E. Spear was appointed by tkis Court, guardian of kis said two ckildren: and ke kas given bond witk approved sureties, in a penalty equal to tkree times tke value of tke infants’ estates, including tke sums of kis two notes, for tke faitkful performance of kis trust. Upon receiving tkis appointment, Spear demanded from Mrs. Wood tke surrender to kim of all tke funds in ker kands belonging to kis wards, and tke discontinuance of ker suit at law. ■ Instead of yielding to tkis demand, ske procured tke bill first named in tke caption to be filed in tke names of tke infants by next friend, against Spear and ker-self, for an account and investment of tke funds of tke infants. Tkereupon, James E. Spear, for kimself and kis wards, filed tke second bill in tke caption named against Susan Wood, praying tkat ker suit at law migkt be enjoined, and tkat ske migkt be compelled to account with and transfer to kim as guardian, all funds of tke wards within ker control. To both bills Susan Wood filed answers, setting forth tke particulars of tke trust estate in ker possession, and professing ker willingness to account under tke direction of tke Court: but in ker answer to tke latter bill, ske suggests, tkat ske should not be doubly vexed as to tke same subject of litigation, and tkat Spear kas misjoined tke infants witk kim as plaintiff, inasmuch as to tke extent of kis wards’ funds used by kim in kis own business, kis interests and theirs are adversary. *187Spear answered the former bill, insisting npon bis right as guardian to the custody and management of the whole fund.

It was stated at the hearing on one side, that the next friend in the former suit was insolvent, perhaps dead; and on the other side, that one of the sureties in the bond of the guardian was insolvent. No foundation's laid for either of these statements, in the pleadings, or the evidence: although it may be well to act upon them to some extent.

No inquiry has been made by the Master which of these suits, so far as their purpose is common, is most for the benefit of the infants; nor is it the practice of this Court to make such comparative inquiry, unless two suits for the same purpose are instituted in the name of an infant by different persons acting as his next friend. Here one of the suits is by a guardian, who unquestionably is entitled to the general custody and management of his wards’ funds, and to call to account a person detaining them: and the other is instituted by a next friend after a guardian is appointed for the infants, as the bill itself states; and before the guardian had exhibited remissness in the prosecution of his remedies against the former trustee. As to this latter suit, the guardian in a regular procedure, should have sought an inquiry whether the suit was for the benefit of the infants — and I regret that this course was not pursued: but after full hearing, I must determine this question, so far as is necessary for the protection of the infants, without the aid of the Master. As against Susan Wood, the interposition of the next friend was at least premature until the guardian had been tardy and remiss in pursuing his remedies; and as against Spear, the only plausible showing of benefit to the infants appears in the allegation, that Spear borrowed some of the trust money from the trustee of his wife, without giving security for the loan. But this was before he had assumed any trust for his children — and the fault, if any, was that of the acting trustee. Granting that both Spear and the trustee in this matter are liable for a breach of trust, he certainly increased the secu*188rity of this fund by giving a guardian’s bond with sureties : and apparently the fund is now safer than if paid over to the former trustee, and as safe as if paid into Court. It is not alleged in the bill, that the fund is unsafe in the hands of the guardian — nor is it stated in what business, hazardous or otherwise, it is employed by him. If he was bound when appointed guardian with convenient despatch to make some other investment of the fund, no convenient time was allowed him for this purpose before he was sued. Is he bound to make such other investments ? It is a technical breach of trust for a trustee to employ trust funds in his own business: so that if he make extraordinary profits he is liable for these to the beneficiaries, and if he make no profit, he is still liable for the ordinary rate of interest. But the Court does not encourage the pragmatical interference of strangers with the discretion of a trustee, in the investment and management of a trust estate, where they make no showing of unproductiveness or unusual hazard in the existing use of the funds. There is no special mode of investing his wards’ funds absolutely prescribed to a guardian, by any statute or rule of Court in this State: and our chief reliance for the safety of the estate under his charge, must be on his fidelity, and the sufficiency of his bond. It is suggested in the opinion in */Sweet*vs. */Sweet,*Spears’ Eq. 311, that it is difficult for the Court to control a guardian in the use of the money of his wards — that the employment of it by the guardian, in his own business, may be the most profitable and secure use of it that is practicable — and that the supervision of the Court must be mainly directed to the continuing adequacy of his bond. In the present 'instance the guardian is father of his wards, and bound by nature and law to protect their interest, and provide for their welfare: and no special reason is presented for controlling his discretion, in the management of their separate estates committed to him. It does not appear to me, that the bill in the names of the infants by next friend *189is for their benefit: but I shall direct principally with a view to costs, some additional inquiry on that point.

I have hitherto assumed, that at the death of Laura A. Spear, leaving children, the trust of Susan Wood ceased, except so far as it was necessary to place the children in possession of the property. It was argued, that the terms of the settlement directing her “ to convey” the property to the children, make this a continuing trust in her: hut this direction refers merely to the mode of transferring the subject of trust, and does not prolong her estate. Her trust terminated at the death of her daughter — although, of course she could not transfer the property itself, until some person was authorized to receive it, and when the guardian was appointed, his authority retroacted and covered ’all the rights of his wards as to chattels and choses: and she might safely, without waiting for a specific direction from the Court, deliver to him the chattels, and assign to him the choses of his wards: indeed, this was her duty.

It is ordered and decreed, that upon the payment by James E. Spear of the costs which had accrued thereupon before he was appointed guardian, Susan Wood be perpetually enjoined from prosecuting her suit at law against James E. Spear upon the two notes above mentioned.

It is also ordered and decreed, that the said Susan Wood deliver to said James E. Spear as guardian the property and moneys, and assign to him the certificates of stock and other choses, belonging to his wards, which may be in her possession, and account to him for her transactions concerning the estates of said wards. And it is referred to one of the Masters to take the account, on the principles of this opinion.

It is further ordered, that one of the Masters inquire and report as to the sufficiency of James E. Spear’s bond as guardian, and the safety and productiveness of the money lent to him by Susan Wood as trustee : with' leave to report any special matter bearing on the question, whether the suit in *190the caption of this opinion first named be for the benefit of the infant plaintiffs.

Costs of the bills in equity to await the Master’s reports.

The Master submitted the following report:

“The decree of Chancellor Wardlaw of the 30th November, 1853, directs the trustee, Mrs. Susan Wood, to deliver to James E. Spear, the guardian of his children, their estate in her hands; and it was referred to me to take the account of the trustee; and that the Master should inquire and report as to the sufficiency of James E. Spear’s bond as guardian, and the safety and productiveness of the money lent to him by Susan Wood as trustee, with leave-to report any special matter bearing on the question, whether the suit first named in the caption of the decree'Ice for the benefit of the infant plaintiffs. I respectfully report, that in obedience to the decree, Mrs. Susan Wood has delivered to the guardian the estate of the infants which came to her possession as trustee, and accounted for the money in her hands, and paid over a balance in money of six hundred and twenty dollars thirty cents to the said guardian, which account was properly vouched.

“ I further report, that under an order of this Court appointing James E. Spear guardian of the persons and estates of his said children, the said guardian executed to me two bonds, each dated the 14th February, 1852 — each in the penal sum of seven thousand five hundred and ninety-one dollars, ($7591.00,) with the same three sureties to each, viz: James S. Roberts, Daniel H. Silcox and John S. Bird, which bonds are in treble the value of each infant’s estate. I have taken testimony and find that James E. Spear is a man in prosperous business, possessing a large and valuable jewelry store in King street; that although James S. Roberts, one of the sureties, is not considered to be good for the amount of the bonds, the other two, Mr. Silcox and Mr. Bird, are both men of considerable property, exceeding in value the amount of the *191bonds; and I regard the estates of the infants as safely and productively invested in the bonds of the guardian; but in my judgment, it would seem to be the duty of the guardian to make the investments of his children’s moneys in other and independent securities. But as the case of *Sweet*vs. Sweet, Speer’s Eq. 309, seems to indicate that the guardian is not bound so to invest the money, Mr. Spear is protected by the law.

*“*I further report, that Mr. Spear has duly rendered to me his accounts as guardian, in which he debits himself with interest on the money of his wards.

*“*In the account of the trustee, there is a charge of one hundred dollars for a fee paid the solicitors in the cause first mentioned in the caption of this report; but as Mr. Spear had been duly appointed the guardian, and executed his bonds before that bill was filed, I think this charge cannot be allowed, it not being for the benefit of the infants. In this view of the matter, Mrs. Wood ought to pay that one hundred dollars to the guardian as pari of the true balance of cash.”

To this report Susan E. Wood, and the next friend of the infants, in their name as well as his own, took exceptions as follows:

1: The evidence of Ezra Wood, and the documents, show that James E. Spear, after signing the marriage settlement, received his wife’s fortune without the consent of the trustee, to whom he afterwards gave a mortgage as security. That on the death of his wife he refused to renew the notes which the trustee held, and became guardian of his children, and immediately filed his bill to enjoin the action which Mrs. Wood, the trustee, had commenced against him; and his answer to the interrogatories filed in the Master’s office, shows that he took the guardianship for the very purpose of getting his children’s money into his hands, and using it as his own ; *192and these circumstances are sufficient to justify the interference of the next friend.

2. The evidence of Mr. Cohen shows, that if ordinary care be taken of the infants’ interest, they are entitled to have their money laid out on real security, and therefore it is demonstrable that this suit is for the infants’ benefit.

■ Wardlaw:, Ch. The exceptions to the Master’s report in these cases renew questions substantially considered in my former decree. I suppose the purpose of the exceptant is not so much to effect conversion of my opinion, as to bring the case, with the new light afforded by the evidence before the Master, under the review of the appellate tribunal. This is a very proper purpose, for some of the doctrines in controversy are doubtful and important.

As the leading statement of fact in the exceptions is not proved to my satisfaction, it is proper, before proceeding to discussion, to set forth more distinctly some of the results of the evidence. I conclude, particularly from her own answers, that Susan Wood did consent that James E. Spear should receive from Ezra Wood a portion of the patrimony of Spear’s wife. Throughout the pleadings, the money thus received by the husband is treated as a loan by Mrs. Wood, as trustee. Among the documents produced by the trustee, is the consent of the wife, on July 20, 1843, to the husband’s use of her money. When the money was originally received by the husband, he gave a promissory note- to his wife, dated January 12, 1841, for two thousand six hundred and twenty-six dollars and twenty-nine cents, which of course was of no validity at law. Afterwards, on February 25, 1842, he gave his promissory note to Susan Wood, trustee, for the same sum, payable one year afterwards, with interest from date ; and, on the same day, executed a mortgage to her of all his stock in trade, and fixtures, in his store in Savannah. *193This note was probably renewed, and partly paid. On January 27, 1848, J. E. Spear, in further renewal, gave his two notes to Susan "Wood, as trustee, payable a year afterwards, one for one thousand five hundred and eighteen dollars and twenty-six cents, with interest from date, and the other for one thousand one hundred and two dollars and ninety-two cents, “ fox interest on money loaned.” Laura A. Spear, the wife, died September 16, 1851; and on November 4, 1851, Susan Wood placed these notes in the hands of counsel for collection, and the counsel wrote to Spear, requesting payment of the notes, or, if this were inconvenient, security for them. James E. Spear was appointed guardian of his children, provisionally, on Eebruary 2,1852, and executed the bonds required on April 14, 1852. On March 15, 1852, he applied by letter of his solicitor to Mrs. Wood, for a transfer to him of the property of his wards; and on next day, through her, solicitor, she expressed a desire that this property should be securely invested. Some further correspondence ensued, in the course of which these parties respectively took the positions, afterwards maintained in their pleadinigs. The infant wards, by Hunting, as next friend, filed their bill against Spear and Wood, April 9, 1852: Spear filed his bill against Mrs. Wood on June 12, 1852.

The case of *Sweet*vs. Sweet, Speers’ Eq., 309, controls my opinion, as it did that of the Master. The mandatory judgment in that case, is merely that a guardian should not be removed from his office, because he had employed in his own business the funds of his ward; and clearly it is the judgment only which is authoritative, and not the particular reasons which may be assigned by the organ of the Court in pronouncing judgment. Still a subordinate judge should not rashly disparage the reasoning of a higher tribunal, and in general should carry out its views, even when they may not amount to absolute mandate or authoritative declaration. It is manifest that, although the particular remedy sought in *Sweet*vs. *Sweet*was *194the removal of the guardian, the Court should have ordered a different investment of the waid’s funds, if it had considered the course pursued by the guardian as amounting to a breach of trust which jeoparded the estate. It is the duty of the Court to interpose for the security of estates under its supervision, in behalf of all beneficiaries, especially of those under disability; and it sometimes acts for this purpose by extra judicial directions, made on the information not only of its immediate officers, but of any *amicus curice,*or stranger, that such an estate is mismanaged. *Lord Dudley's*case, cited 2 Yes. Sen., 484. The case from Speers must be considered as determining in effect, that a guardian’s use in his own affairs of a ward’s estate, is not of itself mismanagement.

To some of the remarks made in that case, if they be intended to apply to all guardians and trustees, I should be reluctant to assent. According to the doctrines of the English Chancery, which are generally followed here, the first duty of trustees is to place the property committed to them in a state of security. For instance, an executor makes himself responsible if he allow assets of the estate to remain outstanding on personal security longer than absolutely necessary, although they may have been so invested by his testator: *Powell*vs. JEvans, 5 Yes. 844; *Lowson*vs. Copeland, 2 Br. C. C. 156. So, too, if an executor himself invest the assets on personal security; *Holmes*vs. *Dring,*2 Cox, 1; or, it seems, if he lend them on security of real estate beyond two-thirds of the value of freehold estate, or even to that extent if the value be much fluctuating as where it is dependent on houses liable to dilapidation; *Stichney*vs. Sewell, 1 Myl. & Cr. 8; Win.’s Ex’ors, 1587, 1547; Lew. Trusts, C. 16. If a trustee mix trust funds with his private monies, and employ the aggregate in a trade or adventure of his own, the beneficiary may, at his option, take a proportionate share of the profits or interest on the sum of trust funds so employed; *Docker*vs. *Somes,*2 Myl. & K. 655. A guardian is responsible to the *195same extent as otter trustees; *D. of Beaufort*vs. Berty, 1 P. Wm’s. 704. Upon these elementary principles, it is manifestly at his own risk that a guardian uses in his own business the funds of his ward, for he thereby makes himself absolutely liable for re-imbursement of the capital, with usual interest, and for' extraordinary profits, if such be made. But it does not follow, that the Court should peremptorily rebuke such employment of a ward’s estate by a guardian, and direct a different investment, when proper provision is made for the ward’s maintenance, and his interests are amply secured. While the Court will discourage such irregular dealing with trusts, it will refrain from activé interference with the guardian’s management, until the safety of the estate is 'put in jeopardy. It may become necessary hereafter — it does not seem to be so now, according to the report of the Master — to require the present guardian to invest the funds of his wards differently, or to give additional security.

The fact, that when a father becomes guardian of his child by appointment of the Court of Equity in this State, he is required, as other guardians, to give bond with sureties for the faithful performance of his trust, may justify some departure from the rules of the English Chancery, but not from the principles recognized there which seek to exact security for the estates in a different form. In *ex parte Mowntford,*15 Ves. 445, Lord Eldon *said*the *Court*never appointed the father guardian, and expressed the opinion that a third person could not be appointed by the Court guardian of an infant while the infant’s father was living, although such person might be appointed *to act*as guardian of the person and estate of the infant under peculiar circumstances. In *Barry*vs. Barry, 1 Mol. 213, (12 E. C. R. 103,) Sir A. Haft, Ld. Chancellor of Ireland, says that a father is guardian of his children by law — by title paramount to the Court’s appointment — and while he lives, the Court cannot appoint another person, except under very peculiar circumstances: *196and that such person, when appointed, is not guardian, but rather a curator to take care of the children and protect them against some prejudice during the life, of the father; and that a guardian so constituted is not required to give any security : the Court, however, always assumes the superintendence of the fortunes. . Notwithstanding these opinions, guardians for children were appointed by the Court in the lifetime of the father, by reason of his immorality, in *Wellesley*vs. *Dh,*Beaufort, 2 Russ. 1; 2 R. & My. 640. Blackstone says, “If an estate be left to an Infant, the father is by common law the guardian, and must account to the child for the profits and again, *“*a father has no more power over his son’s estate than as trustee or guardian; for though he may receive the profits during the child’s minority, yet he must account for them when the child comes of age,” 1 Bl. Com. 453, 461 The case of a father is peculiar in other respects. He is entitled to the earnings of his children’s labor while they live with him and are maintained by him; and yet he is bound generally, if he can, to maintain his infant children from his own estate, without aid from their separate property, how^ ever large it may be. . He is authorized, although he may be himself an infant, to appoint by deed or will guardians of his infant, unmarried children, born or to be born, with ample power over their estates. 8 Stat. 707; 7 Ves. 348. This authority does not seem to be restricted to estates acquired from the father. These circumstances justify the Court in trusting much to the discretion and duty of a father when appointed guardian of his children. I am not unmindful of the consideration that prevention is better than remedy, and that children should be saved, to reasonable extent, by precautionary measures, from the painful and disturbing necessity of pursuing a father and his sureties after he had wasted the estate of his wards: but perhaps the preponderance of considerations is in the scale of leaving much to the natural duty of the father, stimulated by affection and legal obligation.

*197Besides, the suit of the infants, in the name of Hunting as next friend, but by procurement of Mrs. Wood, was instituted immediately after the father was' provisionally appointed guardian, and before by giving bond he was fully invested with the office: and the bill does not state the adventure in which the funds of the infants are employed, except by a general allegation that Spear had mixed these funds with his own estate. Mrs. Wood had not at the filing of this bill, nor before the guardian’s suit, delivered to the guardian that portion of the estate which remained in her hands after her loan long previously made.

It is ordered and decreed, that the exceptions be overruled and the Master’s report confirmed.

It is further ordered, that the next friend Hunting pay the costs of the suit instituted by him in the name of the infants; and that, if he be not of ability to pay, Susan Wood pay these costs: and further, that she pay the costs of the suit by J. E. Spear and his wards against her.

On behalf of the infants, an appeal was taken on the ground that the bill was properly had, and that the fortune of the infants ought to be invested for their use.

Petigru, for appellants.

Mitchell, contra.

(a)

 In a case of Simmons and wife *vs.*Logan, heard at Charleston, in January, 1829, the following circuit decree was pronounced by

Harper, Oh. The bill charges that stock to a considerable amount was transferred to the defendant in trust to pay the proceeds to Mrs. Mary Loyd, the mother of the complainant Mrs. Simmons, for her life, and after her death to transfer it to such of her children as shall then be living, and that defendant has wasted and misapplied the trust fund. The bill prays that defendant may be compelled to give security to complainants for their interest in the said trust fund, whenever the same may accrue to them.

The answer of defendant submits that the complainants have no right to call upon him for such security, as they have no present interest in the fund, and states that he has always paid the interest regularly to Mrs. Loyd and will continue to do so. Upon the answers being excepted to, the defendant made'certain statements before the master, which, as the master testifies, were read and assented to by him. These are in evidence as the defendant's admissions. They amount to this, that he has made use of about $4000 of the trust fund for his own purposes, and he conceives that so long as he continues to pay the intorest regularly *185no one has a right to call the act in question, at all events not the complainants who have no present interest.

The defendant see.ms to oonoeive that a trustee has an unqualified right of disposing of the trust fund as he thinks proper, and that no breach of trust is committed so long as he continues, to pay the interest. This is a mistaken notion which ought to be corrected. The complainants only pray that their contingent interest may be secured to them, and to this they have an unquestionable right as there is so much reason to suppose the fund in danger. But it is my duty to make the defendant aware that if Mrs. Loyd had joined in the suit, and an application to that effect had been made, the Court would have been under the necessity of ordering him to be removed from the trust and to stand committed until the stock should be replaced.

It is ordered and decreed that an account be taken of the fund which has come into the hands of the defendant, and that he give bond to the proper officer of this Court with security to be approved by him to the full amount of the said trust fund, conditioned to pay or transfer to the children of the said Mrs. Mary Loyd who shall be living at her death, the amount to which they shall be respectively entitled of the said fund, and that he pay the costs of this suit.

The opinion of the Court was delivered by

Waedlaw, Oh.

It is manifest from the Circuit decrees in these cases, that the Chancellor was dissatisfied with the reasons expressed for the judgment of the Court of Appeals in *Sweet*vs. *Sweet,*Speers’ Eq. 311, yet was restrained by deference to his superiors in authority, from the full expression of his dissatisfaction. In this tribunal we are not fettered by this consideration, and we may frankly discuss the reasoning *198of foregoing equals in authority. The point decided in that case was simply, that it was insufficient cause for the removal of a guardian from his office, that he had employed in his own business the funds of his ward; and so far as it goes, the decision seems reasonáble, although the Court might well have proceeded to direct a change of investment, with warning that the guardian would be removed if he persisted in retaining the trust funds for his own use and accommodation. It is, however, the argumentation of the Chancellor delivering the opinion of the Court which is most objectionable. ’ He says in substance, that the retaining by a guardian for his own use of the funds of his ward, might be the very best use of them — that he was liable for interest as a borrower would be, with the advantage that there would be no break in the time the interest was accruing; whereas, as to sums received from a borrower, some time would be allowed to the guardian for reinvestment — that the funds were as secure in the possession of a guardian, by reason of his bond being always under the supervision of the Court, and annually brought to its special attention, as they would be by the bond of any borrower, that it was not usual, nor required by law in this State, that trust funds particularly of small amount in the country should be invested in public securities, or in any special mode — and that it was difficult for the Court to control a guardian in his use of moneys.

The authorities cited in the latter of the Circuit decrees under consideration demonstrate, that the first duty of a trustee is to put the estate committed to him in a state of security. Equity and common sense require that he should be unbias-sed in the discharge of this primary duty. His beneficiaries are entitled to the exercise of this independent, impartial, judgment ; but this is impossible if he lend to himself. All the reasons which inhibit a trustee to sell from buying at his own sale, exact with equal force that a trustee to lend shall not borrow from himself. *Mulligan*vs. *Wallace,*3 Rich. Eq. 111. *199He has the same superior knowledge of the condition of the estate, and the same temptation to obtain it at undervalue. It is proper for the security of his beneficiaries and of his own sureties, and for the avoidance of litigation of a particularly disturbing character, that the trust estate should be secured doubly, Eirst, by stocks or bonds, in which it may be invested, and then by his own bond. There can be no doubt of the principle asserted by the Chancellor, that if a trustee mix trust funds with his private moneys, and employ the aggregate in a trade or adventure of his own, he is liable at the option of the beneficiary for re-imbursement of the capital so employed, with usual interest, or for the capital and all profits, which have been made. But suits by beneficiaries against trustees for extraordinary profits, so frequently lead to perjury or suppression of the truth where all the evidence is in possession of the trustees, and so frequently lead to estrangement and hostility where the parties are of kin, that it is politic to prevent as far as practicable such irregular dealings, with trust estates. It has become á crying evil, in our times, that persons seek trusts, especially administration and guardianship, not for the good of those beneficially interested, but for the accommodation of themselves 'and their sureties and other special friends. This is in flagrant violation of the rules and doctrines of equity concerning trusts.

In support of these principles some cases will be added to those cited in the circuit decrees. Lord Thurlow said in *Sadler*vs. *Hobbs,*2 Br. O. 0. 17, the trustee suffered the money to be out for a very long time in the hands of a tradesman, and neglected to call'it in, notwithstanding the party interested in the fund was an infant; in such case he is clearly chargeable. In *Freeman*vs. *Fairlee,*3 Meri. 41, Lord Eldon said, the executor has done what no executor is justified in doing; he has blended the accounts of the estate with his own commercial houses. In *Wilhes*vs. *Steward,*Geo. Coop. 0. G. 6, where executors were empowered to invest a legacy in the *200public funds or in sucb other security as they could procure and think safe, Sir "William Grant was clearly of opinion that they had no power to lay out the money upon personal security, and that their case was like that of trustees to sell who could not be justified in selling for any but the best price obtainable for the property, and that the legatee was fully entitled to the security of the Court. *Adye*vs. Fanillateau/ 1 Cox 60 and *n ; Smith*vs. *Smith,*4 Jno. C. C. 281, 445. In *Langston*vs. *Ollwant,*G. Coop. 83, the will gave the trustees power to invest a legacy upon real or,personal security, and declared that they should not be answerable for any loss happening without their wilful neglect or default; they lent the money (and some of their own too) on his bond to the legatee’s husband, a trader in good credit and circumstances, who some years afterwards became bankrupt: *held*that the authority of the trustees did not extend to an accommodation of their kinsman, and that they were liable for the loss. In *Stichney*vs. *Sewell,*1 Myl. & Or. 8, two executors as trustees were empowered to lend money on government, real or personal security, and one of them lent the money to his co-trustee and the partner in trade of the latter on mortgage of real estate of fluctuating value; the borrowers became bankrupt, and the mortgaged estate proved inadequate for the satisfaction of the loan: Lord Cottenham held the executors liable for the deficiency, saying the testator intended that the estate should have the benefit of the executors’ discretion, but they lend to themselves.

There can be no doubt that a guardian is a trustee and liable as other trustees are; *Dulce of Beaufort*vs. *Baty,*1 P. Wms. 704. It may be that to trustees not under bond and such as are .not required to account annually to the Court, as executors and trustees of the appointment of parties, the doctrines of the Court might be somewhat more promptly and stringently applied, than to guardians who give bond and are required to account to the Court annually, and are under *201the responsibility of giving additional sureties when it seems requisite; still it is not safe to indicate any relaxation of the rules in equity concerning trustees in favor of such as Rave given bond. Suppose a Master or Commissioner in equity, who is under bond for the faithful execution of his office, were directed by the Court to invest on proper security funds in the custody of the Court, and he should report that he had taken the funds for his own accommodation, and that his official bond was fit security, would any Chancellor deem this a safe investment ? Or take the case of a trustee appointed by the Court and under bond for the faithful execution of his duties, who was directed to sell and re-invest the trust estate,' could it be tolerated that he should sell and take the moneys for his own use, and cooly refer for security to his official bond ? It is unsafe to trust to bonds merely, for common experience teaches that, where the principal fails in the discharge of his duties and in his pecuniary means, the sureties contrive to be likewise insolvent. Integrity of the trustee is a surer safeguard than any common law obligation. But where we must depend on bonds, we should have as many as can be reasonably procured.

In the present case the guardian is engaged in trade, and although there is no express charge in the bill nor admission in the answer, that the funds of his wards are employed in this trade, yet from the general charge and admission that the funds are employed for his use, it is pretty plain that the estate of his wards is exposed to the hazards of his mercantile-enterprise. . They seem safe now, but who can tell how long they will be safe ? We are of opinion that the guardian should change as soon as practicable the investment of the funds of his wards into public securities, or bonds secured by lien on real estates, or at least bonds of third persons with proper sureties. It is the special duty of the Master to report concerning such subject, but the Court is not disinclined to receive information for security of funds within its control *202from any person moved by friendly and proper motives towards the beneficiaries.

Nevertheless we affirm the conclusions of the Chancellor in these cases, under the special circumstances. The bill against Spear, was filed at the instance of Mrs. Wood, seemingly for the gratification of ill-nature towards him rather than the conservation of the interests of his children and wards, before he had any opportunity of changing an investment originally and long before made by her as trustee by breach of trust, and before, in fact, he had formally become trustee. She was, however, liable as trustee for breach of trust, and had some pretext for interposing to save herself from the consequences. If she had not perversely refused to pay over to the guardian when appointed, the funds remaining in her hands, she would have been entitled to more indulgence.

Costs are considered within the discretion of the Chancellor, and are not per *se*the subject of appeal, nor are they made so in this case. My brethren have left this matter to me, and as I determined it on the circuit principally in deference to the reasoning in *Sweet*vs. Sweet, I think on review I have •dealt hardly towards Mrs. Wood. Clearly the infants are not liable to costs, nor in my opinion, is their guardian sued before he had committed any breach of trust; still she had the excuse for interposition of saving herself from primary, liability. The bill' at her instance was premature. She was clearly in fault in refusing to pay over to the guardian the funds demanded in the second suit.

It is ordered and decreed that the order as to the liability of Susan Wood, for costs in the first suit be rescinded, and that the appeal be dismissed.

Johnston, Dunkin and Dabgan, CC., concurred.

*Appeal dismissed.*