The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1894-05-01

+ tiously followed the directions of tn
testator.
Neither our law nor the directions
in the will nor the exercise of a sOunC
discretion forbade the making of tn,
investments made by Mr.. Allen
They were in the view of this COur
such that, had the necessity existed
for their approval by the Probate
Court, no good reason could have
been advanced for Withholding suct
approval at the time and under the
circumstances under which they were
made.
The Fai Kee chattel mortgage is the
exception above alluded to. In lend
ing the trust funds it was the duty OF
the trustee to ascertain the status OF
the mortgagor's leasehold interest,
which was cOnfessedly neglected, and,
while in all probability no loss TO the
trust estate may grow out of it, the
Court must hold the trustee answer
able for any loss which may arise
from that investment.
The administrator has made his in
vestments not without authority of
| law nor in violation of the directions
| in the will. The fact that he was not
named executor, but was appointed by
reason of the renunciatiOn of the one
and refusal to accept the trust of the
other executor does not alter the situ-
alton. The administrator stands in
every respect in the same position as
the executors would have stood. He
has the same duties, powers, rights and
| obligations which would have vested
in or fallen upon the executors, had
they chosen to act. Being, therefore,
of the opinion that the administrator
has acted honestly, prudently, faith
fully and discreetly, he is not an
swerable for any anticipated or actual
loss of part of the trust funds except
in three instances; the investment in
the bonds of the Union Iron Works
Company and the bonds of the Seattle
Building Company and the Fai Kee
mortgage. The two former invest
ments may have been made on sound
business principles, yet they were not
made by the administrator personally
but by trusted agent. 1t is imma-
terial that the agent be possessed of
the highest business capacity, tact
and experience. A loss Occasioned
under such circumstances must be
made good by the trustee, and the sum
of $4,000 loss incurred in the first men-
toned investment, and the sum of
$4,000 in the second must be borne by
the administrator because he dele
gated his functions as trustee to an
other.
l. Levin on Trusts, p. 367. Perry
On Trusts, Sec. 40S, says: "If the
trust is of a discretionary nature, the
trustee will be responsible for all the
mischievOus consequences of the del
egatiOn, and the exercise of the dis
cretion will be absolutely void in the
substitute"
Pearson V. Jamison, Mclean, 1877. |
The duties and powers of trustees
cannot be delegated. POtestds del !
egdta non potest deLegdri.
The Kai Fee mortgage was accept |
ed by B. r. Banning as part of the |
assets distributed to him and was in |
cluded in the receipt which was given |
by him to the administrator. That |
receipt created no estOppel. The |
relations between the parties be-
ing virtually those of trustee
and beneficiary made it obligatory
upon the trustee to exercise due dill |
gence in making the investment. The
belief, followed by the assertion, of
Mr.. Allen that the investment was
sound when in fact it was partly of |
doubtful security does not preclude
from seasOnably rejecting it |
when defect in the title was discovered. |
IL Is true that The administrators had |
offered to pay Banning's share in
money which offer was apparently |
not accepted, Mr.. Banning probably
alecting to take the Investments be-
cause such course avoided loss of in
terest and the trouble of reiuvesting
the money, yet even that fact does
not eXonerate the administrator from
liability for investing the trust funds
in that chattel mortgage. Had Allen
known that the leasehOld of Fai Kee
was only "POtr dutre Uien he would
not have loaned the funds upon that
security; if he had loaned it with that
knowledge such an Investment must
have been considered reckless. In
this view the administrator is account
able for any loss caused by that in
,estment.
That no false representation was
made or improper influence used to
obtain the receipt is clearly shown by
he evidence. The conclusion reached
~ us rests upon the fact that the flaw
n the title of the Fai Kee leasehOld
vas one which the administrator
.asily could and therefore should have
discovered.
The computation upon the princi
lies herein enumeratei of the COM
mission due the administrator is re-
erred to the Clerk of the Court and
vhen the amount is ascertained the |
may credit himself
herewith.
The administrator must BE- arged
With the loss on the investment in
he Union Iron Works; also with the
mount invested in the bonds Of the
eattle National Bank Building Com
any, and with the amount of the Fai
Zee mortgage; such conveyances as
nay be necessary to transfer the Sc
urities for the above investments to
he administrator 10 be executed by
he beneficiaries; in other respects the
ccOunts are approved.
Order accordingly. !
A. S. Hartwell and w. a. Kinney