Case Name: Fay, Judge, &c. versus Howe
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1823-10
Citations: 1 Pick. 527
Docket Number: 
Parties: Fay, Judge, &c. versus Howe.
Judges: 
Reporter: Massachusetts Reports
Volume: 18
Pages: 534–536

Head Matter:
Fay, Judge, &c. versus Howe.
In an action on the probate bond of a guardian of a spendthrift, simple interes! only was allowed upon a note, due on demand, from the guardian to the ward, the note being so small that it was not a sufficient object to make new investments with the interest.
Large sums of money having come into the hands of a guardian of infants, there being rents of real estate and income from public stocks periodically received, and no account having been settled for many years, it was ordered that an ac count should be settled with a rest for every year, and the balance thus suuck carried forward to be again on interest, whenever the sum should be so large that a trustee acting faithfully and discreetly would have put it into a productive state.
This was an action on a probate bond brought for the benefit of a spendthrift against one of the sureties of his former guardian. On a hearing in chancery, an auditor was appointed, who in his report fixed upon two sums, for one or the other of which judgment was to be rendered, according to the opin ion of the Court upon the following question, namely, whether simple or compound interest should be charged against the defendant upon a promissory note, payable on demand, made to the spendthrift by the defendant’s principal before he was appointed guardian, and afterwards inventoried by him as the estate of his ward.
Adams, for the plaintiff.
From the case of Barrett v. Joy, 16 Mass. Rep. 227, and the cases there cited by the Court, it should seem that simple or compound interest will be allowed in favor of, or against a. guardian, according to me justice of each particular case. Here the note made by the guardian being in his own possession, and being payable on demand, should be considered as money ; and if the guardian acted like a prudent man, which he will not be permitted to deny, he actually received compound interest. The reason why the law does not give compound interest on a note, even when the interest is payable annually, is because the payee is considered as guilty of loches in not bringing his suit; but no such loches can here be imputed to the spendthrift.
W. Draper, contra.
The Court, in allowing interest against guardians, will adopt a rule as favorable to them as the one governing contracts between individuals, in which interest is expressly stipulated to be paid annually ; more especially where the rule is to operate against a surety in a bond. A spendthrift is not entitled to the same privileges as. an infant or person non compos mentis; because he is not put under guardianship on account of mental imbecility, and he may therefore, by application to the judge of probate, call his guardian to account and compel him to add the interest to the principal. If the spendthrift neglects to do so, he ought to be presumed to have waived his claim to compound interest.
Mams, in reply.
A spendthrift is put under guardianship to preserve his property, as being improvident and neglectful of his rights ; he therefore should not be presumed to have waived any right. He may as well be left to squander his property without a guardian, as to have one who will take advantage of his remissness. The obligation of the surety is commensurate with that of the principal, to the extent of the penalty of the bond.

Opinion:
At the sittings after this term Putnam J. read the opinion of the Court, as drawn up by
Parker C. J.
We think judgment must be for the smaller sum reported by the auditor, with an increase of interest to the present time. In some cases guardians have been charged with compound interest, but only where the circumstances are such as to raise a strong presumption of neglect in not putting the money of the ward into a productive state.
In a case lately decided in the county of Norfolk, where large sums ol money had come into the hands of the guardian and no account had been rendered for many years, there being rents of real estate and income from public stocks periodically received, it was thought right to have the account settled with a rest for every year, including principal and interest, and the balance thus struck carried forward, to be again on interest whenever the sum should be so large that a trustee acting faithfully and discreetly would put that sum into a productive state ; and 500 dollars was the sum which the Court tnought should subject the guardian to this charge. It was considered that it would be difficult for the guardian to invest smaller sums, and that he ought to be allowed to retain something on hand to meet contingent expenses.
The sum which the auditor finds to have been due from the guardian in this case is not precisely stated, for it is only a part of the balance of 188 dollars which is found against him. This is so small that the interest upon it was not a sufficient object for new loans, and it would not have been a breach of trust or negligence in him to have suffered it to remain in the hands of a debtor, so long as it was secure and the interest paid ; and if he might have suffered it to lay in the hands of another, he might keep it himself, without investing the annual interest.
We think the common rule of interest, as applied by the courts to contracts, even where the interest is promised to be paid annually, should not be departed from, except in cases where there has been a palpable neglect to make the most of the property of the ward.
The case alluded to is Robbins, Judge, &c. v. Hayward et al., executors of a guardian of minor children, which was argued at Dedham in October 1822, and determined in February following.
In this case W, Prescott and Peabody, for the plaintiff, contended that strictness was required in the execution of trusts, and that the defendants should be charged with compound interest, especially since in this State a guardian is allowed a compensation for his services; and they cited Wood v. Robbins, 11 Mass. Rep. 504; Wyman v. Hubbard, 13 Mass. Rep. 232; Ex parte Grace, 1 B. & P. 376; The People v. Gasherie, 9 Johns. Rep. 71; Dunsromb v. Dunscomb, 1 Johns. Ch. Rep. 508; Manning v. Manning, ibid. 527; Schieffelin v. Stewart, ibid. 620; Robinson v. Cuming, 2 Atk. 410; Gould v. Tancred, ibid. 534; Treves v. Townsend, 1 Bro. C. C. 384; Hart v. Ten Eyck, 2 Johns. Ch. Rep. 117; Barrow v. Rhinelander, 1 Johns. Ch. Rep. 550; oster v. Foster, 2 Bro. C. C. 616; Raphael v. Boehm, 11 Ves. 92; Dornford v Dornford i, 12 Ves. 127; Stacpoole v. Stacpoole, 4 Dow's P. C. 209; Pocock v. Reddington, 5 Ves. 794. [See also Jennison v. Hapgood, 10 Pick. 104 , Diffenderfer v. Winder, 3 Gill & Johns. 311.]
Hubbard, contra, cited Connecticut v. Jackson, 1 Johns. Ch. Rep. 17; Waring v Cunliffe, 1 Ves. jun. 99; Parrot v. Treby, Prec. Ch. 254; Perkins v. Baynton, 1 Bro. C. C. 375; Newton v. Bennet, ibid. 359; Treves v. Townsend, ibid. 384 Forbes v. Boss, 2 Bro. C. C. 430; Littlehales v. Gascoyne, 2 Bro. C. C. 73 Chatham v. Audley, 4 Ves. 72. —Reporter.