Case Name: Graham v. Austin & als.
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1845-07
Citations: 2 Gratt. 273
Docket Number: 
Parties: Graham v. Austin & als.
Judges: (Absent Bbooke, and Baldwin, J.)
Reporter: Virginia Reports
Volume: 43
Pages: 364–366

Head Matter:
Graham v. Austin & als.
July Term, 1845,
Rewisburg-.
(Absent Bbooke, and Baldwin, J.)
1. Trusts — liability of Trustee — Case at Bar. — Property is settled to the separate use of a feme covert for life, with remainder over to her children. Before the trustees in the settlement consent to act, it is agreed between them and the feme, that each of the trustees shall take and hold a moiety of the fund. In pursuance of this agreement one of the trustees collects the fund; and with the knowledge and approbation of the feme, pays over a moiety thereof to- the other trustee, who wastes it, and becomes insolvent. Held. The trustee; who collected the fund is liable for the whole amount thereof; and for the interest on the moiety paid over to his co-trustee.
2. Same — Case at Bar. — The payments made by the trustees to the feme covert, amount to more than the interest upon the trust fund in their hands; and the Court at her suit makes a decree, directing the trustees to pay to a receiver the principal of the trust fund; and directing the receiver to lend out the fund, and pay one moiety of the interest annually, to the feme, for the use of herself and her family; and to pay the other moiety to the solvent trustee, until the advances *made by the trustees beyond the interest of the fund, are returned; if this can be done during the life of the feme. Held. The Court was right in directing the interest to be paid in moieties to the/m«, and the trustee. But it was error to direct the moiety to be paid to the feme, for the use of herself and her children; but it should have been for her separate use.
In 1832, William M. Austin, then residing- in North Carolina, having, become entitled to a portion of the estate of Mrs. Barry of Philadelphia, executed a deed, conveying his portion thereof to Robert N. Massey and Benjamin R. Morgan, of Philadelphia, in trust, after paying certain specified debts to pay to himself 1500 dollars, and to hold the residue of the property and effects therein assigned to them, and invest the same in productive stocks or securities, at their discretion; and to pay over the interest or income thereof, from time to time, to his wife Isabella Austin, for her life, so that she might receive and enjoy the same in all respects as if she were a feme sole, free from the debts or control of her husband; and after her death to apply the said interest or income to the maintenance and education of any children she might leave, during their minority; and any surplus of such income, to the support of the said William Austin, during his life; and after -the death of the said William and Isabella, to divide the principal sum among the. children of the said William Austin, who should survive him. The deed farther provided, that if the trustees, or the survivor of them, should be desirous to relinquish the-trust, they might,- with the assent of the said William and Isabella, or the survivor of them, nominate two persons as successors, and assign to them the trust and all the rights and incidents thereto belonging; which successors might relieve themselves of the trust in the same way.
The trustees accepted the trust; and after the payment of the dehts provided for, and of the 1500 dollars - to William Austin, the trust fund consisted of fourteen *shares of the stock of the Union Canal Company; the par value of which was 100 dollars a share, or 1400 dollars.
In the year 1834, Austin and wife, with their family, removed to the town of Greensville, in Augusta county, Virginia; and being in narrow circumstances, and receiving the dividends upon their trust property in Pennsylvania very irregularly, or not at all, they applied to Robert Steele and Benjamin F. Graham, both of them merchants in Greensville, to undertake the trust, in lieu of Messrs. Massey and Morgan, who were willing to relinquish it. Steele and Graham consented to actas trustees, with the understanding with Austin and wife, that the stock of the Union Canal Company was to be sold, and that each of the trustees were to hold one moiety of the proceeds thereof, until an opportunity offered itself for a profitable investment; and in the mean time they were each to pay to Mrs. Austin interest on the amount in his hands.
In pursuance of this agreement a deed was executed in 1834, by Massey and Morgan,’ and Austin and wife, by which the trust fund was assigned to Steele and Graham, on the same trusts as it was held upon by the first trustees; and in September of the same 3'ear, Graham went to Philadelphia, and sold the fourteen shares of stock, and the dividends then due thereon, amounting to 105 dollars, for 1354 dollars 50 cents. At the time of the sale the stock was below par, and the sale was made at the full market value, and was recommended as judicious by one of the former trustees.
' Upon the return of Graham to Greensville, he with the knowledge and approbation of Mrs. Austin, paid over to Steele one half of the proceeds of the trust fund; and from that time they each held their moiety thereof, and settled for the interest thereon with Mrs. Austin separately, until some time in 1837 or ’38, when Steele became insolvent.
*In 1838, Mrs. Austin instituted this suit against Steele and Graham the trustees, William Austin, and her children, in the Superior Court of Uaw and Chancery for the county of Augusta; and charged that the trustees had improperly sold the stock, and held the proceeds in their own hands; and asked that an account of the trust fund might be taken, and the trustees be compelled to pay the amount into Court, that it might be properly and securely invested.
Graham answered the bill, and alleged that the stock was sold by the authority of the plaintiff; and that by an express understanding with her, the trust fund was divided equally between Steele and himself, and a moiety thereof held by each of them. He denied that he was responsible for that portion of the fund held by Steele; and said he had always been in advance to Mrs. Austin upon the interest of the moiety in his hands. He was willing to settle his accounts, and pay over the balance in his hands as the Court should direct.
Steele had removed from the Commonwealth before the institution of the suit; and the bill was taken for confessed as to him and the cestuis que trust.
The accounts having been referred to a commissioner, he made a report, presenting various statements, which was excepted to by both the plaintiff, and the defendant Graham.
In June 1840, a decree was made by consent, directing the defendant Graham to pay to the plaintiff 100 dollars. And in November an interlocutory decree was made settling the principles of the cause, holding Graham liable for the default of Steele, and recommitting the report to be reformed according to the principles of the decree.
The reformed report charged Steele and Graham jointly, with the amount of the fund received, 13S4 dollars SO cents, and then charged them with interest annually on that sum, and allowed them credit for the *sums they had advanced to her; and brought the account down to July 1840, when the trustees were in advance to Mrs. Austin 142 dollars 434 cents. The trustees were then credited on the trust fund by 100 dollars decreed by consent to be paid Mrs. Austin, leaving them debtor on the 1st of July 1840, to the trust fund 1254 dollars 50 cents, and Mrs. Austin debtor to them for advances, 142 dollars 434 cents. But though this was the state of the account when brought down to July 1840, the account properly stopped on the 29th of September 1839, when the amount due to the trustees for advances to Mrs. Austin was 134 dollars 34 cent.
The cause coming on to be finally heard, it was decreed that Graham and Steele do pay to the clerk of the Court, who was appointed a receiver for that purpose, 1254 dollars 50 cents, with interest on 1354 dollars 50 cents from the 29th of September 1839, till the 1st of July 1840, and on 1254 dollars 50 cents from the 1st of July 1840, till paid. And that the receiver should loan out the said sum of 1254 dollars 50 cents on the usual terms; and should collect the interest thereon annually, and pay over to the plaintiff one moiety thereof, in support of herself and her family, under the provisions of the deed of trust in the proceedings mentioned; and should pay over the other moiety of the interest, as long as it might be necessary, to the defendant Graham, in payment of the sum of 142 dollars 434 cents, with interest thereon from the 29th of September 1840, till paid. And after Graham’s debt shall have been discharged, to apply the moiety of the interest of the said fund to the restoration of the principal to the original sum of 1400 dollars: provided, the same could be done in the lifetime of Mrs. Austin. And after the fund is raised to the sum of 1400 dollars, then to pay the whole of the interest on that amount annually, to the support of the plaintiff and her family.
From this decree Graham obtained an appeal to this Court.
* Johnson and Michie, for the appellant.
Stuart and Baldwin, for the appellees.
Judge Baldwin bad been counsel In the cause in the Court below.

Opinion:
AIvHEN, J.,
delivered the opinion of the Court.
The Court is of opinion, that there was error to the prejudice of the appellant, in decreeing that the appellant should pay interest on the sum of 1354 dollars 50 cents from the 29th September 1839, until the 1st of July 1840. The interest accruing during that period being properly applicable to the reduction of the balance of 134 dollars 34 cent, ascertained to be due said appellant on the 29th September 1839, with the interest accruing on said balance of 134 dollars 34 cent up to the 1st of July 1840. The residue of said sum of 134 dollars 34 cent and interest, after deducting therefrom the interest accruing on 1354 dollars 50 cents from the 29th September 1839, until the 1st of July 1840, constituting the true balance due the appellant on the 1st of July 1840; to be extinguished in the mode designated in the decree; and the decree should have been for the sum of 1254 dollars 50 cents, with interest thereon from the 1st of July 1840, till paid. •
The Court is further of opinion, that there was error to the prejudice of the appellee Isabella Austin, in requiring the interest of a moiety of the fund to be applied to the restoration of the principal to the original sum of 1400 dollars. The Court being of opinion, that there is nothing in the evidence to prove that the sale of the stocks was made at a sacrifice; and a change in the investment being expedient to enable the said Isabella to receive the provision for her support, intended by the deed of settlement. Under the circumstances, no person interested in the fund has a right to insist that the principal shall be increased beyond the sum of 1354 dollars 50 cents, the amount received by the trustee, and a moiety of the interest of the fund, after discharging the amount due the appellant for his advances, should *be applied to the restoration of the fund to the said sum of 1354 dollars 50 cents: provided the same can be done in the lifetime of said Isabella Austin.
The Court is further of opinion, that it was erroneous to direct the payment of interest to said Isabella Austin in support of herself and family, instead of directing the same to be paid to her for her separate use, in the terms of 'the deed of trust, to be applied by her either to the support of her family, or to any other purpose, at her discretion.
The Court is therefore of opinion, that so much of said decree as conflicts with the principles of this opinion is erroneous, and that there is no error in the residue thereof. Therefore, it is adjudged, ordered and decreed that the same, so far as it is herein decided to be erroneous, be reversed, with costs to the appellant; and that the residue thereof be affirmed; and the cause is remanded, to be further proceeded in according to the principles aforesaid.