Case Name: Hower's Appeal. [Menges's Estate.]
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1888-10-01
Citations: 1 Monag. 24
Docket Number: Appeal, No. 346
Parties: Hower’s Appeal. [Menges’s Estate.]
Judges: 
Reporter: Cases in the Supreme Court of Pennsylvania; being those cases not designated to be reported
Volume: 1
Pages: 24–30

Head Matter:
Hower’s Appeal. [Menges’s Estate.]
An assignment in trust for creditors was executed in 1884. The property consisted of three lots of land. The assignor soon after sold one of the-lots, and the assignee executed a deed therefor, receiving the purchase money April 1,1884, and mingling it with his own funds in bank. , The assignee advertised another lot for sale, but refrained from selling it at the request of the assignor, who agreed to raise money to pay off the debts, and thus avoid a sale of the remaining lote, agreeing that the assignee should not be prejudiced thereby. The assignor remained in possession of the property, and, by the spring of 1886, had paid all the-debts. The first lien, of some $300, was disputed. The assignee filed his account February 28,1887, claiming commissions on the appraised value of the three lots, at the rate of three per cent. An auditor, on exceptions by the assignor, surcharged the accountant with commissions on the proceeds of the lots not sold, allowing $25 as extra compensation, in addition to commissions on the proceeds of' the lot sold, and further surcharged him with interest, from the time the money was received until the account was filed, on $1,400, less the amount which might, have been necessary to satisfy the contested lien and the costs of settling the estate. On exceptions to the auditor’s report, the court reduced the surcharge of interest,, computing it from the first term of court to which the account could have been confirmed after the debts were paid by the assignor, and also placed one-half of the costs of audit upon the accountant. On appeal by accountant, assigning for error the surcharges as to interest and commissions and the imposition of costs, the assignments as to commissions and costs involving other alleged errors, the decree was affirmed.
May 23, 1888.
Appeal, No. 346, Jan. T. 1888, to review decree of C. F. Northumberland Co., dismissing exceptions to report of auditor distributing balance in hands of assignee for benefit of creditors, at May T. 1884, No. 95. Trunkey, J., absent.
The auditor, George Hill, Esq., reported the facts substantially as follows:
On Feb. 14, 1884, Menges assigned his property, consisting of three lots of land, to A. W. Hower, Esq., for the benefit of creditors. The lands were appraised at $8,800. The debts, so far as known, aggregated some $8,000. The assignor negotiated a sale of lot No. 2 for $1,400, and authorized the assignee to make a deed, which was subsequently done, the assignee receiving $175, hand money, and the balance, $1,125, when the deed was delivered, April 1, 1874. The first sum was placed in his vault, the latter sum deposited in. bank to his own credit.
The assignor advertised tract No. 1, appraised at $7,000, for sale on April 21, 1884. It was not sold, however, for the reason that, prior to the date fixed, the assignor and his father represented to the assignee that he, the assignor, could raise the money to pay off all the liens. On this account, the sale was deferred, and was never afterward necessary, as the assignor succeeded, by his own exertions, in paying all his creditors. The assignor remained in possession of lots Nos. 1 and 3, farming them, some of the debts-being paid out of the profits of the lands. The debts were all paid by the middle of May, 1886.
Prior to the assignment, Hower had a claim of $50 against Menges for professional services. At the time of the assignment, the assignor handed the assignee a note of one Treon for $26 for collection. The note was collectéd Feb. 14, 1884, and the money retained.
On Feb. 28, 1887, the assignee filed an account, charging himself with $8,800, the amount of the appraisement, and claiming credit for compensation at three per cent, on that sum, $264, and also claiming credit for $7,400 for real estate not sold and to be reconveyed, and expenses for advertising, filing account, etc., $45.50. The balance shown as due the estate was $1,094.25.
The assignor filed exceptions alleging that the accountant should have charged himself, 1st, with interest on $1,400 in his hands; 2d, with $26 collected from Treon; and, 3d, that he was not entitled to credit for commissions on the appraised value of the real estate unsold.
Before the auditor, the -accountant claimed that he was not chargeable with interest on the- $1,400, because the assignor had entered into an agreement with him, upon the consideration of his —the assignee’s — postponing the sale so as to allow the assignor time to raise the money to pay off the debts and obviate the necessity of a sale of his property, that he, the assignee, should not be prejudiced as assignee by such postponement. The assignee further testified: “Mr. Menges came to me and asked me to pay this money on the judgments. He was there twice. I told Menges in reply that the first lien against his property was held by John Haas, of Sunbury, amounting to over $300, about which there was some dispute, and that I could not run the risk of paying until that was decided, and that he had failed to furnish me the receipts for money he had paid out on the indebtedness. The reason I did not pay sub sequent liens out of this money was because no one demanded it but Menges, and, under the agreement I had with him and the knowledge of indebtedness, I did not consider he was entitled to have any part of that money, and preferred filing my account and have the balance distributed according to law.”
The auditor found that the assignee had been derelict in holding the funds so long uninvested, and accordingly surcharged him with interest from April 1, 1884, to Eeb. 28,1887, the date of filing the account, on $1,400, less $388.95, costs of settling estate and amount which might have been necessary to satisfy Haas’s judgment. It was claimed before the auditor that the retention of the funds amounted to misconduct sufficient to work a forfeiture of commissions. But the auditor held that, as the contest was between ■the assignor and the assignee, and no creditors were interested, the strict rule as to commissions might not apply. And, as the failure to execute the trust was at the request and in the interest of the assignor, and as the assignee had given personal labor and expense in this matter, the auditor allowed commissions of three per cent, upon $1,400, or $42; and $25 additional for services in advertising sale, etc. The auditor also charged the assignee with $26, the Treon collection; and credited him with $50 for professional services, prior to assignment.
Exceptions were filed by the accountant, alleging, inter alia, that the auditor erred in surcharging him, 9, with interest, as above; 10, with the $26 received from Treon; 11, with commissions, as above; and, 12, in allowing $1,367.38 to be returned to Menges; the balance due Menges being the balance of the account $1,094.25, less the costs of the audit, and $2.25, for recording the deed of assignment, and the $24 due A. D. Hower as counsel fees prior to the assignment, or the balance due Menges is $943.75.
The court disposed of the exceptions, in an opinion by Rockefeller, P. J., who, after reviewing the facts, proceeded:
“ The assigned property was in the hands of the accountant and was a trust fund or assets for the creditors. The assignee and his bail were liable for the due execution of the trust. Although the jiroperty was appraised at a sum more than sufficient to pay the debts, so far as known to the accountant, yet he could not be certain that it would bring at a sale sufficient to pay all in full. Sometime before the day fixed for the sale of the other tract, the assignor called upon the accountant and induced him not to proceed, assuring him that he, the assignor, would raise the money to pay off all his debts within a stated time. Upon this request of the assignor, who is the only party interested in this controversy, the accountant did not proceed to sell, and left matters in that condition for a period of more than two years, when, late in the spring of 1886, the debts were satisfied.
“ Now, during all that time, the accountant could not invest the money, because he was liable to be called upon at any moment that the assignor satisfied all the creditors who were interested in the assigned property. It is true the assignor, on one or two occasions, called on the accountant and asked him to apply the money in his hands to the payment of some of the debts ; but, in my opinion, he could not very well have done this until it was ascertained that such debts were entitled to be paid in full out of the fund. The sale which realized the $1,400 was not made by order of court and the liens were not discharged, and it could not be known whether the creditors would all be paid in full or not.
“ I have come to the conclusion that, if the accountant did not use the money in his own business, and kept the amount in hand for the purposes of the trust, under the circumstances, he ought not to be compelled to pay interest until the assignor had complied with the agreement which induced him, the accountant, to drop all proceedings under the assignment. The evidence shows that the judgments, entered before and after the assignment, were satisfied about the middle of May, 1886. The judgment of John Haas was not satisfied until the 18th of December, 1886, but it had been paid for some time before, and the accountant knew it. He could have filed an account which would have been confirmed at the September term, 1886. He did not file it until February 28, 1887, and it could not have been confirmed until the May term, 1887. Thus eight months were lost after the accountant should have filed his account, and accounted for the money in his hands, and, not having done so, I think he is hable for interest during that time on the balance in his hands after deducting the amount of his credits.
“ I am of opinion that accountant is only entitled to commissions on the moneys that came into his hands, with such additional sum as will compensate him for his trouble in regard to the land not sold, and the auditor having allowed $25.00 for that, I will not disturb his finding in this respect.
[“The account, restated in accordance with the foregoing opinion, is as follows :
DE.
“Api’il 1, 1884. Amoxxnt received from sale of tract No. 2..........$1,400.00
To interest on $1,239.20 for eight months . . 49.56
To amount collected from Dr. Treon . . . 26.00
■--$1,475.56
CE.
By expenses as claimed in account .... $41.55
Cost of recording deed of assignment . . . 2.25
Amount due A. D. Hower, counsel fee . . 50.00
Compensation of accountant as follows :
Three per cent, on $1,400 .....$42.00
For general services....... 25.00 67.00 160.80
Balance in hands of assignee...... $1,314.76
“ The auditor’s fees and other expenses reported by the auditor, not being excepted to, amount to the sum of $114.25. As neither party has been entirely successful in his contention, under all the circumstances of the case, I have concluded that the costs ought to-be divided.
Total amount for distribution.........$1,314.76
Deduct one-half of costs to be paid out of the fund in accountant’s hands........... 57.121-
Balance awarded to Benjamin Menges......$1,257.63|-
It is ordered that $57.12j[, being one-half the costs, be paid by the accountant.
“ The report of the auditor, being corrected as above stated, is confirmed.”]
The assignments of error specified the action of the court, 1, in not sustaining the ninth exception, quoting it; 2, in not sustaining the tenth, eleventh and twelfth exceptions, quoting them; and, 3, in restating the account, and decreeing as enclosed in brackets above, quoting it.
L. H. Kase, for the appellant.
The account was filed about two and a half months after the last judgment was satisfied. This was not an unreasonable time, and should not subject him to interest, particularly in view of the delay by the assignor in paying the debts. Besides, as the debts were all paid, the fund could not be considered as a trust fund. The assignee could not have invested, as he was bound to have the funds ready as soon as the assignor had complied with his part of the agreement.
The assignee was entitled to commissions on the amount of thé inventory, as he had gone through with the greater part of the work, and it could soon have been completed. His responsibility and liability, and that of his bail, continued. The agreement could mean nothing else than that the assignee was to have the full compensation, as if he had proceeded.
As there was no neglect on the part of the assignee, none of the costs should have been imposed upon him.
The findings of the auditor are unsupported by .evidence, and will, in such cases, be reversed by this court. Speakman’s Ap., 71 Pa. 25; Riddle’s Est., 19 Pa. 431; Hindman’s Est., 85 Pa. 467; Chew’s Ap., 45 Pa. 228; Cake’s Ap., 110 Pa. 65; Jacob’s Ap., 107 Pa. 137; Miller’s Ap., 102 Pa. 544.
Wm. H. Hackenberg, with him P. L. Hackenberg, for appellee.
If an assignee has trust funds which he cannot apply, he should endeavor to invest them; and, failing to do so, he is chargeable with interest. Lane’s Ap., 24 Pa. 487; Light’s Ap., 24 Pa. 181; Landis v. Scott, 32 Pa. 495; Bruner’s Ap., 57 Pa. 46.
The question of interest does not depend upon the length of time, but in the fact of use by the assignee.
A trustee cannot recover commission or compensation on property not administered. Bedell’s Ap., 85 Pa. 400; Mayberry’s Ap., 33 Pa. 258
The personal use of trust funds is a breach of trust and precludes the right to receive commissions. Bond’s Ap., 2 Py. 242.
An attempt to appropriate the interest which belongs to cestuis que trust, will'warrant the imposition of costs. Gable’s Ap., 36 Pa. 397.
Oct. 1, 1888.

Opinion:
Williams, J.,
On February 14, 1884, Benj. Menges assigned his property, consisting of three lots of land, to A. D. Hower, Esq., for the benefit of creditors. The lands were appraised at $8,800. Menges negotiated a sale of lot No. 2 at $1,400, and Hower, at his request, made a deed to the purchaser. The purchase money was received by Hower, mingled with his own money, and the larger part of it deposited to his own credit in bank. The remaining lands were not sold but left by Hower in the possession of Menges, at his request, and his debts were settled by him and Samuel Menges, his father, without the agency of the assignee.
In February, 1887, the assignee filed his account, claiming commission on the entire appraised value of the real estate, although lot No. 2 was the only part of it ever converted into money or in any manner disposed of by him.' Exceptions were filed by the assignor, and, on hearing in the court below, the commission was disallowed, except upon sums actually coming into the hands of the assignee; and he was surcharged with interest for part of the time during which the trust funds were held by him. In this, we think the court was clearly right.
That it is the duty of one holding trust funds to keep them employed and make them productive, is too well settled to justify discussion. Landis v. Scott, 32 Pa. 495 ; Light's Appeal, 24 Pa. 181.
It is equally clear that commissions are allowed as a compensation for services rendered in the collection or custody of funds actually received by an accountant. Debts inventoried but not collected are to be rejected in fixing the sum on which compensation is to be computed. Mayberry's Appeal, 33 Pa. 258. The case of the appellant is very clearly within the rule, for, not only were lots Nos. 1 and 3 unadministered by him, but the money to pay the debts was earned by the assignor, or advanced by his father, and the accountant had no agency whatever in gathering or disbursing them.
The appellant seeks to avoid the force of this position by suggesting that he might have sold the property and refrained from so doing at the request of the assignor, and upon the promise that he should not be prejudiced thereby. But it is not to be supposed that a trustee would act otherwise than with a conscionable regard to the interests of both the assignor and his creditors. If these could be best served by refraining from the exercise of his power to convert the assigned estate at once into money, a trustee, in the exercise of his discretion, would stay his hand. It is not to be supposed that, under such circumstances, he would insist on bringing the assigned estate to the hammer for the mere purpose of entitling him to commission.
The delay in this instance enabled the assignor to save a portion of his property, and to relieve the assignee from the duties of the trust by taking them upon himself. This has not prejudiced the assignee. He has been saved from liability, as well as from the trouble of converting the assigned estate into money. For what he did do, he is entitled to compensation, but for what was done by the assignor and his father, without his agency, he is entitled neither to credit in his account nor compensation.
The decree is affirmed and the appeal dismissed. T. H.