Court Opinion

ID: 8192171
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:15:16.28198+00
Date Added: 2024-06-11T16:40:23.261169
License: Public Domain

MARSHALL, J.
As we understand the findings of the trial court, it was held that, irrespective of whether the character of the securities in which the trust funds were invested was. *142good, in that payment of principal and interest was amply secured, they were not of the class contemplated by the deceased by the language used in his will, — “I direct my executors and trustees to convert, as early as practicable, all my property and estate into first class interest-bearing real-estate mortgage securities and keep the same so invested.” That is, the idea which the creator of the trust intended to, and did, express was that the investment should be made in real-estate mortgage securities, the mortgages in the entirety to be owned by the administrators of the trust for the beneficiaries.
It must be conceded, and is, as we understand it, that if the proper construction of the language of the trust does not include power to place trust funds in bonds secured, with a large issue of such evidences of indebtedness, by a trust deed, nor in a mere evidence of right by one to participate with others in an indebtedness secured by a real-estate mortgage, then the investments in question were wholly unwarranted.
We have reached the conclusion that the circuit court correctly construed the language of the trust. The creator of it meant more, by the words “first class interest-bearing real-estate mortgage securities” than that the securities should be good and of real estate character, in the broad sense of the term. He meant to confine the investments to the narrow class characterized by sole ownership of the entire mortgage indebtedness, so the securities might be enforced by the trustees, if necessary, without regard to any other party interest therein. “First class” was not thought by the creator, would permit his estate to be complicated with rights of any number of persons who might be interested, as creditors, in the mortgaged property. He intended to require mortgages, running to the trustees, or held by them for the sole benefit of the trust fund. Evidently, in his judgment, a mere participating certificate, entitling the trustees, as such, to share with many persons, in a mortgage indebtedness,, or a bond entitling them to share with a-large number of bondholders, located in *143many places throughout the country, and, perhaps, in foreign countries, with many possible efficient difficulties to contend with, in case of necessity to enforce the security, would not answer to the call for first class mortgage securities to be the repository of the t^ust fund.
As suggested by counsel for respondent, how could trustees of a small trust fund protect the interests of their beneficiaries in case of a foreclosure of a mortgage given to secure $250,000 of indebtedness of which such trustees owned but about four per cent, of it ? It would be, practically, an impossibility. That, óf itself, would stamp such an investment as far from being “first class” from the viewpoint of such trustees. Again, how could trustees, holding a mere participating certificate, as in this case, protect their beneficiaries, in ease of foreclosure of the security, without being required to contend with many difficulties which would preclude regarding the investment as first class for such a trust fund as the one in question?
There does not seem to be any need for prolonging the discussion. It seems very clear that the trial court properly construed the language of the trust. The case turns on what the creator of the trust intended and expressed. No principle of law is involved other than that a trust must be executed according to the plan of its creator, and that the language of the trust, if not perfectly plain, must be so construed, if practicable, as to carry out the creator’s intent as evidenced by all the circumstances characterizing the trust. Authorities are unnecessary, for such principles are elementary.
Counsel for appellant cofttend that the judgment, affording respondents the benefit of the securities, so far as money can be realized therefrom, to restore the trust funds, is inconsistent with the judgment against the guilty trustee for the money improperly diverted, — that appellant cannot have the securities in question and have a judgment for á recovery of the *144money invested therein, as well. Tbe difficulty with that is that the judgment does not proceed upon the theory that the title to the securities is in the trustees, or that they are to have them; but rather upon the ground that the securities have been rejected, subject to an equitable lien thereon in favor of the trust fund. We do not perceive any difficulty in that.
This is not a case of following the trust fund into the property in which it has been improperly invested, and claiming such property, and, at the same time, claiming to recover the fund upon personal liability therefor, as in Rowley v. Towsley, 53 Mich. 329, 19 N. W. 20, and many other judicial and text-book authorities, cited to our attention. The trustees do not claim the securities. They claim that, in equity, they are entitled to hold them as property of the wrongdoer, charged with a lien to make good, so far as practicable, the damage caused by the wrong. There can be no doubt but what the cestui que trust, in such circumstances as exist here, may retain the property and thereby ratify the wrong, or reject it and claim damages for the wrongful investment therein, or claim such damages and charge such property, as belonging to the wrongdoer, with a lien for the damages suffered. We observe nothing to the contrary of this in anything cited to our attention, or anything we can discover. If an authority were found to the contrary, we should be inclined to reject it as wrong on principle.
In reference to the matter under discussion, the rule is thus stated in 2 Story, Eq. Jur. (13th ed.) sec. 1262: “The cestui que trust has an option to insist upon taking the property, or he may disclaim any title thereto *and proceed upon any other remedies to which he is entitled either in rem or in personam. But he cannot insist upon opposite and repugnant rights.”
So the test here is, Is the judgment for a recovery of damages for the diversion of the trust fund repugnant to the lien thereon as the property of the Trust Company to secure, so far as it will, the company’s liability? It clearly does not *145seem so. In Ferris v. Van Vechten, 73 N. Y. 113, cited to our attention by counsel for respondent, it was distinctly held that, in the circumstances of this case, the property in which the trust funds was improperly invested may be sold as the property of the wrongdoer and the trustees held liable for the deficiency. To the same effect are Mann v. Benedict, 47 App. Div. 173, 62 N. Y. Supp. 259; Holmes v. Gilman, 138 N. Y. 369, 34 N. E. 205; 39 Cyc. 552.
In the last citation it is stated as a general rule that the cestui que trust may elect to claim the property, or claim an equity therein, for a restoration of the diverted fund.
It will be seen that, in repairing a wrong of the sort under discussion, the sole test of whether there has been an efficient election between two or more remedies, is whether a repug-nancy exists between one resorted to and another attempted to be used. ' There is no repugnancy between different remedies, all of which are grounded upon the theory that the title to the property involved is in the defendant. One may easily go astray by failing to appreciate such’ test and the distinction between claiming the property, and the fund improperly vested therein, and claiming restoration of the fund as damages for the wrong and the right to security therefor upon the property, disclaiming title thereto, as owner. In the latter circumstances, the law affords all the remedies within the competency of the court to entertain which may be necessary to repair the wrong. There may be several actions and several forms of relief, but there can be but one satisfaction. Russell v. McCall, 141 N. Y. 437, 36 N. E. 498. The real subj ect of litigation here is the damage. The recovery sought was not the money incorporated into the securities, but the damage for breach of trust. Germane thereto was the claim to a lien upon the property improperly taken by the Trust Company, to secure compensation for such damage.
By misconceiving the attitude of respondent as claiming or dealing with the securities as owner, and seeking to recover the fund improperly invested therein, repugnancy between *146the remedial rights asserted here would be quite apparent,, and authorities, without number, could be cited to condemn it. Counsel for appellant found no difficulty in that regard, but the authorities relied on are beside the real case with which we have to deal.
It follows from the views expressed that no suggestion of counsel for appellant, other than those we have treated, need be discussed. The judgment is right and must be affirmed.
By the Court. — The judgment is affirmed.
Eschweiler, J., took no part.