Court Opinion

ID: 6272577
Source: CourtListenerOpinion
Date Created: 2022-02-18 15:50:01.71782+00
Date Added: 2024-06-11T08:59:57.346973
License: Public Domain

Opinion by
W. D. Porter, J.,
The appellant, as guardian of John Joseph Clark, a minor, filed an account of his trust in which he claimed credit for the sum of *433$12.00 paid by him to the City Trust, Safe Deposit and Surety Company for becoming his surety upon the bond which he was by law required, as such guardian, to give. The orphans’ court sustained an exception to said item and the credit was disallowed, which order of the court the guardian now assigns for error.
The only question passed upon by the court below and argued here was the constitutionality of the Act of Assembly of June 24, 1895, P. L. 248, as applied to bonds executed after the approval of the act, and sums paid to sureties on such bonds and allowed by the court in which the trustee is required to account. All other questions growing out of the facts in this particular case are to be taken as expressly waived. The court below held the act to be unconstitutional, and, in order to determine the soundness of that conclusion, we must consider the purpose, scope and effect of the legislation in connection with the conditions to which it applied. The legislation enacted “That any receiver, assignee, guardian, committee, trustee, executor or administrator, required by law or the order of any court to give a bond as such, may include as a part of the lawful expense of executing his trust, such reasonable sum paid a company, authorized under the laws of this state so to do, for becoming his surety on such bond as may be allowed by the court in which he is required to account, not exceeding, however, one per centum per annum of the amount of such bond.” This act applies only to cases where the guardian or other trustee is by law required to give a bond with surety to be approved by some court, to which the principal must account for the faithful execution of the trust. Originally only individuals were under the law competent to act as sureties in such proceedings, but the legislation of recent years has rendered certain corporations, commonly called surety or trust companies, eligible to serve in that capacity. The form of the obligation, the nature and extent of the liability assumed by and the manner of its enforcement against the surety have remained unchanged. The qualifications and responsibilities of individual sureties have been in nowise varied and the corporations have simply been admitted to the class of competent sureti.es. Prior to the legislation in question, individual and corporate sureties stood, in all respects, upon an equal footing. The bond and the sufficiency of the sureties were, and still are, subject to the scrutiny and approval *434of the court. The sureties, whether individuals or corporations, might, and still may, lawfully make a contract with their principal and receive from him a reasonable compensation for the responsibility incurred by the obligation. But it was decided, in Eby’s Appeal, 164 Pa. 249, that the trustee could not charge the estate for services rendered or time and money expended in procuring the bond which, as trustee, he was required to give. It was no doubt to escape the consequences of this decision that legislative aid was sought and the act now under consideration was the result.
The bonds to which the legislation relates are important incidents in the collection, administration and distribution of estates; they are given to enable the principal obligor to hold a position of trust and to secure the proper performance of the duties which pertain to it. The act only takes effect when the law positively requires that a bond with surety be given, or the court legally exercises the power to require such a bond, and when the trustee is required to account to the court. In other words, it only applies to bonds legally required in a judicial proceeding. It is not necessary in this case to consider whether of not the legislature has the power to require that any function by law made necessary in any judicial proceeding shall be discharged by a private corporation, to the exclusion of citizens of the commonwealth. The act of June 24,1895, did not attempt to exclude individual citizens from becoming sureties in such proceedings, it left them equally qualified with corporations. The form of the obligation, the liability thereunder and the mode of enforcement, as to the individual citizen and the corporation, remain the same. The sufficiency of the surety is still subject to the approval of the court. So far as the security of estates was concerned, there was absolutely no change wrought by this legislation.
The only effect of the legislation was to establish a distinction between individuals duly qualified under the law to become sureties and corporations so qualified. It made no pretentions to the protection of public interests or the preservation of estates. The act simply provided that the trustee might include, as a part of the lawful expenses of executing his trust, a reasonable sum paid to a corporation for becoming his surety, while, if he paid a like amount to a duly qualified individual for per*435forming the same service and incurring the same responsibility, he could not include it as a part of the lawful expenses of the execution of his trust. In short, this legislation left individual and corporate sureties upon an equal footing as to the qualifications required and liability incurred; but it provided that if the corporation received payment for becoming surety the amount should be taken out of the trust estate, as a part of the legal expenses of its administration, while if an individual, equally qualified to become such surety, lawfully received payment for so doing, no part of the amount so paid by the trustee could be taken out of the trust estate. In other words, money paid to a corporate surety is a part of the lawful expense of executing a trust, and may be taken out of the estate, while money paid to an individual surety is not such lawful expense and must come out of the pocket of the trustee. This act discriminates between trustees who have performed the same service and complied with all the requirements of the law, in that it allows to those who have a corporation for surety the amount paid the surety, in addition to their compensation for services as trustees, while it denies such additional allowance to those whose sureties are private citizens; it discriminates, without reason, as between estates which have been administered in strict accordance with law, in that it subjects some to a charge from'which others are exempt; and, finally, it makes a discrimination between equally qualified sureties, making the compensation of a corporation a charge upon the estate and denying that advantage to the compensation of an individual surety. This is not such a regulation of a business, under the police power of the state, as was sustained in Commonwealth v. Vrooman, 164 Pa. 306. It is not a prohibition of an injurious business, nor an attempt to regulate a lawful one. It is an undisguised attempt to give the corporation an advantage over the private citizen in an undertaking hr which each is equally qualified under the law to engage, and that the business is closely connected with the administration of justice does not detract from the objectionable character of the statute. Had the act allowed the reasonable charges of all duly qualified sureties, as a part of the legal expenses of execution of the trust, to be taken out of the trust estate, there could have been no doubt of its validity: Sayre Borough v. Phillips, 148 Pa. 482. This act makes a dis*436crimination between equally qualified parties, giving to one a privilege and advantage, in the judicial administration of trust estates, which is denied to the other. It is a discrimination made between those who are equal under the law. This is not protection to the public, but rank injustice to individuals. It is an arbitrary gift to one and an arbitrary denial to another, which cannot be upheld, for it offends against that clause of article 3, section 7, of the constitution of Pennsylvania, which forbids the general assembly to pass any local or special law, “ Granting to any corporation, association or individual any special or exclusive privilege or immunity: ” Scowden’s Appeal, 96 Pa. 422; Ayars’s Appeal, 122 Pa. 266; Wyoming Street, 137 Pa. 494; Commonwealth v. Zacharias, 3 Pa. Superior Ct. 264; 181 Pa. 127. The suggestion that this legislation may be sustained, upon the ground that the liability assumed by the modern surety company is different from that of an individual surety, has no foundation in fact; there is in Pennsylvania no difference in the liability of the two groups of qualified sureties. The bond is not a mere ordinary business transaction of the parties, the necessity for its execution grows out of the requirements of the law, which, having assumed control of an estate, proceeds to administer it through the courts. An administrator or other officer, charged with the execution of the trust, is required to give bond with surety, the qualifications of the surety are fixed by law or order of the court, and the surety, whether an individual or a corporation, must possess the qualifications required, and assume the responsibilities imposed by law. Such sureties are entitled to equal privileges and immunities. The conclusion of the learned court below seems unassailable.
Judgment affirmed.