Court Opinion

ID: 6819720
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:05:43.798118+00
Date Added: 2024-06-11T16:04:04.524556
License: Public Domain

Gregory, J.,
delivered the opinion of the court.
*498This action was instituted by the First and Merchants National Bank, substituted testamentary trustee of the estate of George T. Partridge, Sr., and Johnetta B. Partridge, in her own right and as the next friend of George T. Partridge, Jr., infant, against the Bank of Waverly to recover the sum of $2,564.73, the amount of the loss to the estate for the alleged failure of the Bank of Waverly, through its negligence, to properly perform its duties as co-executor and co-trustee of the estate of George T. Partridge, Sr.
Defendant filed a plea alleging that the parties plaintiff had, in consideration of the payment of one-half the losses to the estate, released the Union Trust and Mortgage Company, the other acting co-executor and co-trustee, and that the release and discharge of said co-executor and co-trustee operated as a release and discharge of defendant. The trial court, to which the issues were submitted without a jury, sustained the plea and dismissed the action. From that judgment this writ of error was allowed.
The facts material to the questions presented may be stated thus: On October 8, 1926, the Bank of Waverly and the Union Trust and Mortgage Company, in the Circuit Court of Sussex county, qualified as executors and trustees of the estate of George T. Partridge. Some time thereafter the Union Trust and Mortgage Company, as trustee and with trust funds, purchased from itself certain notes secured by deeds of trust on real estate. The notes were not paid at maturity and were not reduced to judgment within five years from their due dates. On October 23, 1928, the Union Trust and Mortgage Company was declared insolvent, and Bernard C. Syme was appointed receiver. The First National Bank and Trust Company of Petersburg was appointed administrator d. b. n. c. t. a., and trustee of the Partridge estate in the place and stead of the Union Trust and Mortgage Company. The First National Bank and Trust Company of Petersburg was not permitted to reopen after the national banking holiday, and the Comptroller *499of the Currency appointed W. Hal Payne as a conservator of this bank.
The results of these transactions were that in 1933, the Bank of Waverly and W. Hal Payne, conservator of the National Bank and Trust Company of Petersburg, were acting in their fiduciary capacities on the Partridge estate; and Bernard C. Syme, as receiver of the Union Trust and Mortgage Company, was administering its affairs under the direction of the Hustings Court of the city of Petersburg in a suit instituted by the State Corporation Commission against Union Trust and Mortgage Company. The parties interested in the Partridge estate ascertained that they had suffered a substantial loss by the failure of the Union Trust and Mortgage Company, one of the executors, to faithfully perform and discharge duties owing to them. On October 17, 1933, they and others interested filed a petition in the suit pending in the Hustings Court of the city of Peters-burg against the Union Trust and Mortgage Company.
This petition contains seven printed pages alleging in detail transactions whereby the Union Trust and Mortgage Company had used funds of the Partridge estate to purchase from itself numerous notes owned by it. One of the averments of that petition is as follows:
“Your petitioners aver that the said Union Trust & Mortgage Company transferred the hereinbefore described notes or bonds from itself to the Estate of the said G. T. Partridge, deceased, when the said Union Trust & Mortgage Company was co-executor and co-trustee of the said estate, without the knowledge or consent of your petitioners, or any of them; that no proper appraisement has been made of the real estate upon which the said notes or bonds were supposed to be a first lien; that the said notes or bonds were not a proper investment for trust funds as provided by law; that your petitioners are informed, believe, and therefore, aver that the said transfer of the trust funds from the Estate of the said G. T. Partridge, deceased, did not serve to give the Union Trust & Mortgage Company title to the said funds; that the said Union Trust & Mortgage Com*500pany held the same as co-executor and co-trustee of the said estate for the benefit of the legatees and devisees under the said will of the said G. T. Partridge, deceased, and that the said funds came into the hands of the receiver of the Union Trust & Mortgage Company impressed with this trust, and that he (the receiver) now holds the said funds as trustee for the benefit of your petitioners.”
To this petition Bernard C. Syme, as receiver, filed an answer denying any liability to the Partridge estate for any loss the estate may have sustained.
The issues raised by the petition, and answer filed by the receiver, were settled by the receiver agreeing to pay to the Partridge estate one-half the total loss, which settlement was approved by the court, as appears from the following excerpt from the decree:
“And it further appearing to the court on the statement of counsel at the bar of the court that the parties hereto, subject to the approval of the court, have agreed upon a settlement of the matters in controversy in this suit on the basis of the payment to the administrator and executor as aforesaid of the estate of G. T. Partridge, by the receiver of the Union Trust & Mortgage Company of one-half of any loss suffered by the estate of G. T. Partridge, as and when such loss shall be determined, by reason of its ownership of the said notes, and the court being of the opinion that said compromise settlement is fair, just and equitable, it is accordingly adjudged, ordered and decreed that said settlement be, and the same is, hereby confirmed, but without passing on any of the questions of law involved in this suit, and the receiver of the Union Trust & Mortgage Company is hereby decreed to be indebted to the said administrator and executor of the estate of G. T. Partridge, as and when the same shall have been ascertained, in a sum equal to fifty per cent of all loss sustained by the estate of G. T. Partridge, by reason of its ownership of the aforesaid notes. & * *
“And it is further adjudged, ordered and decreed that the claihi of the administrator and executor as aforesaid *501of the estate of G. T. Partridge against the receiver of the Union Trust & Mortgage Company, by virtue of this decree, be, and the same is, hereby made a preferred claim against all of the assets in the hands of the said receiver of the Union Trust & Mortgage Company.”
The defendant contends that the release of the Union Trust and Mortgage Company, its former co-executor and co-trustee, under the circumstances stated, operated as a legal exoneration of it from all liability for the losses to the beneficiaries.
This contention is made on the theory that a release of one joint tort-feasor operates as a release of all others jointly liable for the same injury. This principle was applied by this court in two recent cases. McLaughlin v. Siegel, 166 Va. 374, 185 S. E. 873, and Bland v. Warwickshire Corporation, 160 Va. 131, 168 S. E. 443.
In Restatement of The Law, Trusts, section 258, the rule as to the liability of trustees is stated thus:
“a. Trustees jointly and severally liable. Where several trustees are liable for a breach of trust committed by them jointly or for a breach of trust committed by one of them for which the others are liable under the rule stated in section 224, they are jointly and severally liable to the beneficiary for the breach of trust.”
At section 224 of the same work it is held that a trustee is liable to the beneficiary for a breach of trust committed by his co-trustee if he “(a) participates in a breach of trust committed by his co-trustee; or (b) improperly delegates the administration of the trust to his co-trustee; or (c) approves or acquiesces in or conceals a breach of trust committed by his co-trustee; or (d) by his failure to exercise reasonable care in the administration of the trust has enabled his co-trustee to commit a breach of trust; or (e) neglects to take proper steps to compel his co-trustee to redress a breach of trust.”
In the present case the Bank of Waverly and the Union Trust and Mortgage Company were jointly and *502severally liable to the beneficiaries of the Partridge estate for the loss occasioned by their negligence.
Regardless of the contrary views expressed by the courts of other States (Young v. Anderson, 33 Idaho 522, 196 P. 193, 50 A. L. R. 1057), in Virginia we are definitely committed to the view that the release of one joint tortfeasor releases the others jointly liable for the same wrong or injury. Burks’ Pleading and Practice (3d. Ed.), pages 5 and 6; Ruble v. Turner, 2 Hen. & M. (12 Va.) 38; Wilkes v. Jackson, 2 Hen. & M. (12 Va.) 355; Wells v. Jackson, 3 Munf. (17 Va.) 458; Brown’s Adm’r v. Johnson, 13 Gratt. (54 Va.) 644; Petticolas v. City of Richmond, 95 Va. 456, 28 S. E. 566, 64 Am. St. Rep. 811; Bland v. Warwickshire Corporation, supra; and McLaughlin v. Siegel, supra.
Mr. Justice Hudgins, speaking for the court in McLaughlin v. Siegel, supra, said (166 Va. 377, 378, 185 S. E. page 874) : “It is not the relationship of the several wrongdoers among themselves, which is the foundation for the rule that a release of one wrongdoer releases all others from liability for the same wrong, it is the fact that the injured party is entitled to but one satisfaction for the same cause of action. It is well settled in this jurisdiction that a release of one jointly liable for a wrong will operate as a release of all other wrongdoers liable for the same injury. This is true even if the release itself contains a statement reserving the right of action against other wrongdoers. Bland v. Warwickshire Corporation, 160 Va. 131, 135, 168 S. E. 443, 444.”
The justice continues with a reference to Fitzgerald v. Campbell, 131 Va. 486, 109 S. E. 308, 27 A. L. R. 799. “In a note to this case in 27 A. L. R. 806, this is said: ‘The general theory expressed in the foregoing cases finds support in a practically uniform line of authorities holding that the acceptance of satisfaction of a judgment against one of two or more joint tort-feasors is a bar to any further proceedings against the other tort-feasors, except for costs.’ See Berkley v. Wilson, 87 Md. 219, 39 A. 502; Adams v. Southern Pacific Co., 204 Cal. 63, 266 P. 541, 57 A. L. R. 1066; and note, 65 A. L. R. 1091. The question of costs was *503not raised in the lower court nor alluded to in the argument before this court.
“ ‘His acceptance of satisfaction of the judgment recovered has the same effect as a release. It extinguishes his cause of action against other tort-feasors liable for the same injury and bars action against them. * * * This is true, though the wrongdoers are severally, rather than jointly, liable for the injury. Cleveland v. Bangor, 87 Me. 259, 264, 265, 32 A. 892, 47 Am. St. Rep. 326.' Wells v. Gould et al., 131 Me. 192, 160 A. 30, 31.”
That the present action is one of tort can not be questioned. The notice of motion filed in the case is grounded upon the negligence of the defendant. There was but one single cause of action and it grew out of the wrongful conduct of the co-trustees. While the co-trustees are jointly and severally liable in tort for the injury caused by their negligence or misconduct, the satisfaction of the cause of action made by one for the mischief wrought discharges the other. It is similar in its operation to an accord and satisfaction. This is true, even though the parties did not intend to discharge the other joint wrongdoer. Bland v. Warwickshire Corporation, supra.
The plea in this case sets up a complete satisfaction of the single wrong charged to have been committed. The evidence clearly sustains the averments of the plea. When the general rule is applied, the plaintiff has no case, and that is what the trial court held.
The rule of law, so well established in Virginia by the cases referred to, is subject to no known exceptions. The fact that the wrong grows out of the misconduct of co-trustees constitutes no exception to the rule of which we are aware. These fiduciary wrongdoers are just as much joint wrongdoers as any other joint tort-feasors. There is just one cause of action against them. When one of them satisfied that single cause of action the other was released. There can be no bar until there has been satisfaction for the wrong done (Code, section 6264) but when once the wrong has *504been satisfied by one, that constitutes a complete bar to any action that may be instituted against the other.
This same rule was formerly applied to the liability of joint obligors. A release of one operated to release all, but by statute the rule was changed in Virginia (Code, section 5763). The very fact that the General Assembly in its wisdom changed the general rule respecting joint obligors and left unimpaired the rule respecting joint wrongdoers is very persuasive that it is satisfied with and approves the rule of law applicable to the latter class.
Our conclusion is that the decree against the receivers of the Union Trust and Mortgage Company entered by the Hustings Court of Petersburg for one-half of the losses sustained as a result of the wrongful conduct of the co-trustees and the acceptance and satisfaction thereof by the beneficiaries of the Partridge estate operates as a bar to the present action against the Bank of Waverly for the other one-half of the losses. The release of the Union Trust and Mortgage Company, one of the co-trustees, from the cause of action for the wrongful conduct of the co-trustees, released the Bank of Waverly, the other co-trustee.
The judgment is affirmed.

Affirmed.