Court Opinion

ID: 6313163
Source: CourtListenerOpinion
Date Created: 2022-02-18 20:18:17.522654+00
Date Added: 2024-06-11T08:59:08.939118
License: Public Domain

The opinion of the Court was delivered by
Gibson, C. J.
Parents, guardians, executors, receivers, and all who manage the estates of infants, are responsible as trustees, and held to the same diligence; but for participation in the acts of their colleagues, the liability of executors is peculiar. In Sadler v. Hobbs, (2 Bro. Ch. R. 117), Lord Thtjbxow admitted the rule to have been confirmed in Leigh v. Barry, (3 Atk. 584), that an executor, joining with his colleague in the signature of a receipt or conveyance, makes it his own; and he questioned the soundness of Westley v. Clarke, (1 P. Wms. 83), in which Lord Northington had held a different opinion; but the master of the rolls subsequently professed, in Scurfield v. Howes, (3 Bro. Ch. R. 94), to find no fault with it. The distinction between executors and trustees, in this respect, is important; for it might be shown that the instances in which a mere trustee has been charged with the defaults of his colleague are comparatively rare. In the Treatise of Equity, (Fonb., B. 2, Ch. 7, § 5), as well as in the opinion of the Lord Keeper, in Fellowes v. Mitchell, (1 P. Wms. 83), the charging *148of an executor for having signed his colleague s receipt is put on the foot of necessity, and likened to confusion of goods, though it is obvious that the same uncertainty in ascertaining how much had been received by each is produced by the joint receipt of trustees. The true reason seems to be, that it is unnecessary for executors to join; and that where they gratuitously assume the character of joint receivers, they agree to trust each other, and become joint accountants, while no such conclusion is to be drawn from the receipt of trustees who cannot choose but join.
In this instance, the question touches the liability cif trustees for each other’s receipts, without joinder'. The appellant was charged with his colleague’s defaults on the principle (Fonb. 185), that where money gets into the hands of a trustee by any act or agreement of his colleague, both are chargeable with it; and that if they agree that each shall have the management of a particular part of the estate, each shall be chargeable with the whole. There is certainly a dictum to that effect of Lord Thuraow, in Sadler v. Hobbs; but Gill v. The Attorney-General, (Hardr. 314) on which he relied, does not bear him out. That was the case of commissioners severally bound with sureties to perform all the articles and rules of the excise; and they were held not to be answerable for each other. That was the point decided; and it turned on the interpretation of the bond. But it was said in illustration, that, though an executor is chargeable for no more than comes to his hands, yet if executors agree among themselves that “ one be to receive and meddle with such a part of the estate, and another with such a part, each of them will be chargeable With the whole, because the receipts of each are pursuant to the agreement made betwixt both.” This is the only thing even in the shape of a dictum that amounts to a judicial recognition of the principle; and it was not predicated of trustees, but of executors, who have separate power to intermeddle and receive without any agreement whatever. Scurfield v. Howes was also the case of executors who had joined in a receipt; and Westley v. Clarke impugned the doctrine, as we have seen, even as to them. But in Fellowes v. Mitchell, Lord Cowper, speaking of the responsibilities of trustees, said: “ it seems to be substantial injustice to decree a man to answer for money which he did not receive, at the same time that the charge on him by joining in receipts, is but notional.” Other cases are much stronger against the principle, as Mr Fonblanque has asserted it. In The Attorney-General v. Randall, (21 Vin., Trust, N, a, pl. 9), one of three trustees to build an almshouse, called on the executors of the founder for the money; and payment being refused, except on the joint receipt of all, he procured the signature of the others, received the money, and failed at the end of four years. The Lord Chancellor said, “ it could not be expected that all should meet together to receive; but if they had, either one must have had the custody of the whole, or it must have *149been divided into shares. And if they entrust one of themselves for convenience or necessity, when all are solvent, which is no more than making him their banker, shall equity punish where there is no default? And this is the case of Churchill v. Hopson; and to charge trustees in such a case would make the case of trustees very perilous, which are very necessary for the common good and convenience of families. And he said that he saw no reason why trustees may not make one of themselves their cashier when there is no fraud; that this was a reasonable thing at the time, as R. (the receiver), was the only trustee who lived in London where the money was paid: and as to an objection made to letting the money be so long in R.’s hands, he said the case of R. differs from the case of a common banker, where the money may be drawn out at pleasure; but here R. had as good.a right to the keeping it as the others; and all paid out till about one-third; and he was entrusted by the testator as well as the others.” Now the joint receipt was signed, in that case, for the very purpose of enabling R. to get the money; and it consequently “ got iiito his hands by act and agreement” of his colleagues, of a nature as absolute as an order would have been. Every joint receipt is such; and less negative in its essence than a refusal to receive. I have extracted the opinion of the Chancellor entire, not only because it embodies the good sense of all that has been said on the subject, but because every part of it may be applied to some feature of the case before us; and I shall add no more than that Townley v. Chalenor, (Cro. Car. 312); Murrell v. Pitt, (2 Vern. 570); Leigh v. Barry, (3 Atk. 584); Churchill v. Hobson, (1 P. Wms. 241); and Applyn v. Brewer, (Prec. in Chan. 173), powerfully support it. In declining to receive the money, of the estate, the appellant did no more than every trustee does who signs a joint receipt for the purpose of putting it into the hands of his colleague; and in limiting his active agency to that part of the business for which alone he was qualified, he acted with extraordinary zeal and discretion. Who will say that the arrangement did not promise fairer for the wards than any other that could have been adopted? and if it was executed in good faith, why should it be made a ground of charge ? The appellant was peculiarly fitted by experience for the management of real estate, but not conversant with pecuniary transactions; while his colleague, on the other hand, had experience in the business of investment and in accounts, having often been an executor, an administrator, or a trustee. Guardians are 'sometimes chosen for diversity of qualification, so that each may take charge of those parts of the trust for which his pursuits have fitted him. A lawyer might beneficially leave the management of his ward’s furnace or forge to a colleague bred an iron master, while he himself attended to matters more congenial to his profession. Still it must be admitted that a guardian commits a breach of trust when he parts irrevo*150cably, even for a time, with his right of joint control, so as to preclude him from exercising it when necessary; as in Keble v. Thompson, (3 Bro. Ch. R. 111), where the one trustee lent the funds to the other. The appellant, therefore, is not chargeable merely for having declined to meddle with the moneys in the first instance; and the next inquiry is, whether he ought to have interposed before he began to doubt his colleague’s solidity; or whether he ought to have been satisfied with the explanation given when he called on him for information about the state of the property.
The result will depend very much on what is the proper degree of a trustee’s vigilance. In Pybus v. Smith, (1 Ves. Jim. 193); Palmer v. Jones, (1 Vern. 144); Man v. Ballet, (Ibid. 44); and Harnard v. Webster, (Select Ca. in Ch. 53), it is said that he is to be charged only for his own receipts, or for supine negligence, and when the proof of it is strong. Sir William Jones (Law of Bailm. 22) says that no more is required of the holder of another’s property, under a contract beneficial only to the owner, than good faith; that he is answerable for gross negligence only; but that in regard to a commission or mandate by which an affair is committed to another to be managed gratis (and a guardianship is such), good faith- itself requires that he use a degree of diligence adequate to the performance of the work. And this degree, it seems, was required, by the Roman law, to be greater than perhaps he might think proper to bestow on his own affairs,' (Ibid, note 5); not, however, I presume, if he were a man of ordinary prudence. By this I mean that one who undertakes the business of another as an unpaid agent, engages to exercise in it the degree of vigilance that a man of ordinary diligence and skill would exercise in his own. Now, though guardians receive a sort of compensation from the liberality of the court, they are of right entitled to nothing; and they stand with us in the samé degree of responsibility as they do in England, where their services are gratuitous. But a guardian is allowed, at all, only for services, not for risks; and as the law has no higher aim than to place the property of an infant on the same footing of security as the property of an adult, the appellant was bound to deal with the estate of his wards only as it may be supposed they themselves would have done, had they been of age.
But, in addition to the charge of having refused to become a receiver, he is accused of negligence in regard to the receipts and investments of his colleague. His appointment seems to have been procured by the administrator, and probably the family, with a view to his services in managing the real estate, for which he was peculiarly qualified. There is no positive proof of the fact, but it may be inferred from the circumstances, that the appellant was appointed without his knowledge, and that his acceptance was procured by the administrator, himself one of the family, on an express understanding that the business of the guardianship *151should be apportioned. Under the civil law, the family council was a legal institution, whose influence in domestic concerns was decisive; and family arrangements are still so far regarded by courts of equity as to be ground for sustaining agreements between parent and child, or between brothers, which would else fail for want of consideration. I pretend not that a stipulation of the administrator, with the assent of the family, would bind the minor children; but it is not too much to say, that the family approbation of the appellant’s course may legitimately weigh in a question of negligence. But, without aid from that quarter, it seems, from the nature of the case, that, he acted with extreme caution and singular discretion in leaving the management of the moneys to one who was better qualified for it, and whose wealth afforded greater security against loss from insolvency.
Negligence is still further imputed to him, for omitting to call his colleague to account, when fears of his insolvency were actually excited in him. But the ground of these fears was very slight, and less might therefore justify him in dismissing them. Both then and afterwards no one stood higher in public opinion than his colleague, as a man of integrity, business, and wealth; and that the appellant had no stronger reason to suspect him than having sometimes seen him called aside on private affairs by those who may have been duns, argues a very great degree of vigilant observation. By these trifles, however, his suspicions were aroused, and they impelled him to do what a cautious man might be expected to do. He inquired into the disposition made of the money, and was told by his colleague, whose truth had never been doubted, that the whole was invested in bonds, secured by a mortgage on a landed estate, which was pointed out. To require him to have dealt with his colleague as a rogue, by calling for the securities, would require of him the highest and most exact vigilance; a degree of it that would ruin every guardian. No rate of commission would compensate the risk incurred from such a trust, and no man of prudence would accept it. Responsible guardians would not be had, and infants would be injured instead of benefiting by it.
It is urged that the appellant was bound to call his colleague to account as soon as he was so far satisfied of the insecurity of the funds in his hands as to consent himself to become the receiver. These guardians were appointed in 1826; the prosperity of him who has since become insolvent received its death-wound in 1831; the catastrophe was not expected by any one but himself before 1838 — two years before his assignment — insomuch that he borrowed money in 1839, on bond and warrant, which has not been entered up; and he borrowed another sum, on his personal security, in 1841, a short time before his failure. It is true that the appellant consented, in 1838, to receive the residue of the money, at the administrator’s suggestion, for which no reason *152was assigned; and there was consequently little in the suggestion to shake his confidence in his colleague’s stability. It is true, also, that the mother testified to the appellant’s admission, made six or seven years before 1841, that he did not know what to think of his colleague, and that he would himself consent to become the receiver; but her testimony is unworthy of confidence, inasmuch as it goes back to a period decisively anterior to 1838, the time material to the question.
Again, it is insisted, on the authority of Brice v. Stokes, (11 Vez. 319), and Walker v. Symonds, that laches was chargeable to the appellant in suffering the money to lie in his colleague’s hands for fourteen years; especially as the statute of 1821, since repealed, made it the duty of guardians to render triennial accounts without being cited. That statute, like the one which requires an executor to file an inventory within a month from the date of the letters, imposed no penalty for a disregard of it — certainly none applicable to a case like the present — and it was, consequently, no more than directory. Independent of that, however, the two cases referred to would go far to sustain the present charge; but it is also true that there has, at all times, been more inconsistency of English decision on this head than on any other, and more than is to be found in our own books on all heads together. Perfect consistency is not attainable, and the decisions of our own courts are not free from discrepance in matters of less importance than rules of property; but the aberrations of no American court will bear comparison with the sweeping alterations of the common law by the English judges. On the subject before us their decisions have been habitually loose; and we feel ourselves so far unfettered by foreign precedent as to be at liberty to adapt the rule of a guardian’s vigilance to the business habits and transactions of our own people. The principle of accountability for the omission of every measure of imaginary precaution which human sagacity- might have foreseen, would be impracticable in a country where counsel cannot be consulted at every step without incurring an expense that would often swallow up the estate. Where the property is small, plain country farmers, unversed in legal niceties, are generally prevailed on by the friends to take charge of it; and from these justice requires no more than a reasonable degree of vigilance, exercised in good faith. It certainly does not require that the office of a guardian should be a trap for the simple. Here there was reasonable vigilance and good faith, and we direct the appellant to be charged with no more than his receipts.
Account reformed accordingly.