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cestui que trust might be injured without having an opportunity of providing for his safety. Wallis v. Thornton, 2 Marsh., 422.

§ 393. But, admitting that the trustees have a right to receive the money before it is due, they have no right to discount legal interest and receive only a part of the debt. Ibid.

§ 394. A trustee appointed by a debtor to sell the mortgaged premises to the highest bidder is bound to see that the sale is fairly made, and that there is a real competition. He is as much bound to take care of the interest of the debtor as of the creditor; and if he finds sham competitors he ought not to proceed with the sale at that time, but adjourn and give a new notice. If there were no competitors at the sale and the creditor has bought the property at his own price, and recover judgment at law for the balance of the debt, the court will enjoin the judgment until the real value of the land bought in by the creditor and the circumstances of the sale shall be ascertained upon final hearing. Fairfax v. Hopkins, 2 Cr. C. C., 134.

§ 395. It is the duty of a trustee, if he finds that he cannot perform the trust, to return the funds to the person from whom he received them. Accordingly where a party accepted a trust to buy railroad land with railroad bonds, at a fixed price per acre, held, that if he was unable to do so it was his duty to return the bonds, and that a sale of them for six cents on a dollar in order to obtain funds to purchase lands was a breach of trust. Kitchen v. Bedford, 13 Wall., 413.

§ 396. An attorney for trustees has no implied power, although he be one of the trustees, to consent to a decree which has the effect of taking the trust out of the hands of the trustees, or of placing the execution of it, in whole or in part, in other hands; and this is specially so in a case of public trust. Vose v. Trustees of the Internal Improvement Fund, 2 Woods, 647. § 397. A testator in New York devised his real estate to his executor and trustee, in trust to sell and convey the same, and, having converted the real estate into money, to divide the proceeds among certain benevolent institutions. The will being silent as to the power of the executor to receive the rents and profits, held, under a state statute providing that "a devise of lands to executors or other trustees, to be sold or mortgaged, where the trustees are not also empowered to receive the rents and profits, shall vest no estate in the trustees; but the trust shall be valid as a power, and the lands shall descend to the heirs or pass to the devisees of the testator, subject to the execution of the power," that the trust to sell and apply the moneys under the will was simply a power in trust, and that the land followed the law of descents and remained in the heirs, subject to their ownership and control until the execution of the power by the executor. Pennoyer v. Shelden, 4 Blatch., 316.

2. Liabilities.

§ 398. Interest and rent, to what extent chargeable with.- Interest will not be allowed against a trustee holding a fund, when he had made no interest, if there be no laches or neglect, or use of money on his part. Cassels v. Vernon, 5 Mason, 332.

§ 399. Where property was held in trust for the former owner, and he suffered the trustees to retain it without renting it, and his widow and children held it after his death, it was held that the trustees were not chargeable with rent. Burr v. McEwen,* Bald., 154. § 400. When a trustee is chargable with simple

ney v. Saunders,* 16 How., 535.

interest, and when with compound. Bar

§ 401. Where a trustee, prior to the late war of the rebellion, appropriated the trust estate to his own use, and treated it from the beginning as his own, held, that he was chargeable with interest from the time he appropriated the property until the same was accounted and paid for, including the period of the war. Bourne v. May bin, 3 Woods, 724.

§ 402. A trustee who, by the terms of his trust, is directed to invest the trust fund in productive securities, is liable to the beneficiaries for interest, even though the trust money lies idle in the bank. Nicholson v. McGuire, 4 Cr. C. C., 194.

§ 403. The estate of a husband who as trustee for his wife, she having placed moneys in his hands to be invested, acted in utter disregard of his trust, treating the funds as his own, neither keeping nor rendering any account of his trust, may be charged with interest compounded annually on the trust funds in his possession, and no compensation should be allowed for his services as trustee. Walker v. Walker, 9 Wall., 743.

§ 404. The principles on which courts of equity charge trustees, assignees and executors with interest on trust money in their hands are that they have either used it in their own business or improperly neglected to invest it. Where there has been gross neglect the court will sometimes make annual rests and charge them with compound interest. In re Thorpe, Dav., 290.

§ 405. There were two trustees of real and personal estate for the benefit of a minor. One of the trustees was also administrator de bonis non upon the estate of the father of the minor 657

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and the other trustee was appointed guardian to the minor. When the minor arrived at the proper age and the accounts came to be settled, the following rules ought to have been applied: 1. The trustees ought not to have been charged with an amount of money which the administrator had paid himself as commissioner. That item was allowed by the orphans' court, and its correctness cannot be reviewed collaterally by another court. 2. Nor ought the trustees to have been charged with allowances made to the guardian trustee. The guardian's accounts also were cognizable by the orphans' court. Having power under the will to receive a portion of the income, the guardian's receipts were valid to the trustees. 3. The trustees were properly allowed and credited by five per cent. on the principal of the personal estate, and ten per cent. on the income. 4. Under the circumstances of this case the trustees ought not to have been charged upon the principle of six months' rests and compound interest. 5. The trustees ought to have been charged with all gains, as with those arising from usurious loans, unknown friends, or otherwise. 6. The trustees ought not to have been credited with the amount of a sum of money deposited with a private banking house and lost by its failure, so far as related to the capital of the estate, but ought to have been credited for so much of the loss as arose from the deposit of current collections of income. Barney v. Saunders,* 16 How., 535.

§ 406. When trust funds are mingled with his own.- A trustee is not permitted to mix his own funds with the trust funds in making loans; and when he does so he becomes debtor to the trust, and if there is a loss it is his loss and not the loss of the trust estate. Moore v. Mitchell, 2 Woods, 483. § 407. Where no accounts are kept.- A trustee is bound to keep clear, distinct and accurate accounts. If he does not, all presumptions are against him, and all obscurities and doubts are to be taken adversely to him. Bourne v. Maybin, 3 Woods, 724.

§ 408. For profits of trust estate. If a trustee uses trust money in trade it is a breach of trust, and he will be charged with all the profits he has made, but if there has been any loss that must be borne by himself. In re Thorp, Dav., 290.

§ 409. A trustee is bound to account for gains made with the fiduciary estate, even though such gains are in the nature of usurious interest. Barney v. Saunders,* 16 How., 535.

§ 410. Of trustee for acts of co-trustee.-If, in the regular execution of a trust, money is paid to a trustee, his co-trustee is not liable for it merely because he joined in the receipt; but if the trustee who received the money had no right to receive it, his co-trustee who joins in the receipt is considered as co-operating in a breach of trust, and will be involved in its consequences. Wallis v. Thornton, 2 Marsh., 422.

§ 411. For losses.-A. was trustee of certain property under a will, the profits to be paid to B. during life, and the remainder to plaintiffs. A. turned the property over to B., who lost it, and suit was brought against A.'s executrix, who was his wife, to reach the assets of A,'s estate in her hands, and also to satisfy a deficiency out of property conveyed to her by A., being more than a reasonable provision for her in view of A.'s liability for violating the trust, and probably intended to defeat that liability, which she understood. Held, that the bill was not multifarious, and that the executrix must respond for the property so conveyed to her, as well as for the assets of the estate. Beatty v. Hinckley,* 17 Blatch., 398.

§ 412. A trustee who, by the terms of the trust, is to keep the trust fund invested, is bound to do so, and, if he keeps a sum on deposit longer than is necessary to enable him to invest it, and loss occurs, he must bear the loss. Barney v. Saunders,* 16 How., 535. § 413. by receiving worthless money.- Where a trustee loans trust funds, consisting of good and lawful money, and receives in payment Confederate money worth but thirty cents on a dollar at the time it was received, and which afterwards became worthless, the entire loss must be his unless he can show that he received it under compulsion. Moore v. Mitchell,* 2 Woods, 483.

§ 414. Lack of compensation as relief from liability. It is no defense for a trustee who has received worthless currency for trust funds loaned, that by verbal understanding with the testator he agreed to receive no compensation for his discharge of the duties of the trust, that he was to manage the business of the trust with the same care as he did his own, and that, having done so, he was relieved from liability by such agreement, notwithstanding the loss. Where a trust is created by will it cannot be modified by verbal understanding had between the trustee and the testator. Ibid.

§ 415. Vessel owners.-The owners of a vessel in a whaling voyage, where they and the crew are shareholders in certain agreed portions in the cargo, are trustees to manage and dispose of it for the benefit of all concerned. The title is in them, but the interest in the proceeds belongs to the shareholders. They are not, like common carriers for others, liable for robbery, as the property is in a large proportion their own, and there is no danger of collusion with highwaymen and pirates; but as trustees, or copartners, or directors in a company, when they are joint stockholders or depositors or private carriers, they are responsible only

TRUSTEES.— DEATH. DISCHARGE. REMOVAL, ETC. SS 416-427.

for ordinary care in selecting agents and carrying the cargo. Joy v. Allen, 2 Woodb. & M., 303.

§ 416. Owners of vessels are generally responsible for the misconduct of the master committed in their business, to third persons, but are not liable to their cestuis que trust, or copartners, or joint shareholder, if using due care in selecting him. Ibid.

$ 417. Miscellaneous.- Where trustees of a public trust have been restrained, by order of the court, from disposing of any of the trust property otherwise than in strict accordance with the legislative act prescribing their duties, and the performance of such duties under the act requires the exercise of judgment and discretion, and they deny any intention to violate any injunction or decree in the cause and aver that they have not done so, they are not liable for contempt for disobedience of the decree of the court. Vose v. Trustees of the Internal Improvement Fund,* 2 Woods, 647.

§ 418. A conveyance was made in trust for the use of a husband and wife for their lives, remainder to their children, with power in husband and wife to sell the property and re-invest on the same trusts. The trustee prevailed upon the husband and wife to permit him to use a sum raised on the trust property, the same being secured by a mortgage on property of the trustee in the same trusts as the original conveyance. The husband and wife were afterwards prevailed upon by the trustee to release this mortgage so that he might purchase other property which he promised to mortgage to them, but failed to execute the mortgage. Held, that he was guilty of a breach of the trust. Caldwell v. Taggart,* 4 Pet., 190. § 419. Where property is received in trust and the trustee sells it and receives and appropriates the consideration, he is liable as agent for the proceeds if the sale is not objected to. Baker v. Root, 4 McL., 572.

§ 420. Where property is conveyed in trust, to be held and managed for the benefit and under the direction of the grantor, the trustees are not chargeable for any acts done with the knowledge or approval, or even to the carrying out after his death of plans made in reference to the property during his life, under the directions of such grantor. Burr v. McEwen,* Bald., 154.

421. Where a trust is general for the benefit of the grantor, private sale of the trust property is permissible, and where property is fairly sold for its fair market value the trustees are not to be charged with a greater sum, though it might possibly have been obtained by taking advantage of the situation of the purchaser. Ibid.

§ 422. Where $1,000 was given to a legatee by a will, the money to be raised out of the testator's estate and paid over to the legatee; and the executor and trustee under the will, having raised the money, instead of paying it to the legatee, purchased bank stock with it; and afterwards, when called on by the legatee to account, sold the bank stock and paid over the proceeds, $1,460.34, to the duly authorized agent of the legatee, which he received as and for the $1,000 legacy, the stock having been sold with his knowledge and consent, it was held that, as there was no evidence the legatee was advised of the purchase of the bank stock, or ever assented to it, the executor had a right to sell the stock and pay over the proceeds. Until the investment was sanctioned by the legatee he had a right to claim the money; and until then, too, the executor had a right to recall or change the investment or pay over the legacy, being bound, if any profits were made by the investment, to account for them, and to make up the loss, if any. Norman v. Storer, 1 Blatch., 593.

3. Death. Discharge. Removal. New Appointment.

§ 423. Death of trustee.

If a trustee dies before the execution of the trust the court has power to appoint a new trustee and to compel the performance of the trust by him, or to decree and enforce the execution of the trust through its own officers and agents, without the intervention of a new trustee. Batesville Institute v. Kaufman, 18 Wall., 151.

Walton

§ 424. estate taken by his heirs.- Where the relation of trustee and cestui que trust exists, on the death of the trustee nothing but the mere legal estate goes to his heirs. v. Coulson, 1 McL., 120. § 425.

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of one of joint trustees - Power of survivor. Upon the death of one of two joint trustees the trust does not survive to the other, unless such a provision be inserted in the deed of trust. Boone v. Clarke, 3 Cr. C. C., 389.

§ 426. A power coupled with a trust vested in two or more trustees will survive when in no way beneficial to the trustee. It is not necesssary that the trustees should have a personal interest in the trust; it is the possession of the legal estate, or a right virtute officii in the subject over which the power is to be exercised, which constitutes the interest necessary to enable the power to survive in the trustee. Lorings v. Marsh, 6 Wall., 337.

§ 427. A will devising property to two trustees for the benefit of testator's children pro

vided that upon the decease of all of said children the trustees were to "select and appoint three or more gentlemen, who shall be informed of the facts by the trustees, and shall determine how, by the payments to permanently established and incorporated charitable institutions, my wish to benefit the poor shall be carried into effect." One of the trustees having died, held, that the power to appoint remained in survivor, being coupled with an interest, and not a mere naked power. Loring v. Marsh, 2 Cliff., 469. § 428. In case of covenant to three trustees jointly, if two of such trustees die the survivor may sue alone. Crocker v. Beal, 1 Low., 416.

§ 429. A. conveyed certain property to B. and C. jointly in trust to pay certain debts due to the trustees and others, and pay the proceeds to himself, with a joint power to the two trustees to sell at public or private sale. Held, that if at the death of A. they had no interest in the property their power did not survive; that the trust was joint and could not be executed by one; that on the death of one the trust failed, and that a conveyance by one was absolately void. Boone v. Clarke,* 3 Cr. C. C., 389.

§ 430. Removal.- If trustees abandon their trust or are guilty of neglect and misconduct, the parties aggrieved may have them removed and new ones appointed. Sevens v. Eldridge, 4 Cliff., 348.

§ 431. A. bequeathed one-half his estate to B. in trust for C. during his natural life, to be invested in securities, and the income to be paid to C. semi-annually. B., as executor, turned over to himself, as trustee, the amount bequeathed to himself as trustee, and executed a _receipt therefor from himself as trustee to himself as executor, and gave bond and security for the faithful administration of said trust fund. B. neglected for two years to invest the sum so receipted for, and to pay C. any portion of his share of the income from the estate of A., and became insolvent. Held, that (1) it was the duty of the court to remove B. from his trusteeship and appoint some suitable person, whose duty will be to proceed to collect from him and his sureties the principal sum received by B., with interest from the time it came into his hands, the interest, when collected, to be payable to C., the principal to be invested by the trustee as provided by the will, and the semi-annual interest to be paid by such trustee to C.; (2) it will be the duty of the trustee to proceed to collect from B. and his sureties one-half of any income he may have received from said real estate since it came into the hands of B., and also to take measures to recover in the future the portion of the income from said real estate which belongs to C. and pay the same over to him. Cavender v. Cavender,* 8 Fed. R., 641; 3 McC., 158.

§ 432.

because of ill-feeling between trustee and cestui que trust.- Where a trustee is charged with an active trust which gives him some discretionary power over the rights of the cestui que trust and brings him into constant personal intercourse with the latter, strong mutual ill-feeling between the two may justify the removal of the trustee; but where the duties of the trustee are merely ministerial, are clearly defined and require no personal intercourse with the cestui que trust, no change by the court is justified. This is especially so where there is another trustee with equal power, without whom nothing can be done. McPherson v. Cox, 6 Otto, 404.

§ 433. of absent trustee- His acquiescence in effect of. Where a trustee has been removed by a decree of a court of chancery during his absence in time of war, in the enemy's country, and at the close of hostilities learns of his removal and the appointment of his successor, and remains quiescent for ten years, making no efforts to perform any of the duties of the trustee, and setting up no claim to the office during that time, such conduct must be considered as an abandonment of any title he may have had to the office of trustee and an acquiescence in the order of things established by the decree of the court ordering his removal. Ketchum v. Mobile & Ohio Railroad Co., 2 Woods, 532.

§ 434. Where application is made to a court of chancery by the settler of a trust, alleging neglect of duty on the part of the trustee, and praying that he, being a naked trustee, might be removed and a new one appointed, it was competent for the court to do so, ex parte, in the conservation of the trust property lying within its jurisdiction, although no service was possible on the absent trustee except by publication. Ibid.

§ 435. The fact that a naked trustee is absent in the enemy's country in time of war is ample ground for his removal and the appointment of another trustee. Ibid.

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$436. of trustee of passive trust.- Where, by a contract between several parties, a trust was created and trustees were appointed, the trust not to take effect, however, till the happening of a certain event, held, that until the happening of the event the trust was passive, and that before that time the court would not, at the instance of one of the parties, interfere to remove the trustees for alleged misfeasance. Sloo v. Law, 1 Blatch., 512.

§ 437. Substitution of new trustees - Their powers. The trustee of a family settlement, in which infants are interested, may be changed by consent of the parties upon a bill filed for that purpose only. Young v. Young, 4 Cr. C. C., 499.

§ 438. Where, upon the resignation of a trustee appointed by will, another is substituted, such substituted trustee does not acquire a discretionary power, vested in the former trustee by the terms of the will, to sell the trust property. Partee v. Thomas, 11 Fed. R., 769.

§ 439. An act of a state legislature in substituting trustees for those named in a will is not void as impairing the obligation of a contract, as no element of contract is involved in the matter. Williamson v. Suydam,* 6 Wall., 723. $ 440. by legislature - Powers of chancellor.- Where the trustees in a trust deed made to secure bondholders of a certain railroad foreclosed the mortgage and leased the road to third parties, after which a majority of the bondholders of the defunct corporation converted their bonds into stock, and formed a new corporation, which by state statute was substituted as trustee for the other bondholders in place of the original trustees, held, that it was beyond the power of the legislature, without the consent of the cestuis que trust, to substitute a new trustee in place of the persons named in the mortgage. Knapp v. Railroad Co., 20 Wall., 117.

§ 441. Land was devised to trustees for the use of I. for life, remainder to I.'s children. On petition the state legislature discharged the trustees and authorized the chancellor to appoint trustees to divide the land as soon as they conveniently could into two moieties, one to be held on the terms of the trust, the remainder to be sold and the interest on the invested proceeds to be paid to I. The chancellor thereupon ordered that the eastern moiety be sold. Subsequently the legislature authorized the trustee under the order heretofore granted by the chancellor, or under any subsequent order, either to mortgage or sell the premises which the chancellor had permitted or might thereafter permit him to sell as trustee. Held, that the authority of the chancellor to make partition was not exhausted, but that he had authority to divide the land by an east and west line and order the sale of the southern moiety instead of the eastern. Williamson v. Suydam,* 6 Wall., 723.

$ 442. M. devised certain land to three trustees and their heirs in trust to collect and pay rents to I. during his life, and on his death to convey the same to his children then living, and, in default of children living, to C. and his heirs. C. having conveyed his interest to I., the latter petitioned the legislature for relief, and was by special act substituted as trustee and authorized to sell a moiety of the land as trustee, with the assent of the chancellor; and it was provided that so much of the proceeds should be invested by the trustee as the chancellor should direct, and the income applied to the support af the family of I. Next year a further act was passed by the legislature authorizing I. to sell or mortgage the premises which the chancellor had permitted or might permit him to sell, and apply the proceeds to the purposes required, or that might be required, by the chancellor under previous acts. On application to him by I. it was ordered that I. be authorized to sell or mortgage the moiety of the estate as provided in the several acts, and also to convey any part of it in payment of any debt owing by him upon a valuation to be made, provided that every such sale, mortgage or satisfaction be approved by a master in chancery and his certificate of approval indorsed on each such conveyance, and that I. apply the proceeds to the payment of his debts and invest the remainder as he may deem proper to yield an income for the support of his family. I. sold part of the lands to G., the consideration being a debt due from I. to him, and certain wild land. The master refused to approve the transaction. Held, that the acts of the legislature divested the estate of the testamentary trustees, but did not vest the fee in I., and that his interest was that of trustee simply, to sell or mortgage with the assent of the chancellor; that the jurisdiction of the chancellor in the matter was strictly limited to that conferred by the acts, and that he could not in connection therewith exercise his ordinary jurisdiction; that the act contemplated a sale for cash only, and an exchange for indebtedness and wild land, though permitted by the order of the chancellor, was void and conferred no title, especially as the provisions of the order required the approval of a master, which had been refused and never given or waived; that the power to sell or mortgage was not exhausted by the fact that I. had mortgaged the lands and subsequently paid the mortgage, but that he might again mortgage or sell, and also that the grantee of G. obtained no title, claim ing as he did under the void acts of the chancellor and I. Williamson v. Berry,* 8 How., 495 Williamson v. Irish Presbyterian Congregation,* 8 How., 565; Williamson v. Ball,* 8 How..

566.

§ 443. Miscellaneous.— Where a trustee refuses to perform a trust a court of equity wil intervene and appoint a receiver, whether there is danger of ultimate loss or not. Wilmer v. Atlanta & Richmond Air Line R'y Co., 2 Woods, 409.

§ 444. Under the trustee process of Massachusetts, by statute of 1794, if the trustee swears he has no goods, effects or credits of the debtor in his hands, he is entitled to be discharged, unless, from other parts of his disclosure, that averment is overthrown. United States v. Langton, 5 Mason, 280.

§ 445. Where the purposes of the trust have been satisfied, equity in a proper case will

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