Opinion
(Filed 22 March, 1904.)
1. TRUSTS — Judgments — Orders — Notice.
The judgment set out in this case was final and would not permit ex parte orders as to the expenditure of the principal of the trust fund.
2. TRUSTS — Commissions — Interest.
The trustee in this case was properly chargeable with interest on the trust funds in his hands.
ACTION by S.W. Isler against O. Brock and others, heard by Judge R. B. Peebles, at September Term, 1903, of WAYNE. From a judgment for the defendants the plaintiff appealed.
Battle Mordecai for the plaintiff.
Stevens, Beasley Weeks for the defendants.
This action was brought by the plaintiff for an account and settlement between himself, as trustee, and the defendants, cestuis que trust, for a division of the personal property and proceeds of sale of real property belonging to the cestuis que trust and for a sale of certain land also belonging to them. At September Term, 1895, of Wayne, in a regularly constituted action, wherein Everett Joyner. Jr., and the defendants in this action were plaintiffs, and A. U. Kornegay, executor of W. F. Kornegay, and others, were defendants, the plaintiff was substituted as trustee in place of James F. Kornegay, the latter having been appointed trustee under the will of Everett Joyner, deceased. Under that decree the plaintiff received from James F. Kornegay, former trustee, the sum of $3,960. At November Term, 1901, of said court, it appeared in the present action that a long (429) and complicated account would have to be taken, and it was, by consent of the parties, ordered that F. R. Cooper be appointed referee to find the facts and make his conclusions of law, under the Code, and the plaintiff was directed to proceed with the sale of the land described in the complaint. The referee heard the matters in dispute, and made a report of his findings of fact and conclusions of law to the September Term, 1903, of the Superior Court. Exceptions were filed by both parties to the report of the referee. A judgment was rendered at September Term, 1903, from which the plaintiff appealed.
The principal contention on the part of the plaintiff is that he should have been allowed certain credits, which were admittedly encroachments on the trust fund, on the grounds, first, that the terms of the decree of the court under which he was made trustee gave him the right to encroach upon the principal fund; and, second, because he was empowered specially by the Superior Court of Wayne, at various terms, to expend part of the principal fund. In the third item of the will of Everett Joyner the testator said:
"I give, devise and bequeath all the balance of my estate — real, personal, mixed, or in action — to my friend, James F. Kornegay, in trust, to receive the rents, profits and interest thereof, and to pay in his discretion such parts thereof to my son Everett and his children as he may think proper, during the life of said Everett, and after the death of said Everett to hold the same for the use of such children as said Everett may have, and to the issue of such as may be dead, such issue to represent the parent and to take such share as the parent would if living."
Kornegay, as we have seen, acted for a while as trustee, but afterwards, as we have seen, the plaintiff was substituted (430) in his place as trustee, and in the decree of the court in which the substitution was made, the nature of the trust under the will of Everett Joyner was set forth. In that judgment the court said: "It is further adjudged that S.W. Isler is hereby appointed trustee in place of James F. Kornegay and W. F. Kornegay, under the will of Everett Joyner, Sr., and that the title to said land and money is hereby vested in said S.W. Isler in as full and ample a manner as the same was vested in James F. Kornegay by said will; and he is hereby directed and empowered to lend the money which shall come into his hands upon first mortgage security upon land as he shall have opportunity, and to pay such interest as he may obtain upon the same, together with the rents from said real estate, to the plaintiff Everett Joyner, Jr., son of said Everett, Sr., during his life, and after the death of the said Everett, Jr., to hold the balance in trust for such child or children as said Everett, Jr., may leave, and to the issue of such as may be dead, such issue to represent the parent and to take such share as the parent would if living; and said trustee is authorized to deposit any funds which may come into his hands in the Bank of Wayne, of Goldsboro, N.C. while in the judgment of said trustee the said bank is a safe place of deposit, until such time as he shall be able to lend the same upon satisfactory mortgage security as herein directed, or until the court shall appoint some other trustee."
It will be seen from the plain language of the judgment of September Term, 1895, that the plaintiff, as trustee, could only disburse to the cestuis que trust the interest arising from a loan of the money on hand and the rents and profits of the real estate. It is true that orders were made in the Superior Court of Wayne, at several terms thereof, either authorizing the expenditure by the plaintiff of such amounts as were encroachments upon the principal fund, or approving such expenditures after (431) they had been made. Those orders, however, were made on the ex parte application of the plaintiff and without notice to the defendants.
Counsel of plaintiff contend that no notice to the defendants was necessary, for the reason that the judgment of September Term, 1895, was of such a nature as to keep the action open for further orders in reference to the administration of the trust. That is a mistaken view of the character of the judgment. It was not interlocutory, but final. In the judgment in the present action the plaintiff was held liable for the principal fund which he received, to-wit, $3,960, and from that amount he was allowed to deduct five per cent commissions for his services. Upon the balance, to-wit, $3,762, the plaintiff was charged with interest from 14 June, 1891, the date of the death of the life tenant, Everett Joyner, Jr., less five per cent commissions on the interest up to the date of the judgment, September Term, 1903.
Three thousand three hundred dollars was to be credited on the judgment by reason of that amount having been paid into the clerk's office by the plaintiff on 14 September, 1903. The judgment further provided that that amount, $3,300, should bear interest from 14 September, 1903.
The plaintiff excepted also to that part of the judgment on the ground that in the decree of September, 1895, in which he was made trustee, he was held liable for only such interest as he might obtain or that might come into his hands. We are not called upon to decide what that language in the decree means. But under the will of Everett Joyner, deceased, and also under the decree of September, 1895, the money and the property in the hands of the trustee were to be paid to those in remainder at the death of the life tenant, and it was certainly proper that in the judgment it should be required that the trustee (432) pay interest on whatever sums he may have in his hands from the time of the death of the life tenant, he not having shown to the referee or to the court that he was not able to lend the money out at interest or that he kept it separate and apart from his own funds. The judgment embraced also the amount for which the real estate had been sold by the plaintiff, and the manner of distribution of the money, and also of the proceeds of the sale of the land amongst the defendants, to which there was no exception.
After a careful consideration of the record, we find that there is no error in the judgment, and the same is
Affirmed.