Opinion
(January Term, 1867.)
Upon taking an account between a cestui que trust and trustee: Held,
1. That the former could not, in 1866, raise any question as to the value of Confederate Treasury notes received by him, being sui juris, without objection, in 1863, 1864, and 1865.
2. Where one of the obligors upon a bond of $102, given in 1858, became insolvent in 1861, and the other in 1865, having been in failing circumstances for two or more years before, the trustee was not responsible for negligence as to collection.
3. Where both principal and surety upon a bond given in 1857 for $2,500.00, were solvent, and there was no necessity for its collection, the trustee was responsible for collecting it in February, 1863, in Confederate notes and individual notes made after 1861.
4. The trustee was responsible for collecting any more of the interest upon the bonds in his hands than was necessary for the maintenance and support of his cestui que trusts.
BILL for the settlement of a trust, filed to Spring Term, 1866, of GUILFORD. At Fall Term the cause was set for hearing upon bill, answer, report of the Master, and exceptions thereto, and by consent transmitted to this court.
(150) Dick, W. L. Scott, and Phillips Battle, for the complainants.
Bragg, for the defendant.
The bill showed that in 1857 the defendant was constituted trustee by a conveyance of property amounting in value to about fifteen (149) thousand dollars, of which he was directed by the deed to hold one-third for the benefit of the wife of Latham Donnell for her life, with remainder to her children, or failing such, to her next of kin; and the other two-thirds "the said George Donnell is to keep for said Latham Donnell as constantly at interest as he conveniently can, and pay the interest arising out of" it to said Latham for life, and then to pay over the same to his next of kin — the receipts of said Latham and his wife to be good to the trustee for the interest from time to time; that the wife was dead, and the complainant, James, an infant, was the only child. The prayer was for an account, the substitution of another trustee, and for further relief.
Upon taking the account the Master allowed the trustee: 1. Various items of Confederate treasury notes paid by him to Latham Donnell at different times during the late war. 2. A bond for $102, with interest upon W. I. McConnell and Joel Hiatt, due in 1858; the facts being that the former had left the country insolvent in 1861, and the latter had died insolvent in the fall of 1865, having been considered to be in failing circumstances for two or three years before. 3. A bond for $2,500, given in 1857 for land and collected in February, 1863; the facts being that it was due by Emily Donnell and W. A. Caldwell as surety; and that before Emily's death the defendant, who was also one of the administrators, paid it to himself as trustee in Confederate treasury notes, and individual notes due in 1861 and after, more than $2,500 of such payments being in Confederate money. 4. Two Confederate certificates of deposit made 1 July, 1864, for $400, being so much interest collected, which Latham Donnell refused to receive.
No further statement appears to be required to understand the opinion.
The cause comes on for hearing upon exceptions filed by the complainants to the Master's report, and for further instructions.
1. The first exception of the complainant, Latham, is not allowed. The Confederate treasury notes having been received by him without objection, it is now too late to raise a question as to the value of such notes according to a specie standard.
2. The second exception of the complainant, Latham, is not allowed. The trustee, holding a note, ought not, after the depreciation of the currency, to have attempted to collect it, although one of the obligors had become insolvent; because it was for the interest of the fund to let it stand without one of the obligors rather than to have collected it in Confederate notes, and considering the state of feeling in the country, we much regret the idea that it was the duty of the trustee to attempt to collect the debt in specie, and to refuse currency; for that was more than could have been expected of the most prudent men in regard to their own debts. So the trustee took the most prudent course in allowing the debt to stand upon the responsibility of Mr. Hiatt, and his failure, by reason of the emancipation of slaves, is a matter for which the trustee can not be held liable.
3. The exception, marked 3d, of the complainant, Latham Donnell, being included in the 1st and 2d of the complainant, James Donnell, is allowed. A trustee holding a note for $2,500 due before the war, principal and surety both being solvent in 1863, without any special occasion for the use of money, and with no object, so far as we can see. except to enable him to settle up the estate of his brother-in-law, receives in payment of the note Confederate notes and notes (151) on individuals, due with small exception after 1861. This naked statement is enough to convict the trustee; he should have observed the same prudence in regard to this note as he did in regard to the note of General Hiatt.
4. The third exception of the complainant, James, is allowed. The trustee was not bound to collect all of the interest annually, but only so much as was necessary for the support and maintenance of his cestui que trusts.
The Master was under a misconception as to the proper construction of the trust deed. It is hard enough upon the cestui que trusts to allow the trustee credit for the amounts which they received in Confederate notes, as of the nominal instead of the actual value, but to allow him credit for a sum which they refused to receive, and which the trustee should not have collected, would carry the matter much too far. In 1864 no prudent man would have received Confederate notes at par in payment of interest upon an ante-war debt. A sheriff or constable, without any special instructions, would have refused to take such notes in discharge of an execution in his hands. We are unwilling to open the door so wide for the entrance of fraud. In face of the high commendation of the trustee, which the very respectable gentleman who makes the report felt himself at liberty to express, we are not at liberty to suppose that the trustee did in fact offer to pay Confederate notes which he had not received in payment; but how easy would it be for a trustee or guardian to pay over "trash," of which he had a pocket full, and retain for his own benefit the original note and claim for interest!
There will be a reference to reform the account according to this opinion, and the cause is retained for further directions.
PER CURIAM. Decree accordingly.
Cited: Larkins v. Murphy, 71 N.C. 561.
(152)