Opinion
13626
April 25, 1933.
Before FEATHERSTONE, J., Abbeville, August, 1931. Modified and, as modified, affirmed, and cause remanded, with directions.
In the matter of the estate of John T. Daniel, deceased. Proceeding on the petition of Robert J. Hutchison and another, as administrators with the will annexed of the estate of John T. Daniel, deceased, for a settlement of the estate and a discharge, in which proceeding Grace Daniel and another appeared and objected to the account as set forth in the petition. From a decree affirming, except in certain respects, a decree of the Probate Judge, the administrators appeal.
The decree of the Probate Judge is as follows:
Robert J. Hutchison and J. Frank Rogers, administrators with the will annexed of John T. Daniel, heretofore filed their petition in this Court praying a settlement of the said estate and a discharge. Along with the petition they filed a statement of receipts and disbursements as claimed by them on account of the estate.
Due advertisement was given, and on the day of settlement the two beneficiaries under the will of John T. Daniel, Grace Daniel, and Ruth Daniel, appeared and objected to the accounts as set forth in the petition and as contained in the statement thereto attached, objecting to all of the items of disbursements therein, and claiming, as shown by the testimony, that upon a proper accounting the petitioners would be indebted to the estate in a very large amount.
In order to state the accounts, it is necessary first to dispose of certain contentions made by the petitioners.
It is claimed by the petitioners in the fifth paragraph of the petition that the sum of $1,942.09 appearing upon the books of the bank as belonging to the estate of John T. Daniel at the time of the appointment of the petitioners and administrators included the sum of $1,000.00 received by the petitioner Robert J. Hutchison as guardian for Grace Daniel and Ruth Daniel. The testimony clearly shows that this contention is wrong. The $1,000.00 received by the said Robert J. Hutchison as guardian was not received until some considerable time after the appointment of the petitioners as administrators as aforesaid. In addition, the bank books clearly show that the said sum was to the credit of the said John T. Daniel or his estate at the time of the appointment, and that the $1,000.00 was not included therein.
It is next alleged in Paragraph 5 of the petition that the petitioners should be credited with the sum of $1,200.00 loaned to J.D. Phillips in December, 1920, along with other funds, the total mortgage debt being the sum of $2,700.00. The testimony shows that in December, 1920, J.D. Phillips executed a mortgage for $2,700.00, the mortgage debt being payable to Robert J. Hutchison, individually. He testifies that in this sum of money was at least $1,500.00 belonging to the estate of John T. Daniel. His testimony is that the sum of money belonging to the estate of John T. Daniel was first loaned to J.D. Phillips on security of either of live stock or of stocks, the nature of which is not given. The loan must have been made by him some time after the appointment of the petitioners as administrators, if made at all, from the funds of the estate of John T. Daniel. He contends that the securities proved to be worthless, and that he took the mortgage of $2,700.00, which was a second mortgage on the lands at Calhoun Falls, as shown by the testimony.
The amount of the second mortgage added to the first mortgage was much more than the purchase price of the lands made in the peak of high prices immediately before deflation began. Under the authorities applicable to loans, which will be hereafter noticed, I have disallowed credit for this investment.
Credit is also claimed by the petitioners for the sum of $862.52 loaned upon two notes to W.W. Thompson. It appears that this money was loaned upon the unsecured notes of W.W. Thompson; the second note for the large amount having been taken when the first note was due and unpaid. Under the authorities hereinafter quoted, I have disallowed this credit.
Credit is claimed for a loan made to H.M. Hall for $200.00; the money having been loaned upon the note of Hall secured by a chattel mortgage upon an automobile. Credit cannot be allowed for this investment under the authorities stated.
A very considerable part of the testimony in the record has reference to credit claimed by the petitioners on account of a loan made by Robert J. Hutchison in the name of the administrators to E.J. Huckabee and E.R. Horton in the sum of $4,000.00 secured by mortgage of a tract of land containing 154 acres, known as the Du Pre place. E.J. Huckabee and E.R. Horton were land speculators, and according to the testimony during the high prices prevalent in 1918 and 1919 purchased a very large acreage of real estate in Abbeville and other counties, and among these lands they purchased the Du Pre place, agreeing to pay for it the sum of $4,500.00. In order to pay for the Du Pre place, they sought a loan from the petitioner Hutchison, who alone managed the affairs of the estate, as shown by the testimony, in the sum of $4,000.00. He loaned them this amount of money upon the tract of land which they had purchased for the $4,500.00 taking their note and mortgage therefor, payable twelve months after date.
The respondents in this case contend that credit should not be allowed for this investment for several reasons: First: because the loan made in the first instance was excessive; second, because the loan was made without proper investigation on the part of either Hutchison or Rogers, the petitioners, and upon real estate which was not desirable and which was not worth the money, except at high speculative prices; third, because no effort was made to collect the loan at its maturity or afterwards at a time when at least a reasonable loan upon the said lands might have been collected if the mortgagors had been pressed for collection.
In order to determine whether or not credit should be allowed for this investment, it is necessary to consider the law applicable to such investments, as well as the facts surrounding the making of this loan and conduct of the petitioners with reference thereto after the same became due.
In the case of Nance v. Nance, 1 S.C. at page 224, the law with reference to investments by guardians or trustees, which law covers this case, is thus stated: "The result of the cases in our own Courts, properly understood in their relation to the general principals of law determining the duties and responsibilities of guardians and trustees in case of investments of trust funds, prevailing in England as well as in this State, may be stated as follows: The trustee will be held responsible for losses of trust funds through loans to private persons, unless securities are taken collateral to such loans. Such securities should primarily consist of mortgages of unencumbered real estate of a value sufficient to guaranty the debt against all contingencies liable to occur, or capable of being foreseen. Bonds of individuals should not be taken in lieu of real securities, unless unobjectionable investments cannot, in the exercise of reasonable diligence, be procured. When personal securities are taken in lieu of real, it will devolve upon the trustee to make the necessity and propriety of such investments appear upon an accounting with the cestui que trust."
In the case of O'Dell v. Young, McMul. Eq., 155, discussing the matter of a loan made by a guardian and his subsequent conduct in reference thereto, the Court has this to say:
"There is, clearly, no foundation for the suggestion, that a guardian is liable, at all events, for the solvency of a security, which he takes for money due to the ward. In the management of their funds, he is bound to exercise the same caution and circumspection that a prudent man would do in the conduct of his own concerns, and no more. He is only liable for negligence. Every man has a right, it is true, to do with his own as he wills, but one who is influenced by the ordinary motives of self-interest, and acting upon the caution suggested by this passion, will not let out his money, or sell property upon a credit, without a reasonable security for its payment, nor will he quietly look on, and see that security daily and obviously diminishing without an effort to secure himself, if the means are in his own power; and this is the sort of diligence which the law requires of one who takes upon himself the management of the concerns of others. Nor can I perceive, that this liability is in the least affected by the circumstance, that the property, as in this instance, was sold under an order of the Court, prescribing the length of credit and the nature of the security. For the power of judging of the sufficiency of the security is reserved to himself, and in determining upon it, a prudent man would take these matters into the estimate.
"It seems to be agreed on all hands, that the defendant's testator was sufficiently circumspect in taking the security in the first instance. All the witnesses agree, that the note of Daniel and Thomas Walker was, at the time it was taken, apparently a very adequate security for the sum: and the only act of negligence complained of, is in not instituting a suit against them for its recovery when it fell due.
"The evidence shews, I think, very satisfactorily, that the credit of both was, at best, doubtful about the time, and shortly after the note fell due, and it furnishes strong grounds to conclude, that it must have been known to the defendant's testator, and yet no legal steps were taken until a year after, and these circumstances, I think, well warranted the conclusion of negligence, drawn from them by the commissioner and the Chancellor".
In the case of Poole v. Bradham, 143 S.C. at page 161, 141 S.E., 267, 269, quoting from 12 R.C.L., at page 1131, the Court lays down the rule as follows: "No duty is more clearly imposed by the very nature and purpose of a guard ianship than to invest the ward's funds in such a manner as to produce an income, and unless the statute expressly requires it, the guardian can make such investments without an order of Court. * * * In making investments the guardian must act in absolute good faith, and with reasonable diligence to insure the safety of the investment. The modern motto `safety first' applies nowhere more strongly than in the investment of trust funds."
From a reading of Sections 568 and 569 and other sections of Perry on Trusts, it appears that the English Courts did not favor investments by guardians and trustees upon real estate securities, and, when such loans were made, the loans were never allowed for more than two-thirds of the reasonable value of the security taken. That rule has not been adopted in this state, so far as I have been able to discover from the authorities cited to me, but it appears to me that in any case it would be dangerous to loan trust funds in excess of that amount. In this case, the testimony is that loans were being made by the Federal Land Bank of Columbia and the joint-stock land banks organized under Acts of Congress for not exceeding 50 per cent. of the value of the property. The testimony shows that at the time this loan was made property was selling for three and four times its value at the pre-war period, and for that reason trustees and investors generally should have been extremely cautious in the amount of money advanced upon real estate as security, especially when loans were made to persons dealing in real estate as were Huckabee and Horton, the framework of whose supposed fortunes might be stricken down at the first reverse in the trend of prices. Under the authorities stated and under the testimony taken, it appears to me that, even if the land taken as security was worth as much as $4,500.00 at the time it was purchased, the petitioners should not have made a loan thereon of more than $2,500.00 certainly of not more than $3,000.00.
And in this connection it becomes important to notice the conduct of these parties in making investments from the funds of their wards. The petitioner Rogers testifies that he turned over the financial transaction of the estate entirely to his copetitioner, Hutchison. He testifies in fact that he did not know for some six or eight years after his appointment that he was in fact an administrator of the estate, notwithstanding he had given bond as such. The petitioner Hutchison, who made the loan, admits that he made no inspection of this real estate. He states that he knew where the land was located and that he had seen it in passing and had some idea as to its value, but he did not take the precaution of having the lands appraised by disinterested parties nor of himself going upon the lands and undertaking to ascertain the value thereof. The testimony of the witness S.H. Rosenberg shows that, of the whole 150 acres, only about 30 acres thereof can be cultivated, and that the balance of the tract of land is made up of hills and gulleys. Had the petitioner gone upon the lands as he should have done, or had he had the lands appraised by disinterested appraisers, this fact would have been discovered by himself.
In addition to the foregoing, it appears that the loan in this matter was made January 13, 1920, and that it became due January 13, 1921. No interest was paid upon the indebtedness when it became due on January 13, 1921, nor was any interest paid until March, 1923, when E.J. Huckabee, one of the mortgagors, paid the sum of $19.00, which was about one-fifth of the interest due upon the mortgage debt at that time. No other interest was paid upon the indebtedness, except the further payment made by Huckabee, November 23, 1923, of $174.14. Notwithstanding the fact that Huckabee and Horton both claim to have been worth considerable sums of money when the loan was made, and notwithstanding the fact that no judgments were taken against either of them for five or six years thereafter, neither of the petitioners in this case made any effort whatever to collect either the principal or interest upon this loan. If a loan in proper amount had been made upon the lands and the loan had been pressed for collection when the parties were in default or at any reasonable time thereafter, the Court finds that the loan could have been collected. The petitioner Hutchison testifies that as late as 1926 he was offered for the tract of land the sum of $2,000.00 by one James M. Baker, whose land adjoined the Du Pre place. He took no action to foreclose and sell, even at this figure, and he now testifies that the lands are not worth more than the sum of $600.00.
Under the circumstances stated, the Court cannot allow the petitioners credit for this loan. The Court finds that the petitioners, or the petitioner who made the loan, was negligent in loaning an excessive amount upon the lands in the beginning, and that the petitioners were grossly negligent in not undertaking to collect the loan when it matured. The negligence in these two respects the Court finds was responsible for the entire loss sustained, and the parties who caused it must bear the loss. It is not proper now, after twelve years, when the petitioners have done nothing to save their wards in this matter, to charge the wards with the loss.
In addition to what is said in the preceding paragraph, the testimony shows, and I find, that the petitioners have heretofore transferred and assigned the note and mortgage of E.J. Huckabee and E.R. Horton referred to, and they are not the owners and holders thereof. The note and mortgage were assigned to secure the sum of $1,000.00 borrowed by the petitioners without any necessity therefor. The mortgaged premises, according to the testimony of the petitioner Hutchison, will not now sell for enough to pay the $1,000.00 borrowed. For this additional reason, I hold that the petitioners are not entitled to claim any credit on account of this mortgage debt.
In undertaking to make settlement, my chief difficulty has been that the petitioners have not produced any vouchers for sums of money alleged to have been paid. They produced three books kept by the petitioner Hutchison, and a very few old checks. These checks throw little light upon the real expenditures. Petitioner Hutchison claims to have had vouchers for all sums paid out, which he testifies were kept in a showcase in an old storeroom at Lowndesville, which storeroom was unoccupied. These vouchers, he now claims, were lost and destroyed by reason of the fact, as he alleges, that some one broke into the storeroom and scattered the vouchers, resulting in their loss. An annual filing of a return in this case, along with his vouchers as required by law, would have saved the petitioner from this embarrassment. In the absence of vouchers for moneys paid, I allowed the petitioners to produce such evidence as they were able of having paid out the sum of money claimed, and they have produced witnesses showing most of the disbursements claimed during the first year of their administration. In addition to this, Dr. Lynn of Thornwell Orphanage has testified to the expenditure of a certain amount of money by the petitioners for the maintenance of the wards at Thornwell Orphanage, and there is evidence that the sum of $175.00 was spent as claimed in the accounts upon the college education of Grace Daniel. The items entered upon the books do not show what sums were paid to Dr. Lynn as distinguished from sums of money remitted directly to the children while they were at Thornwell Orphanage. In practically every case, with one or two exceptions, the money is credited upon the books as having been forwarded to the children, or paid to the children. In making the statement of account during these years when sums were paid to Dr. Lynn, I have deducted from the total amount shown upon the books as paid to the children the amounts paid Dr. Lynn, giving the petitioners credit for the remaining amounts and paid to the children. The sums of the two amounts will correspond to the amounts claimed to have been paid in each year.
The wards contended that the petitioners should not be allowed credit for sums claimed to have been advanced to the children during their infancy, certainly not for an amount beyond what was reasonable and proper for children of their age, and in no case, unless vouchers for the sums claimed to have been paid were produced, or evidence was produced showing such payments. It appears that the children were placed in the orphanage when they were ten or twelve years of age and where other children inmates of that institution did not have spending money, and where it was not necessary for the wards in this case to have more than nominal amounts for spending money. The contention is not without force, but, if I am correct in my holdings that the petitioners in this case must respond for the estate which came into their hands and should not be credited with the investments claimed by them, then the two children, Ruth and Grace Daniel, had an estate the whole of approximately $10,000.00, the income of which was nearly $700.00 annually. Only in two years, perhaps, did the entire amount of disbursements claimed exceed the amount of the interest chargeable by law against the petitioners upon the estates of the wards in their hands. Such being the case, I have decided to allow credit for such sums of money as the petitioners have sworn were paid to the minors for their clothing, maintenance at the orphanage, and for spending money.
I have further concluded to allow the petitioners credit for all sums claimed to have been paid by them as shown by the books introduced in evidence, subject to such corrections as I have made on account of errors evident from an inspection thereof.
I have charged the administrator with all sums received, as shown by the books, making such corrections in the charges as are evidently erroneous, except that I have charged the petitioners with interest upon the annual balances and have charged them with the rent of the house in Lowndesville, which the testimony shows has been occupied during the whole of the time since the death of John T. Daniel.
In calculating the interest upon the amount of money which came into the hands of the administrators, I have followed the rule laid down in the case of Anderson v. Silcox, 82 S.C. 109, 63 S.E., 128, 131: "The master held that the plaintiffs are entitled to interest on amounts improperly expended by the administrators and guardian, and on amounts found to be due by them annually on the accounting. The Circuit Court held that the administrators are only liable for simple interest on the annual balances in their hands of the funds uninvested by them, and not retained to meet the demands of the estate. The general rules on this subject are, first, that the fiduciary is chargeable with interest from the beginning of the year succeeding that in which he received his appointment ( Koon v. Munro, 11 S.C. 139); second, that all funds received during the current year are to be regarded as unproductive until the end thereof, and all expenditures made during the course of the year should be regarded as made before the balance is struck, and that interest is chargeable upon the annual balance so struck ( Nicholson v. Whitlock, 57 S.C. 42; 35 S.E., 412). There may be special circumstances which would warrant a departure from these rules, but no such circumstances appear in this case. Any sums improperly expended by the administrators or guardian in this case must be treated as still in hand in striking the annual balance."
I have not allowed the petitioners credit for any commissions in this case, for the reason that they have made no returns during their administrations of this estate. It is true that the petitioner Hutchison filed two so-called returns with the Judge of Probate, which merely stated the aggregate amount claimed to have been collected, and the aggregate amount claimed to have been paid out by him during the first two years, without giving items, dates, or the names of persons from whom the money was received. Such papers are not returns in contemplation of law, and I so hold and decree.
It is therefore ordered, adjudged, and decreed that the petitioners herein, Robert J. Hutchison and J. Frank Rogers, administrators with the will annexed of the estate of John T. Daniel, do pay from the said sum of $14,231.90 the costs of the Judge of Probate in this case upon the hearing for final settlement the sum of $52.00; that they do pay to Miss Angela Roche, stenographer, for the transcript in this case, the sum of $30.00: and that they do pay from such sum the costs of the witnesses for respondents, amount due $8.70, making a total of $90.70; and that the balance of the said sum of $14,231.90 be paid by the said administrators with will annexed to the respondents, Ruth Daniel and Grace Daniel, or their attorney, in equal shares; that is to say, that they do pay to the said Grace Daniel the sum of $7,070.61 and to the respondent, Ruth Daniel, a like amount.
It is further ordered that the petitioners herein do pay, in addition to the foregoing amounts, the costs of the witnesses summoned by them, whose costs have been taxed by me at the sum of $42.00.
It is further ordered and decreed that either of the parties hereto and any of the interested parties may apply at the foot of this order and decree for such further orders and decrees not inconsistent with the foregoing as are necessary to carry into full force and effect the provisions of this order and decree, and that, if the amounts herein ordered paid are not paid forthwith, then any interested party may apply to the Court for judgment against the said respondents for the amount due him or her in accordance with the terms thereof.
The decree of Judge Featherstone is as follows:
This case was heard by me on appeal from the Probate Court.
The Judge of Probate made an exceedingly able and clear decree, from which both sides appealed.
It was fully and ably argued on both sides.
After giving the matter careful consideration, I am satisfied that the decree of the Probate Judge will have to be affirmed, except in two respects.
I think the Probate Judge was in error in not allowing the petitioners credit for 2 1/2 per cent. commissions for paying out the funds ascertained by the decree to be in their hands. This view is sustained by Gee v. Hicks, Rich. Eq. Sas. 5. Epperson v. Jackson, 83 S.C. 157, 65 S.E., 217, and Blackmon v. Blackmon, 113 S.C. 478, 101 S.E., 827.
I think also that the Probate Judge was in error in ordering a distribution of the funds, without providing for the payment, out of the funds of the estate, of a reasonable attorneys' fee, for the attorney who represented the petitioners; and this even though the finding of the probate was in the main adverse to the petitioners. They filed the petition for a settlement, which was necessary; and it was necessary also for them to be represented by an attorney, on the various issues which came up in the settlement.
This view is sustained by Atcheson v. Robertson, 4 Rich. Eq. 39, where Chancellor Dargan laid down the rule as follows: "I think a rule may be laid down as reasonable as it is simple; that an executor should be allowed re-imbursement for a reasonable counsel fee paid by him for the settlement of the estate in equity, where the aid of the Court appears necessary and proper."
And this rule is reaffirmed in McClellen v. Hetherington, 10 Rich. Eq. 202, 73 Am. Dec., 89. And this holding is not opposed to Wham v. Love, Rice, Eq., 51. The distinction between that case and the case above cited is clear.
In Wham v. Love the issue was between two sets of legatees as to which took under the will. The administrator aligned himself with one set (he also being personally interested), and the finding of the Court was against himself and his set. In these circumstances, the Court denied him counsel fees But the later cases construed that case, and hold that an administrator is entitled to his counsel fees, for the settlement of the estate in equity, where the aid of the Court appears necessary.
The administrators brought the action for the settlement of the estate, which was necessary. And the record shows that many pretty questions arose in the settlement, upon which it was necessary that they have the benefit of counsel. Their administration covered a period when it was unusually hard to properly manage an estate; and it is not hard to see that they may have honestly made mistakes. But, even though they did as was properly found by the Court, that does not mean that they should be deprived of representation by counsel in the filing of the petition and in the litigation that arose in the accounting.
These two exceptions of the petitioners are sustained. All of the other exceptions on both sides are overruled; and the decree of the Judge of Probate is affirmed in all other respects.
The case is remanded to the probate Court in order that that Court may fix attorneys' fees and recast the accounting in accordance with the above views.
Mr. J.M. Nichles, for appellants, cites: Conduct of trustees dealing with trust estates: 3 Hill, 204; 82 S.C. 109; 11 S.C. 139; 56 S.C. 42; 35 S.E., 412.
Messrs. Green Green, for respondents, cite: Good faith and diligence must be used in trust fund investments: 1 S.C. 244; 82 S.C. 109.
April 25, 1933. The opinion of the Court was delivered by
This cause related to the final settlement of the estate of John T. Daniel, deceased, and an accounting on the part of the administrators of the estate, and was heard in the probate Court of Abbeville County. The Judge of Probate, A.B. Garwile, Esq., went thoroughly into all the matters involved in the settlement of the estate, and his decree states fully the facts, as developed in the evidence before him, and his conclusions of law and the reasons therefor.
On exceptions made by the administrators to the probate decree, the cause was heard by his Honor, Circuit Judge Featherstone, who sustained all except two of the conclusions of the Judge of Probate.
The administrators have appealed from the decree on circuit to this Court. There is no appeal on the part of any other party.
On examination of the record, we have not been convinced of any error in the Circuit decree, as complained of by the appellants.
The decree of the Judge of Probate, eliminating the statement of account, and the decree of the Circuit Judge will be reported.
We take the opportunity to again call to the attention of Judges of Probate, and through them to the attention of administrators and executors of estates, of guardians of infants, and of other persons acting in fiduciary capacities in the probate Courts, that this Court does not look with favor upon the very loose and careless manner in which the estates of deceased persons, wards, and beneficiaries of trusts generally have been handled in recent years. There has been too much lack of observance of legal requirements and proper business methods in the handling of such estates. The administrators, executors, guardians, committees, and others, placed in positions of trust, in too many instances fail to make the annual returns required of them by law, and Judges of Probate too often overlook requiring proper annual accountings.
The judgment of this Court is that the decree appealed from be, and the same is hereby, affirmed.
MESSRS. JUSTICES STABLER, CARTER and BONHAM concur.
ON PETITION FOR REHEARING, SEPT. 25, 1933
The petition of the appellants for a rehearing relates only to the findings and holdings of the Probate Judge, affirmed by the Circuit Judge, as to the matter of interest.
By special leave of the Court, the respondents were allowed to file an argument against the petition for rehearing. Therein it is contended that the exceptions of the appellants, both to the decree of the Probate Judge and to the decree of the Circuit Judge, did not properly raise the question as to the correct manner of calculating the interest due by the appellants. An examination of the exceptions shows, in our opinion, that the question was properly raised. In fact, in the argument originally submitted in behalf of the respondent, it was stated that one of the questions involved was this: "Whether the Judge of Probate and the Circuit Judge correctly charged the administrators with interest in accordance with the decisions of this Court?"
On a careful re-examination of the record, we have reached the conclusion that there was error on the part of the Probate Judge as to the interest charged, and that likewise his Honor, the Circuit Judge, fell into error when he approved those charges.
The Probate Judge properly did not change the appellants with interest for the first year of their trust, but, in his calculations as to the succeeding year, he did not allow, as we conceive them, the decisions of this Court. From the total receipts of the first year, he deducted the total disbursements, and upon the balance thus ascertained to be on hand at the end of the first year, he computed interest at the rate of 7 per cent. per annum for the second year. The amount of interest so calculated and the receipts from other sources for the second year were added to the total amount on hand at the end of the first year; and from this sum there was deducted the disbursements for the second year. The balance thus stuck was adjudged to be the amount on hand, or the amount that should have been on hand, at the end of the second year. This method of striking the annual balance was followed throughout the accounting, covering a period of thirteen years.
The Probate Judge endeavored to follow the rule as to interest laid down in Anderson v. Silcox, 82 S.C. 109, 63 S.E., 128, 131, but we think he failed to properly apply the same. Therein it was stated: "The general rules on this subject are, first, that the fiduciary is chargeable with interest from the beginning of the year succeeding that in which he received his appointment ( Koon v. Munro, 11 S.C. 139); second, that all funds received during the current year are to be regarded as unproductive until the end thereof, and all expenditures made during the course of the year should be regarded as made before the balance is struck, and that interest is chargeable upon the annual balance so struck ( Nicholson v. Whitlock, 57 S.C. 42, 35 S.E., 412). There may be special circumstances which would warrant a departure from these rules, but no such circumstances appear in this case. Any sums improperly expended by the administrators or guardian in this case must be treated as still in hand in striking the annual balance."
From the cited authorities, it seems the method adopted by the Probate Judge is to be followed only where the annual receipts, other than interest charges, exceed the annual disbursements; but, where such disbursements exceed such receipts, the annual receipts must be added to the balance on hand at the beginning of the year, and, from the aggregate, disbursements made during the year must be deducted, and on this balance only should interest be charged. Since the disbursements for each year, except those for the last two years, exceeded the annual receipts, it is manifest that the accounting must be restated in accordance with the above announced rule; that is to say, to the total on hand at the end of the first year should have been added the receipts for the second year, and from the sum thereof there should have been deducted all proper disbursements made during the second year, and upon the balance thus struck interest should have been calculated from the end of the first year. In like manner the balance should have been struck for each succeeding year when the disbursements exceeded the receipts.
Since the issue for our determination, stated in the petition for rehearing, has been well presented in written arguments by both counsel for the appellants and the respondents, and since it is apparent to the Court that there was error in our former opinion in approving the interest charges, it does not seen necessary to have a rehearing of the case, but, of course, the former decision should be corrected.
The former opinion and judgment of the Court, filed in the cause, should be amended and modified as indicated herein, and it is so ordered.
The judgment of this Court is that the decree of the Circuit Judge, affirming the decree of the Probate Judge, be, and the same is hereby, modified in the respect mentioned; that in all other respects the said decree be, and the same is hereby, affirmed; and that the cause be remanded to the lower Court for the purpose of carrying out the views announced by this Court.
MESSRS. JUSTICES STABLER, CARTER and BONHAM concur.