Opinion
May, 1910.
Sparks Fuller, for trustees.
Blandy, Mooney Shipman, for contestant.
Charles C. Protheroe, for Russell W. Boyer, remainderman.
The decree to be entered upon the accounting of a deposed trustee must sound in money only. It must contain "a summary of the account as settled." Code Civ. Pro., § 2551. Unless by special convention, the direction must be that the fund be turned over to the successor in money and not in kind. No substituted trustee can be asked to take as cash securities which he neither selected nor approved.
If the accounting trustee has investments of the fund which his successor will not accept, he is equitably entitled to the personal ownership of the rejected securities.
While a keen regard for the safety of the trust would suggest that, in some cases, bad securities might be better than nothing and that they might well be held by the substituted trustee until the decree for payment was fulfilled, there seems to be no warrant for such an arrangement. It is held that the removed trustee is entitled to a clear title to the doubtful assets, either before or at the time of the decree requiring payment from him of the fund in cash.
In this regard, it is said: "He should have them" (all the assets for which he is refused credit) "if for no other reason, in order to fulfill the requirements of the decree" (Matter of Niles, 113 N.Y. 547, 554), and again, "As the executor is required to pay cash to the estate he becomes the equitable owner of the bonds and mortgages in which he has invested the proceeds of the estate, and it may very well be that unless he can make use of these bonds and mortgages he will be without funds to comply with the decree and, therefore, being unable to make compliance may be punished for contempt." Matter of Ryer, 94 A.D. 449, 451.
One of the remaindermen asks that the decree, in addition to directing the transfer in cash of the fund, shall require the immediate deposit of the securities in court, under section 2603 of the Code; but the provision cited has no relation to the removal of a testamentary trustee, and, if it were applicable, it should yield to the rule quoted supra, since it is within the discretion of the court.
A practical difficulty is that only one of the removed trustees accounts. The other is not within the State, and it is asserted that there would be danger to the accounting trustee if these securities should be made subject to the control of his associate or liable to his debts. All the assets in question, however, are now in the hands of the accountant and a transfer will be made to him alone.
The decree must, therefore, provide for the payment to the successor trustee, to be appointed, of $57,799.32, and must direct that the substituted trustee execute to him such instruments as may be necessary to transfer to him title to all of the investments presented by the account.
Decreed accordingly.