Hunt v. Gontrum

Robinson, C. J., delivered the opinion of the Court. Mrs. Miriam R. Lyons died in 1875, and by her will she bequeathed to Robert S. Hunt one thousand dollars “ in trust for the sole use and benefit” of her nephew, William, Galloway. Instead of demanding the payment of this: legacy in money, as it was the plain duty of the trustee, he: accepted. from the executor of Mrs. Lyons certain promissory notes held by him, and among these notes was one of Thomas J. Perry, dated June 25th, 1878, for the payment of $451.92. The interest on this note was regularly paid by Perry to the trustee till 1885, but from that time no interest has been paid nor were any steps taken by the trustee to enforce the collection of the note.

Perry died 1888, and his estate it is said is insolvent; and Hunt, the trustee, died 1889. This is a proceeding by the appellee,, appointed trustee in the place of Hunt, against Hunt’s executor, to recover the loss sustained by the cestui que trust, on account of the Perry note. The case was submitted to the Court below upon a written agreement of counsel, and the questions submitted for its determination, are whether Hunt, trustee, ought and could have reduced the Perry note to money ? And secondly, ⁶⁶ whether Galloway, the cestui qu,e trust, acquiesced or consented to the breach of trust of the trustee?

That it was the duty of the trustee to have taken proper steps at once to collect the money due on the note, there can be no question. He had no right in the first place to accept the assignment of the note from Mrs. Lyons’ executor in part payment of the legacy, but ought to have demanded its payment in money. And if he did accept it, he ought to have proceeded at once to collect the note. In the absence of express authority in the instrument creating the trust, atrustee has no right to invest trust money in personal securities, and if he does, he makes the investment at his own peril.

And even where the investment is left to his discretion, it is well settled that it is not a sound discretion to invest in such securities. Walker v. Symonds, 3 Swans, 62; Drake v. Martyr, 1 Beav. 525; Vigrass, v. Binfield, 3 Madd. 62. In Holmes v. Dring, 2 Cox, 1, Lord Kenyon said: “ No rule was better established, than that a “ trustee could not lend on mere personal security and it “ ought to be rung in the ears of eveiy one who acted in the “ character of trustee.” It is equally clear, too, we think, that the trustee could have collected the money due on this note' if proper steps had been taken to enforce its payment in 1878, when it was assigned to him. Perry was at- that time the owner of a farm containing 123 acres, for which he paid $3,000, and the only lien upon it from 1883 down to his death in 1888 was.a mortgage of $800.

He had besides personal property worth at least $600. Doctor Franklin, the executor of Mrs. Lyons, says he was at the time of the assignment a prosperous farmer and he considered him perfectly good for the payment of the note. Now there is testimony to show that when