Crayton v. Fowler

• Decision Date: 26 August 1927
• Docket Number: 12257.
• Citation: 139 S.E. 161,140 S.C. 517
• Parties: CRAYTON v. FOWLER.
• Court: South Carolina Supreme Court

139 S.E. 161

140 S.C. 517

CRAYTON v. FOWLER.

No. 12257.

Supreme Court of South Carolina

August 26, 1927

Trustee whose investment of trust fund in note and mortgage was a departure from the express direction of the deed creating the trust held personally responsible for resulting loss, though such mismanagement was not willful or prompted by improper motives.

It is a general rule that when a trustee departs from the directions contained in the trust instrument he is liable for any loss occasioned, irrespective of good faith or his best judgment.

Trustee's improper investment of trust funds in note and mortgage in violation of directions contained in trust deed held not ground for removal, in view of his good faith, though bond conditioned on faithful discharge of duties was thereafter required.

Appeal from Common Pleas Circuit Court of Anderson County; S.W. G Shipp, Judge.

Suit by Sallie C. Crayton against J. S. Fowler, individually and as trustee. Decree for plaintiff, and defendant appeals. Affirmed.

The following is the decree of Judge Shipp:

Cothran, J., and Watts, C.J., dissenting.

Sullivan & Sullivan and Watkins & Prince, all of Anderson, for appellant.

A. H Dagnall and Greene & Earle, all of Anderson, for respondent.

BLEASE J.

The decree of Hon. S.W. G. Shipp, circuit judge, in this cause, which will be reported, is entirely satisfactory to this court.

It is the judgment of this court that all the exceptions be overruled, and that the decree of the lower court be and the same is hereby affirmed.

STABLER, J., concurs.

CARTER, J., concurs in result.

COTHRAN J. (dissenting).

I am not in favor of affirming the decree of his honor Judge Shipp in this case for the reasons stated by him. On the contrary, I think that the decree should be reversed, and that the case should be remanded for the purpose of determining certain important issues which have not been passed upon, as indicated below.

The action was instituted for the purpose of having the defendant, J. S. Fowler, as trustee, account to the plaintiff for the income alleged to have accrued and become due to her and for the proceeds of the sales of certain portions of the trust property made by him.

It appears that prior to January 1, 1898, the defendant owned a tract of land in Rock Mills township of Anderson county, known as the "Frank White place," containing 290 acres more or less. On or about that date he conveyed said tract of land to his wife, Hortense C. Fowler, absolutely in fee simple.

On January 1, 1898, the conveyance last referred to having evidently been made for that purpose, Hortense C. Fowler conveyed the tract of 290 acres to the defendant, J. S. Fowler, as trustee, in trust for the purposes mentioned in the deed. (The terms of the trust are set forth in the second paragraph of the complaint, and will be incorporated in the report of the case.) Briefly stated, the trustee was given the "entire control and management of said premises"; he was directed to pay annually to the plaintiff, Mrs. Sallie C. Crayton, a daughter of Mrs. Fowler by a former marriage, the net issues, rents, and profits of the premises, during her natural life with provision therefor after her death, and for the sale of the land at a certain time; "that the said J. S. Fowler, as trustee, may at any time that he deems advisable, and at the written request of the said Sallie C. Crayton, which written request must be indorsed upon his deed of conveyance, properly probated and recorded therewith, sell and convey the said trust property for the purpose of transferring the investment into other real estate, upon the same trusts herein set forth and declared."

The defendant, J. S. Fowler, accepted said trust and entered upon his duties as trustee under said deed; he took entire control and management of the premises, collected the issues, rents, and profits therefrom, and turned the same over to the plaintiff, Sallie C. Crayton, as the deed directed, until he sold and conveyed the greater portion of the place as will be explained.

On December ___, 1910, the defendant, as trustee, sold and conveyed 93 acres of the trust land to one F. F. Martin for $4,220; on December 8, 1910, he sold and conveyed 134.9 acres to one C. D. Chamblee for $6,395; and on January 13, 1919, he contracted to sell 48 acres to one W. T. Daniel for $2,800, which agreement however has not been carried out, but upon which $500 cash was paid. These three sums ($4,220, $6,395, and $500), aggregating $11,115, were received by Fowler. Two hundred twenty-seven and nine-tenths acres of the 290 acres have accordingly passed out of his title and possession. The record contains an admission that these conveyances were made according to the conditions of the trust deed.

The $11,115, thus received by Fowler (assuming what is not clear, that it included the $500 received from Daniel) appears to have remained in his hands uninvested until January 11, 1919, he in the meantime accounting to the plaintiff for the interest, for she states in her testimony:

"I am not now insisting upon my claim for rents accruing from the trust estate, prior to April, 1920, rents or income."

On January 11, 1919, Fowler, as trustee, invested $11,000, the proceeds of the sale of the land as above detailed, in a note and mortgage which had been executed and delivered on that day by the Anderson Real Estate & Investment Company to one C. E. Pilgrim, the note being for $11,000, payable 3 years after date, with semiannual interest at 7 per cent. per annum and attorney's fees. This note was secured by a mortgage upon 236 1/3 acres of land in Williamston township, Anderson county, and upon the payment by Fowler of $11,000 was transferred by Pilgrim to Fowler, as trustee. The land evidently belonged to Pilgrim and was sold by him to the Anderson Company, the note and mortgage being taken to secure the purchase price or a major portion of it.

On November 26, 1919, the Anderson R. E. & I. Company bargained 111 1/3 acres of the 236 1/3 acres covered by the mortgage which had been given to Pilgrim and assigned to Fowler, as trustee, to one J. B. Spearman, for $7,210, and induced Fowler to release the lien of the Pilgrim mortgage from the 111 1/3 acres, the proceeds of the sale going to the Anderson Company, and leaving 125 acres as security for the $11,000.

The relations between the plaintiff and the defendant were not at all harmonious. She testifies that she had been trying to get the trust estate settled up for 8 or 10 years without success. In April, 1920, they were having a lawsuit of some kind, not explained in the record. On April 2, 1920, Fowler Mrs. Crayton, and her only child, a son, J. S. Fowler Crayton, had a conference looking to a settlement of their differences. Fowler was being represented by his attorney, Hon. M. L. Bonham, now an honored circuit judge of this state, the Craytons were represented by Hon. J. P. Carey, as...