Dickerson v. Camden Trust Co.

• Decision Date: 28 April 1947
• Docket Number: 123/543.
• Citation: 53 A.2d 225
• Parties: DICKERSON et al. v. CAMDEN TRUST CO. et al.
• Court: New Jersey Court of Chancery

53 A.2d 225

DICKERSON et al.

v.CAMDEN TRUST CO. et al.

123/543.

Court of Chancery of New Jersey.

April 28, 1947.

COPYRIGHT MATERIAL OMITTED.

Suit by E. Stuart Dickerson, Jr., and others against Camden Trust Company, a corporation of the state of New Jersey and Woodward Tingle Dickerson, individually and as executors and trustee under the last will of Edwin Stuart Dickerson, deceased, for construction of a will, for a decree directing defendants to make discovery of the assets of the estate, for an accounting, and for a surcharge against the defendants because of the losses sustained because of investment of estate's assets in alleged non-legal securities.

Decree in accordance with opinion advised.

Syllabus by the Court.

1. Testator died October 9, 1930. By his will he directed his executors ‘to invest said estate in legal securities and from the income therefrom’ to pay certain annuities. Held, the direction is mandatory and a delay of more than three and a half years in the conversion of non-legal securities on a steadily declining market, and reinvestment of the proceeds in legal securities, was unreasonable and evidential of gross negligence for which the executors upon proper exceptions to their account should be surcharged.

2. Prior to the Statute of 1881 (Chap. 115, P.L.1881, p. 130, G.S. 1709-1895, Vol. 2, p. 2401, sec. 197) an executor or trustee could retain non-legal investments made by the testator only when the will specifically authorized such retention or contained a direction to invest the trust property in securities to the kind received from the testator. The purpose of the statute was to authorize the retention of investments made by the testator except where the will ‘specially directs in what manner the trust funds shall be invested.’ Neither that act, nor Chapter 103, P.L.1899, p. 236, 2 C.S.1910, p. 2271, §§ 34-36, altered the pre-existing rule as applied to this estate.

3. The construction of wills is controlled by the law in effect at the date of the testator's death and the conduct of executors and trustees must be appraised in the light of that law. The prohibition of the acts above referred to against investments contrary to the direction of the will is still in force and was in force at the date of the testator's death.

4. The will of the testator is a law to the executors. Any deviation from such authority is illegal, and at their own risk. The wisdom of testator's directions is not to be considered by executors or trustees.

5. Where the will specifically defines the duties of executors or trustees, they have no discretion in the exercise of their powers.

6. Retaining investments, legal or non-legal, is in effect making them.

7. Due care and good faith cannot justify an executor or trustee who, under a mistake of law, intentionally does that which is prohibited or ignores a plain mandate of his testator's will.

8. An executor or trustee cannot sit idly by and permit securities which have come into his hands from his testator's estate to steadily depreciate in value. Such conduct makes a prima facie case of lack of good faith or failure to exercise reasonable discretion and the burden of explaining such conduct is upon the executor or trustee. And when a security comes within the range of doubt it is the part of prudence and discretion to eliminate it from a trust fund at the earliest possible moment. This rule applies, of course, where the executor or trustee has a right to retain securities in the exercise of a reasonable discretion; a fortiori, where the will contains a mandate to the executor or trustee to convert and invest in legal securities.

9. Even where the securities of a testator are retained by an executor or trustee pursuant to statute or a direction in the will, he is privileged to retain them only so long as they remain safe.

10. Ordinarily executors have a year within which to convert and reinvest, but if good judgment dictates, conversion should be in a shorter period. Circumstances may control such length of time and where the market is steadily declining, and had been for more than a year prior to testator's death, prompt action is in order.

11. The statement of assets required by the Orphans' Court rule to be annexed to an executors' account is a part thereof. An interested party, desiring to do so, must make timely objection to any item or items shown in such statement.

12. In the instant case the executors' accounts had attached thereto lists of investments and assets as required by the rules of the Orphans' Court and no exceptions to any item or items contained therein were filed by any of the beneficiaries of this estate. The decrees approving the executors' accounts are res adjudicata and the executors, as such, cannot now be surcharged for losses sustained by reason of their retention of testator's non-legal investments.

13. Where an executor is directed by the will to convert non-legal securities of a testator into legals, the trustee can legally accept from the executor only legal securities or cash, and if he accepts non-legals, he takes them at the valuation put upon them by the executor in his account, and is liable to account for the value at which he received them.

14. A trustee owes a duty to the cestui on taking over property from the executor to examine the property tendered and see whether it is that which he ought to receive. If he accepts property in which the executor has wrongfully invested the funds of the estate, or accepts non-legal investments retained by the executor, the trustee may render himself liable to the cestui by accepting such tender. He must make up his mind whether the existing trust investments are legal or illegal, judged by the controlling trust clause.

15. If a trustee accepts non-legal investments unauthorized by either the will or statute, he is liable for the value placed upon them by the executors in their account and cannot be allowed for depreciation prior or subsequent to the allowance of the account, and this is especially true where the executors and trustees are identical.

16. In the instant case the executors and trustees are the same. The valuation put upon the securities by the executors cannot be repudiated by the same persons as trustees.

* * *

Powell & Parker, Harold T. Parker and Albert McCay, all of Mount Holly, Autenrieth & Wortendyke, and Alfred A. Rochester, both of Newark, for complainants.

Boyle, Archer & Greiner, Frederick P. Greiner, Grover C. Richman and Grover C. Richman, Jr., all of Camden, for defendants Camden Trust Co. and Woodward Tingle Dickerson, executors and trustees under the last will and testament of Edwin Stuart Dickerson, deceased.

Joseph Beck Tyler, of Camden, for defendants Camden Trust Co., individually, and Woodward Tingle Dickerson, individually; Estelle W. Dickerson and Margaret W. Dickerson; Margaret W. Dickerson, Guardian for Carol Dickerson, a minor; Margaret W. Dickerson, Guardian for Mary Dickerson, a minor; Margaret W. Dickerson, Guardian for William W. Dickerson, a minor; Eleanor H. Johnson and Edward Jones.

BERRY, Vice-Chancellor.

The original bill in this cause was filed on December 22, 1938. An amended bill was filed herein on November 28, 1939. The amended bill seeks a construction of the Last Will and Testament of E. Stuart Dickerson, deceased; a decree directing the defendant executors and trustees to make discovery of the assets of said estate, and the value thereof at the time of the filing of the first, second and final accounts as executors and at the present time; an accounting by the said executors and trustees; it challenges the investment of the assets of the testator's estate in non-legal securities and the retention by the executors and trustees of non-legal securities in contravention of the provisions of the testator's will, and seeks a surcharge against the executors and trustees because of losses thereby sustained. This court is also asked to take general jurisdiction of the administration of said estate and the trusts created under testator's will, and additional relief by way of discovery, accounting, etc., is sought.

The cause originally came before the late Vice Chancellor Davis on the return of an order to show cause why this court should not assume general jurisdiction of the administration of the trust estate and, pursuant to his opinion filed herein on April 10, 1939, this court assumed such jurisdiction by an order advised by him on May 25, 1939. After issue joined, the cause was referred to Vice Chancellor Woodruff by Order of Reference dated March 20, 1941. It was re-referred to Vice Chancellor Sooy by Order of Re-Reference dated March 27, 1941, and re-referred to me by Order of Re-Reference dated November 14, 1941. Numerous preliminary and incidental motions and arguments were had before me from time to time and the cause first came on for final hearing before me on October 8, 1945, and continued from day to day thereafter until October 15, 1945, on which date the final hearing was concluded. Decision was reserved pending the filing of briefs by counsel for the respective parties in interest. Final briefs were filed with me on October 7, 1946.

Edwin Stuart Dickerson, the testator, died on October 9, 1930. His will was probated and letters testamentary thereon were granted to the defendants Woodward Tingle Dickerson and Camden Safe Deposit and Trust Company, the two executors named therein, by the Camden County Orphans' Court on October 21, 1930. The defendant Camden Trust Company is the successor, by merger, of the Camden Safe Deposit and Trust Company.

By the first paragraph ‘Seventh’ (there are two paragraphs numbered ‘Seventh’) of his will, the testator provided, in part, as follows: ‘Seventh: All the rest, residue, remainder of my estate, whether real, personal or mixed of whatsoever kind and wheresoever situate which I may own or have the right to dispose of at the time of my decease, I give, devise and...