Ewing v. Wm. L. Foley, Inc.

• Decision Date: 10 February 1926
• Docket Number: (No. 3782.)
• Citation: 280 S.W. 499
• Parties: EWING et al. v. WM. L. FOLEY, Inc.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Supreme Court

Page 499

280 S.W. 499

EWING et al. v. WM. L. FOLEY, Inc.^*

(No. 3782.)

Supreme Court of Texas.

February 10, 1926.

Error to Court of Civil Appeals of First Supreme Judicial District.

Action by Wm. L. Foley, Inc., against T. J. Ewing, Jr., and others, independent executors and trustees of the estate of George H. Hermann. Judgment for plaintiff was reformed and affirmed by the Court of Civil Appeals (239 S. W. 251), and defendants bring error. Judgment of Court of Civil Appeals reversed, and that of district court affirmed.

J. W. Lockett, of Houston, for plaintiffs in error.

Presley K. Ewing and Ewing Werlein, both of Houston, for defendant in error.

PIERSON, J.

The following will be a sufficient statement of the case for the purposes of this opinion.

T. J. Ewing, Jr., J. J. Settergast, Jr., and John S. Stewart, independent executors and trustees of the estate of George H. Hermann, deceased, plaintiffs in error, as they were authorized to do under the will, through their agents, constructed an eight-story concrete building in the city of Houston, next to and abutting the property of Wm. L. Foley, Inc., who were, and for many years prior thereto had been, conducting a dry goods business.

In excavating for the foundation of the Hermann building, the agents of plaintiffs in error negligently undermined the Foley building, causing the northeast wall of the latter building to crack and fall, necessitating that it be rebuilt, which was done during the months of August, September, October, November, and December, 1916.

Wm. L. Foley, Inc., brought this suit against T. J. Ewing, Jr., J. J. Settergast, Jr., and John S. Stewart, in their capacities as independent executors and trustees, under the will of George H. Hermann, deceased, to recover damages for loss of profits during the time the wall was being rebuilt, and for injury to the "good will" of the business. A judgment in favor of defendant in error for $17,500 loss of profits in its business during the five months mentioned caused by the condition of its building and the confusion and demoralization incident thereto, and for $1,000 injury to the "good will," was sustained by the honorable Court of Civil Appeals for the First District. Plaintiffs in error had acted in good faith, and were guilty of no personal negligence or individual fault in the selection of their agents, or in the matters complained of. For a more comprehensive and detailed statement of the case see the opinion of the honorable Court of Civil Appeals in 239 S. W. 251.

As stated, Wm. L. Foley, Inc., brought its suit against plaintiffs in error in their capacities as independent executors and trustees. It is the insistence of plaintiffs in error that an executor or administrator, as such and in his representative capacity, cannot commit a tort or wrongful or unauthorized act; that, if such act as committed, it is a personal act on the part of such executor or administrator, and one for which he may be held liable in damages personally, but that the estate under administration cannot be held liable therefor; that an executor or administrator, as such, cannot commit a tort. They cite as unqualifiedly supporting this rule the common law of England, which, by statute, has been adopted as the rule of decision in this state, the decisions of the courts of many of the states of the Union, text-writers, and digests.

In the management of the estate, and especially in respect to the building of the eight-story office building in the city of Houston, it is apparent that plaintiffs in error were acting more particularly in the capacity of trustees, and the rules of law controlling the acts of trustees and the liability of the trust estate for their acts is applicable. Shouler on Wills, Executors and Administrators, vol. 1, §§ 608, 609, volume 2, § 1248; Perry on Trusts (5th Ed.) vol. 1, § 263; 39 Cyc. 249, and cases cited; Ferrier v. Trepannier, 24 Canada Supreme Court Reports, 86; Yerkes v. Richards, 32 A. 1089, 170 Pa. 353.

Under the circumstances here narrated, is the trust estate liable in damages for the negligence of the agent of the trustees? May the injured party proceed directly against the property of the trust estate in a suit against the trustees in their representative capacity?

We have recognized that these are important issues. That was reflected in granting a writ of error with the notation "granted upon the importance of the question." Realizing that the main issue in the case is one of first impression in this state, and of far-reaching and of grave importance, the writer has made extensive research in the common law of England, which by statute is the rule of decision in the case in this state, and in the decisions of the American states. We have concluded that in such a case the correct and just rule is that the estate should be held to respond, and that suit may be maintained against the trustees as such. While the courts of most of the American states hold a contrary doctrine, yet it seems to us that this is the just and equitable rule. It certainly is supported by the common law, as will be set out herein, by some of the most distinguished courts of the states, and, we think, by the better reasoning.

A trustee, where it is necessary to do so, may appoint or employ agents or skilled persons to do and perform duties or services in matters in which he cannot be expected to be experienced. As a general rule, one accepting the duties and responsibilities of a trustee is charged, at all events, with the use of ordinary care and prudence in administering the trust. Underhill on Trusts and Trustees, pp. 299, 300, 426; Perry on Trusts and Trustees (6th Ed.) vol. 2, § 914; 39 Cyc. 295. But when such is the case, and the trustee has exercised care and prudence in selecting agents necessary for the performance of the duties incumbent upon him, as in this case the construction and erection of a modern office building, and has acted in good faith, and has been guilty of no personal negligence or individual fault, it would be a harsh and most unjust rule that would hold the trust estate free from liability and would hold him personally liable for damages for the torts of such agent, with no right of indemnity or reimbursement out of such estate. It would hold immune the estate, for the benefit of which the work was properly undertaken, and in many instances would wholly defeat recovery for the injury done where the trustee or trustees were insolvent or without funds.

For the law controlling the liabilities of the trustees under the facts of this case we will look to the common law of England as announced by the chancery courts of England and other authorities.

A parallel case is the case of Benett v. Wyndham (1862) 4 De G. F. & J. 258, 45 English Reports Full Reprint, 1183. Omitting discussion of other issues, we quote the following from that case, which discloses the facts and the principles of law applicable here, to wit:

"This was an appeal from an order of the master of the rolls dismissing a petition.

"The testator in the cause devised his residuary real estate to trustees upon trust by and out of the rents, issues, and profits thereof to pay two annuities, and by the same ways and means, or by such other ways and means (except a sale or sales) as they might think proper, to levy and raise such sum or sums of money as should be sufficient, with his residuary personal estate, to pay off the incumbrances on his estates. Subject to the above trust, he directed his trustees to stand possessed of his residuary real estates upon trust (after an estate which had determined) for the plaintiff for life, with remainder to his first and other sons in tail, with divers remainders over. * * *

"The third point arose as follows: Some timber being wanted for roofing a barn upon the estates, Mr. Fane, who was the resident and managing trustee, marked some oaks to be felled for the purpose, and gave orders to the bailiff to have them felled. The bailiff sent for that purpose the woodcutters who were usually employed upon the estate. One of these trees overhung a deep sunken lane, and, as it fell, a large bough swept into the lane, struck a person of the name of Leaney, a veterinary surgeon, who happened to be passing by, and broke his leg. Leaney made a demand for compensation against the trustees, which they considered exorbitant; and, the parties being unable to come to any terms, Leaney brought his action, which was commenced against both trustees, and continued against Fane as the survivor. Leaney recovered judgment for 1,200 pounds and costs. This sum the trustee paid, and now sought to be reimbursed out of the estate. The tenant for life concurred in this, but urged that the amount ought to be paid solely out of the rents which were set apart for paying incumbrances, as forming a fund which represented the inheritance.

"The master of the rolls dismissed the petition, treating it as doubtful whether any alteration of the scheme could be made on petition, but expressing a clear opinion that the damages arising from a tort must be borne by the trustee personally, and that the other matters formed no sufficient ground for altering the scheme.

"The petitioners appealed.

"* * * The scheme is framed for the purposes of a will which, as the master of the rolls held, gave the trustees a wide discretion. * * * As regards the damages and costs paid to Leaney, the trustee ought not to be held responsible as between him and the estate for an accident taking place in the execution of orders given by him in the discharge of his duty, and in respect of which he is in no manner to blame, though as regards third persons he is answerable for the negligence of those whom he employed. Rex v. Commissioners of Tower Hamlets (1 B. & Ad. 232), Hall v. Smith (2 Bing. 156), Attorney General v. Pearson (2 Coll. 581), furnish an analogy in our favour.

"Mr. Farrer, for the remaindermen, contended that there was...