Fesmyer v. Shannon

• Decision Date: 05 October 1891
• Docket Number: 97
• Citation: 22 A. 898,143 Pa. 201
• Parties: P. FESMIRE ET AL. v. J. SHANNON ET AL
• Court: Pennsylvania Supreme Court

22 A. 898

143 Pa. 201

P. FESMIRE ET AL. v. J. SHANNON ET AL

No. 97

Supreme Court of Pennsylvania

October 5, 1891

Argued February 6, 1891

APPEAL BY DEFENDANTS FROM THE COURT OF COMMON PLEAS OF MONTGOMERY COUNTY.

No. 97 January Term 1891, Sup. Ct.; court below, No. 44 June Term 1886, C.P.

On April 6, 1886, Peter Fesmire, Ephraim Magargal and Josiah Kerper, executors of the will of Peter Fesmire, deceased, as assignees of Benjamin Brown, administrator, etc., brought scire facias against James Shannon, with notice to William Hazel Wilson, terre-tenant, upon a mortgage executed by the defendant Shannon in favor of Samuel Brown. Before trial Josiah Kerper was dismissed by the Orphans' Court of Montgomery county from the office of executor, and, by amendment made at the trial, his name was stricken from the record as one of the plaintiffs.

At the trial, on October 13, 1890, the following facts were shown:

On April 1, 1871, James Shannon executed and delivered to Samuel Brown a mortgage of certain real estate in Norristown, to secure the payment of $2,500, with interest. The mortgagee having died, Benjamin Brown, his administrator, on June 19 1875, transferred the mortgage by the following assignment indorsed thereon:

"I Benjamin Brown, administrator of Samuel Brown, the mortgagee within named, do hereby assign, transfer and set over the within mortgage and all moneys due and to become due thereon unto Josiah Kerper, Peter Fesmire and Ephraim Magargal, executors of the last will and testament of Peter Fesmire, deceased, to hold the same to them, together with the mortgaged premises within described, their heirs, executors, administrators and assigns."

By the will of Peter Fesmire, deceased, his executors, named in the foregoing assignment, were directed to invest the one third of his estate in "good real-estate securities," the interest or income of which was to be paid half yearly to the testator's widow during her life, the principal to be distributable at her death among certain of his children, among whom were Peter Fesmire, one of the executors, and Catharine Magargal, the wife of another. The purchase by said executors of the mortgage in question was made as an investment, in pursuance of the aforesaid direction in the will. At the date of the assignment to them they had settled their final account, in which they set aside $7,306.12 for investment for the widow's benefit. The date of filing that account was given in the paper-books as June 10, 1875. As Josiah Kerper resided near to the widow, while his co-executors resided some distance away, the latter left in his custody the original mortgage and assignment, in order that he might from time to time collect and pay over to the widow the interest accruing upon the mortgage. He did so collect and pay over the interest until 1882, and continued to make payments of interest to the widow until October 1, 1885.

On April 1, 1882, Shannon paid the principal of the mortgage debt to Kerper, who thereupon delivered up to him the original mortgage, and entered upon the record thereof in the recorder's office an acknowledgment of satisfaction under seal in the following form:

"I, Josiah Kerper, assignee of Benjamin Brown, administrator of Samuel Brown, Sr., mortgagee named in the annexed mortgage, do hereby acknowledge full satisfaction for principal and interest of said mortgage, and do release the mortgaged premises to the mortgagor, his heirs and assigns forever. Witness my hand and seal this first day of April, 1882. JOSIAH KERPER, Acting Executor. Acknowledged before me, H. B. STRODOCK, acting for Recorder."

Kerper's co-executors were not aware of this payment until some time in 1886. On cross-examination, they both testified that they had not given notice to Shannon that he must not pay the principal to Kerper, or that the mortgage was held by them as testamentary trustees. The money so collected by Kerper from Shannon was embezzled. ^[*]

At the close of the testimony, the court, SWARTZ, P.J., charged the jury in part as follows:

This is a suit upon a mortgage, and as the court views this case there is no question of fact that requires your consideration. [The only question raised by this issue is one of law, and therefore it seems plain to the court that the duty of the court is to direct you to render a verdict in favor of the plaintiffs and against the defendants.] It is perhaps unnecessary to give my reasons to you for this conviction. . . .

There is no evidence here that Mr. Shannon had any knowledge of any trust devolving upon these executors, other than that which devolved upon them as executors. Nor is there any proof here that Mr. Shannon had notice that this money was invested by the executors, the interest whereof was to be paid to the widow of Peter Fesmire. [The facts as disclosed, in this case, show simply the investment by three executors of the funds of the estate, and the payment by the owner of the property, the mortgagor, to one of the executors, who failed to account to the estate or to his co-executors for the money so received; and, in the view the court takes of this case, that is not a good payment of the mortgage], and the satisfaction entered by one of the executors under such circumstances is not a good satisfaction.

The executors are appointed to act together. The purpose of the appointment of three executors, no doubt is for the better protection of the estate; and when this obligation was taken in the name of the three executors, it was right and proper that each one should be consulted, or at least assent to the payment of this money to any particular one of the executors, for otherwise the matter would be entirely in the hands of one executor, and it would be useless to have the appointment of three. If one executor can undo everything that three can do or may do, it is useless to require that the three should act conjointly in the investment. . . .

[It is your duty, therefore, under the instructions of the court, to render a verdict in favor of the plaintiffs, for the amount of this mortgage together with interest at six per cent from the time the last interest was paid, and that is admitted to be from the first day of October, 1885,] or at least there is no testimony to the contrary.

The jury, in accordance with the direction of the court, returned a verdict for the plaintiffs for $3,255.46. Judgment having been entered thereon, the defendants took this appeal, assigning for error:

3. The parts of the charge embraced in []

Judgment reversed.

Mr. C. H. Stinson and Mr. B. E. Chain, for the appellants:

1. It has never been held that one of a number of executors has not the power to collect a debt or obligation due to the testator in his lifetime: 3 Wms. on Ex'rs, ch. 2. The law does not cast upon a purchaser from one executor the duty of inquiring whether he is mismanaging the estate in fraud of creditors or legatees: Wood's App., 92 Pa. 379. Much less will such a duty be cast upon a debtor who pays a debt due to the estate. It would seem, therefore, that if this mortgage had been held by the testator at his death, the payment to Kerper would have been valid. Can the fact that it was taken by the executors as an investment of assets of the estate, make any difference?

2. Such a distinction is nowhere to be found in the books, and its unsoundness is fully demonstrated by THAYER, P.J., in D'Invilliers v. Abbott, 4 W.N. 124. The assignment, in this instance, indicates no more than that the executors purchased the mortgage to keep the assets of the estate invested until final settlement, which is a very common transaction. They are not named in it as trustees, and the mortgagor was not advised that the investment was held for any trust, under the will or otherwise. See Bowes v. Seeger, 8 W. & S. 222. Moreover, two of the executors trusted Kerper, and held him forth as their agent by giving him possession of the mortgage. What justice is there in the attempt to throw the consequences of their negligence upon innocent parties who acted in perfect good faith?

Mr. W. Horace Hepburn, for the appellees:

1. By filing their account and setting aside $7,306.12 for investment under the directions of the will, for the benefit of the widow, the executors divested themselves of their character as such, as to this money, and assumed that of trustees: Fesmire's Est., 134 Pa. 84; Hill on Trustees, § 364; Aston's Est., 5 Wh. 241. This being so, Josiah Kerper had no power to receive the principal of the mortgage, and release or in any manner discharge the same, without the concurrence of his co-trustees; 1 Lewin on Trusts, * 258; Vandever's App., 8 W. & S. 405; Bohlen's Est., 75 Pa. 304; De Haven v. Williams, 80 Pa. 480; Hall v. Franck, 11 Beav. 419; Cottam v. Railway Co., 1 Johns. & Hem. 243; Bullitt v. Abinger, 6 Jur. 412, Walker v. Symonds, 3 Sw. 63; Lee v. Sankey, L.R. 15 Eq. 204.

2. It is claimed that the mortgagor had no notice of this trust. But he had notice from the assignment that the mortgage was transferred to Kerper and others, as executors of the will of Peter Fesmire, deceased; that it formed no part of the decedent's estate in his lifetime; and that it was made payable, by the terms of the assignment, to the executors "their heirs, executors, administrators and assigns," not to their successors, which earmarked it as an investment by them as trustees. He knew that it was no part of the duty of the executors, as such, to make the investment, and that they had held it for nearly seven years. By the assignment, referring to the decedent's will, he had constructive notice of the trust which that will disclosed: McAteer v. McMullen, 2 Pa. 33; Bohlen's Est., 75 Pa. 313. Having notice of all these things, he was put on...