Garesche v. Priest

• Decision Date: 22 June 1880
• Parties: FERD. L. GARESCHÉ . ADMINISTRATOR, Respondent, v. JOHN G. PRIEST, EXECUTOR, Appellant.
• Court: Missouri Court of Appeals

9 Mo.App. 270

FERD. L. GARESCHÉ . ADMINISTRATOR, Respondent, v. JOHN G. PRIEST, EXECUTOR, Appellant.

Court of Appeals of Missouri, St. Louis.

June 22, 1880

Where an administrator, in good faith, but without an order of court, invests funds in his hands in bonds secured upon a church-building, he will be held liable to the estate for any loss ensuing from the investment, including interest on the fund so invested.

APPEAL from the St. Louis Circuit Court, ADAMS, J.

Affirmed.

A. J P. GARESCHÉ , for the appellant: Interest is not chargeable as of course, but it depends upon the facts of each case.-- Madden v. Madden, 27 Mo. 546; Clyce v. Anderson, 49 Mo. 43. Damages cannot be recovered against a defendant which the plaintiff could have avoided.-- The State ex rel. v. Powell, 44 Mo. 440; Haysler v. Owen, 61 Mo. 274. An executor will be excused if he exercise ordinary skill and care, and is liable only when he has acted in bad faith.-- Fudge v Dorn, 51 Mo. 267; Thompson v. Brown, 4 Johns Ch. 619; Knight v. Earl, 3 Atk. 480; The State to use v. Meagher, 44 Mo. 362; Gamble v Gibson, 59 Mo. 596; Merritt v. Merritt, 62 Mo. 157.

D. T. JEWETT, for the respondent, cited: Wag. Stats. 90, sect. 57; Gamble v. Gibson, 59 Mo. 585.

OPINION

LEWIS P. J.

The question involved arises upon exceptions taken to the final settlement made for Daniel G. Taylor, deceased, the defendant's testator, upon his administration of the partnership estate of the St. Louis Sectional Dock Company. In December 1876, Taylor, as such administrator, having in his hands a surplus of about $38,000, invested $10,000 in bonds, at their par value, issued by the St. John's Episcopal Church. These bonds were part of an issue amounting to $25,000 made in 1872, and having five years to run. They bore interest at ten per cent per annum, payable semiannually, and secured by a deed of trust with power of sale, and constituting a first lien on the church building, situated on Dolman Street, in the city of St. La. At the time of this investment some of the bonds had been paid, so that those remaining unpaid amounted to about $21,600. It appears that the interest was regularly paid until the spring of 1877, and later at only a reduced rate. In the Circuit Court, the exception to the credit taken for these bonds was sustained, and a decree was entered that the respondent recover in money of the appellant the amount paid for the bonds, with interest.

The responsibility of a trustee for an improper or unfortunate investment of trust funds is not to be tested solely by considerations of good faith or purity of motives. Nor will it be sufficient to exonerate him, that he has acted as any ordinarily prudent man might well have done about his own affairs. In most cases, as in the present, there are courts, duly constituted, with jurisdiction to advise or direct the acts of trustees and fiduciary officers in all such matters. Wag. Stats. 90, sect. 57. If an administrator takes it upon himself to ignore the aid which the law has expressly provided to lead him to a safe conclusion, and trusts his own judgment alone, it seems hardly unfair to say that he must abide absolutely by the result, and make his judgment good to the estate, without any regard to the inducements upon which it was formed. The statute above referred to says: " If, on the return of the inventory, or at any other time, it shall appear to the satisfaction of the court that there is a surplus of money in the hands of the executor or administrator that will not be shortly required for the expenses of administration or payment of debts, it shall have discretionary power to order him to lend out the money on such terms and for such time as may be deemed best." It does not appear that the Probate Court was ever consulted about the investment under consideration.

In Gamble v. Gibson, 59 Mo. 585, the Supreme Court said: " The temptations to tamper with a fund by a trustee are so powerful and so numerous, the hopes of bettering the estate so often prove delusive, that the power of changing the character of the fund is most safely reposed in the discretion of judicial tribunals. This is the invariable rule in reference to converting money into real estate, or real estate into money. There, the character is wholly changed, and it can only be done by delegating the authority in the instrument creating the trust, or in other instances by the sanction of the court." This clear statement of the general doctrine, taken into view with the statute above quoted, would seem to attach to any voluntary investment by an administrator, of surplus funds in real estate securities, all the legal consequences of a wrongful act. If such an act, under any circumstances, prove injurious to the estate, it will be no defence for the administrator that he violated the law in good faith, or that he believed his own judgment and discretion to be better than that to...