Gilbert v. Kolb

• Decision Date: 30 April 1897
• Citation: 37 A. 423,85 Md. 627
• Parties: GILBERT v. KOLB.
• Court: Maryland Court of Appeals

37 A. 423

85 Md. 627

GILBERT v. KOLB.

Court of Appeals of Maryland

April 30, 1897

Appeal from circuit court, Frederick county, in equity.

Petition by Alice Virginia Gilbert, by her husband and next friend, J Milton Gilbert, for an accounting by David Kolb, trustee. There was a decree dismissing the petition, and petitioner appeals. Reversed.

Argued before BRYAN, FOWLER, BOYD, ROBERTS, PAGE, BRISCOE, and RUSSUM, JJ.

Milton G. Urner, C. O. Keedy, and Ham. Urner, for appellant.

Charles W. Ross, Benjamin F. Reich, and John S. Newman, for appellee.

RUSSUM J.

William Kolb, of Frederick county, died in 1889, leaving a will, by which, inter alia, he bequeathed to his son, David Kolb, who was also one of the executors named in the will, $15,000 "in trust to invest the same in some safe security or securities, either public or private, with full power in said trustee to reinvest the same from time to time as the exigencies of the trust may require," the income to be paid to his daughter, Alice Virginia Gilbert, the appellant during her life, and after her death the corpus of the estate to be paid to her children then living, and to the descendants of any child or children who may be living at her death, to be equally divided between them per stirpes. There was a mill property known as the "New London Mills," which belonged to the testator's estate which the executors, in September, 1889, sold to one Keller for $3,500. No part of the purchase money was paid, but the executors conveyed the property to Keller, and took from him a mortgage thereon for the entire purchase money, at 5 per cent. interest, and also a mortgage on a farm of 52 acres subject to a prior mortgage of $1,200, bearing 6 per cent. interest. Keller, the mortgagor, died in 1894, and the trustee, on March 16, 1895, filed his petition ex parte, asking the circuit court for Frederick county, in equity, to take juisdiction of the trust, and approve his investments, which was done. Afterwards the trustee and mortgagee foreclosed the mortgage, and sold both properties, buying them in as trustee,--the mill for $2,000, and the farm for $260, subject to the prior mortgage of $1,200. After the foreclosure proceedings were completed, the trustee filed his petition asking to be relieved of the trust, and filed therewith a statement showing a loss of $1,392 to the trust estate. On this petition the court passed an order releasing the trustee from the further execution of the trust, and Hammond Urner was substituted as trustee upon the petition of the appellant, and the trust estate transferred to him, except the investment in the Keller mortgage, in relation to which testimony was ordered to be taken; so that the sole question before us is in relation to the Keller investment. The learned and distinguished judge who decided this case in the court below, after referring to the difference which may exist between the discretion possessed by a testamentary and a conventional trustee,--that is, a trustee appointed under a decree,--clearly and correctly lays down the legal principles which control it, as follows: "Generally speaking, where there are no restrictions imposed" by the testator, a trustee named by him is vested with a discretion which a conventional trustee does not ordinarily possess; and where a discretion is expressly conferred by will, "its exercise in good faith and with proper diligence, though resulting in a pecuniary loss, presents quite a different situation from that which would arise were the loss to follow from an unauthorized act, or from the exercise of an assumed discretion" not intrusted to a conventional trustee. And this is so because the power of the one is broader than the power of the other, and the accountability of each is measured by a totally different standard. Loss resulting from an act of a conventional trustee, though the act were done in the utmost good faith, if it were not an act permitted by the instrument creating or defining the trust, or were done without proper judicial sanction, would fall on the trustee, who, having no discretion at all, or a very limited one,...