CARTER, J.
The plaintiff, Florence (Powell) Leaphart, commenced this action in the court of common pleas for Aiken county in the year 1927 against the defendants, Palmetto Trust Company and National Surety Company, for the purpose of recovering from the Palmetto Trust Company, a corporation under the laws of the state of South Carolina, as trustee for the plaintiff, the sum of $20,000, and interest, "alleged to have been dissipated and lost by the trustee while acting as such for the plaintiff, cestui que trust, " and also to
obtain judgment in the sum of $10,000, and interest, against the other defendant, National Surety Company, as surety upon the bond of the Palmetto Trust Company, the plaintiffs trustee. Among the allegations of fact set forth in the plaintiff's complaint, she alleged the intrusting of a fund of $50,-000 to the Palmetto Trust Company under a settlement had, in pursuance of proceedings entitled James Powell against C. J. Hill et al., instituted in Aiken county, S. C, in which the respondent in the case at bar, then Florence Powell, daughter of James Powell, plaintiff in the Aiken proceedings, received this sum, to be held in trust by the said Palmetto Trust Company, under conditions, set forth in the trust agreement. The plaintiff further, in her complaint, alleges the administration of the fund, and the subsequent dissipation of so much as $20,000 "account investment by the respondent's trustee of that sum in a second mortgage--which proved to be worthless."
The Palmetto Trust Company filed no answer in the case. In fact, it appears from the transcript of record that said company ceased to function as a going concern prior to the time of the commencement of this action.
As stated in the agreed statement of counsel, set forth in the transcript of record, the defendant National Surety Company alleged, among other things, "the cessation of the trust; the failure of notice to the surety of the death of James Powell--when the trust is alleged to have terminated; the continuance after the death of James Powell of the Palmetto Trust Company, not as trustee, but as agent, designated and selected by the cestui que trust; and, thereafter, the designation and selection of I. M. Mauldin as agent of the cestui que trust; and his administration of the trust estate"; and, further, alleged "that of all of the acts and doings of the cestui que trust the surety has been kept in ignorance."
By consent of the parties, the case, by order of the court, was referred to Hon. Edward S. Croft, master for Aiken county, for the purpose of taking the testimony and passing upon all issues in the cause. Pursuant to the said order, the master took the testimony in the case and submitted the same to the court, together with his findings of fact and conclusions of law. In view of the clear and full statement by the master as to all issues, and for the purpose of a full understanding of the case, we quote herewith the following from his report:
"(1) James Powell being in failing health, both mental and physical, as a result of a litigation entitled Powell v. Hill et al. (judgment roll of Aiken County No. 4767) he was declared non compos mentis during 1920.
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Due and complete and wise arrangements were made for his tender care in the homes of two of his married daughters, Mrs. Hill and Mrs. Henderson, during the remainder of his life, and certain property arrangements were made by the Court. Amongst other things Fifty Thousand Dollars of her father's money was awarded to his then unmarried daughter, Miss Florence Powell (Now Mrs. S. J. Leaphart) who is hereinafter referred to as the plaintiff.
"(2) As the Court then evidently considered that the plaintiff was not sufficiently conversant with business affairs to act for herself, the Court provided that her money ($50,000.00) should be turned over to a trustee, which trustee should give bond for the faithful performance of the trust.
"(3) The defendant, Palmetto Trust Company, was appointed trustee, and received Fifty Thousand Dollars in cash, and the defendant, National Surety Company, became surety, the bond being in the sum of Ten Thousand Dollars.
"(4) The terms of the trust inter alia were:
" 'To the Palmetto Trust Company absolutely, as trustee for Florence Powell, upon the trust that the same be held for the benefit of the said Florence Powell during the life time of James Powell, she receiving the income thereof during the same period (less any proper charge for handling) and she to receive the corpus thereof upon the death of her father. * * *
" 'The said trustee is to have the power to do all acts necessary to the proper handling of the said property, including negotiations, sale and reinvestment of any portion thereof, that may be proper in the discretion of the said Trustee; * * * '
"(5) James Powell died September 8, 1922.
"(6) Shortly thereafter the Trust Company acting by and through its Vice-President, I. M. Mauldin, (now deceased) sent securities amounting to Fifty Thousand Dollars, all of which were then good, to the Bank of Western Carolina of Aiken as its agent, for delivery to plaintiff who then lived in Aiken. The bond, however, read in favor of the Clerk of Court (Thomas T. Cushman), and it seems that the Trust Company made no arrangements for obtaining his receipt. Neither the officer of the Bank of Western Carolina who handled the matter--Mr. Mucken-fuss, nor Mr. Cushman were called as witnesses, and what happened between them is not in evidence. Certain, it is, however, that when plaintiff applied to the Bank of Western Carolina for her securities, that bank which was acting as agent for the Trust Company, utterly refused to deliver the securities to the plaintiff and returned them to the Trust Company in Columbia.
"(7) The Trust Company made no further effort whatever to deliver the securities to
its ward, nor to account to her nor to the Court, nor to Cushman, the Clerk of Court, for its actings and doings as trustee, although plaintiff testifies, and I find it to be a fact, that she then wished her property and remonstrated with the Trust Company for not delivering her securities to her. This was in October 1922.
"(8) Plaintiff then seems to have acquiesced in the situation, and the Trust Company for reasons of its own, which certainly have not appeared in the testimony, refrained from taking any further steps toward an accounting and toward delivering its ward's property and ridding itself of its trust, although Mr. Powell had died and it could have done so legally. To the contrary plaintiff's testimony and the letters of the Palmetto Trust Company to plaintiff, which appear fully in the record, show that the Trust Company deliberately determined and elected in the fall of 1922, and after Mr. Powell's death to continue to act in the same manner as previously as plaintiff's trustee. The Trustee Company actually paid her income on the whole of her fund until May 15, 1926.
"(9) The position that after Mr. Powell's death, I. M. Mauldin personally was the trustee or agent is untenable. The testimony and the correspondence especially and the statements of income rendered to plaintiff, show clearly that the Palmetto Trust Company was the trustee.
"(10) Prior to 1926 and while the Trust Company was solvent, both before and after Mr. Powell's death, the National Surety Company had collected the premiums on the bond from the Trust Company, which in turn had charged it against plaintiff. During 1926, the Surety Company collected two premiums directly from plaintiff, having written letters directly to her soliciting their payment. The Surety Company then assured plaintiff's husband that the bond was in good standing. The Surety Company has not returned nor endeavored to return any of the premiums paid to and collected by it since Mr. Powell's death.
"(11) During the fall of 1922, the Trust Company invested Twenty Thousand Dollars of its ward's money in the purchase from Palmetto National Bank of a second mortgage executed by Southern Motor Company of Greenville known as the South Main Street property and the Washington Street property. There were first mortgages upon these properties amounting to Fifty Thousand Dollars in principal.
"(12) I. M. Mauldin, who attended to the whole matter was an officer of the Trust Company, and an officer of the Southern Motor Company, the mortgagor, and an officer of the mortgagee, the Palmetto National Bank.
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"(13) Further than this the Palmetto Trust Company was a component part of the Palmetto National Bank, as is shown by the stock certificates of said bank, which carried a pro rata stock interest in the Palmetto Trust Company. By the terms of the stock certificates the Trust company was controlled solely by the directors and officers of the Bank and a transfer of a pro rata interest in stock in the trust company. While the Bank was incorporated under the laws of the National Government and the Trust Company under the laws of the State Government, the interest of the two were identical and inseparable, to all intents and purposes they were one and the same business organization.
"(14) The Trust Company, in August 1922, had two real estate agents appraise the property covered by the Motor Company's mortgage. They reported the property as worth an aggregate of One Hundred and Ten Thousand Dollars, subject to two first mortgages of Fifty Thousand Dollars. No further appraisal or inquiry...
