Mattocks v. Moulton

• Decision Date: 05 August 1892
• Citation: 24 A. 1004,84 Me. 545
• Parties: MATTOCKS v. MOULTON.
• Court: Maine Supreme Court

24 A. 1004

84 Me. 545

MATTOCKS

v. MOULTON.

Supreme Judicial Court of Maine.

Aug. 5, 1892.

(Official.)

Report from superior court, Cumberland county.

Appeal of Charles P. Mattocks, trustee, from a decree of the probate court sustaining the objections of Augustus F. Moulton, administrator, to certain items of appellant's account. Decree affirmed.

Strout, Gage & Strout, for appellant.

A. F. Moulton, for appellee.

EMERY, J. Cynthia C. Beale, in her last will, after making sundry particular legacies, devised the remainder of her estate to the executor and trustee therein named, "in trust, however, for the following purposes, that is to say: said trustee shall take, hold, manage, and invest all the estate which shall come to his hands and possession under this clause of my will, in such manner as he shall deem for the best interest of all concerned therein, and shall keep the same so invested till Edmund Kimball shall reach the age of thirty years, "at which date the trustee was to turn the estate over to him.

In the same will she appointed the appellant to be executor and trustee under the will. Upon her death the will was duly proved, and the appellant commissioned as executor in October, 1885. His final account as executor was filed in November, 1886, and, after the usual public notice, was allowed, as presented, by the probate court for Cumberland county. In this account the executor charged himself with the amount of the inventory, and with sundry other amounts, "as per Schedule A," and claimed credit for disbursements, "as per Schedule B." In Schedule B was this item of credit, viz.: "Amount transferred to my hands as trustee under the provisions of the will of the deceased to balance this account, as per Schedule C, filed herewith." This item balanced the account, leaving nothing to the debit of the executor. Schedule C (filed with Schedule B) was a list of various notes, stocks, bonds, etc., among which was a note of the Union Packing Company of Portland, collateralled by stock of the same company, and also a note of one Nutter, secured by a second mortgage of real estate in Scarborough. These two investments had not been made by the testatrix, but were made by the executor from cash of the estate in his hands.

After settling the above account, the appellant (the executor) qualified as trustee under the will, but filed no new inventory. He filed his account as trustee in November, 1889. In this account he charged himself as trustee in Schedule A with the same amount he had claimed credit for in his executor's account as transferred to trustee. He claimed credit as trustee in Schedule B for numerous items of disbursements, etc., and also for the following item, viz.: "Personal property in hands of trustee, as per Schedule D, filed herewith." In this last schedule, D, were listed, among other items, the following, viz.:

1. 50 shares stock Union Packing Co.

$2,500 00

2. Note of Union Packing Co. for dividend

158 19

3. Nutter note, collateralled by 10 snares stock Union Packing Co.

401 63

It will be noticed that the appellant had changed the security of the Nutter note from a second mortgage on real estate to shares in the stock of the Union Packing Company, and had also changed the note of that company into its stock.

This company was organized in August, 1884, at Portland, under the general law, for the purposes of canning and packing fruits, meats, fish, and vegetables, and for dealing in the product. Its capital was fixed at $50,000, of which $30 only was paid in. The company did not begin business till 1885, and it then fixed the par value of its shares at $50. Ninety-five shares only were ever issued. Sixty shares were issued in payment for real estate and plant in Scarborough, which at that time, for that business, were worth 83.000. The remaining 35 shares were issued at various times at their par value for the purchase of machinery and tools for leased factories. The whole of the capital stock issued was thus absorbed in real estate, machinery, and tools, leaving nothing for a working capital. The company owned one factory in Scarborough, and had leased two others,—one at Hallowell, and one at Winterport. It carried on business on credit, as was usually done by such companies in the packing business. The stock of the company was never offered, nor quoted, nor did it have any selling value in the open market.

At the times the appellant made the investment of the trust funds in the notes and stock of this company, its business was in healthy condition as regards payments and credits. It has paid no dividends, however, since 1888. In making these in vestments of the trust funds, the appellant acted in good faith after a personal examination, and in the belief that the investments were for the best interest of all concerned, but without consulting any outside parties as to the standing of the company, the value of its stock, or the propriety of such an investment for trust funds.

At the February term of the probate court. Mr. Moulton, the administrator of the original cestui qui trust, then deceased, appeared and objected to the allowance of the three items above quoted from the trustee's Schedule D. The probate court sustained the objections, and the trustee appealed to the supreme court of probate. Evidence was then put in before the appellate court, of which the above narrative is an abridgment, and the cause was then reported to the law court for determination.

The appellant now contends that the original investments made by him as executor in the notes of Nutter, and in the note of the Union Packing Company, were adjudicated by the probate court to be proper investments, by the allowance of his final account as executor, in which account these investments were listed in Schedule C; and that the cestui que trust, not having appealed from that adjudication, is now hound by it.

We do not think that the probate court, in settling the executor's account in the form in which it was presented, had any occasion to adjudicate, or even consider, the propriety of the investments made by him of the funds of the estate. The purpose of the account was simply to show the balance, if any, remaining in the hands of the executor after paying debts, expenses, etc. It is, at least, questionable whether the probate court had the power to allow the item in Schedule B of "amount transferred to trustee to balance account." To do so was to adjudicate that the trustee was entitled to receive the balance. This was assuming to construe the will and to determine who was the residuary legatee, a jurisdiction not at that time conferred upon probate courts. Hanscom v. Marston, 82 Me. 288, 19 Atl. Rep. 460. Even the statute, (chapter 4!). Laws 1891,) passed since this matter came before the court, does not authorize such a determination until after the account is settled and the balance ascertained.

But, in his account, the executor made no claim to be allowed for any loss or depreciation in these particular assets or investments. By listing them in his Schedule C, he alleged them to be of full face value. He only claimed credit for having turned them over to the trustee at their par value. By claiming such credit he alleged that the trustee had received them at such valuation, thereby acquitting the executor. The two offices of executor and trustee, though held in this case by the same person, were legally as distinct as though held by different persons. Plinpton v. Richards, 59 Me. 115.

Under the circumstances above stated, it is difficult to see how the question of the propriety of these investments arose, or was adjudicated, in the proceedings upon the executor's account.

It is again urged, however, that these items in the executor's account cannot be reviewed in this examination of the trustee's account. It is argued that the only way to reach them is by reopening the executor's account, the two offices of executor and trustee being distinct, and this proceeding concerning only the trustee. But if these items were not adjudicated, or even considered in the allowance of the executor's account, (and we have held above that they were not,) there can be no occasion to reopen that account in order to reconsider them and disallow them.

The executor (whether regularly or otherwise) claimed and received credit for "amount transferred to trustee." He claimed and received the benefit of it, as though paid in cash. The trustee was entitled to receive it in cash. The executor was liable to him for cash. If he tool? anything else in discharge of the executor's liability to him, he assumed it as cash. He practically invested the money of the estate in whatever he took in lieu of cash from the executor. In taking from the executor the note of Nutter and the note of the Union Packing Company, as part of the money to be transferred, he thereby, in effect, invested the trust funds in those notes. The trustee having taken them in discharge of the executor's liability, when he need not have done so, we must regard them as investments made by the trustee, and examinable in this, his account.

Coming to the consideration of the trustee's account, must he be charged with the amount of these investments in the note of Nutter and in the stock of the Upon Packing Company, (now conceded to be worthless,) as having been unlawfully made at the time? It will be recalled that the testatrix put no limits to his discretion,—that he acted in good faith, after a personal examination, and in the sincere belief that the investments were for the best interest of all concerned. Having, before the event, thus acted in good faith and with honest judgment under a will without limitation upon his discretion, the appellant claims he has faithfully and fully performed his...