State ex rel. HARTFORD-CONNECTICUT TRUST CO. v. United States Fidelity & Guaranty Co.

• Decision Date: 12 November 1926
• Citation: 105 Conn. 230,135 A. 44
• Parties: STATE EX REL. HARTFORD-CONNECTICUT TRUST CO. ET AL. v. UNITED STATES FIDELITY & GUARANTY CO. ET AL.
• Court: Connecticut Supreme Court

135 A. 44

105 Conn. 230

STATE EX REL. HARTFORD-CONNECTICUT TRUST CO. ET AL. v. UNITED STATES FIDELITY & GUARANTY CO. ET AL.

Supreme Court of Errors of Connecticut.

November 12, 1926

Appeal from Superior Court, Hartford County; Edwin C. Dickenson and Earnest C. Simpson, Judges.

Action by the State, on relation of the Hartford-Connecticut Trust Company and others, against the United States Fidelity &amp Guaranty Company and the Royal Indemnity Company, sureties upon two bonds given to secure the faithful discharge of his duties by the executor and trustee under the will of Joseph W. Cutler, deceased. Judgment for plaintiff to recover $23,007 from the defendant first named and $13,924 from the defendant last named, and each defendant appeals. Error as to defendant first named, and cause remanded, with directions and no error as to defendant last named.

Alvan Waldo Hyde and J. Harold Williams, both of Hartford, for appellant Royal Indemnity Co.

Lawrence A. Howard and Edward M. Day, both of Hartford, for appellant United States Fidelity & Guaranty Co.

John W. Joy, of Hartford, for appellee.

MALTBIE, J.

Joseph W. Cutler, by his will, provided several small legacies and then gave the residue of his estate, one-third to his wife, and two-thirds to one Gilpatric to hold in trust for his daughter, and named Gilpatric as executor. Gilpatric accepted and gave a bond, which was in the usual form, except that it recited his appointment as executor and trustee, and was conditioned upon the faithful discharge of the " duties of said trust." Upon this bond, the defendant the United States Fidelity and Guaranty Company, hereinafter called the Fidelity Company, was the surety. In the course of the administration of the estate, Gilpatric found it desirable to sell the real estate included in it. He thereupon filed a bond, which recited that he had been empowered to sell the real estate, and which was conditioned that he " well and truly account for the avails of said real estate and administer upon the same, and shall well and faithfully discharge the duties of said trust, according to law." Upon this bond, the defendant the Royal Indemnity Company, hereinafter called the Indemnity Company, was surety. The executor sold the real estate and received the money paid for it. Thereafter, he converted to his own use a considerable portion of the estate. This action is brought to recover the amount so converted, his successor in office, as trustee, the beneficiary in the trust, and the testator's wife, as legatee of the other one-third of the residue, being named as the persons beneficially interested in the recovery.

The complaint alleges the giving of both bonds and joins, as defendants, both the surety companies. The Indemnity Company demurred to it on the ground that it joined distinct causes of action against different defendants. The complaint recited that the plaintiffs had no knowledge as to which of the defendants was liable, or whether both were, and, if so, the amounts of the respective liabilities of each. The facts alleged are such as to bring the case within our practice permitting the joinder of causes of action, where the plaintiff is uncertain as to the liability of different defendants, either or both of whom may be responsible for a violation of his rights. Practice Book 1922, p. 278, § 155; Eames v. Mayo, 93 Conn. 475, 106 A. 825.

No application or order for the sale of real estate appearing in the files or records, the plaintiff was entitled to prove that a document comprising the application and subsequent proceedings had once existed, had been lost, and what its contents were. Commonwealth v. Roarh, 8 Cush. (Mass.) 210, 212; Mandeville v. Reynolds, 68 N.Y. 528, 533.

The finding of the trial court that the bond of the Indemnity Company was, in fact, accepted and approved by the court of probate is amply justified by the circumstances appearing in evidence, and we have no occasion to consider the suggestion in the brief of counsel that such an approval could be effective only as it was evinced by a written order, for no such question was distinctly raised on the trial and no specific assignment of error presents it to us. The fact that the bond is dated September 19, 1919, and refers to an order of sale " made this day," whereas the order is found to have been made on September 25, 1919, is without significance; there can be no question, in view of its terms and the surrounding circumstances, that the bond was intended to cover the liability arising out of a sale made in pursuance of the order of September 25th, and the evidence was sufficient to make it effective to that end. Shelinsky v. Foster, 87 Conn. 91, 96, 87 A. 35, Ann.Cas. 1914C, 1007; Bryant Electric Co. v. Stein, 95 Conn. 211, 111 A. 204. In such a situation, certainly, the recital in the bond would estop the Indemnity Company from raising any question as to the actual date of the order. Village of Chester v. Leonard, 68 Conn. 495, 505, 37 A. 397; 21 R. C. L. 999. The finding of the trial court that the order of sale included all the real estate of the deceased is amply sustained by inferences to be drawn from the testimony of the judge of probate and the other evidence on the trial.

The substantial objection of the Indemnity Company is that, prior to Gilpatric's defalcation, he had ceased to hold the property converted by him in his capacity of executor, and was holding it as trustee. The Indemnity Company lays stress upon the filing in November, 1920, of an administration account by Gilpatric and its ultimate approval, as filed, though this occurred after the defalcation. The bond it gave covered the obligation of Gilpatric properly to distribute the funds received from the sale of the real estate, and the surety upon the bond would be liable for his failure to do so, even though the account filed by him had been approved before the dafalcation. State ex rel. Moriarty v. Donahue, 82 Conn. 308, 311, 73 A. 763, 135 Am.St.Rep. 273. It is of no moment, then, whether or not the filing of the account and its subsequent approval is to be regarded as establishing, as of the date it was filed, the performance by Gilpatric of all his duties save that of a proper payment of the fund to those entitled to it. Until such a payment was made, the obligation secured by the bond was not discharged.

The trial court has found that Gilpatric never held two-thirds of the residuary estate as trustee and that he never held any of it as trustee, unless that is to be implied, as a matter of law, from the other facts found. As the account he submitted in November, 1920, was not approved and no order of distribution was made until long after his defalcation, there was not, prior to it, any debt owing from Gilpatric, as executor, to himself, as trustee, and hence no basis for the application of the doctrine by which, where a person in one capacity owes money to himself in another, the law regards the debt as having been, in fact, paid. Burnside v. Robertson, 28 S.C. 583, 6 S.E. 843. The virtual completion by Gilpatric of his duties as executor might give rise to a presumption that thereafter he held the fund in the capacity of trustee, but, at least, as bearing upon the release of the Indemnity Company from further liability, that presumption would be one of fact, and hence rebuttable. Pratt v. Northam, F. Cas. No. 11376, 5 Mason, 95, 109. No implication of law arising in the case, the finding of the court that Gilpatric never held the residuary estate, or any part of it, as trustee, is a conclusion drawn from the subordinate facts and must stand, unless it violates some principle of law or it is shown to be unreasonable or illogical, in view of the other facts found. Goodsell v. McElroy Bros. Co., 86 Conn. 402, 407, 85 A. 509.

Upon the basis of the account filed by Gilpatric in November 1920, the amount of the estate which would have constituted the trust fund was $44,908.48. He had, as executor, opened a charge account in the National Bank of which he was cashier, in the name of " J. W. Cutler Estate." This account, the court has found, he used for other purposes than those connected with the administration of the estate, and, while this finding is attacked, a comparison of the bank statement showing the deposits and withdrawals with the items of his account establish the finding to be correct beyond any doubt. After filing his account with the court of probate, he...