Zimmerman v. Frailest

• Citation: 70 Md. 561,17 A. 560
• Parties: ZIMMERMAN et al. v. FRAILEST et al.
• Decision Date: 03 May 1889
• Court: Court of Appeals of Maryland

17 A. 560

70 Md. 561

ZIMMERMAN et al.

v. FRAILEST et al.

Court of Appeals of Maryland.

May 3, 1889.

Appeal from circuit court, Frederick County, in equity.

Bill by John W. Hargett, assignee of Francis M. Frailey, against Joshua J. Zimmerman, for an account of certain trust funds. Pending the suit the complainant assigned his interest in the subject-matter to Margaret A. Frailey, and Zimmerman died; whereupon Mrs. Frailey and others were substituted as complainants, and the heirs of Zimmerman were made defendants. Decree for complainants, and defendants appeal.

Argued before ALVEY, C. J., and BRYAN, MILLER, ROBINSON, and MCSHERRY, JJ.

J. E. R. Wood and John C. Motter, for appellants. Wm. P. Maulsby, Jr., for appellees.

MCCRERY, J. Nicholas Holtz by his will bequeathed a share of his estate to John Zimmerman, of John and his heirs in trust, "to be by him invested for the separate use of" Mary A. Frailey, in such manner as the trustee might deem advisable, and in further trust to pay over the income to her during her life. The testator directed the trust-estate, upon Mrs. Frailey's death, "to be paid to" her "heirs entitled by law to the same." Zimmerman accepted the trust, and some years afterwards died. Thereupon his executors filed a petition on the equity side of the circuit court for Frederick County, asking the appointment of a new trustee, and on the 2d day of September, 1863, a decree was passed appointing Joshua J. Zimmerman. On the 22d day of December of the same year the new trustee made a report of the trust-estate which had come into his hands. This report showed that he had received from the executors of his predecessor certificates for 200 shares of the capital stock of the Frederick County Bank; a promissory note of the cestrum queue trust, Mary A. Frailey, for $258, dated in April, 1851; and 75 cents in cash. He represented to the court in this report that he had "an opportunity of investing the sum of $3,000 of said trust funds with undoubted and safe landed security," and he then asked for authority to sell the bank-stock for the purpose of making that investment. On the same day the court passed an order empowering the trustee to sell the stock, directing him "to invest the proceeds of sale in good landed security," and requiring him to "report his proceedings to and bring the investment into * * * court for its action thereon." In the latter part of 1868 and early in 1869, Zimmerman sold the bank-stock. The proceeds of these sales, aggregating $3,675, he paid in November, 1868, and January, 1869, to one Daniel Culler, in part payment for a farm of about 100 acres, which Mrs. Frailey, through her son Francis M. Frailey, had purchased. To secure the balance of the purchase money, Zimmerman gave to Culler a mortgage upon his (Zimmerman's) personal property; and on January 19, 1878, when that balance had been paid out of the proceeds of the sale of real estate owned by Mary A. Frailey, Culler conveyed the farm to Zimmerman, whom he described in the deed as "trustee of Mary Ann Frailey under the will of N. Holtz." The trustee made no report of this transaction to the court. Shortly after the execution of this deed Mrs. Frailey died, leaving surviving her a son, Francis M. Frailey, a daughter, Ellen Stein, and a granddaughter, the child of a deceased son. On February 12, 1879, John W. Harnett, to whom Francis M. Frailey had assigned his interest in the trust-estate, filed a bill against Zimmerman, calling on him for an account of the trust, and praying for a decree compelling him to pay over the one-third of the trust-estate which had been originally received by him. The case was not brought to a final hearing until September, 1888, more than nine and a half years after the bill had been filed. In the mean time Harnett assigned the interest he acquired from Frailey to Frailey's wife. Zimmerman's own property was sold under mortgages, and Zimmerman himself died. His heirs were made parties, and from the decree holding his estate liable for the whole of the trust funds, and directing the surplus in the hands of the trustee who made sale of Zimmerman's property, under the mortgages alluded to, to be applied in replacing the trust money invested in the farm, and in the promissory note referred to, they have appealed to this court.

It is of the most vital importance that trustees be held to a strict and rigid accountability, and however serious may be the consequences which in particular cases the application of this rule may entail upon the individuals affected, or upon their heirs or sureties, insensibility to those consequences is a stern and imperative mandate of judicial duty. It is infinitely better, even in exceptional cases of manifest hardship, that a trustee should suffer the results of his own errors and mistakes of judgment, than that the settled and established principles which have uniformly governed courts of equity in protecting the interests of cestrum queue trust against the trustee should be relaxed or strained in the slightest degree for his acquittal or relief. His duty requires the exercise of high diligence and absolute good faith, and while the law affords him ample protection, if he seeks the aid and follows the direction of the courts having jurisdiction over the subject, it generally fixes upon him the responsibility for all losses which may result from unprofitable or unfortunate investments made upon his own discretion and judgment. Wayman v. Jones, 4 Md. Ch. 500. There can be no question as to his liability when the trust-estate has been wasted by his own breach of trust, although he may have acted with the best intentions, (Ringgold v. Ringgold, 1 Hard. & G. 11,) unless the cestrum queue trust with full knowledge of the facts and of his rights in the premises, and being under no legal disability sanctions or acquiesces in the wrong, (Hill, Trustees, mar. pp. 382, 525, and eases there cited.)

Joshua J. Zimmerman was a substituted trustee, who derived his authority from the decree by which he had been appointed. That decree, while imposing upon him the duty of executing the trusts created by the will of Holtz with respect to the fund in question, did not clothe him with the discretion which the testator HUD reposed in the person selected by him. With powers thus defined, he was authorized, in 1863, to sell the bank-stock solely for the purpose of investing the proceeds in "landed security," he then having, so he stated in his petition, an opportunity to make such an investment. He suffered five years to elapse before making sale, or even attempting to make sale, of the stock; and when he did sell, instead of doing the only thing which the order of the court had empowered him to do, he applied the trust funds in partial payment for land bought by Mrs. Frailey, the cestrum queue trust for life. He neglected, as we have said, to make any report of this to the court, and he did not afterwards exercise any supervision or control over the land. Even if he supposed he had authority to do...