Rice v. Halsey

Headnote

Rice v. Halsey, 156 App. Div. 802 , affirmed.

Appeal from an order of the Appellate Division of the Supreme Court in the first judicial department, entered May 29, 1913, reversing a judgment in favor of plaintiff entered upon the report of a referee and granting a new trial. The plaintiff is the widow of one John Smith Rice, and the remainderman of a trust of personal property created by her late husband, who was the life tenant thereof. The defendants are stockbrokers, doing business in the city of New York under the firm name of C. D. Halsey & Co. The trustee of the said trust was John Drohan. He was originally joined as a party defendant, individually and as trustee, but the action as to him was severed. This action was brought as against these defendants to account to plaintiff for $7,943,75 —the proceeds of the sale of two blocks of bonds which the trustee had intrusted to the defendants for safekeeping. A year and

a half after the trustee had deposited the bonds with defendants, and seven years after the creation of the trust, the trust bonds, and later the proceeds from their sale, were used as margin for stock market speculations conducted through defendants. The question is whether the transactions so far as 0. D. Halsey & Co. were concerned were justified by the provisions of the trust instrument and by the fact that the transactions were all made by the direction of Rice and with the approval of Drohan.