Thompson v. Hicks

It appeared upon the trial that testatrix, Mary Jewett, died on January 31,1887, leaving a last will and testament, whereby she constituted the defendants and one Benjamin K. True executors and trustees thereof. The will was duly admitted to probate, and said persons duly qualified as such executors. The questions that arise upon this appeal relate to the ninth clause of the will, which reads:

“Ninth. I give and bequeath to my executors and executrix, in trust, so much and such a sum of money as will enable them to invest the same (which they are hereby directed to do), and keep the same invested, and

therefrom produce a net sum of sixty dollars per year, which sum I hereby give and bequeath to the colored man, Isaac Thompson, now living xyith me, and which sum I direct to be paid to him in quarterly payments during his natural life; and the principal sum so invested I give and bequeath to the herein mentioned Benjamin K. True and to Allen Prescott True, share and share alike, or, in case of the decease of either of them before me, then to the survivor of them.”

In the course of administration of the estate, the funds, as received, were placed in bank to the credit of the estate, checks upon which were payable only when signed by two of the trustees. About May 9, 1887, it was determined by the trustees to invest the sum of §1,500 for the purpose of securing payment of the annuity; and on that day the defendant George F. Hicks and True drew and signed a check, upon the estate account, for the sum of §1,500, and the same was delivered to True for the purchase of United States bonds. True never invested the money in any securities, but converted the same to his own use. He paid a part of the annuity irregularly, in small amounts, and died insolvent, about December, 1891. On October 30,1888, a judicial settlement of the accounts of the executors was had before the surrogate of Richmond county. In the account as presented, the executors credited themselves with the sum of §1,500, and for the “amount set apart for annuity of Isaac Thompson as per Schedule E, 1st.” Thereupon the court entered a decree settling the accounts, and directed “that the sum of fifteen hundred dollars mentioned in Schedule E, 1st, of the account of said executors and executrix, as cash paid to Benjamin K. True, executor, for purchase of United States bonds, being the amount set apart for the purpose of raising the sum of sixty dollars per annum for Isaac Thompson, and now held by Benjamin K. True, be hereafter held by said executors and executrix as trustees under and pursuant to the trust created by the ninth clause of the will of said testatrix, and that said sum be invested by them forthwith according to law, in the name of said executors and executrix, as such trustees, and kept invested in their names to answer the terms of said trust.” Up to the time of entering this decree, neither of defendants has interested himself in the slightest to see that True executed the commission by investment of the funds intrusted to him. After the entry of the decree, defendant George F. Hicks, acting for himself and his co-executor, demanded the money of True or its investment, but did not produce compliance with either demand. About May 21, 1889, Thompson instituted proceedings to punish True for contempt for failure to comply with the decree directing him to invest the money. This seems not to have proceeded beyond an order to show cause and its service, and no adjudication was had thereon. The court below found that defendants and True had neglected to invest the money and produce the annuity, and that the defendants were negligent in not calling True to account, and attending to the investment of the money in the bonds, and adjudged that they be charged as trustees with the sum of §1,500; directed that said sum be forthwith invested so that it shall produce a net income of §60 per annum, which sum shall be paid to plaintiff during his

It thus appears from the evidence and findings that the money which was paid to True came from the possession of the defendants, and was paid to him from the funds of the estate, in pursuance of an agreement made by defendants so to do. The case is therefore brought within the rule that where the executor or trustee sought to be charged has received the funds of the estate, and voluntarily delivers them over to an associate, or does any act by which they were brought under the sole control and management of the latter, where otherwise he would not have received them, such executor or trustee so delivering the funds is liable for any loss that may be sustained as a consequence of such act. Croft v. Williams, 88 N. Y. 384 ; Bruen v. Gillet, 115 N. Y. 10 , 21 N. E. 676 . We find no case, upon the facts here presented, where this rule has been departed from. The evidence disclosed that True was a broker, and dealt in the securities in which it was proposed to invest the money. There was no reason or excuse for delay in making the investment, and it seems to have been expected that it would be done at once; yet, in the continual presence of this expectation, defendants did nothing, either by way of insistence or suggestion that True perform the obligation charged upon him and them, but remained perfectly passive in the matter, until aroused to action by the decree of the surrogate, nearly 18 months later. Even then no decisive steps were taken. The cestui que trust was making his wants known crudely, but plainly, and with little light regarding his legal rights. True failed to pay the annuity promptly, sent one worthless check, and it was only by the most persistent effort that anything was forced from him. At some time, about this period, he must have been paid his fees as executor, amounting to $1,000; and this payment must have come through defendants, as it does not appear that any moneys of the estate were collected by True individually, and money could only be obtained from the. bank on the signature of two. With this condition of ignorance on the part of the cestui que trust, and evidence of financial weakness on the part of True, defendants were called upon to exercise prudence, care, and diligence commensurate with known conditions for the protection of this fund. By no reasonable. construction can we say that they did. On the contrary, there was a laxness and inattention to a plain duty, which led the court below to a finding of negligence in discharge of their trust, and we think this finding is supported by the evidence. It is sought to defeat this conclusion by the claim that the decree of the surrogate is conclusive respecting the delivery of the money to True, and exonerates defendants from liability on account thereof. By the Code of Civil Procedure (section 2742), a judicial settlement o'f accounts by a surrogate’s court is made conclusive of four things: First, ‘that the items allowed to the accounting party for money paid to creditors, legatees, next of kin, necessary expenses and services, are correct; second, that the party has been charged with all interest on money embraced in the

It is further claimed that no power to amend the complaint existed in the court. It is true that the complaint was framed upon the theory of a recovery for the annuities due and unpaid. Such is its prayer for relief. But all the facts were pleaded which entitled plaintiff to a recovery, and the relief granted was fairly within the scope of the issue. The parties tried the action upon the theory that defendants were to be charged for the money sufficient to pay the annuity or be relieved entirely. All the evidence was introduced without objection, and the court was authorized to permit any judgment consistent with the complaint and embraced in the issue. Code Civ. Proc. § 1207; Hale v. Bank, 49 N. Y. 626 ; Thacher v. Association, 46 Hun, 594 .

The complaint alleged, in its seventh paragraph, that defendants had failed and neglected to invest the money or pay the annuity, and had illegally appropriated the money to their own use and benefit. This alleged negligence and the amendment allowed did not change the cause of action. It embraced a new allegation of negligence, but did not bring in a new cause of action. It was therefore within the power of the court to allow it. Davis v. Railroad Co., 110 N. Y. 646 , 17 N. E. 733 . If it were otherwise, it does not appear that defendants objected to the order amending the complaint. The order recites that the application to amend was made upon the trial in order to conform it to the evidence and facts. For aught that appears, defendants consented to the amendment, and they cannot now be heard to object thereto.

While we reach the conclusion that the defendants are charge

Judgment appealed from should be modified as above, security to be approved by a justice of the supreme court, and, as modified, affirmed, with costs. All concur.