does not expressly name the security upon which the money was out, except
the sum of £860 ; and then it is no longer interest at £1 per cent, but £5 per
cent., charging himself with a larger interest, after he received it, than he gave
credit for before he received it. Afterwards, from 1787, he proceeds dealing
with Fielder only, receiving the interest of that particular sum until 1704.
The result of the evidence is, that, with Brice's permission, this money was
suffered to remain with Fielder upon his personal security; that if Mooring
knew as much as Brice, so Brice *knew as much as Moorinsr, and can-
. . . . . . r*7321
not complain that this was a misapplication, permitting it with respect L ""- 1
to his own interest.
Mooring also placed so much confidence in Fielder, that though the money
got into the hands of Fielder alone, it is very difficult to say, as against those
who come after Brice, that Mooring is not to be answerable. This is a sale
under a power, but without necessity. This is an act that never could have
been done by the mere exercise of the judgment of one of the trustees, enabling
him to determine that it was necessary. There was no necessity in respect of
which the other should join. But, though a trustee is safe, if he does no more
than authorize the receipt and retainer of the money, as far as the act is within
the due execution of the power, yet, if it is proved that a trustee, under a duty
to say his co-trustee shall not retain the money beyond the time during which
the transaction requires retainer, and says, with his knowledge, and therefore
with his consent, the co-trustee has not laid it out according to the trust, but
has kept it, or lent it, in opposition to the trust, and the other trustee permits
that, for ten years together, the question turns upon this : not whether the
receipt of the money was right, but whether the use of it subsequent to that
receipt, was right, after the knowledge of the trustee that it had got into a
course of abuse. Of that, it seems, Mooring was distinctly informed, the paper
connected with the marriage settlement stating upon the face of it a breach of
trust. Though not very intelligible, it shows that an account of the securities
taken by Fielder for £1260 was put into the hands of Mooring. That gave
him information that Fielder was lending some of the money upon notes, some
upon bonds ; and, as soon as a trustee is fixed with knowledge that his co-
trustee is misapplying the money, a duty is imposed upon him to bring it
back into the joint custody of those who ought to take better care of it.
The conclusion is, that Brice cannot call upon Mooring as to the interest ;
440 LIABILITY OF TRUSTEES AND EXECUTORS.
but as to the principal, Mooring is *answerable, but he is not to be
*- ^ charged with more than was actually misapplied.
Townley v. Sherborne, and Brice v. Stokes, are leading authorities as to
the liability of persons for the acts and defaults of their co-trustees and co-
executors — a subject which will be considered at some length in this note;
although it is proposed, in the first place, to notice some of the duties of trus-
tees and executors, with respect to their cestui que trust, and of the liabilities
â– which result therefrom, but more especially with respect to the getting in, the
custody, and investment, of the property committed to their care.
It may here be first mentioned that in charging trustees with breaches of
trust it is immaterial how the trust was created, whether for valuable consi-
deration, or by the voluntary gift of the trustees themselves, (Drosier v. Brere-
ton, 15 Beav. 221,) and that persons assuming to act as trustees, although
they are not actually or legally such, will incur the same liabilities, in respect
of a breach of trust, as trustees regularly appointed : Raclcham v. Siddall, 16
Sim. 297; 1 Mac. & G. 607 ; Pearce v. Pearce, 22 Beav. 248.
As to getting in Outstanding Property.] — Trustees and executors ought not
to leave money outstanding upon personal security; and though, in the exer-
cise of a fair discretion, they are not obliged to commence legal proceedings
unnecessarily, they must exert themselves to get it in, and, if necessary, to
commence compulsory proceedings, (Lowson v. Copelamd, 2 Bro. C. C 156 ;
Bailey v. Gould, 4 Y. & C. Exch. Ca. 221 ; Powell v. Evans, 5 Ves. 839 ;
Caney v. Bond, 6 Beav. 486; Fenwick v. Greenwell, 10 Beav. 412 ; Ticker
v. Smith, 3 Sm. & Gi.ff. 42, 46;) and where" the debt is payable by instal-
ments, trustees will not be justified in giving any great indulgence ; for the
debtor's inability to pay the sums accumulated, by permitting them to run
together, will be constantly augmented, (Caffrey v. Darby, 6 Yes. 488.) In
fact, a direction to convert with all convenient speed, is no more than the
ordinary duty implied in the office of executor : Buxton v. Buxton, 1 My. &
Cr. 93.
In Tebbs v. Carpenter, (1 Madd. 291,) executors were directed by the tes-
tator to receive rents and invest them in the £i per Cents. They employed
a person to receive the rents, but, according to the Master's report, there were
arrears amounting to £1500 ; and the impression on the Master's mind, as
appeared by his report, (p. 298,) was, that, by using proper means,
L '° J *tbe whole might have been recovered. It was held by Sir Thomas
Pluraer, Y. C, that the executors were liable to make good the arrears, though
without interest. "It cannot," said his Honor, "be admitted as an excuse,
that they devolved the care of this estate to another; they must answer for
his negligence. I am anxious not to discourage persons from acting as exe-
cutors, by throwing difficulties in their way, and am willing to make every
proper allowance ; but I must not forget the established doctrine of this Court.
If persons accept the trust of executors, they must perform it ; they must use
TOWNLEY V. SHERBORNE. — BRICE V. STOKES. 441
due diligence, and not suffer infants to be injured by their negligence
If there be crassa negligentia, and a loss sustained by the estate, it falls upon
the executors. Here, for want of evidence, I cannot say that all this rent
could not have been recovered; and I am reluctantly obliged to assume, that
no exculpatory evidence could be produced, and therefore they must be charged
with these arrears. Interest upon the arrears was but faintly pressed for, and
ought not to be given. Interest was asked for in Lawson v. Copeland, but
refused." See also Wiles v. Gresham, 2 Drew. 258; M'Gachen v. Dew, 15
Beav. 84.
It is clear that an executor ought not, without express authority, to carry on
the trade of the testator, (Kirkmcm v. Booth, 11 Beav. 273,) except for the
purpose of winding up the concern ; but he may, and in some cases is bound to
complete the contracts entered into by his testator : Collinson v. Lister, 20
Beav. 356.
Although a loss may have taken place by an executor not converting the
assets, he will not be liable for it, if the delay was caused by his exercising a
reasonable discretion. And a difference of opinion between two executors as
to the propriety of converting the assets at a particular period, followed by a
demand made by one of them upon the other to concur in effecting an imme-
diate conversion, does not deprive the latter of the right to exercise his own
discretion, or render him liable for the loss that may arise from the delay con-
sequent on his declining to comply with the demand. Thus, in Buxton v.
Buxton, (1 My. & Cr. 80,) John Buxton, an executor, whose testator died on
the 21st of March, 1826, in the exercise of his discretion did not sell some
Mexican bonds for more than a year after the death of the testator, viz., part
in the month of June, and part in the month of October, 1827, although there
was a direction in the will to pay legacies within four months, and to convert
with all convenient speed, and although Alice Buxton, his co-executrix, re-
quested him to sell at an earlier period. Lord Cottenham, then Master of the
Bolls, held, that as John Buxton appeared to have *acted throughout p-qn
with diligence and good faith, he was not liable for the loss consequent
on his not having sold the bonds sooner. " Except," said his Lordship, "the
provision for the payment of the legacies within four months, there is nothing
peculiar in the will. A direction to convert with all convenient speed is no
more than the ordinary duty implied in the office of an executor, and there
must necessarily be some discretion. If a reasonable discretion were to be
denied to an executor, — if it were to be laid down as an inflexible rule, that
he ought to convert the assets without waiting or considering how far it was
for the interest of those who are beneficially entitled, there would, of necessity,
be always an immediate sale : the executor would be bound to sell, at whatever
loss. Such a rule would be, in its operation, most injurious, and it has never
been acted upon by the Court, which, in cases of this kind, has always consi-
dered what is for the interest of all parties concerned.
" The real question for the consideration of the Court is, whether a reason-
able discretion has been here exercised by the executor. I cannot think that
442 LIABILITY OF TRUSTEES AND EXECUTORS.
it was his duty to come to an immediate sale of these bonds, any more than
of any other description of property. Looking to the correspondence, it is
impossible to impute anything to the executor but an anxious desire to in-
crease an estate in which, undoubtedly, he had himself a large personal in-
terest. The testator had bought these bonds at a very high price, and a con-
siderable depreciation had taken place in their value prior to the time of his
death. It is to be observed also, that, at the end of the four months, when
the legacies were directed to be paid, the bonds were lower than the prices
which they afterwards realized ; and if they had been then sold, it could only
have been on the ground that it was a convenient time to convert them. On
the 21st of July, at the expiration of the four months, the bonds were only at
£40, and, early in that month, they had been sold as low as £31, a depression
from which, towards the middle of the month, they began gradually to recover.
Now, there were no circumstances at that time to render a sale of them a
matter of pressing moment. â– On the contrary, indeed, if they had been sold,
nothing could have been done with the proceeds ; nor did the parties interested
require a sale. The application by Alice Buxton was made in the following
October, the leasehold estates not being at that time adequate to the payment
of the legacies. The executor, however, still entertained an opinion that it
was not advisable to sell ; and if he did exercise that discretion, as it was
within his authority to do, there was no immediate purpose to which the pro-
duce could be applied.
r*7RR1 *" Thus matters went on until the time arrived when there was a
^ pressing necessity for realizing the whole of the assets, and then the
bonds were sold at a price higher than they would have brought in July,
though not so high as they would have produced in October, 1826. This,
then, was the state of circumstances : there was property to be converted for
a legitimate purpose, which purpose could not be carried into effect at the
particular time, although, if the conversion had taken place at that time, a
large profit would have been derived from the transaction. No authority has
been produced in which, under such circumstances, the personal representatives
of a testator have been held liable for the loss occasioned by their not selling
at the earlier period. In Loicson v. Copeland, (2 Bro. C. C. 156,) an execu-
tor was held liable for a bond debt, which had been allowed to remain due for
several years after the testator's death, the report stating, that only one appli-
cation had been made to the obligor for payment, and that no further steps
had been taken against him. These, too, are, in a certain sense, bond debts ;
but they could only be realized by a sale of the securities. In its circum-
stances, therefore, that case was totally dissimilar to the present. The same
observation applies to Powell v. Evans, (5 Ves. 839,) which was also the case
of a bond debt : there, three years had elapsed from the death of the testator,
and, besides the lapse of time, the executor had never, during that period,
made any inquiry as to the circumstances or solvency of the obligor. Then
comes the case of Tebbs v. Carpenter, (1 Madd. 290,) which, as reported, is
a very strong decision ; but whatever may be the merits of that case, it was a
TOWNLEY V. SHERBORNE. — BRICE V. STOKES. 443
neglect sought to be charged on the executors for the loss of arrears of rent
due for several years, and from a great variety of tenants. In the two cases
first adverted to, there was not only considerable delay, far exceeding that
which occurred in tbe present case, but also several additional circumstances
implying or amounting to crassa negligentia on the part of the executors, and
showing that they took no care or trouble, and did not attempt to exercise
any judgment as to the time when the money should be called in.
" In the present case nothing of that kind can be imputed. On the part
of the executor, there was a vigilant attention throughout ; he exercised his
best discretion, and, if he has erred, it was an error in the judgment he formed
with respect to the propriety of leaving the property in that state of invest-
ment in which he received it from the testator. If, therefore, he was entitled
to exercise a discretion, — and the proof is that he did so, although he came
to an unfortunate conclusion, — the *question is, whether he is to be ^-r, - ,
charged with the loss. I can find no case, and none has been pro- .
duced, in which an executor has been called upon to bear the loss that has
arisen, because in the bona fide exercise of a reasonable discretion, the con-
clusion he came to has turned out unfortunately.
"If, then, an executor be, in general, entitled to exercise such a discretion,
the next question is, how far that discretion was limited in the present in-
stance by the application made to Buxton by his co-executrix ; in other words,
did that application render it his imperative duty to sell ? If that were so,
the effect would be to vest the whole discretion in Alice Buxton, and totally
to deprive John Buxton of any. If a discretion rests with one of two
executors, it must surely follow that the discretion cannot be taken away by
the other coming to a different conclusion. One is not bound to agree with
the other. In case of a diversity of opinion, they can only resort to some
higher authority which is competent to control them both. The Master's
view, however, was different, although certainly one would have supposed
that the time which there was most reason to consider as the proper time was
the month of July, soon after the time when the first application was made to
the executor, rather than the following October. I cannot, therefore, think,
that if Buxton was entitled to exercise a discretion in the matter, he was
bound to surrender his own judgment, because one of his co-executors enter-
tained a different opinion from himself." And see Prendergast v. Lusliington,
5 Hare, 171, 176.
Where executors have neglected to realize assets which are outstanding
upon an improper investment, there is no fixed period from which the loss for
which they are liable is to be calculated, as it depends upon the nature of the
property and the evidence affecting it. Thus in Hughes v. Empson, 22 Beav.
181, where the executors found a portion of the testator's property invested
in Crystal Palace Shares which were at a premium at the testator's death, but
subsequently fell to a discount : the executors were charged by the certificate
of the Chief Clerk with the value at the end of two months ; but Sir J.
Romilly, 31. R., varied the certificate to twelve months. " I concur," said
444 LIABILITY OF TRUSTEES AND EXECUTORS.
his Honor " with the argument that there is no fixed period, and that it is
impossible to say it is one year. You cannot fix one period for selling every
species of property. Thus, suppose the testator possessed a large quantity of
horses, it would be culpable to keep them, at a great expense, incurring
necessarily a great outlay for their maintenance, instead of selling them at
once. . . . Under the circumstances, I consider that the executor may pro-
perly exercise a reasonable discretion and I *cannot fix any particular
â– * period. I think, in my own view, that two months would have been
a reasonable time, but he might fairly have considered twelve months. I
shall therefore, only charge him with the loss which would have occurred if
he had sold them at the end of twelve months. I have considered whether I
could lay down any general rule, but find it impossible. The question de-
pends on the particular nature of the property and the evidence affecting it."
See also Bate v. Hooper, 5 De G. Mac. & G 338 ; Wilkinson v. Duncan, 20
L. J., N. S. (Ch.) 495.
As the Court, in the administration of an estate, would not permit a real
security to be called in without an inquiry as to its expediency, {Howe v. Earl
of Dartmouth, 7 Ves. 150,) so an executor is not obliged to call in a mort-
gage, if the security be good, and the money be not wanting to pay debts.
" What," asks Lord Camden, " is the executor to do ? Is he to call in the
securities before creditors require payment of their debts ? Must the money
lie dead without interest, or must he put it out on fresh securities ? On the ori-
ginal securities he has the testator's confidence for his sanction ; but on any
new securities, it will be at his own peril. He should not be required to call
in the securities until the creditors call for payment of their debts, or unless
he has reason to suspect the solvency of the debtor:" Orr v. Newton, 2 Cox,
276. Even if a trustee found part of the trust funds invested upon a second
mortsace, it does not seem that he would be bound to call it in. See
Robinson v. Robinson, 1 De Gr. Mac. & G. 252.
Although an executor or administrator should have taken no steps at all to
obtain payment of a sum of money, if it appears that if he had done so, they
would have been, or there is reasonable ground for believing that they would
have been ineffectual, then he is exonerated from all liability. Per Sir J.
Rornilly, M. R., in Clack v. Holland, 19 Beav. 271 ; and see East v. East, 5
Hare, 343, 348 ; Maitland v. Maiiland, 16 Sim. 233; Ratcliffe v. Winch, 17
Beav. 217; Ballx. Ball, 11 Ir. Eq. Rep. 370, 375; Stiles v. Guy, 16 Sim.
232.
And where trustees compound with a bankrupt-debtor to the trust, they
will be liable to make good the full amount of the debt, if it be impossible to
show that the bankrupt would have obtained his certificate, or that the debt
might not have been recovered in full : see Wiles v. Grcsham, 5 De G. Mac. &
G. 770 ; affirming S. C. 2 Drew. 258, where, however, Lord Justice Turner
expressed a doubt whether the trustees should have been charged without
further inquiry.
"When trustees are ordered by the Court to realize securities and they
TOWNLEY V. SHERBORNE. — BRICE V. STOKES. 445
neglect to do so, they will be liable for the loss sustained by *their i-^oqt
neglect, that is to say, the difference between the price which the secu-
rities actually realized, and that which they would have realized if sold at the
time when the trustees were directed to sell them : Davenport v. Stafford, 14
Beav. 319, 338.
As to the liability of a trustee who is abroad, see Byrne v. Norcott, 13 Beav.
336.
Where a trustee indebted to the trust becomes bankrupt, it is his duty to
prove the debt, and if he neglect to do so, he will be liable to the loss, not-
withstanding he has obtained his certificate. See Orrett v. Corser, 21 Beav.
52, where Sir J. Romilly, M. R., said, " Suppose a person owing money to a
trust estate becomes bankrupt, and the trustee is a distinct and separate per-
son ; knowing of the bankruptcy, he is bound to prove the debt ; if he does
not, he commits a breach of trust, and would be held liable for all that he
might have received under the commission, if he had proved the debt as he
ought to have done. Is the case altered because the trustee is himself the
debtor ? I think not. The original debt no doubt is barred; but the amount
of the dividends which the trustee might have received under the commission
is a liability subsequently attaching to the trustee in that character, and is
not affected by the bankruptcy or the certificate."
As to the Custody of Trust Property."] — Trustees or executors are bound
to take the same care of trust property as they would of their own ; and if
they have done so, they will not be liable for any accidental loss — as, for
instance, by a robbery of the property while in their own possession, {Morley
v. Morley, 2 Ch. Ca. 2,) or by robbery or loss whilst in the possession of others
with whom it has necessarily (that is to say, in the ordinary course of business)
been intrusted. Thus, in Jones v. Leiois, 2 Ves. 240, where an administra-
trix put goods, to be delivered to the plaintiff, into the hands of her solicitor,
from whom they were stolen, Lord Hardwicke held, that she was not liable
for the loss. " I do not know," said his Lordship, " that a bailee, executor,
administrator, or trustee, are bound to keep goods always in their own hands.
They are to keep them as their own, and take the same care. If, therefore,
a man lodged trust-money with a banker, if lost, in many cases the Court has
discharged the trustee, especially if lost out of the banker's hands by robbery.
In the present case, what has been done is, what she would have done with
her own, leaving them with her solicitor, in order to be delivered to the plain-
tiff when proper so to do. And why might she not do that ? It is the same
as if they had been in her own custody ; and there is no pretence that they
were collusively put into the hands of her solicitor. *It would be too r**,* n-i
hard to charge her with these things lost."
So, executors or trustees will not be liable, if, in the ordinary discharge of
their duty, they deposit the assets in a bank, although the bank may fail —
if, for instance, in the case of executors, the deposit be made within a year
after the testator's death, and it is necessary for them to have money in hand
446 LIABILITY OF TRUSTEES AND EXECUTORS.
for the payment of debts, legacies, or other purposes : Johnston v. Newton, 11
Hare, 160 ; and see Wilks v. Groom, 3 Drew. 584.
Nor will they be able for a deposit on tbe sale, necessarily left in the hands
of the auctioneer as the agent both for them as vendors, and for the pur-
chasers : Edmonds v. Pealce, 7 Beav. 239. So, pending the preparation of
a mort°-afe security, a trustee is justified in investing the money in exche-
quer bills : Matthews v. Brise, 6 Beav. 239.
But if money be left unnecessarily in the hands or in the power of third
parties, it will be at the risk of the trustees or executors ; if, for instance,
money be left in the hands of a banker more than a year after the death of a
testator, and after debts and legacies have been paid, and whether it be pro-
ductive or unproductive : Darke v. Martyn, 1 Beav. 525; Moyle v. Moyle, 2
Buss. & My. 710 ; Gibbons v. Taylor, 22 Beav. 344.
So, where trustees for sale having sold the property, place the conveyance
executed by them, and having their receipt endorsed, in the hands of a soli-
citor, who received and misapplied the money, they are liable for a breach of
trust : Ghost v. Waller, 9 Beav. 497 ; Roicland v. Witherden, 3 Mac. & G. 568.
So, where a trustee properly invested money in Exchequer bills, pending
the necessary delay in completing a contemplated mortgage security, he was
held by Lord Langdale, M. B., personally liable, because he left them undis-
tinguished in the hands of the broker, who acted as banker : Matthews v.
Brise, 6 Beav. 239. And a trustee or executor will also be liable, if, upon
failure of a bank, it be found that the money has been placed to his own credit,
or mixed with his own moneys : he ought to pay it to the credit of the trust ;
for if, instead of distinguishing it, he pays it to his own account, on his be-
coming bankrupt it would go to the credit of his estate ; and if the bankers
had any account with him by way of set-off, that set-off would affect equally