State Ex Rel. Collins v. Gooch

Siiith, C. J., (after stating the facts). It is manifest that there being no guardian, the receiver was appointed to act substantially as such, in taking care of and disbursing the fund. He is allowed to expend the income in the maintenance and education of the infants during the succeeding twelve months, and required to make annual returns, “to be-passed upon and audited” by the Judge presiding. While a receiver generally, as a trustee, is responsible only for the-consequences of his own neglect, and is protected when he acts in entire good faith in the management of the estate committed to him, yet the measure of duty and responsibility is to be found in the capacity in which he acts. In this case he is a quasi guardian, required to keep the money safely invested and bearing interest, which he may expend as income, for the infants; so that we may find in the similarity of functions, some aid in determining the liability of his office, in ascertaining that of guardians. *190 Now, we think a guardian would be deemed derelict who ■should thus invest the estate of his wards, by deposit in another State and without security. However solvent may be the person or persons to whom, as principals, money is loaned, it is his duty to require further security. Boyett v. Hurst, 1 Jones Eq., 166. While this is a positive obligation imposed by statute, it is a recognition of a safe rule for the preservation of the property, whose whole management is entrusted to the control and discretion of the trustee. Moreover, it was an improvident disposition to place the fund not only in a bank in another State, but also far from his personal oversight and observation, which were due in order to its preservation. Furthermore, it is made the duty of the guardian to render his annual account and report the manner and nature ■ of such investment as he may have made of the trust estate, The Code, §1617, Moore v. Askew, 85 N. C., 199, to the end that the sanction or direction of the Court may be had for every act which could affect the ward or his estate. Is not this duty implied, and as much needed, when the receiver as a quasi guardian, is managing the trust fund ? Had he reported the deposit and been sustained by the Judge, he would have had ample protection. It was at his own risk that he neglected to secure this sanction. We do not impute to the receiver any intentional dereliction in the premises, for the unusual order dispensing with bond and securities shows the confidence both of the Court and counsel in his personal integrity and fitness for the place, and we have no doubt that it was well merited, but we are indicating and enforcing a statutory rule of fiduciary obligation, necessarj'- for the security of fiduciary interests. We are aware of cases, indeed they are numerous, where a receiver is held justified in using banks as depositaries and disbursing agents, as affording facilities in the settlement of estates and in transmitting .•money by bill to distant residents entitled, as in Knight v. *191 Lord Plymouth, 3 Alk., 480; Rowth v. Howell, 3 Ves., 565. To like effect is the ruling in Railroad v. Cowles, 69 N. C., 59. These, however, are acts done in discharge of a duty, to which such agencies furnish great facilities, and are strictly proper. But the present case is different. The receiver insists and takes a security in the form of an assignable certificate, designating, it is true, the character of the fund, as in other cases of making a loan. He leaves the fund for a considerable period, without asking the advice, or making known what he has done, to the Judge, whose officer he is, and under whose authority he acts. Under the circumstances, we think there has not been that circumspection and vigilance due from the trustee, and that he ought to make good the loss. Judgment reversed, and judgment for the whole amount. The residue of the judgment will not be disturbed. Error. Reversed.