Lathrop v. Bampton

By the Court, Sanderson, J.: The facts of this case, so far as a statement of them is necessary to our present purpose, are substantially as follows: Humphrey Griffith, now deceased, in February, 1859, then being the guardian of Augusta Hunter Dean, now the ward — 20 — of the present plaintiffs, came into the possession of the sum of two thousand five hundred dollars, in gold coin of the United States, derived from a lawful sale of certain real estate in which he had previously, upon the consent of the Probate Court, invested the estate of his ward. He never aftefward invested said sum or auy part thereof for the benefit of his ward ; nor did he keep the same separate and apart from his private funds, or keep any account thereof, or of the incomes or expenses therefrom between himself and his ward; but, on the contrary, mixed the same with his private funds and used it in his general business expenditures and investments, and never afterward separated the same so that it could be distinguished from his own private property. In March, 1863, Griffith died, without having rendered any account of his transactions as guardian, or made any'provision for the settlement of his accounts as such ; but leaving a last will and testament, in which he attempted to dispose of all the money and all the estate, real and personal, in his possession as his sole and individual property, regardless of any supjmsed interest which his ward might have therein. Afterward, in April, 1863, his will was admitted to probate, and the defendant Bampton appointed executor, who thereupon took possession of all the money, property and effects of every kind of which his testator died possessed, and at the time this action was brought was engaged in administering upon the same as the estate of his testator, regardless of all claims thereto on behalf of Augusta Hunter Dean. Among the assets which came into the hands of the defendant, there was only the sum of two hundred dollars in money. The estate of Griffith is insolvent, and the sureties upon his official bond as guardian are also insolvent and unable to respond for the trust fund so received and held by him. When the property, real or personal, in the possession of Griffith at the time of his death was acquired by him, whether before or after he carné into the possession of the trust fund does not appear; nor does it appear that any of said property, — 21 — real or personal, was purchased by him with said trust fund or any part thereof. Upon this state of facts, the defendant having refused to account to and with the plaintiffs touching said trust, this action was brought for the purpose of subjecting the entire assets in i¿he hands of the defendant to the trust in question, and to compel the defendant to pay over the full amount of said trust fund, with interest, out of the assets in his hands, before any part of the same were otherwise used or appropriated in the due course of administration. No “ claim” was ever presented to the defendant by the plaintiffs, o any one else, on behalf of Augusta Hunter Dean, as provided in the Act concerning the settlement of the estates of deceased persons. In the Court below the plaintiffs obtained a decree for the payment of two thousand eight hundred and forty-three dollars and fifteen cents out of the assets generally in the hands of the defendant as executor prior to any use or appropriation of the same in the course of his administration; and the defendant has appealed, claiming that the judgment cannot be sustained upon the facts as alleged in the complaint or as found by the Court. When Court of equity will enforce a trust. As claimed by counsel for respondents there can be no doubt but that a Court of equity will enforce a trust against all persons, who with notice of the trust may come into possession of the trust property, in the same manner and with like force and effect as against the original trustee. Hence, if this action could have been maintained against Griffith in his lifetime, it may now be maintained against his executor. But so far as the action may be regarded as a case in equity to reach specific property, or a specific fund held in trust, it is clear that it could not have been maintained against Griffith in his lifetime upon the facts disclosed by the record before us, and if so, it, as a matter of course, cannot be maintained against his executor. — 22 — Except as to the two hundred dollars in money, there is no pretense that any of the real or personal property now in the hands of the defendant as executor once constituted the whole or a part of the trust fund. On the contrary there is nothing to show that such property, or any part thereof, was purchased or acquired by Griffith subsequent to the 4th day of February, 1859, the day on which the twenty-five hundred dollars realized from the sale of his ward’s estate came into his hands. Non constat but that it may all have been owned and possessed by him on that day. Such being the case there is no ground upon which it can be inferred, much less asserted, that he employed the trust fund in its*acquisition. It is true the Court finds generally that he mixed the trust money with his own and used both in his general business expenditures and investments, but the Court does not find, nor does the complaint allege, that any of his estate now in the custody of the defendant is the fruit or product of those investments. Such investments may have proved total failures and nothing realized therefrom. But be that as it may, as already stated, there is nothing to show that the property in the hands of the defendant is’ the product of such investments. When cestui que trust can claim specific property. Before a cestui que trust can claim specific real or personal property he must show that it is the identical property originally covered by the trust, or that it is the fruit or product thereof in a new form. The rule upon this subjet is well and concisely stated by Mr. Justice Lewis in Thompson's Case, (22 Penn. State R. 17): “ Whenever a trust fund has been wrongfully converted into another species of property, if its identity can be traced, it will be held, in its new form, liable to the rights of the cestui que trust. No change of its state and form can divest it of such trust. So long as it can be identified either as the original property of the cestui que trust, or as the product of it, equity will follow it; and the right of reclamation attaches to it until detatched by the superior equity of a — 23 — bona fide purchaser for a valuable consideration without notice. The substitute for the original thing follows the nature of the thing itself so long as it can be ascertained to be such. But the right of pursuing it fails when the means of ascertainment fails. This is always the case where the subject matter is turned into money and mixed and confounded in a general mass of property of the same description.” (Story’s Equity, Secs. 1,257-9; Tiffany and Bullard on Trusts and Trustees, 33, 34.) When cestui que trust may elect between personal liability and specific property. Where-a trustee, in violation of his trust, invests the trust property or its proceeds in any other property, the cestui que trust may elect to hold the substituted property subject to the trust or to hold the trustee personally liable to him for the breach of the trust. The former he can do, however, only when he can follow and identify the property either in its original or substituted form, as we have already seen. If this cannot be done, the right of the cestui que trust to elect is gone, because its exercise has become impossible, and he is therefore forced to rely upon the personal liability of the trustee; and such seems to be the condition of the cestui que trust in the present case. When thus forced to rely upon the personal liability of the trustee, a cestui que trust occupies a position towards the estate of the trustee which is no better, but is identical with that of a simple contract creditor. He has no special lien upon the general estate of the trustee which is superior to that of any other creditor; for the specific property covered by the trust is gone, and nothing is left to the cestui que trust except a naked claim for damages generally, on account of the breach, to be obtained through an action at law, attended by all the incidents of a like action on behalf of one who is not the beneficiary of a trust. The cases of the People v. Houghtaling, 7 Cal. 348, Gunter v. Janes, 9 Cal. 643, and Wells, Fargo & Co. v. Robinson, 13 — 24 — Cal. 133, are, as we conceive, in no respect at war with the foregoing views, but on the contrary in harmony therewith. Nor do we think this action can be sustained as to the two hundred dollars in money. The identity of a trust fund consisting of money may be preserved so long as it can be followed and distinguished from all other funds, not by identifying the individual pieces or coins, but by showing a separate and independent fund or value, readily distinguishable from all other funds. (The United States v. The Inhabitants of Waterborough, Davies R., 154.) That has not' been done in this case. Our conclusion is that the plaintiffs, upon the facts as disclosed by the record, had only a claim against the estate of Griffith, upon which they could have recovered had the same been presented to the defendant as required by the Act concerning the settlement of the estates of deceased persons, but that they are not entitled to the relief which they obtained in the Court below. Had the demurrer to the complaint been sustained, it is possible that the plaintiffs might have been able by amendment to have made a case within the principles announced by us. We therefore accompany the judgment of reversal with an order granting a new trial. Judgment reversed and new trial ordered.