In re Holbert

Wallace, J., delivered the opinion of the Court: This appeal is brought by the executor of the- estate, from a decree of the Probate Court, directing him to be charged with interest at the rate of one and one quarter per cent, per month, upon certain moneys of the estate. The evidence before the Court below is not in the record here, but it -was made to appear to that Court that the executor had mixed $7,000 of the. assets of the estate with his own private funds, and used it in his business from May, 1869, to March, 1870, and that he might, during all that time, in the exercise of reasonable diligence, have loaned the money on good security, at the rate of one and one quarter per cent, per month, which was the usual rate of interest in San Joaquin County. [601] It also appeared that the will of the decedent contained a direction to his executor, to loan the moneys of the estate on good security. It is claimed by the executor that, upon this state of facts, he. should have been charged at the rate of seven per centum per annum, instead of one and one quarter per cent, per month. The facts found by the Court below amount to a devastavit upon the part of the executor. It was a misappropriation of the funds of the estate in his hands, to have mingled them with his own affairs, and employed them in the prosecution of his private business. Under the direction contained in the will, he should have loaned this money at interest, and a wilful failure in this duty will render him accountable; and the measure of that accountability will depend upon the circumstances. In case that ho has negligently permitted the fund to lie idle and unproductive, he will be chargeable with interest at the non-conventional rate fixed by statute. In case, however, that he has actually converted the fund and invested it in his business, he may, at the election of the legatee or other party interested, be held to account, either for the interest which he might, with ordinary diligence, have obtained from others upon a loan of the fund, or to account for the profit, if any, realized by the employment of the fund in the business in which it was embarked; the principle upon which the Court proceeds being that the executor is never to be permitted to turn the fund to his own private advantage, nor to make gain for himself by its use. Therefore, if he will divert the fund into his private business, while he incurs the usual risk of loss, he shall have no corresponding hope of profit. This principle, as applied to the accountability of executors, has been recognized for nearly two hundred years as salutary and to be commended, because, as Chancellor Kent says : “It secures fidelity and removes temptation.” The respondent elected in the Court below to take the interest at which the appellant might have loaned the money, and made no inquiry into the amount of:profit that the latter had realized from its use. The appellant complains here, that [602] there was no proof on the subject of profits; but this clicl not injure him, because such proof would still have left the respondent the option to go for the interest at the prevailing rate, instead of the profits themselves. We discover no error in the decree, and it is affirmed.