In re the Estate of Dyott

The opinion of the Court was delivered by Rogers, J. It has been repeatedly held, as is seen in Hise’s Estate, (5 Watts 157), that the Supreme Court takes cognizance of ’appeals from the Orphans’ Court as an appellate court strictly. This is the general rule; although as respects that court, and that court alone, it has been modified by the Act of the 14th April 1835, which enables the Supreme Court to hear and determine the same as to right and justice may belong, and vests a power in them to refer the case to auditors, when in their discretion they may think proper. The rule is at least as applicable to appeals from the Court of Common Pleas, in the distribution of money arising on sheriffs’ sales, as to decrees of the Orphans’ Court. The nature of an appellate court is to correct the errors of inferior tribunals; who are supposed to examine the case thoroughly, and who cannot, with propriety, be said to have erred, where the mistake has arisen from any cause to which their attention has not been called. We cannot examine the case de novo, without overwhelming the court with business; and, in many cases, unless this be done, and the cause be reheard in toto, we run the risk of doing more injustice than we prevent, by determining a cause on an apparent state of facts, which the opposite party has no opportunity to explain or rebut. In the case in hand, it does not appear, but the reverse, that any exception was taken before the auditors to the interest account, or the commissions. After [565] stating the exceptions, in which neither the interest nor commission are mentioned, the auditors say; “these were all the exceptions taken to the accounts, at the hearing before us.” They then add; “ we find, however, that the commissions of the assignee are charged on the gross amount of sales, viz. $30,576.81, which we conceive to be incorrect. The usual and proper course, wef submit to be, to charge the commissions on the nett amount, or that which actually comes into the hands of the accountant.” And that is true; but it presents a very different question from the one which has been submitted to us. It appears, therefore, negatively on the face of the report, that these exceptions were not taken at the hearing before the auditors. But although not taken, both points were made at the hearing in the court, who, on an examination, decided in favour of the accountant. I have inquired into the practice of that court, and find that the practice is to allow exceptions, although not taken before the auditor: in many cases this would be necessary to prevent injustice. The court may determine the point either on the evidence returned by the auditors, may hear other testimony, or may remand the case to the auditors, with proper directions, as they may deem right. Under the circumstances, then, the case is open for examination here on the exceptions taken in court: they are, that the auditors erred in not charging the accountant with interest, as to the allowance of five per cent, commissions to the assignee; and because the auditors erred in refusing to consider the question of property in T. W. Dyott’s estate. If executors, administrators, or trustees, through negligence, suffer money to remain unemployed, they are responsible for interest; much more, if they use the money for their own purposes. They are not allowed to make any gain, profit, or advantage from the use of the trust funds. If they convert the trust moneys to their own use, or employ them in their business or trade, they are chargeable with compound interest. And the cestui que trust may elect to take either the profits made by the money, or interest. Fox v. Wilcocks, (1 Binn. 199; 1 Johns. Ch. 629); Lewin on Trusts 328; 24 Law Lib. It is an incontrovertible rule, that where a trustee receives interest, or suffers others, who act as his agents or in his stead, to receive interest, they must pay interest. The assignee Sneyd, it seems, being unable to obtain security for the faithful discharge of the trust, agreed with Holmes & Porter, who were exchange brokers, that, on condition they would become his sureties, he would allow the proceeds of the estate to be paid to them. According to this arrangement, and on an order from the assignee, Richards & Bispham, who sold the goods, paid to Holmes & Porter the amount of sales, $28,549¡-yu. And this large amount of money, instead of being applied to the faithful execution of the trust, has been suffered to remain in their hands, and has, as was to be expected, been used in their business. Since the death of the assignee, the [566] Girard Life Insurance Annuity and Trust Company has been substituted in his place, and with every exertion they have been able to obtain the payment at different times of only the comparatively small sum of $8064. The arrangement made by Sneyd with Holmes & Porter, was for his own convenience and benefit. To procure bail, he consents to make them his agents, and he must be responsible for their acts. It is said the arrangement was a proper one; be it so; but that does not exempt the assignee from responsibility for their misconduct. He must look to them for indemnity, if they have abused his confidence. It is very plain that the creditors are entitled to interest, because the money has been used; and to whom are they to look, except to the person who undertook to discharge the duties of an assignee with fidelity, and to his sureties, who are the same persons who have had the use of the money ? Sneyd has identified himself with Holmes & Porter. Their acts are his acts. We are of opinion that the assignee is chargeable with interest from the time the money was paid into the hands of Holmes & Porter; for from that time it is fair to presume they intermixed it with their own funds. It also results from the statement of the facts as above, that the assignee has not entitled himself to commissions. Commissions cannot be allowed to a person who has been guilty of fraud; nor is he entitled to any compensation when he has wasted, or suffered others to waste and mismanage the estate. Trustees, assignees, &e., should receive a liberal compensation for their services; but, at the same time, they should be held to a strict accountability for their conduct. Here it is manifest that the creditors, instead of being benefited by the assignee, have been materially injured by the mismanagement, calling it by its mildest name, of the assignee or his agents. This opinion is founded on the assumption, that the facts stated are true, but they appear in a deposition of Mr Richards, which was taken on a rule after the cause was removed to this court; but as we can hear the cause only on the testimony taken in the Court of Common Pleas, it is not legally before us. Enough, however, appears on the face of the report, to convince us that the justice of the case requires that it should be re-examined as to the parts indicated. The auditor states in his'report, that the assignee received $28,573.60; none of which, does it appear, was ever paid over to the creditors, and only $8064 to the subsequent assignee. According to the principles stated above, he is liable to interest, whether the fund remained unemployed in his hands, or was used for his own purposes. ■Sufficient appears in the evidence. to make it his duty to give some account of the management of the fund. The next exception is, that the auditors declined hearing evidence to prove that the effects assigned by J. B. & C. W. Dyott to Samuel Sneyd, for the benefit of creditors, were not the property [567] of creditors, in point of fact, of J. B. & C. W. Dyott, but belonged actually to Thomas W. Dyott. Without touching the abstract question, whether such testimony may not be admitted before auditors, when the claimant consents to come against the fund as a creditor for money had and received; or where goods sold were in the custody of the assignor as a banker or commission merchant, and were transferred to his assignees for the benefit of his creditors; yet we think it plain, that the general creditors of T. W. Dyott had no right to be heard before the auditors. If T. W. Dyott had taken the benefit of the Act, or had made a voluntary assignment for the benefit of creditors, there would have been such a fixed and certain interest in the assignees, as to enable those acting in behalf of his creditors, to avoid the assignment as fraudulent, or to assert a right to the property as his; or if he had been dead, according to the case of Buehler v. Gloninger, (2 Watts 226), and Stewart v. Kearney, (6 Watts 454), his personal representatives or trustees for the creditors, or, in the latter case, for the benefit of his estate, would have been competent to make the exception. But beyond the instances put, we have never gone; and we can perceive no right in any person, by merely representing himself to be a creditor, to interpose a claim to the property in the behalf of the debtor. If T. W. Dyott had not been placed in a peculiar situation, no person would doubt the application of this principle. But we conceive that his unfortunate position cannot alter the case, as he has not lost the right to control his own funds, or to protect exclusively his pecuniary interests. We agree that the auditors had no right to inquire into the judgment of the District Court. They are bound to treat the judgment as a valid and conclusive judgment, and all they could do, was to adjourn the case, which was done, for a sufficient time to enable the counsel to apply to the court to open the judgment. The auditors, however, would not be precluded from receiving testimony to show that since its rendition, the judgment has been paid, or otherwise satisfied. It has also been repeatedly ruled that no person is entitled to be heard in the court, unless he enters an appeal from the decree of the court. Decree reversed, so far as respects the interest and commission, and the cause remanded to the Court of Common Pleas for further hearing.