Konigmacher v. Kimmel

The opinion of the court was delivered by Huston, J., (who stated the facts of the case.) It is á maíteí . constantly .occurring in every county, that executors or guardians- are charged with losses, and to settle, if possible,- some rule is desirable.- Perhaps this.cáse was so peculiar in some of the circumstances as- to call for a decision, in part founded, on those circumstances; The old cases at law as to the liability of executors, guardians,- &c. are of such a nature as to excite astonishment. They would seem, by consent, to have been set up, like a cock at Shrovetide, to be thrown at by all who delight in such sport. If an executor could not agree with a debtor of the estate, and to save expense, referred the dispute to arbitrators, who made a deduction from his demand, the executor was charged, and must-make up this deduction out of his oWn pocket; and it did not avail him- to prove that the deduction was properly made. This is cited-as law by Toller, although it has not been the law for several centuries. It first changed to this, that a submission of a matter to arbitration, was an admission of assets; now that is not so'; and itisyit length considered, truly, as a mode of ascertaining matters on which the parties cannot agree. Courts of equity early interfered in the case of executors, &c.and as they were then obliged,in every case of arecovery on a bond, to interfere to save the defendant from paying the whole penalty, so they interfered to save executors and administrators, from paying what in justice and conscience they ought not to pay. This case has been fully and ably argued, and this court is not unanimous. I proceed to state the ground on which the majority have come to a conclusion. I have said the old cas.es are unrea [212] sonable, and are not law now. There was a time when the affairs of executors were principally settled either in ecclesiastical courts, or in courts of law'; but as the jurisdiction of chancery increased, it included, along with other trusts,, the accounts, settlements and responsibilities of executors, administrators and guardians, which are now almost exclusively determined in that court.. I shall not go into all the authorities, nor trace this jurisdiction from its origin, but content myself with a few cases. In 3 Atkyns, 480, Knight v. Earl of Plymouth, a receiver appointed in chancery for the rents of a minor, recéived seven hundred pounds, at Worcester There being some expense and risk in-, remitting to London, in specie, he gavé it to Winsmore, a trader in good credit, and took his-bills on London. The bills were protested, and Winsmore became a bankrupt within a week: it was-proved, however, that at the time the, bills were taken, his credit was as good as any man’s in-Worcester. The receiver was not charged with the money, although it was urged, that not being a trustee appointed by the party, but by the' law, he must answer with the utmost strictness; that he received compensation too for his services, and therefore was held to greater strictness.' In 1 Peer. William, 141, where an-executor, without being authorized by a decree, puts out money on real security, he is not liable though- the money is lost, if given on security reputed good, and no fraud. Ambler, 218. ex parte Belshier. The assignee of a bankrupt, who also receives a. compensation, employed a broker to sell tobacco, who received the price, and about fen • days after died insolvent.,The commissioners of bankruptcy charged the assignee with the loss; but on application to chancery, the chancellor said, if the ■assignee was charged in this case, no- sane man would ever become an assignee. He entered at large into the law, referred to several, cases, and came to the conclusion, that it is not necessary, in every case, to take security: if the trustees act for the trust as prudent persons act for themselves, and in the usual way of business, they are not liable. In 2 Vernon, 240, Jones and Lewis, we find a still stronger case, and to the same effect — after decree to account and1 to pay over, an administratrix instead of going to' the plaintiff and' paying, left the,money with her solicitor, to pay when called for; .he was robbed, and. she was excused. It is again put on the ground of her acting as-prudent people act in their own cases; to keep the trust fund as they keep their own. I coidd trace the same doctrine through every case from that time. ^ In a neighbouring state, a,chancellor of great eminence for .learning, industry and ability, has-fully adopted the same doctrine; and it is settled in New York, that executors, administrators or guardians, are not liable beyond what they .actually receive; unless [213] in case of gross negligence. Where they act as others do with their own goods, with good faith, and not gross negligence, they are not liable; indeed the first case is stronger than that. See 2 Johnson’s Ch. 27, et seq. 4 Johnson’s Ch. 619. This subject has been considered in this court: I shall not review all the cases. In 11 Serg. & Rawle, 67. 8 Pimm v. Downing and Stalker, we have a case much stronger than this. The money was not forced from the administrators (the mother and uncle of ■the ward,) for three years, and was lost; for this the guardian was not held hable: part was in the hands of the joint guardian, and by Stalker given to his co-guardian, who was going into trade; for this he was held-liablel The principie settled in ¿hatease, is, that for gross negligence, trustees are liable,-and for ¿heir own acts in not carefully securing money, which was in their hands, and put out by them; but for not sueing at once, a mother, who was an administratrix, and in good credit, or not sueing her, when they first heard of her insolvency, if no probability of recovering at-that time, they were not answerable. In 12 Serg. & Rawle, 317 Johns. Appeal. The matter -was again fully considered; in that case, the grounds for charging the guardian, were stronger than in this. In 1815, he settled with the .executors, and for a balance to his ward, of one thousand six hundred and seventy-two dollars, he neither took, nor .asked security, but interest was paid him. In 1819, the executor settled his account, and a balance of nine thousand dollars and upwards, was in his hands; the guardian took no step to recover his ward’s share, for seven months. In 1820; he applied to the Orphans’ Court, to have security or that the executor should be dismissed, and he was dismissed. It is true that the money was not payable to the ward until she was twenty-one,' but the executor was not cited to give security, until he was totally insolvent; yet there was no suit nor judgment against him, until after he was dismissed by the Orphans’ Court, nor no evidence that he was of doubtful credit; nor of any notice to guardian, except by deposition of the widow, who had trusted him, and who, herself had no security. It is there said, to be the harshest demand that can be made in equity, to make .a trustee answerable for what never was in hisp hands, or to make up a deficiency not owing to his wilful default. More ought not to be expected from guardians, than common prudential care; they should not be made liable, unless under unfavorable circumstances; their acts expose them to the animadversion of the law, for supine negligence, shewing carelessness of duty and of the ward’s interest, or when the loss is occasioned by their own act, in giving credit without taking security, when they sell goods or put out money in .their' own hands. ,, [214] Where executors or administrators, take possession of the goods of the deceased, and sell them, (usually in this country at auction,) it is usual .to require from the purchaser, of such as aye sold on credit, surety in the note; if this is not taken, the executor is generally charged with ,the .amount, for he had the goods in his own possession: hut he is no.t obliged to take ;a freeholder for bail. If the bail is a man generally reputed good for so much, it is sufficient. So if a guardian has on hand money of his ward, and puts it out, lie .will generally be liable., unless he take a surety in the note. I do not say, he would in all cases: ex gratiaif he took a mortgage on land, ,and an old title, unknown at the tune, should sweep away the property. In short, whenever the executor or guardian, actually has the fund, and disposes of it to another, he must do if with proper and strict caution, as a prudent man would, and is seldom safe unless he does take security. But where the fund .never actually comes, into the hands of a guardian, all the cases make a difference; he is not bound instantly to sue in all directions: the mother, brothers, or brothers-in-law of the ward, are not to he harassed to extremity, if to all appearance, and in the general opinion, the money is safe in their hands. If adults of the family have funds in the same situation, or if other prudent men have, and consider all safe, the law doe.s not require every possible precaution .and exertion from a guardian. An unusual rise and .depression of property, occurred over most parts of this State, from 1814 to 1820, many of those who were considered, .and who were of eminent skill in business, of great industry, and as honest as any of their neighbours, were ruined. It was a time in which ruin overwhelmed many of all classes, and accident had more to do in the eventual wealth or poverty of every man, than knowledge or exertion. The infatuation, as it is now-called, pervaded all ranks. A few from extreme caution, a few from extreme indolence, and perhaps some few from a great superiority of mind, or experience, kept aloof. It is not right, however, to make them a standard, by which trustees, are to be held liable or not; pre-eminent knowledge .or uncommon foresight, are not required. Ordinary men are to he compared with, and judged by the standard of ordinary men. Common skill, common prudence, and common caution, ar.e all that courts have required or ought to require. -There is no proof that Weidman, -was a general speculator; he bought a place called the Dry Tavern: no one has said he bought too high or lost by it. If he had become extravagant or intemperate, or lost his character for honesty, or if an opinion that he was failing had generally existed, the guardian ought to have sued or got security. The proof fairly viewed is, that until the sale of his [215] Garber place, had shown .a loss of above twelve thousand dollars, he was considered safe.; and even then the widow did not sue, nor ask security, nor did any but two out of about twenty creditors, all of whom, we must take to be careful, prudent men. Your money lenders, are not dull sighted, nor negligent of their interest; and no court, I think, has said that a guardian is liable unless he have more caution, more knowledge, or more foresight, than his neighbours. No two cases of this kind can be exactly alike in all their circumstances, and therefore, courts can only give general rules. Whether a case comes within a general rule, is a matter about which judges have differed, and will differ. In this case, a majority of the court are of opinion, that, as he never had possession of the money, and found it in hands which the family and neighbours thought safe, it was not gross or culpable negligence, to leave it there. As to not getting the interest, it was probably, perhaps certainly, because the ward did not need it. The fact, that Weidman, was deeply indebted, though believed solvent, is answered by the case from Atkyns, in which he whose drafts the receiver .took, was believed good, though he became bankrupt in a week. As to not sueing after sale of the land, it is answered by Pimm v. Downing, where the guardian was excused for not sueing the administrators as soon as he heard they were indebted, because there was no eyidence, he would then have got any thing. In this case, we see no evidence, that a suit would have obtained any more than is now got. The decree of the Circuit Court, is reversed as to all which respects the amount lost by the insolvency of Weidman. The rest of the decree is affirmed. Tod, J., dissented. Pecree reversed.