Morgan v. Rotch

Foster, J. The plaintiffs invoke the equitable jurisdiction of this court on the ground that the defendant Rotch, as one of the executors of the estate of which they are two of the residuary legatees, has made an improper sale of certain valuable stock Which' he has himself indirectly purchased at a price below its value. The prayer of the bill is that he may be declared a trustee of such stock for the benefit of the plaintiffs to the extent of their interest as residuary legatees. The bill expressly alleges that he has settled no executor’s account in the probate court. Assuming, as we are bound to on this demurrer, that Mr. Rotch still holds the stock, having caused it to be bought in for his own benefit, it may be taken for granted that he is bound to account not only for its full value, including all dividends which have been received upon it up to the present time, but also for the entire value which may hereafter be obtainable for the stock until it is disposed of according to law or charged to the executors in the settlement of a probate account. The price realized at the sale already made does not determine the value to the prejudice of either creditors or legatees; and the executor can be allowed to derive no advantage from a sale and purchase which must be regarded as contrary to his duty and a violation of his trust. But the question now is as to the mode of remedy, which is not to be sought in a court of equity, if plain, adequate, and complete relief can be obtained in the probate court. Wilson v„ Leishman, 12 Met. 316. A very different case from the present would be presented if the executor’s account bad been finally settled in ignorance of the improper character of the sale. Then, perhaps, a court of equity, if the remedy in the probate court were lost, might enforce a trust and order a new sale by the executor, or afford other appropriate relief to enable the parties beneficially interested in the estate to realize the full value of the property. So also the interposition of equity might be necessary if the other executors jointly entitled with the defend [400] ant Rotch to this stock complained that he had improperly caused it to be transferred into bis own hands, and sought to have the transaction set aside on that account in order to enable them to continue to hold the stock in fulfilment of their trusts, or to prevent them from being jointly chargeable for property which one of their number had undertaken to appropriate to himself. But such is not the frame of the present bill; and, assuming the truth of its allegations, we do not perceive that the residuary legatees can require anything more than that the stock shall be charged at its utmost value in the probate settlement of the estate. Full justice will be done to them by such a course. They have no right to a transfer of the stock in specie to them or in trust for their benefit. All they are entitled to is the residue in the executor’s hands after payment of debts, specific bequests, and charges of administration; which is to be ascertained as a pecuniary balance. They are interested merely in the amount of the residue, as to which all their rights .can be fully protected in the probate court. By the ordinary mode of accounting there, the executors are charged with the personal estate at its inventoried value. If they have been unable to realize that amount, and the personalty has been fairly sold for a less sum, without any fault or want of due diligence on their part, they are credited with the deficiency. If on the other hand there has been or ought to have been a gain made by sales, they are charged with such gain. And if they still hold the specific personal property, and do not choose to sell it, they may be charged with any increase of value. For their liability is to account for all they actually have realized and for all which they reasonably could and ought to have realized from the estate. In such a settlement, if the market value of the stock cannot be precisely determined, its prospective value, of which the fact that the executors insist upon retaining it in their own hands is some evidence, may be considered in estimating the amount at which it shall be charged. If the sale which this bill seeks to annul had never taken place, such an accounting in the probate court would have furnished to the residuary legatees all the [401] relief which they need or are entitled to. The probate settlement will now be made upon exactly the same basis; and full, redress is obtainable before that tribunal, the ordinary and appropriate jurisdiction of which is not to be transferred into a court of equity. Demurrer sustained, and bill dismissed with costs.