Harding v. Canfield

START, O. J. The respondent is the executor of the last will of Sarah A. Peck, deceased, and the appellant is her residuary legatee. On December 31, 1896, the probate court in and for Goodhue county settled the final account of the respondent as such executor, and disallowed a credit item therein of $448.10. This amount had been deposited in the Bank of Zumbrota, which afterwards became insolvent. The disallowance of the item left a balance due from the executor of $448.10, which was ordered to be paid to the appellant. The respondent appealed to the district court from so much of the order of the probate court settling his final account as disallowed the item, and directed the balance to be paid to the appellant. The district court, upon a trial of the case therein without a jury, made its findings of fact, and found, among other matters, the following: “Fourth. That said executor, E. Y. Canfield, deposited said sum of four hundred and forty-eight dollars and ten cents in the Bank of Zumbrota, which bank became insolvent after the money was deposited therein, and that sum is all, or nearly all, a loss. Fifth. That in making such deposit in said bank and permitting it to remain therein, said executor exercised reasonable care and prudence, and such care and prudence as a person of ordinary care, prudence and judgment would have exercised under the same or similar circumstances, and that the loss of the said money must be borne by the said estate, and not by the said executor.” As a conclusion of law, the trial court directed judgment reversing the order of the probate court as to the disallowance of the credit item in question, and from the judgment so entered the residuary legatee appealed to this court. 1. The trial court, over the objection and exception of the appellant, permitted the respondent to testify that when he deposited the money he honestly believed the bank was all right and solvent, and that he handled the funds of the estate just as carefully as he did his own. It is true, as claimed, that what the belief of the respondent was as to the solvency of the bank when he made the deposit, and whether he managed the trust funds as carefully as he did his own, are not the test of his liability. The test is whether he honestly exercised in the premises that degree of care which men [247] of common prudence ordinarily exercise in tbeir own affairs. If he failed to exercise such care, tbe fact tbat be acted in good faitb will not exonerate him, but evidence showing tbat be acted in good faitb, and managed tbe trust funds as be did bis own, is competent as tending to show tbat be exercised due care. Its value is for tbe court or jury, wben considered in connection witb tbe other testimony. 2. Tbe only other question on this appeal is whether tbe fifth finding of fact made by tbe trial court is sustained by tbe evidence. If it is, tbe conclusion of law and judgment are right. Tbe bank became insolvent after tbe money was deposited therein. Tbe act of tbe respondent in making tbe deposit originally is not questioned. “Tbe complaint here,” to quote from appellant’s brief, “is tbat he did not withdraw tbe money from tbat institution wben be discovered its precarious condition.” Tbe evidence is undisputed tbat tbe respondent was tbe cashier of the bank from 1878 to August, 1893, and president from tbat date until its final failure in January, 1894; also that the bank loaned, prior to May, 1893, to tbe Guaranty Loan Association of Minneapolis, a financial institution then reputed to be solvent, some $90,000. In May, 1893, tbe officers of tbe bank learned for tbe first time tbat tbe loan association was insolvent. Thereupon tbe bank closed its doors. It succeeded in making an arrangement witb its depositors and creditors to extend tbe time of tbe payment of tbeir claims for six months, and it resumed business. But it was seriously affected by tbe loss of its investments witb tbe loan association, and in January, 1894, a receiver for it was appointed. Tbe appellant claims tbat tbe executor failed to exercise reasonable care for tbe preservation of the fund because be did not withdraw it after tbe bank resumed in May, and before tbe final failure in January following. Tbe bank was only able to resume by reason of an arrangement witb its depositors and creditors to extend tbe time of tbe payment of their claims to six months. The executor testified on this point as follows: “At tbe time of its suspension in May, 1893, there were $1,400 of tbe funds of tbe estate in tbe bank; afterwards I paid Mrs. Harding [248] $800. I drew out as much as I thought that I could under the arrangement with the creditors. It was agreed between the bank and the majority of the creditors that their deposits should not be withdrawn for six months from the time it reopened in May, 1893. I signed no agreement to that effect, but it was understood that I should let the funds of the estate remain in the bank for six months. This money was deposited in the bank in my name as executor, and was at all times subject to my check, and between the suspension in May, 1893, and the failure in January, 1894, nothing aside from this arrangement prevented me from withdrawing the same. When I deposited the money of the Peck estate in the bank, I had no reason to believe that the bank was insolvent.” It is not clear that a prudent man would have withdrawn the fund from the bank after it resumed. It is to be noted that the loss occurred when the bank first suspended, by reason of the failure of the loan association; and the arrangement with creditors was to enable the bank to resume, and creditors to secure the ultimate payment of their claims in full. If any considerable number of the creditors had insisted on withdrawing their money, it would only have hastened the appointment of an assignee or receiver. Upon the whole evidence, we are of the opinion that the finding of the trial court in question is sustained by the evidence. ■Judgment affirmed.