Klatt v. Keuthan

NORTONI, J. This is a suit by Amanda EL Klatt, cestui que trust, for an accounting against Fred E. Keuthan and William H. Koehring, trustees under the will of Anna E. Peterson. By the terms of the will of Anna B. Peterson, certain funds were left to Fred E. Keuthan and William II. Koehring, trustees, in trust for her son Julius Peterson for life, with remainder over to his children. Plaintiff, Amanda E. Klatt, is the sole surviving child of Julius Peterson, and prosecutes this suit for an accounting. The controversy relates Jo the' loss of the sum of $5265.34 entailed upon the estate through the misconduct of the trustee Fred E. Keuthan and the alleged negligence of his cotrustee, William H. Koehring. It is conceded that the two trustees, acting jointly, received the sum of $5265.34, in funds belonging to the trust estate, and executed their joint receipt therefor. The evidence is, that the trustee William H. Koehring paid no attention whatever to the responsibility imposed by the trust, but permitted his cotrustee, Fred E. Keuthan, to take possession of and invest the funds as he saw fit. Some time thereafter, Keuthan invested this money in a deed of trust, which he kept for about a year and then sold. Upon realizing the money on the sale of the deed of trust, Keuthan used it for Ms own benefit and finally went into bankruptcy. It is argued on the part of defendant Koehring that he may not- be held to account for the default of Ms cotrustee, Keuthan, because it is said he was «in [309] nowise at fault. In other words, it is urged that Koehring did not misappropriate any part of the funds of the estate and that he should not be held for the fault of Keuthan, who did. This argument proceeds upon the hypothesis that both Keuthan and Koehring acted together in purchasing the deed of trust, for it is said ■that it was merely kept in the possession of Keuthan, who afterwards converted it to his own use. It may be that if such were the facts of the case, the argument advanced would inhere with much force; but the evidence in the record, which is wholly undisputed, supports a contrary view. There is no evidence even tending to prove that the two trustees, acting together, purchased the deed of trust and merely left it in the possession of Keuthan, but, on the contrary, it appears that they jointly received the amount of $5265.34, for which- a joint receipt was executed, and that Keuthan alone was permitted to take charge of this money and invest it without any sort of supervision or cooperation on the part of defendant Koehring. In such circumstances, no one can doubt that responsibility is entailed upon the cotrustee, who was thus remiss and negligent about performing the duties enjoined upon him by the trust. Touching a similar question, Mr. Perry, in his work on Trusts, Vol. 1 (6 Ed.), section 418, says: “But if a trustee receive any portion of the funds from a transaction, he must personally see to the application of them; he cannot pass them over to his cotrustee for investment or distribution ; and -if he do so, he will be personally responsible for the acts and defaults of such cotrustee.” [See, also, Deaderick v. Cantrell, 10 Yerg. (Tenn.), 263; Clark’s Appeal, 18 Pa. St. 175; Sterrett’s Appeal, 2 Pa. 419; Edmonds v. Crenshaw, 14 Peters 166, 39 U. S. 166.] The version of the trustee Keuthan, given in evidence, is to the effect that he and Koehring’ received the money from the Peterson estate, and that Koeh-' [310] ring had nothing to do. with it, but that Keuthan had sole charge of the matter, kept the account in a small book which he had lost, and that the money was invested in a deed of trust by him, which deed of trust he subsequently sold through Mr. Love, a real estate agent, a year later. The witness O’Connor says defendant Koehring said to him, that “he didn’t know anything about the matter; that Mr. Keuthan had handled it entirely and he didn’t know anything about the estate or what had become of the money, except that he knew they had received a certain amount from the estate of Anna E. Peterson. Anything further, as to what became of the money, he didn’t know; that Mr. Keuthan handled the matter entirely.” Defendant Koehring did not even take the stand to dispute the evidence thus given, and it must be regarded as conceded that he consented to his cotrustee Keuthan’s taking charge of the funds and investing them and disposing of the securities as he saw fit. Obviously such careless and negligent conduct on his part operated a breach of his trust and he should respond accordingly. The judgment is affirmed. It is so ordered. Reynolds, P. J., and Allen, J., concur.