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invested in proper securities, and in such a way that it may be made available for the purposes of the trust.

As courts of equity in England were in the habit of directing moneys which were in the custody of the court to be invested in 31. per cent. annuities, it came to be considered an established duty on the part of trustees to invest trust moneys in those funds.1 Several statutes, however, have been passed by which many other securities have been designated as lawful investments for trustees. Thus trustees are now allowed by act of parliament to invest in real securities in any part of the United Kingdom, and Bank of England, or Bank of Ireland, or East India Stock; unless such investments are expressly forbidden by the trust instrument.2

141. A trustee cannot invest the trust funds in personal securities; and even if they have a discretion as to investments, it is not a sound exercise of that discretion to invest in such securities. This is the rule in England and in the United States.3 So, also, for a trustee, in the absence of express authority, to employ trust funds in trade or speculation, will be a gross breach of trust. In England a trustee must not invest in bank stock or shares of public companies, and the rule is the same in New York and Pennsylvania. But in Massachusetts the rule is different.6

Mortgages on real estate are considered proper investments for

1 Smith's Manual of Equity, 194. See Brown v. Wright, 39 Georgia, 26; King v. Talbot, 40 New York, 76.

2 22 and 23 Vic., c. 35, ? 30; 23 and 24 Vic., c. 35, 11; Id., c. 145; 30 and 31 Vic., c. 132, 2 1. See Hill on Trustees, 560 (4th Am. ed.).

s Walker v. Symonds, 3 Swans. 81, note(a), citing Ryder v. Bickerton (where Lord Hardwicke said that "a promissory note is evidence of a debt, but not security for it"); Adye v. Feuilleteau, 1 Cox, 25; Holmes v. Dring, 2 Cox, 1; Smith v. Smith, 4 Johns. Ch. 281; Nyce's Estate, 5 Watts & Serg. 256; Swoyer's Appeal, 5 Barr, 377; Wills's Appeal, 10 Harris, 330; Gray v. Fox, Saxton (Ch.), 259; Harding v. Larned, 4 Allen, 426; Clark

v. Garfield, 8 Allen, 427; Moore v. Hamilton, 4 Flor. 112; Spear v. Spear, 9 Rich. Eq. 184 (see, however, Nance v. Nance, 1 S. Carolina (N. S.), 209); Barney v. Saunders, 16 Howard, 545; Perry on Trusts, ? 453.

4 Perry on Trusts, 454. See Poole v. Munday, 103 Mass. 174, for an exceptional case where the rule was not enforced.

Ackerman v. Emott, 4 Barb. 626; Hemphill's Appeal, 6 Harris, 303; Worrell's Appeal, 10 Harris, 44; Perry on Trusts, & 456; Hill on Trustees, 578 (4th Am. ed.).

6 Harvard Coll. v. Amory, 9 Pick. 446; Lovell v. Minot, 20 Pick. 116; Perry on Trusts, & 456.

trustees in the United States, and in England the investment in such securities is now authorized by statute.1

In several of the United States the subject of investments by trustees is expressly regulated by statute."

142. A trustee is chargeable with interest on balances that he improperly retains in his hands, and sometimes with compound interest. Moreover, if a trustee is directed by the trust instrument to invest in a particular stock, and neglects to do so, the cestui qui trust has his election to take the money and legal interest thereon, or so many shares of stock as the money would have purchased at the time when the investment ought to have been made, and the dividends on the same. And so, if a trustee embarks the trust funds in business, the cestui qui trust may take either the amount with interest, or the profits of the business.5

143. It is one of the fundamental principles of trusts, that a trustee cannot use his position as a trustee for his own advantage in any way. He must have an eye single to the interests of the cestui qui trust. The rule in the Rumford Market case, and similar cases already noticed under the head of Constructive Trusts, are illustrations of the strictness with which this rule is enforced." A trustee cannot make any profit at the expense of the trust estate; he cannot use trust funds for his own benefit; he cannot buy in trust property for himself at his own sale, nor can he buy up any debt, charge, or encumbrance to which the trust estate is liable, at less than is actually due thereon, and then collect the full amount from the estate.

1 Perry on Trusts, 22 457, 458; Stat. 22 and 23 Vic., c. 35 (Lord St. Leonard's Act).

2 Perry on Trusts, & 459.

3 See Penny v. Avison, 3 Jur. (N. S.) 62; Bruner's Appeal, 7 P. F. Smith, 46.

4 Shepherd v. Mouls, 4 Hare, 504; Robinson v. Robinson, 1 De G. M. & G. 256; Byrchall v. Bradford, 6 Mad. 235; Perry on Trusts, 469. See, also, McIntire v. Zanesville, 17 Ohio St. 352, and Lamb's Appeal, 8 P. F. Sm. 142.

5 Jones v. Foxall, 15 Beav 392; Robinett's Appeal, 12 Casey, 174; Kyle v. Barnett, 17 Alab. 306; Barney v. Saun

And it has been held in many

ders, 16 How. 543; McKnight's Exrs. v.
Walsh, 8 C. E. Green, 146; Perry on
Trusts, 470. See Whitney v. Smith, L.
R. 4 Ch. App. 513.

6 Ante, p. 103. See, also, Blauvelt v. Ackerman, 5 C. E. Green, 141; Washington R. R. Co. v. Alexandria R. R. Co., 19 Grat. 592; Boerum v. Schenck, 41 N. Y. 182.

7 Burgess v. Wheate, 1 Eden, 226; Sugden v. Crossland, 3 Sm. & Gif. 192; Robinson v. Pett, 3 P. Wms. 251, n.(a.); Michoud v. Girod, 4 Howard, 503; Pooley v. Quilter, 4 Drew. 184; 2 De G. & Jo.

cases that a trustee may not even purchase the trust property at a judicial sale, brought about by a third party, and which he had taken no part in procuring; although upon this point there are several authorities the other way. Contracts between a trustee and cestui qui trust may be made, but they are scrutinized by the courts with great severity.3

144. The rule that a trustee can obtain no benefit whatever from his position, was in England carried to the extent of holding that he was not even entitled to compensation or allowance for his trouble and responsibility in the care and management of the trust estate, unless they were expressly allowed, in the trust instrument ; and this rule applies also to executors, guardians, receivers, directors of corporations, and in general to all fiduciaries. But this rule has not been adopted in the United States; and trustees and other fiduciaries in this country are entitled to a reasonable compensation for their services. The amount is in some States fixed by statute, and in others regulated by the court to which the trustees are liable to account." The English rule in regard to commissions, was cited with approval by Chancellor Kent, in two early cases in New York; but the only States in which it is now followed appear to be Delaware, Ohio,10 and Illinois.11

327; Shoemaker v. Van Wyck, 31 Barb. 457; Herr's Estate, 1 Grant (Pa.), 272; Barksdale v. Finney, 14 Grat. 338; Green v. Winter, 1 J. C. R. 27.

1 Obert v. Obert, 1 Beas. 423; Ricketts v. Montgomery, 15 Maryl. 46; Jamison v. Glascock, 29 Missouri, 191; Bank v. Dubuque, 8 Clarke (Ia.), 277; Elliott v. Pool, 3 Jones Eq. 17; Campbell v. Johnson, 1 Sand. Ch. 148; Chandler v. Moulton, 33 Verm. 245; Martin v. Wynkoop, 12 Ind. 266; Ogden v. Larrabee, 57 Ill. 389.

2 Prevost v. Gratz, 1 Pet. C. C. 364; Fisk v. Sarber, 6 Watts & Serg. 18; Chorpenning's Appeal, 8 Casey, 315; Elrod v. Lancaster, 2 Head, 571; Mercer v. Newcum, 23 Georgia, 151; Huger v. Huger, 9 Rich. Eq. 217; Earl v. Halsey, 1 McCart. 332; Hill on Trustees, 249, 250,

note (4th Am. ed.); Note to Fox v. Macreth, 1 Lead. Cas. Eq. 216, 217 (3d Am. ed.). See ante, p. 106.

3 Perry on Trusts, & 428. Post, Part II. Chap II. Sec. III.

4 Robinson v. Pett, 3 P. Wms. 251; 2 Lead. Cas. Eq. 206, and notes.

5 Perry on Trusts, 904. Notes to Robinson v. Pett, supra.

6 Notes to Robinson v. Pett, 2 Lead. Cas. Eq. 206; Perry on Trusts, & 916.

7 See Perry on Trusts, 918, notes, where the authorities and statutes are collected.

8 Green v. Winter, 1 Johns. Ch. R. 37; Manuing v. Manning, Id. 534.

9 Egbert v. Brooks, 3 Harring. 112; State v. Platt, 4 Id. 154.

10 Gilbert v. Sutliff, 3 Ohio St. 149. Constant v. Matteson, 22 Ill. 546.

In England, however, trustees are allowed for their expenses reasonably and properly incurred in the execution of the trust;1 and it need hardly be added that the same rule exists in the United States. Allowances to trustees are, however, in the discretion of the court; and even the expenses of a trustee will not be reimbursed if they have been incurred unnecessarily, and against the remonstrances of the cestui qui trust.3

145. The position of trustee is one of personal confidence, and he cannot, therefore, delegate his office even to a co-trustee.1 A trustee may, however, employ a steward, agent, or attorney in cases where it is usual to do so in the ordinary course of business; and one of several trustees may be such agent.

146. Questions have frequently arisen as to the responsibility of a trustee for the acts of his co-trustee, and how far he is liable for money for which he has joined in giving a receipt, but which has been actually paid into the hands of a co-trustee, and lost.

The general principle which governs cases of this description seems to be, that a trustee will be required to act in regard to the trust estate with the same diligence and care which a careful man displays in the conduct of his own affairs, to exercise good faith, and not to connive or in any way aid any bad faith on the part of a co-trustee; but he is not required actively to unite with his co-trustee in everything which is done in the administration of the trust. The rule is, that a trustee is generally

8

Perry on Trusts, 2 910; Hill on Trus- Co., 33 Barb. 579; Sinclair v. Jackson, 8 tees, 574.

2 Green v. Winter, 1 Johns. Ch. 37; Towle v. Mack, 2 Verm. 19; McElhenny's Appeal, 10 Wright (Pa.), 347.

3

Cowen, 543; Webb v. Ledsam, 1 K. & J. 385; Leggett v. Hunter, 19 N. Y. 445; Bowen v. Seeger, 3 W. & S. 222. It seems to be unsettled exactly how far

Berryhill's Appeal, 11 Casey, 245; trustees are responsible for money colWalker v. Walker, 9 Wal. 743.

4 Hawley v. James, 5 Paige (Ch.), 487; Pearson v. Jamison, 1 McLean, C. C. 197.

5 Ex parte Belchier, Amb. 219; Hawley v. James, 5 Paige (Ch.), 487; May v. Frazee, 4 Lit. 391; Telford v. Barney, 1 Iowa, 591; Blight v. Schenck, 10 Barr, 285; Lewis v. Reid, 11 Ind. 239; Mason v. Wait, 4 Scam. 197; Abbott v. Rubber

lected by an attorney-at-law, whom they have employed. See Perry on Trusts, ¿ 405.

6 Ex parte Rigby, 19 Ves. 463.

7 Neff's Appeal, 7 P. F. Sm. 91; Jones's Appeal, 8 W. & S. 150; Davis v. Harman, 21 Grat. 200. See Sutton v. Wilders, L. R. 12 Eq. 373.

8 Ochiltree v. Wright, 1 Dev. & Bat. Eq. 336; Ray v. Doughty, 4 Blackf. 115.

not responsible for the conduct of his co-trustee. Upon this subject the leading authorities are the cases of Townley v. Sherbourne,1 and Brice v. Stokes. In the first of these cases it was resolved that where lands or leases are conveyed to two or more upon trust, and one of them receives all or the most part of the profits, and afterwards dies or becomes insolvent, his co-trustee shall not be charged or be compelled to answer for the receipt of him so dying or becoming insolvent, unless some fraud or evil dealing appear to have been in them to prejudice their trust. The reason of this decision is, that, trustees being by law joint tenants, every one is equally entitled to receive the rents. In Brice v. Stokes the trustee was, under the particular circumstances of the case, made responsible for money for which he had joined in a receipt, although the amount had not been actually received by him; but the general rule (which has since been acted upon) was laid down by Lord Eldon to be, that at law, where trustees join in a receipt, prima facie all are to be considered as having received the money; but that it is competent to a trustee, and, if he means to exonerate himself from that inference, it is necessary, for him to show that the money acknowledged to have been received by all was in fact received by one, and the other joined only for conformity.1

But while it is true, as a general rule, that a trustee shall not be liable for the acts or defaults of his co-trustee, yet any fraud or improper dealing or gross negligence on the part of a trustee (as, for example, if he were to stand by and see a breach of trust committed by his co-trustee), will render him responsible. As soon as a trustee is fixed with knowledge that a co-trustee is misapplying the money, a duty is imposed upon him to bring it

1 Bridg. 35; 2 Lead. Cas. Eq. 858 (4th Eng. ed.).

5 See Mucklow v. Fuller, Jac. 198; Booth v. Booth, 1 Beav. 125; Styles v.

2 Brice v. Stokes, 11 Ves. 319; 2 Guy, 1 MacN. & G. 422; Taylor v. Lead. Cas. Eq. 865.

3 See 2 Lead. Cas. Eq. 865, and notes; Bowers v. Seeger, 8 W. & S. 222; Sinclair v. Jackson, 8 Cow. 543; Peter v. Beverly, 10 Peters, 562; 1 How. 134; Taylor v. Benham, 5 How. 233; Perry on Trusts, 8417.

4 See Kip v. Deniston, 4 Johns. R. 23.

Roberts, 3 Alab. 86; Worth v. McAden,

1 Dev. & Bat. Eq. 199; Latrobe v. Tiernan, 4 Maryl. Ch. 474; Monell v. Monell, 5 Johns. Ch. 283; Irwin's Appeal, 11 Casey, 294; Ducommun's App., 5 Harris (Pa.), 268; Clark v. Clark, 8 Paige, 153; Mary Evans's Est., 2 Ash. 470.

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