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Savage agt. Gould et al.

changing the place of trial to Rockland county, without costs to either party of the motion on this appeal.

BARRETT, J., concurs.

NOTE. - An order was thereupon entered changing the place of trial back to Rockland county, and directing the New York county clerk to forthwith deliver to the clerk of Rockland county all the papers and documents in this action on file in his office, pursuant to section 988 of the Code of Civil Procedure. (REP.

SUPREME COURT.

EDWARD SAVAGE, as executor, &c., appellant, agt. Mary L.

GOULD et al., respondents.

Accounting by executor and testamentary trustee Improper investment of

trust funds - Executor's personal liability for acts of agent also to account for commissions made on loans.

An executor must exercise due diligence in the making of loans to pro

tect himself from personal liability for losses. The taking second mortgages and reliance upon the judgment of others

not such diligenee. When mortgages so improperly taken are foreclosed and bought in by him

for the estate, executor is liable for costs, taxes, &c. Commissions allowed to a trustee out of trust funds by mortgagees, or to

his attorney, when the trustee is to share therein, remain the funds of

the estate and are to be accounted for as such. That some service was rendered by the attorney will not alter this rule

when the amount is manifestly excessive, as compensation and the burden is upon the executor to establish such value.

Third Department, General Term, January, 1880.

The facts are the same as in the appeal from the order of removal (Supra p. 234).

Charles W. Mead and Edwin Countryman, for appellants.

I. It was the plain and unquestionable duty of the trustee to convert the securities of the estate, other than mortgages,

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Savage agt. Gould et al.

into cash, and invest in bond and mortgage as he was directed to do by the terms of the will. 1. The authorities are uniform that the trustee must follow the direction of the trust instrument as to making investments (Burrill agt. Sheil, 2 Barb., 457, 469 ; Gilman agt. Gilman, 2 Lans., 1, 6; Forbes agt. Ross, 2 Bro. C. C., 430; S. C., 2 Cox, 113; Perry on Tr., secs. 452, 460, 470; Ackerman agt. Emott, 4 Barb., 626; Bohde agt. Bruner, 2 Redfield, 333; Mant agt. Leith, 15 Beav., 524 and 527). 2. Even had the trust instrument been silent on the subject, his duty would have been the same as to conversion and investment (Gillespie agt. Brooks, 2 Redfield, 349; 1 Perry on Tr., sec. 440). 3. The onus of showing that no conversion of securities is intended is on those who say it is not (Morgan agt. Morgan, 14 Beav., 72; Blann agt. Bell, 2 Degex, McN. & G., 775, 779). 4. The terms of the will and the general rules laid down by courts of equity coinciding in this case, it would not be possible to more completely justify the course of the trustee. 5. In performing this duty of converting the assets, the trustee exercised such good faith and prudence as to secure & net gain of nearly $12,000 to the estate. (a) In all these cases the values of the securities were lower both at the time of appraisal and at the time of rendering the account than at the intermediate time of sale. In some cases the lowest price was before, and in other cases after the time of sale, but in all cases the trustee took advantage of the highest prices to realize the cash on the securities he was required to sell. 6. The mortgages outstanding at the time of testator's death have not been disturbed.

II. In making the investments which are disallowed by the surrogate, the appellant exercised the utmost degree of care and prudence which is required of a trustee. 1. Investigations and inquiries as to the value of the property, and also as to the title, &c., were in each case made and reported to him by Mr. C. (a) C. was not the mortgagor's solicitor, but the trustee's own partner, a lawyer in whom he had

Savage agt. Gould et al.

entire confidence, and who was employed for the requisite services because of that confidence. (6) This confidence was reasonably based upon the relations between C. and himself. (©) It was further justified by the observation and experience of the trustee in reference to Mr. C.'s estimates upon property which they had examined together. (d) The course of the trustee was that which is in universal practice in such cases, viz., that services of this kind should be performed by the solicitor of the mortgagee, though paid for by the mortgagor. 2. In the case of the most important loan (that of $5,000 to Geo. Martin), the trustee obtained the valuation of an expert, a competent real estate agent of the city of Albany, who placed a value upon the property of more than three times the amount of the loan. 3. In respect to all of these mortgages, the trustee, before making the investments, had such information regarding the value of the property as would show the investment to be proper and judicious under the strictest rules of the courts, and the correctness of such information was established by the evidence given on the accounting. (a) The market price and the value as determined by actual sales, are considered by prudent business men, as well as by the courts, the best evidence of value. (6) Opinions of value are a weaker kind of evidence, to be depended upon when actual sales or the market price cannot be shown (Graham agt. Maitland, 37 How., 307, 309; Mains agt. Haight, 14 Barb., 76, 83, 84; Harrison agt. Glover, 72 N. Y., 451, 454, 455; Whipple agt. Walpole, 10 N. H., 130; Beard agt. Kirk, 11 N. H., 398, 401; Kellogg agt. Krauser, 14 Serg. & Rawle, 137, 142; Brill agt. Flagler, 23 Wend., 354, 356). 3. In reference to these investments, evidence was offered by the trustees as bearing upon the actual values and also npon the question of his good faith and prudence, which was improperly rejected by the surrogate. (a) The evidence thus offered was of numerous sales of lots of the same kind and in the immediate vicinity of the mortgaged property at or near the time of the respective

Savage agt. Gould et al.

loans. (6) The best proof of such transactions was the conveyances themselves as the first link in the chain of evidence. (c) In one instance the conveyance offered in evidence was of a portion of the very property included in the mortgage. (d) There was also coupled with these various offers the additional offer to show that the trustee had knowledge of the sales at the time of the loans, and relied upon that information in part in making them. These yarious offers and the rulings of the surrogate thereon will be found in

case.

III. The trustee having, in good faith, invested the funds of the estate in the kind of investment directed by the testátor, and with that degree of care, diligence and prudence which prudent men of discretion and intelligence in such matters employ in their own like affairs, he cannot be charged with any loss that may have occurred (King agt. Talbot, 40 N. Y., 76; Harvard Coll. agt. Amory, 9 Pick., 461; Brown agt. French, 125 Mass., 410; Lovell agt. Minott, 20 Pick., 116; Thompson agt. Brown, 4 Johns. Ch., 619, especially 628, et seq.; Jones agt. Lewis, 3 De Gex. & Sm., 471; Mikel agt. Mikel, 5 Rich. Eq., 220; Gray agt. Lynch, 8 Gill., 403; Neff's App., 51 Penn. Stat., 91). A trustee who is an attorney is entitled to his taxed costs in a suit conducted by him for the estate when paid by the other party to the suit (In the Matter of the Bank of Niagara, 6 Paige, 213, 215; Collier agt. Munn, 41 N. Y., 143, 147).

IV. The trustee cannot be required to account to this estate for the compensations paid by the morgagors for legal services rendered in connection with mortgages which are accepted by the respondents and all their benefits retained by the estate. 1. They were not paid by the estate, nor out of the funds of the estate, nor for services rendered to the estate. 2. They were not profits made by the trustee or his partner out of estate funds, but the wages for services actually rendered. A trustee who was a solicitor sold out stock forming

Savage agt. Gould et al.

part of the trust estate, and invested it in mortgage. He acted in the transaction as solicitor for the mortgagor as well as for the trust estate, but made no charge against the trust estate for his services, being paid for them by the mortgagor. He also derived some profit as a solicitor in consequence of the employment of part of the mortgaged estate for building purposes. The court of appeals in Chancery held that the cestui que trust could not charge him with the profit thus made, as having been made by the employment of the trust estate in business (1869, Whitney agt. Smith ; Law Reports, 4 Ch. App., 513). Where a trustee deposited trust funds with a banking firm of which he was a member. Held, by the supreme court of Pennsylvania that the fact that he as one of the firm might have received profit from the use of the moneys so deposited, would not make him liable for interest on the fund (1871, Hess Estate, 68 Penn. St., 454). 3. They were not usurious (Harger agt. McCullough, 3 Denio, 119; Eaton agt. Alger, 2 Abb. Ct. App. Dec. 5; S. C., 2 Keyes, 41, 47; Thurston agt. Cornell, 38 N. Y., 281; Eldredge agt. Reed, 2 Sweeney, 155; Wheaton agt. Voorhies, 53 How. Pr., 319; Van Tassell agt. Wood, 19 Alb. Laro J., 217, reversing S. C., 12 Hun, 388; Matthews agt. Coe, 70 N. Y., 239). 4. There being no evidence whatever that the amounts so paid were unusual or extortionate, there can be no presumption that they were other than what it is claimed by the trustee that they were, viz. : fair and reasonable compensations for services actually rendered to the mortgagors. 5. They were entirely unobjectionable, unless it is unwise and imprudent for a trustee or mortgagee to require the mortgagor to employ and pay such mortgagee's own solicitor to manage legal transactions and pass upon legal questions which are of the utmost importance to the estate or fund under his control (See Eldridge agt. Reed, 2 Sweeney, 115; Wheaton agt. Voorhies, 53 How. Pr., 319, 320, 321). 6. The course pursued in this estate being in accordance with the practice established in the lifetime of the testator, he

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