Savage agt. Gould et al. must have expected and intended that the same methods would be adopted in the investment of the trust funds under his own will. 7. Under no circumstances could the trustee be held chargeable with those compensations which were received by Case alone, or with the portion received by Case of those which were shared as partnership earnings. (a) A trustee's partner may receive fees to himself, even from the estate, for services rendered to the estate (Lewin on Trusts, 240; Clack agt. Carlon, 30 Law J. Ch., 640). (b) A trustee cannot in any event be charged with more than he has received (Osgood agt. Franklin, 2 Johns. Ch. 1, 27; Hamburgh Man. Co. agt. Edsall, 1 Beas. [12 N. J. Eq.], 392, 401; Jones agt. Foxall, 15 Bea., 388, 395). a Alva H. Tremain and Andrew Hamilton, for respondents. I. The moneys received on account of loans by the appellant and his partner, or by the partner and enjoyed by the appellant, and which descriptions cover all the moneys charged in item IV, were clearly the avails of dealing with the trust funds, unless they are to be regarded as a part of them, which was never invested, and in either aspect it was the duty of the appellant to account for all of them. These bonuses will be found (supra, p. 7, schedule "D," marked as Nos. 1, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14), which were received and divided between S. and C., and of which the appellant admits he retained his share. Nos. 16, 17, 18, 19, 20, 22, 23, 24 and 26, which were received by C., paid by him to S. as treasurer of the firm, equally divided between them, and by each their share retained down to May 3, 1876, when they ante-dated their articles of copartnership, dating them back fifteen months after all but $10,800 had been invested, out of a total investment now outstanding of $107,629.33, for fear of the question of usury being raised, and S. pretended to pay back his share to C., by giving him a check for $290.75, months after its receipt and division, whereas the amount thus received by S. was $1,283.37; and Nos. 28, 29, 30 and 31, which S. Savage agt. Gould et al. in reality participated in by being exempted from the payment of all office expenses (shown during fifteen months to be $2,105.25). (a) A trustee will not be permitted to make profit for himself out of the trust property; and he is equally prohibited from purchasing or dealing with it for his own gain (Colburn agt. Morton, 36 How., 150-160, Court App., and cases; Same Case, 5 Abb. [N. S.], 308 to 316, Court Appeals; Littlye agt. Beveridge, 58 N. Y., 592-606; Fulton agt. Whitney, 5 Hun, 16; 3 Redf. on Wills, 402, 403, 553; Story's Equity Jur., sec. 1277, a; Van Epps agt. Van Epps, 9 Pai. Ch., 237; Kellogg agt. Wood, 4 Pai. Ch., 578; Holloway agt. Stevens, 48 How., 129; Lewin on Trusts [6th ed.], 243). This the trustee has done by putting up the job of letting C. handle the money, abstract large sums therefrom, while he came in covertly for his share of the plunder. One who joins with him is also disabled (Sweet agt. Jacocks, 6 Pai. Ch., 355). An usage authorizing an agent to make a profit upon his principal is a usage of fraud and plunder, and cannot be supported (Diplock agt. Blackburn, 3 Campb., 43), where it is held that if the master of a ship in foreign port receive a premium for a bill on England on the ship's account, although the usage is for masters to appropriate such premiums to their own use, yet this belongs to the owner of the ship. A subordinate or agent of trustee is equally disqualified from making gains out of the estate, where it is to be shared in any way by the trustee (Terwilliger agt. Brown, 44 N. Y., 237– 40-41, affirming 59 Barb., 9; Hawley agt. Cramer, 4 Cow., 717). Nor can the trustee or executor give it to one and then take back a part to himself (Powers agt. Powers, 48 How., 389). If he charged a bonus in his account for skill and services in conducting the business of the trust, it will be set aside (Perry on Trusts, vol. 1, secs. 427, 428, 429, and vol. 2, sec. 904). No profit can be made by them for increase (3 Rev. St. [6th ed.], sec. 70, p. 101). Nor can his partner make any profits out of the trust funds, or for the performing of services, unless the partner alone takes the profits. Nor can Savage agt. Gould et al. either charge for professional services where both would share in the proceeds (3 Redf. on Wills, 556, sec. 118; 3 Redf. on Wells, 416, note; Collier agt. Munn, 41 N. Y., 143, 146; Perry on Trusts, vol. 1, pp. 520-21, sec. 432; Lewin on Trusts [6th ed.], 249, 243). Whether usurious or not, the trustee must account for all gains (Perry on Trusts, vol. 1, p. 571, sec. 468; 3 Redf. on Wills, 406, secs. 18). The rule in England and America is that a trustee must account for all profit he has made (3 Redf. on Wills, 402, secs. 10, 11; 403, sec. 12; 406, sec. 18; Utica Ins. Co. agt. Lynch, 11 Paige Ch., 520). Trustee cannot even charge costs in an action against him personally for acts arising out of his attempts to protect trust property (Pierson agt. Thompson, 1 Edw. Ch., 212). Thus showing how strictly the rule is applied to trustees who seek to make litigation for the purpose of taking costs out of the estate as they have done in this estate, the amount being over $1,997.30, as already proved, with five other foreclosures pending, part of which were defended by pleas of usury, and in which costs would doubtless be $2,500 more. All he is entitled to, under the statutes, is the commissions that the law gives him and his necessary expenses; hence, all other profits go to the estate (3 R. S. [6th ed.], p. 101, sec. 58; Id., p. 102, sec. 66). All these bonuses should have been accounted for and were property of the trust (Perry on Trusts, vol. 1, secs. 427-430, and sec. 468, p. 571; Tiffany on Trusts, 554-558). Being the moneys and profits of the trust, appellant refused to include them in account, appropriating them to his own use, endeavored to conceal their receipt and hide it from investigation or discovery by his antedated articles of copartnership, and calling it expenses of office and otherwise. (b) These moneys cannot be regarded as mere legal expenses incurred and charged for services in perfecting searches and papers. This view is placed entirely out of question when the amounts charged are compared with the amount of the loan. (c) C. was the agent in these loans of the trustee. His receipt in every case says so: "Received, Albany, Savage agt. Gould et al. N. Y., April 9, 1875, of S., executor and trustee, &c., fifteen hundred dollars, to be loaned to Joseph Fellows for one year from date thereof on bond and mortgage. (Signed) T. L. C.” C. being such an agent of S., and S. being the trustee and responsible to the respondents, these amounts which were taken as bonuses were really the moneys of the estate which had never been invested. They never left the hands of the appellant and his partner C., who was given the money to "invest," &c. In each case they took their moneys out of the fund that was to be loaned, so that in fact it never was loaned, but remained the money of the estate in their hands. In every one of these cases the bonuses belong to the estate (Perry on Trusts, secs. 429, 430, vol. 1, p. 571). (e) Regarding C. as the agent of S., there is no substantial difference between the bonuses which S. took and kept, or took, kept and pretended to return to his agent, or took indirectly from his agent as office expenses. The agent is equally estopped with his principal, who is liable for his acts and accountable for his receipts and profits. (a) It was the duty of the trustee to see that the investments were secure, productive of interest, and subject to future recall (Ackerman agt. Emmott, 4 Bar., 626; King agt. Talbot, 40 N. Y., 76, 86, 88; affirming same case, 50 Barb., 453, 484; Tiffany on Trusts, 587, 600, 601, 602, 603; Smith agt. Smith, 4 Johns. Ch., 281; 4 Edw. Ch., 718). A trustee should not loan more than one-half to twothirds of the value of the property (Bogart agt. Vanvelsor, 4 Ed. Ch., 718-722, 723; 40 N. Y., supra; Dayton Sur., 522). It may be improper to loan even two-thirds (Perry, vol. 1, p. 549, sec. 457; Lewin on Trusts [6th ed.], 286). (As when, as in this case, loans are made on a falling market.) In each of these cases the evidence conclusively established not only that the amount loaned was in excess of this rule of two-thirds, but the full value of the property was in no instance as great as the mortgage, but that it was practically worthless. Where this rule is violated it is well settled that the trustee is personally liable for the loss accruing (40 N. Y., VOL. LX 29 " Savage agt. Gould et al. 76, supra; 50 Barb., 453, supra; 4 Edw. Ch., 718, supra; 3 Redf. on Wills, 559; Baker agt. Disbrow, 18 Hun, 29; Gillespie agt. Brooks, 2 Redf. Rep., 349-360). And a cestui que trust is at liberty to elect to approve an unauthorized investment or reject it at his option (Id; 3 Redf. on Wills, sec. 452; Dayton on Sur., 522). And where separate investments are made, he may adopt or reject each, as his interest dictates (Id.; Perry on Trusts, sec. 621, vol. ). And where improper investments are rejected, the trustee can be charged with the amounts and legal interest thereon (Baker agt. Disbrow, supra; King agt Talbot, supra; Tiffany on Trusts, 593595; Perry on Trusts, vol. 1, secs. 468-472; Bodie agt. Bruner, 2 Redf. Rep., 333-337; 3 Redf. on Wills, 402). (b) It is no answer to charge Case with these wrongs, whether he be regarded as the agent of the mortgagor or the appellant. A trustee cannot give funds to a solicitor, and allow him to misapply them, and then escape responsibility (Brown's Accounting, 16 Abb. [N. S.], 457 and 466, and numerous cases cited; Tiffany on Trusts, 597, 570; 3 Redf. on Wills, 547, 548; Perry on Trusts, vol. 1, sec. 402). If trustees rely upon a valuation made by the mortgagor, or a surveyor, who is his agent, without having a survey of the value on behalf of the estate, it is a breach of trust, and they will be held liable for any deficiency in the value of the security (Lewin on Trusts [6th ed.], p. 286, sec. 25). Nor must he employ the solicitor of the borrower to fix upon the value or survey, which he did in every loan (Lewin on Trusts [6th ed.], p. 279, § 59). (c) The Fellows second mortgage of $900, treated as an investment, was, within the rule, properly charged against the appellant. A trustee should never loan on second mortgage (Perry on Trusts, vol. 1, p. 550, sec. 457; Lewin on Trusts [6th ed.], p 291, sec. 40). IV. In item VIII of decree the surrogate properly disallowed the credit claimed for appellant's commissions, $500. He claimed to take them on his own responsibility. This merely rejected the amount as a credit of $500 on the date of July |