Kidder M. Moore and J. C. Montford, Executors, Appellants, v. Daniel Hamilton, Guardian, Appellee, 4 Fla. 112

SEMMES, Justice, delivered the opinion of the Court. This case comes before the Court on an appeal from Leon Circuit Court, and the principal facts presented by the record are these : On the 30th of March, 1841, Moore, one of the executors of William Turner, deceased, having in his hands the sum of $1,612 50 in bills of the Union Bank, belonging to the estate of his testator, loaned the same to Craig & Lockerman, who executed and delivered to him their note, in the following words: $1,612 50. On the first day of January next, we, or either of us, promise to pay to K. R.

Moore, one of the executors of William Turner’, deceased, sixteen hundred and twelve fifty one-hundredth dollars, for value received. W. P. CRAIG, EDWARD LOCKERMAN, Sec’y. The drawers of this note becoming insolvent, it remained uncollected in the hands of the executors. Afterwards, on the 25th of October, 1849, an account of the executors with the estate, bearing date in April, 1844, was filed in the office of Probate for Leon County, and in this account appears this item of $1,612 50, reported as insolvent.

To this account, is annexed a statement of the Judge of Probate, that the account as stated is on the supposition that the $1,612 50, received at the death of the testator, was in Union Bank notes, &c.

On the same day, the attorney for respondent filed in the Probate office the following exception : “ Daniel Hamilton, guardian of the infant children, who are distributees under the will of William Turner, deceased, by Thomas Randall, his attorney, appears in Court, and makes exception to the decision of his Honor, the Judge of Probate, by which the executors are allowed a credit for $1,612 50, the amount of the loan made to Craig and Lockerman, on their returning the note and judgment thereon as being insolvent, on the ground that said loan was made contrary to law, and prays an appeal.” By evidence taken before the Judge of Probate, it appears that, at the time the loan was made to Craig & Lockerman, they were wealthy and amply able, as was supposed, to respond to their liabilities; and it further appears by the record, that the bills of the Union Bank, at or about the date of the note, were depreciated to the extent of twenty-five per cent.

The allowance of the credit of $1,612 50 constitutes the subject matter of the present controversy; and the question presented to the consideration of the Court is, as to the authority of the executors to dispose of the bills of the Union Bank in the manner they did. The authority of executors to invest money belonging to the estate of their testators on personal security, has been the subject of frequent adjudications in the English Courts.

In some of the earlier decisions, a discretion to some extent, when exercised in good faith and with due caution, seems to have been conceded to executors in this respect; but the more recent cases make no such concession, and the doctrine may now be considered as settled in England that an executor cannot invest on personal security; if he does, it is on his ’own responsibility, and at his own hazard. Precedents in Chancery, 272. Wilkes v. Steward, Cooper’s Equity Reports, 6. In the case of Terry v.

Terry, Chancery Precedents, 273, the Court say, that the rule is now well established, that an executor or administrator, lending money of the deceased on bond, or promissory note, or other personal security, though not guilty of a legal devastavit, yet is guilty of a breach of trust in equity, and is personally liable, if the security proves defective.

It is true, that, where an executor exercises reasonable ■care and diligence in 1¿he strict line of his duty, he will not ■be liable for any deficiency of the money in his hands, or for the insolvency of any person who may be intrusted with it; yet, if he travel out of that line of duty, and assumes to invest any part of the property of the estate in funds, or upon securities not authorized by law, and a loss ensue by insolvency or otherwise, he will be liable, however unexpected the result, or however free his conduct may have been from improper motive. See Clough v. Bond, 3 Mylne & Cr., 496.

If an executor, without good reason, leave money due upon personal security, which, though good at the time, afterwards fails, he will be responsible. 5th Vesey, 1839. 1st Maddock, 290. And the case is much stronger, where he makes the investment improperly, as upon personal security. 2d Williams on Executors, 1547. See, also, 7th Blackford’s Reports, 529. 2d Wheaton’s Reports, 32. Ina case reported in 2d Cox’s Chan.

Cases, 1, Lord Kenyon held that a trustee could not lend an infant’s money on private security; if he did, he would become responsible, if the obligors became insolvent, though they were in very ample circumstances at the time of the loan ; that the rule was a wise and excellent one, and should be adhered to.

Independent of the authorities referred to, the provisions of our statute seem comprehensive enough to determine the question before us. “ Executors, administrators and guardians may, by leave of the Court, retain in their possession the money of any minor, paying for the same lawful interest, or shall, under the direction of the Court, put out the money of the minors at interest, upon such mortgage security as the Court shall allow, and if such security be taken bona fide, and shall prove insufficient, it shall be the loss of the minor, &c.” Thompson, 207.

It will be observed that the statute not only restricts the power of executors to mortgage security, but as a further protection of the interest of minors, very properly annexes to the exercise of that power, the sanction and approval of the Court of Probate. To avoid the operation of this statute, it is contended by counsel for appellant, that these infant children, who are distributees under the will of Turner, have no legal title to this money, or any portion of the estate, and can have none, until the account of the executors is closed, and the estate finally settled up.

This doubtless is true, and yet they have such an interest in this fund and the other property, as would authorize the Courts to interpose their power, and protect the estate from waste and mismanagement. Our statute recognizes this interest as a direct and personal one, by empowering the Court of Probate, upon their application, through their guardian, and proof of mismanagement on the part of the executors, to require of the latter bond and security for the due administration of the estate. Thompson, 210.

Besides, the effect of the argument is to render the provision of the statute, as to executors and administrators, wholly unmeaning and inoperative; for upon their accounts with the estate being finally adjusted and closed, it is their duty to pay over to the guardian of the minors their distributive share, and not loan it out, (if in money,) even-on mortgage security. It is also insisted that these bank bills are not money, and' are, therefore, not within this statute.

That they are not money strictly speaking is conceded, and the same may be-said of the bills of all other banks ; and when depreciated,, they lose, to a certain extent, even their representative character. Less their depreciation, like other bank notes, they are, in conformity with common usage and common understanding, regarded as money. In the case reported in 12th Johnson’s Reports, 220, the Court say, that bank bills are treated civiliter as money, and a tender is good, unless specially objected to.

The Legislature, in the use of the word money in this statute, doubtless intended to give to it its general signification ; for it can hardly be supposed that it was contemplated to restrict the word to gold and silver, and require executors to loan that on mortgage security, while bank bills should be regarded and sold at public outcry, as other personal property. But independent of these considerations, the defence set up by these executors is far from being a meritorious one; for in all their dealings with the estate, they have regarded the bills of the Union Bank as money.

If they considered them as the other personalty belonging to the estate, why put them in their

schedule as money ? Why retain the bills of this bank in their hands, for the avowed object of paying the debts of the testator, and for which purpose it is not pretended they were not available 1 Besides this, by reference to their account, we find that in 1841, they sold the real estate of the testator for bills of this bank, amounting to the sum of $1,695, and charged commissions on this amount with interest, less the depreciation, at the rate of six per •cent.

As to the sum now in controversy, we find in their ■account this charge — “ To commissions on cash on hand at the death of the testator — say $1,623 50, at 6 per cent— •$97 4L” It further appears that, after being allowed by the Probate 'Court the sum of $553, for depreciation on the proceeds of their own sale of the real estate, they retain $750 in these bills to pay out as money, for and on account of the estate. These facts sufficiently indicate their own opinion as to ■the character of these bills.

The Court is not disposed to give them a different character, and one, in its opinion, not contemplated by the statute. The Court is of opinion that bank bills left by a deceased person, and coming into the hands of an administrator or executor, should be regarded as money, Under the provisions of our statute ; and that the (executors in this case, having failed to invest this money in the mode prescribed by law, the estate should not suffer on account of the misapplication of this fund.

In loaning this money, these executors no doubt acted in good faith, and with an honest purpose of benefiting the estate ; but in discharging the trust committed to them, they have assumed to exercise a discretion which the law does not warrant, and it is out of the power of this Court to shield them from its consequences.

The Court can discover no reason in this case for relaxing the rule, as laid down in the authorities; but, on the contrary, many considerations of a public nature might be invoked, why the English rule, strict as it is, should be rigidly adhered to, and especially where the interest of minors is affected. Let the judgment of the Circuit Court be affirmed.