3 Moore's Appeal, 10 Barr, 435.
4 The duty of trustees to invest the trust funds in safe securities is most strictly enforced in King v. Talbot, 40 N. Y. 76 (1869), in which a very valuable opinion is given by Woodruff, J.
5 Clough v. Bond, 3 Myl. & Cr. 490, 496; Hancom v. Allen, 2 Dick. 498; Trafford v. Boehm, 3 Atk. 444; Adye v. Feuilleteau, 1 Cox, 24; s. c. 2 Dick. 499, note; Jackson v. Jackson, 1 Atk. 513; Knight v. Earl of Plymouth, 1 Dick. 126; Fyler v. Fyler, 3 Beav. 550; Holland v. Hughes, 16 Ves. 111.
1 Clough v. Bond, 3 Myl. & Cr. 490. In this case, Lord Cottenham, speaking of the personal representatives of a deceased person, who are treated as trustees, says: "It will be found to be the result of all the best authorities upon the subject, that, although a personal representative, acting strictly within the line of his duty, and exercising reasonable care and diligence, will not be responsible for the failure or depreciation of the fund, in which any part of the estate may be invested, or for the insolvency or misconduct of any person who may have possessed it; yet, if that line of duty be not strictly pursued, and any part of the property be invested by such personal representative in funds or upon securities not authorized, or be put within the control of persons who ought not to be intrusted with it, and a loss be thereby eventually sustained, such personal representative will be liable to make it good, however unexpected the result, however little likely to arise from the course adopted, and however free such conduct may have been from any improper motive. Thus, if he omit to sell property when it ought to be sold, and it be afterwards lost without any fault of his, he is liable: Phillips v. Phillips, 2 Freem. 11; or if he leave money due upon personal security, which, though good at the time, afterwards fails: Powell v. Evans, 5 Ves. 839; Tebbs v. Carpenter, 1 Madd. 290. And the case is stronger, if he be himself the author of the improper investment, as upon personal security, or an unauthorized fund. Thus, he is not liable upon a proper investment in the three per cents, for a loss occasioned by the fluctuations of that fund: Peat v. Crane, 2 Dick. 499, note; but he is for the .fluctuations of any unauthorized fund: Hancom v. Allen, 2 Dick. 498; Howe v. Earl of Dartmouth, 7 Ves. 137, see p. 150. So, when the loss arises from the dishonesty or failure of any one to whom the possession of part of the estate has been intrusted. Necessity, which includes the regular course of business in administering the property, will, in equity, exonerate the personal representative. But if, without such necessity, if he be instrumental in giving to the person failing possession of any part of the property, he will be liable, although the person possessing it be a coexecutor or coadministrator. Lang-ford v. Gascoyne, 11 Ves. 333; Lord Shipbrook v. Lord Hinchinbrook, 11 Ves. 252; 16 Ves. 477; Underwood v. Stevens, 1 Meriv. 712." And see Hanbury v. Kirkland, 3 Sim. 265; Broadhurst v. Balguy, 1 Younge & Coll. C. C. 16, 28.
2 Knight v. Lord Plimouth, 3 Atk. 480; Jones v. Lewis, 2 Ves. 240; Rowth v. Howell, 3 Ves. 565; Massey v. Banner, 4 Madd. 416; Adams v. Claxton, 6 Ves. 226.
3 Ex parte Belchier v. Parsons, Ambl. 219; 2 Story, Eq. Jur. § 1269.
§ 378. Again, a trustee is not permitted to invest the property of his cestui que trust solely in personal securities of any kind; nor can he allow any debt which conies to his possession to stand upon the personal credit of the debtor.1 He is, therefore, bound to take security on real estate, or something of permanent value, or to act under the direction of a court of equity, which he may always claim.2
§ 379. Such, undoubtedly, are the rules, which are held in the English courts of equity to govern the duties of a trustee in investing the property of his cestui que trust.3 A more limited doctrine was at one time advanced by Lord Northing-ton, who declared that a letting of money on personal security did not, of itself, constitute gross negligence and breach of trust, but that other circumstances must be shown in order to charge the trustee.4 This doctrine, however, did not meet with favor, and has been since wholly denied in the English cases.5 It would seem, however, to have been adopted in this country as the most proper and reasonable rule;6 for, as has been said by Mr. Justice Story, that " to add hazard and risk to trouble and to subject a trustee to loss which he could not foresee, and consequently not prevent, would be a manifest hardship, and would be deterring every one from accepting so necessary an office."7 It has been directly held in the Supreme Court of Massachusetts, that a loan by a guardian, upon the promissory note of the borrower, payable in one year with interest, and secured by a pledge of shares in a manufacturing corporation, the amount of the loan being about three-quarters of the par value of the shares, and less than three-quarters of their market value, was an investment made with sound discretion; and although the borrower failed before the note became due, and the shares fell in value below the amount of the note, the guardian was held not to be responsible for the loss.1 Mr. Chief Justice Shaw, in this case, reasserts the rule declared in a previous case, " that all that can be required in such cases is, that the trustee shall conduct himself faithfully, and exercise a sound discretion."2
1 Powell v. Evans, 5 Ves. 839; Tebbs v. Carpenter, 1 Madd. 290; Adye v. Feuilleteau, 1 Cox, 24; Ryder v. Bickerton, 3 Swanst. 80; Walker v. Symonds, 3 Swanst. 62; Holmes v. Dring, 2 Cox, 1,2; Wilkes v. Steward, Coop. 6; 2 Story, Eq. Jur. § 1274. See Richardson v. Boynton, 12 Allen, 138.
2 Ibid.; Leech v. Leech, 1 Cas. Ch. 249; 2 Story, Eq. Jur. § 1276, note 1. See Lovell v. Minot, 20 Pick. 116.
3 Holmes v. Dring, 2 Cox, 1, 2; Adye v. Feuilleteau, 1 Cox, 24; Ryder v. Bickerton, 3 Swanst. 80; 1 Eden, 149, and Mr. Eden's note, p. 150; 2 Story, Eq. Jur. § 1274.