4 Harden v. Parsons, 1 Eden, 148.
5 Wilkes v. Steward, Coop. 6; Walker v. Symonds, 3 Swanst. 62. See also Lowson v. Copeland, 2 Bro. C. C. 156, and Mr. Bell's note.
6 Harvard College v. Amory, 9 Pick. 461; Lovell v. Minot, 20 Pick. 116, 119; Case of Calhoun's Estate, 6 Watts, 185; Thompson v. Brown, 4 Johns. Ch. 628; Jones's Appeal, 8 Watts & Serg. 143; Hext v. Porcher, 1 Strobh. Eq. 170; Twaddell's Appeal, 5 Barr, 15; Brown v. Wright, 39 Ga. 96.
7 2 Story, Eq. Jur. § 1271. And see King v. Talbot, 40 N. Y. 76.
§ 380. Again, where a trustee places money belonging to his cestui que trust in the hands of a banker, he must be careful to distinguish the fund from his own property, and to keep a separate account thereof, or he will be held liable in case of the failure of the banker.3 Where, therefore, a guardian, on the day of the receipt of money belonging to his ward, deposited it in his own name in a banking institution then in good credit, but which subsequently failed, and took a certificate thereof, payable to himself or bearer, it was held that the loss fell upon him, although on the day of deposit, by indorsement on the certificate, he declared it to be the property of his ward, and placed in the bank for his benefit.4
§ 381. But, where special directions are given as to the duties of trustees in the instrument creating the trust, they will override the rules of equity, and form the guide and exposition of the duties of the trustee; and it is only in cases where a trustee acts without special directions, that he will be bound by the strict rules stated above.
§ 382. Where a trustee commits a breach of trust wilfully, he is personally liable to make good any injury resulting therefrom to his cestui que trust. If, therefore, he sell the trust property improperly, and receive payment therefor, although he can pass the title to a bond fide purchaser for a valuable consideration, he will be personally responsible; and if he should afterwards come into possession of the same property, the trust would revive and attach to it again.1 So, also, the same rule obtains where he misapplies the money, or invests it in improper securities;2 and if he make use of it for his private advantage and profit, he will be responsible for all the profit made thereon.3 Wherever there is a breach of trust, the debt is treated as a simple contract debt, and is only binding upon personal assets of the trustee, even in cases of fraud, unless there be some acknowledgment of the debt, under seal, by the trustee.4 But courts of equity, in such cases, will so marshal the debts, that if the personal assets be exhausted by specialty creditors, the simple contract creditors will take their place, and receive satisfaction out of the real estate.5
1 Lovell v. Minot, 20 Pick. 119. See Kinmonth v. Brigham, 5 Allen, 277 (1862).
2 Harvard College v. Amory, 9 Pick. 461. See also Smith v. Smith, 4 Johns. Ch. 281, 445, where Mr. Chancellor Kent seems to adopt the same rule. See also Clark v. Garfield, 8 Allen, 427 (1864).
3 Massey v. Banner, 4 Madd. 413; Freeman v. Fairlie, 3 Meriv. 29.
4 Jenkins v. Walter, 8 Gill & Johns. 218.
§ 383. Where funds are placed in the hands of a trustee for accumulation, in trust for a minor, to be held until such minor arrives at full age, he would be justified in appropriating the interest, and, if necessary, even the principal, to the maintenance and education of the cestui que trust, where there is no other property adequate for their purposes, and where the minor is of tender age, without living parent, there being no devise over and no third person .interested in the fund.6 And indeed where a trustee expends the interest or principal of an accumulating fund, under circumstances that would induce a chancellor to make a decree for such a use, the court will allow him, in the settlement of his accounts, credit for such expenditures, in like manner as if a previous order had been given.1
1 2 Story, Eq. Jur. § 1264; Pocock v. Reddington, 5 Ves. 800; Harrison v. Harrison, 2 Atk. 121; Bostock v. Blakeney, 2 Bro. C. C. 653; Forrest v. Elwes, 4 Ves. 497; Earl Powlet v. Herbert, 1 Ves. Jr. 297; Byrchall v. Bradford, Madd. & G. 235. If one who holds an estate in trust, with power to dispose of it for his own benefit and others', convey it to a third person, acquainted with the nature and character of the trust, and without any consideration or benefit to the cestuis que trust, the transaction will be deemed fraudulent as to them, and they may follow the estate in the hands of such grantee. Smith v. Bowen, 35 N. Y. 83 (1866). 2 Ibid.; Steele v. Babcock, 1 Hill, N. Y. 527; Estate of Evans, 2 Ashm. 470.
3 Fawcett v. Whitehouse, 1 Russ. & Myl. 132; Docker v. Somes, 2 Myl. & K. 664; Wedderburn v. Wedderburn, 4 Myl. & Cr. 41; 1 Story, Eq. Jur. § 465; Saegar v, Wilson, 4 Watts & Serg. 501.
4 Bartlett v. Hodgson, 1 T. R. 42; Vernon v. Vawdry, 2 Atk. 119; 2 Story, Eq. Jur. § 1285, 1286.
6 Cox v. Bateman, 2 Ves. 18. 6 Petition of Potts, 1 Ashm. 340.
§ 384. Where there are several trustees, one is not responsible for the acts of the others, of which he has no cognizance, or which he has not co-operated in or connived at.2 And if one of several trustees sign a receipt jointly with the others, this mere fact alone will only render him liable for money which he has received.3 And in this respect the liability of a trustee is distinguished from that of an executor, the latter being ordinarily liable for the money received by his coexecu-tor if he join with him in a receipt;4 and this distinction in favor of the trustee obtains upon the ground, that, as he is bound to join with his cotrustee in a receipt, the act is not a voluntary one, and ought not to bind him. Yet if a joint receipt be given, and it do not appear from the instrument itself, and cannot be clearly proved how much was received by one trustee, and how much by the other, each will be charged with the whole, the liability being the same as if the parties had mixed up their personal account with their account as trustees.5 Again, if the trustee have improperly suffered his cotrustee to retain property for a long time without proper security; or if he connive at or assent to any improper act by his cotrustee; or if he agree with his cotrustee that the latter shall transact exclusively a certain part of the duty; or if he pay over to his cotrustee any funds which he may receive,he will not be jointly liable.1 But when a trustee becomes a purchaser at a sale by a cotrustee, it is necessary, in order to render the sale utterly void by reason of the fraudulent acts of the seller, to connect the purchaser with them.2
1 Petition of Potts, 1 Ashm. 340.
2 2 Story, Eq. Jur. § 1280.
3 lb. § 1281; Fellows v. Mitchell, 1 P. Wms. 83, and Cox's note; Churchill v. Hobson, 1 P. Wms. 241; Westley v. Clarke, 1 Eden, 360; Monell v. Monell, 5 Johns. Ch. 283.
4 2 Story, Eq. Jur. § 1280a; Sadler v. Hobbs, 2 Bro. C. C. 1.14; Moses v. Levi, 3 Younge & Coll. 359, 397; Chambers v. Minchin, 7 Ves. 197; Brice v. Stokes, 11 Ves. 324; Shipbrook v. Hinchinbrook, 16 Ves. 477.
5 Fellows v. Mitchell, 1 P. Wms. 83; s. c. 2 Vern. 504; 2 Story, Eq. Jur. § 1282; Hart v. Ten Eyck, 2 Johns. Ch. 108; Mumford v. Murray, 6 Johns.
Ch. 1, 16.
§ 385. It is hardly necessary to add that a party may be personally liable on his contracts, in some cases, although the contract be in fact in relation to the property of the cestui que trust, and although the defendant add the word "Trustee " to his signature.3
1 Gill v. Attorney-General, Hardr. 314; Shipbrook v. Hinchinbrook, 16 Ves. 479; Sadler v. Hobbs, 2 Bro. C. C. 116; Keble v. Thompson, 3 Bro. C. C. 112; Langston v. Ollivant, Coop. 33; Caffrey v. Darby, 6 Ves. 488; Oliver v. Court, 8 Price, 127; Mumford v. Murray, 6 Johns. Ch. 14; Bate v. Scales, 12 Ves. 402. ,
2 Beeson v. Beeson, 9 Barr, 279.
3 See Pumpelly v. Phelps, 40 N. Y. 60 (1869); Bush v. Cole, 28 N. Y. 261; DeWitt v. Walton, 5 Seld. 571.