As stated by Mr. Justice BUFORD in main opinion there is a distinction to be drawn between the status of trust funds which a trust company may under the statute invest in certain securities and trust funds which the trust company had no lawful authority to invest in securities; and as also stated, where trust funds are commingled with other funds of the trustee, and disbursements are made from the common fund, or the common fund is wasted, it will be presumed that the part disbursed or wasted was that of the trustee and not the property of the cestui qui trust; and the presumption is now that those administering a trust fund have properly discharged their duty; and the general duties of an administrator is to collect the effects of the deceased, to pay the claims against *Page 851 his estate and to distribute the residue to those entitled thereto.
The statute authorizes Trust Companies to qualify and act as administrator or other fiduciary or trustee, requires such companies to keep trust funds separate from their general funds, provides that trust funds shall not be liable for the debts or obligations of the trust companies, and designates the classes of securities in which trust funds may be investedwhere investment of such trust funds is duly authorized. See Secs. 4185, 4186, Rev. Gen. Stats. 1920; Secs. 6126, 6127, Compiled General Laws 1927.
It is only when a fiduciary trust company fails or is financially unable to meet all of its trust and general obligations, that questions of commingling funds, priorities in in payments and presumptions as to the use or dissipation of the general or trust funds of a fiduciary trust company arise for judicial or administrative decision.
Where a trust company that is authorized to act as trustee or other fiduciary, commingles its trust funds with its general funds, and after making disbursements from the commingled funds fails, and its assets pass into the hands of a receiver, if the trust funds should have been held in cash, the presumption is that amounts which have been invested or otherwise used or dissipated were the trustee's general funds, since the presumption is against an illegal use of the trust funds; and where the trustee fails and has insufficient assets to meet the fiduciary and general obligations of such trustee, the preferences of the cestui que trustent are, as occasion requires, confirmed to the lowest cash balance on hand at any time after the trust funds were received, unless the trust funds are traced into securities or other estates of the trustee. But when the trust funds may lawfully be invested in particular classes of securities and the assets of the trust company include securities *Page 852 in which the trust funds could lawfully have been invested by the trust company, and the cash on hand is insufficient to cover the trust amounts that should be paid from cash in hand, the presumption is that the trust funds were lawfully invested, if such securities were acquired after the commingling of the fund; and the preference of the cestui qui trustent may extend to the securities on hand so acquired, in which the trust funds could lawfully have been invested, in the absence of some showing that the trust funds were not so invested.
Ordinarily an administrator merely as such is not authorized to invest funds of the decedent's estate, the general duties of an administrator being to collect the decedent's personal assets, pay his debts and distribute the balance.
If it is the duty of a trust company to hold particular trust funds in cash, as when the trust company is an administrator without authority to invest monies of the decedent's estate and upon failure of the trust company, the cash on hand is not sufficient to pay all depositors, the beneficiaries of the funds held by the trust company as administrator may have a right to priorities in the cash on hand at the time the trust company failed, predicated upon a legal presumption that the trust company having no right to invest or to dissipate funds held by it as administrator, did not invest or dissipate its trust funds.
Where the trust company had authority to invest fiduciary funds held by it, and when the trust company failed, it had securities of the classes in which the trust funds could properly have been invested, the cestui qui trustent may have priorities in such securities, predicted upon a legal presumption that the trust company exercised its authority to invest and did invest the trust funds in the securities on hand that were proper for such investment, and that the trust funds were conserved, and that dissipatations *Page 853 or losses if any were from general funds of the trust company rather than from the trust funds, in the absence of evidence controlling the case.
Where the cash on hand is not sufficient to pay all the trust amounts that should have been held in cash by the trust company, it may be appropriate to apportion the payments among those entitled to preference in payments from the cash on hand.
Likewise where the trust company had securities or other property in which particular trust funds could properly have been invested by the trust company and such securities or property are insufficient to cover all the trust funds that could properly have been invested therein, it may be appropriate to apportion the payments from the securities on hand among those duly claiming amounts that were held by the trust company and that could lawfully have been invested in the particular securities.
Where an administrator as such is not authorized to invest the funds of the decedent's estate, collections or deposits by the administrator as such are to be held in cash or subject to check; and if the administrator is a trust company and it fails after commingling its general funds with the funds it received as administrator, the beneficiaries of the decedent's estate may have a preference over general depositors as to the cash on hand, and also as to securities (if any which may remain after the claims of cestuis qui trustent having priority as to securities lawfully acquired with funds as herein before stated shall have been satisfied and which securities shall have been shown to have been acquired by the administrator after the commingling of that trust with the general funds, predicated on the legal presumption that where there has been a waste or dissipation or loss and also an unauthorized investment of commingled funds in valuable securities, the trust funds were conserved by the fiduciary company and the waste, dissipation *Page 854 or loss was from the general funds rather than from the trust funds in the absence of evidence controlling the case.
When a trust company lawfully acts as a fiduciary with power to invest funds in particular securities, and the trust company as such fiduciary commingles the trust funds with its general funds and then invests such commingled funds in securities that are lawful investments for the trust funds, upon a general failure of the fiduciary trust company the cestuis qui trustent may have a preference in the securities found among the fiduciary company's assets that are authorized investments of the fiduciary trust fund, in the absence of a showing that the trust fund was not invested in such securities.
It does not appear in this case by allegation or exhibit whether the administrators with the will annexed had authority to invest the funds of the decedent's estate, the will not being in the record. The principles above stated sufficiently indicate the rules that should be observed in further proceedings herein.
As under the allegations of the bill of complaint appropriate evidence may be adduced to establish an equity for at least some substantial relief within the scope of the relief sought, the general demurrer to the bill of complaint should have been overruled, and the decree of reversal should stand.
Rehearing denied.
TERRELL, C. J., AND ELLIS, STRUM, BROWN AND BUFORD, J. J., concur. *Page 855