While I concur in the conclusion that the order of the Appellate Division must be reversed and this proceeding remitted to the Surrogate's Court for further and proper proofs, I am unable to assent to some of the reasons which are presented by Brother CULLEN to justify that result. There can be no disagreement as to the equitable rule which underlies the rights of the parties to this proceeding. It is well stated in Matterof Cavin v. Gleason (105 N.Y. 260), as follows: "As betweencestui que trust and trustee, and all parties claiming under the trustee, otherwise than by purchase for a valuable consideration without notice, all property belonging to a trust, however much it may be changed in its nature or character, and all the fruit of such property, whether in its original or altered state, continues to be subject to or affected by the trust." Nor can it be doubted that the necessary and logical corollary of this rule is that the right of the cestui quetrust to follow and appropriate the trust property ceases only when the means of ascertainment fail (Holmes v. Gilman,138 N.Y. 376), which is but another way of saying that it must be "ascertained, traced and identified." Our difference in this case arises over the application of the rule to the facts of this case. The trust fund herein was clearly traced into the hands of the appellant's testator, the deceased guardian of the respondent. At the time of said guardian's death he had in his possession an amount of property which was more than sufficient to satisfy the trust fund. There was no written account or other affirmative evidence to show whether any part of this property was a portion of the trust fund or the proceeds thereof. It consisted of money, *Page 201 choses in action and real estate. To the extent that it consisted of money or property in which said guardian had the right to invest the trust funds, I think there is a presumption that it was a part of the trust fund, and this presumption was sufficient to cast upon the deceased guardian's executor, the appellant herein, the burden of proving that it was not a part of the trust fund or the proceeds thereof. (Perry on Trusts, sec. 128.) Neither law nor equity should presume dishonesty or dereliction of duty where the conduct of one who is charged with the trust is consistent with honesty and performance of duty. Nor shouldcestui que trust be charged with the onus of making proof which the trustee is presumed to have in his possession or which the latter's negligence or misconduct has put it out of the power of the former to produce. Such a rule would put a premium upon dishonesty in fiduciary relations and upon official misconduct. Confusion resulting from the acts of the trustee should never embarrass the rights of the owner or cestui que trust in following his property. (Perry on Trusts, secs. 447, 847; Story on Eq. Jur. secs. 468, 623; Story on Agency, secs. 205, 332, note.) The "means of ascertainment" of a trust fund do not fail until the court has probed the memory, conscience and accounts, if any, of the trustee whose delinquency is urged as his only defense. The rule for which I contend is not in conflict with the doctrine that a trust fund must be "ascertained, traced and identified" before it can be appropriated to the purposes of the trust. Neither is it at variance with the decisions cited in the opinion of Judge CULLEN. In Matter of Cavin v. Gleason (supra) there was clear affirmative proof that the trust fund had been used for the payment of the trustee's individual debts, and, hence, the cestui que trust were of necessity remitted to their rights as general creditors. In Holmes v. Gilman (supra) the partnership funds were definitely traced into a policy of insurance which one of the partners had procured upon his own life for the benefit of his wife, and it was held that the cestui que trust, the surviving partner, was entitled to the proceeds of the policy which were less *Page 202 than the amount of the trust fund. In Ferris v. Van Vechten (73 N.Y. 113) it was held that the misappropriation by executors of a fund created for a specific purpose will not be presumed, but must be proved. The real point of contention in the case at bar was not involved in either of the cases referred to. We are dealing, not with the necessity for ascertainment, but with the method by which it should be accomplished. I agree that there can be no presumption that the real estate, of which the deceased guardian had title, and the proceeds of the insurance policy upon his life were a part of the trust fund. This is because the guardian has no right to make such investments. But as to the money and choses in action in which the guardian had the right to invest the trust funds and which in the aggregate amounted to less than the trust fund, I think there is a presumption that it was a part thereof. A man will not be presumed to have done wrong when the circumstances are such that he may have done his duty. An analogous principle was applied in the leading case (In reHallett's Estate, L.R. [13 Ch. Div.] 696), where JESSEL, Master of the Rolls, said: "Nothing can be better settled either in our own law, or, I suppose, the law of all civilized countries than this, that where a man does an act which may be rightfully performed, he cannot say that that act was intentionally and, in fact, done wrongly. A man who has a right of entry cannot say he committed a trespass in entering. A man who sells the goods of another as agent for the owner cannot prevent the owner adopting the sale and deny that he acted as agent for the owner. It runs throughout our law and we are familiar with numerous instances in the law of real property. A man who grants a lease believing he has sufficient estate to grant it, although it turns out he has not, but has a power which enables him to grant it, is not allowed to say that he did not grant it under the power. Wherever it can be done rightfully, he is not allowed to say against the person entitled to the property or the right that he has done it wrongfully. That is the universal law."
It is true that here there are creditors of the deceased *Page 203 guardian whose rights are to be recognized. But what are those rights? Simply to resort to the individual assets of the guardian for the payment of their claims. Where a trust fund has been traced into the hands of a trustee and, at the time when conflict of interest arises between the cestui que trust and the individual creditors of the trustee, the latter is shown to be possessed of assets of such a character that it is doubtful whether he holds them in one capacity or another, there is quite as much reason for the presumption that they are a part of, or proceeds of, the trust fund as there is for the presumption that they are the trustee's own property. For these reasons I dissent from the statement in Judge CULLEN'S opinion that respondent's proof entirely fails to comply with the requirement that the trust fund must be "ascertained, traced and identified." And I respectfully submit that enough was shown to put the executor of the deceased guardian to his proof, at least as to the money on hand at the time of the guardian's death and as to some of the choses in action. This rule should be applied in the further hearing of this proceeding in the Surrogate's Court.
GRAY, O'BRIEN and BARTLETT, JJ., concur with CULLEN, J.; PARKER, Ch. J., and HAIGHT, J., concur with WERNER, J.
Ordered accordingly.