(after stating the facts as above.) The study of this case has not been an easy, but a difficult, one. The referee, in an elaborate and learned opinion, has expressed, and in the main sustained, his views, and they have again been adopted by the learned surrogate, upon due consideration, with one exception. The difficulty of review arises from the multitude of facts, figures, and circumstances in which the record abounds, examined with reference to the numerous findings and the various exceptions taken and presented for consideration, and the involved method in which they were submitted by the appellant. If, upon such an examination, results differing from those arrived at in the court below shall be proclaimed, it may be that errors will be made, but the duty of review is imposed, and must be performed. The case is certainly one in which the ceremonies of the trial must be more impressive and more valuable upon the facts, at least in some respects, than the review, from the great advantage of hearing the witnesses, and gathering and grouping the facts as they were stated.
Beginning with the finding in regard to the Reeder mortgage, it is thought that the referee was not justified in charging the appellants with the loss attendant upon its presence as an asset.. It was not selected by them, but formed a part of the estate which was divided, and without unnecessary expense, as we have seen. The testator had made the investment in these mortgages, and they must either have been- sold, or divided and set apart to the trusts, for which they were sufficient in number. Without reference, therefore, to the power given the trustees to invest in such property or securities as they in their discretion might deem most advantageous, and without, therefore, invoking it for their benefit, the appellants were not chargeable with the loss on the Reeder mortgage, unless the circumstances show affirmatively that .they acted in an unreasonable manner in retaining it, and that the failure to sell was unjustifiable. McRae v. McRae, 3 Bradf. Surr. 199. Here it must be borne in mind that the cestuis que trustent were treated all alike, and none benefited at the expense of the others; five mortgages of like character having been found as part of the .estate, and appropriated in making the division. What would have happened as to the pecuniary result, had the mortgages been sold, does not appear; whether, for example, it would have been more advantageous to have sold than to have retained them. There is a great difference between an investment by the trustees of moneys forming a part of *847the estate, and the retention of securities purchased by the testator, and held by him at the time of his decease. In the one case the investment, whether wise or unwise, is the independent, uncontrollable act of the owner; and in the other it is the act of the trustees, whose discretion is limited and whose duties are prescribed; and each is to be subjected, therefore, to wholly different rules, if, indeed, the act of the owner is subject to any rule whatever. The referee places his conclusions upon King v. Talbot, 40 N. Y. 76; Adair v. Brimmer, 74 N. Y. 539; Hun v. Cary, 82 N. Y. 65; and Ormiston v. Olcott, 84 N. Y. 343. In all these cases except the last the investment was made by the trustees, and the last has no application, except so far as it recognizes the rule established in the first, which requires, it would seem, investment, when made by the trustees, to be made in federal or state securities, or in bonds and mortgages within the state. We are not dealing with facts, therefore, that make the principles of these cases applicable. The liability of the appellants rests upon different principles, as already suggested, involving unreasonable conduct in failing to sell or to act. Was the conduct of the appellants such as to warrant such a conclusion? In the spring of 1871, March and May, letters testamentary were issued to them. In February, 1872, upon the Reeder mortgage, assigned to the respondent, a judgment of foreclosure was obtained, but in an action commenced on September, 1871, for the nonpayment of interest, and the property conveyed by it purchased. This was less than one year after the letters were issued. It is true that interest was due upon it at the time the letters were issued, but the mortgage was allowed to remain, on the constant promise of the payment of interest and settlement, which it was hoped and believed, it would seem, would take place. This course of conduct is often adopted by prudent men, and especially if the •security be of doubtful value. It does not, therefore, follow that it was unreasonable, unjustifiable conduct in failing to foreclose at an earlier date, under these circumstances, from the mere delay which occurred. Something more than this should be shown to warrant such a finding. Even trustees, although circumvented by stringent rules, are not expected to be guarantors against any misfortune in the management of their trust. They must, it is true, be vigilant and prudent, but in the sense in which these qualities are ■developed by human beings ordinarily gifted. In Re Gray, 27 Hun, 455, (decided in this department,)-the time allowed within which to sell securities was declared on authority to be one year, although that rule was not universal, •and cases were cited in which a more extended period was allowed. In that case stock which was part of the estate was held on a falling market in hope of improvement, which came, but not to the extent anticipated, and the executors held it for further advances. This was unfortunate, for the shares fell considerably in value; but the court held that it could not be said that •they had acted improperly, for their conduct was such as prudent, cautious, .and intelligent business men would have deemed to have been "proper if they had been managing their own affairs. The purchase of the property herein made was made, no doubt, with intent to avert loss, and was such an act as prudent and cautious men would commit. The object in view was a good one, and was founded upon an investment made by the testator, who not only believed in the security, but, as already suggested, induced the appellant Gardiner to make a similar one. There is no pretense that the appellant derived any benefit whatever from it,—not the slightest,—upon the record. In Hogan v. De Peyster, 20 Barb. 117, it was said of the security there considered: “ This is not a new investment.” The case of Ackerman v. Emott, 4 Barb. 626, shows the distinction between the two cases, and that an executor is liable for an unauthorized investment in bank stock, but admits that he is not liable for permitting such investments made by his testator to continue. In Thompson v. Brown, 4 Johns. Oh. 619, the administrators permitted the business to be carried on as they found it, and it was held not to be a new and *848distinct original trading with the assets, voluntarily entered into by them, entailing personal responsibility; and in Browan v. Campbell, 1 Hopk. Oh. 233, the chancellor sustained the exchange of the notes of the Union Cotton Manufactory for the stock of the Otsego Cotton Manufactory, the investment not having been made by the personal representative. These cases illustrate, in connection with the others cited, the distinction between existing and new investments; and sustain the proposition that the retention of the former, even by a change in the form of them, will not entail a personal responsibility, unless the conduct of the trustees is unreasonable and unjustifiable. It must be borne-in mind, also, that after the foreclosure and purchase Mrs. Jones, who had been appointed the guardian of the petitioner, collected the rent of the property purchased. The original investment, it cannot, be denied, was injudicious, but this was the act of the testator, and a similar one was made by the appellant Gardiner under his advice.
It is insisted on behalf of the appellants, further, that, assuming the Reeder mortgages to be an invesment, it was authorized by the trust, which vested a discretion in them, and that it was ratified by the petitioner. It is not deemed necessary to consider either of these propositions at great length. It may be enough to say of them, generally, that the referee has shown satisfactorily that the assumed ratification cannot be sustained on the facts nor upon the law. Wjien the division was made in 1871, the petitioner was a child, and what she said or did during her minority, even if it were based upon a * full knowledge of her rights and the acts of the appellants, would not estop her from demanding an accounting. Upon her arriving at maturity she took possession of the property purchased upon the foreclosure, but it does not appear that she had been advised of the facts relative to its acquisition, and knew nothing of the character of the Reeder mortgage, or the mortgage subsequently given by the trustees as a result of the purchase. It is true that in 1881, in which year, and on the 17th March, she became of age, she began proceedings against the appellants for an accounting as executors, and that they filed an account in September of that year; and, further, that these proceedings were amicably settled in December following, when she was given some, if not all, of the securities mentioned in the account as having been set apart for her when the division took place during her minority, in 1871. The account does not disclose all the facts. There is nothing in it to show the condition and value of the assignment of the Reeder mortgage, and the changes made by its foreclosure, and the sale and purchase of the property covered by it. She had then lately received a memorandum from the appellant Gardiner, stating that the mortgage held for her trust was $25,000, and thus an indication, upon which she could rely, that the amount to be set apart for her was intact. She was evidently then in ignorance of the facts in regard to the Reeder mortgage, and was not estopped, therefore, from asserting any right in regard to it. Actual and full knowledge is indispensable, and, after that, the act invoked must be clear and unequivocal, fairly indicating an intent to affirm the transaction. 2 Pom. Eq. Jur. § 809; Boerum v Schenck, 41 N. Y. 182, 190. _ The knowledge must be of all the material particulars and circumstances, and Vj the cestui que trust must be fully apprised of the acts ratified, and of her legal rights in the matter. Adair v. Brimmer, 74 N. Y. 554. Indeed, it is said in that case: “All that is implied in the act of ratification, whenset up in equity by a trustee against his cestui que trust, must be proved, and will not be assumed.” These views were expressed by the referee, and are adopted as conclusive upon the question considered. In the conclusion arrived at, however, in regard to the liability incurred by the appellants as to the Reeder mortgage, these questions as to them are not so material. That relating to the assumed ratification is considered, nevertheless, in detail, although the other is not, as it is thought to be unnecessary, in order to assert that herein the appellants are relieved only for the reasón that the original investment was made by the *849testator, and the consequences resulting from that incident did not impose responsibility upon them, under all the circumstances of the case. These observations apply as well to the bank stock which was kept, and upon which a loss occurred. They were part of the assets, and were divided and held in the trust. The conduct of the appellants in not selling them was not unreasonable or unjustifiable, within the rules of the cases referred to. It follows that the loss on the bank stock was not properly chargeable against the appellants personally, and should be borne by the trust; and also that the trustees should be credited with the expenses of the foreclosure, and the taxes and expenses paid upon the property, except as hereafter stated, subsequent to its purchase, and as well the interest paid by them on the first mortgage.
In reference to the item of $4,430, disallowed by the surrogate, the referee makes the following statement in his opinion: “There is a conflict in the testimony regarding them. It seems that, at the time they were paid, Dr Jones had charge of real estate to one-fifth of the net income of which Miss Jones was entitled. She says she received the checks personally from Oliver L. Jones; that he told her they were for rent of property on Broadway and Fifty-Ninth street, and she always understood it so; that when she asked for more money Dr. Jones always said that the Broadway property was not bringing more than the amount thus paid her, $200 a month; that that was her income. Dr. Jones flatly denies making these statements. The cheeks were drawn against his private account. The stubs from the check-book contain only the bare entry of date, name, and amount. He further testified: *1 didn’t pay her the rents on the Broadway property specifically at any time. What she has.received has been on account. She wanted about $200. That was what she wanted a month,—about $200. All that she received was on account generally.’ By stipulation the real estate account is produced for the purpose of deciding the question only. The petitioner is entitled to one-fifth of the net rents. It appears from a tabulation of balances due for rent over expenses, and of checks paid, that Mr. Jones began to give her these checks when there began to be a balance of rents in her favor, and that his payments by check kept a little behind the net receipts for rents. This corroborates Miss Jones, and tends to show that the checks emanated from the real estate, and were intended to be on account of it. It is most striking that after she became of age, and had instituted proceedings against her brother as executor, and he had filed an account,—in short, at a time when she was looking into her affairs,—he should have given her the last and largest of these checks, October 8, 1881, $680, and that this is within $20, as I figure it, of the net amount due her on account of these rents. It looks to me like a payment intended to settle up that account to date; and on the whole testimony I must conclude that the checks were paid on account of the real estate, and not on account of the trust.”
No error seems to have been committed by the referee in treatingthe $4,430 as an amount of payments made by the appellant Jones to the respondent on account of her share of the rents of the real estate, and refusing to allow him to charge’the same against the trust fund, A critical examination and analysis of the rent account confirms the substantial accuracy of the tabulation appended to the points subtly tied on her behalf. That tabulation shows that the payments in question began soon after the rent account exhibited a balance in her favor, and continued to be made in installments more or less closely representing the amounts due to her thereon, until such time as she assumed the charge of her share of the realty, and received the rents, with the appellant's intervention; at which time the latter paid her an unusually large sum, approximating with sufficient closeness to the amount then actually due to her on the rent account to justify the referee’s conclusion that it was made for the purpose of balancing the same. These circumstances, taken together, raise a strong presumption in favor of the correctness of the *850referee’s reasoning; and this is still further corroborated by the respondent’s testimony that she always.understood these payments to have been made on account of rents. The testimony of the appellant Jones in no way tends to rebut this presumption. It is evasive and unsatisfactory, and by no means amounts to a denial of the fact that these payments were so made. He says: “I didn’t pay her the rents on the Broadway property specifically, at any time, —not specifically; what she has received has been on account. She wanted about $200; that was about what she wanted a month,—about $200. All that she received was on account generally.” And this is virtually what the respondent claims. It is nowhere contended that the appellant Jones- paid her, at an.y time before the closing of the account, the specific sun) then actually due her, but that from time to time he made payments “on account generally,” ceasing with the sum before mentioned, apparently the amount then due her, after which she collected the rents herself. The fact that these payments were made by his individual checks tends also to confirm this conclusion. In the most favorable view that can be taken of his testimony, all that can be claimed from it is that the $4,430 was paid on account, to be applied both to the rent account and to the trust fund. Setting aside any inquiry as to the questionable conduct of the appellant Jones in mingling two entirely distinct and separate accounts, it would seem to be totally unjustifiable for him to charge against the trust fund a sum which in part, at least, upon his own admission, was paid on account of rent. Had the fact so been, it would have been easy for him to show in what way, other than by the checks in question, he had accounted to the petitioner for the Broadway rents. His failure to do that is to my mind further corroboration of the correctness of the express ruling on this branch of the case. The effort on the part of the appellants’ counsel to weaken the force of the circumstances surrounding these transactions fails, it may be said, without disrespect, of any purpose beyond that of making “confusion worse confounded,” if the merits of this appeal are properly appreciated. The fact that other payments, from other-sources, were made to the petitioner during the period covered by the checks under consideration, has no bearing upon the question at issue. The Broadway rents were received by the appellant Jones, and it was his duty to account for them to the petitioner individually, and not as trustee; and it is impossible to resist the conclusion, upon the whole case, that his individual checks, substantially coincident as to amount, and coeval in point of time, were given for that purpose, and for that purpose only. The accounts generally seem to have been kept with such a lack, not only of method, but of intelligibility, that the appellants have no just cause to complain if they suffer disadvantages from that circumstance.
The case, it must be further said, does not disclose any reason why the interest upon the unpaid taxes upon the Reeder property, and which was imposed as a penalty, should not be borne by the appellants. The money to pay the taxes was accessible either from the estate, or could have been obtained in its credit. These items, therefore, should not be allowed to the appellants, but charged against them. In this respect the decree must with others be modified.
The charge of interest with annual rents does ¿lot seem to be warranted. The division of the estate among the several beneficiaries was made by the appellant at an early day, and, so far as the record discloses their acts, it was done in good faith. The chief errors apparent, and of which complaint is made, were in holding assets that were not as valuable as supposed, but which were purchased and held by the testator. The principles governing the allowance of such a penalty are not presented here. The facts differ materially from those which influenced the judgment of the court in Cook v. Lowry, 95 N. Y. 103. The court said that the case presented by the evidence and by the findings exhibited gross dereliction of duty; the trustee keeping no ac*851count of the fund or the income, and using the securities of the trust in his own business, changing them from time to time for his own benefit, and rendering no account of his realizations. Here there are, as already suggested, no such incidents. The learned referee, starting from assumed misconduct, was naturally led to the conclusion which such an element would warrant perhaps, and hence the imposition of the punishment by allowing interest with annual rests. In Schiefelin v. Stewart, 1 Johns. Ch. 620, the learned chancellor, upon a full consideration of the subject, determined, as stated in the syllabus of the report, that a trustee was not allowed to make any gain, profit, or advantage of the trust funds, or to convert the trust moneys to his own use, or employ them in his business. If he did the latter acts, or either, he could be subjected to the payment of compound interest. If he negligently suffered the trust moneys to lie idle, he was chargeable with simple interest only. This case has not been questioned or disturbed, and the rule declared has not been enlarged. The appellants should have been charged only with simple interest on any of the sums allowed against them, where annual rests were declared proper by the referee, and granted. The decree must be modified in this respect.
This disposes of all the exceptions which are available to the appellants, although it does not embrace a statement in detail of all those presented for consideration. Many of them result from rulings which have been rejected by the views herein expressed, and some of them, after earnest hunts indulged in, over and over again, for meritorious support, have been abandoned as worthless. The details of the record; the double sets of accounts; the numerous exceptions; the series of figures and calculations dotted over the appellants’ brief,—have let to numerous examinations of the case, causing its retention and consideration for a longer period than usually allotted to such controversies; but the delay has arisen from a struggle to fully comprehend all the varied elements and antagonisms assumed by tile appellants, and gainsaid by the respondents, and to dispose of the appeal so that no injustice would be done to either party. Whether this has been accomplished or not, however earnestly desired, remains to be seen from the subsequent history of the case. The judgment appealed from„must be corrected in accordance with these views, and, if the parties cannot agree, it will be referred back to the referee, that he may adjust the liabilities according to the modifications declared to be necessary herein. If this course, however, be one which it is supposed will lead to delays, then the subject maybe entertained and disposed of on a settlement of the order to be entered herein, and by me, on due notice. Ordered according to these views.
Van Brunt, 1\ J„ and Daniels, J., concur.