Taylor's Estate

Thompson, J.,

The questions raised by the exceptions are the right of the trustee to invest in non-legal securities and1 the loss sustained by the subsequent sale or maturity of some of them.

A careful study of the third item of testator’s will, as modified by the codicil, shows that he gave the residue of his estate to his executor, the accountant, “to have, hold, take, manage, convert, invest and dispose of the same as they may consider to be to thePadvantage of my estate, as hereinafter provided, in trust, nevertheless,” to pay to his wife one-third of his personal estate, with the option to have same, held in trust if she so desired — which option she did not exercise — and the remaining two-thirds of his personal estate and all his real estate “to convert, manage, invest and reinvest the same and collect” the income, and pay the net income to his daughter during life under a spendthrift trust, subject, however, as directed by the codicil, to pay to his wife in cash semi-annually such sum of money out of the residue and remainder of his estate as shall be fully equal in amount to the net income of one undivided third part of his real estate, so that she shall have and receive to her own use what would be equivalent in money to all that she would receive and take “under the intestate laws of this State, in case she *609should elect to take against my said will,” with limitation over of principal at his daughter’s death to her children and issue of deceased children living at her death, and in default of such to charities.

The auditing judge was of opinion that the discretionary power as to investments given to the executor in the opening clause of this item related solely to his duties as executor.

By the adjudication upon the executor’s account, fourteen months after testator’s death, certain non-legal investments found in his estate were awarded to the accountant as trustee at an appraised value. The trustee afterwards sold some of these investments at a price less than the appraisement, and retained others until maturity, thus depriving the estate of the premium on said investments which could have been realized had they been promptly sold; and the auditing judge surcharged the accountant with the losses thus sustained. The accountant, as trustee, also invested in non-legal securities at par or less, the market values of which have declined, and in one security at a premium which, upon maturity, entailed a loss of $75. The auditing judge surcharged the accountant with this loss and directed that the securities still on hand be stricken from the account and cash substituted therefor. The accountant filed exceptions to the findings.

We think, however, that this construction of the power and discretion of the accountant too narrow.

It is not usual to give an executor, qua executor, the power or to impose upon him the duty of management and investment. The duty of an executor is to settle the estate and get it ready for distribution, and with that distribution, decreed by the court, his powers are exhausted and his duty ends. Why so solicitous in enjoining duties and so lavish as to discretion in performing them when both were to expire with the year? If testator really meant that the estate should be handed to the trustee in cash or legal investments, he could have expressed that intention in fewer words, or even more emphatically by not saying anything.

The testator certainly did intend to give the accountant, whether as executor or trustee, or both, a discretion not conferred by law; and “my estate,” whose advantage is thus committed to it, certainly comprehends realization of income also.

The primary object of testator’s bounty was his daughter. His only concern as to his wife was to relieve, her from the collection of the net income from an undivided third of his real estate given her by the will, and directing the trustee to pay her a sum equal to it, after deduction of commissions, etc. And his anxiety to secure his daughter’s comfort during life beyond peradventure is shown by the creation of a spendthrift trust for her.

It is a matter of common practice not to convert gilt-edged investments of a testator, producing a steady and handsome income, where the production of income is the first and chief end of testator’s provision.

Under these circumstances, to hold that the testator intended the discretion so broadly given to deal with the estate “as they (the accountant) may consider to" be to the advantage of my estate” should apply only to its powers as executor and not also as trustee, because omitted in defining the destination of the balance of his residuary estate, would seem to be highly technical, and imputing to the testator the setting of a trap to catch the trustee, who might in good faith construe the will as conferring upon it the same discretion admittedly given it as executor. It was said in Hodgson’s Estate, 158 Pa. 151 (153): “The accountant is a trustee, and is responsible to his cestuis que trust, who in this case are heirs, for which reason this matter is to be decided *610upon a more liberal view of the trustee’s discretion than as against creditors: Bruner’s Appeal, 57 Pa. 46.”

The trustee, even if charged strictly with the administration of his trust under the law, might well suppose that, as the testator himself considered the certainty of the fixed income enjoyed by himself preferable to the risk of a new investment of enhanced principal which might enure solely to the benefit of the remainderman, this fact would justify him in the retention of the original investments.

We are not advised as to what testator’s investments cost him, but they produced income ranging from 4 per cent, to 6' per cent., and were all above par at the time of his death, ranging from a 4 per cent, investment maturing in 1917, appraised at 105; another maturing 1948, at 108; a 5 per cent, investment maturing 1912; at 1021; another maturing in 1920, at lili, and so on, culminating in a 6 per cent, investment maturing in 1910, at 125.

The first and main object of the creation of the trust was to provide an income for his daughter, and the income received for the daughter was exactly that which the testator himself enjoyed, although by the trustee’s conduct of the estate the remainderman is deprived of the enhanced value which would have accrued to the estate had the trustee sold the investments at their appraised value. It may well be that the trustee, in the then state of the securities market, found that even if it sold the investments and realized an enhanced principal for the remainderman — subject always to a new risk — the daughter would receive a smaller income than by holding them and having the same income the testator himself enjoyed, with a sure recovery of the par value at maturity. The argument of counsel for the remainderman that a trustee should sell even a non-legal investment of a testator, simply because a premium may be realized would apply to a perfectly legal investment of the testator which during the continuance of the trust might be sold at an advance. But speculation in the securities of an estate is not looked upon with favor; and unsuccessful speculation, even though for the laudable purpose of benefiting the estate, always receives, in a surcharge, the punishment it deserves.

There is nothing in the holding of a non-legal investment of a testator until maturity which in itself shows supine negligence on the part of a trustee, and, in the present case, the trustee, even if charged strictly with the administration of its trust under the law, might well suppose that, as the testator himself considered the certainty of the fixed income enjoyed by himself preferable to the risk of a new investment of enhanced principal which might enure solely to the benefit of the remainderman, the like management of the estate by it to secure the greater comfort of the daughter was within the contemplation of the testator.

However, as we read the will and codicil, the testator clearly committed his estate to the accountant as executor and trustee, to have, hold, take, manage, convert, invest and dispose of the same and to reinvest as it might consider to be to the advantage of his estate; and, therefore,

The exceptions are sustained and the adjudication is modified accordingly, and, as thus modified, is confirmed absolutely.

Lamorelle, P. J., and Gest, J., did not sit.