The opinion of the court was delivered by
Mr. Justice Aldbich.In Witherspoon and Wife v. Watts et al., Ex’rs, I stated why I have been delayed in filing the opinion assigned me in that case, which also applies to this. Ante p. 396.
This is an appeal from the decree of his Honor, Judge Kershaw, which is so full and convincing, so well sustained by reason and authority, that it is hardly necessary to enlarge on what he has so strongly enforced. The decree collates the authorities on which the judgment of the court is based. The proposition is that a' trustee is not liable if he discharges his trust with the same care and prudence that a prudent man will use in the transaction of his own affairs. As was said in Doud *453v. Sanders, Harp. Eq. 277, executors “ are always protected by the court when they have acted conscientiously and for the best.” Also in Glover v. Glover, McMull. Eq. 154, “ When an executor acts upon a rule established by the habits of society, and in some degree from necessity, it ought not to be imputed to him for negligence.” And so, in Hext v. Porcher, 1 Strobh. Eq. 171, “A trustee here is required to act faithfully in the interests committed to him, but the general management is left to his discretion.”
This court has not the slightest inclination to interfere with the rule laid down in Nance v. Nance, 1 S. C. 218. But the question now presented is, Does the rule apply to a transaction completed before that case was decided? The testator, Jacob Pope, by his will, made Bud C. Mathews, his brother-in-law and trusted friend, his executor. In the will he gave the executor power to sell a portion of the estate, “and to invest the proceeds of the sale and the cash and choses in action, in bank stock or otherwise.” He died in 1849. Among the assets were two notes, one of the late Chief Justice O’Neall and of Pope and O’Neall, the latter being the surety of Pope. Pope died, and O’Neall was appointed his administrator. There was also a note of Damage. The executors allowed O’Neall to renew his notes, but took no sureties. He also permitted Damage to renew his note, but required him to give security.- Damage failed to add a surety to his note; the war coming on it seems to have been overlooked in the excitement.
The special objects of the testator’s bounty were his widow and his grandson, Dutherford, the sister and nephew of the executor. These plaintiffs only take an interest in the estate of the testator in case of the death of these special objects of his love. The widow, after the payment of some legacies, was to receive the whole estate for life — Dutherford, after her death, when he arrived at the age of twenty-one years. The plaintiffs, in case of the death of Dutherford, without leaving issue then living, to take the estate when they arrived at the age of twenty-five years, which would be in 1865 and 1867.
The referee, Mr. Caldwell, in his report, charged the executor with the notes of O’Neall and Damage. The case was heard on *454exceptions to that report. Judge Kershaw, in a very carefully considered decree, overruled the referee, and decided that the executor is not liable. The question submitted by the appeal is to reverse this decision.
As I have said, the rule in Nance v. Nance is approved, but is it just and equitable to apply that rule to this case? It has always been the law in this State, “ that the trustee is answerable for those losses only which are occasioned by such acts or omissions as a prudent man could not do or omit in his own affairs.” So it is said in Nance v. Nance, “ The rule as laid down was intended to define the responsibility of trustees while acting within the limits of their discretion, and not to give support to the ideas that the discretion was unlimited as to the character of investments, and their responsibility measured solely by the purity of their motives and the degree of care exercised in the control of the trust fund.”
It appears, from the evidence, that the O’Neall and Kamage notes were perfectly good up to the close of the war; that the executor was advised by the judge not to put money in bank stock, but to put it out at interest in notes on individuals. The referee, in his report, says: “ The parties executing the notes appear to have been good at the time, and it is not the executor’s fault that they are not so now. He has kept the funds separate from his; he has been diligent; he appears to have been perfectly honest; and he thus seems to have acted with that fidelity and sagacity which the great current of decisions in this State pronounce sufficient for a fiduciary’s exoneration.” He absolves him from all liability for funds and property held by him before and during the war, except the O’Neall and itamage notes.
At first, I was disposed to think the learned judge was in error; but after carefully considering his decree and reviewing the authorities he has adduced in support of it, I have come to the deliberate conclusion, that it will not only be a hard case to chai’ge this executor with the O’Neall notes, but that it will violate every principle of equity by which this court has heretofore been governed. Undoubtedly, up to the close of the war, the note of Judge O’Neall was a perfectly safe investment; not a shadow of suspicion could be cast on his paper; in addition to *455his exalted character and large estate, it was not the custom of the community to require mortgages, and it was common to lend money to solvent men without taking a surety. If we add to this the fact that the testator himself had invested in Judge O’Neall’s paper, without additional security, how can it be said that .this trustee did not act as a prudent man would with his •own, especially, too, when he was acting under the counsel and advice of one of the highest legal authorities in the land ? That he did not collect the note, is not worthy of consideration. Why •collect money, directed to be invested, to lend it out again immediately ? Why call in what was then considered as good an investment as the country afforded', to re-invest it in another note, not better, if so good ?
The Bamage note is somewhat on a different footing. As regards this investment, the executor' did require a surety; but he let Bamage have the money before the surety was given, thus •showing that he was entirely satisfied that the note with only Bamage’s signature was perfectly good, in which judgment lie is fully sustained by all the evidence. The excitement and confusion of the war prevented the completion of the arrangement. It may be said, that he did require a surety showed he was not satisfied with the safety of the investment; but this idea is negatived from the fact that he let Bamage have the money without the surety, and by the abundant testimony as to his solvency and ability to meet his engagements at any time before the disaster of defeat. In addition, the learned judge who heard the cause, was satisfied the executor acted as a prudent man would in the management of his own affairs. I think so, too, for it is more than probable that any surety Bamage may have offered would not have been better than himself, and would, like him, at the close of the war, been broken up and ruined. Would it be ■equity to say now, because the executor, in the exercise of his discretion, or, if you will, by accident, and occasioned by the confusion and excitement of the war, did not do that which, at first, he intended to do, and which, if he had done, would not have made the fund any more secure, or benefited the estate, shall now -be liable for an investment that, under any circumstances, would be worthless ? I think not. Besides, this is a question *456of fact which the Circuit judge, after full hearing and careful deliberation, has decided in favor of the executor; and as no principle of law has been violated, and the will committed the general management of the estate to his discretion, this court will not depart from its practice and overrule the decree on a question of fact, supported by the evidence.
Costs follow the judgment, and there is no error here. The appeal is dismissed.
Me. Justice McIvee.As I am unable to concur in all of' the conclusions reached by his Honor, Judge Aldrich, to whom was assigned the duty of preparing the leading opinion in this case, I propose to state, as briefly as practicable, my views of the questions involved. [Here follows a statement of .the case.]
These notes, so far as the question of the liability of the-executor for the amounts thereof is concerned, seem to me to stand upon different grounds. The individual note of Judge-O’Neall, given for the amount of his own note to the testator, is manifestly nothing but a renewal of a note in which the testator-had seen fit to allow a portion of his funds to remain invested for a considerable length of time before his death, and as the executor was charged with the duty of investing the funds of the estate until the period arrived for turning it over to the parties entitled under the will, I am unable to see any breach of trust on the part of the executor in allowing this amount of the fund to remain in the same way in which the testator had for a long period kept it invested. I agree, therefore, that the executor is not chargeable with the amount of this note.
The other note of Judge O’Neall stands upon a different footing. There is no distinct finding of fact as to what was the intention of the parties in the transaction out of which this note arose; whether the note of Judge O’Neall was taken in satisfaction or payment of the note of George Pope, and the debt of' Thomas H. Pope, or whether it was taken as a simple renewal of those debts. The referee, in speaking of the transaction, says that the defendant “ allowed Judge O’Neall to take up this note with his own note, for the sum then due,” &c., while the Circuit judge, in speaking of the O’Neall notes, uses this lan*457guage: “ These notes were never collected by the executor. They were simply renewed; the debt remained the same. It is true the note of Judge O’Neall alone was taken as a renewal of the joint and several notes of Pope and himself, but there is nothing in the case to show that the renewal note was not as good as the original.”
The most natural inference is that the object of the transaction was, as the referee says, “ to take up ” or extinguish the original note, thereby releasing the estate of George Pope from, any further liability thereon, so as to enable his executor to proceed with the settlement of his estate; and when to this is added the undisputed fact that to the amount of that note was added another debt due by another person — the sum of $1,000 due the-estate of Jacob Pope by Thomas H. Pope, with which Geo. Pope does not seem to have had -any connection — the inference seems irresistible that the object was, not simply to renew the-original note, but to extinguish the debt secured thereby, as well as the independent indebtedness of Thomas H. Pope, which, for some reason not disclosed in the testimony, Judge O’Neall was-willing to assume, and create a new debt on the part of Judge O’Neall to the executor.
If this be so, then the practical effect of the transaction was that the defendant, as executor of Jacob Pope, collected both of these debts, as well the one due by Thomas H. Pope as the one due by George Pope, and re-invested the amount thereof in the-individual note of Judge O’Neall, without any security of any kind. The legal question presented then, is whether an executor charged with the duty of investing the funds of his testator’s-estate, as this executor was, is at liberty to invest such funds in the note of a private individual without security of any kind. I am not aware of any case in which such an investment of trust funds has ever received the sanction of any court, and, on the contrary, there are at least two cases in which such an investment has been condemned. Spear v. Spear, 9 Rich. Eq. 184; Nance v. Nance, 1 S. C. 209.
In citing the last-mentioned case, I desire to say that while I have no fault to find with the judgment of the Court in that case, I have never been able to approve that portion of the *458•opinion which undertakes to prescribe the limits within which a trustee is at liberty to exercise his discretion. It does not seem to me that the authorities in this State warrant the use of the following language in the opinion, where, in speaking of the character of the securities in which a trustee may properly invest trust funds, it is said: “ Such securities should primarily consist of mortgages of unencumbered real estate, of a value sufficient to guaranty the debt against all contingencies liable’ to occur or capable of being foreseen. Bonds of individuals should not be taken in lieu of real securities unless unobjectionable investments cannot, in the exercise of reasonable diligence, be procured. When personal securities are taken in lieu of real, it will devolve upon the trustee to make the necessity and propriety of such investments appear, upon an accounting with the «aestui que trust.”
On the contrary, my understanding of the matter is that we have no rule here prescribing the classes of securities in which trust funds shall be invested, or the preference which is to be given to one class over another; but all that is required is that a trustee shall invest the funds committed to his care upon good and sufficient security. This is the limit of his discretion, and if, within this limit, he manages the funds entrusted to him with the same care'and diligence that a prudent and cautious man bestows upon his own affairs, he will not be liable, even though loss may ensue. But where a trustee goes beyond this limit .and invests trust funds without any security at all, he cannot escape liability for any loss that may ensue, even though he may be-■able to show that he has acted in good faith; for, by failing to take security, he substitutes himself as such, and must account .accordingly.
It seems to me, therefore, that the executor is chargeable with the larger note of Judge O’Neall, given to take up-the note of George Pope, as well as for the f1,000 due by Thomas H. Pope. But, as I understand that the executor has already been charged with such amounts as he has received on this note since the termination of the war, from the assets of Judge O’NealFs estate, the amounts so received should either be stricken from the account already taken, or be allowed as credits to the executor *459-on the amount of this note, so as to avoid charging the executor twice with the same.
For a similar reason, it seems to me that the executor should 'be charged with the Ramage note. This was a clear investment of trust funds, without any security whatever, and the fact that the executor intended to take security and failed to do so, only makes the case stronger against him. . The excuse suggested for such failure, that the war came on, and, in the excitement and confusion incident to the times, it was overlooked, does not appear to me to be a sufficient reason for such neglect. The note bears date April 6th, 1860, more than eight months before the .'State seceded, and more than twelve months before hostilities actually commenced. There was, therefore, ample time before these stirring events occurred, for the executor to have arranged this matter, even if he could be excused for letting out trust funds without taking security at the time. It seems to me that the investment of trust funds stands upon a very different footing from accepting payment of a debt in a check upon a bank which proves to be worthless. A trustee might well be excused for doing the latter, as that would be in accordance with the usual course of business, but I do not think it a usual or proper practice for a lender to advance the money to a borrower before the required security has been given.
The question of costs is a matter peculiarly within the discretion of the Circuit Court, and in my opinion the Circuit judge, ■under all the circumstances of this case, wisely and properly ■exercised his discretion in requiring the costs to be paid out of the estate.
I think, therefore, that the judgment of the Circuit Court should be modified in accordance with the views herein announced, and that the case should be remanded to that court for such further proceedings as may be necessary to carry out these views.
Me. Chief Justice Simpson.There being no testimony in this case showing either bad faith or negligence on the part of the trustee, on the contrary it appearing that the loss complained of occurred from causes which could not have been foreseen by *460him, I think under the circumstances he should be held harmless, especially as under the terms of the will he was invested with large discretion in the management of the estate entrusted to his care. I do not agree, however, with the remarks of Judge Aldrich, in reference to the case of Nance v. Nance. On this subject I concur with Judge Mclver in the dissenting opinion, but this does not affect the result. I therefore concur in the general results herein. *
Judgment affirmed.