dissenting: R. A. Brand died on 24 June, 1930. He had $5,000 (500 shares, par value of $10.00) in stock in the N. C. Bank and Trust Company. Under his will he left same to the N. G. Bank and Trust Company and Margaret E. Brand, executors and trustees for certain purposes. “Immediately after his death said stock came into the possession of the executors of his estate and was transferred on the books and records of the bank to £N. O. Bank and Trust Company and Margaret E. Brand, executors of the last will and testament of R. A. Brand, deceased.’ ” Nothing else appearing, the stock would be assessable “for all contracts, debts, and engagements of such corporation.” But equity steps in and halts the legal hand by showing gross negligence — the twin of bad faith and fraud.
On or about 23 May, 1935, the North Carolina Bank and Trust Company and Margaret E. Brand, executors, filed in the office of the clerk of the Superior Court the final account, and thereupon all the property and assets of the estate were transferred and delivered to the North Carolina Bank and Trust Company and Margaret E. Brand, as trustees, upon the terms, conditions, and uses set forth in the will of the said R. A. Brand.
In the agreed statement of facts set forth in the record, pages 1-5, it-is admitted that the said Margaret E. Brand is and was wholly inexperienced in business, and the North Carolina Bank and Trust Company held itself out as competent and qualified to manage the estate of her deceased husband and to advise the said Margaret E. Brand in all matters connected therewith, and that at all times said bank, through its trust department, handled the active management of the estate, kept all records, received and disbursed all funds, merely calling upon the said Margaret E. Brand for her signature whenever the same was necessary.
In the agreed statement of facts, the exact findings are as follows: “On numerous occasions during the period of approximately two years prior to the beginning of the liquidation of the North Carolina Bank and Trust Company, Robert A. Brand, Jr., one of the legatees under his father’s will, acting on behalf of himself and of his mother and the other beneficiaries under said will, consulted the trust officer of the North Carolina Bank and Trust Company at Wilmington and urged the sale of said stock and a reinvestment of the proceeds therefrom in Government Bonds or other similar securities, but said trust officer, who had assumed the active management of said estate on behalf of said bank, stated to the said Robert A. Brand, Jr., that said stock was a good *384and safe investment and should be retained, and in spite of protests by the said Robert A. Brand, Jr., on behalf of himself, his mother, and the other beneficiaries under his father’s will, said trust officer, acting on behalf of said bank, declined to sell or dispose of said stock.”
In the main opinion, the cases cited and relied on by the Commissioner of Banks do not touch the equitable defense of the widow and infant beneficiaries under the will of R. A. Brand. In fact, no case in the main opinion deals with the factual situation in the present case. I think the cases of Hood, Comr., v. Martin, 203 N. C., 620, and Hood, Comr., v. Paddison, 206 N. C., 631, are applicable to the facts on the present record.
In the Paddison case, supra, pp. 634-5, it is said: “The defendant, as a defense, alleged and set up actionable fraud on the part of the president of the bank, in the purchase of the stock. Whatever may be the English decisions and some of the American decisions, this Court has held that actionable fraud, if shown, is a good defense. In Chamberlain v. Trogden, 148 N. C., 139 (140-1), speaking to the subject, citing numerous authorities, is the following: ‘There is some conflict of authority as to the right of the subscriber to rescind his subscription or maintain a defense to his obligation therefor on the ground of fraud, after the corporation has become insolvent and its affairs have passed into the possession and control of a receiver of the bankruptcy court, or other method of general adjustment, primarily for the benefit of creditors. The English cases and some courts in this country have held that, under conditions indicated, it is no longer open to the subscriber to maintain such a defense. These English decisions, however, are said to be based to some extent on the construction given to certain legislation on the subject, and the weight of authority in this country seems to establish that, under exceptional circumstances, the subscriber may avail himself of the position suggested even after insolvency. . . . All of the authorities, however, are to the effect that, in order to do so, the subscriber must act with promptness and due diligence, both in ascertaining the fraud and taking steps to repudiate his obligation.’ The president of the bank has authority to make the alleged contract. Warren v. Bottling Co., 204 N. C., 288 (290).”
The cases cited by defendant are also in point: Rutledge v. Stackley, 162 S. C., 173, 160 S. E., 429; Mobley v. Phinizy (Ga. App.), 155 S. E., 73.
The question involved: More than two years before the liquidation of the North Garolina Bank and Trust Company, a stockholder in said bank died, leaving a last will and testament, in which he appointed the North Garolina Bank and Trust Company and his widow as executors. In the will, the corpus of his estate is devised to his minor grandchildren. *385As a part of his estate, there comes into the hands of his executors (who afterwards qualified as trustees), five hundred shares of North Carolina Bank cmd Trust Company stock, the North Carolina Bank and Trust Company as executor and trustee, although urged to do so by the devisees under the will, refused to sell said stock and reinvest the proceeds, but retained the stock until the liquidation of the bank. Is the estate of the minors liable for the statutory stock assessment? I think not, under the facts and circumstances of this case.
In Stroud v. Stroud, 206 N. C., 668 (671), it is said: “It is well settled as the law of this State and elsewhere that neither an executor, an administrator, nor a guardian is an insurer of the assets of the estate committed to his custody and care. In DeBerry v. Ivey, 55 N. C., 370, it is said: £An executor, like other trustees, is not an insurer, nor to be held liable as such in taking care of the assets which come into his hands, nor in collecting them. He is answerable only for that crassa negligentia, or gross neglect, which evidences bad faith. The estates of deceased persons are deeply concerned in the existence of such a principle. If an executor was put into the position of an insurer — answerable for any neglect, however slight — unprotected by an honest endeavor to perform his duties, honest and reasonable men would rarely be found willing to incur the responsibility; and those only would incur it who calculated possible gain and loss.’ See Thigpen v. Trust Co., 203 N. C., 291, 165 S. E., 720.”
Was the North Carolina Bank and Trust Company guilty of “gross negligence, which evidences bad faith?” I think so, under the findings of fact in this action. The stock totalling $5,000 was in the North Carolina Bank and Trust Company and the North Carolina Bank and Trust Company was one of the executors and trustees of the will of R. A. Brand, Sr. The trust officer of the bank assumed the active management of the estate. The North Carolina Bank and Trust Company knew, or in the exercise of ordinary care should have known, the condition of the bank. For a period of approximately 2 years prior to the liquidation of the bank, on numerous occasions, Robert A. Brand, Jr., one of the legatees under his father’s will, and acting on behalf of himself and his mother, one of the executors and trustees, and the other beneficiaries of the will, consulted and urged the trust officer to sell the stock in the North Carolina Bank and Trust Company, and to reinvest the proceeds therefrom in Government Bonds or other similar securities. The trust officer, who knew, or in the exercise of due care should have known, the condition of the bank, stated to Robert A. Brand, Jr., representing the other executor and trustee, his mother, and the beneficiaries under his father’s will, that the stock was a good and safe investment and should be retained, and in spite of the protests, the trust officer, acting on behalf.of the bank, declined to sell or dispose of the stock. *386Under these facts, should this widow and the children and grandchildren, minors, under the will of Robert A. Brand, Sr., not only lose the $5,000 in the North Carolina Bank and Trust Company, but also be assessed an additional $5,000 ? I do not think so.
“Equity looks upon that as done which ought to have been done. 1 Story Eq. Jur., sec. 64 G. Equity will treat the subject1'matter, as to collateral consequences and incidents, in the same manner as if the final acts contemplated by the parties had been executed exactly as they ought to have been; not as the parties might have executed them,” citing numerous authorities. Black’s Law Dictionary, 3d Edition, page 675.
“No man can serve two masters: for either he will hate the one, and love the other, or else he will hold to the one and despise the other. Ye cannot serve God and mammon.” Matthew, 6th chapter, 24th verse.
The North Carolina Bank and Trust Company, in its dual capacity, looking solely to the interest of its bank, was grossly negligent, evidencing bad faith, in its duty as executor and trustee, in not selling the stock, and it thus caused the loss. The plaintiff Commissioner of Banks, when he took charge of the North Carolina Bank and Trust Company, took it cum onere, and had no authority under the provisions of N. C. Code, 1931 (Miehie), sec. 218 (c), subsec. 13, to levy the stock assess-' ment. The wrong was done — gross negligence and bad faith were shown — when plaintiff took charge of the bank, and plaintiff, in good conscience and fair dealing, is estopped to make this assessment.
In 92 A. L. R., p. 463-4, it is said: “And it has been held, also, that an administrator, who, as director of a bank, has opportunity, and owes a duty, to inform himself as to its financial condition, cannot excuse his negligence in retaining stock of the bank for nearly four years, up to the time of its failure, without making any attempt to dispose of it, although he holds the stock as an asset of the estate, on the advice of a guardian and mother of infant beneficiaries that it should be so allowed to remain.”
“Mills v. Hoffman (1883), 92 N. Y., 181. The Court pointed out that the duty of administering the estate was upon the administrator, and not upon the guardian or mother of the infants, and that it was not claimed that they had any knowledge or means of ascertaining the true condition of the bank.
“And the facts that the testatrix in a letter, the contents of which are communicated to her executor, has indicated a desire not to have any of her securities changed and a purpose of purchasing long-term securities with this object in view, and that the party communicating this information to the executor, a daughter of the testatrix and a life beneficiary, expresses a similar desire not to have the securities changed, will not, it seems, relieve the executor from responsibility for loss resulting *387from retention of such securities and investment thereof in proceeds authorized by law. See Wotton v. DeReau (1901), 59 App. Div., 584, 69 N. Y. S., 753 (affirmed without opinion in 1901), 167 N. Y., 629, 60 N. E., 1123.
“But if a majority of the beneficiaries request a sale of stock by the personal representative, this fact may, it seems, require prompt action on his part. It appears that in Hiddingh v. Denyssen (1887), L. R., 12 App. Gas. (Eng.), 624 — P. C., in which executors were held responsible for failure for about eighteen months to dispose of shares of stock belonging to the estate (it being held that six months would be a reasonable time for them to sell the shares), those interested in the estate had, about the close of the six-months period, requested the executors to dispose of the stock. The view was taken that the executors, having been called upon by the major portion of the heirs to do as soon as possible the duty which the law laid upon them, were bound to delay no longer.
“And an administrator has been held liable for failure to sell speculative securities when requested to do so by a preferred distributee, even though his delay in doing so was due to the insistence of secondary distributees who hoped to secure a better price by a later sale.
“In the reported case (Re Mellier [Pa.], ante, 430), where the decedent’s estate consisted of speculative securities, and an agreement was entered into among those claiming the estate by which one of the claimants was entitled to payment of a certain sum in satisfaction of her claim, it was held that the administrator could not, except at his own risk, refuse to comply with the demand of such claimant, as preferred distributee, that he sell the securities which were declining in value on the market, in order to realize funds for payment of the amount to which she was entitled, although his refusal to sell, or delay in selling, was due to objection on the part of the secondary distributees, who insisted that the securities should be held in the hope of a later rising market, which might give them a share, or an increased share, in the estate, after payment of the preferred distributee. So that, where the securities were finally sold for less than the amount required to pay the preferred distributee, the administrator was surcharged with the value of the securities belonging to the estate as of the date when demand was made by such distributees for their sale.”
N. C. Code, 1931 (Michie), ch. 78, Trustees, Art. 1, sec. 4018, 4018 (a), makes provision for trustees, guardians, executors, administrators and others acting in a fiduciary capacity to invest surplus funds in certain securities, and are protected in so doing.
In Perry on Trusts & Trustees, 7th Edition, Yol. 1, sec. 465, in part, it is said: “If no directions are given in a will as to the conversion and investment of the trust property, trustees, to be safe, should take care to *388invest the property in the securities pointed out by the law. It is true that a testator during his life may deal with his property according to his pleasure, and investments made by him are some evidence that he had confidence in that class of investments; but, in the absence of directions in the will, it is more reasonable to suppose that a testatof intended that his trustees should act according to law. Consequently, in states where the investments which trustees may make are pointed out by law, the fact that the testator has invested his property in certain stocks, or loaned it on personal security, will not authorize trustees to continue such investments, even though requested to do so by the beneficiary, beyond a reasonable time for conversion and investment in regular securities, and what is a reasonable time must depend upon the circumstances of each party in the case.”
From the facts in this case, I do not think that N. C. Code, 1931 (Michie), sec. 219 (e), or Corporation Commission v. McLean, 202 N. C., 77, contrary to the positions here taken.
The plaintiff in its brief says: “And notwithstanding the request for a sale of the stock, it appears that the stock was permitted to remain upon the bank’s records in the name of the estate, without any effort being made to force a sale by appealing to the courts for relief.” It was the duty of the North Carolina Bank and Trust Company to sell without the beneficiaries appealing to the court. The beneficiaries, for two years, made urgent requests and in spite of same, the North Carolina Bank and Trust Company refused to sell. It is responsible alone for the consequences and should not be allowed to take advantage of its own wrong.
The North Carolina Bank and Trust Company, acting in a dual capacity, under the facts disclosed in this case, was subjected to the imperative duty of selling said stock.
“If self the wavering balance shake,
It’s rarely right adjusted.” — Robert Burns.
While a trustee who holds bank stock subject to assessment is relieved of personal liability thereon, and creditors have the right to collect the assessment out of the assets of the trust, such trustee loses his right to exemption “if he retains stock when he should convert it, and thereafter assessment is made.” Bogert: “The Law of Trusts and Trustees,” Yol. 3, p. 2146, sec. 720. In such a case a different principle applies, and, as between the trustee and the cestui que, the trustee should bear the assessment, because of his breach of trust. Bogert, supra.
It may be conceded that the relationship between the trustee and the bank was known to the stockholders, that such relationship was contractual, and if the trustee is solvent that he is liable, for the faithless*389ness of the trustee is not denied, but that is not the point at issue here. The question is whether the trust-fund doctrine can be used to take from the defendants, through the wrong of the trustee bank, that its creditors may have more. No equity can be founded upon a wrong. It is obvious that a beneficiary cannot be held responsible for the acts of a faithless trustee. If it appear to be a hardship to creditors that they are without remedy, as regards an insolvent trustee, the answer is that the hardship is no more than would be the case with any other insolvent holder of bank stock. The position of creditors is the same in any event, but to hold that the beneficiaries of a trust estate, in the face of a negligent trusteeship, must be made to suffer because of his faithlessness, rather than creditors, would be to set at naught equitable principles that are fundamental in our law. Upon this altar the defendants are to be sacrificed for the benefit of the bank’s creditors. Has not the solicitude for creditors thus reached the stage of a “Vaulting ambition, which o’erleaps itself, and falls on the other?” (Shakespeare — Macbeth.)