[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 549
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 550 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 552 After a careful examination of the voluminous and somewhat diffuse record and briefs, we are led to the conclusion that this appeal must succeed. The proceedings in the Surrogate's Court, and the decision which closed them were without any apparent regard to certain well-established *Page 553 equitable principles; to the recognition and protection of which every person is entitled, while accounting in that court for his acts as executor or administrator. The appellant, Niles, raises no question as to his responsibility towards the widow. The issue is between him and his co-administratrix, Mrs. Miller, who is also the next of kin of the intestate. And the question is whether she is in a position to hold her co-administrator, Niles, to a full liability for the consequences of improper dealings with the assets of the estate. Can she divest herself of all responsibility for the consequences of his acts and, either in her capacity as co-administratrix, or, in her capacity as beneficiary, can she charge him with every act claimed to be a breach of trust, and with consequent losses? This question is not complicated by her dual capacity; rather, it is simplified; because the elements of concurrence, of knowledge, or of acquiescence, in the individual, are equally available to the administrator, Niles, as weaknesses in either position, which she may take in her attack upon him.
Before passing to the consideration of the question thus suggested, we observe, with respect to the decree of the surrogate, that it contains a provision which we hold to be highly inequitable and harsh. It is contained in the concluding clause, and by it Niles is required to raise and pay over to Mrs. Miller the sum found due her as her distributive share of the estate, before she is to transfer to him the securities and moneys forming part of the estate, and which she had obtained and continued to retain possession of. Niles was accounting as an administrator. The theory of such accounting is the statement of what he received as the estate of the intestate; of his acts with respect to the assets in his hands and of a balance on hand for distribution. Disregarding, for the present, all questions as to the regularity of the investments of moneys made by him when he accounted, his balance was arrived at by stating, as credits to himself, those investments as payments to Mrs. Miller, as next of kin. They were wholly disallowed as credits, upon her objection. If she refused to accept, or to be bound by them, the *Page 554 decree should make some allowance for them. She could not retain possession of them and, at the same time, claim that the items in the account, which they represented, should be disallowed and that the administrator should be compelled to pay over to her her share of the stated balance. That would be a most inequitable mode of proceeding. The parties interested in the administration of an estate are not entitled to any such species of security for its performance as that, or to any other than the bond which has been given. The administrator is either entitled to some credit for the securities, in which he has placed the moneys of the estate, and which he has delivered to the beneficiary; or, if he is not, and the securities are not accepted or recognized by the beneficiary, then he should have back all that the beneficiary may have received and now objects to his being credited with. It seems too plain for discussion that, if no credit whatever is given to the administrator for his investments, then he is entitled to be placed in his former position with regard to the estate and, consequently, to have the possession of all assets in the beneficiary's hands. He should have them, if for no other reason, in order to fulfill the requirements of the decree. It is easily imagined how it might happen that the administrator, if possessed of no individual resources, would be rendered incapable of making payment under such a decree. He might have acted in good faith, but mistakenly as to the law of his duties; and, being called upon to replace the moneys, represented by investments disallowed as improper, finds himself without the possession of the securities, but yet required, in some way, to make the payment. There is something in this which shocks the legal as well as the moral sense.
Without dwelling further on this objectionable feature of the decree, we come to the main question of the case. For the unusual delay in distributing the estate, continuing over some nine years, we are furnished with a probably good reason, in the fact of the recurring periods of insanity of the widow. The desire of the daughter to avoid any publicity of her mother's condition and the mother's unfitness to be entrusted *Page 555 with the possession of her share of the estate, operated as causes for continuing the administration of the estate so long. However it may have been, no objection seems to have been raised, until the administrator Niles fell into his financial difficulties; when his co-administratrix assumed, and excluded him from, the control and direction of affairs. During the course of the administration, up to this moment, Niles had undertaken to make dispositions of the funds of the estate by ways of loans and investments. There is no doubt but what Mrs. Miller reposed the utmost confidence in him and relied upon his ability and honesty. That follows from her selecting him to act with her in the administration; from her entrusting him, from the beginning, with the custody of the assets, and from her permitting him to make investments. It is with respect to the investments, which he made with the estate moneys, that Mrs. Miller now insists that they constituted breaches of trust on his part, for which he solely is answerable.
Assuming that the investments were irregular and improper acts, and did constitute breaches of trust, the question, nevertheless, suggests itself as to whether Mrs. Miller is so dissociated from their commission, as to be able to shift from her own shoulders all responsibility for what has occurred. It may be proved that the administrator, in some instances, has acted wrongly, and that he has abused the confidence imposed in him, so as to deceive and mislead the judgment of his co-administratrix. We do not say that he has not done so, or that it might not be shown that he has deceived her. But, taking the record before us, there is no finding that any fraud was committed or deception practiced by Niles. Therefore, we are not satisfied that any basis has been laid for holding him solely and exclusively liable for the consequences to the estate of his acts. The referee found that the loans were made without Mrs. Miller's knowledge, except in one instance; but he also found that the securities in question were all taken in her name. He further found as follows, viz.: "That when informed that investments were taken in her name, she was told by Niles that they were so taken on account of her *Page 556 mother's mental condition, for convenience * * * and understood that they were investments of the estate." This finding involves, it will be seen, the fact of knowledge having been, at some time, communicated to Mrs. Miller with respect to investments. At this point it may be observed that, whether Niles treated the investments in question, at the time, as made for the estate of the intestate, and whether he is now entitled to treat them as payments to Mrs. Miller, as beneficiary, does not seem to be very material as a question. As she was co-administratrix as well as beneficiary, and the widow's rights are conceded and not affected, finding one way or the other would not affect the questions presented to us by these two parties. The referee found expressly that there was information furnished to Mrs. Miller by Niles, concerning the investments, upon her request for such, and independently; but he denied numerous requests, presented on the appellant's part, for findings as to authority from Mrs. Miller to make the investments, and as to her assent or ratification with respect thereto, as to her knowledge thereof and the absence of objection thereto.
Unquestionably there is ample evidence in the case to establish, if not Mrs. Miller's concurrence, her assent in many, if not in all, instances; but such a fact seems to have had no influence upon the referee's mind in passing upon the case, and, evidently, was considered immaterial as affecting her rights. The theory upon which he proceeded, and upon which the courts acted in confirming his decision, utterly ignored the effect upon the rights of the contestants of her assent to, or acquiescence in, the acts of the administrator. This matter of the administration of assets is one which is peculiarly within the cognizance of equity, and a Surrogate's Court, in adjusting the accounts of executors and administrators, is governed by principles of equity as well as of law. (Upson v. Badeau, 3 Bradf. 15.) In the exercise of the statutory powers, conferred upon him to direct and control the conduct and settle the accounts of administrators and executors, the surrogate is not fettered; nor is he prevented by any rule of law from doing exact justice to the *Page 557 parties. He is supposed to administer justice in each case within his jurisdiction, according as the equities of the case demand; within the confines only of statutory provisions. Now, what was Mrs. Miller's position in the case? She was co-administratrix and, at the same time, the next of kin and prospective distributee of two-thirds of the estate. Niles was joined with her to aid her in the office, which she could have filled alone. Except that she chose to leave the custody and management of the affairs of the estate to her co-administrator, she was, at all times, a factor in the administration, and legally chargeable with what was done therein; in the absence of any fraudulent practices of deception or concealment upon her by her co-administrator. She had frequent consultations with him and, at various times, sought and obtained information as to the affairs of the estate. There is no evidence that she was in any sense excluded from the administration by Niles. She relied upon his judgment, and, by her own testimony, we are informed that she "never failed, whenever he told her anything about investments, to assent to it." At another time she says "I did not object to any one of these investments when I heard of it." There is enough in this record to show that, if not in all instances, in many, she knew of the investments which were made by her co-administrator, and if she did not concur, either she assented, or, by raising no objection, acquiesced. Her attempt to distinguish between authorizing or directing an act of the other administrator, and assenting to it when done, is quite futile and ineffectual for any purpose here. Upon her, equally with her associate in the office of administration, rested the duty to be vigilant to guard the estate from waste, loss and impairment. Having sought the office, while she remained in it, she could not stand by and see an improper use made of the assets, and thereafter claim immunity in her official capacity, or advantage in her private capacity; whether such claim should be grounded upon ignorance of her legal duties and rights, or upon her mistaken reliance upon her associate in office. We hold this, with the proviso that if she can show that he deceived her and purposely concealed the *Page 558 facts from her, which were requisite to a fair understanding of a transaction, she is not bound by it.
From what appears, we may assume that Niles acted generally upon his own ideas, and, possibly, often with some selfish or interested end in view. But to his taking the initiative in action, she never appears to have objected, if she did not actually prefer it; depending, as the evidence shows she did, upon his judgment. As to subserving his own ends, as he certainly seems to have done in some instances, by the employment of the funds of the estate, if she chose to consent, or, with knowledge, failed to object to it, she cannot be heard to complain of the consequences. Having entered upon the office, she was bound to perform its duties; and mere passiveness will not furnish an adequate excuse, or any ground for relief in equity for the consequences of administrative acts by her co-administrator. She could not rely upon him to manage affairs and then claim to have been relieved from the performance of her legal duty. He who fills a position of trust conjointly with others cannot remain passive, when he knows of irregular acts by his associates, without coming equally under the judgment of the law for the consequences. Mrs. Miller was bound to inform herself with respect to the affairs of the estate and to inquire as to the use which was made of its assets. (1 Perry on Trusts, §§ 418, 419, and cases cited; Brice v. Stokes, 11 Vesey, 324; Styles v.Grey, 1 Mac N. G. 422; Monell v. Monell, 5 Johns. Ch. 293-296; People v. Townsend, 37 Barb. 527; Wilmerding v.McKesson, 103 N.Y. 329, and cases cited at p. 340.) It is unnecessary to cite further authorities upon such well-settled propositions. They will be found collected in the treatises on trusts; to which department of jurisprudence the matter of the administration of assets is referable for its governing principles.
There is no question of creditors to consider here. Mrs. Miller was the party principally interested in the estate and, at the same time, she had the power to protect herself in various ways. For injuries to our rights from the fraudulent acts or deception of others we are allowed to seek redress, but *Page 559 for the consequences to ourselves of poor advice from others, of our own mistakes of judgment in business affairs, or with respect to the capacity of persons whom we employ, I see no relief in the law. Nor is the result affected by considerations of the respondent's position as cestui que trust. If there were breaches of trust committed by the administrator, in his management of the affairs of the estate, the concurrence of thecestui que trust, or her subsequent assent or acquiescence therein, with the means of knowledge afforded to her, would forever estop her from proceeding against the administrator, acting as her trustee, for the consequences therefrom. (Lewin on Trusts, 773, 774.) That author cites the case of Brice v.Stokes (11 Ves. 319), where it was said that knowledge in thecestui que trust of an improper act of the trustee has been held to prevent the former from holding the latter answerable. Such a principle would seem to merit especial application in a case like the present one, where the cestui que trust was associated in the very trust itself.
We hold, therefore, that just so far as Mrs. Miller had the means of knowing of her co-administrator's acts and assented to, or acquiesced in them, she is bound. The question is merely between the two. Where concurrence in the action of Niles can be proved, or, with adequate knowledge of it, she is proved to have assented, expressly, or by her passiveness should be deemed to have acquiesced in it, as co-administratrix she is chargeable with its consequences, and as beneficiary she is estopped from objecting to it; provided that she is unable to prove fraudulent practices by Niles, by which she was misled and deceived as to the facts of each transaction.
As the case was tried on a mistaken theory as to the liability of Mr. Niles, as one of the administrators, towards Mrs. Miller, it should be remitted to the Surrogate's Court for further proceedings, in conformity with the principles indicated in this opinion, and judgment should be entered accordingly, with costs to the appellant, to be paid from the estate.
All concur, ANDREWS, J., in result.
Judgment accordingly. *Page 560