3. Where a cestui que trust acquiesces for years in the failure by one of two trustees to fulfill his duty in paying over to her the interest upon a fund in his hands, and does not notify the other trustee of such failure, nor make any demand upon him in the premises, and the defaulting trustee in the mean time becomes insolvent, her administrator cannot compel the other trustee to make good the default.

(Syllabus by the Court.)

Bill by Reeves S. Dyer, administrator of Elizabeth Waters, deceased, against Joseph K. Riley and Ephraim Waters, exec. utors of Ephraim Waters, deceased, to compel defendants to pay complainant certain moneys due plaintiff's intestate in her lifetime under the will of Ephraim Waters. Judgment against defendant Ephraim Waters. Bill dismissed as to defendant Joseph K. Riley.

The other facts fully appear in the following statement by PITNEY, V. C.:

The defendants were named executors in the last will and testament of Ephraim Waters, deceased. The will was made in April, 1866. The testator died in July, 1866, and the will was proven, and letters testamentary issued to the defendants, on the 8th of August, 1866. The defendants joined in an inventory of the estate, and on the 15th of October, 1867, they also joined in a final accounting, which showed a balance in their hands of $31,931.14, consisting almost wholly of promissory notes and bonds, a portion of the latter secured by mortgage. The will contains this clause: "I order my executor to place at interest the sum of eight thousand five hundred dollars, and collect the interest on the same half-yearly, and pay the said interest half-yearly to my said wife, Elizabeth, during her natural life." At the decease of his wife he directed that this sum of money be divided between his daughter, Mrs. Caroline Dyer, the wife of the complainant, and bis son, Ephraim Waters, one of his executors. He gave other legacies amounting to $9,200, and the residue to his son, Ephraim. The widow died May 27, 1881, intestate. Reeves S Dyer, the complainant, and the husband of Caroline Dyer, took out letters of administration upon the estate of Elizabeth Waters on the 5th of January, 1887, a little less than six years after her death, and on the 21st day of October, 1887, more than six years after her death, he filed the bill which is the foundation of the present suit. In that bill he sets out the provision for Mrs. Waters, charges the proof of the will by the defendants, and that they took upon themselves the burden of the execution of the trusts in the will contained, and filed their joint account as herein before stated. The bill then proceeds to state that the burden of administering the estate was largely assumed by Ephraim Waters, and that for a time Waters paid to his mother Elizabeth, the interest secured to her by the terms of the will, “but that since the year 1870 the said Ephraim, and the said Ephraim and Joseph, executors and trustees as aforesaid, almost wholly failed to pay to the said Elizabeth Waters, deceased, in her lifetime, and up to the time of her death, the interest moneys so se

cured to her," and that large arrearages of interest were due her at the time of her death "by the said executors and trustees, or one of them," and were still due and owing to the complainant, as her administrator. The bill further states that the complainant "has sought the said executors and trustees, and especially the said Ephraim Waters, executor and trustee as aforesaid, (who is chiefly and almost wholly to blame for the failure in not carrying out the said trust in the said will, so in favor of your orator's decedent as aforesaid,) to account for the moneys so due the said decedent in her lifetime under the said trust, and has written and caused to be written numerous letters, especially to the said Ephraim Waters," asking for an account and settlement, and threatening suit, "many of which Waters has answered, and although he (Waters) has made numerous promises and numerous appointments to meet your orator in relation thereto, he has never kept said promises or appointments, nor have the said executors come to any account or settlement with the complainant touching the trust moneys due by them," and charges that the said executors and trustees owed Elizabeth Waters in her lifetime, and at the time of her death, large arrearages of trust moneys; and the bill prays that Waters and Riley, executors and trustees as aforesaid, may account for and pay over to the complainant all the moneys due by them under the will of Ephraim Waters to Elizabeth Waters in her lifetime, and at the time of her death, together with interest. The bill prays process against Ephraim Waters, individually, and Ephraim Waters and Joseph K. Riley, executors and trustees. Process of subpoena ad respondendum was issued on the bill, and returned, served, as to both defendants, to the 9th day of November, 1887. No answer was filed or appearance entered by the defendant Riley, and no order or decree taken against him until years afterwards, as stated further on. An answer was filed by Waters, a replication filed thereto, and proofs were taken, and the cause brought to a hearing before a vice chancellor, who filed his opinion on the 3d of February, 1890, as reported in 46 N. J. Eq. 484.1 Under that decree an order of reference was made April 26, 1890, to take an account of the amount due from Waters. The master reported on the 25th of August, 1890, the sum of $3,747.90 as due from Waters to the complainant. That report was duly confirmed, and on the 7th of October, 1890, final decree was signed in favor of the complainant, and against Waters, for the sum last mentioned. In the mean time, in November, 1889,-before the opinion was filed,-the defendant Waters failed in business, and made an assignment for the benefit of his creditors to Norcross & Macellister, and on the 3d of June, 1890, after the interlocutory decree had been entered against Waters, and while the account for the amount due was being taken by the master, Dyer filed a supplemental bill in this cause against Waters and Riley and the '19 Atl. Rep. 129.

assignees of Waters, in which he set out that the sum of $8,500, the principal of the trust fund in the hands of the defendants, from which complainant's intestate was to receive the annual interest, and also another trust fund established by the same will, had been paid, according to the direction of the will, to the parties entitled thereto; and he claimed a preference out of the estate in the hands of the assignees for the amount which should be found due complainant by the court on the report of the master. No relief was granted under this bill; but subsequently, on the 11th of January, 1892, Dyer presented a sworn claim to the assignees of Waters for the amount due on the decree, and received a dividend therefor. On the 11th of April, 1890, after the opinion had been filed, complainant obtained an order upon Riley to plead, answer, or demur within 30 days; and in obedience to that order the defendant Riley appeared and answered, and the cause was retried, as against him.

H. A. Drake, for complainant. M. P. Gray, for defendant Riley.

PITNEY, V. C., (after stating the facts.) Riley, by his answer and amended answer, sets up, in effect, three defenses. First, he alleges that he never acted as trustee, as contradistinguished from executor, and that part of the defense is set out thus in his auswer: "And this defendant, further answering, admits that the burden of administering said estate was largely assumed by said Ephraim Waters, the son of said testator, one of said executors, and avers the fact to be that upon the auditing and filing of said accounts in Salem county orphans' court, and the allowance of the same in all things by said court, this defendant's coexecutor, said Ephraim Waters, (son of said testator,) took the entire charge, custody, and possession of the whole surplus of the said estate remaining after the payment of the debts of said testator, and the expense of settlement of his said estate, and thenceforth, since the year 1867 up to the present time, has had the exclusive custody, control, and management of said estate, and of the moneys and property thereof." The second defense is that the complainant's demand, upon which he recovered against Waters, was a joint demand, and that, if he (Riley) was liable at all, he was liable jointly with Waters, and that the presentation by the complainant to the assignee of Waters of a claim for the amount due him from Waters, upon the decree of this court, was a discharge of Waters, under the twenty-first section of the assignment act. Revision, p. 40. And, third, that he (Riley) was guilty of no negligence in permitting his cotrustee to take actual care and custody of the asseta of the estate, and that, under the circum- | stances of the case, complainant's intestate was estopped by her conduct from calling on the defendant Riley to make good the default of her son in not paying the interest to her from year to year. The answer, in support of this point, sets out that the defendant Waters was at the date of the accounting, and for a long

time afterwards, a man of reputed wealth and of business capacity, and, after stating the insolvency of Waters after having paid the principal moneys of the trust to the parties entitled thereto, proceeds as follows: "And this defendant avers that the above-named action of said Elizabeth Waters in her lifetime, and of said Ephraim Waters and Caroline Dyer, was a full rati. fication and acceptance of said Ephraim Waters as sole trustee for said trust fund, and for all interest that might come due thereon, and an acquiescence in his action as such sole trustee, and a discharge from any and all responsibility as trustee of the same, if any such responsibility ever existed, which this defendant denies. And this defendant avers that by the omission of said Elizabeth Waters in her lifetime, and of said Ephraim Waters and Caroline Dyer, to take any steps during the long period of twenty years, having full knowledge of the facts as hereinbefore set forth, and the omission of said complainant, administrator of said Elizabeth Waters, since her death, to enforce said supposed trust against this defendant as trustee, and against said Ephraim Waters, trustee as aforesaid, until he, the said Ephraim Waters, had become insolvent, the said Elizabeth Waters in her lifetime, and the complainant since her death, and said Ephraim Waters and Caroline Dyer have been guilty of gross laches and neglect, to such an extent that if said several parties, or either or any of them, ever had any right or equities, as against this defendant, as such supposed trustee, as aforesaid, which this defendant denies, they, and each of them, bave wholly abandoned and lost the same; and this defendant prays that he may have the same advantage of defense upon this ground as if he had formally pleaded the same."

The first ground above stated was supported by proof that at the settlement in 1867 of the accounts of the defendants, as executors, the whole of the assets of the estate were at once placed in the hands of Ephraim Waters by the request of the widow, the complainant's intestate, and that Waters continued to act as trustee from that time on, and that he was recog nized as sole trustee by Mrs. Dyer, and that she, from the year 1870 on, demanded and received from ber son only about $50a year, and that she never made any demand whatever upon the defendant Riley for any arrears of interest; and a forcible argument was made in support of this point, based upon the distinction between the function of an executor and that of a trustee, as defined by the chief justice, speaking for the court of errors and appeals, in the case of Pitney v. Everson, 42 N. J. Eq. 361, 7 Atl. Rep. 860. But I have not found it necessary to consider either this or the second of the defenses, since I think that the defendant must succeed on the last point taken, viz. the absence of negligence on the part of himself, and the conduct and laches of the intestate in her lifetime, and her next of kin since her death. As before remarked, it appears that although from the year 1870 on until her death, a period of 11 years, the intestate received only about $50 a year from

her son, (excepting the last two or three years of her life, when she was imbecile, and he paid the cost of her support,) yet she never made any demand upon Riley to execute the trust, and to pay her any in. terest, but looked solely to her son, and indicated by her conduct that she was satisfied to look to him alone. Then after her death her next of kin failed to take out letters of administration for almost six years after her death, and neglected to file their bill unti! more than six years after her death, and in that bill made but very faint, if any, charge against the defendant Riley. An examination of the opinion in Dyer v. Waters, 46 N. J. Eq. 484, at page 487, 19 Atl. Rep. 132, shows that the court there had difficulty in meeting this allegation of laches and lapse of time occurring after the death of the intestate, and did so only on the ground that there were negotiations and attempts to settle going on continuously between the next of kin and Waters. The court there says: "The principle upon which courts of equity refuse to enforce stale claims, in cases where the statute of limitations does not apply, either directly or by analogy, is that, considering all the circumstances, it would be inequitable to do so, by reason of the danger of doing injustice to the defendant, because, for instance, the defendant, by reason of the delay, has changed his position irretrievably, or lost some advantage he was entitled to keep, or that evidence has been lost or facts obscured by the lapse of time. Story, Eq. Jur. § 529. None of the reasons there stated for holding Waters liable, notwithstanding the lapse of time, apply to the defendant Riley. The circumstances of the case render it reasonably certain that if he had been called upon, either in the lifetime of the intestate, or within a reasonable time after her death, to account for these arrears of interest, and had been informed that he was to be held liable for Waters' default in that behalf, he would have been able to have saved himself from Waters, who was then amply able to pay, as in fact he did save himself as to the principal of the two legacies put in trust, viz. that for $8,500 for the widow for life, and the one for $6,700 for Mrs. Dyer for life. Further, the evidence shows that neither Mrs. Waters nor her daughter, Mrs. Dyer, with whom she lived, nor her husband, the complainant, nor any other person, ever notified the defendant Riley that his cotrustee was in any respect failing to perform the trust, or called upon him to perform any duty in respect to it. Mrs. Waters was never a woman of any business capacity, and a few years after the settlement of the estate her memory and faculties began to fail, slowly and almost imperceptibly at first, but steadily, until about the year 1877 or 1878 she became imbecile. Up to this time she had lived mainly with Mrs. Dyer, but, the health of the latter having failed, she was put by Mr. Waters in the care of a cousin, and remained there until she died. The proofs indicate a settlement between mother and son for arrears of interest up to April, 1870. From that time on, and during her residence with Mrs. Dyer, he paid her only

about $50 a year; probably not so much, ber habits and dress being very simple, and her wants but trifling. All this was known to Mrs. Dyer, who, with defendant Waters, were her sole next of kin, and also to her children and to the complainant. Now it seems to me that Mrs. Waters, so long and so far as she was compos mentis, was estopped by her conduct and failure to notify Riley of her son's default, or to make any demand upon him in that behalf, from seeking to charge him for such default, and that, so far as she was not sui generis, her next of kin are equally estopped. They knew of her condition, and the default of her son, and they should have sought her consent to interfere in her behalf to enforce her rights, and, failing in that, should have procured a commission of lunacy, and a legal guardianship of her affairs. It seems to me that Mr. Riley, baving placed these assets in the hands of his cotrustee by the request of the intestate, and with the knowledge and acquiescence of all parties interested, and the assets or enough of them for that purpose being, as appears by the inventory, already invested in securities proper to be held as investments, and having heard no complaint from any of the persons interested of any default on Waters' part, was fully justified in believing, as he did in fact believe, that the trust was being properly performed.

With regard to the latter part of Mrs. Waters' life, covering the period of ber complete imbecility, the master's report shows, and it was admitted at the hearing, that she was supported by her son, and that he paid for such support, and for her funeral expenses and physician's bill, the sum of $1,600. The net income of the trust fund during that period was about $450 a year. So that there was practically no default on the part of Waters for the last three or four years of her life, and during the time she may be properly said to have become entirely imbecile. The demand, then, is for arrears of interest which became due while she was living with Mr. and Mrs. Dyer, before she had become entirely incapacitated, and while she had a will and wishes of her own, and theythe daughter and son-in-law-were fully aware of the default; and it should not be overlooked that the demand here sought to be enforced is not, strictly speaking, founded on a breach of trust. In this respect it stands in clear distinction from cases of misappropriation or misinvestment of the principal of the funds, as will be observed upon an examination of the authorities. The defendant Waters, as before observed, had in hand sufficient securities, of a proper character, from his father's estate, to establish his mother's fund, and the other fund provided for by the will, without any change or new in vestment, except as they should be paid from time to time. There is no proof that he ever improperly dealt with any of them. All that appears is that he never set apart any particular securities for this particular one of the two funds to be established. The precise ground upon which the decree went against him was that he failed to pay to his mother the interest which he

présumably collected and received for her. Now, there was no negligence on Riley's part, as it seems to me, in permitting his cotrustee to do this work without his personal interference in each case, so long as he had reason to suppose that he was actually doing it in the ordinary course of business; and he had a right to so suppose from the fact that no complaint was made to, or notice to the contrary given, him. It seems to me, therefore, that as often as Waters made default in paying his mother, and she consciously acquiesced in it, she so far waived her right to call upon Riley to make it good. She trusted her son, and made him her debtor. And that the same rule ought to apply to the next of kin, who had her in care and charge during the period of her incapacity, whenever that commenced.

It is well settled that the tenant for life of a fund, under such circumstances, is debarred from relief. It is so expressly held by Lord Eldon in the leading case of Brice v. Stokes, 11 Ves. 319. There Mrs. Brice, the complainant, was entitled to the interest of a fund for her lifetime, and her husband knowingly permitted the fund to remain in the hands of one trustee, and accepted interest from him; but that trustee failed to pay to Brice all the interest, and died insolvent. The object of the bill was to charge the surviving trustees, not only with the principal money which had been lost, but also with the arrears of interest which were due to Brice; and Lord Eldon held the surviving trustees liable for the principal money, but not for the arrears of interest due to Brice. The case is stronger than this, because it was proven that one of the surviving trustees knew that the money was not properly invested by the defaulting trustee. The same principle was applied in the case of Walker v. Shore, 19 Ves. 387. There a married woman was entitled to the income of a fund to be derived from the sale of certain landed property which was devised in trust, with power of sale and investment, with directions to pay the married woman for life, and at her death to go to her children. She permitted the trustees to hold the property without sale for many years because it was advancing in price, and, when it was sold at a great advance, she demanded out of the gross proceeds a sum of money which would be equal to the interest which would have accrued on the value of the property if it had been sold at the first moment when the trustees might have sold it. It was held that, so long as she acquiesced in the nonsale, she was not entitled to interest. But the authorities go further with regard to the interest or income of a fund received by one trustee, and follow the rule laid down in the leading case of Townley v. Sherborne, Bridg. 35, 2 White & T. Lead. Cas. Eq. 858. The principle of the cases is that if the estate be once properly invested the securities may be lodged in the hands of one trustee, and he be permitted to collect the interest, and pay it over to the tenant for life, and the other trustee will not be liable for default in paying over the interest until he has notice of some default or misconduct on the part of his cotrustee.

This

rule is based upon the circumstance that it is practically impossible for both trustees to attend in person to the collection of the rents or interest. The case principally relied upon at the argument by the complainant was Burrows v. Walls, 5 De Gex, M. & G. 233, which, it must be confessed, is in some respects similar to the one before the court, but in the very point in controversy is quite distinguishable from it; and it is to be observed of it, in limine, that the decision of Vice Chancellor Wood, (afterwards Lord Hatherley,) who first heard the cause, was in favor of the trustee there sought to be charged, and that his ruling was reversed, on appeal, by Lord Cranworth, upon grounds which seem to me very narrow, and by no means satisfactory, and, as between the strength of the two names in this country, the authority of Lord Hatherley is quite as great as that of Lord Cranworth. There a tenant for life, a married woman, acquiesced from year to year in the possession by one of several trustees of a fund, and in the noninvestment of it by him. She died, and her children, who were the tenants in remainder, and had been infants during the greater part of the continued breach of trust, brought suit against the other trustees to recover the fund; the one trustee having it in possession having become bankrupt, and there being a total loss. The suit was to recover the principal of the fund, with interest from the death of the mother, and not, as here, for any interest which bad accrued to her in her lifetime. This distinction is radical.

The single element of negligence on the part of Mr. Riley, which counsel for the complainant was able to point out, and upon which alone he relied, was the fact that he did not insist upon having certain specific securities chosen out of the assets of the testator, and set apart and earmarked as representing the fund of $8,500 provided for by the will for Mrs. Dyer's support. Admitting, for argument's sake, that this failure amounted to negligence, there still remains a serious difficulty in complainant's way, and that is that the default of the acting trustee, here relied upon, was not the natural or necessary result of such neglect. The condition in which the assets were left did not facilitate the son's default. If the assets had been properly earmarked, it would still have been quite easy for him to fail to pay over the interest to his mother. The same is true as to his dealing with the principal. If the fund had been invested in the joint names of the trustees, it would still have been in the power of the one who had their possession to misappropriate them. For these reasons I am of the opinion that the complainant's case fails, and the bill must be dismissed, as to him, with costs.

1852, and in 1862 gave a mortgage upon his interest in the estate to secure to the other children the payment of such sum as might be found due to them from him upon his accounting as executor. In 1882 the executor filed a bill for an accounting with these children, and to have the mortgage canceled. Held, that the lapse of time was so great and the accounts kept by the executor so defective, that no accounting would be decreed. 22 Atl. Rep. 545, affirmed.

2. Held, further, that, as it was impossible to ascertain what sum was due to the children upon an accounting, the mortgage would not be canceled. 22 Atl. Rep. 545, reversed.

(Syllabus by the Court.)

Appeal from court of chancery.

Bill by James R. Morgan against Charles Morgan and others to secure an accounting between complainant and defendants, and for the cancellation of a mortgage which complainant, as executor of his father's estate, had executed to defendants. There was a decree refusing an accounting. and allowing the cancellation of the mortgage, and defendants appeal. Decree reversed as to the cancellation of the mortgage.

Collins & Corbin and Charles T. Covenhoven, for appellants. Abraham V. Schenck, for respondent.

REED, J. The decree appealed from was made in a suit instituted by James R. Morgan to secure an accounting with his brothers and sister, and to have canceled a mortgage which he had given them while he was acting as executor of his father's estate. The facts are these: Charles Morgan, the father of James R. Morgan and four other children, died in 1852, owning a valuable farm and clay banks in South Amboy, and an undivided half interest in property in Trenton. At this date all the children were minors, their respective ages being: James R., 19 years; Charles, 17 years; L. O., 14 years; Ann E., 11 years; and Theodore R., 9 years. They were all named in the will as executors. James R. alone took out letters testamentary. The testator, in his will, after providing for his widow, directed that all his property should be divided between his children when Charles arrived at the age of 21. This event would occur in 1856, leaving an interval of four years. In the mean time the property was to he kept intact, the farm and clay banks were to be operated as usual, and the children were to be maintained and educated out of the proceeds of the business and the rents of the estate. James R. Morgan, as executor, conducted the business, until the date arrived when, by the provisions of the will, the property was to be divided. No division, however, was made. James R. proceeded, without any apparent change in method, to run the business, receive the rents, pay bills for the children, and to act as general administrator of affairs. He lived in the homestead mansion, his mother living with him much of the time until her remarriage, in 1857. James R., himself, married in 1858, and his wife thereafter took his mother's place at the homestead. condition of affairs continued unchanged until 1862. In the mean time the brothers

This

and sister were at varions schools, or studying for professions, making their homes at the homestead during their vacations. During this period of 10 years from the death of the father, no account was filed, and none stated. In December, 1862, by the advice of the family's legal Counselor, James R. secured the other children against his acts as executor. He deeded to them his undivided interest in the property. Accompanying this deed was a defeasance executed by the other four children. The latter paper recited that the first-named deed was given to secure any debt that, upon settlement of the father's estate, should be found due from James R. Morgan, as principal and acting executor, to his brothers and sister. It provided that upon the payment of such sum the said property should be reconveyed, or any surplus refunded, at the option of said James R. Morgan. It is this deed which the bill prays may be canceled. After the giving of these instruments, James R. Morgan proceeded as before. In 1865 the homestead was burned, but James R. boarded with his foreman part of the time. Then he moved into the premises formerly occupied by the overseer. He was in charge of the business, himself working the clay banks, with the exception of three years, when they were leased, until 1877. During this entire period, from 1852 to 1877, no account was presented of the receipts on account of rent or profits from farm or clay bank, of his expenses incurred in conducting the business, or of his disbursements made on account of the respective brothers and sister. A bill in chancery having been filed by the other children to partition the property, James R. Morgan, in 1882, filed a bill in the present case, which bill was amended by the substitution of the present bill in 1890. The bill in the present case, as already remarked, seeks to have canceled the mortgage which he gave to his brothers and sister in 1862, on the ground that it is paid. He claims that there is nothing due upon it. He claims that an account taken will, instead of showing an indebtedness from him as executor, show that he has disbursed more than he has received. He therefore asks for an accounting touching the matters involved in his administration of the estate. He also asks that the four children may account for the profits which have accrued to them from their possession of his interest under the deed from the year 1877, at which time he says they went into possession as mortgagees.

The vice chancellor who heard the cause below refused the prayer of the complainant, asking for an account concerning the administration of the estate. In this conclusion I think he was clearly right, and for the reasons which he gives. It appears that after the testimony was taken, and argument was had before the vice chancellor, the complainant was directed to present a detailed statement of his receipts and disbursements for the period over which the investigation swept. This account shows receipts from all sources amounting in the aggregate to $119,184.19, and disbursements to the amount of $176,