Nelson v. Hall, 58 N.C. 32, 5 Jones Eq. 32 (1859)

Dec. 1859 · Supreme Court of North Carolina

58 N.C. 32, 5 Jones Eq. 32

JOHN H. NELSON, Executor, against JOHN J. HALL AND OTHERS.

Where a testator ordered his executor to loan out a certain fund, directed to be raised upon his estate, and the interest applied to the support and education of his children, and a portion of the fund was lost by the insolvency of the parties to whom it was loaned, which insolvency occurred so suddenly, that the debt could not be saved by the exercise of ordinary care, it was Held that such loss ought not to be put upon the executor.

Executors are not held responsible as insurers; good faith and ordinary care is all that is required of them.

Cause removed from the Court of Equity of Craven county.

■ Josephus Ilall, possessed of a large real and personal estate, made his will, and died in the year 1843, and appointed the plaintiff, John H. Nelson, his executor, who liles this bill for a settlement of the estate, and for the direction of the Court of Equity upon certain questions of difficulty growing out of the said will. The first clause of this will, is as follows: “ I leave all my perishable estate (except such as shall be disposed of in the following clauses of this will) to be sold by my executor, together with my schooner, ‘ the Samuel Hyman,’ and the proceeds of such sales, together with the proceeds of the negro hire, and all moneyed interest, (not especially or otherwise disposed of in this will) to constitute a fund, and to be kept at interest in good bonds to my executor, for the education and support of all my children.” In pursuance of this direction, there were notes, bearing interest, held by the executor, on sundry persons, amongst others, a note on John Blackwell, James C. Justice, and William P. Moore, for $1086,79, and another, on the same parties, for $659, also a note on B. Oliver and W. P. Moore, for $50. The several parties to these larger notes, made assignments for the security of their creditors, and were taken in and provided for in such assignments, but the assets falling short, only 75 per cent, of principal and interest was made on the same. So that twenty-five per cent, of these notes was lost, and the $50 note entirely lost by the sudden bankruptcy of the parties. In the account taken by the commissioner, Mr. Roberts, he only charged the executor with the sum realised, and did not charge him with the $50 note. Exceptions were taken to the report on this acoount. The evidence taken as to the sudden and unexpected failure of the parties to these notes, also as to that of $50, are sufficiently noticed in the opinion of the Court. There were several questions submitted in the pleadings, but it is not deemed necessary to notice them here, as they are treated of in the opinion of the Court. The chief questions, in this Court, were upon the'exceptions to the commissioner’s report.

J. W. Bryan, for the plaintiff.

No counsel appeared for the defendants in this Court.

MaNly, J.

The purpose of this bill, is to settle the estate of Josephus Hall, deceased, to ascertain the balance in the hands of the executor, who is complainant, and to procure from this Court a declaration of rights, in respect to the principal legatees, the children. The most of the questions raised as these rights are merely speculative, and relate to certain limitations over to the survivor or survivors, in case any or either of them shall die. As they are all liming, it will be ^improper for us to anticipate the event of death, and adjudicate the rights which may spring up out of it. The contingency, upon which the questions will become practical and necessary to be decided, will probably happen in the day of our successors.

It was referred to the clerk and master in the Court below, to take an account of the fund belonging the estate. This account has been taken and reported, and two exceptions are filed to the same.

First. The allowance of twenty-five per cent, discount upon two notes of Blackwell, Justice, and Moore, the one for $1086 ; the other for $659.

Secondly. The total loss of a note of Oliver and Moore for $50.

This is part of a fund which the testator has directed shall be kept at interest, upon good bonds, for the education and support of all his children. The notes in question, were taken and kept by the executor in the management of this fund, and became uncollectable by the bankruptcy of the parties.

"We have considered the evidence relating to the matter of the exceptions, and especially to the sudden and unexpected character of these bankruptcies, and conclude the executor is not liable to make good these losses. All the witnesses, examined, concur, that the failures of Blackwell, Justice and Moore, were a surprise to the community in whieh they resided ; that they were possessed of large resources, were transacting extensive business, and were held in the highest grade of credit down to the day of their respective assignments for the payment of debts. The failure of Oliver, who was the principal in the small note of $50, took place about five months before Moore’s, who was the surety. This, if the debt had been larger, or the standing of the surety less unquestionable, might have been sufficient to put the executor on his guard, and induce him to seek other security, but under the circumstances, we think it was not. Such losses as have occurred in the management of this fund, are incidental-to investments of a similar kind, in all communities. They happen even to the. most vigilant, and must happen oftener to those who exert only ordinary caution, and this last is the grade of care to which an executor is bound. Executors should not be held responsible as insurers; all that a sound public policy requires, is, that they shall act in good faith, and use oxdincmy care. The proofs satisfy us that there has been no want of these, and we, therefore, conclude, the executor is not liable.

ít seems, from the pleadings and proofs, that one of the 'daughters, Eliza Jane, has arrived at the age of eighteen years* and the will provides, that all the common-stock property, not specifically bequeathed, «hall he kept by the executor, and when the son, John H., 'arrives at the age of twenty-one years, he is to have his distributive share. When Eliza Jane arrives at eighteen or marries, she shall receive her share of ■the balance, and Josephine, in like manner, to take the residue ] and in case of the death of any of the said children, the survivors or survivor to be entitled to the interest of such deceased child, &c. Eliza Jane, having arrived at the-age, designated by the testator, is clearly entitled, we think, to have her share allotted to her.

This is a response to the first enquiry, which we have been Invoked to answer in regard to the construction of the wilh Other enquiries, we have already stated, it is not expedient nr proper for us to answer, for the reason, that they depend upon what we hope, are remote events, which it may never be •our lot to witness.

Let a decree be drawn in this case overruling the exceptions, and confirming the reported account of the master, in -all respects, and declaring it to be the opinion of the Court, that Eliza Jane Hall, is now entitled to have her share of the •estate, remaining on hand, and belonging to the children, ah lotted to her in severalty.

Let the costs be paid out of the funds in the hands of the 'executor.

Pee Curiam, Decree accordingly.