(after stating the facts). This is the plaintiffs’ appeal, but we find the exceptions of the plaintiffs and defendants so beax’iug upon each other, that we have deemed it most conducive to an understanding of the points raised and insisted on by cither side, to consider on this appeal all the exceptions taken by either party.
The following facts were either not controverted, or were established by ample proof, taken before the referee: That James A. Moore, the first husband of the plaintiff Annie E. Carr, died on the ... day of July, 1869, leaving two children, Minnie Moore and John C. Moore, minors of tender age. That the defendant W. F. Askew was appointed guardian of the said Minnie and John, on the 30th day of August, 1869; that said John C. Moore died in September, 1869, leaving as his only next-of-kin, his mother, the plaintiff, and his sister, the said Minnie; that the said James A. Moore, at the time of his death, had a policy of insurance on his life, for ten thousand dollars in the _ZEtna Life Insurance Company, “for the benefit of his wife, Annie E. Moore, so long as she remained in widowhood, and children;” that W. F. Askew, as guardian, received from the insurance company on the 11th December, 1869, $6,526.54, *207in full of all claims due by the company upon the life policy of James A. Moore, and that on the same day, the plaintiff Annie E. Moore (now Carr), received from the company $3,263.27, in full of all claims on the said policy due to her as widow of the said James A. Moore, and that she paid over the sum so received by her from the insurance company, and added thereto out of her individual funds, $210.00, to make the sum of $10,000.00 with which Askew, as guardian, charged himself, as received December 13th, 1869, in his return of December 13th, 1870, and that he continued to make returns upon that basis, until 1882, when he ceased to be guardian by the death of his ward; that he used this money of his ward in his own business without making any investment of the same.
The plaintiff’s ground of exception is, that the Court overruled his 2nd and 4th exceptions, and in this we think there was error. The $1,631.63, which is the subject of this exception, was found by the referee to be a portion of the fund received by the defendant from the insurance company, due to John C. Moore, who died before the fund was received by the defendant, when he was no longer guardian of the said John C. Moore. But the receipt given by the defendant to the company, was signed by him as “guardian,” without stating of whom he was guardian, and as he was then guardian only of Minnie Moore, it must be intended he received it for her, especially as in his guardian return of 13th December, 1870, he charged himself with ten thousand dollars, as guardian of Minnie Moore, which was made up by the sum received by the defendant and plaintiff respectively, from the insurance company, and $210 added thereto by the plaintiff, to makeup the $10,000. The defendant Askew is chargeable with this sum, because he received it for his ward, and charged himself with it as her guardian; for, it is held, when a guardian has received money by virtue of his office, and for his ward, he cannot exonerate himself from liability, by showing that the money was due to another, Humble v. Mebane, 89 N. C., 410, which was followed and approved in Sain v. *208 Baily, 90 N. C., 566, and Burke v. Turner, Ibid., 588 — and in this latter case it was held, that the sureties werealso liable, and if be was chargeable with the money so received, it follows that he was also chargeable with compound interest thereon, until the death of his ward, which occurred in the year 1882. This disposes of the exceptions of the plaintiff, and we now proceed to consider those of the defendant.
The first exception cannot be sustained, because it was in evidence that John C. Moore died before any money was received from the 7Etna Life Insurance Company.
His second exception cannot be sustained because it was expressly proved by the testimony of the plaintiff' Annie E. Carr, that she paid to W. F. Askew as guardian of Minnie Moore, the sum of $3,473.46, the amount received by her from the insurance company, and the defendant Askew charged himself with it.
His third exception is met by the sworn returns of the defendant Askew, as guardian of Minnie Moore, to the Probate Court of Wake county, and by the testimony of the plaintiff.
His fourth exception is frivolous, for it is immaterial in the investigation of this case, whether the plaintiff was married to Albert G. Carr on the 13th day of December, or some other day, but if material, it was so alleged in the complaint and not denied.
His fifth exception is met by his own statement accompanying his return as guardian, to the Probate Court of Wake, on the 13th day of December, 1882, and verified by his oath.
His sixth, seventh, eighth, and tenth exceptions appertain to the allowance of seven per cent, interest on the amount received by the defendant as guardian. These exceptions, we think, cannot be sustained, for the reason that the defendant Askew, in his returns, had charged himself with eight per cent, from 1869, until the marriage of the plaintiff in 1875, and then with seven per cent, until the death of his ward in 1883, and after that with six per cent.; and for the further reason, that the evidence *209taken by the referee upon that matter, varies from six to eight per cent., and we think it was reasonable and just, under the proofs, that the intermediate sum of seven per cent, should be adopted as the average and maximum of interest with, which the defendant, should be charged, compounded until the death of his ward in 1883, aud with simple interest after that time. As a general rule, when a trustee has not only neglected to invest the fund, but has applied it to his own purposes, as by using it in his trade, he may be charged with interest at the highest rate. Adams’ Equity, 664. But in this case, the defendant had annually made a fair return for thirteen years, and had for a good portion of that time, charged himself with eight per cent, interest; that is a circumstance which might very properly have been taken into consideration by the referee, in exonerating him from being charged with the highest rate of interest.
His eighth exception is without merit. It is altogether unimportant whether the defendant received the $10,000 “ under and by virtue of, and according to the terms of said policy,” or not. It is sufficient to charge him with that amount, whether he received it all, directly from the insurance company, or a part of it, by donation to his ward, from the plaintiff. It suffices that he received that amount, and charged himself with it in his returns.
His eleventh exception in regard to taxes, cannot be sustained, for we must take it that the defendant paid no taxes on the fund in his hands, as taxes due upon the estate of his ward, or that he paid any taxes whatever on the fund, as he did not charge his ward with the taxes in his returns; for it is fair to presume, if he had paid them, he would have so charged them, as beseems to have been very particular and minute in his returns, in charging her with all the items of his disbursements.
The defendant further excepted to the referee’s conclusions of law; all of which have been heretofore disposed of, in our decisions upon the exceptions above considered, except the second exception in the series, which is to the conclusion of the referee, *210that the defendant Askew “is not entitled to any commissions upon his receipts and disbursements.”
We think this exception should be sustained. It was held by this Court in the case of Burke v. Turner, 85 N. C., 504, “that a guardian is not entitled to commissions on money collected and used by him in his own business,” but that was a case where the guardian not only used the money in his own business, but was guilty of gross negligence in not making his returns, &c. In this case, although the guardian used the money of his ward for his own purposes, he made his annual returns with strict punctuality and fairness for thirteen years, so that it might be seen at all times, for what sum he was liable to his wards, and he and his sureties were perfectly responsible. Although he violated the law, and abused the trust reposed in him, by the use of his ward’s money, we do not think it was such gross malfeasance as should exclude him from the right to be allowed commissions. As the sum he received was large, and he had no litigation, and very little trouble, except in paying out- small sums for the maintenance and education of his ward, we think he should have been allowed 2^- per cent, on the receipt of the $10,000; and five per cent, on his annual disbursements. This accords with the rule laid down by the Court in the case of Graves v. Graves, 5 Jones Eq., 280.
Both parties excepted to the judgment of the Court. The plaintiff’s exception was to the overruling of his exceptions to the report of the referee, Nos. 2 and 4, and these have already been disposed of by holding there was error in not allowing these exceptions.
The defendant excepted to the judgment:
1. Because the Court decided that the defendant Askew was not entitled to a trial by jury upon the issues of fact raised by the report of the referee.
2. Because it decided that the counter-claim of the defendant Askew be dismissed.
3. Because it decided that the sentence “but taking into consideration the interval occurring between the taking in, and re-*211lending of loans, a continual rate of 7 per cent.per annum, would have been the maximum that could have been realized,” in the latter portion of referee’s report, be stricken out.
4. “Because it decided that all the other exceptions by the plaintiff to the report of the referee should be overruled, and because he sustained all the findings of facts, and conclusions of law of the referee to which the plaintiff' excepted.” The ground •of the first exception taken by the defendant to the judgment of the Superior Court, presents the very serious and important •question, whether upon a compulsory reference, the parties have a right to have all the issues of fact raised by exceptions to the report of the referee, tried by a jury. Though it may not be considered entirely as an open question, it is at least a question involved in so much doubt, as to require a definite solution.
Among the first cases in which the sections of The Code giving to the Courts the right to refer cases to referees, was Klutz v. McKenzie, 65 N. C., 102, and there Chief Justice PeaksoN, speaking for the court, said, “ the parties to a case referred, were not entitled to have the issues raised by exceptions taken by them before the referee, tried by a jury.” This view is strongly maintained by RodmaN, Judge, in his dissenting opinion in Armfield v. Brown, 70 N. C., 32; and the Court in Overby v. Fayetteville B. & L. Ass’n, 81 N. C., 56, and Grant v. Reese, 82 N. C., 72, very clearly intimates an inclination to support the decision in Klutz v. McKenzie, since the amendment to the Constitution of 1875, Art. 4, §8.. In Green v. Castleberry, 70 N. C., 20, and Armfield v. Brown, Ibid., 32, it was held that the parties had the right to have all such issues tried by a jury, but the opinion on that point in both of these cases, was an obiter dictum. The Constitution, Art. 4, §13, declares, “In all issues of fact joined in any Court, the parties may waive the right to have the same determined by a jury, in which case the finding of the Judge shall have the force and effect of a verdict by a jury.” The contemporaneous construction of this section of the Constitution, may be gathered from the Acts of the Legislature *212upon the subject, passed some time after the adoption of the Constitution.
In C. C. P., §221, The Code, §393, the Legislature has defined what is an issue of fact, to-wit, “an issue upon a material allegation in the complaint, controverted by the answer; or an issue upon new matter in the answer, controverted by the reply, or an issue upon new matter in the reply, except an issue of law is joined therein.” It will be seen from this, that the Legislature of 1868, many of the members of which had been members of the Convention which adopted the Constitution in the same year, considered issues of fact, to be such issues as were raised by the pleadings. By C. C. P., §224, and The Code, §398, these issues of fact must be tried by a jury, unless a trial by jury be waived, or a reference be ordered.
By §244, C. C. P., The Code, §420, “ all or any of the issues in the action, whether of fact or law, may be referred upon the written consent of the parties,” &c. This is a trial by a referee, and as it is by consent, it has been held the parties waive a jury trial of all the issues in the action; that necessarily means all issues raised by the pleadings.
By §245, C. C. P., The Code, §421, provision is made for a compulsory reference in certain cases there enumerated, but it is expressly provided that the compulsory reference under this section, “ shall not deprive either party of his right to a trial of the issues of fact arising on the pleadings.” The exception to this, is when questions of fact arise upon motion, &c., but we do not think this applies to facts arising on exceptions to a referee’s report. If the reference is by consent, the parties waive their right to a trial by jury, and the referee is compelled to decide the whole case upon the law and facts raised by the pleadings; but if it is compulsory, the parties waive nothing, and are still entitled to a trial by jury, as if no reference had been made, and when there is no reference, the trial by the jury, of course, is confined to such issues as are raised by the pleadings.
We are of opinion such was the intention of the framers of the Constitution of 1868.
*213To put a different construction upon the section of the Constitution referred to, would open a wide door to prolixity and delay in legal proceeding, attended with confusion and triflingly vexatious controversies, which it was the policy of the new system of procedure to avoid, and whatever objection may have been ■entertained to such interpretation of the Constitution of 1868, it is removed, we think, as was intimated in the case of Overby v. Fayetteville B. & L. Association, 81 N. C., 56, by the amendment to the Constitution of 1875, Art. 4, §8. Our conclusion is, there was no error in the refusal of the Court below to allow the defendant to have the issues raised by his exceptions tried by a JU17-
The next exception taken by the defendant, was to the dismission by the Court of the defendant’s counter demand against the plaintiff, for an alleged indebtedness to him. Strictly, as a counter-claim, it cannot be set up against the plaintiff, because she is suing in this action in autre droit, and it has been held that a •counter-claim for an individual debt, cannot in such a case be maintained. Currie v. McNeill, 83 N. C., 176; Holliday v. McMillan, 79 N. C., 315, same case 83 N. C., 270.
But here it is alleged by the defendant, that the plaintiff is indebted to him in a large sum for. money loaned her, and that she is insolvent, and has no other means, wherewith to pay this indebtedness, except out of her share of the money which she seeks to recover from the defendant in this action, as administra-trix of Minnie Moore. The plaintiff denies the debt, aud also her insolvency, and pleads that if she is indebted to the defendant, the debt is barred by the statute of limitations.
These are issues of fact raised by the pleadings, and should •have been submitted to the jury, not upon the ground of a counter-claim or equitable set-off*, but a retainer in the nature of a set-off, which is founded upon the equitable principle, that it would be unjust and against conscience to allow the plaintiff, if insolvent, to receive a large sum of money from the defendant, in a portion of which she was interested, without having that inter*214est, whatever it may be, subjected to the claim of the defendant, if established. Adams Eq., 508; Pegram v. Armstrong, 82 N., C., 326.
This exception, we think, was well taken, and should have been sustained, and the defendant is entitled to have these issues-tried by a jury, and if found in his favor, should have -the amount so found, deducted from the amount of the plaintiff’s-interest in the recovery from the defendant.
Our opinion is there were errors in the particulars herein indicated; and that the case be remanded to the Superior Court of Wake county, to the end that the following issues be submitted to a jury :
1. Is the plaintiff indebted to the defendant in the sum of $2,854.90, or any part thereof?
2. Is the same or any part thereof barred by the statute of limitations — and if only a part, what part?
3. Has the plaintiff any other means of paying her indebtedness to the defendant Askew, besides her interest in the recovery in this action?
And further, that after the verdict of the jury, the case be recommitted, that an account be taken of the indebtedness of the defendant to the plaintiff as administratrix of Minnie Moore, in accordance with the modification of the judgment of the Superior Court made in this opinion, and the further account- of the interest of the plaintiff Annie E. Carr in the sum due by the defendant. Should the above issues be found in favor of the defendant, then such sum so found to be due from her, may be deducted from the amount of defendant’s liability.
The Clerk of this Court will ascertain the aggregate amount of costs in both appeals, and there must be a judgment against the plaintiff and her sureties on the appeal for one-half of said costs..
This was the defendant’s appeal, in the foregoing case, and the facts are the same.
In this action, it was agreed that the summons, complaint, answer and other pleadings, the order of reference, the report of the referee including the evidence, the defendant’s exceptions thereto, the judgments and defendant’s exceptions thereto, shall constitute the defendant’s case on appeal for Supreme Court.
And inasmuch as in that appeal we have deemed it advisable and proper to consider and adjudicate upon the exceptions of the defendant, as well as those of the plaintiffs, our determination upon the exceptions of the defendant in that case, must be taken and considered as our adjudications upon those exceptions on this appeal, and the same disposition made of them.
The case is remanded on the same ground and for as like purpose as in that case.
The Clerk of this Court will ascertain the aggregate amount of costs in both appeals, and thej-e must be judgment against the defendant, and his sureties for the appeal, for one half of said costs so ascertained.
Modified and remanded.