Supreme Court of United States.
*470 Mr. Henry Hitchcock for appellant.
Mr. William A. McKenney for appellee.
MR. JUSTICE WOODS delivered the opinion of the court. He stated the facts in the foregoing language, and continued:
The first contention of the plaintiff in error is that the demurrer to the bill should have been sustained, because the nature of the trust was not therein so sufficiently set forth as to form the foundation of a decree on the part of a court of equity.
Whether the trust was fully and accurately set forth could not be known until the filing of the answer or the taking of the proofs. When the demurrer was heard, from all that then appeared, the exact provisions of the will of the testator raising the trust, and all the terms and conditions of the trust, were stated in the bill. It could not then be known whether or not there was anything more to state. What was stated showed the creation of a trust estate, the appointment of a trustee, the designation of a cestui que trust, and specific directions to the trustee in respect to his duties. The court could not assume that any of the provisions of the will relating to the subject matter of the trust were omitted from the bill, and what was stated was sufficient, if correctly stated, to enable the court to act intelligently. The demurrer was, therefore, *471 properly overruled. But the defendant refused to stand on his demurrer and answered the bill. Having, as it may be fairly presumed, the will of the testator before him, he undertook to set out in his answer, under oath, the provisions of the will in respect to the trust estate and trust in question. There is no pretence that any material word or clause, in relation to the subject of the trust was omitted from the answer. It is, therefore, too late for the defendant, on final hearing in the appellate court, to object that the provisions of the will were not fully set out in the bill of complaint. If there was any defect in the statement made in the bill, it was rendered immaterial by the statements of the answer, and is not now ground of complaint. Greenleaf v. Birth, 5 Pet. 131.
A similar assignment of error to that just noticed is, that the court erred in removing the appellee from his office of trustee without having before it the will or declaration of trust for interpretation.
But it is clear that a defendant to a bill in equity, who states in his answer under oath the provisions of a writing, which is presumed to be in his possession, cannot complain that the court acted upon his admission. The court might in its discretion have refused to interpret the writing without its production. But having acted upon the presumption that the defendant in his answer stated truly the contents of the writing, the latter cannot, on the ground that the writing itself was not put in evidence, ask a reversal of the decree. Courts of equity are frequently required to act on the admissions of the answer without other proof. Thus, when a cause is heard upon bill and answer, the decree is based entirely on the admissions of the answer without other testimony. Reynolds v. Crawfordsville Bank, 112 U.S. 405; Brinkerhoff v. Brown, 7 John's Ch. 217; Grosvenor v. Cartwright, 2 Cas. Ch. 21; Perkins v. Nichols, 11 Allen, 542. At all events, it does not lie in the mouth of a defendant in equity to complain that the court assumed his answer made under oath to be true and decreed accordingly.
The next assignment of error is that the decree rendered by the Circuit Court is not justified by the law.
*472 The decree rests solely on the ground alleged in the bill, of neglect of duty and mismanagement of the trust property. If these grounds are sustained by the proof the authorities are ample to justify the decree of removal. For, where the acts or omissions of the trustee are such as to show a want of reasonable fidelity, a court of equity will remove him. Ex parte Phelps, 9 Mod. 357; Mayor of Coventry v. Attorney-General, 7 Brown Par. Cas. 235; Attorney-General v. Drummond, 1 Drury & Warren, 353; Attorney-General v. Shore, 7 Sim. 309 n; Ex parte Greenhouse, 1 Madd. 92; Ex parte Reynolds, 5 Ves. 707; Clemens v. Caldwell, 7 B. Mon. 171; Johnson's Appeal, 9 Penn. St. 416; Ex parte Potts, 1 Ashmead, 340; Buchanan v. Hamilton, 5 Ves. 722; Ellison v. Ellison, 6 Ves. 656, 663; Portsmouth v. Fellows, 5 Madd. 450; Lothrop v. Smalley, 8 C.E. Green (23 N. J Eq.), 192; Hussey v. Coffin, 1 Allen, 354; Attorney-General v. Garrison, 101 Mass. 223.
The averments of the bill sufficiently charge, and the proofs establish, neglect of duty and mismanagement of the trust estate. The charge of the bill, which is distinctly admitted by the answer, is, that the Probate Court found in the hands of the appellant, executor of John Cavender, as due and belonging to said trust estate, the sum of $17,169.49, and ordered him to pay over that sum to himself as trustee. The averment of the bill is sufficient to charge, and the admission of the answer sufficient to prove, the receipt by the defendant, as trustee, of the sum of money mentioned. They are conclusive evidence of the fact. For when one person is to pay money and receive the same money, and nothing remains but to enter receipts and payments in their proper accounts accordingly, the law will consider that as done which ought to be done. Thus, where a sole executor sustains the two-fold character of executor and guardian, the law will adjudge the ward's proportion of the property in his hands to be in his hands in the capacity of guardian, after the time limited by law for the settlement of the estate, whether the final account has been passed by the Orphan's Court or not. Watkins v. State, 2 Gill & J. 220. So, where the same person is executor of an estate and guardian of a distributee, and there is nothing to show in which capacity *473 he holds funds after payment of debts and settlement of the estate, he shall be presumed to hold them as guardian. The State v. Hearst, 12 Missouri, 365. See also Johnson v. Johnson, 2 Hill, S.C. Eq. 277; Karr v. Karr, 6 Dana, 3.
But the proof that the trust fund came to the hands of the trustee does not stop with the order and decree of the Probate Court finding the money in his hands as executor, and directing its payment to himself as trustee, for it appears that he made and filed in the Probate Court his receipt as trustee for the fund, and upon the strength of that receipt procured his discharge as executor. The record of the Probate Court, put in evidence, shows these facts. We have, therefore, the admission of record of the appellant, upon which the Court of Probate acted, at his instance, and upon the strength of which it made an order relieving him from liability as executor, and it is binding on him, and he cannot be heard in any controversy with the appellee to deny his admission that the fund came to his hands.
It remains to inquire whether the proof sustains the charge of neglect of duty and mismanagement of the trust funds.
Having taken possession of the trust moneys, it became the duty of the appellant to invest them as directed by the will, if it were possible to do so. The proof shows that it was possible. The appellant admits, under oath, that he has made no investments of the trust assets, and placed no funds in securities of any sort, or in bank, and set aside no annuities for the benefit of the cestui que trust or the trust estate. His own admissions show neglect of duty and mismanagement of the trust estate.
The neglect to invest constitutes of itself a breach of trust, and is ground for removal. Clemens v. Caldwell, 7 B. Mon. 171, 174; Lathrop v. Smalley above cited.
The only defence set up in the answer of the appellant is a denial that he ever gave a receipt as trustee, or that he had been discharged as executor by the Probate Court, or that the trust fund ever came to his hands. As the facts thus denied are conclusively established by the evidence, the denial is an aggravation of the misconduct of the appellant. A trustee, *474 into whose hands trust assets are shown to have come, who not only fails to discharge any duty of the trust, but even denies that he has ever received the property, cannot successfully resist an application made to a court of equity for his removal.
The counsel for appellant say that they regret that the pleadings and evidence do not permit a full presentation of the case upon its merits. We cannot act on this vague intimation. There may be facts not disclosed which, if shown by the record, would entirely change the aspect of the case. But we must try the case as the record reveals it. Upon the cause, as presented, with no explanation vouchsafed by the appellant, it is difficult to conceive of a clearer case for the removal of a trustee and the appointment of another in his stead.
Decree affirmed.
