Ostrander, C. J.
(after stating the facts). 1. The trustees and the beneficiary were entitled to receive from decedent’s estate $5,000 in cash. The investment of this fund, contemplated by the will, was a permanent investment, the earnings to be paid annually to the complainant. The note in question was what is known as short-time paper. It fell due during the period required for administering the estate. It had run the- time the testatrix agreed that it might run. That it was on hand when the executors proposed to close the estate must be attributed to the fact that the trustees, who were also executors, contemplated taking over and receipting for this note, or a renewal of it, in payment of the legacy. They contemplated doing, and they did, an act as trustees which would discharge them as executors. The case for them [402] stands no better than it would if they had deliberately chosen to accept from a solvent estate a personal note instead of money. Mattocks v. Moulton, 84 Me. 545 (24 Atl. 1004). Indeed, the case for them may not stand so well as this, because their interest as beneficiaries under the will, their interest as executors, and any other interest in the matter which is disclosed, may be considered in determining whether they did not deliberately assume the peril which attended their choice, and the continuing peril of failure to collect the note. The direction of the testatrix to use “their best skill and discretion” did not enlarge the powers or discretion of the trustees. Kimball v. Reding, 31 N. H. 352 (64 Am. Dec. 333); Caspari v. Cutcheon, 110 Mich. 86 (67 N. W. 1093). Strictly, it was a direction to exercise more than ordinary care and prudence.
It is general doctrine, accepted everywhere, that a trustee must show the utmost good faith. He must exercise in the execution of the trust the degree of care and diligence which a man of ordinary prudence would exercise in the management of his own affairs. In respect to the investment of trust funds, in the absence of express directions from the settlor and of statute directions, courts have not infrequently been called upon to determine whether particular investments evidenced the exercise by the trustee of ordinary prudence. However conflicting in some respects the decisions may appear to be, in one respect they are reasonably uniform. It is a generally accepted rule that it is not prudent to invest trust funds in unsecured notes of an individual or of a partnership. We have found no decision which announces a contrary rule where the trust contemplated an investment of a permanent nature. This rule condemns the defendant trustees, and, if applied, obliges them to account to the cestui que trust for the fund.
It is said by the trustees that the investment was approved by the settlor, and it ought not to be considered [403] imprudent to do what she had done. It would be equally cogent argument for the complainant to say that it was not prudent to accept this note, because, as the trustees knew, banks would not accept it without indorsement or other security. This is not the case of changing or refusing to change the character of specific funds given in trust. Nor is it reasonable to say that the settlor had * ‘ invested ’’her money.
It is said in the brief for the Corning executors:
“We repeat again, the trustees did not invest the money in this note. The note was assigned to them by a decree of the probate court. True, it was at the suggestion of the executors (not the trustees), but the probate court was not bound by their suggestion. The testimony of Judge Crane shows that the order was made upon his own judgment, after considering the pecuniary standing of the makers of the note, and the fact that Mrs. Bartlett made, the investment herself and renewed the note, without indorsement, from time to time until her death. The executors had a right to ask for instructions, and it was the duty of the probate court, upon application, to give them directions. If the probate court made a mistake in so doing, and complainant was dissatisfied, it should have appealed.”
In the brief for defendant Lemke, counsel asserting that the probate court had statutory jurisdiction in that behalf, the following argument is made:
“ Assuredly the fact that there were trust legacies to be assigned did not lessen the conceded jurisdiction of that court to assign the residue, nor the force of the decree entered. If it should be thought that the probate • court ought to have so construed this will as to require tbe executors to pay this legacy to the trustees in cash, still, that question is barred by the decree, and not open to review in this collateral suit. Those courts have the fullest jurisdiction over the construction of wills under such circumstances.”
And again:
“It is manifest that he [the probate judge] intended that the notes should be held as these investments, and [404] that he knew they were not assets belonging to the beneficiaries. There is nothing in the decree or record anywhere in conflict with this, nor is there the slightest pretext for calling these notes assets after they came to the trustees. They were no doubt assets of Mrs. Bartlett’s estate until they were assigned to the trustees, and then they at once became investments, for such was that court’s decree. For another clear and conclusive reason these notes were not assets: They never belonged to the beneficiaries at all, until they were assigned to the trustees by the probate court’s decree, and then that decree fixed their status as being not debts to be collected, but as legacy investments to be held for them. Without intending to make any admission, we might admit that it is the duty of the fiduciary to promptly collect ordinary assets in the form of notes and the like. But we deny that that rule, if right, applies here.”
There was no occasion to construe the will, and the probate court was not asked to and did not construe it. The trustees were not appointed by the court, but by the will. Gibney v. Allen, 156 Mich. 301 (120 N. W. 811); Wooden v. Kerr, 91 Mich. 188 (51 N. W. 937). Nor did they ask the court for instructions.
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Ostrander, C. J.
(after stating the facts). 1. The trustees and the beneficiary were entitled to receive from decedent’s estate $5,000 in cash. The investment of this fund, contemplated by the will, was a permanent investment, the earnings to be paid annually to the complainant. The note in question was what is known as short-time paper. It fell due during the period required for administering the estate. It had run the- time the testatrix agreed that it might run. That it was on hand when the executors proposed to close the estate must be attributed to the fact that the trustees, who were also executors, contemplated taking over and receipting for this note, or a renewal of it, in payment of the legacy. They contemplated doing, and they did, an act as trustees which would discharge them as executors. The case for them [402] stands no better than it would if they had deliberately chosen to accept from a solvent estate a personal note instead of money. Mattocks v. Moulton, 84 Me. 545 (24 Atl. 1004). Indeed, the case for them may not stand so well as this, because their interest as beneficiaries under the will, their interest as executors, and any other interest in the matter which is disclosed, may be considered in determining whether they did not deliberately assume the peril which attended their choice, and the continuing peril of failure to collect the note. The direction of the testatrix to use “their best skill and discretion” did not enlarge the powers or discretion of the trustees. Kimball v. Reding, 31 N. H. 352 (64 Am. Dec. 333); Caspari v. Cutcheon, 110 Mich. 86 (67 N. W. 1093). Strictly, it was a direction to exercise more than ordinary care and prudence.
It is general doctrine, accepted everywhere, that a trustee must show the utmost good faith. He must exercise in the execution of the trust the degree of care and diligence which a man of ordinary prudence would exercise in the management of his own affairs. In respect to the investment of trust funds, in the absence of express directions from the settlor and of statute directions, courts have not infrequently been called upon to determine whether particular investments evidenced the exercise by the trustee of ordinary prudence. However conflicting in some respects the decisions may appear to be, in one respect they are reasonably uniform. It is a generally accepted rule that it is not prudent to invest trust funds in unsecured notes of an individual or of a partnership. We have found no decision which announces a contrary rule where the trust contemplated an investment of a permanent nature. This rule condemns the defendant trustees, and, if applied, obliges them to account to the cestui que trust for the fund.
It is said by the trustees that the investment was approved by the settlor, and it ought not to be considered [403] imprudent to do what she had done. It would be equally cogent argument for the complainant to say that it was not prudent to accept this note, because, as the trustees knew, banks would not accept it without indorsement or other security. This is not the case of changing or refusing to change the character of specific funds given in trust. Nor is it reasonable to say that the settlor had * ‘ invested ’’her money.
It is said in the brief for the Corning executors:
“We repeat again, the trustees did not invest the money in this note. The note was assigned to them by a decree of the probate court. True, it was at the suggestion of the executors (not the trustees), but the probate court was not bound by their suggestion. The testimony of Judge Crane shows that the order was made upon his own judgment, after considering the pecuniary standing of the makers of the note, and the fact that Mrs. Bartlett made, the investment herself and renewed the note, without indorsement, from time to time until her death. The executors had a right to ask for instructions, and it was the duty of the probate court, upon application, to give them directions. If the probate court made a mistake in so doing, and complainant was dissatisfied, it should have appealed.”
In the brief for defendant Lemke, counsel asserting that the probate court had statutory jurisdiction in that behalf, the following argument is made:
“ Assuredly the fact that there were trust legacies to be assigned did not lessen the conceded jurisdiction of that court to assign the residue, nor the force of the decree entered. If it should be thought that the probate • court ought to have so construed this will as to require tbe executors to pay this legacy to the trustees in cash, still, that question is barred by the decree, and not open to review in this collateral suit. Those courts have the fullest jurisdiction over the construction of wills under such circumstances.”
And again:
“It is manifest that he [the probate judge] intended that the notes should be held as these investments, and [404] that he knew they were not assets belonging to the beneficiaries. There is nothing in the decree or record anywhere in conflict with this, nor is there the slightest pretext for calling these notes assets after they came to the trustees. They were no doubt assets of Mrs. Bartlett’s estate until they were assigned to the trustees, and then they at once became investments, for such was that court’s decree. For another clear and conclusive reason these notes were not assets: They never belonged to the beneficiaries at all, until they were assigned to the trustees by the probate court’s decree, and then that decree fixed their status as being not debts to be collected, but as legacy investments to be held for them. Without intending to make any admission, we might admit that it is the duty of the fiduciary to promptly collect ordinary assets in the form of notes and the like. But we deny that that rule, if right, applies here.”
There was no occasion to construe the will, and the probate court was not asked to and did not construe it. The trustees were not appointed by the court, but by the will. Gibney v. Allen, 156 Mich. 301 (120 N. W. 811); Wooden v. Kerr, 91 Mich. 188 (51 N. W. 937). Nor did they ask the court for instructions.
Counsel for appellants construe the order of the court as either a direction to invest or an approval of an investment already made. It is not necessary to give it a construction favorable to either theory. In terms it approves and confirms the provision agreed upon by the executors and the trustees for paying certain legacies, not in money, but in notes. It refers to the receipts, and if they are again examined it will appear that certain notes belonging to the estate have been “accepted in satisfaction ” of legacies bequeathed by the will to be invested. The record does not support the assumption that the probate court understood that the notes so accepted were to remain uncollected and represent, for an indefinite period, the trust fund. But whatever the real intention of the trustees and the court may have been, the result must be the same. The proceedings to administer an estate are essentially proceedings in rem. There is no residue of an es[405] tate to assign until general legacies, as well as debts and expenses, have been paid. The court could properly make no order requiring a legatee of money to accept anything but money in satisfaction of the legacy. Such an order would be a nullity. It is unnecessary to consider the extent of the powers of probate courts under Act No. 253, Pub. Acts 1899. Jurisdiction to allow the final account of executors and to close an estate is not derived from this statute, and no one would be bound by the notice of such a proceeding to assume, or to suspect, that the court would incorporate in an order closing an estate and discharging executors a provision affecting rights which, upon the theory of appellants, did not attach until the estate was closed. The will gave the legacy to the executors and trustees. The legacy could not be satisfied except by payment of money unless the trustees consented. That portion of the order approving the disposition of these notes rests, therefore, upon the consent of the trustees.
We notice, in passing, that the receipt of the trustees to which the order of the probate court as well as the petition of the executors refers, describes a note for $10,000, made by the A. F. Bartlett Company, due two years after date, and a note of Alexander M. Lemke for $5,000, due two years after date, as two of the notes accepted in satisfaction of legacies. Neither note appears in the inventory of the estate of Mrs. Bartlett, and the note of Lemke does not appear in the inventory of the trust estate which the trustees filed in compliance with the statute.. Instead, this inventory describes a note of the A. F. Bartlett Company for the same amount. The receipt states, also, that the Ross Bros, notes which have been accepted are each payable to the order of A. M. Lemke. Without explanation, one would suppose that these notes were, or were to be, indorsed by the payee. The inventory of the trust estate does not so designate the notes. Complainant is not concerned with these facts except as they indicate, or [406] do not, that it was supposed that the probate court ap-proved the taking of any of the notes, as an investment, and except as it may bear upon the question of complainant’s acquiescence, with knowledge of the real facts, in the conduct of the trustees.
It may be added, in conclusion, that we are not prepared to hold that there is authority, statute or other, for substituting, in the first instance, the discretion and prudence of a court for that of a trustee charged by the terms of a will with the proper investment of funds.
2. Being of opinion that the case must be determined without reference to the good or bad faith of the trustees, we do not consider the question.
3. As has been stated, the trustees filed an inventory of the property comprising the trust estate. It does not indicate to which of several trusts created by the will either of the notes described attaches or belongs. At the time it was filed, none of the notes accepted in satisfaction of the legacies had become due. Thereafter, several accounts were filed, showing receipts of interest and sufficiently informing any one interested that complainant derived whatever money had been paid to it from Ross Bros. None of the accounts was allowed. The burden rested upon defendants to prove acquiescence, with knowledge, on the part of the beneficiary in the course pursued by them. The testimony fails to show knowledge. Such testimony as was given tends to prove that the trustees paid the interest collected, not to the complainant or to any of its officers, but to the treasurer of a local society.
Mr. Corning states, in a letter appearing in the record, written after the failure of Ross Bros., that he has been advised that it should not so have been paid.
The court below reached the right conclusion, and the decree is affirmed, with costs to complainant.
Brooke, Blair, and Stone, JJ., concurred with Ostrander, C. J.