Ormiston v. Olcott

29 N.Y. Sup. Ct. 270

• Court: New York Supreme Court
• Decided: September 15, 1880
• Status: Published

Opinion

Bockes, J.:

At the death of Mr. Morse there was no investment specifically belonging to the trust. The estate of Mr. Morse was solvent. It was the duty, therefore, of the surviving trustee, Mr. Olcott, to require from the estate of Mr. Morse payment in cash of the amount owing to the trust, or the delivery of securities to that amount, of the kind in which trustees may invest. The acceptance of the Toledo securities was, therefore, a voluntary act of Mr. Olcott, by which he placed the trust estate in that kind of investment.

~W e do not think that a trustee is allowed to invest in bond and mortgage out of the State. Certainly, not without express authority by the court or by the instrument creating the trust. So the rule has always been understood; and the rapid growth of new and «lightly settled States is no reason for relaxing the rule, but rather for adhering to it more firmly. Treating, then, the acceptance of the Toledo bond and mortgage as practically an investment made •by Mr. Olcott, Ate think it was unauthorized.

If the cestui gw trust, being of full age and in a condition to understand his rights, had approved the act when it was done, or, perhaps, aftemards, this might have relieved the trustee. But we •see no sufficient OAddence of this. Mr. Olcott made a voluntary •accounting before the surrogate. In that account he states hoAV the funds are invested. But in the decree of the surrogate, made thereupon, there is no recognition or approval of the investment. The surrogate therein finds that Mr. Olcott has a certain sum in his hands, Avhich he orders him to retain and properly invest in ■good and sufficient securities. Now, if anything is to be inferred from that decree in regard to the Toledo bond, it is that the surrogate, on the hearing of all parties, would not approve of the investment, but would only determine the amount in Mr. Olcott’s hands, and direct him to invest that amount properly. This is the more reasonable view, since it noAv appears that Mr. Olcott had, in addition to the Toledo bond and its collaterals, the personal obligation of the residuary legatee of Mi’. Morse, a person then solvent,

We have no reason to doubt that, in taking the Toledo bond, Mr. Olcott acted in good faith. If the estate of Mr. Morse had been insolvent, it might have been a proper act for Mr. Olcott to take the best securities which he could get, even though they were not of the kind in which trustees may invest.

We think that the order or decree or the surrogate should be reversed, with costs, and the prayer of the petition granted, the form of the proper order to be settled by Judge Bockes.

Learned, P. J., and Westbrook, J., concurred.

Order reversed, with $10 costs, and disbursements; prayer of ■petitioner granted;

order to be settled by Bockes, J.