Roberts's Appeal

92 Pa. 407, 1880 Pa. LEXIS 73

• Court: Supreme Court of Pennsylvania
• Decided: March 29, 1880
• Status: Published

Opinion

Chief Justice Sharswood

delivered the opinion of the court, March 29th 1880.

This is an appeal by the administrators of the estate and the trustees under the will of John Edgar Thomson from a decree of the Orphans’ Court on the settlement of the account of the administrators of his estate. The appellants adopted the novel practice of entering five appeals — a separate appeal for each claim on the estate with the decision of which they were dissatisfied. It was not only novel but dangerous. The same party is clearly entitled to but one appeal from the same decree. Upon the assignment of his errors, he is conclusively presumed to have no other ground of complaint against the decree, and had a motion been made to dismiss all the appeals but the first, the appellants would have had no recourse but the interposition of the court in their discretion to correct'their mistake. We will make such a decree as will put the record right and do justice in the matter of costs.

1. The first question we will consider is in the matter of the claim of Mrs. Lavinia F. Thomson and Mrs. Charlotte F. Reed to the income of the estate.

The will of Mr. Thomson with the two codicils is certainly a very peculiar one. It will be in vain to look for precedents in the books which can throw any light upon its' construction. In the will itself there would not be much difficulty. It is plain that by “proceeds” he meant “income,” and it is equally plain that he intended that the legatees — though named subsequently to the provisions for his wife and niece — should receive their bequests and legacies independently of those provisions. Subject then to the payment of these legacies his wife was to have so much of the income of his estate as in her sole discretion she might deem necessary for the maintenance of herself and her niece in such style as she might think best to promote their happiness and comfort during her lifetime. She would have the right to receive the whole remaining income if she required it. Neither the trustees under the will nor the court upon any principle of law or equity could say for her what ought to be the style in which she should live or how much would be a sufficient allowance for any style she might choose. Then if her niece should survive her, he directed the sum of two thousand dollars annually to be paid to her as long as she might live. The trustees were to appropiate the remainder of the net income to the purpose of a charity. It is true he describes it as “the remainder of the net income of my estate, after the payment above specified or so much of it as may be judiciously applied.” This cannot give the trustees the right to limit the claim of his wife to what they might consider judicious. It is evident that Mr. Thomson bad the most unbounded confidence in his wife, and might well consider that she would not claim the whole of the remainder so that there would still be something to apply to the charity. It was not the trustees but Mrs. Thomson who was to make the judicious application.

The first codicil is in these words: “ I desire my dear niece, Lottie Foster, but to whom I cherish the feelings of a father, to be so treated and regarded in the law as if she really were my child, receiving during her lifetime such income from my estate as if she really were my child, and I postpone the operation of the trusts of my will so as to fully effect this result, until her decease, upon which event they are forthwith to take full effect as expressed in the will.” The first remark to be made as to this codicil is that it does not mention his wife. Not a syllable in it indicates an intention to revoke or modify the provision in the will for her. Yet to give the words their strict interpretation, it would necessarily reduce her allowance to one-third of the income. It would seem that the intention was only to modify the provision of the will as to his niece. Instead of an annuity of two thousand dollars if she survived her aunt, he declared that she was to be so treated and regarded in the law as if she was really his child, receiving during her lifetime such income from his estate as if she were really his child. That is, that not absolutely but during her lifetime she should be entitled to receive the whole income of his estate. Accordingly, the operation of the trusts for the charity is postponed until her decease. We cannot see that the second codicil varies materially the result. He declares that he wished his niece to be considered as his daughter, and to take out of the income of his estate all that she'required to make her more than comfortable, in her housekeeping during her lifetime, and then thinking perhaps that she might not require the whole of the income, he adds : “I do not desire to postpone by it the operations of the trusts of my will, except so far as may be necessary to secure the above object.”

Another construction of the first codicil which interprets it so as to reduce the provision for Mrs. Thomson to one-third only of the net income to her during her life, and to give the remaining two thirds to his niece during her aunt’s life, and the whole at the period of her death, has already been adverted to. One or other of these constructions must be the true one. Whichever construction prevails, the appellants have no cause of complaint. They have no right to any portion of the income during the lives of Mrs. Thomson and Mrs. Reed, except what may remain after what they have pleased to require. Neither Mrs. Thomson nor Mrs. Reed have appealed from this decree. They are satisfied with the decree below as between themselves. As to them, it has passed in rem acljudicatam. Practically, under either construction, they are entitled to receive the whole income during their joint lives and the life of the survivor. The appellants have failed to convince us that the charity they represent is at all injured by the decree below. The only party who might have been injured has not appealed but acquiesces. As to her, the decree below is conclusive, and the trustees will be fully protected in making their payments according to it.

2. The next complaint which we will consider, is as to the decision of the court below upon the claim of Mrs. Ellen B. A. Mitcheson.

This exception appears to have been argued in the court below, as it' was here solely on the ground that it was an allowance of interest upon interest. There is certainly..no good reason why a man who wrongfully withholds the payment of interest — due upon an admitted debt — should not also pay interest upon interest. The interest is the money of the creditor as well .as the principal, and if it is wrongfully withheld, the wrongdoer should pay for the use of it. All interest is but hire for the use of money. No one questions the law or the justice of compelling the hirer of property other than money at a certain annual sum to pay interest on such sum. Interest is recoverable on rents agreed to be paid for the use of land. It is certainly not usury. Lord Thurlow said in Waring v. Cunliff, 1 Vesey, Jr. 99 : “ My opinion is in favor of interest upon interest, because I do not see any reason, if a man does not pay interest when he ought, why he should not pay interest for that also.” Chief Justice Ttlghman (5 S. & R. 222), speaking of allowing interest upon interest in the revival of judgment, says : “ Nor is there anything against equity in it. The payment of interest is occasioned by the default of the defendant. It is equitable that he should pay interest on the whole sum detained from the plaintiff.” It must be admitted, however, that the law is settled that unless there is a special agreement or an account stated and a balance struck interest upon interest cannot be recovered. This is the undoubted rule as between debtor and creditor. We think, however, the rule is not applicable with so much strictness as between trustee and cestui que trust■ The money as received by the trustee is the money of the cestui que trust. If sufficiently ear-marked the law follows it. It is a breach of duty in the trustee to mix it with his own funds. It is his plain duty to pay it to the cestui que trust as received — and if he has made profit or interest — that profit or interest belongs to the cestui que trust. The onus is on the trustee to show that it has been kept apart and not used by him. These considerations fully sustain the ruling of the learned court below. But that ruling may be sustained upon another ground. When the payment was made by Mr. Thomson, it was in fact a partial payment on account. He may have intended to direct the application of it to the principal sum. It is probable he did. But' it does not appear that he made any such express application. Certain it is that Mrs. Mitcheson did not so receive it. The receipt she gave and which was accepted was expressly on account. In all cases of partial payment, it is the law which makes the application. It may be doubted whether the debtor has a right to make any other application. It is only where there is more than one debt that the debtor has a right in the first instance to direct to which debt the payment shall be applied. Mrs. Mitcheson received the money as a partial payment, she had a right to refuse to receive it, and could therefore make her own terms. The rule as to partial payments is well settled, and there is no reason why it should not be applied to this case. According to that rule the application is to be made first to the interest then due, and the balance to the reduction of the principal. This would in this case leave the unpaid interest, still standing, as a part of the principal remaining due, and would of course bear interest: Spires v. Hamot, 8 W. & S. 18, and the authorities there cited, to which may be added Moore v. Kiff, 28 P. F. Smith 96. This relieves the case of any difficulty.

3. The next question presented is that which arises upon the claim of the administrator of the estate of William Phillips, deceased.

The transaction between Thomson and Phillips in regard to the Templeton lands was evident^ a cash transaction — so intended and by strong implication manifest on the face of the papers. Phillips had paid in cash for the land $31,856.30. Thomson agreed to purchase an interest of one-fourth, and to pay in cash $7964.07. Phillips gave him a receipt in full as for cash, and then took, not a security payable at a future day, but a simple due-bill payable at once. It was the same, precisely, as if Thomson had actually paid in coin,, and Phillips had immediately loaned it to him, taking his due-bill or novpayable on demand. It was not therefore a case in which a failure to convey would be a good equitable defence as in the ordinary case of securities given for purchase-money. No demand was ever made by Thomson of Phillips in his lifetime for a deed declaring the trust. There was no default in Phillips. His death renders a literal compliance impossible. But Thomson’s estate cannot suffer. The receipt signed by Phillips is as effectual though perhaps not as formal a declaration as could he made. It can be proved by the subscribing witness and put on record. Had a formal declaration of trust been given and recorded, it would not have prevented Phillips from selling. A power for that purpose was reserved. Indeed it was the reason why Phillips retained the legal title. The record of this receipt will secure Thomson’s estate from any conveyance by the heirs, and if any creditor should proceed to levy and sell it will be notice to the sheriff’s vendee that one-fourth interest in the land belonged to Thomson, and could not be sold for Phillips’s debt. On payment of this due-bill, Thomson’s estate will have a right to an absolute deed in fee from Phillips’s heirs — discharged of the lien of his debts. Why then should Thomson’s estate withhold the money, the cash he admitted to be presently due ? The case of Roland v. Tiernan, 8 W. & S. 193, is entirely in point.

4. -5. The only claims which remain to be considered are those of administrators of Samuel Yeazey, deceased, and of the Oakland National Bank and others.

We are of opinion that the learned court below were right in sustaining the exceptions to the auditor’s report, and in holding that the contract for the purchase of the stock of the Bangor, Old-town and Milford Railroad was not within the scope of the articles of association of the International Railway Construction and Transportation Company. The object of this latter company, which was unincorporated, was expressed to be. “ the building, equipping and operating the European and North American Railway.” The road whose stock was bought was a competing road, running parallel with the latter road for a short distance. But however desirable it might be for the International to own this road and thus prevent competition, we fail to see that it was within the scope and objects of the International. That was strictly confined to a very definite purpose, and to suppose that the trustees could bind the copartners to purchase any other road seems very far out of its proper line. Indeed, the parties evidently so thought themselves, for they stipulated “to procure a writing in which the individual members should authorize the same with their liability.” There were in all twenty-three members of the International, and without scrutinizing particularly the terms of Mr. Thomson’s letter of December 29th 1869,' we may concede that he, with thirteen others, did authorize the contract. The question then simply is, whether he is bound without the concurrence of all his copartners. If he is, the effect undoubtedly is that he is individually responsible for the whole amount, with the right to call upon the other thirteen for contributions. But was this his agreement? We think not. It is evident that all the members were to be individually bound or none. There is no evidence that the fact that only a part of the members had agreed to be bound on the clause of the contract entered into for the purchase, by which it was stipulated that less than the whole number might agree, was ever brought to the knowledge of Mr. Thomson, or assented to and ratified by him. How then, without evidence of knowledge, could he be estopped ? If Mr. Thomson had been the only one who assented, is it possible that he would have been bound individually with no right to call upon any of his associates for contribution ? We think it is too clear for argument. Mr. Thomson’s letter is confirmatory of this view. He says that the purchase was to be paid for by the duly authorized note or notes of the said company. Now if the contract was not within the scope of the partnership, the notes were not the duly authorized notes of the company unless authorized by all the parties. Unless all the parties were bound the partnership was not bound. We think, therefore, the learned court below erred in awarding in favor of the claim. As to the claims of the Oakland National Bank and others, we affirm the decree upon the report of the auditor and opinion of the learned court below.

Decree reversed as to the claims of the administrators of Samuel Veazey, deceased, the Oakland National Bank, Joshua W. Hathaway, Edward D. Jewett, Hugh Ryan and Mrs. Haney Farnsworth, and affirmed as to the residue. And it is ordered that the appeals numbered 106, 107, 108 and 109, of January Term 1879, be dismissed at the costs.of the appellants ; that the style of this appeal Ho. 105, be amended by striking therefrom the words, “ on the claim of Mrs. Ellen B. A. Mitcheson;” that all the assignments be filed in this case, and that the costs of this appeal be paid by the appellants from the estate of J. Edgar Thomson.

Per Curiam.

And now, April 2d 1880, it is ordered that the decree heretofore entered in the above case be amended by striking therefrom the names of the Oakland National Bank, Mrs. Nancy Farnsworth, Hugh Ryan, Joshua W. Hathaway and Edward H. Jewett, and that as to the claims of those parties respectively, and of the Second National Bank of Bangor, the decree of the Orphans’ Court be and the same is hereby affirmed.