Ellig v. Naglee & Sharp
Ellig v. Naglee & Sharp
Opinion of the Court
The first point made by the plaintiffs’ counsel is that the Chancellor erred in finding that the trustees had fairly discharged the trust.
It appears that Sherman entered under his assignment, on the fourth of April, 1855, and that defendants called upon him for
It is insisted, by the learned counsel of plaintiffs, that the bringing of the suit for $84,000 against Sherman was not a proper exercise of discretion, and that the delay in bringing the suit was unjustifiable, and the trustees should, therefore, be held responsible for all the losses occasioned by this mismanagement.
It is a general principle applicable to trustees, that when they act with good faith, and without any selfish motive, they are entitled to be treated by a Court of Equity with liberality and indulgence; and, especially, when they act under the advice of counsel. Trustees act for the benefit of others, and not for themselves, and the fair exercise of their judgments should be a protection to them. Very supine negligence, or willful default, will render them liable; but to make them liable for mere errors of judgment would tend to discourage good and prudent men from undertaking any trust. (Garrett v. Noble, 6 Simons, 516; Taylor v. Benham, 5 Haw., 285: Thompson v. Brown, 4 John. Ch. R., 629.)
The trustees were not to blame for bringing the suit against Sherman, as they did it with good motives, and under the advice of competent counsel. But the delay in bringing any suit to
The Chancellor decreed that the sum allowed the trustees was a lien upon the trust property, and that, if not discharged by the plaintiffs within thirty days, execution should issue, and the trust estate be sold to satisfy the same.
It is insisted by the counsel of jDlain tiffs that this portion of the decree was erroneous, for the reason that the advances made by Maglee were not expended upon the trust property, or for its benefit, and, therefore, constituted no lien upon the land •, that they were mere personal loans from Maglee, for which no specific lien could be decreed by the Court, but for which Ellig and wife were personally liable in an action to recover the amounts.
We think this portion of the decree too harsh, under the circumstances of the case.. It seems clear that Maglee made the advances, with the understanding that they should be repaid out of the incoming rents. It was only proper to give him a lien upon the net incoming rents, including those involved in the suit of the receiver against Sherman and others. The allowance to Sharp should be a lien only upon the rents, in the same manner as the allowance to Maglee. The net rents should be appropriated to the payment of the amount of the allowances until the same are paid.
The cause will be remanded, with directions to the Court below to modify the decree in accordance with this opinion. The appellants will be entitled to the costs upon appeal.
Reference
- Full Case Name
- ELLIG v. NAGLEE AND SHARP, TRUSTEES
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- When trustees act with good faith, in the management of the trust property, and without selfish motives, they are entitled to be treated by a Court of Equity with liberality and indulgence, and especially when they act under the advice of counsel. Very supine negligence, or willful default, will render them liable; but to make them liable for mere errors of judgment, would tend to discourage good and prudent men from undertaking the trust. Delay, on their part, in bringing suit to recover the rents of the trust estate, if subsequently approved by the cestui que trusts, will excuse them. Money advanced by the trustees to the cestui que trusts, with the understanding that the same should be repaid out of the rents of the trust property, is a lien only upon the net incoming rents, and not a lien upon the trust property. The same is true respecting the charges for legal services of one of the trustees in the management of the trust property. The rents must be applied to the payment of such allowances until they are liquidated.