The New Jersey Law Journal, Volume XLV, No. 2, February, 1922

by Various

The result of the demand of the exceptant was the agreement by the executor and the exceptant, in the office of John P. Manning, her attorney, upon a settlement which provided for a payment of part of her share in cash and part in investments of decedent continued by the executor. The settlement fell through, not apparently because the securities or settlement were unsatisfactory, but because exceptant disapproved of the word "heirs" in the release requested of her by the executor.

At the time, in 1918, the exceptant was willing to take, as her share of the estate, some of the same investments which she now declares the executor was negligent in continuing. Thereafter, and up to the filing of the account, the attorneys of the exceptant and the attorneys of the executor were in frequent negotiation, endeavoring to settle the differences of the parties and agree upon a distribution or division. Certainly, during this period, the executor would not be charged with bad faith or failure to exercise reasonable discretion in keeping the subject matter of the negotiations in statu quo, ready for immediate distribution or division in the event of an agreement.

Where, then, is the evidence of lack of good faith and failure to exercise reasonable discretion? I can find none. Indeed, when it is realized that two of the beneficiaries are entirely content with the executor's retention of the securities in question; that that which the securities in question represent is as valuable to-day as when the decedent died; that the depreciation is a paper or market one, due to abnormal conditions general throughout the world; that with the return of normal conditions these securities are likely to find their old level, and that the exceptant herself has continued to hold her individual securities, of the same general type as those here in question, it is easy to believe that had the distribution of the estate taken place heretofore, to-day would have seen all parties holding on to their securities, collecting their accustomed income, hoping for the return of the conditions which would mean a rise in the market value of their said securities. The mere fact that the executor did not close up the estate within a year or two after the decedent's death, but continued to manage and administer it, including the real estate, with the consent of beneficiaries, did not increase or change his liability. He was bound to take the same care of the estate as before, no more, no less. Perrine v. Vreeland, 6 Stew. 102.

We will now take up the claim that the executor should have invested the cash on hand instead of keeping it in the bank, and that, having failed to do so, he must be charged with the difference between the interest he did get and that which he might have received had he invested it.

This exception is also overruled. It is true that, generally speaking, it is the duty of an executor to invest funds in his hands; but the propriety of charging an executor or trustee with interest because he has failed to invest the funds depends upon other facts than the mere possession of the funds, and I know of no case holding that where, pending negotiations for settlement and distribution, an executor left the funds of the estate in saving banks, he must be charged with the interest he might have received had he invested the funds of the estate and perhaps thereby interfered with the immediate liquidation and settlement of the estate. On the contrary the tendency of the decisions is to uphold such conduct.

His course prior to the demand in 1918 was acquiesced in by the exceptant; his actions since then were governed, and necessarily, by the continually pending negotiations. In any event the uninvested funds at best scarcely equalled at any time, as far as I can discover, two or three thousand dollars, sums perhaps not always easy to quickly and satisfactorily invest.

This leaves for consideration only the act of the executor in investing five thousand dollars of his cestui que money in Public Service funds. These were securities in which a trustee had no right to invest. They are not among those investments which our statute permits trustees to invest in, and, in establishing the investments, the exceptant has made out a prima facie case requiring explanation by the executor.

Undoubtedly the executor acted in good faith, but that will not protect him as in the case of continuing investments made by a decedent. His explanation, other than that he acted in good faith, appears to be that the investment was made with the acquiescence of the exceptant; that she is estopped from questioning the investment.

I doubt that the exceptant had actual knowledge of the investment when it was made, and the general acquiescence which negatived bad faith in the executor in continuing the decedent's investment would not suffice to protect the executor in making an investment of this kind. Nor do I find that she possessed the knowledge of this transaction that would permit of the application of the doctrine of estoppel.

As a consequence, unless there are facts which have escaped or have not been brought to my attention which relieve the executor from the normal effect of an investment of this kind, he must be charged with the depreciation of these bonds, unless the beneficiaries agree to accept the bonds as such.