
    John A. Snelling and Elizabeth, his wife vs. Joshua McCreary.
    
      Trustee — Investment— Oonfederate Bonds.
    
    By a decree made in 1859, a trustee was ordered to invest certain moneys in slaves, if in his judgment “ said investment can be made on advantageous terms, and that, until said investment be made, he do pay the annual interest accruing on said trust-fund to his cestui que trustThe trustee made no investment in slaves, but retained the trust-fund in his own hands (paying the interest for several years to his cestui que trust) until 1863, when he invested it in Confederate seven per cent, bonds, having first, on his own petition, and without notice to liis cestui que trust, obtained an order for leave to make the investment: Held, that the trustee was not justified in making the investment in Confederate bonds, and he was ordered to account for the fund to his cestui que trust.
    
    Where a trustee is left to the exercise of his own discretion in making an investment, what a prudent man would do in the management of his own affairs, is the measure by which his liability is to be determined, but where the particular mode in which the investment is to be made is prescribed, he must adopt that mode, and no other.
    The Act of 1861, authorizing trustees to invest in Confederate securities, did not apply where the property or securities, in which the investment was to be made, had been prescribed by the Court.
    An order made on trustee’s ex parte petition, and without notice to the cestui que trust, will not justify the former in departing from the terms of a previous decree, by which both were bound, directing a particular mode of investment.
    BEFORE LESESNE, OH., AT BARNWELL, FEBRUARY, 1868.
    The decree of his Honor, the Chancellor, is as follows:
    Lesesne, Ch. The bill in this case was filed on the 18th June, 1866, by John A. Snelling and Elizabeth, his wife, against Joshua McCreary, the trustee of Mrs. Snelling, for an account, and involves the investment of certain funds of the trust estate in Confederate seven per cent, bonds in the year 1863. The facts of the case, so far as it concerns the questions submitted for my determination, are comprised in the following statement. It appears that on the 7th of February, 1859, in a certain cause then depending in this Court, (McCreary vs. Willis?) the present defendant, Joshua McCreary, was appointed by a decretal order of Chancellor Dunkin, the trustee of the complainant, Elizabeth Snelling, the wife of said John A. Snelling, and required to enter into bond, with two or more sureties, in the penal sum of $7,000, conditioned for the faithful performance of his trust. It was further ordered that upon the defendants complying with the terms of his appointment and receiving the trust fund, “ he do invest it, as is expressed and set forth in the order made in said cause by Chancellor Wardlaw, on the 2d of February, 1858, if in the judgment of the said Joshua McCreary, said investment can be made on advantageous terms; and that until said investment be made, he (the said Joshua McCreary) do pay the annual interest accruing on said trust fund to his cestui qu,e trust." On reference to the decretal order of Chancellor Wardlaw, on the 2d of February, 1858, it is found to be in substance as follows. It confirms the report of the Commissioner of this Court, recommending Joseph Ileightower as a suitable person to be appointed trustee of Mrs. Snelling, and requires him to enter into bond, with sureties, for the faithful performance of his trust; and after authorizing a specific appropriation of a portion of the trust fund in the bond of John A. Snelling, given to the Commissioner for the purchase of slaves, it directs that the balance of said fund (which is the fund now in question) be invested in the purchase of other slaves, to be held by him on certain terms and limitations, and with further directions, immaterial however to the questions now submitted for adjudication in this case. It appears that said Joseph Heightower afterwards declined his appointment as trustee of Mrs. Snelling, and hence the appointment of the defendanc, Joshua McCreary, in his place, under the subsequent decretal order of Chancellor Dunkin, on the 7th of February, 1859. It further appears, that ou the 21st of March, 1859, soon after his appointment, the defendant, McCreary, received the trust fund in question ($2,382.56) from Mr. Hagood, the Commissioner, and, in pursuance of the decretal order appointing him trustee, continued for several years to pay the interest on said fund to the complainants. The investment in slave property was never made by tbe defendant; but it appears, that on tbe 27th of June, 1863, a petition was filed by him in this Court, requesting authority to invest tbe trust fund, then alleged to be in bis bands, amounting to $2,382.56, in seven per cent. Confederate bonds. And on tbe 4th of November, 1863, tbe Commissioner of this Court, to whom the petition was referred, having previously reported in favor of said investment, a decretal order was made by Judge O’Neall, authorizing tbe petitioner, Joshua McCreary, to invest the said fund held by him in trust for Mrs. Snelling, in bonds of tbe Confederate States of America, bearing interest at seven per cent, per annum. It is proper to state, that this application of defendant to Judge O’Neall was entirely ex parte, and that it does not appear that complainants had any notice either of the petition, or of the investment of the trust fund in Confederate bonds, until after tbe termination of the war. At the trial of the cause, testimony was produced on both sides, which does not appear to me very material, as the facts on which my decree is founded are apparent from the pleadings. It was however proved by Mr. Hagood, who, at the date of this transaction, was the Commissioner of this Court, that though he has no recollection of the particular circumstances of this case, it was then, (1859,) and during his official term, a general custom for persons to seek the appointment of trustees for the purpose of getting tbe use of the trust funds. And the complainant, Mr. Snelling, who was examined as a witness, testified that when application was made to defendant for his consent to act as a trustee for Mrs. Snelling, he at first objected, on the ground that if he took the trusteeship, he would soon he compelled to invest the funds in negroes; but on. being assured that the cestui que trust did not desire such investment to be made, and that he could use the money as long as Mrs. Snelling lived, he paying the interest, he agreed to assume the office. This is also corroborated by the statement of Judge Aldrich, then the solicitor in the cause of McCreary vs. Willis, who says that the impression left on his mind is, that the moving cause which induced Mr. McCreary to take the office of trustee was the use of the fund for the time, as his recollection is that it was then important for him to have the use of the money. This alleged agreement also appears to be further confirmed by the very terms of the decretal order of 7th of February, 1859, as already set forth. In behalf of the defendant, it was also proved by Mr. B. J. Bavant, formerly Commissioner in Equity for Beaufort District, Mr. Patterson, the present Commissioner for Barnwell District, and J. J. Maher, JEsq., that investments by guardians and trustees of trust funds in Confederate bonds were very generally made in 1863. Mr. Bavant says such was the case so far as his range of observation extended, embracing Beaufort District and the lower part of Barnwell, and thinks it was common throughout the State, though he has known some to invest in property. Mr. Patterson says, that he knew prudent business men during the war to invest in eight per cent. Confederate bonds, or in seven per cents., if they could not get the eight per cents. The great anxiety of people seemed to he to get rid of Confederate money on any terms. The sum of $2,800 would not, he thinks, in 1863, have purchased a tract of land of any value; a good negro might have been bought for that sum. He adheres to the opinion expressed in his report on defendant’s petition in 1863. Mr. Maher thinks that in 1863 investments in Confederate bonds were regarded as best and safest, but he himself as a trustee would not. have been willing to receive a gold debt, well secured, in Confederate currency, and would not have advised a client trustee to do so.
    Such is the substance of the testimony (as taken from my notes) produced at the trial of the cause. But apart from this evidence, I am of opinion that the question as to the validity of the investments now under consideration may be determined on the case set forth in the bill, and admitted by the answer of defendant. Considering the decretal orders of 1858 and 1859 as orders in pari materia, and therefore to be interpreted by the well-known rule of construction, I cannot but regard them as equivalent to a decree of this Court, prescribing to the defendant a specific rule for the investment of the fund 'in question. The preferred mode of investment was the slave property; but until said investment could be made on advantageous terms, he (the defendant) was to pay the annual interest, accruing on said trust fund, to his cestui qiie trust. It appears to me, therefore, that the defendant was authorized, under the decree of the Court, to invest this fund in only one of two ways: 1st. In slave property. 2d. In a loan, to himself on his own personal liability, secured of course by his bond as trustee to the Commissioner of this Court, with adequate sureties. The second mode was adopted; and as the fund was never invested in slaves, the said investment in his own bond has been, by the very terms of the decree, continued to the present time. This conclusion can only be controverted by showing that the decree of the Court, directing the investment, has in some way or other been overruled, and a different mode from wbat it prescribes directed, by higher authority.
    The question, then, is, whether the" defendant has been able to make out such a case of justification. The right to invest this fund in Confederate seven per cent, bonds has been rested by defendant’s counsel, on three several grounds:
    1st. The general authority of a trustee to invest the funds committed to his charge, and his exoneration from responsibility, if he has used the same diligence and sagacity which a prudent man is expected to exercise in his own affairs. In the case of .Taveau vs. Ball, (1 McO. Oh. 464,) and Bryan vs. Mulligen, Ex'or, (2 Hill Ch. 364,) the rule is laid down that persons acting in a fiduciary capacity are bound to manage the funds committed to their charge, with the same care and diligence that a prudent and cautious man would bestow on his own concerns. And in the late case of Boggs vs. Adger, (4 Rich. Eq. 408,) cited at the bar, it was held, that where a trustee, in investing funds, acts faithfully, and with common diligence and sagacity, he will not be liable, if the funds are lost. I am not aware that this rule has been ever questioned, but it is only applicable to cases in which no specific investment of the fund has been directed by competent authority, and the trustee, therefore, left to the exercise of his own sound discretion. Where it is otherwise, and the trustee is ordered by a decree of the Court to invest in a certain way, it is evident that such decree becomes the law of the case, and any investment of the fund different from the prescribed mode is unauthorized and illegal, and any loss resulting therefrom chargeable exclusively to him.
    2d. The next plea in justification of this investment by the defendant is the Act of Assembly of this State in 1861, (p. 87,) entitled “An Act to authorize trustees to invest funds in bonds of the Confederate States.” This Act provides that guardians, trustees, executors, &c., holding funds in trust for investment, are hereby authorized to invest the same, &c. Now, in the present case, the trust fund was already invested in the defendant’s bond, and the case, therefore, would seem to be excluded from the purview of the Act by its very terms, but, in addition to this, the fund was so invested by a decree of this Court, directing the continuation of said investment until the occurrence of a contingency which never did happen. The question, then, is whether, supposing the present case within the provision of the Act, this decree of the Court could be reversed, altered or amended by an Act of the Legislature. I think not. I hold that a decree of this Court, between parties properly before it, and in a case within its jurisdiction, is not only conclusive between said parties, as res adjudicata, until reversed, but that it could only be. reversed by paramount judicial authority. It is essential to the character of a constitutional government that the several departments — legislative, executive, and judicial — should be confined to its appropriate sphere of action, as defined by the fundamental law, and any intrusion of one department on the province of another would be an infringement of the constitutional barriers which limit their respective authorities, and therefore unwarranted and invalid. By the Constitution of South Carolina the judicial authority of this State is vested in the Courts of Law and Equity, and it can only be by the action of the Courts of Appeals and Errors, as established by the Legislature, that a decree of this Court, which obviously pertains to the judicial functions of the government, could be legitimately altered, amended or reversed. I am, therefore, of opinion that the Act of 1861, could not, in contravention of such decree, afford any justification for the investment of this fund in Confederate bonds.
    3. The last position assumed in behalf of the defendant, as to this investment, is the decretal order of Judge O’Neall, on the 4th of November, 1863. It is sufficient to state, in reply to this ground of justification, that said order was made on the ex parte application of the defendant as the trustee of Mrs. Spelling; and it does not appear that the complainant had any notice of the petition, or the order to invest in Confederate bonds, until after the termination of the war. The proceedings, therefore, on that occasion can only be considered as res inter alios acta, and not binding on the present complainants. Story’s Eq. Plead., (§ 207, 208,) and the case of Sollee vs. Croft, (7 Eich. Eq. 42,) in which it was decided that orders obtained on the ex parte petition of a trustee do not bind his cestui que trust, are conclusive as authority on this point. The views I have taken of this case avoid any question as to the right of a trustee to change an investment made in 1859, in currency equivalent to gold, into Confederate seven per cent, bonds, at par, in the year 1863 ; as to which I now express no opinion. It is ordered and decreed that the Commissioner of this Court do take an account from the defendant, Joshua McCreary, of the interest due on the sum of $2,382.56, (two thousand three hundred and eighty-two dollars and fifty-six cents,) the principal of the fund received by said defendant as the trustee for the complainant, Elizabeth Snelling, on the 21st of March, 1859, from the date of said receipt to the date of said accounting, and that the sum found due by the said defendant be paid by him to the complainants. It is further ordered and decreed that defendant do deposit, with the Commissioner of this Court, by or before the first day of May next, sufficient securities in the form of safe and productive bonds or certificate of stock to the amount of the principal of the said trust fund; said securities to be approved by the Commissioner, and held subject to the further order of this Court; and that in default of defendant to deposit such securities, the Commissioner be and is hereby authorized and directed to collect by fieri facias the said sum of two thousand three hundred and eighty-two dollars and fifty-six cents, with whatever interest may be found due, and hold the same subject to the further order of this Court. And it is also ordered, that defendant do pay the costs of this suit. The parties, or any of them, to have leave to apply at the foot of this decree for any further orders that may be proper in the cause.
    The defendant appealed, and now moved this Court to reverse the decree on the following grounds:
    1. Because the defendant, Joshua McCreary, was directed (by the order of 7th February, 1859, referred to in the decree,) io pay the annual interest to his cestui que trust; and the investment of the fund by him in seven per cent, bonds of the Confederate States for the purpose of raising the annual interest, until the investment in slaves, was prudent and proper.
    2. Because the order of February 7th, 1859, did not prescribe the mode of raising the annual interest required to be paid, which was, therefore, left to the discretion of the defendant; and the investment of the funds in seven per cent, bonds of-the Confederate States, was prudent and discreet.
    8. Because, until the investment of the trust fund in slaves, the defendant was authorized to invest the same temporarily to raise the annual interest; and the investment in seven per cent, bonds of the Confederate States, for that purpose, was judicious and proper.
    4. Because an investment of the trust funds in the bond of the defendant, or the use of the same in his own business, was not authorized or required by the order of 7th February, 1859, nor permitted by law and the principles and practice of this Court.
    5. Because the Act of the General Assembly of this State entitled “An Act to authorize trustees to invest funds in bonds of the Confederate States” (A. A. 1861, 13 Stat. 87,) did authorize the investment which was made by the defendant in seven per cent, bonds of the Confederate States, whether made as a permanent or a temporary investment.
    6. Because the said decree is contrary to law, equity, and evidence.
    
      Hutson & Townsend, for the motion.
    Finley, contra.
   The opinion of the Court was delivered by

Dunkin, Ch. J.

The general principles which should regulate the conduct of trustees, and the measure of their accountability, are stated in the case of Boggs vs. Adger, (cited in the decree,) and have been repeatedly recognized. When left to his own judgment, the trustee must exercise his discretion in the manner in which a prudent man would in the management of his own affairs. If he is at a loss as to the mode of investment, or if the condition of the parties or of the estate may seem to require a particular mode of investment, it is at once the duty and the privilege of the trustee to seek the instruction of the Court, and thereby insure its protection. It is hardly necessary to say, that if he departs from the instructions thus sought and received, he acts on a responsibility which he must be prepared to vindicate.

By the order of February, 1859, (made in a cause in which the trustee and. cestui que trust were all parties, and under which the trustee received his appointment,) it was provided that, upon receiving the trust fund from the Commissioner in Equity, the trustee should invest the same in slaves, “ if, in the judgment of the trustee, said investment can be made on advantageous terms, and that, until said investment be made, he do pay tbe annual interest accruing on said trust fund to his cestui que trust” The order is plain and unambiguous in its terms, scarcely susceptible' of misinterpretation; yet it is a departure, in some respects, from the ordinary practice and policy of the Court. Tbe circumstances which seemed to justify this departure are fully stated in the decree of the Chancellor, and the parol testimony exhibited the motives which probably actuated the several parties in assenting to the arrangement. Twelve months previously, a different person had been appointed trustee, (the defendant, according to his answer, having then declined,) but when the person thus appointed ascertained that he was to give bond and sureties, and thereupon invest the fund in slaves, or in consequence of some other consideration, he declined to comply with the terms of his appointment. Thereupon, the application to the defendant (who, it was said at the bar, is a brother of Mrs. Snelling,) was renewed, and he was assured that, if he would accept the trust, the parties did not wish the investment in slaves, and he could have the use of the money during Mrs. Snell•ing’s lifetime, paying to her the annual interest on the fund. Mr. Hagood, the former Commissioner, proved that such was considered a desirable arrangement for trustees, and the solicitor in the cause testified that the pecuniary condition of the defendant rendered it particularly convenient to him, and, he believes, influenced his determination. Whatever may have been the motive of the parties, the order was made with the concurrence of all. The fund was to be held by the trustee until, in his judgment, it could be advantageously invested in slaves, and, until such investment, he was to pay to Mrs. Snelling the annual interest. If, on 7th February, 1860, the defendant had been called on for the interest, it would scarcely be deemed a satisfactory reply that, finding it inconvenient or impracticable to make seven per cent., he had invested the fund in six per cent. United States stock, or in his neighbor’s bond, well secured, but the interest not yet due, and had thus exercised the discretion, properly confided to trustees. The fallacy of the reply would be transparent on reference to the order. Does it make any difference in his favor that he had paid the annual interest regularly for several years, as prescribed by the order, and then, sua sponte, had adopted this mode of applying or investing the trust fund. The order of February, 1859, though not properly a decree, was an administrative order, and was equally obligatory upon the parties until authoritatively rescinded or modified, after due notice to those interested. That order left no room for the exercise of the defendant’s discretion, except as to the investment in slaves, and provided, in the meantime, for the security of the fund in defendant’s hands, and for his payment of the annual interest. If, in the course of time, and in the progress of events, circumstances changed, and either, or all of the parties desired a modification or rescission of the order, it was his or their obvious course, upon proper notice, to submit their application to the Court, which, upon hearing the parties, would make such order as the circumstances would seem to require or render expedient. It is due to the candor of the defendant’s counsel to state his disavowal of the position that the ex parte application, in November, 1863, was of this character. Upon this point, the judgment of the Court in Sollee vs. Croft, (7 Rich. Eq. 34,) is as conclusive as the reasons are satisfactory. Until the order of February 1859, had been regularly modified or rescinded, its continuing efficacy and obligation remained. In one of our cases it is said by Chancellor Harper, that where a decree or order is made by consent, it is the parties’ own act, and they should take such decree as they can abide by. Such was obviously the character of this order. The effect of it was that, until invested in slaves, the fund should stand secured by the defendant’s official bond, he paying the annual interest. Under such circumstances, the provisions of the Act of 1861, whatever may be its efficacy, have no application. The parties had themselves agreed upon a mode of investment mutually satisfactory, which had received the sanction of the Court, and which had been carried into effect.

It is ordered and decreed that the appeal be dismissed.

"Wardlaw, A. J., concurred.

Inglis, A. J., absent at the hearing

Decree affirmed.  