
    
      MORGAN & AL. vs: THEIR CREDITORS.
    
    Appeal from the court of the first district.
    .Where tru3“ tees are appointed in a to receiveS eLmfiJe obíigoVfeíi^ have rity to lend thé money out toothers.
   Porter, J.

delivered the opinion of the court. Chandler Price, the obligee of a bond execu-dT»y the late Benjamin Morgan, due the first ray of January, 1824, and bearing interest at the rate of six per cent, payable annually, by executed the 20th ofSeptember, 1825, at Philadelphia, in the state of Pennsylvania, de- “ rhat in consideration of natural love and- affection to my daughter Sarah Price Rose, I assign said bond to William E. Hu- and Joseph Reed; and incase of the w ■ death of either, or any other person to be ap-J 1 pointed as hereafter mentioned, then to such person, and the survivor, as he the survivor shall appoint; in trvsf, for the sole and separate use of my said daughter, Sarah Price Rose; the interest to be paid to her during her life time, and her receipt alone to be sufficient* and on her death to such person as she, by any paper in the nature of a will, shall nominate,” «fee. «fee.

Since the creation of this trust, an event, most probably not anticipated at the time it was made, has occurred, namely, the failure of the obligor. By the laws of this country, the note becomes due and demandable at once, and the trustees named in the deed already set out, have obtained payment of it as they state, by a transaction of which the following instrument is the evidence:

** For -and in consideration of the sum o sixteen thousand eight hundred and thirty dollars and five cents, the principal and interest of the bond, of which the within is a copy, anf. . the original now in possession of the syndics-of the estate of Benjamin Morgan; received in the note of Thomas A; Morgan, secured by a mortgage from him on the premises, late the estate of Benjamin Morgan deceased, purchased by the said Thomas A. Morgan from the syndics thereof, which said note is accepted by us in full payment and entire satisfaction of this bond; we do hereby assign, transfer, and set over unto the said Thomas A. Morgan, the said bond, and all the monies due, and to become due, thereon.”

At the foot of this instrument is one executed by the person for whose benefit the trust was created, in the following words: “ I acknowledge to have received of Thomas A. Morgan» the full amount of interest due on the bond of which the within is a copy, and the original now in the possession of the syndics of Benjamin Morgan’s estate; and hereby assign over to him all my interest in the same.”

The appellee took a rule on the appellants» in the district court, requiring them to give up to him the note of the insolvent already mentioned, and three others similarly circumstan-They objected todo so, and after argu-the court decided that the appellee had a right to receive them. From this judgment, the syndics have appealed.

The only question presented to the court, is whether this transfer, by the trustees to the ap-pelee, of the note, is a legal exercise of the powers vested in them by the' deed of trust.

Two objections have been suggested to its correctness. First—that by the terms of the deed, the power of the trustees is limited to receiving the interest due on the bond, and no authority is conferred on them to collect the principal. Second—that if they have the power to collect the principal, they have no authority tq exchange the notes in the insolvent’s estate for those of any other individual.

As these objections are both founded on the idea of there being a necessity for a strict and literal performance of the trust, they may be considered together.

As the deed was executed in a country governed by the common law, and the assignment to the appellant was made there, the case must be examined in relation to that system of juris» prudence. As we are not familiar with it, we r _ have had some diffidence in coming toa elusion.

If the. effect of the assignment was considered under the strict rules of the common law, .there could be no question as to its validity, for the legal title is vested in the trustees, and they have passed it away. But the severity of that system has compelled the countries governed by it, to throw the whole controul and jurisdiction of trust estates into their courts of equity. These courts, with some aid from the legislature, have established, in relation to this subject, a system of rational jurisprudence by which trusts are made to answer all the beneficial objects society can receive from them. 7 Bac. ab. 136. 2 Black Com. 337.

The first and most important of their rules is to give effect to the intention of the creator of the trust, if it be possible. To accomplish this they look more to a substantial, than to a strict or formal performance of the duty imposed on the trustee. If an unforeseen event, which the party did not contemplate, arises, they will interfere so as to carry into effect the general intention. And it Seems, though the rule-is not clearly established, that whatever a trustee would be eonmelled to do by suit, be may do without it. 2 Fonblanque’s equity, 13, 2 chap 7, § 2. Ibid, chap. 8, § 4. 3 Bro. Ch. Rep. 60. 2 Vernon, 137. 1 Bunbury 136. 2 Freeman 42. 2 Ch. Cas. 16. Sugden on Powers, 445 & 446. 2 Eq. cases abr. 668 6 Vesey, jr. 793.

The application of these principles to a great variety of cases, may be found in the English books. Those most analogous to that before the court, are collected in Bacon's Abridgment, rol. 7,183; and the rule extracted from them is, “ that where a trustee sells out stock contrary to the trust, the cestui que trust may elect to have the stock restored, or the produce of it paid. But if a trustee for the benefit of the trust estate, sells out of one fund and invests the produce in another, or transfers the money from one real security to another, the property continues unaltered, and he shall not be chargeable.

In the case before the court, the intention of the creator of the trust w as, that his daughter should receive the interest on a certain sum of money, for the period therein mentioned, and at the expiration of it the principal. An urr foreseen event has rendered it impossible for the interest to be collected in the manner indicated in the deed. The duty of the trustees, therefore, looking to the general intent, is, to provide a remedy against the occurrence, by putting the money out at interest somewhere else. This they could be compelled to do by the cestuy que trust, and we have little doubt they may do so without compulsion. In exercising this power, the law requires a sound and honest discretion; and the extent to which they have used it here, seems as well sanctioned by authority, as it is by the reason of the thing. Whether they discharge the duty now devolved on them, by collecting the money from the insolvent’s estate, and then lending it out, or by exchanging the notes of the bankrupt for those of another man, against whose solvency, and ultimate responsibility, no douBt has been expressed, is a difference in the mode, but not in the end.

But, admitting the principles on which this opinion has been just expressed, are erroneous, er that we have drawn unsound conclusions from them, the approbation of the cestuy que trust clearly renders the transaction valid. i§he is not shewn to be under any disability arising from minority or other cause; and though at law she has neither jus in re, nor ad rem, yet in equity she has both: she jmg jm an(J jus disponendi, and assent cures any defect that might other- . i wise exist m the power the trustees have exercised. 7 Bac. ab. 180,185. 3 Atk. 444.

Eustis for the plaintiffs—Hennen for the defendants.

It is therefore ordeied; adjudged and decreed, that the judgment of the district court be affirmed with costs.  