
    Common Pleas Court of Montgomery County.
    In the Matter of the Trusteeship of Hazel Tischer.
    
    Decided November 11, 1932.
    
      Legler & Murray, for Hazel Tischer. '
    
      Estabrook, Firm & McKee, and John W. Bricker, attorney general, for Union Trust Co.
    
      
       Affirmed by the Court of Appeals June, 1933.
    
   Snediker, J.

This case is on appeal from the decision of the Probate Court of this county with regard to exceptions filed by Hazel Tischer, beneficiary under a testamentary trust created by George W. Tischer in item second of his last will and testament. The exceptions have reference to a first and second account of The Dayton Savings & Trust Company and to the fourth account of The Union Trust Company. The court below on consideration found that the exceptions to the first and second accounts of The Dayton Savings & Trust Company were well taken and sustained them, and overruled the exceptions to the fourth account of The Union Trust Company and thereupon ordered and adjudged that the trustee file an amended fourth and final account, accounting for the principal sum of the trust herein, to-wit $6,000.00 with interest at six per cent from June 27, 1925, taking credit for all proper and legitimate disbursements.

Item 2 of the will of George W. Tischer reads as follows:

“Item 2. I give, devise, and bequeath to The Dayton Savings & Trust Company, of Dayton, Ohio, as trustee, the sum of Six Thousand ($6,000.00) Dollars, the same to be held in trust for the benefit of my granddaughter, Hazel Tischer, the daughter of my son Harry A. Tischer, upon the following conditions, to-wit:

“(a) I appoint The Dayton Savings & Trust Company, of Dayton, Ohio, as trustee of said Six Thousand ($6,000.00) Dollar fund and direct that it shall make all reports to and conduct the trust herein created under the instructions and authority of the Probate Court of Montgomery county, Ohio.

“(b) I direct that said Six Thousand ($6,000.00) Dollar fund shall be invested by the trustee herein in safe securities of its own choosing by and with the approval of the Probate Court of Montgomery county, Ohio, and the executors and trustees of my estate hereinafter named.

“(c) Said trustee shall make said investments so that the same shall be safe as possible and yield as great an income as possible.

“ (d) This trust shall continue until my grand-daughter, Hazel Tischer, becomes twenty-one years of age, at which time said trust shall terminate completely and the trustee herein is hereby directed at that time to pay said fund direct to my grand-daughter, Hazel Tischer, the same to become hers, her heirs’ and assigns’ absolutely and forever.”

This will was probated on March 18, 1925. On June 19, 1925 The Dayton Savings & Trust Company qualified as trustee under the will and proceeded with the performance of the trust. On June 26, 1926 it filed its first account as trustee, showing an investment of the $6,000.00 in First Texas Joint Stock Land Bank of Houston 5% bonds and in Second 434 Liberty Loan bonds. These investments were aproved of by the executors of George W. Tischer’s estate and when this account was settled in August of 1926 the Probate Court also approved thereof.

The second account of The Dayton Savings & Trust Company was filed in 1928, and showed an investment in Texas Joint Stock Land Bank of Houston and Federal Land Bank bonds. This account was approved by the Probate Court on August 1, 1928.

On April 11, 1930 The Dayton Savings & Trust Company by reason of the consolidation of the assets and business of The City National Bank & Trust Company and The'Dayton Savings & Trust Company and the formation'of The Union Trust Company tendered its resignation, which. was accepted by the Probate Court, and The Union Trust Compány was appointed as trustee on its application. •

In June of 1930 the third and final account of The Dayr ton Savings & Trust Company was filed, showing an investment in First Texas Joint Stock Land Bank and Federal Land Bank bonds; and on August 1, 1930 this account was aproved by his Honor, Judge Wiseman.

On September 1, 1931 The Union Trust Company filed a fourth and final account, thus coupling-up its account with the accounts of The Dayton Savings & Trust Company.

In the account thus filed by The Union Trust Company an investment is shown in Federal Land Bank of Louisville and First Texas Joint Stock Land Bank bonds.

Meantime Hazel Tiseher, the beneficiary, had come of age and had employed counsel. She filed exceptions to the first, second, and fourth accounts filed by the trustee. In these exceptions her contention is that the purchases made by the trustee were not authorized by the probate court as required by the will; and she also complains because the trustee bought bonds of its own bond department at a profit, and she claimed that the trustee was not- entitled to the fee set out in the fourth account for the reason that it had been guilty of misfeasance in handling the- trust fund. It was upon the hearing on these exceptions that the decision was made by the court from which the appeal is prosecuted in this court. "

The fundamental things which are to be considered are the provisions of the will establishing the trust and the duties of the testamentary trustee in pursuance thereof.

' By Item 2 the testator indicates ah intention that- the trust shall be conducted as á testamentary one. In other words, that it shall be under the supervision of the Probate Court and shall be in pursuance of the authority given that tribunal by the Genera] Code of Ohio,. By Item 2 (b) the .testator, particularly specifies that the -tr-úatee shall'make its investments: (1) In safe securities; (2) These securities shall be of its own choosing; (3) Its choice must meet with the approval of the Probate Court and of the executors and trustee of the testator’s estate; and (4) He directs the trustee to make the investments so that they shall be as safe as possible and yield as great an income as possible.

It is with reference to subdivision (b) that we are here principally concerned.

It is the duty of a trustee to obey all lawful directions of the settlement if practicable, and it therefore became the duty of this trustee to carry out, so far as in the exercise of ordinary prudence it could do so, the directions of this testator. In doing this it may be said that the trustee could only lawfully invest the trust funds in securities which were authorized by the settlement or were -permitted by the General Code. All that can be required of a trustee to invest is that he shall conduct himself faithfully and exercise a sound discretion. At the time of the appointment of The Dayton Savings & Trust Company as trustee there was found in the Code Section 11214, which reads as follows:

“When they have funds belonging to the trust which are to be invested, executors, administrators, guardians, including guardians of the estate of minors, and trustees may invest them in bonds or certificates of indebtedness of this state, of the United States, or in bonds or certificates of indebtedness of any county, city, village, or school district in this state on which default has never been made in the payment of interest, or any bonds issued by any bank organized under the provisions of the Act of Congress known as the Federal Farm Loan Act, approved July 17, 1916, and amendments thereto, or in such other securities as the court having control of the administration of the trust approves.”

If the trustee acted within the law as we have just quoted it, in the absence of a showing of a willful mismanagement, it would be proceeding within the provisions of subdivision (b) of Item 2 of the testator’s will. There is not any showing here of any such mismanagement. The investments when made were apparently such as tl# law approves and were in fact such as were approved by the executors of the estate.

It only remains, then, for us to determine whether the failure to secure the approval of the probate court before the investment was in fact made is fatal thereto.

There is a case in the 132 Pa. St, Reports, page 479, where the direction of the will was that a residuary estate should be invested in trust in productive real estate, well secured ground rents, mortgages, and so forth, after approval thereof on prior application to the Orphans’ Court having jurisdiction of the account. The investments were made without such prior approval but subsequently the Orphans’ Court did approve them and the court held:

• “The only effect of the failure to first obtain the approval of the Orphans’ Court was to throw upon the trustee the burden of showing that the investment was such as the law permitted and that in the light of existing circumstances there was no imprudence in making it.”

Then there is the case of Stevens v. Robertson which was reported in 37 L. J. R., Chancery, at page 499, where there was a settlement to trustees authorizing them to invest the trust fund with the consent in writing of the tenant for life, in which the court held:

“To that investment it appears that no previous consent was given in writing. Subsequently to the investment, however, the plaintiff and his wife, who was then the tenant for life of the property, joined in signing printed receipts for the dividends payable as interest on these debentures. The question is: whether that was such a consent to the transposition of the securities as acquitted the trustees of responsibility for breach of the trust with respect to them ? I am of the opinion that under the circumstances of the case it was not. In some instances, no doubt, the consent of a cestui que trust to an investment of trust moneys by the trustee must be a previous one; but in the creation of this trust there are no such words which require any such consent.”

We are not to be understood here as hinting that any receipt made by this minor would constitute a consent but we are simply submitting an authority to the effect that subsequent consent by the one from whom the consent must come is not objectionable under proper conditions.

In the case of American Bonding Company of Baltimore v. The Second National Bank of Cincinnati, et al, 22 O. C. C. (N. S.) 177, a similar question was under discussion and the court in rendering the opinion said:

“Where a trustee purchases with funds in his hands bonds constituting the highest form of investment known to the law and the investment is reported to the court in his account, which is confirmed in due course, such confirmation operates as an approval of the investment as fully as though a prior formal order had been made.”

We do not regard it as necessary to multiply authorities along this line, but only say that in our opinion the investment made by the trustee and reported in all of these accounts was within the' power conferred upon it by the legislature and met with súeh approval by the probate court and by the executors of the estate as satisfied the requirements of the will. So finding, the objection to the allowance of the fees to the trustee, as in its final account, should be overruled.

The losses which have occurred with respect to the trustee’s investment are such losses as occur to the most prudent investor, arising from a condition of the market beyond his control.

In our opinion,, the exceptions should be overruled in their entirety. An entry may be drawn accordingly.  