It is immaterial as to what the profits were. The devisees could elect to take interest. It was the duty of the Court to charge such a rate as would cover the profits which it must be presumed the executor made. ( Code of Civil Procedure, secs. 1, 13, 1614.) The Court was administering this particular law.
In the Estate of Holbert , 39 Cal. 600, the Court, upon facts the same as in the case at bar, charged the executor with the ruling rate. There the will directed the money to be loaned; but here it was theduty of the executor to invest the fund at the ruling rate. (Perry on Trusts, secs. 452, 471; Civil Code, secs. 2258, 2261, 2262.)
Had the will, in the case at bar, directed the money to be invested, it would have made the duty of Daniels to invest no more binding. It is immaterial whether it was his duty to invest or not, as he did invest by loaning it to himself. It was a gross violation of duty to use it himself, but having done so, he ought to pay the estate as high interest as he was compelled to pay others. The Court adopted a rule less rigid. He paid one and one-half, and still prospered in business. Had he desired, he could have been discharged from his trust. (Walls v. Walker , 37 Cal. 429.) But he elected not to be discharged while he was paying one and one-half per cent. As he did use the money, and the devisees are entitled to all the profits, the burden is on him to disclose them. He is unable or unwilling to do this, hence the Court could only fix a rate that would reach the profits, or presumed profits. (Perry on Trusts, secs. 452, 471; John's Administrator v. Hedrich et al. 33 Ind. 129; Ibid. 191; Walker v. Walker, 9 Wall. 44; Hook v. Payne, 14 Wall. 452; Gunter v. Janes , 9 Cal. 661.)
Appellant claims that he should be charged with only legal rate. This is less than he admits the profits to have been, and would not satisfy the rule in Holbert's Estate, which is that he should pay legal interest when he permitted the fund to lie idle; and would violate the rule established by this and other Courts of Equity.
The Court was justified in stating the account with annual rests. The yearly profits were put into the business, and annual rests or compound interest were necessary to reach them. (Scheiffelin v. Stewart et al., 1 John. Ch. 620; DePeyster v. Clarkson, 2 Wend. 77.)
JUDGES: Crockett, J. Mr. Chief Justice Wallace did not express any opinion.
OPINION
CROCKETT, Judge
There is no difference in principle between the present case and that of the Estate of Stott. In that case and in this, the executor mingled the trust fund with his own, and employed it in his business. In the former case the executor was a merchant, and for a series of years used the money of the estate, mingled with his own in his business; while, in the present case, the executor was a farmer, and used the trust fund in conjunction with his own for a number of years, in conducting his farming operations. From the very nature of their transactions, it would be extremely difficult, and perhaps impracticable, to ascertain with any degree of accuracy what profit was realized from the trust fund; and in the case of the Estate of Stott, we held that the proper rule in such cases was to charge the executor with legal interest, computed with annual rests. It was shown that the executor in the former case, and in this, were at all times able to respond for the trust fund, whenever its payment should be properly demanded; but we held that this circumstance did not exonerate them from interest, to be computed with annual rests, as above stated.
Judgment and order reversed, and cause remanded, with an order to the Court below to modify its judgment in accordance with this opinion.