ROLLIN MATHEWSON, Exr et al.

บ.

GEORGE P. DAVIS et al.

Opinion filed June 19, 1901-Rehearing denied October 10, 1901.

1. TRUSTS when trustee is not chargeable with interest. Where the only duty of one receiving a deposit of money on trust is to be always ready to pay it over whenever the beneficiary is entitled to it, he is not ordinarily chargeable with interest.

2. SAME when mingling of trust funds does not create liability for interest. One who receives money under an agreement to pay the same over to a party when the title to certain property should be cleared, is not liable for interest before such title is clear, although he deposited the money, with other funds, in his own name, where it appears there never was a time after the deposit was made that his check for the amount would not have been honored by the bank where the money was deposited. (MAGRUDER, J., dissenting.)

3. SAME when executors are chargeable with interest for withholding trust fund. Executors are chargeable with interest upon a fund which was held by their testator, to be paid over by him to a certain party as soon as the title to certain land was perfected, where, though the title to such land was perfected by limitation soon after their testator's death, they refused to pay over the money until deeds were made or some proceeding was had to perfect the title; but such action is not ground for compounding interest.

4. SAME-equity will not compound interest except in a case of gross delinquency. A court of equity has power to compound interest annually or at shorter periods, according to the delinquency of the trustee; but interest will not be compounded except in cases of gross delinquency.

Mathewson v. Davis, 91 Ill. App. 153, reversed.

APPEAL from the Appellate Court for the Third District;-heard in that court on appeal from the Circuit Court of McLean county; the Hon. COLOSTIN D. MYERS, Judge, presiding.

RALPH F. POTTER, for appellants:

Trustees, and others sustaining a fiduciary and confidential relation, cannot deal on their own account with the thing or the person falling within that trust relationship. And it avails nothing that the intentions of the

trustee are honest. Thorp v. McCullum, 1 Gilm. 625; Dennis v. McCagg, 32 Ill. 445; Miles v. Wheeler, 43 id. 126; Michoud v. Girod, 4 How. 503.

Executors are charged with the administration of a trust of which their testator was trustee, on its original terms. 1 Perry on Trusts, secs. 264, 343, and cases cited; DePeyster v. Ferrers, 11 Paige's Ch. 13; Schenck v. Schenck's Exrs. 16 N. J. Eq. 174; Seymour v. Freer, 8 Wall. 218.

A trustee or other fiduciary must not mingle trust funds with his own, and is prohibited from gaining any advantage to himself from the use of the fund. 1 Perry on Trusts, secs. 447, 454; 2 Pomeroy's Eq. Jur. secs. 1076, 1077; Seymour v. Freer, 8 Wall. 218.

When a trustee or other fiduciary uses trust funds in his personal business, all profits from such use belong to the beneficiary. 2 Pomeroy's Eq. Jur. secs. 1052, 1075; 1 Perry on Trusts, secs. 427, 429; Barney v. Saunders, 16 How. 543; 2 Story's Eq. Jur. sec. 1276.

Where trust funds are used in the personal business of the trustee and no account of profits is rendered, the beneficiary is entitled to interest with annual rests, for the burden of proof is on the trustee to show that he has made no profits or received no benefits from the money; and if he refuses to account or show the amount of profit received the court will give compound interest, in order that it may be certain that the cestui que trust gets the profits from the trade or business in which the trustee has employed the money. 1 Perry on Trusts, sec. 271; Ogden v. Larrabee, 57 Ill. 398; Hurd v. Goodrich, 59 id. 450; Asay v. Allen, 124 id. 391; White v. Sherman, 168 id. 604.

JOHN E. & MAYNE POLLOCK, for appellees:

The complainants in this cause ask for an accounting of a matter which has negligently been let run for over thirty years, when the lapse of time, which has carried with it the life and memory of witnesses, makes it now impossible to render any account. Under these circum

stances they are precluded by their laches from having an account in respect to the interest on this money. Godden v. Kimmell, 99 U. S. 201; 12 Am. & Eng. Ency. of Law, 550; Lyon v. Chase, 51 Barb. 13; Dickerman v. Burgess, 20 Ill. 266; Ellison v. Moffatt, 1 Johns. Ch. 47; Lloyd v. Kirkwood, 112 Ill. 339.

The only duty of Judge Davis or his representatives in this case was to have the money always ready at their command when it should be legally demanded of them, and under such circumstances they are not to be held accountable for interest. Meek v. Allison, 67 Ill. 46.

The deposit of this money in Judge Davis' individual name is not sufficient to charge him with interest on the same. Estate of Schofield, 99 Ill. 513.

Mr. JUSTICE CARTWRIGHT delivered the opinion of the court:

The controversy in this case is over the question whether appellees, as executors of the will of David Davis, deceased, are liable to appellants for interest upon a sum of money deposited with said David Davis to be held by him until the title to a tract of land should be perfected, and if liable for interest, for what period it shall be charged, and whether it ought to be compounded.

In the year 1865 Brockholst Mathewson, of Johnston, Rhode Island, was the owner of eighty acres of land in Christian county, in this State. David Davis, of Bloomington, had sustained some business relations with Mathewson, and through his agency a contract for the sale of the land was made to William A. Goodrich. Mathewson died before a deed was executed, giving all his property by will to his brothers, George and Rollin Mathewson, who were named executors of the will. George Mathewson died before the testator, and Rollin Mathewson was the sole executor. The deed could not be obtained from the heirs of George Mathewson, and on February 13, 1867, Judge Davis wrote to Rollin Mathewson, the executor, as

follows: "The land is unoccupied and can't be protected unless a written contract is given to Mr. Goodrich reciting the payment of money and that the deed will be made as soon as it can be done. This you can execute by signing, sealing and acknowledging as executor of your brother's will. I will get the money from Goodrich and retain it until the title is perfected, when I deliver him such a contract or bond for the deed. I have paid the taxes for many years for your brother at his request and am continuing to pay them. Be good enough to make out such a contract and enclose it to me. Goodrich will not hold his offer good much longer. Of course, I wish to be refunded the money I have paid for taxes, but I want to get rid of the matter also. I have kept the business in charge for your brother on account of my old business relations with him. I can deposit the money in bank where I live, to await the transmission of your deed. This letter is written in presumption that you cannot now perfect the title."

On May 28, 1867, Judge Davis received $880, the purchase price of the land, to hold the same, as proposed in his letter, until the title should be perfected in the purchaser, William A. Goodrich. The money was deposited by Judge Davis to his credit in his own account at the First National Bank of Bloomington, and the taxes referred to in his letter, which he had paid, amounted to $51.28. William A. Goodrich went into immediate possession upon his purchase and afterwards sold the land to H. L. Vandeveer, who conveyed it to E. A. Vandeveer. Said William A. Goodrich or the said grantees have ever since had possession of the land and received the rents and profits thereof. The money remained on deposit with Judge Davis according to the agreement, and nothing was done towards perfecting the title or making the deed. The only thing that appears to have been done up to about the time of the death of Judge Davis, in the year 1886, was that Rollin Mathewson wrote him,

inquiring about the matter, early in 1871, and afterward Davis replied that if he would have the deed made for the premises and sent to him he would bring the matter to a close. No deed was made, and the executor left the money on deposit with Judge Davis, as before.

Judge Davis died on June 26, 1886, leaving a will, of which the appellees are surviving executors. From the death of Judge Davis a correspondence was kept up between his executors and Rollin Mathewson, the executor of Brockholst Mathewson, in which the latter sought to secure payment of the money. No deed had been made, but the executors of Judge Davis admitted that the Statute of Limitations had perfected the title to the land, after twenty years' possession, in Goodrich and his grantees. They acknowledged that Goodrich had paid for the land and that he and his grantees had been in possession over twenty years and had put on valuable improvements, and that the title was perfect, but they insisted on having some proceeding in chancery or a deed from all the heirs of Brockholst Mathewson, and refused to pay over the money without having the title perfected by such proceeding or deed. The correspondence continued, Rollin Mathewson insisting upon payment, and in 1897 Goodrich and the present owner released all claim to the purchase price. A satisfactory conveyance was made to E. A. Vandeveer, the owner of the land. This suit was then commenced by the filing of a bill by Rollin Mathewson in his own right and as executor, and by the heirs of George Mathewson, the appellants, against the executors of Judge Davis, appellees, for an accounting and payment of the fund, with interest, and for general relief. The cause was referred to a master in chancery, who took the evidence and reported, recommending a decree for $828.72,-the amount of the deposit less the taxes,—and also for interest on said sum at six per cent for six years, five months and seven days. The master stated that he arrived at this period for which interest