On appeal from the former Court of Chancery.
No. A-50: For modification: Chief Justice Vanderbilt and Justices Case, Heher and Ackerson. For reversal: Justice Wachenfeld. No. A-82: For modification: Chief Justice Vanderbilt and Justices Case, Heher, Wachenfeld and Ackerson. For affirmance: None. No. A-89: For modification: Chief Justice Vanderbilt and Justices Case, Heher, Wachenfeld and Ackerson. For affirmance: None. The opinion of the court was delivered by Vanderbilt, C.J.
The several appeals in this cause stem from a decree of the former Court of Chancery surcharging the defendants Camden Trust Company and Woodward Tingle Dickerson by reason of their administration of the estate of Edwin Stuart Dickerson, deceased. The decedent died on October 9, 1930, leaving a will executed in August, 1930, in which he designated the Camden Safe Deposit and Trust Company, the predecessor of the Camden Trust Company, and his son, Woodward Tingle Dickerson, executors and trustees of his estate. After making several relatively small bequests and disposing of his residence and household effects, the testator gave the residue of his estate to his executors, in trust, "to invest said estate in legal securities and from the income therefrom arising to pay" certain annuities to his widow and two sons, other relatives and employees, with gifts over of the principal upon stated contingencies.
Almost immediately after qualifying, the defendant executors and trustees took possession of the assets of the estate, which consisted of realty and personalty valued at $526,430.46 as of the date of death. The great bulk of the personalty, amounting to more than $490,000.00, was composed of bonds, stocks, notes and other investments, purchased by the testator during his lifetime, which were not legal investments for fiduciaries in this State. Although general economic conditions, both preceding and following the commencement of the administration of this estate, where such that the value of securities of the type constituting the assets of the estate was rapidly declining, the executors, notwithstanding the direction contained in the will, retained almost all of the securities without making any attempt to dispose of them. Indeed, upon the conclusion of their administration as executors, the defendants turned over to themselves as trustees the greater part of these securities which, with minor exceptions, they still held at the time the present suit was instituted.
The executors filed their first accounting in December, 1931, and their second and final accounting in June, 1934, in the Camden County Orphans' Court. In the statement of assets annexed to each of the accounts, the executors set forth a complete schedule of the securities held by the estate, listing them, however, at the inventory value at the date of the testator's death. Thus, while the market value of the estate assets had depreciated to approximately $190,000.00 as of the date of filing the final account, it carried them at $330,000.00. Although this appears to have been the practice prevailing in those years, it should be noted in passing that, since the 1941 revision of the rules of the Prerogative Court and of the Orphans' Court, it has been incumbent upon an accountant to set forth in the statement of assets the true value of the assets of the estate, as well as the inventory value, Prerogative Court Rule 35; Orphans' Court Rule 27; Rule 3:95-2. All parties in interest, including the complainants, were duly notified of the filing of both accounts, but no exceptions were taken with respect to the propriety of the retention by the executors of the non-legal investments. The decree allowing the final account charged the executors with the sum of $330,567.20 as being in their hands which, after the payment of commissions and counsel fees totalling $12,000.00, was "to be disposed of according to law."
Upon the allowance of their final account as executors, the defendants turned over to themselves as trustees all of the assets of the estate, accepting them at inventory value instead of the then depreciated market value. On November 21, 1938 they filed their first account as trustees, scheduling and charging themselves with the assets of the estate at inventory value, again as of the date of the testator's death. Prior to the allowance of this account, the present suit was commenced by several of the cestuis, seeking in essence to surcharge the defendant fiduciaries for the losses accruing to the estate as a result of the decline in value of the non-legal investments. The former Court of Chancery thereupon assumed general jurisdiction of the administration of the estate and trusts under the will of the testator and directed the removal to it of the proceedings under
the trustees' first accounting, then pending in the Camden County Orphans' Court.
The final decree advised by the learned Vice Chancellor ordered the immediate sale and conversion of all the non-legal securities remaining in the hands of the trustees and the investment of the proceeds into authorized securities, and surcharged the defendant trustees for the difference between the value at which the non-legal securities had been accepted by them on taking over the assets as trustees and the sum actually received from the sale of said securities, as well as for the consequent loss of income. The decree further provided for the allowance to the trustees of income and corpus commissions, and for the allowance of fees and expenses, payable out of the estate, to counsel for the complainants, counsel for the defendants as fiduciaries and counsel for the defendant beneficiaries. A separate application by the complainants E. Stuart Dickerson, Jr. and Elizabeth E. Dickerson for reimbursement of out-of-pocket expenses allegedly incurred as incident to the preparation for and the prosecution of this litigation was denied.
The defendant fiduciaries appeal from those portions of the decree directing the sale of the non-legal securities and reinvestment of the proceeds, imposing the surcharge, and granting a fee to counsel for complainants. A cross appeal has been taken by the complainants, challenging the allowance out of the estate of costs and fees to counsel for the defendant fiduciaries and to counsel for the defendant beneficiaries. An appeal from the allowance of income and corpus commissions to the trustees has been abandoned. Appeal has also been taken by the complainants E. Stuart Dickerson, Jr. and Elizabeth E. Dickerson from the denial of their application for reimbursement for out-of-pocket expenses.
It is the position of the defendant fiduciaries that, under the terms of the will and the applicable statutes, they were authorized to retain any non-legal investments which were made by the testator and received by them as part of the assets of the estate. Although it is true that under the provisions ...