Clapp, Jayne and Francis. The opinion of the court was delivered by Clapp, S.j.a.d.
Exceptants appeal from a judgment allowing the ninth intermediate account as to the trust under the will of Philip C. Walsh. There are three principal questions in the case:
1. Whether the Federal Trust Company, the surviving trustee, is chargeable for interest, which it paid to itself out of the trust income, on a bond and mortgage acquired by its banking department;
2. Whether the Trust Company is accountable for profits, if any, made by it and an affiliated company on securities purchased by the trustees from the affiliate; and
3. Whether the trial court erred in denying exceptants a hearing on their claim that trustee failed to maintain property, called the Homestead, as directed by the will.
First, then, is the Trust Company surchargeable for the mortgage interest? At testator's death in 1922, he and Mary E. Walsh, his wife, were obligated on a bond and mortgage on the Homestead, property owned by her. The trial court found:
"In September 1923 the mortgage on the property came due and the then mortgagee was unwilling to extend it * * * efforts were made by members of the Walsh family, without success, to refinance the mortgage. The Walshes asked the Federal Trust Company for help and the Bank finally in October, 1923 took the mortgage over paying full value for it."
"* * * from the evidence it clearly appears that * * * [as] a convenience to the Walsh family this bank took over the mortgage and paid the face value for it in order to save the Walsh family from having the mortgage foreclosed."
The Trust Company in its fiduciary capacity was doubly obligated to pay the interest on this mortgage: the testator not only had signed the bond, but (as was held in another phase of this case) by his will had in effect directed his trustees to pay this interest.
Circumstances may be such as to justify either an advance by a fiduciary of his own money on behalf of the estate or any other action on his part by which he becomes its creditor; and while the court will scrutinize the circumstances sharply, still if it finds a sufficient justification for the action taken, it will allow the fiduciary interest on his claim. Liddel v. McVickar , 11 N.J.L. 44, 47 (Sup. Ct. 1829); Camden Trust Co. v. Haldeman , 133 N.J. Eq. 427, 434 (Ch. 1943), affirmed Camden Trust Co. v. Cramer , 136 N.J. Eq. 261 (E. & A. 1945); ...