When an executor or administrator misapplies the estate of the deceased, or subjects it to loss or damage, he is liable to make good the loss or damage so occasioned.
Illustrations:
(i) The executor pays out of the estate an unfounded claim. He is liable to make good the loss.
(ii) The deceased had a valuable lease renewable by notice which the executor neglects to give at the proper time. The executor is liable to make good the loss.
(iii) The deceased had a lease of less value than the rent payable for it, but terminable on notice at a particular time. The executor neglects to give the notice. He is liable to make good the loss.
Legal Commentary & Landmark Judgments: Section 368
Section 368 enacts the personal financial liability of an executor or administrator for devastation (devastavit), holding him personally bound to make good any loss or damage caused by misapplication, embezzlement, or waste of estate assets.
Devastavit takes three primary forms:
(1) Direct Misapplication: Embezzlement, conversion of funds to personal use, or paying legacies out of turn while debts remain unpaid.
(2) Maladministration: Selling estate assets at a gross undervalue, compromising valid estate claims without justification, or making speculative unauthorized investments.
(3) Negligent Inaction: Permitting limitation periods to expire on debts due to the deceased, or failing to insure estate buildings against foreseeable destruction.
The liability under Section 368 is personal and attaches to the executor's private assets. The action survives against the executor's personal estate under Section 306.
Section 368 is the ultimate sanction against rogue executors. Beneficiaries do not have to settle for the remaining depleted estate; they can sue the executor personally for devastavit under Section 368 and execute the decree against the executor's personal salary, bank accounts, and private real estate.