Bronson v. Bronson

| N.Y. Sup. Ct. | Feb 15, 1874

Van Brunt, J.

— The plaintiff in, this action founds her claim to relief upon the following grounds:

First. That this court had no power to appoint Willet Bronson and John J. Townsend to fill the vacancies caused by the death of Arthur and Frederick Bronson.

Second. That, even if this court had the power to fill the vacancies caused by the death of Arthur and Frederick Bronson, upon a proper application being made to it for that purpose, the presentation of a petition did not authorize the exercise of that power; but that the application must be made by bill filed.

Third. That, even if the appointment of the defendants Willet Bronson and John J. Townsend is adjudged to be valid, the said Townsend has so misconducted himself in the matter of said trust, that he should be removed therefrom.

The said plaintiff also claims that it shall be adjudged in this action that all the rents, issues and profits which have arisen from that portion of the estate of her father, Isaac Bronson, which has been set apart as her share, and which she has allowed to accumulate in the hands of said trustees, belong absolutely to her, and do not form any part of the trust estate which the said trustees are entitled to hold.

The first question which it is necessary to consider is: Had this court the power to appoint the defendants Willet Bronson and John J. Townsend to fill the vacancies caused by the death of Arthur and Frederick Bronson ?

It is a well established rule, and needs no authority for its support, that the court of chancery has a general jurisdiction, entirely outside of and beyond that conferred upon it by the Bevised Statutes, in respect to all trusts and trust estates.

It is because of this general jurisdiction that the court of chancery was accustomed to appoint a trustee to execute a trust where there was no trustee named in the instrument creating the trust, who was willing to take upon himself its execution.

The familiar maxim being, that the court will never allow a trust to fail for want of a trustee. The same principle has been invoked in respect to many powers which are usually conferred upon trustees.

In the case now under consideration it is to be observed that the devise to the .trustees is peculiar in form. It is not to the trustees and to the survivors and survivor of them, but it is to the trustees and survivors of them, and to such person and persons as may be associated with them or succeed them in .said trust.

The testator then gives 'to the survivors, upon the decease of any of the trustees, the power to appoint another person in his stead, and expressly invests such appointee with the same power and interest which the deceased trustee had.

It is further to be observed, that this power of appointment to fill any vacancy, caused by the death of any trustee, could only be exercised by all the surviving trustees;-and, that if two trustees should die, without the vacancy caused by the death of the first being filled, the power of appointment by the surviving trustees was forever gone.

It would seem that these circumstances clearly indicate that it was the intention of the testator, that the trust should be kept full, and that it was the duty of Frederick and Oliver Bronson, to have filled at once the vacancy in the trust, caused by the death of Arthur Bronson.

This duty having been imposed upon Frederick and Oliver Bronson, and they having neglected to perform it, until, by the death of Frederick Bronson, it became impossible to do so in the manner prescribed by the testator, it devolved upon this court.

It is, however, claimed by the plaintiff that the power to appoint a trustee devolves upon the court, only when there is no trustee in existence who can execute the trust; and that such not being the condition of affairs in respect to this trust, Oliver Bronson, one of the trustees, still surviving and capable of executing the trust, nothing devolved upon this court.

But it is to be observed, that Hill on Trustees, at page 188, lays down a different rule. He says: “ That there is no doubt that where the donees of the power (referring to the power to appoint new trustees to fill vacancies) neglect to exercise it, on the occurrence of any vacancy, equity, under a proper application, will interpose, and itself make the appointment, although this will only be done where the number of trustees is so reduced as to render a new appointment actually necessary as where the number is lessened to one-third.”

And again, at page 190, he says : “ Whenever circumstances render it necessary or desirable to appoint new trustees, the court of equity, in the exercise of its inherent jurisdiction, will interpose upon proper application and make the appointment.”

This jurisdiction exists, and will be equally enforced, whether the instrument creating the trust does or does not contain a power to appoint new trustees. Ho person interested could be advised to rest satisfied with the appointment of a new trustee under a power, unless the terms of the power clearly and distinctly authorized the appointment in the particular event which may have occurred. If there be the slightest doubt as to the validity of the application of the power to the case in question, the appointment, for the security of all parties, should be made only under the sanction of the court.

It would thus appear that the exercise of the power of appointment of new trustees by the court is not limited to those cases in which there is no trustee to execute the trust, but that the court has the right to exercise that power whenever the circumstances of each particular case seem to require its intervention, and necessarily the court itself is the sole judge as to when such an exigency has arisen. Therefore, it seems to me, that the court having determined that the circumstances of this case required that the vacant trusteeship should be filled, that decision could only be reviewed upon an appeal, taken in the proceeding in which it was made.

There is another ground upon which the defendants Willet Bronson and John J. Townsend claim to support the validity of their appointment, and that is, that the plaintiff, Mary Bronson, consented thereto.

It has been shown, I think, that the court had the power to make the appointment, and even if the more orderly way of making such appointment would have been by bill, it is difficult to see how Mary Bronson, after having formally consented that the appointment should be made as it was made, can now retract that consent. She has admitted the right of the court to make the appointment, and by her consent to the appointment has testified to its advisability, and that it was proper that the court should act. Even if the court, except upon regular bill, would not have had the right to make this appointment, as far as she is concerned, she has waived that irregularity by her consent.

The next question which it is necessary to consider, is: Even if this court had the power to fill the vacancies caused by the deaths of Arthur and Frederick Bronson, could it do so upon petition ?

It is claimed that the only power possessed by courts of equity, since the Be vised Statutes, in the matter of appointment of trustees to fill vacancies, are those defined by the statute, and that no power is conferred by the statutes to do what was attempted here.

I have been unable. to find any foundation for the claim that the concluding articles of the Bevised Statutes on uses and trusts either did limit, or were intended to limit in any manner, the general undefined jurisdiction of the court of chancery in the matter of trusts. But rather they would seem to have been intended somewhat to enlarge the powers already existing in the court.

It is to be noticed that the phraseology of sections 69, 70 and 71 is somewhat peculiar. Section 69 authorizes the court of chancery to accept the resignation of any trustee upon petition. Section 70 provides that the court of chancery may remove any trustee upon the petition or bill of any person interested in the execution of the trust. And section 71 provides that the chancellor shall have full power to appoint a new trustee in place of a trustee resigned or removed. There is no provision contained in the. statutes authorizing the appointment of any trustee in any case by petition. And the revisers never could have intended that a trustee could be removed summarily by petition, and that the chancellor should have no power to fill the vacancy in the same summary manner.

It is true that In re Van Wyck (1 Barb. Ch. R., 565), the chancellor has said, independent of the statutes on the subject, the court of chancery had no power, upon mere petition, to discharge a trustee or to accept his resignation and appoint another in his place, without the consent of all the parties who are, or who, upon any future contingency, may be interested in the execution of the trust, and that the usual course of proceeding for the purpose of changing a trustee is by bill, to which all persons interested should be made parties, either actually or constructively. But this language would seem to be at variance with the actual practice in the court of chancery. In the case of Hawley agt. Ross (7 Paige, 103) the court of chancery did appoint a new trustee by petition.

In the case of Millbank agt. Crane (25 How. Pr. R., 193), the identical question now presented for consideration seems to have been decided.

In that case, the sole surviving trustee having died, the defendants were appointed trustees in his place, upon petition, and that action was brought to procure their removal upon the ground, among others, that the court had no power to appoint new trustees upon petition. It was held in that case, that upon the death of a sole surviving trustee of an express* trust, the trust vests in the supreme court, and it is the duty of the court to appoint another person as trustee to complete its execution.

The proper mode of appointment of the new trustee being necessarily summary, it was held to be by application by petition, and not by formal bill.

It was further held, that the notice or summons was- not in the nature of process to bring the party into court, consequently the appointment of the new trustees was valid, even if it should be thought to be irregular or even imprudent and indiscreet to make it without formal notice to and summons • of those interested.

Mr. justice Allen, in hip opinion in that case, says: “ The proceedings for the appointment of a new trustee, and the execution of the trust were necessarily summary and 'not by formal bill.” An action, with all its delays and expense, would have been out of place. The duty to appoint a trustee is imperative, and the court had simply the exercise of a discretion in the selection of a suitable person and the taking the requisite security. The court, by the death of a sole trustee, became trustee, and the person appointed was its agent to carry out the trust under its direction. It may well be that, but for the statute authorizing a summary application by petition, the orderly way for the removal or change of a trustee would be by bill, but not so where there is no trustee, but one is to be appointed by the court • to fill the vacancy. The proceeding by petition was regular and in the usual course.

It thus appears to have been expressly decided, in the above case, that, where the duty of appointing a trustee has devolved upon the supreme court, the appointment may be made summarily by petition, and not by bill; therefore, in the case at bar, it having been shown that the court had the power to fill the vacancies occasioned by the death of Arthur and Frederick Bronson, the appointment of the new trustees by petition was regular.

* This brings us to the consideration of the third ground upon which the ■ plaintiff has based her claim for relief as against the defendant Townsend, viz., that the said Townsend has so misconducted himself in the matter of said trust, that he should be removed therefrom.

In the consideration of this question, I shall not attempt to discuss, in detail, the particular charges made against Mr. Townsend, but only their general character. It must, however, be borne in mind that this suit was not prompted by any difficulties which the plaintiff had had with Mr. Townsend, or by any embarrassments which she had experienced by reason of the manner in which the trust was administered; but that the suit was brought solely because of the differences which had arisen between Mr. Townsend and his co-trustees, and because of the representation made to her, by Oliver and Willet Bronson, that it was necessary that Townsend should be ejected from the trust, and that that could only be done by having a suit brought in her name.

These differences between Mr. Townsend and Oliver and Willet Bronson arose entirely because of the claim upon the part of Townsend of the right to charge the trust estate with ■ office rent and clerk hire.

During the administration by Frederick Bronson of this trust he had been accustomed to charge to the estate, in addition to office rent and clerk hire, five per cent for his commissions, which was clearly illegal, as his charge for commissions was greatly in excess of the amount allowed by statute; and although this had been done for a long series of years without objection, Dr. Oliver Bronson, when the trust devolved upon him by reason of the death of Frederick Bronson, determined that it should not continue.

Accordingly, when the appointment of Willet Bronson and Mr. Townsend was first discussed, it was distinctly understood that none but legal charges should be made against the trust estate. With this understanding in respect to charges, in February, 1869, Willet Bronson and Mr. Townsend were appointed trustees. From the time of this appointment down to at least the summer of 1869, and perhaps later, the trust estate, with the assent of all the trustees, remained in the same office in which it had been administered by Frederick Bronson, and its books were kept by the same clerks, and the business generally was conducted in the same manner as had been done by him.

About this time Hr. Willet Bronson came to the conclusion, and so advised Dr. Oliver Bronson, that trustees had no power or authority to employ a clerk for the purpose of • keeping the books of the estate at the expense of the estate; and he insisted that Hr. Townsend should not make any charge against the estate for clerk hire or office rent, basing this demand-upon the alleged agreement of Hr. Townsend to make none but legal charges. Hr. Townsend, upon the other hand, claimed that the trustees of an estate, of the magnitude of this one, had the right to employ a • clerk for the purpose of keeping the books; and he accordingly charged, as had been previously done by Frederick Bronson, a certain sum to. the estate for clerk hire and office rent.

Mr. Willet Bronson construed the' agreement made by Hr. Townsend prior to his appointment, that none but legal charges should be made against the estate, into an agreement that no charge should be made against the estate for its administration, except the legal commissions of the trustees; and hence objected strenuously to the charge for office rent and clerk hire, made by Hr. Townsend.

The differences which arose between Mr. Townsend and Willet Bronson culminated in a demand by Willet Bronson, concurred in by Dr, Oliver Bronson, for a surrender of the books of the trust to Mr. Willet Bronson, which was refused by Mr. Townsend.

The subsequent events and misunderstandings between Hr. Townsend and Hr. Willet Bronson, prior to the commencement of this action, I do not think it. at all necessary to notice, because they arose entirely out of the position which Hr. Willet Bronson took in respect to the charge for office rent and clerk hire, and that which Hr. Townsend took in reference to the custody of the books, neither of which can be sustained.

It is very clear that Hr. Willet Bronson was mistaken in supposing that trustees of an express trust, of the magnitude of the one now under consideration, had nó power to employ a clerk at the expense of the trust estate (Hawley agt. James, 5 Paige, 318); and Mr. Townsend was correct in supposing that such an expense would he justifiable. Indeed, the greater part of the amount of the charges for office rent and clerk hire, which were so strenuously objected to by Dr. Oliver Bronson and Mr. Willet Bronson, and because of which Mr. Willet Bronson charged Mr. Townsend with dishonesty, were incurred with the express sanction of Dr. Bronson and Willet Bronson, and Mr. Townsend was not in the slightest degree guilty of any breach of faith in making them.

But I think that the refusal of Mr. Townsend to deliver the books and papers to Mr. Willet Bronson, upon the joint demand of Dr. Oliver Bronson and Mr. Willet Bronson, cannot be sustained.

It seems to me to be, beyond all question, the right of a majority of trustees to determine in the manual custody of which of them the books and papers of the estate shall remain, and the only way that any trustee could justify a refusal to obey the wishes of the majority in that respect, would be by showing that he had reasonable ground to suppose that the estate would suffer loss thereby. It was but natural that Mr. Townsend should, with great reluctance, see the administration of the estate taken from the hands which had administered it for so many years, to the satisfaction of all parties interested, including Dr. Bronson himself. And I can further see how that reluctance would be increased by the knowledge, that the demand for the removal of the books and papers from the custody in which they had remained so many years was founded upon an erroneous idea of the law, in respect to the rights of trustees to employ a clerk and charge the expense thereof to the estate.

But none of these considerations can justify the refusal of Mr. Townsend to respect the wishes of a majority of the trustees. If one of the trustees was willing to do the clerical work of keeping the books without expense to the estate, and the majority of the trustees wished that he should do so, they had clearly the right to have the trust administered in that way.

Although it has been charged in the complaint that Mr. Townsend has excluded Dr. Oliver Bronson and Mr. Willet Bronson from all control or management of the trust fund, and from all participation in the same, I do not think «that the evidence sustains that allegation. Neither do I think that the refusal of Mr. Townsend to deliver to Willet Bronson the books, papers, &e., of the trust estate, although unjustifiable, furnishes sufficient ground for the removal of Mr. Townsend. Neither do I think that the differences which have arisen between the trustees aré of such a nature as to prevent the due administration of the trust estate; these differences have arisen, from a misconception by Willet Bronson of the legal powers of the trustees, and resulting in the assumption by Mr. Townsend of a position in respect to the manual custody of the books, papers, &c., of the estate, which cannot be defended.

The only remaining question to determine is: To whom do the accumulations of the trust estate belong %

In his original will, Isaac Bronson provided that the shares allotted to each of his daughters should remain in the possession of the trustees, and remain their estate at law during her natural life, and that the interest, rents, issues and profits only thereof should be paid to her, as they accrued, during her natural life; and that they should not be at the control of her husband, or subject to his debts, but be to her sole and separate use; and that, on her demise, her portion should be conveyed and delivered to her issue, to be and belong to such issue for ever.

In the codicil to his will, bearing date March 30,1838, after reciting that the codicil was made because he was desirous of making alterations therein, that the same might be mo,re conformable to existing laws, provided that the interest, rents, issues and profits of that portion of his estate which should be allotted to any one of his daughters, as directed in the fifth article of his will, should, by said trustees, be applied to the sole and separate use of each daughter, respectively, for whom the same should be holden in trust, and should be exempt from the control and debts of her husband; and, on receiving a receipt or discharge of any cestui que trust, executed under her hand to them, acknowledging a sum applied to her use, said trustees should be absolved from any further obligations, in any way or manner, to pay the same sum.

In the next section he makes some further provision in case of the death of any of his daughters without issue, in respect to the division of her portion.

It will be observed that the testator has nowhere, either in his will or in the codicil thereto, provided for or made any distribution of any accumulations.

In his will he provided that the interest, rents, issues and profits of the portion which should be allotted to any one of his daughters should be paid to her as they should accrue, during her natural life, and then provides, in case of her decease, what shall be done with her portion, evidently referring to the portion of his estate which had been allotted to her.

This will was made prior to the time when the Revised Statutes went into effect. His codicil was made in the year 1838, some time after the Revised Statutes took effect; and, undoubtedly, Isaac Bronson had been advised that the provisions of his will were not in conformity with the requirements of the Revised Statutes, 'and he, therefore, made the codicil' above named in order that the provisions of his will might be made to conform thereto.

If, therefore, upon an examination of the will and this codicil, we' should come to the conclusion that it was the intention of the testator that the rents, issues and profits of the portion allotted to any one of his daughters should belong to her absolutely, such intention must control the determination of the question now under consideration.

I am unable to see how it is possible, after an examination of the provisions of this will and codicil, to come to any conclusion other than that such was the testator’s intention. I-n his will he provides that the rents, issues and profits of each daughter’s portion shall be paid to her as they accrue, and upon her death he disposes of nothing but the portion of the daughter, making no allusion whatever to accumulations; in fact, there could be no accumulations if the terms of his will were complied with, and the income of the daughter’s portion were paid over as they accrued, as the will directed.

An examination of the codicil, in respect to the daughter’s portion, will show that the trustees, although directed to apply to the sole and separate use of each daughter the income of her portion, were not expected to attend personally to such application, because the receipt of each daughter, acknowledging a sum applied to her use, completely absolved the trustees from any further obligations in respect to said sum. And, also, it will be observed that the codicil is equally silent with the will as to any accumulations, although exceedingly precise as to what shall be done with the original share or portion, upon the decease of any of his daughters.

I am clearly of opinion, from these circumstances, that the testator undoubtedly intended that the whole of the income of the.portion of his estate allotted to each daughter should belong absolutely to her, to be disposed of as she saw fit.

■ It has been urged in this case that the evidence shows that the plaintiff is of a weak mind and incapable of managing so large a sum as had been allowed to accumulate; but the answer to the suggestion is, that our statutes have provided but one way in which a person can be deprived of the management of his property, and this court has no power or authority to pass upon the question of the ability of the plaintiff to manage her affairs. I think, therefore, that the sums which have been allowed to accumulate in the hands of the trustees, of the income of her portion of her father’s estate, belong absolutely to her, and form no part of the trust estate, and that she is entitled to receive the same upon presenting to the trustees a receipt in form prescribed by Isaac Bronson in the first codicil to his will.

The conclusions, therefore, to which I have come, upon the questions submitted to me for decision, are:

First. That the supreme court had the power to appoint such persons as they saw fit to fill the vacancies caused by the death of Arthur and Frederick Bronson.

Second. That it was in accordance with the practice of this court, and of the court of chancery, to make such appointment upon petition.

Third. That Hr. Townsend has not been guilty of such misconduct as calls for his removal from the trust.”

Fourth. That all the income derived from the plaintiff’s portion of her father’s estate, and which has been allowed to accumulate in the hands of the trustees, belongs to her, and she is entitled to claim the payment of the same to her by the trustees, upon presentation of a proper receipt therefor.

Judgment is ordered accordingly.