191 Ky. 685 | Ky. Ct. App. | 1921
Opinion of the Court by
Affirming and reversing in part on both original and cross appeals.
The two sons and a son-in-law, Thomas E. Moore, Jr., were appointed executors and trustees of the will. An ex parte proceeding was filed by the trustees and others interested, seeking authority to sell decedent’s property to the two sons. A judgment granting the relief sought was entered and the property was sold to the two sons, who agreed to pay for the interest of each sister $47,500.-00, or at a valuation of $190,000.00 for the entire property. Within three years after their purchase the two sons disposed of the property for over $400,000.00
This suit was filed by Mrs. Ireland and the children ■whose interests had been sold to secure-their proportion of the profits realized by the purchasers, on the ground that the trustees had no authority to sell to themselves individually the trust property. This court, in an opinion reported in 178 Ky. 199, 198 S. W. 762, sustained the petitioners, and held that the sale of the property would be treated as a «ale by the trustees- -to inure to the benefit of all. The lower court was directed to ascertain the exact sum actually collected from the sale -and the amount, if any, still due. A deduction was ordered for such expenses, if any, as were incurred in effecting the sale, or in perfecting- titles, also for the amount of taxes paid by the purchasers after they acquired the property, these sums to be credited on the purchase price, with interest, the balance to be prorated among those entitled thereto, the Moore children and Mrs. Ireland to be charged with $47,500.00, which had been previously paid them.
Upon the return of the case supplemental pleadings were filed, proof taken, an accounting had and judgment entered.
Complaining the lower court failed to follow the mandate of this court in many important matters, and for other alleged errors, Mrs. Ireland, her two children and the Moore' children have taken this second appeal. T. E. Moore, Jr., is the only surviving trustee.
A motion by appellees to dismiss the appeal was passed to a hearing on the merits. This motion was based on a previous settlement of the judgment. After entry
Civil Code, section 757, provides in part that
“ ... when a party recovers judgment for only part of the demand or property he sues for, the enforcement of such judgment shall not prevent him from prosecuting an appeal therefrom as to so much of the demand or property sued for that he did not recover.”
Construing this section of the Code, we held in Hendrickson v. New Hughes Jellico Coal Co., 172 Ky. 568, 189 S. W. 704, that an endorsement of satisfaction of the judgment, interest and cost on the margin of the order book did not preclude an appeal by plaintiff. See also Cravens v. Merritt, Jr., 178 Ky. 727, 199 S. W. 785.
The acceptance of a voluntary satisfaction of a judgment will not bar an appeal when the judgment is not for the full amount sought. A contrary rule prevails where there is a valid settlement of the cause of action. Under the state of the present record the 'Satisfaction of the executions did not bar appellants’ right to appeal.
Appellants claim the judgment is erroneous in several respects. These we will take up in the order of their presentment, and then discuss the items involved on the cross appeal.
1. An allowance of $16,000.00 to the trustees for making the sale. After making certain devises and bequests, testator in clause 11 of his will provided that the residue of his property, with the exception of the property in Jackson and Rockcastle counties., was given to his trustees to hold in trust for the benefit of his four children according to certain directions therein contained. Among other things, that they should operate the lumber plant at Ford, Ky., until the logs and standing timber on the Kenkvky river could be manufactured and sold, but
In clause 12 the Jackson and Rockcastle properties were given equally to his four children to be held, managed and disposed-of by the thr ee trustees named in paragraph 11, being the two sons and son-in-law heretofore mentioned, the same not to be -sold until the expiration of at least three years after his death, with the right on the part of the trustees to postpone the sale until as much as ten years after his death.
Clause 16 reads as follows:
“For their services as trustees each of said trustees named in paragraph eleven, and their successors, shall receive an annual allowance of six hundred dollars.
“And in as much as it will be necessary for my son, Robert L. Thomas, to give his entire personal attention to the business, because of his actual familiarity therewith, I desire, in consideration of his doing this, that he shall receive as compensation therefor the additional sum of $1,200.00 per annum. It is understood that the allowance herein provided for shall be in lieu -of all other compensation to said trustees in their capacity of both trustee and executor and cease with the three year period.”
The executors and trustees received the compensation for the three years provided by the last mentioned clause.
Appellees claim the trustees were compelled to expend much time and energy in disposing of this property, clearing titles, keeping off squatters, etc., etc., and for their services for consummating and completing the deal and disbursing the money they were entitled to a sum in addition to that mentioned in clause 16.
The property consisted of approximately 20,000 acres, covering an area of some thirty-one square- miles, and was .situated about twelve miles from a railroad. The lower court ordered an allowance to the executors of $16,000.00, but on cross appeal they are asking that it be
T. E. Moore, Jr., one of the trustees, .found the purchaser. He is counsel for the appellants and not only .is not asking any allowance for the services so rendered by him, but is resisting any allowance to the trustees other than that fixed in clause 16. But for the provision of clause 16 it could not be satisfactorily contended that the trustees were not entitled to adequate compensation for the arduous duties they were compelled to perf orm in the care, management and control of this vast area of land. But we find it impossible to escape the positive instructions of testator found in this clause. In the language of the will, “It is understood the allowance herein provided for shall be in lieu of all other compensation to said trustees in their capacity of both trustee and executor, and to cease with the three year period.”
We must assume testator meant exactly what he said in his carefully prepared will. It was his manifest intention that, aside from the compensation fixed for the Services rendered for the three year period as provided
2: $8,190.00, discount deducted from the purchase money. Objection is raised to this item allowed by the lower court. It is argued the purchase money notes which were discounted were as good as government bonds, and there was no rteason for discounting same. In discounting these notes the executors did nothing more than would have been done by them or any other good business men in the conduct of their own affairs. Many considerations might justify the holders, of notes in discounting them. As no good reason is pointed out why this allowance should not .stand it will not be disturbed.
3. $5,000.00 allowance to J. W. Fowler. Fowler was an employee of the Ford Lumber & Manufacturing Co. on a nominal salary. While so employed he made pur
4. Allowance of $4,500.00 to Fowler for salary and expenses. Item 3 was an allowance for special services rendered by Fowler in caring for the land until it was disposed of. Item 4 represents a nominal salary he received and his general expenses. As in the preceding item we think this allowance was within reasonable limits. The salary was for a period of over thrtee years, the amount of which is not objected to, and for the reasons given as to item 3 we do not think the court erred in allowing this sum.
5. Allowance of $4,000.00, interest on items of 'expenses incurred before the second sale. While there was no specific exception to this item, we find no ground to disallow it. Since the court has held that the sale inured to and for the benefit of all the children the court very properly allowed interest on the items paid by the Thomases until the final disposition of the property.
6. $15,100.00, depreciation in the Livingston Mill property. This mill site, with approximately 150 acres, was located in Eockcastle county, and some distance from the Jackson county lands. This property was included in the original purchase by the Thomases, and was authorized by the judgment in the ex parte proceedings. The Jackson county lands consisted of about twenty thousand acres, valued at $170,000.00, and the Livingston
From the sale of the house and the insurance all but $1,000.00 retained by E. L. Thomas was put back into the business, accordingly his 'estate should be charged with this amount. On the counterclaim appellees are asking an additional allowance of $20,900.00 on account of the operation of the Livingston mill. This is composed of two items: First, the. sum of $17,000.00 which, it is claimed, the Thomases lost in the operation of the mill; second, the remainder is the net amount received from the sale of the house and insurance, with the 'exception of the $1,-000.00 retained by E. L. Thomas. Appellees contend it was the desire of testator that this property should be operated in connection with the Jackson county lands
Upon a return of the case the court will make inquiry into this matter, permitting the parties to introduce such proof on this matter as may be desired. If the mill property was operated subsequent to the sale to Ritter, etc., which seems to have been the case, the estate is not chargeable with any losses after said date excpt those incurred in the prudent operation of the mill incident to the disposition of the logs and other supplies theretofore provided for. The Thomases or their estates are entitled to reimbursement or credit for such loss as may have been 'sustained on account of the operation of the Livingston mill up to the sale to Ritter, etc., and the subsequent period above referred to, because they were in good faith operating the plant under the belief they were the owners of it as well as the landed estate. If they were holding the other property as trustees for the estate a like result would follow in regard to this property.
This disposes oif the items involved on the original appeal.
We will now consider those on the cross appeal, (a) Appellees are asking that credit be entered for $15,000.00 as the amount of taxes payable since 1912 on the one-half of the proceeds of sale belonging to appellants. This amount is based on the idea that the ¡state and county rate for the years involved was one dollar on each one hundred dollars of taxable value and one and 50/100 dollars as the average rate for city taxes in the state. It is said that Lexington, where appellees lived, is known to be much higher than the average city in its tax rate.
(b) Claim for $15,000.00 additional on account of interest on items of expep.se before the second sale seems to have been waived.
(c) Included in the total acreage conveyed to Eitter and associates was a considerable area owned individually by the Thomas brothers. Appellants contend this- is 2,553.24 acres, appellees insist it is 3,200 acres. The difference is caused by contradictory statements in the depositions of T. E. Moore, Jr.
The court fixed this item at 2,637.61 acres. The total purchase price of $473,170.15 for something over 23,000 acres is figured on the basis of $20.66 2-3 per acre. The lower court allowed on -this account $54,507.24.
In giving his second deposition Mr. Moore says he had not s'een the original deed for about five years, at the time he first testified, that he had since found he made some errors in stating the acreage sold. In the second deposition he fixes it at 2,553.24 acres. The deed from the Thomases to Eitter, etc., did not specify which of the tracts conveyed were owned by the Thomas, brothers, but from the derivation of title and examination of the deed books the witness said he ascertained the total acreage owned by them. Eleven of the twelve tracts mJentioned include 2,428.09 acres; the acreage of one, the Lear tract, is not given. The witness on cross-examination conceded an omission of 147 acres- from one tract. This admission, the unstated acreage in the Lear tract, and the further fact that in some instances the conveyance was for so many aeries more or less, leads to the conclusion the lower court fixed the exact acreage as near as could be under the evidence.
(d) $50,000.00, enhancement in the value of the property by reason of the general warranty deed executed by the Thomases. The last and largest item made the basis of the counterclaim is that of $50,000,00, claimed as
It is testified the purchasers would not have taken the property in the absence of a general warranty deed, and there is much proof in the record that this character of deed added considerably to the salable value of the land. Appellees do not base their claim upon the mere right to be indemnified, but insist they should receive credit for the amount to which the value of the property was enhanced by reason of the general warranty covenant. This position is not without merit. When appellees sold this land after their purchase from appellants in order to effectuate a sale they were compelled to execute a deed of general warranty. This deed 'was made by them individually under the belief that the sale to them under the order of court was valid. Therefore, upon the resale of the property, appellants incurred no responsibility for the marketability or warranty of title, nor did they join in the deed.
It is conceded that had appellants not asked for a ratification of the sale and a distribution of the proceeds they might, 'with propriety, question the reasonableness and legality of this claim. Only a part of the consideration of the sale of the land was paid in cash; deferred payments extended over a period of seven years. The granteie was given power under the deed to deduct for any loss of the land conveyed. Of $10,000.00 retained in non-negotiable notes but $10,000.00 was held as a security for any loss under the warranty. The activity shown by the purchasers in their use of the property, the cutting of timber, building of railroads and switches, would have a tendency to stir up' any hostile or probable claims during these eight years of their occupancy, but the record does not show the pendency o!f any such claims or suits.
Unquestionably the general warranty deed added to the value of the property — an enhancement that inured to the benefit and profit of appellees to the extent of one-half. The Thomas brothers could not have been compelled to incur an individual liability on account of this
However, the burden of the responsibility growing out of the warranty should be borne alike by all. We doubt if the method adopted by the lower court is a sufficient ' protection to appellees. This can only be done through the execution of bond in an amount not exceeding one-half of the purchase price with interest, by which appellees will be afforded proper protection and indemnity for their warranty. Upon the return of the case and in the settlement thereof the lower court will see that such a bond within reasonable limits as to time and amount is executed.
Prom the gross proceeds of the sale of the property the court made certain deductions and found that the shares of Mrs. Ireland and the Moore children amounted to $159,608.41. Adding certain items of interest and crediting them with amounts previously paid the net amount due Mrs. Ireland’s trustee is fixed at $29,974.11, and a like 'sum due the Moore children.
In the distribution of the proceeds the share due the estate of W. R. Thomas was paid one-third each to Lis widow, Carrie Hanson Thomas, his daughter, Ethel T. Rounsavall, and his son, Hanson Thomas. The share due Robert L. Thomas was retained by him.
The judgment accordingly directed that the amount due Mrs. Ireland’s trustee and the Moore children be paid one-half by the executors of R. L. Thomas and one-sixth each by Mrs. Carrie H. Thomas, Mrs. Ethel T. Rounsavall and Hanson Thomas. In so doing it is said the court erred, the contention being that appellees are co-obligors, and the estate of each of the Thomas brothers is chargeable with and liable for the entire amount of the judgment. The importance of this point is pressed with great earnestness because of the fact that Hanson Thomas is shown to be insolvent. No objection is made to an order of contribution as between appellees for their proportion of the judgment, but as to those entitled to recover it is said they should not be limited to certain
But whether a trust obligation and its resultant liability is s'everal or joint depends largely upon the facts. In the present suit the sale to Ritter, etc., was approved and a settlement was asked upon the basis of the proceeds of that sale. Before the execution of the deed to Ritter, etc., W. R. Thomas died intestate, hence under the law of descent his widow and children took Ms interest in the land. In 1912 R. L. Thomas and the widow and heirs of W. R. Thomas conveyed the land to Ritter, etc., and it was provided in the deed that payments should be made one-half to R. L. Thomas and one-sixth each to Mrs.. W. R. Thomas and her two children and the- purchase money was paid accordingly. While the deed to the Thomas brothers was set aside appellants elected to stand by the deed from the- Thomases to Ritter, etc. Appellants were not compelled to accept the conditions of sale as fixed by that deed, but having elected so to do they must abide by its terms. Those terms were agreeable to the grantors. In accepting the sale price appellants acquiesced in the method of payment adopted by the parties.
It is evident appellants Were satisfied the property brought a good price, at least they were unwilling to risk a resale. With full knowledge of the terms of the sale they adopted them as their own, therefore they cannot complain because the court prorated the judgment in exact accord with the terms of the deed. This disposes o:f all the items questioned on the original and cross appeals.
For the reasons herein given the judgment appealed from will be affirmed and reversed in part on both the original and cross appeals as herein indicated. As to the item of loss- incurred in the operation of the'Livingston mill, up to the time of the sale to Ritter, etc., the case will be reversed for the purpose of allowing the parties to take such further proof as they may desire, with instructions to the court to enter judgment for such an amount as appellees may show themselves entitled to on this account.