Clay's Adm'r v. Edwards' Trustee

84 Ky. 548 | Ky. Ct. App. | 1886

JUDGE BENNETT

delivered the opinion op the court.

On tlie 2d day of March, 1866, Ossian Edwards, of Bourbon county, Ky., deeded to J. N. Pry all of Ms personal estate, consisting of the proceeds of a tract of land, amounting to $28,909.15, and household and kitchen furniture, and choses in action of every description, to be held in trust by J". N. Pry for the ■exclusive use aud benefit of Patsey K. Edwards, wife of Ossian Edwards, as separate estate during her life, with remainder to such, of her children by Ossian Edwards as might be living at her death, and to the living descendants of such as might have died before her death, with power in said trustee to invest said estate, by the consent of Patsey K. Edwards, in writing, in any real or personal estate for said trust purposes; also to sell, reinvest and resell and reinvest said estate from time to time as the interest of said wife and children, in his and her judgment, might require.

J. N. Fry accepted said trust and proceeded to administer it until the 19th day of April, 1867. On that day there was a paper filed in the Bourbon Circuit Court, styled as follows:

“Bourbon Circuit Court.

“Patsey Edwards’ Trustee, on petition.”

Then follows what purports to be the statement of J. N. Fry, trustee for Patsey Edwards, and Patsey Edwards herself, setting forth the conveyance of said estate to J. N. Fry, in trust-for the separate use of said Patsey for life, with remainder to his, Ossian Edwards’, children by her, etc., and that said Fry had accepted said trust, .and that it had become inconvenient for him to act, and asking to be released as trustee, and that some one be substituted in his stead. Then follows what purports to be the statement of Patsey Edwards, expressing her willingness to the release of Fry as trustee, and asking the appointment of S. H. Clay in his stead. This paper was not sworn to nor signed by any one.

On the same day that said paper or petition was filed an order was made displacing said Fry as trustee, and appointing S. EL Clay trustee in his place, and “the parties hence dismissed.” And on the same day, S. H, Clay executed bond as trustee, with J. N. Fry as his surety. At the October term, 1868, of the Bourbon Circuit Court, an order was made redocketing the case, and discharging J. N. Fry from any liability as surety for S. EL Clay on said bond, and directing that said Clay do execute another bond as trustee, with W. EL Pierce as surety, payable to Patsey Edwards; and thereupon Clay executed another bond, with W. EL Pierce as surety, and the papers were ordered filed away. On whose motion the case was redocketed, and the orders taken, does not appear. At the April term, 1872, of said court, it was entered upon the record that, “by consent of parties, it is ordered that this action be re-docketed, and is referred to the master, who is directed to audit,” etc. On the next day the master filed a long report showing that there had come to the hands of S. EL Clay as trustee, including interest, over twenty thousand dollars, all of which he had expended, and more, too, by over twenty-five hundred dollars. The report of the master was confirmed in haste, and the papers again filed away. It does not appear at whose instance said order redocketing the case was made or the orders taken. The order simply recites, “by consent of parties.” S. El. Clay died in 1873, and El. C. Clay was appointed his administrator.

EL T. Patón, who had been appointed trustee in place of S. EL Clay, and Patsey K. Edwards and her children brought suit against El. C. Clay as the administrator of S. El. Clay, and J. N. Fry as surety on the bond of S. EL Clay. They, EL T. Patón, &c., set out in their petition and amended petition the deed oí trust of Ossian Edwards to J. N. Fry; that Fry accepted the trust and received the trust estate, amounting to over $28,000; that Fry afterwards turned over to S. H. Clay the amount of the trust estate remaining in his hands, who had been appointed trustee in place of Fry by the Bourbon Circuit Court, and who had executed bond as such trustee, with Fry as his surety; and the report of the master showed that there had come to the hands of S. H. Clay, including interest thereon, over twenty thousand dollars, and in violation of his duties as trustee, and in violation of the rights of the plaintiffs, he had paid out, to numerous persons not entitled thereto, large parts of said estate. The administrator and Fry filed separate answers.

The answers traverse the charge of improper use of the trust estate; that it had been paid out to persons not entitled to it, etc. They also plead the settlement of S. EL Clay’s accounts made in 1872 by the master commissioner of the Bourbon Circuit Court, and its approval by the court, in bar of the action. Fry also pleaded his release as surety on S. EL Clay’s bond by the Bourbon Circuit Court in bar of the action as to him. The plaintiffs, in their reply, attacked the proceedings of the Bourbon Circuit Court, by which Fry was released as surety on S. EL Clay’s bond as trustee, and by which the settlement was made, upon the ground that they were void, etc...

The court below not only adjudged that these proceedings were void, but adjudged that the judgment of the court releasing Fry as trustee and appointing S. EL Clay trustee in his stead was void also. The lower court then referred the case to the master commissioner for the purpose of auditing, etc. The master reported the balance due plaintiffs, after deducting all proper credits, which, together with interest thereon, amounted to thirteen thousand eight hundred and eighty dollars. The lower court rendered judgment for this sum against H. C. Clay, as administrator of 'S. H. Clay, and J. N. Pry. Prom that judgment they have appealed to this court.

The paper filed on the 19th of April, 1867, with the caption, “Patsy Edwards’ trustee on petition,” as a pleading, is certainly a nondescript. It does not come up to any of the requirements of the Code of Practice, which was in force at that time. Besides, the paper brought none of the beneficiaries of the trust before the courtnor did it profess to do so, except Patsey Edwards, and as the paper was signed by no one, nor sworn to by any one, it can not be said that she was before the court.

Conceding that Pry had the right to file a petition in equity in the circuit court, for the purpose of being released as trustee, and the appointment of a new trustee in his place, he could do so only by filing his petition, and making all of the beneficiaries of the trust estate parties, and bringing them before the court by process, etc., and setting forth in his petition the reason why he wished to be released, and the appointment of a new trustee. (Hill on Trustees, page 280.) None of these things occurring, the lower court had no jurisdiction to hear' and determine Pry’s application for a release and the appointment of a new trustee. Therefore, its judgment releasing him as trustee and appointing S. H. Clay in liis stead was void. It follows that all of the subsequent proceedings of the court taken at the October term, 1868, reinstating said case on the docket, and releasing Fry as the surety of S. H. Clay on his bond as trustee, and the taking of a new bond from Clay, with W. H. Pierce as surety, and at the April term, 1872, again reinstating said case on the docket, and ordering the master to settle and audit the accounts of S'. H. Clay as trustee, and the judgment approving and confirming the master’s report of settlement, were void.

The judgment of the circuit court rendered on the 19th of April, 1867, releasing Pry as trustee, and appointing Clay in his place being void, and nothing occurring in the subsequent proceedings of the court validating said void judgment, it follows that Pry, notwithstanding said judgment, continued to be the legal trustee of said estate; and as the same was placed in the hands of S. H. Clay, with the consent of Pry and by his procurement, he is responsible as such trustee to the beneficiaries of the trust, for Clay’s faithful administration of it according to the terms of the trust deed, and for his payment of it to the proper parties.

But conceding, for the sake of the argument, that the judgment rendered on the 19th. of April, 1867, releasing Pry as trustee and appointing Clay in his stead, and taking Clay’s bond as trustee, with Pry as his surety, was valid, yet it must also be conceded that the judgment was final,fand that the dismissal of the parties to the action deprived the court, after the closing of its derm, of all further jurisdiction of the action or its subject-matter; and that jurisdiction could not thereafter be regained for any purpose whatever, except by a regular petition, bringing all of the parties interested before the court, and setting forth the grounds for the relief desired, because the judgment was not only final, but was executed at that term of court, and nothing, by the terms of the judgment, was directed to be done thereafter, and which remained unfinished. Therefore, the subsequent orders redocketing said case — the first for the purpose of releasing Pry as the surety of Clay; the second for the purpose of having the master to settle the accounts of Clay — were void and of no force.

According to the foregoing views, the bond executed by Clay, with Pry as his surety, is void as a statutory bond, but it is not void as a common law bond.

This court{ in the case of Cotton's Guardian v. Wolf, 14 Bush, 246, says: “The general rule is that a bond, whether required by statute or not, is good at common law if entered into voluntarily and for a valid consideration, and if not repugnant to the letter or policy of the law.”

“Cotton, on his own motion, was permitted to qualify as guardian, and, by the execution of the bonds, obtained the possession of the estate belonging to each one of the infants, and, after converting it to his own use, his surety, the party who enabled him to reduce it to possession by going on the bond, is now insisting that he is not responsible because the entire proceeding under which the appointment was made is void. * * * One who voluntarily qualifies as guardian, whether in good faith or as a mere wrong-doer, and, by the execution of a bond, obtains the possession of the ward’s estate, will be held liable, together with his surety, for it, although the appointment may be void.”

The appellees sued on thé bond executed by S. H. Clay, with Fry as his surety. They set out in their petition and amended petition, in' substance, that S. H. Clay had not faithfully executed the trust which he had assumed ; that he had violated said trust duties by paying out a large part of the trust estate to persons not entitled to it, etc., etc. It is 'true that the petition not only sets forth the bond, but the subsequent proceedings of the court above alluded to, including the settlement by S. H. Clay with the master, and attempts to surcharge that settlement. But none of these allegations were necessary to constitute a cause of action ; all of them should be regarded- as surplusage. The lower court doubtless did so ; then, regarding them as surplusage, and as stricken out of the petition and amended petition, the allegations left therein are sufficient to sustain an action on the bond as a common law bond.

The bond and its execution by Clay, with Fry as his surety,' are sufficiently set out; the breach of the bond is sufficiently set out, and the relief demanded is sufficiently set out.

The foregoing views dispense with the necessity of discussing the questions raised as to the sufficiency of tiie pleadings, and as to whether the appellees’ reply is a departure from the cause of action set up in their petition and amended petition. These questions are made upon the idea that the bond is good as a statutory bond, and that the subsequent proceedings of the court are valid.

Clay and Pry are net only bound upon this bond as a common law bond, and appellees’ action may, therefore, be treated as well taken, but they could have been held bound without reference to the bond, because the attempted release of Pry as trustee, and the appointment of Clay in his place being void, Pry in fact continued to be the legal trustee; and Clay having acquired the possession and control of the estate as a wrong-doer, by the consent of Pry, they are both jointly and severally liable to appellees for any mismanagement of it by Clay.

We find no error in the master’s report.

The judgment of the lower court is afiirmed.