Estate of Wakefield

188 Wis. 322 | Wis. | 1925

Rosenberry, J.

It is argued that the will created eight separate and distinct trusts; that by the order assigning the estate and pursuant to the letters of trust issued, “the entire issue of stock was thrown by order of the court into a common fund and the trustees given title as far as it could be given by the court, but no further, to all of the outstanding stock in trust for the benefit of all of the cestuis que trustent jointly;” that this was in violation of the terms of the will and destroyed the scheme of the testator, and as such gave control of the corporation by a single right instead of by eight different rights; that Thomas Wakefield, one of the sons of the deceased, is only one of the cestuis que trustent under the letters of trust and as such is entitled to a child’s share of the income; that the petitioner has been substituted for her husband, Thomas Wakefield, as cestui que trust until the amounts due her under separate maintenance are paid in full; that the accumulation of funds in the hands of the trustees for the benefit of the corporation is adverse to the interests of the petitioner, and that the duties of the trustees as trustees for the corporation, as trustees for Thomas Wakefield, and as trustees for the petitioner to the extent of her interest in the income due Thomas Wakefield, and as officers and directors of the corporation, are so inconsistent as to disqualify the respondents from longer continuing as trustees for the petitioner.

On behalf of the respondents it is contended-that it is their duty under sec. 182.19, Stats. 1923, to determine the amount of net profits properly applicable to the defendant; that dividends cannot be properly declared until it be determined whether under the will of George M. Wakefield the income to be distributed in the form of dividends is such as has been earned since the death of George M. Wakefield, or whether all surplus and undivided profits, whether earned prior or subsequent to the death of George M. Wakefield, is subject to such distribution. The provisions of paragraph XI of the will, relating to distribution, are as follows:

“My said trustees and their successors in trust shall, out of the profits properly applicable to dividends of the George M. Wakefield Mineral Land Company, deduct and pay over the said one-ninth thereof to my said wife and the said two hundred and fifty dollars to Mary Cunningham annually before distributing the dividends to my children hereinbe-fore named, that is to say, Vernon T. Wakefield, James P. Wakefield, Arthur A. Wakefield, Cyrus PI. Wakefield, George M. Wakefield, Jr., Grace W. Taylor, Luella King, and Thomas Wakefield, and the dividends distributed to the last named persons and their children as hereinbefore provided shall be the profits of said corporation properly applicable to the dividends after such profits are diminished by the said payment of one-ninth thereof to my wife and the said annuity to Mary Cunningham, and after retaining not less than five thousand dollars and no more than ten thousand dollars at all times in the treasury of said corporation for the purpose of paying taxes or other lawful charges against said corporation which may be unforeseen and unexpected.”

On behalf of the respondents it is argued that until the questions raised by their answer have been determined it cannot be contended that the trustees of the estate as such are guilty of any misconduct; that they should not be required to determine at their peril the legal questions involved. None of the other beneficiaries under the will of George M. Wakefield join in the petition. If the argument made by counsel for the petitioner is carried to its logical conclusion, it would result in the appointment of separate trustees for the benefit of the petitioner, who claims through Thomas Wakefield. Such trustees could not elect themselves members of the board of directors of the corporation nor could they have a controlling voice in the management of the trust. In view of the situation that exists, there being no allegation of mismanagement, refusal to act, or other misconduct on the part of the trustees, it cannot be said that their position as officers and directors is hostile or inconsistent with their duties as trustees or that their actions are contumacious.

The question of what undivided profits and surplus is applicable to dividends is one quite proper to be raised, and until it shall have been determined that there are funds either in the treasury of the corporation or in the hands of the trustees for its benefit which are properly applicable, the trustees cannot be charged with misconduct in failure to make distribution thereof. The situation presented in this case is not at all like that presented in Attorney General v. Garrison, 101 Mass. 223, or Gartside v. Gartside, 113 Mo. 348, 20 S. W. 669. The right of the beneficiaries to have a distribution of prior earnings and the amount subject to distribution under the terms of the will is not so clear as to make the conduct of the trustees in awaiting a determination of the court in respect thereto contumacious, nor does it amount to legal misconduct as a matter of law.

By the Court. — Order affirmed.