90 S.E. 37 | S.C. | 1916
Lead Opinion
September 30, 1916. The opinion of the Court was delivered by For the reasons therein stated, the judgment of the Circuit Court is affirmed.
MESSRS. JUSTICES WATTS and GAGE concur in the opinion of the Court.
Concurrence Opinion
I concur in the result in part.
1. Appellant complains that the Court erred in substituting its own discretion for the discretion of the trustees. This should not be sustained for the reason that the will directed the payment of $2,900 annually to the Misses Lesesne. That requirement was absolute and not a matter of discretion. The payment was not made.
The method of raising the necessary funds (the management of the property) was a matter of discretion. No authority has been cited (it is hard to conceive that there could be such authority) that holds that where the method of performing the primary intention of the will is discretionary, the trustee or executor could defeat the will by refusing to exercise his discretion. Here the legacies were not paid and the trustees cannot defeat them by means of a discretion as to method.
2. Again it is said the Court erred in requiring these trustees to pay, individually, these legacies, in the absence of fraud or gross mismanagement. The order made no such requirement. These trustees might not get as much for themselves if they pay the legacies, but under the order of the Court, the estate and not the trustees pay the legacies. Residuary legatees would always get more if specific legacies *442 were unpaid, but the estate of the testator pays the specific legacies and not residuary legatees. This judgment is against the estate and not against the trustees, individually. There is no provision of law that allows an executor or trustee to swell his own estate by failure to pay specific legacies. If the rule were otherwise, an executor or trustee who was also the remainderman (and so the ultimate beneficiary) could apply the entire income to the improvement of the estate while the life tenant (the primary beneficiary) is in want.
I think the Circuit Court did err in selecting the specific property for sale and fixing the order of sale. There is a present need of money to pay the beneficiaries and a present power of sale. I think the Court should order the trustees to exercise the power of sale, and that it shall be exercised at once. To that extent I think the Circuit decree should be modified. Besides this, a sale in South Carolina, of lands in New Jersey sold under an order of South Carolina Court, would, to say the least of it, give a doubtful title and probably result in loss. I think this provision also should be modified.
With these modifications, I think the decree should be affirmed.
Dissenting Opinion
The time at my disposal forbids my attempting to discuss at length the issues of law and fact involved in this case, or to state in detail the reasons why I do not concur in affirming the judgment of the Circuit Court. The importance of the issues, however, requires me to state my reasons as briefly as possible.
While it is manifest that plaintiff and her sister were the prime objects of the affection and generosity of testatrix, it is equally clear from a consideration of the whole will that they were not the sole objects thereof. Testatrix evidently contemplated and intended that the trust estate should be so managed that, if reasonably practicable, each and every *443 bequest and devise should be fully satisfied. To that end she gave the trustees large power and discretion, which they were in duty bound to exercise, according to their best judgment, so as to carry out her intention, not only for the benefit of plaintiff and her sister, but also for all other legatees and devisees. Their duties were responsible and delicate; especially delicate, because they themselves were devisees of interests that were contingent upon the value of the estate at the death of the life tenant. And while full force and effect should always be given to the wise and wholesome rule that trustees may not so manage a trust estate as to make profit therefrom for themselves, yet the rule is not so unreasonable or exacting as to require them, where they are personally interested in the estate, to sacrifice their own personal interests for the benefit of other cestui que trustent. In such circumstances, reason and justice require no more of them than that they manage the estate just as ordinarily prudent trustees who are not personally interested would. If their management measures up to that standard, no one has the right to complain of it. Careful consideration of the management of this estate in the light of all the circumstances shows that it did not fall so far short of the requirements of the law as to merit the condemnation of the Court. While, in some things, our judgment may have differed from that of the trustees, yet we must not overlook the fact of vital importance that testatrix invoked their judgment, not ours, and that she gave them the power and discretion to act, and not us; and while the power of the Court to control trustees is unquestionable, it is well settled that it will not and should not do so, except when abuse of discretion is clearly made to appear. The fact and circumstances of this case fall far short of making out such a case. Some of their acts or omissions that have been most questioned and criticized have been abundantly justified by the actual results. We must not forget that it is often very difficult — sometimes impossible — to sell unproductive real estate, especially *444 in large bodies, without sacrificing it. The very fact that it is unproductive and requires the investment of large sums of money often makes it unsalable. Nor must we overlook the fact that prior to the disastrous storm of August, 1911, there appeared to be no reason or necessity to sell any of the lands of the estate. Up to that time, the management of the estate seems to have been satisfactory to all parties in interest. Since then, it cannot be denied that financial and other conditions in this State have made it exceedingly difficult to dispose of large holdings of real estate at reasonably fair prices. Under all the circumstances, it would be unjust and inequitable to make the trustees personally liable for the deficiency in the income of the estate. To say that, because the Court ordered that it shall be paid out of their shares, it is paid out of the estate, and not by them personally, is fallacious. That would be true, if the Court had ordered it paid out of that part of the estate which was not specifically devised, but such is not the case. As the life tenant has died since the filing of the judgment below, the effect of the judgment is to make the trustees personally liable for the deficiency of the income; and the facts and circumstances certainly do not warrant the Court in doing so. The practical result will be that, notwithstanding plaintiff and her sister will be greatly benefited by the failure of the trustees to sell enough real estate to raise the desired income, they will get all the benefit that has resulted from that failure in the increased value of the real estate and the trustees will be penalized for so managing the estate that the final result has been beneficial rather than detrimental to them. I am unable to conceive how it can be said that such a result or the conclusion by which it is reached is just and equitable.
Testatrix did not give plaintiff and her sister an annuity, as the Circuit decree, not in fact, but in effect, holds. She gave them only the net income of the trust estate to the amount of $2,900 per annum. If she had intended to give them $2,900 per annum, absolutely and at all events, it would *445 have been easy to have said so; and, no doubt, she would have said so, for her will was carefully prepared by able counsel. And, while the trustees were given power to sell and reinvest, it nevertheless appears from the will that testatrix contemplated and intended that the estate should be preserved so far as practicable to satisfy all her bequests and devises, and not alone those to plaintiff and her sister, and the trustees would have been subject to just criticism and complaint, if they had not reasonably endeavored to give practical effect to every provision of the will.
The Court below in effect substituted its judgment and discretion for that of the trustees, and erred in so doing. It erred also in making the trustees personally liable for the deficiency of the net income of the estate. That should be made up to the plaintiff and her sister out of that portion of the estate which was not specifically devised; or, if necessarily out of the specific devises, then in the order required by the will, the last bequest or devise being first exhausted and so on in turn. The Court erred also in taking the sales and the order thereof out of the hands of the trustees and putting them into the hands of the master.
The judgment should be modified accordingly.
