Nashville Trust Co. v. Lebeck

et al. et al. v. Trust Co. Nashville Lebeck (Nashville, Term, December 1953.)

Opinion July 23, filed 1954.

1G6 Nashville, for Nashville Trust Stokes,

Whitworth Co., etc. for Nashville,

Walker, Lansden, Davis & Co. guardian

Jay G. ad litem Nashville, Stephenson, Annie Lebeck, Jr., Morton Thomas Gilbert Lebeck, Alice Ira Jean Mendel and Mendel. Mendel, James guardian L. ad Nashville, of Cornelius, Sr., Charles litem for Lebeck. Morris Nashville, of Reich, Davis &

Hume, Howard, Boult, York New Spitzer and M. James Spitzer, & Feldman City, Harvey Co. opinion

Mb. Ci-iiee delivered the Neil Justice Court. Company,

The Nashville Trust Herman Click and May, Daniel under Lebeck, of Louis wills deceased, and Michael their Lebeck, S. filed deceased, original Chancery County bill in the Court Davidson August alleging, things, among on 8, 1951, other they property held in trust on the north side Church City Street in the the “Lebeck Nashville, known as Building”. occupied building Harvey This Company, years and for a number of had been used as large department one of in Nashville. stores expired Harvey December 1953. Michael S. equal tenants Lebeck were owners as Lebeck Louis in common. complainants signed alleged a lease had

The bill years, Company of 25 for a with the Cain-Sloan an exhibit to the bill, made the same duly Register’s David- recorded Office had been County. of the lease The base consideration son obliga- agreement year other to assume and an $125,000 property. copy wills A reference to tions with respective filed an exhibit to also as owners is bill. alleges

The complainant hill further that, “The trus- respective under tees, the terms of their trust instru- specifically given power ments, were property, prohibited above expressly described and were selling, mortgaging, creating any upon, lien from disposing property”. (Emphasis sup- otherwise said plied). language important, The italicized is will appear opinion. later in this Under the terms of the will of Michael his S. Lebeck, undivided one-half interest was with devised to trustees pay directions the income to wife for life decedent’s and remainder to' his sons, Clarence E. Lebeck and during* respective Morton Lebeck, S. their lives, etc., grandchildren, remainder to children or etc. Under the will of Louis Lebeck his undivided one-half interest property was devised to Herman Glick, trustee, pay with directions to the net income to his Le.ah wife, Lebeck, life and at her death to certain remainder- naming alleged men, them. It is Lebeck is Morris years unmarried, and old, is unsound mind. will beneficiaries, also names certain minor children as to wit, Mendel, Thomas Gilbert Alice Mendel and Jean property James Ira who share in the trust Mendel, the death of their father. alleges complainants

The bill further are advised proper respective construction of the wills beyond had the to make a “trustees probable including duration of the ultimate re- trusts” being- being. maindermen, those those not important concluding paragraph to the bill as follows: involved, issues they guid- “Being are advised that entitled to the protection matter, of this court ance C£)

o complainant trustees seek the Court’s construction respective of the wills; in and, if the alternative, opinion should be of complainant trustees power under the wills did not have the and authority to make the lease Court, exhibited to the thereby and bind the ultimate remaindermen, ratify, approve Court, nevertheless, confirm, and the actions of the entering trustees in into the lease agreement with Company, The Cain-Sloan aas valid binding and exercise of their discretion trustees, agreement being to the manifest best in- terests of the trust beneficiaries and the ultimate re- ' ” maindermen. ‘‘ prayer respective of the bill is, That the wills Michael S. Lebeck, deceased, and Lebeck, deceased, Louis by be construed Court, reference to the au- power thority complainant and make trustees to leases question, realty particularly of the in and to the authority complainant to enter trustees agreement into the aforementioned lease with the de- Company”. fendant, The prayer There that, the alternative to the effect authority if the did not have to make question and bind ultimate remaindermen with- approval ratify, out “that the Court court, approve complainant confirm and the .action trus- agreement entering into the lease for the term of tees years best interests mentioned, as manifest respective advantage life beneficiaries of testamentary including involved, re- the ultimate trusts The bill Herman Grlick maindermen”. is sworn to May. Daniel including minors the mental interest,

All incompetent, were made The Chancellor defendants. .appointed two able Bar as members of Nashville guardians for the ad litem with full to act cestpi que trustent, and insane defendants. minors guardians

Aaiswers were filed all defendants. approved ad which later cross-bill, litem also filed a was brought attention The to the Chancellor. cross-bill relating to the of the certain information Chancellor Company’s Harvey rights if certain fixtures to remove made not etc. The cross-bill renewed, its lease was discovery purpose Harvey’s for the of a a defendant Harvey building. Harvey’s Com- to offer to lease proposed pany lease renewal and exhibited its answered objected property, com- which of the all of was plainants. Complainants the cross-bill moved dismiss application made was denied, and thereafter which was Appeals for of the L. Felts to Honorable Sam of the Chan- the action and reverse to review certiorari petition was denied. but the cellor, pretermit any of reference to the order reference We report, it is and his since Master Clerk and importance. any of the case our view opinion in a memorandum held Chancellor The learned almost unanimous to be seem “the authorities that here, involved country the one that such by the Court.” binding, ratified be must order of authorities “A number Speaking he held: further, property with terminates of trust a lease hold that beyond is void.” John duration its trust, 22 A. L. R. 114, 23 W. S. 559, Tenn. Johnson, 92 son v. Porter, 56 Meath v. 487; 44 Tenn. Ruffin, v. 179; Coffee (Trusts); re In Hubbell 133 L., Sec. 26 R. C. 224; Tenn. Bogert on Trusts Eng. 648; Cases Ann. Am. & 14 Trust, Trustees, & and Am. Jur. Sec. 791; Vol. Secs. 790 Upon legal question 473. above we are in accord the Chancellor.

It cannot be doubted but Cain-Sloan Com pany beyond An ex lease extends the life of the trust. opinion he amination of the Chancellor’s discloses power held that the execute a trustees were without beyond lease that would extend the life of the trust with .approval. Upon express out the court’s ratification or full consideration of all the the Chancellor dis evidence approved of. the Cain-Sloan lease and found proposal Harvey Company in for the best terest beneficiaries. Appeals complainants appealed to the Court of holding that the

and that Court reversed the Chancellor, Cain-Sloan, had full to make the lease to parties. rights which of all concluded settled petitioned guardians for certi- The ad litem this Court orally granted. been which The issues have orari, was by argued on behalf and elaborate briefs filed counsel of all in interest. assign- principal question in the at raised

The issue is Appeals finding in of erred of error that Court ments power adjudging execute had full to that the trustees and upon binding the men- and that the same was lease, incompetent all re- tally and defendants, the minor and including in and those those maindermen, had being; the trustees error to hold that it further was power authority and that the already and exercised such Chancery be could not substituted of the Court discretion gave trust which the settlors for the discretion to the trustees. opinion prolong unduly tous

It would respond ap every by contention made on counsel tbis peal, thought if even At the advisable to do so. outset Appeals misjudged we think of the Court the case holding complainants sought declaratory de parties. rights Nothing cree to declare the is said declaratory seeking in the bill but the bill about relief, primarily solely of Michael construe wills 8838 authorizes Louis Lebeck. While Code Section arising rights a suit to declare “construction enter the Court will not instruments”, wills and other may contingent it interests that never tain to decide Fidelity Guaranty Askew, 183 Tenn. arise. Co. v. U. S. & (2d) cited therein. 533, 191 W. and cases S. the contention of counsel for the We also dismiss signing contract, trustees and recording effectively If the entire matter. it, closed thought law, which true as matter this is be of as complainant’s should we then the suit concede, do not have been dismissed. ap to find a vain search look to wills

We propriate language the trustees which confers question. power intention of to make the lease be must to confer such of the trust settlors respective wills, corners of the four found within implication, not to be expressly clear complainants from the no comfort can derive found. having Appeals the trustees finding property have the right would to -sell is found this statement error of it. The basic “There follows: shall Lebeck as Michael will of mortgage, a lien create sell, in the trustees no property, dispose upon, of said or otherwise premises being major the con false part it.” The false. clusion is dispute, record beyond before us almost discloses complainant trustees entertained serious doubts authority

as to appears their to make this lease. It on the face prayer, of the bill they and “that are en- guidance protection titled to the and this court Why complainants guid- matter.” should these seek “the protection unques- ance and they of the court” if had authority they tioned contend? in- Moreover as further dicating validity doubts as to the com- lease the plainants sought to amend their bill to have the Chan- approve cellor the Cain-Sloan for a beyond would not extend the life trust. It was properly They permitted denied. are not an to assume unequivocal position original and bill, abandon attempt jurisdiction it for in an another limit Chancery complainants’ presents Court. suit amazing two and irreconcilable wit, contradictions, (1) “protection guidance” the trustees craved and deny and at court, the same time protection grant any lunatics, the court to to minors and que (2) they trustent; trust cestui have burdened the seeking expense, an vali- estate enormous decree dating lease and the Cain-Sloan now contend that parties binding all without court lease was plain approval, inference that this was not suit any purpose. necessary In words, other the court’s protection” only is of value to them if and “advice partisan purposes, juris- their otherwise its when it suits positively disavowed. diction is by the made

The contention contract had def- in fact a lease which been that this binding upon all in- initely concluded, contrary On the record. sustained terest, parties expressly agreed the it not be a bind- that would Chancery ing obligation approved by the until was it prelim- April parties signed On .a Court. 26, 1951, inary agreement provided: which embodying

“A all formal drawn lease will be spelling of the conditions out full details * * * agreement be submitted lease. shall lease approved by Chancery of Davidson subject County, Tennessee, and offer is made by Chancery Court David- such confirmation County, son Tennessee.” contemporaneously day

On the same purported agreement, signing a so-called lease by Agreement” signed “Collateral was Mendel Morton Lebeck and Ira that the trustees, effect approval prepared seeking a and filed will bill have competent jurisdiction by and determi- lease court advantageous be and should nation that the lease is fully justify foregoing agreements approved. The merely lease the an offer to was conclusion agreement, property, which was to a tentative Chancery approved Court. binding only' when by the foregoing agreements later reaffirmed were testimony appears in as follows: their .as your May). it (To In other words was “Q. Daniel understanding not to be valid was that there approved it? court time, unless the understanding. my was A. That ‘‘ you you when intended executed what That’s Q. why I no reason other A. can see I the document? to court.” went testimony Mr. of Warner effect the same

To Company, as Trust McNeilly, of the Nashville President following: shown anything “I don’t know about left ont of the lease, bnt know I it was contem- plated all the time that the lease would be submitted Chancery .approval.” the court, Court, for complainant having signed These trustees, foregoing agreements, having acknowledged them estopped making under are oath, from the contention binding upon that the Cain-Sloan lease was all approval in interest without the of the Chancellor. Ac cording testimony May any the to of it was not valid for agrees. time, and with this statement the Court of ,a equitable estoppel prin-

The doctrine of not new is ciple applicable which we think is here. It is old as as Chancery universally recognized. itself, Court is and estoppel according One elements of to Gibson’s Chancery alleges in “He who is, Suits is to be heard (Sec. contrary what to his former 3rd is statement.” estoppel Ed.). It further stated “The author, is thing represented, oper- and commensurate with party put entitled to its benefit same ates represented thing position The if the were true.” guardians prejudice litem and the to the ad insane deprive the effort to them of defendants is minor protection Chancery an right Court, i. e. investigation if the contract of to determine Cain- for their made on their behalf is contract, Sloan, interest. best jurisdiction complainant trustees invoked

The “protection guidance” Chancery for its Court of validity particular of a con to the for a decree proposal The of cross-bill Cain-Sloan. the lease i. e. tract, proposed prayed that another guardians ad litem proposal ap- Company Harvey wit, lease, praised. complainants brought Chancery When the to the question Court the respective of their under the jurisdiction specific purposes, trusts, and craved its jurisdiction then pur- court, had there, for all poses. guardians naturally prayed ad litem for the protection of minors and lunatics, who had become wards of the court. having Chancellor situation, considered the

issues said: involved,

“The Court convinced that action its premises, necessary in the it follows, as of course, acting for those who are unable to act for that, themselves, the Court will be concerned with the question obtaining contract best available for ’’ those whose interests it must act. Appeals give think the Court

"We failed jurisdiction due consideration inherent Chancery dealing with the administration especially where the of minors estates, trust interests are involved. With reference to the dis and lunatics property position lunatics, the of infants and i. e. the of property, of the or lease such Chancellor stands sale Gaboury, parentis, Tenn. 89 W. Ricardi v. S. 484, loco authorizing making the “the of a lease of 98,100, and property must consider that which “will a minor”, of supra. Gaboury, him.” Ricardi v. to beneficial be most pleadings, and Regardless when minors lunatics the of protection property of their court, are before of to be “matters conscience” rights is said and interests scope “strictly of the Chancellor’s within fall Bispham Principles jurisdiction.” extraordinary 8, Sec. rights protecting their Chancellor is Equity. In of pleadings of technical and limited not circumscribed but law as counsel, stands aloof and within the acts parens patriae. Magevney Karsch, 32, 49-50, v. 167 Tenn. R, (2d) opinion by S. C. J. 562, Green, 65 W. 92 A. L. 343, of It is not that where settlor controverted dispose property by or trust sale directs trustees specific and it does not violate manner, positive accordingly rule of must act law, carry But then out the intention of the even testator. authority if the Chancellor the inherent consider has any way mandate from the the trustees have deviated que prejudice will to the of the cestui manifest Gaboury, supra; trustent. Ricardi Restatement v. 187. In on Trusts,

Law of Sec. Scott Sec. Trusts, 187; Porter, 228, Meath 56 Tenn. it is said: v.

‘‘ equity will watch the administration a court of over that the interest trust, and execution of a see protected, parties it can be done con- far. as all is equity, fair- and of with the of law rules sistent to .all concerned.” ness foregoing issue, cut is a clear statement except always where the in cases will, the issue

it is ,a expounds creating and court itself, trust, instrument necessary. all not at review the Chancellor trustees that made

Contention but rests contract, make a lease no has qual- only in a That solely is true their discretion. within responded case Chancellor In the instant ified sense. in- manifest to be the conceived what he as to to the issue especially minors and and more terest clearly in his que indicated He trustent. cestui insane legal moral a be under will opinion “the trustees adjudicated for the es- to be best duty execute ’’ tate.

It appears conclusively the Chancellor considered the evidence bearing issue done every ,and, having so, disapproved the proposal Cain-Sloan and approved the Harvey Company’s for a proposal renewal contract. He pointed out unmistakably wherein the latter was su- perior to that former. His finding regard appears in his action upon the Clerk report, Master’s and covers It pages. would well many nigh impossible to refer to fact. But one every particular item should be mentioned. Thus on page of his opinion, he says:

“It is shown record that Com- Harvey had pany spent $686,694.00' on the Lebeck Building its thereof during occupancy up time of taking ‘AA’ herein, exhibits testimony (Harvey ‘BB’), and this is without into taking account what was done own by Harveys’ carpenters, staff painters, other (Hep. 109, artisans Todd, pp. 112.).

“ Prudent that, well have might foreseen if present tenant, spent after a having so great sum of were denied money improving property, renewal, respect to these right litigation on surrender of the improvements, would premises, follow. inevitably almost ,an much to estate avoid such

“It is worth controversy.

# # ^[*] «S # ^[*] which rental, of percentage question “On shows that contract, part vital record very Har- January 1952, year ending fiscal ’ attained a level would result had sales veys payment considerably of rent in of the excess year; minimum $125,000.00 fixed whereas, year during-the have sales would not same produced any fig- percentage rental. In on the fact, produced, year for that would ures Cain-Sloan sales per- produce any fall far short of sufficientvolume centage shown that Cain- Furthermore, rental. it is percentage rental not sales would result Sloan they by until increased almost of the total sales 50% January year ending for the 1952.” over those provision important Harvey lease, Another appears superior lease, be to the Cain-Sloan found to findings, as follows: the Chancellor’s agreed Harvey proposal, it that es- is “Under equipment, air-conditioning, blowers and calators, Harvey all of which were installed elevators, etc., proposed any prior lease, execution of its replacement les- will be surrendered thereof; no re- end of the there is term, whereas, sors at quirement for the installation the Cain-Sloan equipment, air-conditioning nor there is escalators, improved.” property requirement any be finding be brushed aside foregoing of fact cannot improvements at importance. The fixtures noof represent $686,694. present an investment of any lack question .as made trustees No Harvey Company responsibility to fulfill of the financial contract. its opinion we conclude this noted as

It should Company complainant and Cain-Sloan Appeals assign error did Company Harvey finding of the Chancellor thinkWe there superior trust estate. benefit to ofwas 180' support

is abundant evidence to his decree. results that It Appeals the Court of and the reversed decree of the Chancellor is affirmed. The cause is remanded to the Chancery Court for such further orders decrees as may necessary adjudication become rights to a final parties. and Burnett, Justices, concur.

Prewitt and Swepston, Justices, dissent. Tomlinson (concurring). Justice Prewitt, Harvey’s Chancellor found for and the Appeals upholding reversed, the lease of Cain-Sloan, In- corporated. property involved herein in is the heart of located

the business district on Church in Nashville, Street and occupied by Harvey’s, department now Im- store. mediately to property department the East of this controversy store of Cain-Sloan, and is between the operators department two these establishments, property herein involved known as the Lebeck Building formerly depart- used Lebeck Brothers as a ment store.

Michael S. Lebeck and his brother, Louis were Lebeck, equal in owners tenants common of Lebeck this property. Michael S. Lebeck devised one-half his interest property and to trustees directed them to lease the property pay and the net income to certain named life beneficiaries; and the death of the life beneficiaries, provided my he trust should cease “and un- said pass simple in one-half interest said divided store fee ’’ my per stirpes'. law said sons, the heirs two prop- his Lebeck devised interest Louis Lebeck prop- erty directed his to trustees .and trustees to lease the erty pay bene- net income to certain named life apon he ; beneficiaries, ficiaries and the death of life provided my un- should “and said trust cease divided one-half interest the store house on Church pass my Street, and in fee Street, said lot on Broad is to simple per my at law three heirs said children, ’’ stirpes. Company,

Herman Click and Nashville Trust trustees Herman under the Michael Lebeck Click will, S. May, entered will, Daniel under the Louis Lebeck Building agreement into a lease for the Lebeck Cain- May corporation. Company, Sloan lease is dated This twenty-five years beginning for a term of 1,1951, runs January fol- 1, 1954. The lease contains lowing : agreement sign

“All who this lease hereto, they fiduciary capacity, are law- in a warrant empowered fully to execute authorized and pursuant in them agreement vested operation by or instru- law or the instrument of ’ ’ relationship. fiduciary creating the ments provision in the though the above even However, agreed trus- that the thereto the lease, Cain-Sloan Chancery of Davidson file .a bill would tees the whether of that court County a decree to ascertain lease power the Cain-Sloan execute had trustees remaindermen binding ultimate it would so twenty-five lease term the full for estates the trust be- terminate them, or either trusts, years should lease term. fore the end filed competent life beneficiaries trustees

The person mind of unsound Lebeck, a against Morris a bill will; Lebeck beneficiary the Louis under life and a guardian of Morris the ultimate remaindermen Lebeck, of the trust now who are and the minors; estates, born, Company, Cain-Sloan Cain-Sloan lease. lessee under the purpose primary The a decree the bill was secure . declaring they authority so trustees had such that could es- bind the ultimate of the trust remaindermen though them, even or either of trusts, should tates, terminate term. before the end of lease secondary purpose that if the court

The of the bill was complainant not should determine that did have authority respective under the wills to execute ratify agreement, event, lease then and the court being the mani- the lease hereinbefore as for mentioned advantage fest of the life beneficiaiies interest respective testamentary including ul- involved, trusts being. yet in timate remaindermen those incompetent appointed for the ad litem were Guardians was that the trustees did and their defense defendants, power with- to execute the not have the Cain-Sloan incompetent approval their clients. out court as bind so Company theory of the suit The has same complainants have. incompetent Harvey Company defendants and the theory that the trustees suit, is, have the same they un- not have such did of the Cain-Sloan the execution to exercise dertook lease. May, testimony trustees, of Daniel one of

follows: your under- it was

“NX'—161 In other words standing not to be valid that there was approved time unless Court lease? my understanding'.

“A. That was you you “NX—162' what intended when That’s executed the document?

‘ why ‘A. I can no other I went to see reason Court. you “EX—163 what intended? That’s “A. Yes.”

(Also, 148) May’s testimony 137, see 138,147, EX'— import McNeilly, testimony To the same Mr. is the Company. instance, President Nashville Trust For question on he with refer- cross-examination, stated Chancery ence to submission of the matter to the Court: anything don’t know out of “I about left contemplated I all the time but know it was lease, Court, that the lease would be Chan- submitted cery approval.” Court, Company into entered

The trustees and prepar- April “preliminary agreement” on 26, 1951, atory formal heretofore men- to the execution of the preliminary in mind that this tioned. It should be borne days by agreement into several was entered executed. before the formal lease was provides: preliminary agreement This agreement to, shall submitted “The lease Chancery approved by, of Davidson Coun- subject ty, made to such and this Tennessee, offer Chancery Court of Davidson confirmation County, Tennessee.”

Simultaneously the lease to Cain- the execution of agreement” Company May a “collateral on 1,1951, Sloan part provides parties, which executed follows: ques- legal

“(b) that there is understood It is binding will be or not the lease whether tion as to upon the remaindermen under the will Le- of Louis predecease if beck Ira Mendel should Lebeck, Morris upon and the remaindermen under the of will Michael S. Lebeck if Morton Lebeck should before the die termination of the lease. Under circumstances these agreed together it is Ira Men- trustees, apply del and Morton a will to court of com- Lebeck, petent jurisdiction for a determination to whether authority or not the trustees have said make lease twenty-five years, parties, binding to be all if even or trusts, one of them, should terminate prior (unless to the termination of the lease Morris Lebeck shall have died before such determination, necessary apply only in which will event it be interest), application to the other half and that said enough ample will be made soon to afford time for entry such determination before the of Cain-Sloan possession. into

‘‘ The and Lebeck trustees Morton and Ira Mendel prepared satisfactory will a bill, have and filed seeking approval agreement them, of the lease competent jurisdiction, a court of which will seek, bill among things, a other determination that the trustees authority agreement, to execute the had advantageous agreement that the lease and and approved, rights, be should declaration of parties.” status, liabilities appears and the then it that the trustees So fully proposed lease, understood that interested subject Chancery be 'to would Cain-Sloan, the lease approval. noted, and to be It be determinative should seems question, just agreement” that in the “collateral quoted from that “the Lebeck and Morton prepared Ira will have a hill, Mendel and filed satisfac- tory seeking approval agreement to them, of 'the lease competent jurisdiction, a court of seek, hill will which among things, other the trustees determination agreement, had the to execute agreement advantageous that the lease and should * * *” approved ‘‘ parties agree- So it is evident that the to the collateral only question ment” not of submitted to the court the power authority agreement their to execute the lease agreement but whether would Cain-Sloan, the lease advantageous approved. be should agree- To have the court determine whether the lease parties advantageous (minors ment and in- was competents) determining tantamount whether the is advantage of those to the manifest interest and was parties by agreement disability, own under and the their advantage question de- of a have made the interest and question by the to be for decision terminative submitted court. principle wills, a of a construction

It is cardinal that the entire instrument and contracts deeds, leases intention examined to determine the will be looked to and parties. 677, 207 Ransom, 185 Tenn. McCord v. of the (2d) therein cited. 581, and cases S. W. question appears of whether that the no doubt

There advantage was for the lease executed primary objects disability was one under of those say parties heard to now cannot be and the bill, authority question primary one of inquiry. limit the and thus estoppel ordinarily judicial the law

“While 186

applied to one who has made oath to state of facts judicial pro in a proceeding former which in a later ceeding yet he undertakes to fre contradict, quently applied, where no oath is to one involved, positions who undertakes to maintain inconsistent judicial Stamper proceeding.” Venable, v. 117 Tenn. 97 557, S. W. 812; Stearns & Lumber Coal Co. v. Co., Jamestown R. 206, Tenn. W. S. 334. requires

It no citation of show Chancery plenary jurisdiction Court has broad watch over and care for the and in- interests minors competents. Chancery jurisdiction When the Court has purpose jurisdiction purposes. for one it will take for all Chancery jurisdiction After the Court obtains of a suit purpose granting equitable for the some distinctive permit, relief, if the circumstances of the case all brought are interest before it will it, controversy determine the entire and award full and complete justice final relief so as to do the liti- to all gants bring possible litigation and so toas all the over subject compass judicial matter within the of one de- Chancery, termination. in G-ibson’sSuits 4th Ed., Secs. 36,. 38. jurisdiction Chancery

Once the of the been Court has judicial invoked to obtain a in- construction of a trust strument and directions to conduct, as the trustee’s be- meaning cause of doubt to as the true and intent of provisions creating of the instrument the or trust, to particular pursue, the course which the trustees should faithfully obey any the trustees must directions which gives. Only way the court he would be relieved personal liability, neglect obey may and a of refusal or to punishment. summary Pom- render the trustee liable to p. eroy’s Jurisprudence, Equity 1064. 179, Sec. 4, Yol. agreement case, Under facts of the trust and the appears ex- it that the terminate before trusts would piration beyond any its duration and lease, Bogert 790- Yol. Trustees, 4, is void. on and Sec. Trusts 54 Amer. 473. 791, Jur., Sec. it Bogert Sec. Trustees, 4,

In on Trusts and Yol. was said: may to in doubt as

“Nevertheless, trustee precise to the sound- extent his may grant judgment ex- a lease that ness his beyond many years of the trust. the termination tend protection, protect own and for his To trust duty before the Court of the trustee consult ’’ making such lease. in the instant been followed have This course should especially testified the trustees themselves where case, ap- have to be ithey would that understood that Chancery proved by Court. Chancery Court, case was

Once this incompetents jurisdiction, minors Court took eye with an case considered Chancellor involved, and it disabilities, under of those interests to the best opposing comparison two of the offers seems coming correct was Chancellor Harvey’s mani- for the offer conclusion disabilities, advantage those under interest fest ordering decree his correct we think he was Harvey’s rather accept proposition of Company. than the Appeals should of the Court the decree

It results affirmed. that of the Chancellor and be reversed (dissenting). Justice Tomlinson, Swepston Mr. Justice and I think that we re- should impel cord the reasons which us to dissent from the scholarly opinion majority written for the of our broth- ers on the preliminary our Justice. A Chief existing statement of the situation should, however, be made. Building owners of the Lebeck vested their testa-

mentary authority duty deciding trustees with the persons the terms under which, to whom, these testa- mentary building. trustees would lease that Pursuant duty, they agreed such with the Cain- upon Company Sloan litigation. its lease involved Notwithstanding majority opinion this, the directs, upon effect, issuance of a mandamus these trustees building scuttle the Cain-Sloan lease, and lease the Iiarvey Company twenty-five years to the in accord- proposed ance with terms and conditions which were Harvey after the Cain-Sloan lease had been consum- mated. part

The reason for the above stated action majority constituting of this Court is that the three majority did the think, as Chancellor, proposed by Harvey “superior to” the Cain-Sloan Disavowing*any lease. intention to debate this collateral weight (1) we do observe that matter, evidence, report according & Clerk Master, favors every juris (2) sui life tenant and financially remaindermen interested the Lebeck Build- ing including parents rental income, and its of interested prefers that each minors, have testified the Cain-Sloan lease. (1) authority, think that the Court no

We has con- leasing nection with Building, of the Lebeck to sub- stitute its discretion for that which the owners of that preferred building (2) to vest these trustees, is compel without to these to trustees exercise discretionary power way their in a selected and com- by opinion manded In it, the addition, Court. it is the opinion dissenting of at least the writer of this majority opinion though I am in- sure it not so does — imposes speak inequity, a material to conserva- tend — tively, upon Company Cain-Sloan the action which by it has taken. awarded And, same has token, Harvey Harvey equitably that to which not entitled. This last assertion will be stated discussed first. Harvey twenty Company, assignee of a odd as

years occupying Building for lease, has been the Lebeck expiration years. Anticipating 31, on December some prac- keeping with a 1953, trustees, sound business negotiations Harvey early in 1950 initiated with tice, negotiations commencing January 1954. a lease These only year. However, more than a continued for much get Harvey they which from was one could ever offer financially niggardly they" disadvanta- considered geous the beneficiaries of manner to in a substantial Lebeck trusts. plight then initiated the trustees

In of the matter this Company. That Com- negotiations Cain-Sloan pro- length pany, made the time, a reasonable after agreement which finally posal the lease which resulted opinion, majority orders today, its repudiate. ac- the trustees before However, trustees approached they again Har- cepted offer the Cain-Sloan offer. inquired made its best it had to whether vey subsequent to Thereafter, and had. reply that it Its 190'

the consummation of the lease between the agreement trustees and Cain-Sloan, made the proposal Harvey which the Court decision, orders today’s majority accept.

I am of the that, under the opinion just circumstances stated, a matter of equity, (1) right, business ethics, deprive Company this lease and is not Harvey Company equitably (2) entitled to In it. a Court no more my opinion, ought tolerate a than it trust, benefits wrong supposedly should- tolerate a that detrimental to that trust. is wrong

In in substituting the action of the Court considering kept its discretion for the it be that of should trustees, in it thought mind that this action is taken because is only “the superior” the the lease is by majority Harvey there could indeed, the two. There is no finding, in faith, not have acted bad be, that these trustees in There them. abused the discretion vested arbitrarily in its dis fore, substituting- this action Court to be contrary cretion for that of trustees seems heretofore followed. the rule which this has always Court our of Appeals by That rule is stated clearly 147, Fleisch, 139, 4 Appeals, Tenn. Smith the case of v. Court as follows: “Unless approved by language of discretion abuse arbitrary faith or a gross bad chancery a court of shown, the trustees is on the part of the duties performance with the interfere will never trust, out the terms of in carrying of the trustee * * * ” ppe on Sec Scott by Trusts, . used language judg will not substitute its “the court 187, tion is * * * so trustee) long (meaning ment for his, motives, from proper faith and not only good he acts a reasonable judgment.” bounds within the but also ordering Moreover, these trustees to enter into the agreement proposed by Harvey, majority has, opinion, ignored in our long recognized rule stated by as far back as 1850 our case of Deadrick Armour, v. Tenn. 596, to “where a trustees have power

discretionary equity to consent or a court of not, has no to control or enforce them.” All can it do they if holding violate trust is to them, remove after illegal. their action departure from these well rules, as as the action majority, premise

taken rested a which, opinion, (1) (2) in our not in fact does exist and as- suming legally permissible existence,' its does render the action taken. premise upon predicates majority which the its by agreement

action Cain-Sloan lease was parties not to become effective unless sanctioned as to all its terms conditions the Court. This supposed says situation, authorized, Court is so accept majority, to order the superior party different Court thinks because of the two leases. premise by majority this decision establishes places upon which it the word the construction

means of “approved”, by the Cain-Sloan used trustees and as negotiations. during of The tentative the course their necessary probably be to that “it would offer recited approval letter of the lease”. trustees’ have approved acceptance it the that should “be stated of “subject Chancery stated that was Another Court”. Testimony approval”. appropriate was court giving broad a construction to the In so effect. same opinion majority “approved”, the used, as there word has, we failed to think, consider the and circum- facts surrounding stances of in ne- word, use that these gotiations. Those he circumstances will now stated. possible reasonably

It not to lease the Lebeck Build- ing responsible advantageous lessee, on a terms, reasonably long for a All the unless lease be term. proof building case of Nash- this Building type ville the Lebeck and location of reasonably requires twenty of between and duration requirement, thirty years. Pursuant to this the trustees agreed Company the duration of that years. twenty-five this lease be would that the Lebeck wills fact, however, Because of upon provided the death each trust “shall cease” simple in re- fee title tenants, life vest of certain ages life of of these and because some maindermen, they probability would die in all tenants were such passed, parties years long twenty-five had before twenty-five contemplated as to whether were doubtful any provision further years would of in the lease occurring before validity life of a tenant after the death twenty-five years. expiration The sole sur- of that seventy viving the two trusts one of life tenant of (January 1, years effective date at the half old one 1954) the lease. twenty-five years, there was

Except to as any one, and could in the minds doubt never authority, had reasonably been, have agree, without discretion, an abuse of absence pro- terms, conditions approval, such court making Hence of the lease. they infit saw visions “approved” by Court, word the use approval an term think, we had mind, twenty-five years, if the court first find that should give authority the wills did not make trustees probable extending’ beyond a lease duration time of both or either of the trusts. agreement

The collateral between the con- clusively think, we that the construction demonstrates, just placed upon “approved”, we have the word as used parties, That col- these is the correct construction. legal agreement, reciting lateral after “there is a that question” authority validly to the the trustees to provides building twenty-five years, lease the for then competent apply trustees “will to a court jurisdiction to whether or not the a determination as for twenty-five authority said lease trustees had to malee parties, years binding if or trusts, all even the be prior the termination one of terminate them, 'Should (Emphasis supplied.) of the lease”. right expressly given to make

The trustees are 8838(c) application an to the Court such Code Section * * * may a dec- providing have “trustee * * * rights legal to deter- relations laration of question arising .any in the administration of mine * * * questions including of construction trust, highly no know of a more I Scott on Trusts —and wills”. subject says authority respected at Section on text — period page as to the when the 189.3, may agree a lease will for which* of time expressed clearly to them to run not seem does the advice “the trustee should seek instrument, then trust they may be made superior right supplied.) (Emphasis to that Pursuant run”. bill. duty filed this the trustees place think of that bill prayers conclusively We upon, “approved”, parties, tlxe by word the as used these placed upon construction which we Moreover, have it. parties litigation since by pleadings, to a .are their bound parties it becomes immaterial as to what meant these “approved” negotiating their use of the word in the says binding Cain-Sloan lease. The bill this lease is they authority the if trustees had the to make lease of twenty-five years, approves period or if the Court such says identically of time. answer of Cain-Sloan thing. meaning So, same it makes no difference what during negotiations had in mind in course of “approved”. their use of the word pertinent quoting prayers In of italiciz- this bill Prayer ing is added. 2 of the bill is as follows: respective “2. That the of Lebeck, wills Michael S. deceased, and be Lebeck, Louis construed deceased, authority Court, with reference to the and power complainant of trustees make leases of the question, realty particularly in au- as to the complainant thority and of trustees agreement enter into aforementioned lease with Company, the defendant. The Cain-Sloan as to so and the ultimate remain- bind beneficiaries life being yet in dermen, unborn, both those and those for commencing January years 1, 1954, the term ending 31,1978.” December (third) prayer of the bill follows: other is as alternative, the Court should That,

“3. if complainant opinion did respective under the wills not have the years agreement execute the lease for agreement the ulti- so as to bind out the lease set yet being those not remaindermen, those mate being, approval obtaining- without of this Court, ratify, approve that the Court the action confirm complainant entering trustees in into the lease agreement years being the term mentioned, as advantage manifest best interests and respective testamentary- life beneficiaries of tlie including involved, trusts the ultimate remainder- yet being.” men in and those not opinion, language permits prayers In our of these only prayed by the conclusion that relief bill the trustees is that the construe these wills reference to the of the to make a trustees lease period probable longer for a of time than the duration of power, give the and if the do trusts, wills then approve Court the the action of the trustees in agreeing twenty-five years to a of mani- festly the to best interest of all concerned. premise upon

Therefore, we think that the which the majority rests its conclusion does not fact exist. More opinion, it had that would in our make existed, not, over, legally permissible majority. the action of In the the City New York Smith, case of Bank Farmers Trust v.Co. N.Y. 189 E. 93 R. 222, 223, 598, 600, N. A. L. is said that : duty accepting

“In a the trust, trustee assumes administering with care. That of the trust reasonable though, duty at times, cannot be trus- shifted, may court, instructions of the tee, doubt, when ask ordinarily, .advise the trustee what not, court will pursue there room for the he where is course shall of choice.” exercise making of choice is room for the exercise

There Building, as demonstrated of the Lebeck of a lease fact that two are in this case. leases before the Court only period thing as to which there doubt of time which the are authorized to let the lease question only run. then, is the which these trustees That, right have the and it is the determine; ask Court question only to de- has opinion, in our the terms termine, this case' where provisions be in the lease which should inserted Building left to the which owners Lebeck are matters its discretion of these trustees. properly my judgment, con- when wills are

In these Lebeck brothers it must held that each of the strued, .authority make intended vest his trustees (in period case 25 of time for a reasonable years) regardless time would of whether such probable beyond both or either duration of extend the trusts. corners, demon- within its four wills,

Each of these purpose each that the dominant scheme strates provide income an and children his widow was to testator paid by during years from their lives rents all way They Building. had no Lebeck lessees identity then become knowing who would of those necessary by building. to follow It of has the owners for his trustee implication intended that each testator making years of the agree a term of such to advantageous ac- to an procure lease an as would lease to say intended testator ceptable To lessee. time power as to of the limit say probable of the trusts duration is. destroy as to his trustees to so shackle intended testator person responsible property. No rentability conditions. such it under would Upham, Wisconsin In re Case 152 Wis. N. 48 L. 5,W. R. N. S., so in its facts A., 1004,is similar pertinent point to the instant on case under discussion appropriate. observing as to make its reference After property that the involved was of such character require long location as to if in its duration, producing seriously come character was not to be im paired, the Court said this:

‘‘So from the will itself and from in connection it, with the characterizing origin, circumstances its we power are constrained hold with- lease, * * * any given by reasonable limitations, * * * Mr. PlanMnton to his trustees, such unless unqualified power as was conferred in this case ‘during by necessary implica- the term of the trust’ power or tion law, settled conferred no to create extending beyond term leasehold the termination of the trust. applicable general

“The doctrine, to the matter express power discussion, an under is that to lease given to a trustee, confers to make .a lease period, any considering reasonable the kind of property country and the custom the and all the bearing subject. circumstances on the & # # < * * * £ purpose where effectuation of the requires reasonably long Then the trust lease. expressly by necessary to do unless im so, plication presumed negatived, to be conferred carry purposes it to the trust. The exercise of out legitimate trust, exercise of is as power expressly 275, 140 152Wis. N. conferred.” W. pages pages 48 L. N. 1014- R. at 11-12, A., S., at5, 1016.

198 twenty-five years

The to make this lease of is by expressly negatived not the wills either of Lebeck by implication. necessary only fact which raised a question in the each will the that minds provides the for the of the.life trust benefit tenants upon the death of the life tenants fee shall cease simple remaindermen. title vest the upon by the trust fact is termination the life from that tenant, reason of death of a the rents the expiration properties are time on of the paid directly who .as remain- then, and will be these of, to, Except, property. become the owners of the dermen, strictly sense, in a technical therefore, provision unexpired not conflict with that lease then simple upon vesting directing in fee of title will the life tenant. the death of Gaboury, 484, 493, 115 Tenn.

In of Ricardi v. our case powers (a of testa case which S. 98,W. involved) mentary said with not the Court trustees were year making ninety-nine lease in of a reference to interested that: which minors were * * “ * making one of a lease such as the complainants does this cause desired property deprive interest prevent simply the les- Its to be leased. effect taking property entering sors from long possession as the terms thereof actual to the The title lease are observed lessee. subject right property, of alienation and the lease had been executed.” as if no remain lease, provision reference conflict, be a But if there yield each tes- trust must termination procure tator’s dominant scheme and intent to to his widow during and children an income their from lives proceeds the Building. of the lease of the Lebeck &East Burns, Collins v. 104 Tenn. 169, 181,56 S. 830. When W. required yielding this to that intent had, dominant is implicit seems to follow that in this dominant intent each testator is the intent to authorize his to Building rent the Lebeck under a condition for length (in twenty-five years) reasonable of time this case regard probable without duration either trust estate.

But if mistaken in the conclusion that the intent of testators towas in vest the trustees to lease property years, for a reasonable term of notwith- standing beyond the fact that such a term will extend probable duration of the trust, all the nevertheless, litigation Courts which been in have involved this have finding concurred in that it all the best interest of Building concerned that the Lebeck a be leased for years; twenty-five reasonable time, wit, language in on that, Trusts, Scott the Court is permit, permit, authorized and does lease of duration “since the has Court to authorize direct from the ex- deviations terms of the trust where igencies contemplated have arisen the settlor”. pages Trusts, on Section 1015-1016. In our 189.3, Scott opinion stopped right Court should have there. This left in full force and effect the which would have trustees, the exercise of discretion that clearly in them, selected, wit, vested had testators lease. strayed we think has far from However, practiced, heretofore understood and law of trust, going by substituting for that of further its discretion choice, in a there and- matter as to which trustees, mandamusing, effect, these trustees scuttle they sign the which the which had made one “superior”. majority of this Court considers

Case Details

Case Name: Nashville Trust Co. v. Lebeck

Court Name: Tennessee Supreme Court

Date Published: Jul 23, 1954

Citation: 270 S.W.2d 470

Court Abbreviation: Tenn.