122 N.Y.S. 256 | N.Y. App. Div. | 1910
William S. Pyle died on January 1, 1906, leaving a will and codicils thereto which were duly admitted to probate and letters testamentary issued to the plaintiff and the defendant Jaimes T. Pyle, the executors and trustees therein named. The testator left him surviving the plaintiff, his widow, and two children, the defendants Mary Y. and William Scott Pyle, his only heirs at law and next of kin. By his will, after making certain specific bequests, he gave his residuary estate, consisting of both real and personal property, to his wife and his brother, the defendant James T. Pyle, in trust, to receive the income derived therefrom and pay the same to the wife during her life, with remainder to the children under' certain conditions. The trustees accepted the trust, since have been and now are acting as such. At and for some time prior to the death of William, he and his brother James had been engaged as partners in business under the firm name of James Pyle & Sons. The busi
First. It is urged the judgment appealed from should be reversed because the complaint fails to show that complete relief cannot be obtained in the Surrogate’s Court. There is no doubt that a Surrogate’s Court has the power, under section 2817 of the Code of Civil Procedure, to remove a testamentary trustee when there exists any of the conditions set forth in such section. (Matter of Hirsch, No. 1, 116 App. Div. 367; affd., 188 N. Y. 584.) A Surrogate’s Court has ■only such power as is given to it by statute, and this power was conferred upon it by chapter 482 of the Laws of 1871. (Savage v. Gould, 60 How. Pr. 234.) The rule seems to be quite well settled that where complete relief can be obtained in the Surrogate’s Court, the Supreme Court will refuse to take cognizance of' an action; that, before it will do so, facts must be set out in the complaint sufficient to show that adequate relief cannot be obtained except in the Supreme Court. (Borrowe v. Corbin, 31 App. Div. 172; affd., 165 N. Y. 634; Citizens' Central Nat. Bank v. Toplitz, 113 App. Div. 73; affd., 188 N. Y. 634; Matter of Smith, 120 App. Div. 199 ; Post v. Ingraham, 122 id. 738.) But it is at least doubtful if the question whether it will take jurisdiction of an action where complete relief can be obtained in the Surrogate’s Court can be raised by demurrer to a complaint on the ground that it does not state facts sufficient to constitute a cause of action.' ' The question seems to have been decided otherwise by this court. (Mildeberger v. Franklin, 130 App. Div. 860.) However, that question, is not here necessarily involved. A Surrogate’s Court can remove a testamentary trustee only for some one or all of the reasons' stated in the section of the Code referred to, which are disqualification, incompetency which renders him unfit for the due execution of the trust, or some affirmative act to the detriment of the trust estate or its management. The Supreme Court has power to remove a testamentary trustee not only for the reasons which would justify such action in the Surrogate’s Court, but also “ for any other cause.” (Real Prop. Law [Consol. Laws, chap. 50; Laws of 1909, chap. 52], § 112.) So if it be assumed that the Surrogate’s Court might remove a trustee
'Second. It is urged that the judgment should be reversed because the facts set out in the complaint would not justify the court, if the same were established at the trial, in removing the defendant as trustee. In the main I think this contention is correct. Most of the reasons assigned for the ground of removal relate to the manage- • ment of the trust estate,, which necessarily involves judgment and discretion, and as to these it is fairly to be assumed that the appellant, by reason of his business experience, is better able to determine them than the plaintiff.
There is, however, one ground specified which, if true, not only presents a serious question, but I think, under all the facts and circumstances, entitles the plaintiff to have the appellant removed. It is a fundamental rule relating to the acts of a testamentary trustee that lie must not only act for the benefit of the trust estate,- but also in such -a way as not to gain any advantage, directly or indirectly, except such as the law specifically gives him, for himself. He owes an undivided duty to his beneficiary, and he must not, under any circumstances, place himself in a -position whereby his personal interest will come in conflict with. the interest of his cestui que trust. (Pom. Eq. Juris. §§ 1075-1077; Chaplin on Express Trusts & Powers, § 193; Matter of Hirsch, No. 1, supra) The purpose sought to be secured by this rule of law is to require a trustee to assume a position where his every act is above suspicion and the trust estate, and it alone, can receive not only Ills best services, but his unbiased and uninfluenced judgment. When he has acted otherwise, or when he' has placed himself in such a position that his personal interest -has or may come in conflict with his interest as trustee, then, so far as I" have been able to discover, the court never hesitates to remove him. Under such circumstances the court docs not stop to inquire whether the transactions complained of were fair or unfair. It. stops the inquiry when the relation is disclosed. (Munson v. S.,. G. & C. R. R. Co., 103 N. Y. 58.) The appellant personally owns one-half the capital stock of the corporation, fz-ozn which he is receiving a ' salary of $25,000 a year as. its president. Hé and the plaintiff as
I am of the opinion, therefore, for the reasons stated, that the complaint stated a cause of action and the judgment appealed from should be affirmed, with costs, with leave to the appellant to withdraw his demurrer and answer on payment of the costs in this court and the court below. .
Ingraham, Clarke and Scott, JJ., concurred.
Judgment affirmed, with costs, with leave to appellant to withdraw demurrer and answer on payment of costs. .