154 A. 229 | N.H. | 1931
This case presents issues as to the jurisdiction of the probate and superior courts, respectively, in the matter of testamentary trusts. It also involves the interpretation of certain provisions of the will relating to the trust, and some questions as to the methods of administration.
I. General equitable jurisdiction over trusts was conferred upon *61
the superior courts at an early date. Parsons v. Parsons,
These earlier acts were given extended consideration in Hayes v. Hayes,
In that case no bond had been filed by the trustee. The case might have been disposed of upon the ground, discussed in the opinion, that such action was a necessary prerequisite to probate jurisdiction. But the court declined to do so, and expressly placed the decision upon the grounds outlined above.
The issue of conflicting jurisdiction appears to have first arisen in 1871. The case was a petition to apply the cy pres doctrine to a charitable testamentary trust. The trustees were also the beneficiaries, and it did not appear that there had been any appointment by the probate court, although the trustees had held and administered the trust estate for some time. Objection was made that the proceedings should be in the probate court. In overruling the objection the court, after stating the general equitable power to advise and direct trustees, said:
"If, then, jurisdiction has been conferred upon courts of probate to make orders and decrees in relation to the sale, management, investment, and disposition of trust property, and that shall be construed to embrace cases like the present, it cannot, in the absence of any provision to that effect, take away the jurisdiction of this court." Petition of Baptist Church,
At an earlier date, jurisdiction was exercised over a trust fund, upon petition of an executor-trustee, and a decree was entered for the return to him by the guardian of a beneficiary of certain funds held to be a part of the principal trust. No question of probate jurisdiction appears to have been raised. Wheeler v. Perry,
Methodist Episcopal Society v. Harriman,
Hale v. Railroad,
In Rolfe c. Asylum v. Lefebre,
Equity jurisdiction was sustained in French v. Westgate,
If these were all the decisions upon the subject, they would sustain conclusion that equity jurisdiction to compel the execution of a trust, to advise trustees as to their duties or to interpret instruments *63 creating trusts, may draw after it a full accounting for the trust. But, as will appear hereafter, later cases express a different view. And it is to be noted that in each of the cases hereinbefore considered there was a distinct ground for seeking equitable relief, independent of an accounting for the trust, and that in none of them except French v. Westgate, supra, was any accounting had or ordered.
Power to remove trustees and power to appoint their successors has also been considered in several cases. That a court of equity has power to remove, notwithstanding the statutory jurisdiction of the probate court, was declared in Barker v. Barker,
The issue of jurisdiction to appoint a successor was not considered, but in another case decided the same day, it was declared in unequivocal terms that it is the duty of the probate court to appoint all trustees of testamentary trusts, whether named in the will or not. Carr v. Corning,
An examination of the statutory provisions for the administration of express trusts shows that an appointment by the probate court is required in every case. "Every trustee . . . shall give bond to the judge of probate." P. L., c. 309, s. 1. Failure to give bond is to be deemed a declination of the trust. Ib., s. 7. "These provisions . . . prescribe certain things which must be done before . . . [the] executor is authorized to pay over the funds in his hands. The trustee must have qualified as the statute requires." Fernald v. First Church,
But it may be said that a court of equity having the matter in hand, and having ordered the removal of the old trustees, may pass upon the fitness of a proposed new one and make the choice, as an incident to the general relief it has jurisdiction to grant, — that in such event it would be the duty of the probate court, when applied to thereafter, to treat the matter of removal and selection as res adjudicata and make a formal appointment in conformity to the order of the superior court.
One answer to this is that because of the statutory provisions before referred to the appointee of the superior court would be forbidden to intermeddle with the trust estate. Appointment and giving bond in the probate court are statutory prerequisites to power to act. Bank c. v. Tilton,
In Roberts v. Corson,
More definitely still, it was decided in Scammon v. Pearson,
If the argument advanced in the Massachusetts case cited and relied upon in Barker v. Barker,
In none of the Massachusetts cases supporting the theory of concurrent jurisdiction is any consideration given to the explicit provision, common to their statute and ours, that every trustee shall give bond to the judge of probate. The conclusions there reached are plainly contradictory to the provisions of the original act. The language used there was that every trustee shall give bond to the judge of probate to return an inventory, to render accounts to him, and to faithfully execute the trust. Laws 1820, c. 21, s. 1. All these provisions have been retained. P. L., c. 309, s. 1.
The plain common sense of the matter is that these statutes were intended to confer upon the probate court a jurisdiction over trusts comparable to that over estates of deceased persons and wards, and that to this extent the jurisdiction of the superior courts was taken away, except as it might be exercised upon appeals from probate decrees. Procedure in late cases has been in harmony with this conclusion. Weston v. Society,
This view is reinforced by the application of the universally recognized rule that where there is a plain, adequate and complete remedy at law equity has no jurisdiction. It is also supported by an eminent textwriter upon the subject. "The jurisdiction exercised by Probate courts in the matter of admitting wills to probate, appointing *66 administrators, and taking administration bonds, is exclusive of all other courts or tribunals in all the States. Other matters committed to their jurisdiction are, generally, within their exclusive original jurisdiction, any party interested having, in most States, a right to appeal and have a trial de novo in the appellate court." 1 Woerner, Am. Law of Adm. 534. "In some States, courts of equity have retained concurrent jurisdiction with probate courts in some respects, chiefly in the matter of compelling executors or administrators to account. The general tendency, however, is to vest exclusive original jurisdiction over executors, administrators, guardians, curators, etc., in Probate courts." Ib., 535.
The general line separating probate jurisdiction from that of the superior court is not difficult of ascertainment. The distinction is that between things which are "incident to the business of conducting the administration" and "a settlement with the judge of probate" concerning administration already had. Patten v. Patten,
This common-law test does not however solve every problem, for the legislature has from time to time conferred additional powers upon the probate court; and such changes must be taken into account in any situation to which they are pertinent. The decision in Hayes v. Hayes,
None of these, nor other somewhat similarly significant provisions, appear to have been considered in the cases cited. Whether those decisions could be treated as construing statutes not therein referred to, so that a subsequent reenactment would foreclose a reconsideration of the interpretation, whether even the doctrine of stare decisis would apply to the situation, or whether the question of the meaning and import of the statutes cited above should be treated as one of first impression, need not be decided in the present case. The issues here would not be affected by a conclusion one way or the other.
If the probate court has jurisdiction to construe a will or deed of trust, as an incident of its authority to pass upon accounts, or make a decree of distribution, it is not to be doubted that the superior court still has the frequently exercised power to advise a fiduciary as to the law governing his future conduct of the trust.
The probate court has no jurisdiction to settle a dispute between the fiduciary and one who may stand in the position of debtor or creditor to the estate. Hayes v. Hayes,
As to the past and completed transactions of the fiduciary, the question of legality is to be passed upon in the first instance by the probate court. "So far as it involves charging or discharging the . . . [fiduciaries] on account of . . . official acts, it is to be passed upon by the probate court when they settle an account. In that matter *68
this court has no jurisdiction to direct in advance the action of that tribunal." Scammon v. Pearson,
As before stated, there is undoubted jurisdiction in equity to advise the fiduciary as to all doubtful questions touching his duty to act. So also there is jurisdiction upon the application of a co-fiduciary to compel a proper administration of the trust. Crane v. Hearn,
But in none of these cases is there authority for a court of equity to order an accounting such as the statute requires in the probate court. The decisions on this subject as to executors and administrators rest upon both constitutional and statutory provisions. The fact that as to trustees the inhibition implicit in the written law is statutory only makes no difference here. The power of the legislature to change one and not the other does not impair the efficiency of the former so long as no change is made.
These conclusions do not impair the authority of equity to see that trusts are administered according to their true intent or to protect beneficiaries from incompetent or dishonest trustees. If urgent need be shown for action to protect the trust from loss, a court of equity may appoint a receiver with authority to take and hold the property until the issue as to new trustees is settled as the law provides. Such a receiver is the proper officer of the court of equity, and accountable to it. Eastman v. Bank,
It may be said that, even with such procedure, the issue of removal and new appointment can be brought into the superior court upon appeal. This is true, but if it is so presented it is to the appellate court of probate and not to the chancellor. The point is that the superior court "has no power to advise or direct in advance the action of the probate court, or to interfere with due administration therein." Barrett v. Cady,
In so far as the earlier cases hold that equity has concurrent jurisdiction with the probate court in the settlement of the accounts of trustees, or in the appointment or removal of trustees, they have in effect been overruled and are not to be followed.
So much of the present orders as amount to a tentative decree for the removal of the present trustees and the appointment of a new one is to be disregarded. The order for an accounting involves the power *69 of the court of equity to intervene at the request of a co-trustee for the protection of the trust from erroneous administration. The bill is brought by a trustee, who has the right to ask for the correction of errors whereby parts of funds have been improperly disbursed. The recipients of such disbursements are also parties here, and equity can settle the respective rights and liabilities of the contestants in this single proceeding.
This part of the controversy also involves the construction of the trust and a definition of the rights of the respective beneficiaries. The position taken earlier in the proceedings that there was a proper distribution of stock rights, etc., to those given the income only seems to be now abandoned. The rule on that subject is well settled in this state. The test is whether the property in question was in fact income accruing during the life of the trust, or a distribution of capital. The former belongs to the life beneficiary, the latter to the corpus of the estate which goes ultimately to the remainderman. In the absence of other evidence as to the underlying facts, stock dividends, or rights, are assumed to be principal, while cash dividends are treated as income. Holbrook v. Holbrook,
It is urged that the plaintiff has consented to some or all of the transactions of which she now complains and that therefore she is estopped to deny the validity of the action taken. But she does not appear here solely in her individual right. She also seeks relief in her capacity as a fiduciary. Even though she may have participated in illegal dealings with the trust, it has always been her duty to act legally and to make reparation for illegal action taken. Her position is that she now desires corrective action by the board of which she is member. Her consent did not estop the beneficiaries, whom she now seeks to properly represent.
II. The plaintiff also claims that the will requires that the trustees act unanimously, and that therefore action by the majority against the will, or without the consent, of the minority is invalid. The superior court adopted this view, and enjoined any dealing with the trust except in conformity therewith.
"When more than one trustee is required to execute a trust, a majority of the trustees shall be competent to act in all cases, unless the instrument or authority creating the trust shall otherwise provide." Laws 1901, c. 2, s. 1; P. L., c. 309, s. 3. "The will — the instrument *70
creating the trust — neither provides in terms nor by necessary implication that the trustees shall act as a unit. Consequently a majority may act in all cases. Laws 1901, c. 2." Ladd v. Ladd,
Judged by this test, there is nothing in the will here involved to take the case out of the statutory rule. The implication relied upon by the presiding justice is at best a doubtful one. It is sought to be drawn from the facts that the testator gave the trustees extraordinary powers, that certain of the powers were to be exercised personally and that one of the trustees was of the half blood of the other two. It is manifest that the testator expected the broad powers given would be exercised. He evidently desired action in the matter of investment and reinvestment. Everyone knows how difficult it often is to obtain this when unanimous consent of a numerous board is required. It is as fair an argument to say that because of the nature of these powers the testator intended that the majority should govern, as to contend that because of great responsibility he required unanimous action.
It is true that some of the functions of the trustees are personal, and cannot be exercised by a third party; but this tells nothing of how they were to be exercised, whether by majority rule or otherwise.
The idea that he contemplated contention between the children of his two wives, rests in conjecture alone. The inference seems very strong that if he had had in mind the thoughts now imputed to him, he would have expressed the same, and directed that unanimous action was necessary. No doubt the testator intended that all the trustees should act. They are all to participate in the consideration of proposed conduct of the trust. But this by no means implies that unanimity of judgment is required. The full board is to act upon the matters in hand, but non constat that their action must be unanimous.
The statute was designed to afford relief from situations like that presented here, and its provisions govern in this case. But while the decision of the majority controls, it does not follow that they may carry on the trust independently of the minority trustee. In all matters preceding action, she is entitled to take part in their deliberations and to give to the board the benefit of her views. Her present residence at a distance may make this difficult to accomplish, but a proper administration of the trust requires that she be given reasonable opportunity to express her views and hear theirs. This does not mean that the other trustees must journey to Connecticut in order to *71 give her an opportunity to participate in their deliberations. The trust is a local affair, locally administered. If there might be some extraordinary circumstances requiring the unusual course of their going to her, it must be true that as a general rule she must come here, or else depend upon communication with them from a distance. As before stated, the rule of reasonable conduct and reasonable opportunity to participate in the deliberations is to govern in all cases.
III. Complaint is also made concerning certain administrative details. The will provides that the trustees may hold the stocks in their individual names. It has been the practice in some instances to take certificates in the name of one trustee, who held the certificates. The papers and documents belonging to the trust should be kept together in a safe place, controlled by the trustees as such, and not in the custody of an individual member of the board. In view of the peculiar nature of the trust powers, there appears to be no valid objection to the form of certificates employed. It is much the same as the common practice of dealing in "street certificates" which are passed from one holder to another, without a recorded transfer.
As hereinbefore indicated the injunctions issued should be dissolved. Whether there is occasion for the issuance of one limited in accordance with the views herein expressed, or whether a receiver should be appointed to take over the trust, pending proceedings in the probate court, are matters for the consideration of the superior court. But if "there is nothing indicating any intended breach of the trust or danger to the trust fund, no case is made for granting an injunction, or for the immediate appointment of a receiver." Gale v. Sulloway,
Case discharged.
All concurred. *72