*1 Construing through. used, 233.010 Sections 233.165 the words seeking plain meaning, promotion and their and rational their (Union objects, historically and purposes, their manifest considered 359 Mo. 222 S. W. intent El. Co. v. 2d Morris, [-2]), appears Legislature plain special of the to be that such road districts whole, rural The act as should embrace a area. a as well as Sections 233.100, contemplates a having 233.095 and road district a rural area. plaintiff City The boundaries road a district and the Gladstone, city class, of the fourth coincide. Plaintiff district has rural road no plaintiff It declaratory judg- area. follows is entitled to applicable expendi- ment that 233.100 Sections are not special city tures of judg- district or road funds roads streets required pay ment that defendants are plaintiff four-fifths bridge prayed by road and et plaintiff. taxes cetera, judgment reversed the cause is is remanded with directions BtocJcard, judgment conformity to enter hereto. GG., Barrett and concur. foregoing opinion PER C., adopted CURIAM:—The Bohling, opinion
as the judges court. All the concur. Mary Plaintiffs-Appellants, Caroline Vest Otts, Bader Bader v. Bialson, Trustee, S. James Defendant-Appellant, Travel Indemnity Defendant-Respondent, No. Company, ers 293 W. (2d) S. 369. One, July 18,
Division 1956. Rehearing Opinion September Filed, Overruled Per Curiam 1956. *2 plaintiffs-appellants. Bernard C.
Burton *4 Douglas H. J ones and Thomas F. McDonald for defendant-respond- ent.
1108 trust, seeking [372] HYDE, an accounting J. Action .remove surcharge the trustee of a trustee testamentary with a judg- ap- against the-surety have him on his bond. Plaintiffs ment making dismissing their allowances pealed from decree suit expenses attorneys’ fees. the-trustee’s pointing'out question Defendants rai-se our jurisdiction, true, they no It is as specific asks for amount. state petition that the 668) Houck, 2d a' in (citing Sup., v. Mo. S. W. recital Juden to'give juris this- Court involved is not sufficient briefs to amount diction; petition plaintiffs-’ in case the states the basis However, this basis; judgment on that for amounts to be determined daim and asks total affirmatively in shows these amounts the record and the evidence W. (See Clark, 1087, $7,500.00. v. 349 Mo. 163 S. more-than Bates Maplewood Co., Inv. 351 Mo. 5; 2d 97 Townsend v. & Loan 93; Bates, Mo. W. 2d 911, W. 2d Bates v. S. 167 S. Co., v. Fuel 1117; Aufderheide Polar Wave Ice 124 S. W. 2d & The-petition trustee W. 2d 776.) that the 4 S. asked Mo. 337, as com surcharged with the full amount which has received $5,780.11 at the 1948, which the record shows was pensation since trial; surcharged dif and also asked that he be with the time the' price' apartment building of an on Russell ference the sale between plaintiffs’ therein, which capital Louis invested Street St. ‘ addition, plaintiffs In a sur-' $3,468.13. asked evidence showed was' property charge-of on the invested which income loss they in an amended compute petition, on the basis of-their evidence as they sought file, asked $1,677.18; and sur building apartment on another charge alleged an' loss purchased than its real value. Also have for more claimed to been expenses $1,- allowances to the trustee involved are additional $5,000.00.. affirmatively ap attorneys’ Thus it fees and-for dispute exceeds the sum that the' amount pears from the record n * (Sec. jurisdiction. V, Const.) Art. so we have *6 the appeal the filed a motion to Defendants also dismiss failing fair and concise in to make a ground of violation of Rule 1.08 the decided that argument. facts We have statement of the without plain-: although a merits justice require interests of decision the paragraph headings and improper tiffs’ statement contains some comT matters argumentative Properly in nature. such ments which are (cid:127)'‘ an only provided rule in the of the brief part should be argument”. dismiss The motion to is overruled. (executed December
The involved trust was established will 1943) It was of who 1943. mother died December jfiaintiffs’ -defendant) (hereinafter drafted Bialson referred as con-, a will who was named therein as executor and trustee. There was and by plaintiffs grounds incapacity of mental defendant’s test undue, valid and the but there ivas no trial on these issues influence, plain ity upheld. until of the was The was to continue will trust age born (daughters 35; Mary of testatrix) tiffs of reached the pro February also January-25, 1926. It was and Caroline leaving a during daughter period vided that either died the trust if minority. children, during The minor child or the trust continued (by will) investment given (a) following trustee III of the wras estate powers: hold, possess, manage and said trust “To control convey every part power and full thereof, sell,' transfer, manner, dispose and upon and such terms and such same proper. meet and prices, for such as to said shall Trustee seem given granted, power full have, hereby Said Trustee shall and is and any authority part and all or of said to invest and reinvest or stocks, estate in securities manner, such and such loans, bonds, for such property, real, terms and personal upon other or and proper, meet and lengths time, of shall as to the said Trustee seem investments which being and ivithout a class of his restricted to being it may make; permitted Trustee or law to hereafter authority complete hereby give intended full and said Trustee encumber, control, exchange, sell, convey, hold, possess, manage, every said pledge, invest, part of lease, whole and and re-invest the discretion, without according judgment trust estate and to his sole any to do. The trustee upon authority so power limitation his and may discharge employ his duties agents in of counsel and other compensation.” pay and determine and to them reasonable duty (by as to the beneficiaries discretion the trustee 111(b) “(b) The trustee shall (f) will) follows: daughters. Mary my hold the in trust for benefit two trust estate pay and distribute shall over Bader Otts and Caroline Bader and monthly equal or other con- entire net therefrom in income derived Mary daughters Bader Otts my venient installments said unto amount, Bader, said share one-half Caroline each to receive thirty-five (35) years.” age of alike, they share until reach the “(f) The’said any during time Trustee, the continuance of the in the trust, may upon exercise his sole encroach discretion, principal of the trust estate support, for the maintenance and educa- tion, necessity the beneficiaries of the trust. The propriety *7 of upon principal, encroachment and the amount thereof, by shall Trustee, be determined said and his determination ’’ shall be final. (IV) provided:
The will compensa- “The Trustee shall receive as tion for gross his services (15%) percent upon fifteen hereunder, income percent upon the fair accruing each year market value of the to the trust principal estate and five of the trust (5%) as and estate, dispersed when the same is from or distributed free trust. In no fifty ($50.00) event the Trustee shall receive less than per year Dollars as his compensation.” minimum corpus The of the trust in corporation estate 1945 consisted of stocks awith market value of $15,000.00; more unencumbered than real on Broadway $12,250.00 (testatrix estate South paid valued at had 1943) that amount ; for it in (subject real estate on Accomac Street $3,750.00 (which a deed) $5,000.00 subject trust valued at was also rights Caroline’s homestead age 1947); until she in became of $2,272.47 year. cash at the end of the of Defendant sold most these in stocks 1946 and 1947; they profit a value were sold at over the as of the date capital gains paid of testatrix’ death a tax so that was for the money trust estate. in two Defendant invested the received apartment Street) buildings (one on Miami one Russell Street and on by so that of 1947 in corpus end all of the real estate. One was of principal by investing charges against made defendant is that all in real prudent estate he failed to maintain a diversi- fication recklessly investments and concentrated the risk loss recklessly, trust It assets. is also acted contended that defendant purchases, without due making skill and in two care, caution these guilty that he was failing of breach the trust of trust in to maintain real in proper repair estate and that he invested in the Russell Street apartment increasing with the improper motive of his commission (computed gross the in- income) a motive which conflicted with terest concerning beneficiaries. The facts these invest- following appear ments from the record.
Miami Apartments. Street this purchase Defendant contracted to building $9,250.00 consisting apartments May 3, three 1946 for from Peter Kintzele, a real estate real estate broker who also dealt in on his own -Kintzele account. The deal Avasclosed 1946. June bought property re- $5,750.00 this 1946 and made February, pairs costing $1,200.00. $5,750.00 Kintzele’s It also had been sold It vendor. apartments, subject had three rent controls to Federal control, a first floor subject unit as a tavern. to rent rented $9,500.00 property July This a sale Avhich wa.ssold out commission of paid adjustments $475.00 was and with the net amount $9,056.33. realized for the was Thus the loss about said making $200.00.-Defendant that before purchase he had the property man, checked real estate J. P. who collected Texier, rents for Broadway him on property. plaintiffs He said also were money requesting thought more and he he could increase by investing the estate in real estate. He did raise rent on the per tavern $35.00 $70.00 month to and after relaxation of Federal requirements, July control 1947, obtained rent increases apartments. had expert testimony Plaintiffs to the effect that the property was not worth in 1946 but no value was fixed it and was stated their witness that did not reflect its price value but that cheap” at that “it was “a awful hell aof good bargain.” gross income, expenses net income on this property shown reports be, the trustee’s as follows: YEAR GROSS INCOME EXPENSES NET INCOME (7 mo.) (7 mo.) (7 mo.) $ $311.08 $260.60 *8 1947 1113.50 834.46 279.04 1948 1340.40 498.39 842.01 1949 1380.40 392.92 987.48 1950 1460.40 598.77 861.63 1951 1467.30 491.39 975.91 1952 1488.00 345.32 1142.68 These expenses included $120.00 interest annually after 1947, which charged should have been Russell property Street because $3,000.00 this pay pur- was interest borrowed to on the Russell gross chase. defendant’s commission on the income is However, 15% from (considering deducted the income shown. Nevertheless these factors) appears $9,250.00 it that, after the net income on the always in (not considering invested was depreciation) excess 8% averaged and 1949 about for to 1952 inclusive. There was evi- repairs dence that Miami was 1910 built between and Some 1912. required were in 1947 was reason net income for low year. Apartments. September 25, Russell Street On con- defendant purchase apartment tracted to Kintzele an on Russell Street basement, (built 1914) apartments, including with seven one in the completed purchase and He on October 1947. said also ad- purchase. time, making vised with Texier before At that Broadway, trust properties had three unencumbered and (Accomac, paid August. Miami), having the trust deed on Accomac been purchase up The Street set in his trustee’s was defendant report $29,250.00 However, property (two as a deal. the Accomac $7,250.00 apartments) in at so that the involved was was traded cash
$22,000.00. property for the price paid This Kintzele had was year the Aceomac profit earlier in the his whatever so that was property $4,500.00by $5,000.00 was estimated as defendant worth, (Aecomac re- price paid textatrix in 1943. plaintiffs, it quired it, he sold esti- repairs extensive which Kintzele made before labor.) by him The $3,500.00 including at his own mated value of $22,000.00 paid $14,000.00 assuming was a deed of trust borrowing $3,000.00 property a deed Miami trust on the $5,000.00 ($500.00 paying paid in cash from estate on hand. was funds closing $4,358.00 adjustments.) This down and check was due to by $1,701.63 by paying investment was out increased heating plant (and heater) water so 1949 and 1950 cost of a new gas expenses property operating could used and reduced. subject subject until to Federal rent control remained it was $26,500.00 in 1953 out commission it was sold of which real estate (Defendant $11,090.87 $1,000.00 paid. was a check received proceeds sale, making adjustments cash for rents, for the etc.) interest, considering prop- Thus the Accomae taxes, insurance, erty only $14,- $4,500.00, property worth total investment in the (not the net including $14,000.00 deed) 201.63 while amount (after payment (plain- received the trust deed debt) closing valuing figuring on checks, tiffs the basis of the Aeeom-ac receipts at $5,000.00, at the net fixes the investment $11,090.87 making $3,468.13). corpus loss even on the Certainly, $2,700.00. of about figures basis of defendant’s there was loss figures property Defendant’s income on this were as follows: YEAR NET INCOME EXPENSES INCOME GROSS 45.69 loss $3020.09 $ $2974.40 761.36 3345.60 2584.24 769.26 2656.34 *9 1951 3399.70 2704.24 695.46 1008.10 1952 2486.40 3494.50 partly partly repairs The 1948 income due to roof be loss was (Plaintiffs year. rents were increased until in that cause late say year dili proper could increased earlier with rents have been However, by authorized.) gence increase was defendant, since a 15% an situation, expenses include reflect the true these should addition al $120.00 annually for interest on the $3,000.00 borrowed trust deed on purchase the Russell was secured property, .a gross income property. Miami Defendant’s commission 15% for income distribu be determine the actual should also considered Considering property. these produced tion to the beneficiaries factors, property from the divided left Russell income beneficiaries, follows: between the wrasas
1113 Expenses
Including Remaining Trustee’s net income Commissions and $120 Yield on interest on distribiition to Grass Investment $3,000 loan Rentals Year Beneficiaries (none) $2,974.40 $3,586.19 $611.79 loss 1948 3,206.08 139.52 1949 3.345.60 1.08% .9 3,289.74 1950 135.86 % 3.425.60 3,399.70 .5 3,334.20 65.50 1951 % 2.5 3,130.23 364.27 3,494.50 1952 % Total Net Income Available
Distribution to Beneficiaries (705.15 611.79) .$93.36 ’48-’52 ..................... — corpus invested Plaintiffs’ calculation shows that at 3% $14,- at 1948-1949 and property (figured $12,858.00, Russell deducting heating plant), 559.00, replacing 1950-1952 after produced, have trustee’s commissions the amount would 3% have been would $1,770.54 (for years) total amount of these five ($327.88 annually, 1948-1949 to- available distribution them. claim- annually, 1950-1952.) plaintiffs’ basis of"
$371.26 This is the investing in surcharge for a $1,677.18 for income loss caused available.) Plain- actually property ($1,770.54 the Russell $93.36— amount reports that tiffs also calculate from the trustee’s Rus- proportion gross from the trustee’s commissions property sel as follows: properties and the other Commissions Ru,ssell Broad- from way Commissions
Trustee’s Commissions Total Prop- Total Miami Income of % Year Commissions Property erties Commissions 1948 586.11 $ 446.16 $ 43% 615.84 1,117.68 501.84 45% 688.46 1,202.30 513.84 43% 676.20 1,186.15 509.95 43% 690.18 1,209.35 42% $3256.79 $2490.96 Estate. Concerning Real Broadway Property Matters and Other *10 income net 1875) best Broadway property (built before combined than'the producer more (netting of the properties three profit at a sold net of and was inclusive) the other two 1948-1952 price over the paid testatrix had for it in which also was the inventory price. Broadway buildings consisted two three commercial units and 15 three room flats. All rentals all properties were agents got collected for defendant real estate who of the manage- collections for services, their included which [377] 5% ment (This services. 3% charge on Miami was reduced to in 1952 Russell.) complain make Plaintiffs that defendant failed to necessary repairs buildings permitted them deteriorate in They concerning value. had considerable evidence their including Building condition, photographs, City records Inspector and the concerning Police Court inspection, notices to rer pair and complaints, complaints company records of to the real estate collecting the agent, testimony rents as defendant’s of tenants plaintiffs expert. their real estate Defendant he main- said tained them on as minimum a produce basis as could the maxi- mum income. As judge commented, the trial this was common con- dition under rent control and there no repairs evidence to show would have increased the value of the buildings the amount of their cost. Defendant position duty took the plaintiffs’ that it was during maintain Accomac period got the homestead and it into such condition necessary it was dispose spend either to of it or least repairs. says Defendant that he sold the corporate stocks and invested the purpose real estate for the increasing the income of the plaintiffs’ estate because of claim that they money. says needed investing more He real estate he did increase the net income available for distribution to them and shows that the net $31,000.00 assets, income and rate of return on after deduction of gross trustee’s commissions on income, was follows:
Periods which assets were not invested in Real Estate 100% yearly periods. full years 12-14-43 to 12-31-45—2 net income —2343.24 ” ” 1- year 1-46 to 12-31-46—1 —1649.43 —5.32% ” ” —year 1- 1-47 to 557.87 12-31-47—1 —1.80% = years Total —4 average 1137.65 income —4550.54 year. per Periods in which assets were invested in Real Estate yearly periods. full jrear 1-1-48 12-31-48—1 net —1659.78 income —5.35% ” ” year 1-1-49 12-31-49—1 —1903.01 —6.13% ” ” year 1-1-50 12-31-50—1 —2603.34 —8.39% ” ” year^ 1-1-51 12-31-51—1 —2369.03 —7.64% ” ” year 1-1-52 12-31-52—1 —2766.51 —8.92% = years average Total —5 2260.33 year.
per *11 1115 very little However, property hereinabove added shown, due Furthermore, partly to low 1947 was this return. income of Broadway higher at expenses to the both Miami were fact that than year year (Due to more that than in other of the trust. Miami.) Moreover, Broadway repairs $1200.00 and over $350.00 no from then estate because of the income Aecomae went into rights. upstairs in Aecomae at the time it Plaintiffs lived homestead they They at was for Russell. were both married the time and traded apartments one the third in Russell moved into floor for they per paid month. was not increased when $35.00 defendant This plaintiffs apartment rent controls and later sublet this were relaxed paid had per $65.00 month and retained the difference. Plaintiffs rights no un- Accomac, rent at because of homestead there Caroline’s shortly purchased, til also the rent before Russell retained rights floor apartment pay the first under but did the interest during Mary on the period; trust deed debt that was Caroline’s guardian during period.
The amount and payment of trustee’s commissions and the distribu- Distributions t.o Beneficiaries and Trustee’s Commissions. tion to from beneficiaries income and was as follows: year One Pay- to Total Trustee Paid periods Trustee Commis- Paid to ments Beneficiaries ending Pay-Beneficiaries Commission sion Benefic- iaries from as shown from Corpus Earned ments. Income
12-31-45 864.80 700.00 2343.24 3202.68 859.44 12-31-46 573.66 164.80 1649.43 1800.00 150.57 12-31-47 768.77 973.66 557.87 1840.00 1282.13 12-31-48 1063.28 368.77 1659.78 2280.00 620.22 12-31-49 1119.03 363.28 1903.01 1930.00 26.99 12-31-50 1202.30 963.28 1680.00 1680.00 12-31-51 1186.15 2058.05 1680.00 1680.00 12-31-52 1186.15 1209.35 1840.00 1840.00 1209.35 7987.34 13313.33 2939.35 16252.68 Defendant corpus. retained commission payments on these 5% It will be noted that the full amount of net income for 1952 was not distributed to the beneficiaries. The undistributed ex- year cess for each $926.51, $923.34, $689.03, 1952— 1950— 1951— $2,538.88. total of These re- amounts were shown on the trustee’s ports years each corpus. of these Defendant as transferred did theory this on replace he could from current income the distributions to years. prior beneficiaries from Plain- made tiffs contend this 111(b) was in the will paragraph violation and ask that the surcharged trustee be for interest on these undistri- This, buted amounts which they $428.18. calculate would total by 'the was ordered withheld net
total amount of This plaintiffs. 1955 to distributed trial March 16, court on ivas overruled new trial motion plaintiffs’ on which was the date surcharge for this basis as the plaintiffs and the interest claimed figured that date. (all made parcels of real estate the three As of the sales of result more than received commenced) after this suit was *12 consisted corpus of trust the $32,000.00. the trial, At the of the time of Indebtedness 2 $30,000.00 Certificates of face value II. S. 5/8% made and year, and end of each in cash. At the receipts and annual showing all his plaintiffs reports sent to detailed and questioned is not accuracy reports of these disbursements. (Included supra. they figures calculations are the for all basis undistributed wrasthe figures, trial, in the time of the corpus at the corpus theory that previous on the of withheld subsequent income.) Other facts replaced could be distributions made. rulings hereinafter will be in connection with stated following finding's: “1. That the the The trial court’s makes decree any improperly or reckless evidence adduced herein does show 2. That part the of the Trustee herein. motivated acts or conduct on any requiring his re- guilty incompetency of Trustee -was not accepted benefits moval. the beneficiaries the of the- investments That long period made the Trustee over a of time and beneficiaries con- during practically sulted and had benefit of counsel all with the period by the 4. That of the of the trust Trustee. administration given powders instrument Trustee was broad under the trust any did of that said Trustee not violate his duties or the terms loss, and trust instrument. 5. That the Estate said sustained no beneficiaries have been paid a substantial income. 6. That the removed, Trustee not be should ordered and further finds that any surcharged evidence to show that he should be .fails ’’ amounts. pass duty -weight In this kind of it while our on the case, is of the findings, evidence make our own we accord deference due questions the Chancellor’s determination of factual is it necessary conflicting to determine from oral evidence of witnesses who appeared (Shelton him. v. 119, before 343 Mo. 119 S. W. McHaney, 2d 951 V.A.M.S.) Therefore, -Sec. 510.310 BSMo. cases cited^ accept finding we will the court’s that no there was reckless fact or improperly or defendant, motivated acts conduct in the sense no or grossly negligent dishonest motive intentional violation or disregard findings of duties. of the findings Some other are not However, fact but are instead conclusions law. finding there is one accept of fact cannot on the that we basis of the namely, whole record, finding loss, estate sustained no because the evidence conclusively shows a loss there was on the Bussell transaction. sub ivas the total value it true that While in 1945 when stantially the trial as it was at the time of the same because the mainly is true began, administration the trust Broadway equal to the loss inventory value) on profit (over the stocks (There gain in market value of also some Russell. ivas sold.) liability by reason of a breach incurred “The trustee who has liability by proving duty reduce his regarding of a investments cannot legal illegal or conduct he has other profit made Trustees, 702; in the Trusts and Sec. trust administration.” (Bogert, b; Trusts, see also Scott Restatement of See. comments 761; N. McAleer, Mass. 175 E. 213.1; Sec. v. Trusts, Creed 422; N. Bartling, State ex rel. v. 149 Neb. 2d Bottcher W. King Mortgage Talbot, v. North American 76; v. 40 N. Y. Schuster T) Estate, Co., 667; Cuyler’s Loan Pa. & C 65 N. E. 2d (Ohio), 317; 236 W. Murphy-Bolanz Land &Loan (Tex.), Co. a?.McKibben, S.
78; certainly Annotation, an un 1422.) 171 A.L.R. Russell was standpoint fortunate producing- investment from the substantial net income for the beneficiaries as well as from the loss sus tained. The judge trial in a memorandum the decree filed Avith said: “The iirvestment in property the Russell time it was Street *13 considered”; made appear does not to too have been Avell but thought there Avas in price placed no loss because of the Aeeomac the However, price deal. the by inflated the same of Avas amount as the gain price inflation in the Accomae so that there was-no (See
to transaction, the estate from analysis that. of the cash supra.) Thus Avemust find that there awas loss of on the Russell produced any transaction and also that Russell never fees) (after substantial net expenses and trustee’s available for distribution to plaintiffs prior to the commencement of this action. (Less than $100.00 inelusÍATe.) total 1948-1952
TIoAvever,these
do
facts alone
not show breach of trust, because
a trustee is not an
required
insurer nor
judg
in
to
.infallible
his
(Boland
ment.
v.
Co.,
Mercantile-Commerce Bank &
349 Mo.
Trust
731, 163
Fairleigh
S. W. 2d 597;
Fidelity
v.
National Bank & Trust
Co.,
1118 would man prudent such investments as only and investments preservation in primarily view property having'
make of his own be de- income to regularity of the estate and and amount ” in selecting investments (For rived. to be considered in matters income see comment safety regularity of and amount addition Trusts, See. Trusts; m of Scott 227, under Sec. Restatement investment By had wide 227.12.) the terms of trust, invest- powers and investments, was unrestricted as to class of authority being in expressly authorized; ment real estate validity expressly encumber real estate was also authorized. of cannot provisions will contest and these trust was established in the questioned. now be
Nevertheless, although
given
discretion
defendant was
the widest
beyond
making
in
managing investments,
not mean he is
that does
accountability.
equity
all control
favor
“A
of
will never
court
a construction that confers
and uncontrollable
on the trustee absolute
powers.” (Garesche
W.
Levering Inv.
48 S.
Co.,
v.
While as provisions we construe the trust nevertheless, sole of complete as class discretion to investments, speculative this did not or investments authorize hazardous care, dispense class or all of caution and requirements skill, requirements Certainly of risk. are not reasonable diversification specifically Although estate an authorized excluded. real was invest Broadway trust provisions the and the owned ment under of this trust began, nevertheless, fact that real estate Aecomac when it the necessarily prudent was an authorized investment make it did (See corpus Bogert, have real estate. Trusts the entire invested in Trustees, Sec. 678.) When the trust began, about half of corpus corporate provided the value which some was stocks, profit, diversification of sale at a investments. The of these stocks payment mortgage Miami, of the of un purchase Aecomac and the evidence, der the an of cannot be held to be abuse discretion view of findings the trial court’s own of and our view the evidence. How
ever, purchase put Russell estate all trust in real no from had commercial free rent did the control, units, expenses, other probable operating two. basis Moreover, estimated, apparent the evidence shows could have been it was produce very that it would little net income available distribution long subject rent con existing beneficiaries as as it was to the trols. essentially speculative investment, Thus it was both as probable early value, dependent upon net termina income and future tion of anticipated by rent controls which the evidence shows purchase defendant. To property, subject to a mort gage, and part Miami to obtain encumber purchase price, $17,000.00 against incurred an indebtedness yi charges (This estate with annual interest $680.00. yi gross Russell rentals; commissions; another went for trustee’s commissions, 15%, 5%.) agent’s commissions, and rent It collection is true Aceomac, just expired, in which homestead had Caroline’s required repairs kept; extensive it was to be if but Russell also re quired repairs which reduced income net and increased (After repairs investment. $8,000.00 by was sold Aecomac Kintzele.) must, upon We transaction course, consider this basis of the existing at it circumstances the time was made and not upon subsequent (Restatement Trusts, m, events. Sec. comment p. 652; 227.12, Trusts, p. 1224; Scott on See. 54 Am. Jur. Sec. 377; it, 335.) Nevertheless, viewing C.J.S. See. so we must agree with the trial court’s view that this transaction “at the time appear it was made does not to have been too well considered.” It appear prudent does not standpoint as a investment either of producing to the or for distribution beneficiaries available *15 $26,- on a $17,000.00 debt (incurring a safety corpus invested of in resulting as 191) well as Sec. purchase, Trusts, see Scott investments. in of diversification class
lack con to be factor important another there is Furthermore, permitted trustee namely, circumstances sidered, that under the a conflict was which there position in placed in a himself to to was due This the beneficiaries. himself and interest between regardless gross income of substantial that he would receive fact income available any net produced this investment of whether while to him was certain return beneficiaries. Thus substantial (The result highly speculative. for the income beneficiaries was $2,490.96 com defendant received from 1948 to 1952 inclusive that available for the total net gross income, while mission $93.36.) loss the risk of Therefore, distribution to beneficiaries was we While entirely placed income was almost on the beneficiaries. in purpose or mean to hold that defendant’s motive do not this was comply making investment, do hold that it a failure this we duty solely interest of the with his the trust in the administer making in this to an abuse discretion amounted beneficiaries investment, all cir considered in connection with of the other when doubt, great hope for he had cumstances hereinabove discussed. No early considerable increase both in income and value from termina speculative character of tion of rent controls but that indicates the conclusion, circumstances, transaction. Our under all these subject liability that defendant should be for the loss surcharged this investment and hold we that he should be the sum $2,700.00. surcharge This is not much more than defendant re ceived in commissions on gross Russell income and the result gain transaction; will be from anything will not the Russell plaintiffs gain anything and as hereinabove shown did not substantial from it.
We must further hold comply failed to (111(b) will) the terms the trust providing that the trustee pay “shall over and distribute the entire net income derived there (the equal monthly estate) from or other convenient install my daughers’’ (naming plaintiffs). unto said ments This is manda tory (McMillan v. Hospital, Barnard Free Skin & Cancer 304 Mo. W. 410) part S. defendant’s retention of of the net years 1950, 1951 and 1952 although was unauthorized, theory done on replace previous that he could distributions subsequent (See income. Trusts, Restatement of 182; Sec. Scott 182.) on Trusts, points See. Defendant provision to no of the will authorizing replacement and we hold there is none. This was recognized by the trial noted, court and, defendant was'ordered pay plaintiffs withheld income to and has done so. Plaintiffs surcharged defendant should be contend with interest for the period
1121 to question appear not this income was does withheld but since this accountable previously decided, have been hold defendant will not we for not been a interest. defendant have allowed However, should (which ordered commission on of income the court this distribution trial, for here- credited on allowance to him preparation the made discussed) corpus and did not become inafter because it was not by being replace corpus distributions. improperly retained to that, regardless or not are urge
Plaintiffs of whether there long standing hostility other the ill-will and between the grounds, requires trustee and the his removal. The trial court’s beneficiaries strong personal an memorandum “There no doubt that a states: tagonism developed has but between the beneficiaries and the trustee fortunately resign has assured he after he has the trustee that will proven that has hand he not defrauded the beneficiaries and after his ling proven guilty of the estate has been to he is be such that not charges against the laid recognized him.” The trial thus that it court be in would the best interest the trust to have a estate new trustee provided and in final its decree that the additional allowance which paid the court “upon resignation made defendant to be him was to ’’ turning and over the assets of the to estate his successor trustee.
Hostility generally between a and trustee beneficiaries not in does ground itself discharge trustee; constitute a for the removal or but it is a factor to taken into consideration; especially the where by exercise requires discretion the trustee personal relationship be tween the beneficiary, trustee and under some circumstances may require though removal of the trustee even been1 has without (54 112, in the 132; fault administration of Am. the trust. Jur. Sec. 90 191, 232; See. 331; C.J.S. Annotation 45 A.L.R. Restatement Trusts, 107; Trusts, Sec. 107; McHaneY, Scott Sec. Shelton v. 343 119, 951; Hawley, Mo. 119 W. S. 2d Selleck v. Mo. W. 56 S. 387; 2d Gartside, 669; v. W. v. Gartside Mo. 20 S. Gaston App. Hayden, hostility 938.) Mo. 73 W. In S. started case, beginning at trust, plaintiffs when contested the will on ground of during defendant’s undue influence. It continued period Mary when had a Caroline homestead at Accomac and her than, guardian. They represented by lawyer were then a different brought one who will controversy contest and there was about repairs Accomac, maintenance and money, about their need attorney things and other matters. Their tried work out with--de during during fendant period; period that that most of the ad vances from were made. Plaintiffs were both while married daughter. living at Accomac each separated had Each was her support husband at themselves and small children. When time of the trial and they they moved from Ac were working (where they rooms) Russell, had seven plaintiffs eomac and their together apartment husbands five lived one room on the third floor. apartment of this controversy condition about the There bills hospital heat, repairs, about floor; getting on lower also about were matters; remarks born, and other were the children when that, plaintiffs defendant defendant and plaintiffs to
made
say
Certainly
we cannot
very much resented.
were
hostility, creation of this situation
in the
fault
was without
was,
part of
withholding'
action in
improved
his
required him
provisions
1952 when the trust
1950, 1951 and
years
there
record
from the
plaintiff. It seems clear
toit
to distribute
*17
prevent the
parties as to
hostility between the
and
resentment
is such
manner
in the
being
out
defendant
from
carried
purposes
trust
the
together with
Considering
these matters
obviously
all
intended.
created
permitted to be
interests
and
conflict
the
of
transaction
Russell
thereby,
required.
trustee is
removal of the
is that the
conclusion
.our
circumstances,
court
the
that,
further hold
under these
We
for addi
$1,650.00
made
to defendant of
not have
allowances
should
defense,
expenses
for
and
preparation
$167.80
for
tional fees
his
attorney’s
any
amount for
fees or for
additional
$5,000.00-for
and
439,W.
It is said: “Allowance of to a trustee has who trust, upon finding committed' a breach of a that the trustee incompetent chargeable or largely with actual bad faith or ‘is fraud, judicial matter-of ordinarily discretion and will not be disturbed appeal. In the trustee, resulting only case minor of a faults partial losses surcharged, funds for his account has been may court, discretion, its diminish the amount of the trustee’s compensation.” (54 424, 539; Am. Jur. Sec. see also Annotation 110 577, citing Levering 566, Co., Garesche 436, v. Inv. 146 Mo. A.L:R. Cornet, S. W. 653 and Cornet v. 269 Mo. 190 S. 333.) W. Sec. Trusts, Restatement of “If states: the trustee commits a breach trust, may deny compensation court in its discretion him all or compensation reduced him allow him a full or allow compensation,” under Scott e Sec. considered see comment (For to be matters “The trustee is liable Scott: Trusts, 243.) said It there See. trust; and even if the court resulting his breach loss liability breach of trust b’e’-set" compensation, his can him allows compensation compensation or withheld against claim for his off his ’’ accept finding Since good until he made loss. we has fraud, or bad faith was no reckless' dishonesty, trial court there defendant, part we overrule the contention that he conduct on the surcharged compensation with the amount be allowed he should no what he has-received and set has received. We, therefore, off against hold that defendant $2,700.00surcharge;for may retain he re- loss, commissions-which would entitled to 15% during- on income collected and after 1963 and the commis- ceive 5% settlement; sion on to which he would be entitled on final however, provided, that he account for shall collected on the years 1950, withheld income for the 1951 and distributed'to plaintiffs hold which commission we not entitled. -is judgment The decree and is reversed and remanded with directions judgment to enter decree and in accordance with the views herein ex- pressed. All concur. Rehearing
On Motion for *18 PER says CURIAM. Defendant he accounted for the 5% commission on the to distributions the beneficiaries in his 1953 report. (Made herein.) after the trial course, if Of he has done so the trial may take court that into consideration in its final decree. Other matters reargue raised in the rulings motion made in opinion
our and we rulings adhere to these for the reasons stated there in. However, we argument note one made follows: “The annual charge $3,000.00 interest of $120.00 on the deed of trust put on the property Miami to get buy to funds property the Russell cannot be (as considered erroneously the did) Court charge as a on the property Russell income and at the same principal time the amount of $3000.00 money be considered as invested in the Russell Avenue equity. If the loan to purchase is be treated money as a mortgage for the property Russell charged the interest against proper ty income, the invested only in Russell is $9500.00. The assets of the trust invested in property, the Russell were the prop Accomac erty, valued $4,500.00, $5,000.00. and cash in the sum of The Court] simultaneously eharg'ed $120.00 against interest Russell income and computed yield from the investment on the. $Í2,50Ó,00 basis of investment.” only The bearing this matter fixing has- is in' the amount of
investment in Russell for the purpose figuring percent annual yield produced by it. Actually our mistake that, in computing this yield, we to failed consider the $14,000.00 mortgage on Russell in- attorney had (Plaintiffs’ therein. investment determining the total Actually the total yield.) figuring it failed to consider likewise funds— ($17,000.00 borrowed $26,500.00 in Russell investment yield should figure, and, give the true funds); $9,500.00 estate obligated for $26,500.00 the trust estate was figured because be fal- it. The pay the interest and had to earn debt that, his under argument shown fact lacy of defendant’s had borrowed any yield would if he computation, method buy the entire Russell. there suggested It should also be said that it is not true as beneficiary every be a would conflict interest between trustee percentage in which the a compensation case trustee’s was fixed as gross depend The income. determination of real conflict would in percentage involved, gross net proportion the come, way managed with reference which the estate was increasing gross income disproportionally to net income. rehearing
The motion for is overruled. Betty Amy L. Naunheim, Mrs. Norma Phelps, Leschen Suzanne F. L. Edna H. Moore, William II, John A. Leschen, Leschen, Mary Roebling, Plaintiffs-Respondents, v. Leschen, G. Defendant-Appel Corporation, Company, Watson-Stillman lant, (2d) No. 45015 293 S. 429. W. Two, September
Division 1956.