88 Ky. 615 | Ky. Ct. App. | 1889
delivered tiie opinion or tiie court.
The questions involved in this case arise between the 'devisees of ¥m. Ii. Walker on the one side, and the •executors of his last will on the other. At the time of his death Walker was a prosperous merchant in the city •of Louisville, and the owner of a large estate. He was fthe senior member of the firm of Wm. H. Walker & ‘Co., and his son Frederick, then quite young, the junior member, the father owning two-thirds of the capital invested in the business and his sou the remaining one-third. Being desirous of having the business of the firm continued, and confiding in the personal and business integrity of his son, when executing his last will ;and testament, he left, by certain provisions of that 'instrument, the sole management and control of the firm business to this son, with the right, on the part of the latter, to become an equal partner if he saw proper, instead of retaining only an interest of one-third.
By the fourth clause of his will the following devises are made : “ I give and devise all the rest, remainder and “ residue of my property to my children living at my “ death, share and share alike, to be divided among them, the personalty at my death and the realty when the youngest of them living to be twenty-one years of age
By the eighth clause of the will, or so much as bears on the issues made, the testator says: “ It is my wish that “ my son Frederick carry on the business of W. TI. ££ Walker & Co., in that name and style, and in my store- ££ house where it is now carried on, giving him power to ££ change the place, until my youngest child living is “ twenty-one years of age, or for a shorter time if he “ does not find it profitable. To that end all my capital “ and interest in that concern shall be continued therein, “ and shall be chargeable for its debts and liabilities, but “ my other property shall not be so chargeable. * * * “ Frederick is not to be charged with five thousand dol- “ lars advanced him on his becoming of age, and he is to “ have the privilege to purchase at a fair valuation, and “ upon reasonable time, such portion of my share in said “ concern and its good will as will make his share equal “ to one-half. What he may so pay is to be divided as “ profits of the concern. While my store-house is occu- “ pied by the firm it shall pay rent therefor. The profits “ of the concern, which shall be ascertained and declared “ on the first of January after my death, and annually
At the time of the testator’s death he left some valuable but unproductive real estate and but little personalty, and, as the record shows, some of the real estate had to-be sold to pay taxes and other charges against the estate, about which there is no controversy. The testator, in his lifetime, evidently- looked to the profits of the mercantile firm for the support of a large family, and realizing the fact that such an expenditure must still continue, pro: vided by his will that the profits of the firm should be annually declared and paid out to his wife and children. Some five or six of his children were then infants, residing, after his death, with their mother and the adult-children engaged in business. Such was the condition of the testator’s estate and family at his death; and after his decease his wife, Mary, his son, Frederick, and his son-in-law, James E. Breed, qualified as executors without surety (such being the request of the testator), each executing an individual bond. The wife, Mary, was also appointed guardian of the infants.
His son, Frederick, undertook the management and control of the firm of W. H. Walker & Co., purchasing for himself the additional one-sixth interest, thereby.
In a year or two after the death of the testator his- executors (three of them) all united in a petition to the Chancellor, alleging a doubt as to the nature of their authority .and powers under the will; and as the estate could not be wound up until the youngest child arrived at age, it was of the utmost importance that they be guided in the ■discharge of their duties by the Chancellor, and that their -accounts be from time to time settled, etc.; and to the •end that justice may be done, and all errors or mistakes made, if any, be avoided, in the future, and that plaintiffs may be instructed in their trust, and protected in their ex■ecution of the same, the plaintifs pray the court to construe the will of W. II. Walker, and define the poioers and duties of the plaintiffs as executors ; and further, that the cause be referred to the commissioner for a settlement of their accounts, etc.
On this petition all of the devisees were- before the court except the appellant, William Walker, who seems not to have been served with process. The cause was ■submitted for a construction of the will on the petition of the executors, and a' judgment rendered, in which it was said by the Chancellor, that but for the money arising ■(meaning the profits) from the firm of Walker & Co. the landed property of the estate must have been sold at a sacrifice, and that (in his opinion) the continuation of the business was not only fully authorized but judicious; that it was not necessary for the executors to withdraw the profits ascertained at the end of each year ; that the
This was the instruction by the Chancellor to the executors in regard to their official duties, and the construction placed on the provisions of this will on the petition of the executors. The Chancellor, placing himself in the position of the testator in the conduct of his business at the date of the will in question, and the means necessarily resorted to for the support of his family, and the object testator had in view in confiding to his son the control of this large mercantile firm, saw the necessity for withdrawing the profits as the wants of the family might require, six of them then being infants, and said to the executors: “You can leave the.profits of the firm in /‘the concern, and-withdraw them when required for the “purposes of the estate ”
It was regarded as a safe depository for these profits, and the Chancellor, in permitting Frederick to retain their custody, subject to the demands of the adult children or the guardian of the infants, who was the mother and a, co-executor, was confiding a much less sum to the control of Frederick than the testator, who had confided to him the sole care and control of the most valuable part of his estate, and that which produced the only income for the support of his wife and children. The report of settlement made by the commissioner, under the original
The business conducted by the firm was that of the-purchase and sale of whisky, and in the conduct of this, business it was indispensable, as the proof shows, to. have indorsements of paper by way of accommodation for the-firm, and the firm would return the favor by making likeindorsements for others. Such was the manner, but in a more judicious way, in which the testator had conducted the business that resulted in making the firm of W. EL Walker & Co. a substantial monied concern. The firm,, when the son took control of it, indorsed for Jordan and others, who also indorsed for W. H. Walker & Co., and the former becoming a bankrupt, the liabilities of the firm, arising from its own indebtedness and its liability asindorser, wrecked the entire firm property financially,, and the whole was lost to the estate.
After this failure of Fred. Walker, or the firm of Wm. H. Walker & Co., the executors filed a supplemental petition in the action filed in 1874, alleging the bankruptcy of the firm, and asking for a settlement of their accounts, as executors. To that supplemental petition the appellants' filed answers, in which they seek to make the co-executors with Fred. Walker liable for the acts of the-latter in the management of the firm business of Wm. H. Walker & Co., his misappropriation of the profits of that firm, and the unlawful use by him of assets belong
It is evident from the proof, and the report of the ‘commissioner in this case, that neither James E. Breed ■■or Mary Walker, the co-executors, took any control of the firm business confided by the testator to his son Fred■erick, nor did they handle any money of the estate. Mrs. Walker, perhaps, received the proceeds (small in .amount) of some real estate that has 'been accounted for, .and in regard to which there is no dispute.
The first, and one of the principal, questions in this case arises as to the liability of the co-executors, who qualified with Frederick Walker as such, for his mismanagement of the firm property. No joint bond was executed by the executors, and the entire firm business placed by ■■the will of the testator under the control of the son for an indefinite period, and not subject even to the supervision of his ■oo-exeeutors. This firm property had been in fact severed from the general estate of the testator, ■and not made the subject of disposition by the executors as such. It was made, by the will, a special trust confided to the son, the proceeds or profits of which he was required to apply in-a particular manner, and by the very terms of the will, and.the character of the business and property placed in the custody of the son, it was rendered impracticable for the co-executors to share in its management or to look to the- application of its ■results. The testator never contemplated that any one ■else should have the right to control this special devise, •or become responsible for the manner in which it was ■conducted, or that his other executors were to look to
As one executor has no power to prevent his co-executor from receiving the assets, his liability is confined to the assets he receives, unless he connives at the devastavit of his co-executor, or omits to perform some duty that is made imperative by the will. A will directing the investment of monies for a particular purpose must be executed by the representatives who undertake the performance of the trust; and to permit the money to be collected by one executor, and to be retained by him for his own purposes, or for such a length of time as would be unreasonable instead of making the investment, would make all responsible; but in the ordinary administration
The son was empowered by the eighth clause of the will to' purchase an additional interest in the firm business. He made this purchase by debiting the one side and crediting the other, and it remained there as profits, to use ■ the language of the will, to be appropriated by the trustee for the benefit of the family, and the adult appellants had as much right to compel the payment of the profits over to them as these executors had, who are sought to be made liable.
It would be unreasonable to hold that the appellees, Breed and Mrs. Walker, the widow, were bound to look to these profits and their appropriation by this
There is, we think, no rule of law or equity that would hold these co-executors liable in this case. They have been guilty of no fraud, and even if required to look to the profits of the firm business, they had no reason to-believe that the son was wasting the estate or misappropriating the trust fund. The testator, in his desire to-continue the business in which he had accumulated his fortune, saw proper to place the bulk of his estate under the control of his son, in whom he had the greatest confidence, and who has abused that confidence only to the extent of making indorsements that were unfortunate and reckless, causing the loss of his entire estate. These , devisees have no claims, moral, legal or equitable upon those, who were, as well as themselves, recipients of the.
"We must affirm the judgment of the Chancellor as to the appellees, Breed and Mrs. Walker, but as to the appellee, Ered. Walker, the judgment is reversed, and . cause remanded with directions to refer the case to the commissioner to fix his liability, which may be easily determined by the report adopted by the commissioner in the record before us. His liability for the firm assets can not be doubted.