97 Ark. 588 | Ark. | 1911
First. When a trust is created by a will, a court of equity has jurisdiction to construe the will. This power is incident to the jurisdiction which courts of chancery have over trusts. Frank v. Frank, 88 Ark. 5, and cases there cited; 22 Enc. PI. & Pr. 60, 61 and 62 and numerous cases cited in notes.
As early as 1842 this court held that “as chancery will compel the performance of trusts, so it will assist the trustees and protect them, in the due performance of the trust, whenever they seek the aid and direction of the court as to its establishment, management and execution.” Ex parte Conway, 4 Ark. 302.
In Dimmock v. Bixby, 20 Pick. (Mass.) 374, it is said: “Whenever a trustee doubts as to his safety and security in complying with any claim of a cestui que trust or doubts as to any other matter arising in the execution of his trust, his only prudent and safe course is to wait for the directions of a court of equity. The common course in such cases is for 'the trustee to decline acting without such a sanction, leaving the cestui que trust to bring his bill to compel the execution of the trust. But it does not seem to be material whether the trustee be a plaintiff or defendant in the suit, the object of the application to the court being in either case the same.”
; “There are few cases of doubt in which the trustees may not properly decline to act without direction of the court.” 22 Enc. PL & Pr. 63. The will under consideration created an express trust for the payment of debts. The trustees were given unlimited discretion to “mortgage, sell, or lease” the lands for that purpose. The trust ended when the debts were paid; but if not paid before the children of the testatrix arrived at legal age, the trust terminated then any way.
The estate at the time of Mrs. Grider’s death owed about $38,000. Some of this indebtedness was not due until January 1, 1906, and could not have been, paid without the consent of the creditor before that time. Debts could not be paid by simply mortgaging the estate. For mortgaging to pay some debts would only be creating other debts to pay. It would require an income from other sources to satisfy the mortgage.
The testatrix evidently meant that, if her mother and husband deemed it to the best interest of her children, they could mortgage the lands of her estate to secure the debts until they could be paid out of the income derived from leasing or selling the lands. The whole will shows that the testatrix contemplated that it would take some time for the trustees to pay her debts, and that these might not be paid until her children had arrived at legal age. But the will was silent as to how the trustees should or might manage the estate during the time that would be required to sell the lands or to mortgage and lease same. The will, too, is silent as to whether the purposes of the trust should end when any of the beneficiaries were of age, even though the debts were still unpaid. It was a matter of doubt, and a question for construction, as to whether the testatrix intended to postpone the distribution of the estate among the beneficiaries until they all became of age.
A trustee is only entitled to come into a court of equity to have a construction of the will upon some doubtful question. 22 Fnc. Pl. & Pr. 64; Heald v. Heald, 56 Md. 300; Woods v. Puller, 61 Md. 457; Hayden v. Marmaduke, 19 Mo. 403; Methodist Episcopal Society v. Harriman, 54 N. H. 444; Vanness v. Jacobus, 17 N. J. Eq. 153; Matter of Brewster, 43 Hun (N. Y.) 600; Merlin v. Blagrave, 25 Beav. 139.
But there was sufficient ambiguity about the will in the above particulars to justify the trustees in asking a court of equity to construe the will concerning them. The court, however, should have declined to entertain jurisdiction of the ex parte petition of the trustees. For the court could readily see from the petition that the trustees were seeking a construction of the will that would enable them to “annually mortgage the rents, shares, income, and profits of the plantation, mules and farming implements for the purpose of operating it in the usual and customary way.” This is the construction the court gave the will. Under this construction the trustees could postpone the payment of the debts until the youngest child became of age. Indeed, by devoting the' entire income of the estate to expenses of operating the plantation in the “usual and customary way,” the payment of the mortgage debt that existed at the time of Mrs. Grider’s death has been postponed almost till the youngest child shall have become of age. Therefore the rights and interests of the beneficiaries were affected by the construction which the trustees sought and which the court granted. They were entitled to a hearing in their own right. The application for construction of a will must be by bill of complaint, and not by petition, in order that all parties interested may have notice. 22 Enc. PI. & Pr. 64, 1203; Gibbins v. Shepard, 125 Mass. 541; Ledyard’s Appeal, 51 Mich. 623; Matter of Van Wyck, 1 Barb. Ch. (N. Y.) 565, and other cases cited in note.
The court erred in taking jurisdiction of the administration of the estate for the purpose of construing the will and in giving directions to the trustees upon their ex parte petition, and also erred in its construction of the will. Eor, as we have shown, there was no authority to the trustees to operate the plantation in the usual way. There is-no authority to mortgage crops and personal property, rents, etc., for securing advances to operate the plantation. The only power given to them is “to mortgage, sell or lease the lands” for the payment of debts. Such debts as the trustees might have to incur in order to lease the lands to the best advantage would be included by necessary implication in the power to lease. But there is no language of the will that can be construed as giving the testamentary trustees power to carry on general farming operations and a general merchandise and supply business, no matter how advantageous or profitable these might be to the estate. The court not only erred in giving this construction to the will, but further erred in virtually assuming the administration of the estate by its orders and directions to the trustees and in receiving and approving annual reports of their management. The court, having assumed such jurisdiction, further erred in not requiring of the trustees a strict accounting of all the assets of the estate in their hands showing the disbursements with vouchers therefor, and the amounts received from all sources. For “a trustee must keep clear and accurate accounts of the trust property.” Underhill on Trusts, p. 332; Perry on Trusts, 821; 28 Am. & Eng. Enc. E. 1095, and note.
But, however egregious the above errors of the court and however great the mistakes of the trustees, these errors and mistakes can not be corrected by this appeal. For McGavock, the minor, was a necessary party to this proceeding for accounting, and he was not brought into court. Moreover, counsel for appellants, in his oral argument, expressly abandoned the prayer of his amended complaint for an accounting.
Second. All the proceedings of the chancery court in the matter of the construction of the will and of the administration of the estate, under the will, and all the acts of the trustees pertaining to such administration are, however, relevant to the question whether or not the court erred in refusing to remove W. H. Grider from the position of trustee. In this connection it was proper for the appellants to aver and set forth in their complaint all the acts of W. H. Grider in connection with his management of the trust estate from the beginning. Notwithstanding appellants brought suit, soon after reaching their majority, to remove the trustee, which, upon adverse decision, they failed to prosecute, still they are not estopped by that decision from setting up the same matter in this complaint together with the subsequent conduct of the trustee as alleged grounds for his dismissal. While the bringing of that suit and the failure to prosecute after dismissal was an apparent acquiescence on the part of appellants that there had been nothing in the .conduct of W. H. Grider calling for his dismissal, yet that decision was not res judicata of the issue in this case as to whether or not W. H. Grider should now be removed. To determine whether he had been a competent and faithful trustee, his conduct as such from the beginning of the trust was in review, and the court did not err in refusing to strike the allegations of the former complaint from the complaint in the instant case. We have, therefore, with the aid of the exhaustive brief of the learned counsel for appellants, considered all the allegations of the complaint and all the evidence adduced as to the alleged delinquencies of W. H. Grider, and we do not discover any evidence of inability or unfaithfulness on his part as executor of the estate. Being doubtful what course he should pursue in the performance of his duties, he, almost from the beginning of his trust, brought the will into court and sought the court’s direction and supervision. This act itself is the highest evidence of good faith. He construed the will as not requiring a strict accounting to any court of the amounts received and disbursed .by 'him in the management of the estate. He conceived that it was his duty under the will to operate the plantation after Mrs. Grider’s death just as he had been doing before. He conceived it to be his duty to pay the debts, if it could be done in this manner, by the time the youngest •child was of age. This was a total, but honest, misapprehension of the purport of the will.
The learned chancellor coincided with W. H. Grider in his construction of the will, and directed him to continue to so manage the estate, and approved the reports made from year to year of such management. Therefore the conduct of Grider in his management of the estate and in his manner of accounting must be viewed in the light of the direction and approval of his course by the chancery court. The conduct of Grider was, in a sense, thus caused by the court to which, he appealed for guidance.
From the viewpoint which Grider and the chancery court had of the purport of the will, it certainly can not be said that Mr. Grider’s management of the estate has been incompetent or unfaithful. But, on the contrary, it shows 'him to have been both conscientious and efficient. For the record shows that, under the construction that he and the chancery court gave the will, his management has been eminently successful, resulting in great enhancement of the estate to the consequent benefit of the beneficiaries. Although such management was contrary to the rights of appellants under the provisions of the will, as we construe it, yet such management can not be set down as an impeachment of 'his competency or fidelity as a trustee.
If the court had removed him, it would have been virtually a condemnation of its own agent for doing the things it had at first directed and approved. Such treatment of the trustee was neither deserved nor necessary, for the court at the time of its judgment had then taken charge of the estate for the protection of the beneficiaries, and could thereafter control the conduct of the trustee Grider. The court did not err in refusing to remove W. H. Grider from the trusteeship.
Third. It was the intention of the testratrix that there should be no distribution of the estate among the beneficiaries until her debts were paid, and that, unless her debts were paid before the youngest child became of age, the estate should not be divided or partitioned among the beneficiaries fill the majority of the youngest child. The record shows that the debts have not (been paid, and therefore appellants can not maintain this suit as for partition.
Fourth. As to the judgment in favor of Ball & Company, the evidence shows that in 1906 appellants at the request of Ball & Company joined in a mortgage that was executed by the trustees for advances during that year. The appellants accepted money that was advanced to the trustees under this mortgage, and that was paid to them by the trustees through drafts on Ball & Company. Likewise the appellants received money for other subsequent ■ years that they must have known was advanced to the trustees by Ball & Company, and secured by mortgage executed to Ball & Company by the trustees. The report of the special master shows that during the years 1905, 1906, 1907 and 1908 appellants received in person from the trustees the sum of $2,055. There was evidence to warrant the. conclusion that appellants knew that this money was obtained by the trustees from Ball & Company. The evidence also warranted the conclusion that appellants knew that the balance of the amount of the judgment was expended (by the trustees for the betterment of the estate, and they acquiesced .therein. They should not deny it now. Appellants, having received a portion of the money derived from the contracts thus made by the trustees with Ball & Company and having acquiesced in the expenditure of the balance for their benefit, are now estopped from setting up that those contracts are invalid.
One can not. receive or accept a 'benefit under a contract which ‘ he knows at the time was unauthorized, and then set up the invalidity of the contract. Grider was insolvent. Therefore the pro rata interest of appellants in the estate may be subjected in equity to the payment pro rata of the judgment of Wm. M. Ball & Company. Norton v. Phelps, 54 Miss. 467; Clopton v. Gholson, 53 Miss. 466; Norton v. Phelps, 103 U. S. 393.
As to the judgments in favor of other parties disclosed by the record, it suffices to say that they have not been made .parties to this appeal.
The judgment refusing to dismiss W. H. Grider from the trusteeship, and the judgment in favor of Ball & Company.as to the appellant is affirmed. In so far as the judgment in favor •of Ball & Company affects the interest of McGavock Grider, the minor, the same is reversed and remanded, for the reason that no guardian ad litem was appointed for him, and no answer has been filed by -any guardian for him. Section 6023, Kirby’s Digest; Cowling v. Hill, 69 Ark. 350; Freeman v. Russell, 40 Ark. 56. T¡he cause will be reversed with directions for further proceedings not inconsistent with this opinion.