Case Name: Helen F. Woodbridge, as Substituted Trustee of the Estate of Samuel Freeman, Deceased, Appellant, v. Augustus Bockes, Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1902-04-01
Citations: 170 N.Y. 596
Docket Number: 
Parties: Helen F. Woodbridge, as Substituted Trustee of the Estate of Samuel Freeman, Deceased, Appellant, v. Augustus Bockes, Respondent.
Judges: 
Reporter: New York Reports
Volume: 170
Pages: 596–612

Head Matter:
Helen F. Woodbridge, as Substituted Trustee of the Estate of Samuel Freeman, Deceased, Appellant, v. Augustus Bockes, Respondent.
Woodbridge v. Boches, 59 App. Div. 508, affirmed.
(Argued February 19, 1902;
decided April 1, 1902.)
Appeal from a judgment of the Appellate Division of the Supreme Court in the fourth judicial department, entered March 15, 1901, affirming a judgment in favv. of defendant entered upon a dismissal of the complaint by the court on trial at Special Term.
This action was instituted by the plaintiff, as a substituted trustee under the will of Samuel Freeman, deceased, to compel her predecessor in the trust, the trustee named in the will, to account for the moneys and property of the trust estate and to pay over such as he may be found chargeable with. A trial was had and findings were made by the trial court, from which the following facts are extracted, as those material to the narrative of the case. Samuel Freeman died in December, 1870 ; leaving a last will, of which the defendant was constituted sole executor and trustee. lie gave hi§ residuary' estate to the defendant, as executor,. in trust to apply the income thereof to the use of the testator’s daughter, this plaintiff, during her life, “ not, however, to exceed in the aggregate the annual sum of $3,500.” Upon the decease of his daughter, he gave the trust fund and property to her child, or children, and in case no child, or descendant of any child, should survive her, he directed that they were to go to his next of kin and heirs at law. He further authorized his daughter to dispose of one-half of the trust estate by- her will. He fixed the compensation of the trustee at §500.00 annually.
The plaintiff was the testator’s only child and, at the time of his death, she was married to Rev. John Woodbridge and had two children ; who are now surviving and who, with one child recently born to one of her children, are her only descendants. The defendant qualified as executor and trustee of the will; but he allowed the plaintiff’s husband, under her sanction, to retain the securities of the estate and to manage the same, until June, 1872, when he executed and delivered to Mr. Woodbridge a general power of attorney to use, manage and control the properties held in trust. This instrument recited that it was executed with the approval of the plaintiff and it contained a further writing, signed by her, wherein she “ sanctioned, ratified and approved ” the appointment of Mr. Woodbridge as defendant’s attorney and declared that “the said John Woodbridge is to be deemed also my agent and attorney in all matters and things done and to be done and performed under said power of attorney.” From that time on, the business of the estate was conducted by Mr. Woodbridge,- with the plaintiff’s knowledge and approval, until September-, 1889 ; at which time all the real estate included in the trust was made over to the plaintiff, individually. At the same time, the plaintiff and her two children, who were then of full age, executed a release, under their seals, to tire defendant, “reciting the fact that the defendant had nothing to do with the estate personally and that it had been managed exclusively by John Woodbridge as agent, and by which the plaintiff and her two children ratified and confirmed all the acts of the said John Woodbridge and absolutely released the defendant from any claim or demand, that they, or either of them, may, or might, have against him by reason of his acts as executor or trustee, or otherwise, and also agreed to indemnify and save him harmless from any liability by reason of any acts of John Woodbridge.” “ These releases were executed freely and voluntarily by the plaintiff and her two children * * * with fall knowledge of all the facts and without any fraud, actual or constructive, or misrepresentation of any character on the part of the defendant.” None of the estate, real or personal, is now in the hands of either the defendant, or of Mi'. Woodbi;idge; the real estate being all held by the plaintiff and the personal estate having been in the possession of the plaintiff and of her husband, as her attorney, since 1872. The defendant “ has accounted for the property of the estate, as well as the nature of the case would admit ” and he has not at any time, “ taken, accepted or retained to his own use any property, funds or money belonging to the estate.” The plaintiff and her husband, with their two children, from 1872 until about 1894, resided upon property at New Brunswick, N. J., purchased at a cost of $50,000, with the funds of the estate; the title to which is in the plaintiff. “The plaintiff was fully aware of the steps taken by her husband in purchasing said property and using the trust funds for that purpose and for the support of the family, and the plaintiff acquiesced in and united with her husband in such disposition of the funds.” The New Brunswick property, “ which was so occupied by the plaintiff and her family, was large and expensive, and the family lived in expensive style with servants, horses, carriages, etc., and the income of the estate was not sufficient for this style of living.” The plaintiff “ in such manner has largely overdrawn her annuity of $3,500 per annum, and there is nothing due or owing from the defendant, or from the trust estate, to her on account thereof.” In 1894, the plaintiff had herself appointed “ as substituted trustee in the place and stead of the defendant.”
The trial court, also, found, as facts, that the plaintiff has had possession and control of the property and effects of the estate “ and holds the same, or, if at all disposed of, misappropriated, or wasted, such disposition has been caused, permitted, sanctioned and approved by the plaintiff in her own use and enjoyment thereof.” “ If any deficit exists in the funds of said estate, the same has been caused and brought about by the plaintiff herself, or by and through her acquiescence, approval and participation, and is represented by the indebtedness owing by the plaintiff to said estate, $50,000 of which was invested in the New Brunswick property, the title to which is in the plaintiff’s name, and interest thereon, amounting to over $40,000, all of which is unpaid, and by other property, or the proceeds thereof, all of which went into the possession of plaintiff, or of her husband as agent, with her consent, or was disposed of with her knowledge, sanction and approval.” “ If the plaintiff would account to and pay over to the estate the funds which she has appropriated, or participated in appropriating, to her own use and purposes, and her indebtedness to said estate, * * * this would fully meet and answer all and any alleged deficit or devastavit charged or claimed to exist herein.”
Upon the above facts judgment was directed to be entered against the plaintiff, dismissing her complaint, and that judgment has been unanimously affirmed at the Appellate Division, in the fourth department.
It appears that Dr. Freeman, the testator, resided, at the time of his death, at Saratoga Springs in this state; as did, also, the plaintiff, with her husband, who was a Presbyterian clergyman, until 1872, when they purchased the residence in New Brunswick, N. J. It appears, also, that the defendant had filed an inventory of his testator’s estate, in January, 1871, which showed that the personal estate amounted to upwards of $150,000, and that the real estate was of uncertain value.
The substitution of the plaintiff, as trustee under Dr. Freeman’s will, in 1894, was effected through a proceeding upon the petition of the plaintiff and of her children, in which the defendant united; which requested the court to accept the latter’s resignation as trustee and to appoint the plaintiff as trustee in his place. The order upon the petition permitted the defendant to resign without an accounting.
Appleton D. Palmer for appellant.
John L. Henning for respondent.

Opinion:
Gkay, J.
Doubtless, the general rule in equity would require a trustee to account to his cestui gue trust in a proper case, and would require of him, when laying down his trust, upon a proper demand, to render an account of his management of the estate confided to him. The application of the rule, however, is complicated with such extraordinary facts, in the present case, as to make its enforcement questionable. The proceeding is in a court of equity and whether it will exbrcise its equitable jurisdiction, and grant the relief prayed for, will depend upon the facts, as well as upon the application of legal principles. The above facts, as they are established for us by the unanimous affirmance of the judgment of the Appellate Division, exhibit the parties to this action in a situation which is creditable to neither. As to the defendant, he is shown to have been unmindful of the trust and personal confidence reposed in him by his testator and to have neglected the duties devolved upon him by the will; the performance of which he assumed by qualifying as executor. Instead of preserving and managing the trust properties, as directed, he permitted the same to pass into the possession of, and to be used by, the plaintiff and her husband. This, necessarily, subverted the testator's testamentary scheme; for his intention, in appointing the defendant as his executor and the trustee of his residuary estate, was to prevent the trust estate from being controlled by his daughter, and, necessarily, of course, by her husband. It was to be cared for by the defendant during the plaintiff's life and the income, to a certain amount, only, was to be applied for her benefit. Upon her death, it was to go to her children, or descendants; or, failing such, to the testator's next of kin and heirs at law. The defendant, though chargeable with no actually dishonest dealings with the trust property, was, nevertheless, unfaithful to his testator's instructions and, therefore, in the eye of the law, delinquent to his trust. Although he may have been released from accountability by his oestfioi que úrust and by her children, the remaindermen, he finds himself in a situation, where he will be incapable of responding to possible demands of contingent remaindermen for the trust estate, in the event of the failure of plaintiff's children to survive her.
As to the plaintiff, there are several considerations, which render her situation, as a complainant in the action, one which neither appeals to the conscience of a court of equity, nor inclines it to strain any rule of law in her favor. As the cestui que trust, it was, manifestly, improper and incompatible with her relation to the estate, that she should be appointed the trustee. (115 N. Y. 346-357; 147 ib. 560-568.) Having secured from the defendant the possession and the control of the trust properties, soon after her father's death, and having, thereafter, managed them, personally, or through her husband as her appointed agent, she wasted the estate in illegal investments, or in a mode of living beyond that which her rightful income warranted. When, after the lapse of some twenty-seven years of this course of conduct and when, after having released the defendant, some ten years before the action, as far as she and her children could do so, she demands that he now account for the trust estate and that he pay it over to her, in her new capacity, her demand comes with an ill grace. When she sought, and obtained, his resignation as trustee and her own appointment as trustee, in his place, no accounting was required, or ordered, on his part. When instituting this action, she does not make herself a party individually, as cestui que trust. (See Perry on Trusts, secs. 875, 876; Sherman v. Parish, 53 N. Y. 483, 490; Vetterlein v. Barnes, 124 U. S. 169.). Furthermore, such time has elapsed as to make it difficult for the defendant to render any account, under the circumstances.
These are considerations, which must militate against the plaintiff's right to maintain her action. It is no absolute right. It is one which should be accorded upon principles of equity, alone. It may be lost by operation of an estoppel through acquiescence, as it may by release ; or the circumstances may be such as, either to make an accounting unnecessary, or one improper to be decreed. (See Perry on Trusts, sec. 849; Sherman v. Parish, 53 N. Y. 483-492; Butterfield v. Cowing, 112 ib. 486-492; Matter of Niles, 113 ib. 547-559; Brice v. Stokes, 11 Vesey, 319; Walker v. Symonds, 3 Swanst. 1-64; Nail v. Punter, 5 Sim. 555; Chillingworth v. Chambers, L. R. [1 Ch. 1896] 685, 699, 707.) If it is just and equitable that the defendant should be required to account to the plaintiff, he will be so directed; but not otherwise. The matter is exclusively one coming within the domain of equity.
It is true that the plaintiff is suing in her capacity as trustee, alone; but the court will look through the form of the proceeding, at the substance of the matter. It will consider whether the facts disclosed are such as to justify her, in any aspect, in appealing to the exercise of its equitable powers. Representing herself as the eestui que trust, she is without right to hold the defendant to account; for she not only has authorized, and acquiesced in, the breach of his trust, in complaisantly surrendering the control and management of the trust properties to her or to her husband, as her agent, but she is found to have what trust properties there are. She has, individually, released the defendant from all liability by reason of his executorship and trusteeship and she is, herself, liable to the trust for the trust properties which she has received and used. (Perry on Trusts, sec. 669 ; Ghillingworth v. Gliambers, svqpra.) Of course, it follows that she has no possible claim for any accrued income of the trust. It is not a question of any alienation by the beneficiary of her interest. It is whether she can make the defendant account for the income of the trust, when she has received, and is liable for, the trust fund. Directly, or indirectly, she received the whole of it, as it is found, and the defendant has accounted as well as the nature of the case permitted.
She cannot demand an accounting in the right of her children, in whom, by the terms of the will, the residuary estate has vested as the remaindermen ; because, when of full age, .they joined with her in releasing the defendant and the instrument of release is found to to have been voluntarily executed by them, as by her, without any fraud, or misrepresentation, and with full knowledge of all the facts.
What right has she to call him to account? By an impersonal right ? But that means that, notwithstanding her complicity in the course which has led to this result, if disastrous to the trust, she may be recognized in her assumed office of trustee and may be accorded a right, which, personally, she has forfeited, morally, as well as legally. That cannot be. However separate the office and the individual, a court of equity cannot, and should not, grant to the former what the incumbent is unfit to be trusted with. Herein is the flaw, which deprives the plaintiff's assertion of an equitable right of any force.
Is she in any position to maintain the action in the right of the infant descendant, as a contingent remainderman; which is the only possible theory, under the circumstances ? That the court might, in a proper case, require the defendant to account for, and to make good, the wasted trust estate, in order that it may he preserved for the contingent remainder-man, may be true; but this is not a case where it is necessary to decide that question. The plaintiff may represent the trust estate ; but she does not represent the remaindermen. She is not their trustee and they are not represented in court. She is the cestui que trust and, as such, she has had the whole trust estate, directly, or indirectly, and is liable for it. The court might well deny the prayer of plaintiff's bill of complaint, by reason of the impropriety of her acting in the double capacity of cestui que.trust and of trustee; as by reason. of her being equally liable with the defendant upon the demand of a contingent remainderman to account for the estate, in the event of the failure of her children to survive her. If she cannot maintain it for herself, or for the present remaindermen, by reason of their acts, I perceive no equitable principle, upon which she might maintain it upon the fiction that she is proceeding in behalf of contingent remaindermen.
However inexcusable the defendant's acts as trustee maybe, he should not be held to account to one, who has induced the commission of his illegal acts ; who has acquiesced in his violation of the trust; avIio, individually, is answerable for the wasted estate and who, having acquiesced in the discharge of the defendant Avithout a direction to account, after the lapse of years brings such an action. The plaintiff's demand is repugnant to equity.
The conclusion I reach is that the judgment should be affirmed, with costs, and that our order shall state that the determination in this action shall be no bar to, nor authoritv against, the maintenance of any action, or proceeding, by or in behalf of, the contingent remaindermen, as may be advised, to secure their rights, or interests, in the corpus of the trust fund.