Court Opinion

ID: 5211421
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:13:32.576907+00
Date Added: 2024-06-11T08:27:22.600845
License: Public Domain

Ingraham, J.:
Robert E. Dietz died September 19, 1897,.leaving a last will an.d testament which was duly admitted to probate in the county of Hew *642York. The testator created a trust of certain shares of stock of a corporation which he controlled, to continue during the life of his ■ wife, the petitioner, to whom he directed the dividends and income thereof to be paid, and upon her death the same was to be sold and the proceeds distributed as part of his residuary estate. There was also bequeathed to his trustees the sum of $100,000 in trust, to pay the income thereof to his wife during her life and upon her death to be divided between his children, share and share alike. He ■appointed his son, Frederick Dietz, liis son-in-law, William Henry White, and one Samuel McMillan as executors and trustees under the will, to whom letters were duly issued October 5, 1897. These trustees remained in possession of this trust property down to July 3, 1904, when William Henry White, one of the trustees, died, and the surviving trustees continued to administer the trust until December, 1908, when this application was made.
Since the death of the testator this corporation, called the H. E. Dietz'Company, has been under the substantial control of Frederick Dietz, who for many'years before the testator’s death had been a • director and officer of the company, and under his management the corporation has met with remarkable success. Frederick Dietz had - been in the employ of the • testator prior to the commencement of this business in 1868. The testator and his son Frederick commenced this business at that time and continued it until 1886 when a corporation was organized to which the business was transferred. At-the time of the organization of the corporation there was allotted to Frederick Dietz 200 shares of stock, to his brother John Dietz 150 shares of stock, and the balance was retained by the testator^ Prior to the death of the" testator the average net earnings of the business- was about. $14,000 a year, and since that time the business has so much increased that during the past four years dividends in the aggregate of seven hundred and twenty-five per cent on the capital stock have been declared by way of extra dividends, and in addition a large surplus has accumulated. As the result of that increase, the petitioner has received an income from this corporation of from thirty-two per cent to thirty-five per cent on the capital stock, and which has aggregated about $653,400.
The petitioner is the widow of the testator. The testator had another son named Howard J. Dietz, who has never had any con*643neetion with the business and who was not appointed a trustee. It is alleged that for many years prior to the death of the testator his son Howard was a constant source of trouble, anxiety and expense to his father, because of his dissipated habits ; that he has been ten times an inmate of institutions to enable him to reform, and that this condition has existed for over twenty years. The petitioner is eighty-four years of age and is now in receipt of an income of over $29,000 a year from this trust. Her son Howard is now living with her at her home in Hew York city and constantly complains of not being able to use the principal of the testator’s property although he receives an income of about $9,000 a year. And it is directly charged that this proceeding is instigated by Howard for the purpose of obtaining possession, if possible, of some of the property of this estate. In reply, to these facts the petitioner swears that the habits of her son Howard are not in any way in question in the proceedings, and that whatever those habits were in years gone by, his conduct and course of action in the past two years have been' such that in the petitioner’s opinion he is as competent and qualified as any of her children to care for and control property. But there is no denial in any of the papers, so far as I can see, of the allegation in regard to the past habits of Howard ; that he is living with the petitioner or that this application is made for his benefit. Those interested in the estate, with the exception of the petitioner and Howard, object to the appointment of an additional trustee.
The authority to make this appointment is contained in section .2818 of the Code of Civil Procedure. That section provides that where one of two or more testamentary trustees dies or becomes a lunatic, or is by decree of the Surrogate’s Court removed or allowed to resign, a successor shall not be appointed except where such appointment is necessary in order to comply with the express terms of the will, or unless the same court or the Supreme Court shall be of the opinion that the appointment of a successor would be for the benefit of the cestui que trust. To justify the appointment in this case, therefore, the court must be satisfied that such an appointment would be for the benefit of the cestui que trust. I think the facts stated conclusively show that the áppointment of a trustee in place of the deceased trustee is not at all necessary for the protection of *644the trust property, for the proper administration of the trust, or for the protection of the cestuis que trust. On the contrary, considering the business that is carried on by this corporation, the success that has attended the management of the corporation by the managing trustee and those connected with him in its business, and the fact that, n'o suggestion is inade that any legal principles have been isolated in the management-of the trust, or that, so far as the trust-property is concerned, the present trustees have hot managed the same with ability and success, it seems to me plain that the. application is not made for the benefit of the trust estate or of the cestuis que trust but to accomplish some ulterior purpose; that not only does it not appear that the appointment of a successor would be for the benefit of the cestuis que 'trust but it would be to their positive detriment.
For this reason I think the surrogate should not have made the appointment and that the order appealed from should be reversed, with ten dollars costs and disbursements, and the application denied, with ten dollars costs;
McLaughlin and Clarke, JJ., concurred; Laughlin and Scott, JJ., dissented.