Court Opinion

ID: 6999267
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:39:03.703183+00
Date Added: 2024-06-11T16:09:52.427387
License: Public Domain

Me. Justice Wobthington delivered the opinion of the court. This cause was heard by the chancellor in open court upon oral and documentary testimony. His finding of facts should not then be disturbed unless clearly contrary to the weight of evidence. Burgett v. Osborne, 172 Ill. 227; Maratta v. Anderson, 172 Ill. 377. The errors assigned, which are important to be considered, are, first, that the Circuit Court erred in refusing to decree an accounting by the defendants in the cross-bill of John Penn, trustee, for the trust fund mentioned in the cross-bill, together with lawful interest thereon; second, the Circuit Court erred in refusing to decree an accounting by George W. Brown, administrator with the will annexed of Nathaniel M. McCurdy, deceased, to John Penn, trustee, for the trust-fund mentioned, together with lawful interest thereon. Plaintiff in error urges two propositions for the consideration of this court: 1st. That George W. Brown had no authority to manage or invest the trust fund, meaning the 400 shares of bank stock. 2d. That if he had authority to manage or invest the fund, that it was so carelessly and improperly managed by said Brown and his associates, that this management, with their payment of unearned dividends, amounted to devastavit of the fund, and thereby renders them jointly and severally liable for it. The consideration of the first proposition involves the construction of the will of McCurdy, and an examination of the decree of the Circuit Court of Fayette County rendered at its February term, A. D. 1877. The will of McCurdy appears to have been drafted by himself, and with the intention to name executors in it, but none were named. In one place it states, “The $3,000 (to the M. E. Church) shall be paid by my executors hereinafter to be named, as soon after my decease as they mzty be able to discharge all other bequests I make in this will, out of my dividends on my bank stock in the National Bank of Vandalia.” And in another place, “ I also will and ordain that my executors shall, on the best terms they can make and within a reasonable time after my death, sell all the property, real, personal and mixed, of which I may die seized, * * * and the money received kept on interest when the amount is too small to meet a legacy, shall be delivered and paid over to the proper persons authorized to receive the same, as follows,” etc. It is evident by these citations, that when drafting his will he intended that it should be administered by executors selected by himself. It is also evident that the clause, “ I also will and ordain that my executors shall * * * sell all the property, real, personal and mixed,” must be considered and construed with the clauses referring to the bank stock. In other words, it was not his intention that his bank stock should be sold with his other personal property. He intended this to produce earnings to pay the Marrs’ annuities as long as any one of them lived, and expected it to remain bank stock. The language of his will is: “ The means to meet and discharge all the legacies in this will hitherto devised will be found in the earnings of my bank stock, and when they a/re all fully discharged I hereby will, bequeath and devise unto the proper government of McKendree College * * * to endow and support, and maintain and continue in use a professional chair, to be known as the McCurdy Professorship of the Pure and Applied Sciences, two hundred shares of one hundred dollars each, to be transferred on the books of the National Bank of Vandalia, to the credit of McKendree College, the earnings of which shall be appropriated to the salary of the Professor, etc. * * * The said stock shall be considered as a perpetual endowment, and no part thereof shall ever be diverted to any other use. * * * After the transfer of stock to the college or its authorized agent is made, and the college becomes its legal proprietor of that amount of capital stock, it, the college, will be entitled to a participancy in the management of the National Bank of Vandalia, and may continue so or sell out the stock, and invest elsewhere, * * * but as the condition of things now is, I would advise that it be kept as stock in the bank, so long as the bank may hold an existence as such, and then seek other investment.” From these extracts from the will of McGurdv, his intention with reference to-the bank stock is clearly seen. It is a cardinal rule of construction, that the intent of a testator must be given effect when it can be ascertained, and where the testator has not accurately or completely expressed his meaning by the words he has used, those words may be supplied from the context which will effectuate his intention. Glover v. Condell, 163 Ill. 584. Supplying the words “except my bank stock,” after the words “all my estate, real, personal and mixed,” does effectuate the intention of the testator as gathered from the entire will. No one having been named in the will as executor, it follows that no confidence was reposed in any particular person for its execution, which therefore devolved upon George W. Brown, as administrator cum testamento annexo. At the February term, 1877, of the Fayette County Circuit Court, a decree was rendered in a proceeding in chancery, in which Brown was complainant, authorizing him to sell the real estate of the deceased, and granting, defining and affirming his powers, as follows : “ It is therefore further ordered, adjudged and decreed by the court, that said complainant, administrator- of the estate of said McCurdy, transfer and dispose of said bank stock as in said will specified, and that it be so transferred and disposed of for the uses and purposes in said will mentioned, and that said administrator is hereby fully authorized and empowered to sell all of the other property of said Nathaniel M. McCurdy, deceased, including real estate, personal and mixed property, and to collect what is due said estate and to disburse the same as directed by said will. “And it is further ordered, adjudged and decreed by the court, that said real, personal and mixed property may be sold, * * * and said complainant shall have generally all the powers, rights, duties, and authority that an executor could or might have, if named and mentioned in said will, and said administrator shall report all his actions and doings to the County Court of said Fayette County, as provided by law in reference to administrators.” The decree of the chancellor finds that McKendree College and the Board of Church Extension of the M. E. Church were made parties defendant to this bill, and entered their appearance, and that the court had jurisdiction both of the subject-matter and of the parties. ■ We see no valid reason for a different finding. It is urged by the complainant that the decree rendered is not in accord with the bill filed. That the bill sought only authority to sell real estate. There is a conflict of testimony as to the scope of the bill. One of the counsel for complainant, who had the bill for examination, testifies that while in his possession he was ill with typhoid fever eight weeks, and after recovery was unable to find the bill. That the only relief sought by it was for power to sell real estate. Brown, the complainant in the bill, testifies that “ the proceeding was to construe the will, and determine my powers under it to conduct the business, including the bank stock.” In view of this conflict of evidence, we must presume that the decree is not broader than the bill, and was authorized by its allegations, prayer and the proofs offered. Every presumption is indulged to support the decree of a court of general jurisdiction. Wenner v. Thornton, 98 Ill. 156. It is claimed, too, that it is in the nature of a consent decree, and for this reason is not conclusive. The record shows that defendants were ruled to answer, and failing to plead, default was taken and decree pro oonfesso. Such a decree is a decree in invitum, and not a consent decree. It is strongly urged, too, that the entry of appearance of the Board of Church Extension was improperly and fraudulently procured to be entered by complainant. We have carefully examined the evidence upon this point and do not think it sustains the charge. In any case, the decree was a final decree, is still in force, and all parties acquiesced in it and acted under it without question, so far as this record discloses, from February, 1897, until attacked in this proceeding, a period of nearly twenty years. It is too late now for parties to the case to question its validity.' Under the decisions in this State, an administrator with the will annexed has no power to sell real estate without an order of court, although the will may have directed its sale by the executor. Hall v. Irwin, 7 Ill. 176; Nicoll v. Scott, 99 Ill. 537. It is held in these cases that “ executors may act in a double capacity: as executors by virtue of their office, and as agents or trustees under a warrant of attorney; * * * and it is only the powers and duties of the executor, as such, resulting from the nature of his office, which devolve upon an administrator with the will annexed, and not an authority as trustee,” etc. An examination of Hall v. Irwin, above cited, shows that the case is decided with reference solely to the authority of an administrator with the will annexed" to sell real estate. The inference from the reasoning employed in the case, and from the authorities cited, is that1 the limitation of the authority of such administrator, as compared with the authority of an executor, applies only to real property. It may be said, too, that the case of Conklin v. Edgerton’s Adm., 21 Wendel, 423, cited in this opinion, has since been qualified in Mott v. Ackerman, 92 N. Y. 349. We think that the weight of' authority is, that, in the management of personal property and trusts in relation to the payment of legacies from personal property or its earnings, all the duties of an executor, which rest upon him by virtue ■ of his office, devolve upon an administrator testamento annexo, unless it appears from the will that such duties were cast upon the executor by reason of personal trust and confidence. This includes duties which are in the nature of a trust. Woerner on Adm., Vol. I, Sec. 178; Hall v. Cushing, 9 Pick. 395; Leslie v. Moser, 163 Ill. 502; Blake v. Dexter, 12 Cush. 559; Knight v. Loomis, 30 Maine, 209; Farwell v. Jacobs, 4 Mass. 634; Mott v. Ackerman, 92 N. Y. 539. “The office of such administrator differs little from that of an executor.” Hood on Executors, 978. But, without reference to these authorities, the decree of February, 1877, gives to Brown all the rights, powers and duties that he would have had if he had been appointed executor of the will of McCurdy. The legal effect of this decree was to construe the will; and to give the administrator testamento annexo power to sell real estate; and as incident to his duties as such administrator, to grant and affirm his authority to transfer and dispose of the bank stock for the uses and purposes mentioned in the will, and to exercise all the “ powers, rights, duties and authority that an executor could or might have if named in said will.” If the investment of the bank stock for the purpose of earning money to pay the Marrs annuities was in the nature of a trust, there is in this decree ample authority for Brown to invest and manage it as trustee. It was evidently the intention of the testator that the fund represented by the bank stock should be kept invested, as its earnings were the only means provided for the payment of the annual legacy to the Marrs. It is also evident that it was his desire and intention that it should continue invested as bank stock in the [National Bank of Vandalia until these legacies were discharged. If Brown had been named as executor in the will it would have been his duty to collect the earnings of the bank stock and to apply them in the payment of these legacies as long as Mrs. Marr or either of her daughters lived, and at their death to transfer the stock as provided in the will. This would have carried with it the duty to keep invested the fund represented by the bank stock, after the surrender of the national bank’s charter, so as to produce earnings; for the payment of the annual legacies was as sacred a trust as the final transfer of the fund producing these legacies, and the .legacies could only be paid out of the earnings of the fund. This view of the duties of Brown, as administrator with the will annexed, was doubtless the view taken by the court in its decree of February, 1877, and is the reason why he was ordered to report his doings from time to time to the County Court of said Fayette County, the tribunal which had jurisdiction over the administration of the estate. Where a “ controversy arises over the construction of a will and the distribution of trust funds in the hands of an administrator with the will annexed, a proper disposition of the case will not take the estate out of the hands of the County Court; but when the will is construed, and the rights of the parties determined, the settlement of the estate can proceed in the County Court.” Minkler v. Simons, 172 Ill. 326. The first proposition, then, of complainant in the cross-bill, that George W. Brown had no authority to manage or invest the trust fund, is not sustained. The four hundred shares of stock represented two-fifths of the capital stock of the National Bank of Vandalia. It had been a highly prosperous financial institution. The testator did not contemplate .that any change would be made in the investment during the lifetime of his sister, Hary K. Harr, or of the' daughters, or either of them. After their death it was to be transferred to McKendree College and to the Board of Church Extension. He advises in his will that when the two hundred shares were transferred to McKendree College, they should remain as stock in said bank, and be managed and controlled by the representatives of said college. At the time of McCurdy’s death no one questioned the prosperous condition of the bank, nor does there appear to have been any reason for questioning it. It was not, then, careless or improper management by Brown to allow said stock to remain invested as the testator had invested it, and desired that it should remain invested. When the bank surrendered its charter in 1883, it was done because the stockholders believed it to be to their profit to do so. Three-fifths of the stock was owned and controlled by stockholders whose personal interest was involved. It is not to be presumed that they acted rashly, or inconsiderately, or knowingly against their own interest. If they can not be considered as so acting, why should Brown be so considered ? They were co-stockholders with Brown as administrator, not by their own volition, but as a result of the disposition of his stock by the- former president of the bank. They could not compel Brown to' sell or transfer the stock, nor did they control the two-thirds of the stock necessary under the federal statutes to force a surrender of the charter and a dissolution of the corporation. In no sense then can they, if acting honestly, so long as the National Bank of Vandalia continues in existence, be treated as co-trustees with Brown, or as intermeddlers with the stock represented by him. When the National Bank of Vandalia ceased to do business on the first of April, 1883, the Bank of Vandalia immediately succeeded it. The assets, the capital, the former stockholders (now partners), the place of business, and inferentially the deposits and the customers, were the same. It was, in other words, the same bank, conducted as a partnership instead of a corporation. If it seemed prudent and advantageous to practical business men, owning three-fifths of the stock, to continue the bank as a private bank, there is no reason shown why it should not have seemed equally prudent and advantageous to Brown, controlling two-fifths of the stock. It was his duty to keep it invested. It was the advice of the testator “ that it be kept as stock in the bank as long as the bank may hold an existence as such.” The only change was from a national bank under certain management to a private bank under the same management. We see, then, no reason why Brown, as administrator, or as trustee, should be charged with carelessness or mismanagement in continuing the investment in the Bank of Vandalia on April 2, 1883, which had been in the National Bank of Vandalia on April 1, 1883. It is true that the relation of those who had been co-stockholders with him in the first named bank, was now changed to that of partners with 'him. It is also true that this new relation was of their own volition, while the former was not. They must have known, too, that the funds he brought into the partnership represented the stock he had controlled in the former bank, and must have known, too, for what uses and purposes it was held. It is in evidence also and not contradicted, that public notice was given of the investment. George W. Brown testifies: “ The national bank law compels national banks to give notice of liquidation. We gave that notice, and adjoining the same was notice of the organization of the Bank of Vandalia, giving the name of the stockholders. The notice stated that I had the Mc-Curdy money in the new enterprise.” He also testifies: “ I was elected a trustee of McKendree College, I think, at the annual conference in 1891. I attended the commencement at which the board of trustees have a session. I told them I had the McCurdy fund in stock of the Bank of Vandalia; that the national bank had surrendered its charter; that it was a private bank and the stock representing the $40,000 was merged into the Bank of Vandalia, and that the income from it was being used to pay the annuities as provided by the will, and commissions and so forth. This is my best recollection as to the report I made them. I think that was in 1891. I know Bev. T. H. Herdman very well. He was a professor of the college, and I think its president for a short time. He was a member of its board of trustees. I think it was in 1885 Mr. Herdman came to Vandalia, from Lebanon, and inquired about the condition of the fund. I told him its condition and where it was invested.” Geo. W. Seaman testified that he was a trustee of Mc-Kendree College from 1856 to 1883. That he called the attention of the board to the McCurdy bequest in 1877, and that in 1883 he was “ offensively persistent in demanding • that they apply business sense to their own interests and take possession of this fund by “ legal process if possible, and by force if necessary,” but that his proposition was" voted down. He also testifies to a correspondence with Dr. Kynett, the secretary of the Board of Church Extension, “ ten years ago,” in reference to the fund. From this testimony it is clear that the eestids que trust had knowledge of the funds bequeathed to them. It affords also, strong grounds for presumption that they, too, knew of the manner of its investment, and so knowing, virtually acquiesced and consented to it. Brown also testifies that the stock (of the National Bank of Vandalia) did not pay ten per cent dividends all the time, but that it was making ten per cent at the time of the change, and that for a few years after the change, the Bank of Vandalia made ten per cent. We think, then, that the findings of the chancellor,-that McKendree College and the Board of Church Extension, during the entire course of said business, knew of said will, of Brown’s appointment as administrator, of the decree of February, 1877, and that Brown had undertaken the management of the said fund, are warranted by the evidence; and that his conclusion that Brown had lawful authority to manage said fund and to carry out the provisions of the will, until relieved by the death of the annuitants, or by an authorized appointment of a successor, is correct in fact and in Jaw. We think, too, that the evidence fails to show that, under the conditions as they appeared at the time, the continuance of the fund as an investment in the Bank of Vandalia, after the surrender of the charter of the national bank, was “carelessness and mismanagement.” If, then, these conclusions are right, Brown’s co-stockholders in the National Bank of Vandalia were neither intermeddlers nor co-trustees with him while the fund remained in the bank. If as administrator he had authority to invest the fund in the Bank of Vandalia, and there was nothing to indicate that it was not honestly and discreetly invested, his partners did not become intermeddlers or co-trustees with him in the management of the fund for the sole reason that it was so invested with their knowledge and privity. It is held even that the knowledge of one partner that a trust fund is misapplied does not make his co-partners liable. 1 Bates on Part., Sec. 481. If, then, they did not become chargeable as co-trustees because of the investment, it is clear that they would not become chargeable because, in the vicissitudes of business, honestly conducted, the investment proved unprofitable. If, in making the investment, Brown had been guilty of a breach of trust, and his partners had knowledge of the breach, a different question would be presented. In such case the authorities cited by plaintiff in error would apply, and all the partners having such knowledge would be chargeable as co-trustees. It is claimed by plaintiff in error, in argument, that, the partners of Brown in the Bank of Vandalia, having knowledge-of the character of the fund invested by him and of the limitation of its use to produce earnings for the payment of the Marrs annuities, are chargeable with' a devastavit, or loss of the fund, by reason óf unearned dividends declared and paid out of the capital of the bank. This question is not before us for review. The theory of the cross-bill is that the fund was invested by Brown without authority, and that being so invested with the knowledge of his co-partners, they became co-trustees with him in its management, and are therefore liable for it. Upon this proposition the decree of the chancellor finds against plaintiff in error, and we affirm the finding.- The claim that in the management of the bank that its capital was diminished by the payment of unearned dividends, and that this fact was known to the partners managing its business, and that in consequence of this, they have made themselves liable for the .fund, presents an issue of fact, that does not appear in the pleadings. ■ All parties interested should have had an opportunity to meet and contest it if they so desired. In a proceeding in chancery against guardians for an accounting, it is said in Smith v. Smith, 4 Johnson’s Ch. Rep. 281: “ The only complaint against the guardians is, that they did not collect the money of the executor, who duly received it. But there is no such neglect charged in the bill, and they are not to be answerable for breaches of duty not charged in the bill. If it had been made a substantial allegation, they might, perhaps, have met and answered it fully and excused themselves completely from the charge of that neglect of duty.” A complainant is not permitted to make one case by his bill and another by his proof. Coale v. Moline Plow Co., 134 Ill. 355. It is claimed by plaintiff in error that the amount of the fund to the extent of $40,000, invested in the Bank of Vandalia, should be a preferred claim against its assets. We see no reason, either in law or in equity, why innocent creditors of the Bank of Vandalia should be postponed in the payment of their claims until $40,000 is paid to McKendree College and the Board of Church Extension. If Brown was authorized to invest this money as the court below found, and we affirm, it became subject, so far as the rights and equities of innocent parties are concerned, to the vicissitudes of business, the same as any other capital invested, and no lien exists, in law or equity, to protect capital invested as against creditors doing business with the investors. The decree then correctly orders that the receiver pay the creditors of the Bank of Vandalia, before delivering two-fifths of the remaining assets to the trustee, John Penn, complainant in the cross-bill. No accounting by Brown is prayed for in the cross-bill. Under the prayer for general relief this might be decreed, if it appeared from the evidence and the pleadings to be necessary for the adjustment of the equities involved. It does not so appear. The estate is still unsettled, and under the decree of the Circuit Court of Fayette County of February term, 1877, before cited, including the trust fund claimed by complainant in the cross-bill, is in the County Court of said county for supervision and adjustment. This seems to be warranted by Minkler v. Simms, cited supra. It appears also that a decree has been had in the Circuit Court of said county, appointing complainant in the cross-bill trustee of the fund in the place of Brown. This involves a transfer of the fund from Brown to said trustee, and therefore an ascertainment, through an accounting by Brown, of the receipts and disbursements of liis administration. Perceiving no substantial error in the record, the decree of the Circuit Court is affirmed. Hr. Justice Creighton, having tried this case in the court below, took no part.