Allwardt v. City Nat. Bank & Trust Co. of Battle Creek (In re Allwardt's Estate)

• Decision Date: 08 December 1936
• Docket Number: No. 18.,18.
• Citation: 278 Mich. 80,270 N.W. 223
• Court: Michigan Supreme Court
• Parties: In re ALLWARDT'S Estate. ALLWARDT et al. v. CITY NAT. BANK & TRUST CO. OF BATTLE CREEK.

278 Mich. 80

270 N.W. 223

In re ALLWARDT'S Estate.ALLWARDT et al.

v.CITY NAT. BANK & TRUST CO. OF BATTLE CREEK.

No. 18.

Supreme Court of Michigan.

Dec. 8, 1936.

In the matter of the estate of Frederick A. Allwardt, deceased, wherein Ray Allwardt and another filed a petition against the City National Bank & Trust Company of Battle Creek, as administrator of the estate of Frederick A. Allwardt, deceased. From an adverse judgment, petitioners appeal.

Reversed, and new trial ordered.

Appeal from Circuit Court, Calhoun County; Blaine W. Hatch, judge.

Argued before the Entire Bench, except POTTER, J.

Jackson, Fitzgerald & Dalm, of Kalamazoo, for appellants.

Howell S. White, of Detroit, for intervening petitioner and appellant.

Bernard J. Onen, of Battle Creek (Stuart H. Redner, of Battle Creek, of counsel), for appellee City Nat. Bank & Trust Co.

TOY, Justice.

Deceased died intestate on May 9, 1930, leaving an estate worth approximately $100.000. His heirs at law were Ada Harris, daughter, Ray Allwardt, son, and Robert Allwardt, a minor grandson, the two latter of whom are petitioners and appellants herein.

On June 17, 1930, the defendant bank, appellee, was appointed administrator of the estate.

On September 4, 1930, an inventory and appraisal was filed in the probate court showing real estate of the value of $46,000 and personal estate of the value of $56,238.81. The latter consisted of 389 shares of Guardian Detroit Union Group stock, appraised at $46,680; 231 3/5 shares of Peerless Portland Cement Company stock, appraised at $1,852; other stock of divers corporations and other personal assets.

On October 17, 1930, the probate court entered its order allowing claims against the estate in the amount of $18,919.73, which order contained a provision, reciting that whereas it appeared that the administrator had sufficient assets of the estate in his possession to pay all the debts thereof, it should pay such debts within sixty days therefrom.

The administrator filed its first annual account on May 20, 1931, which was allowed on June 12, 1931; no objection being made thereto. Likewise the year following, its second annual account was filed and allowed without objection. Similarly did it file its third annual account, which was allowed, without objection, on June 28, 1933. In each account the Guardian Group stock was reported at the value of $46,680, whereas its value had been steadily decreasing until it became worthless.

On July 25, 1933, appellant Ray Allwardt, as one of the heirs of the estate, filed his petition (which was later joined in by the minor heir, Robert Allwardt, through his guardian), charging the administrator with failure and neglect of duty and illegality of action in its handling of the affairs of the estate, especially the Guardian Group stock, whereby the heirs of such estate had suffered heavy loss, and praying that the administrator be required to file its final account, and that it be surcharged with all loss suffered by the estate because of the alleged neglect of duty upon the part of the administrator. The petitioner also sought the removal of the administrator and the substitution of another in its stead.

The administrator filed its answer to such perition, admitting the depletion of the value of the estate, but asserting that it acted in a manner which it considered to be for the best interests of the estate, and ‘that in the administration thereof it acted with the utmost good faith,’ and for that reason it ‘should not be removed as administrator nor surcharged with any losses by reason of the retention of personal property rather than selling same.’

To this appellants filed their reply, denying, among other things, that the administrator acted in the ‘utmost good faith.’

The probate court, after a hearing thereon, denied the petition. Appellants thereupon appealed to the circuit court. After appeal to the circuit, the administrator petitioned the court to remove the case from the docket as a civil jury case and place the same on the docket as a non-jury civil case. The court in its opinion denying the petition, stated: ‘Upon examination of the pleadings as filed in said case, it appears that there are a number of disputed questions of fact and the appellants have the right under the statute and decisions * * * to have the same submitted to a jury, under an issue to be framed by the Court.’

Thereafter the case came on for trial. The court, with counsel for both parties before it, proceeded to go over the petition of appellants, for the stated purpose of framing the issues thereon. Practically all of the allegations of the petitioners were either admitted by counsel for the administrator or decided to be a question for determination by the court, until the following occurred:

‘The Court: As to (paragraph) 4-E what would you say the issue is?

‘Mr. Onen: I would say that the issue under that is whether or not the City National Bank as administrator of the Estate and its officers and those in charge of the administration of this estate exercised that care, prudence and judgment which a man of fair average capacity and ability brings to bear in the transaction of his own business, and that that furnishes the standard by which the administrator in the performance of his trust duties shall be governed, and that in this case the officers and those in charge of the administration of the estate handled the sale of the Guardian Group stock belonging to this estate in the same manner as they held (handled) stock in that same company for themselves. And that in addition to that they thought it was bad judgment to sell the stock when it had so decreased in value from the appraised value at the time they were appointed administrators and they thought it would increase in value over its then market value.

‘Mr. Fitzgerald: That is as to the administrator's good faith.

‘(Consultation)

‘The Court: If you claim there are any disputed questions of fact over anything state it on the record and then I will pass upon them and decide whether they are disputed questions of fact that are material; then you will have an...