American Nat. Bank of Beaumont v. Biggs

• Decision Date: 11 March 1954
• Docket Number: No. 4929,4929
• Parties: The AMERICAN NATIONAL BANK OF BEAUMONT et al., Appellants, v. R. E. BIGGS et al., Appellees.
• Court: Texas Court of Appeals

Page 209

274 S.W.2d 209

The AMERICAN NATIONAL BANK OF BEAUMONT et al., Appellants, v. R. E. BIGGS et al., Appellees.

No. 4929.

Court of Civil Appeals of Texas, Beaumont.

March 11, 1954.

Rehearing Denied Dec. 1, 1954.

Further Rehearing Denied Dec. 29, 1954.

Orgain, Bell & Tucker, Beaumont, Graves, Dougherty & Greenhill, Austin, Morris, Underwood & Oldham, Houston, for appellants.

R. E. Biggs, Liberty, F. L. Kuykendall, Austin, E. E. Davis, Newton, for appellees.

WALKER, Justice.

This appeal is from a decree which authorizes the trustees of the Aurelia Mitchell Trust to pay a fee to certain lawyers for legal services rendered by these lawyers in another suit. The proceedings had in the other suit in the Court of Civil Appeals and in the Supreme Court are reported sub nomine Mitchell v. Mitchell at 235 S.W.2d 744 and 151 Tex. 1, 244 S.W.2d 803. Following is a statement of matters material to this appeal.

The Aurelia Mitchell Trust was created by the will of Aurelia Mitchell. Two of Aurelia Mitchell's children, namely, Leon Mitchell and Fuhr Mitchell, were named executors and trustees; and Leon Mitchell has acted as trustee since the death of his mother. Fuhr Mitchell was replaced as trustee by his brother Vick Mitchell before Mitchell v. Mitchell was filed, and Vick Mitchell has served as trustee since his appointment.

It is apparent that the administration of Aurelia Mitchell's estate in the probate court ended long ago, and from the nature of the issues made in Mitchell v. Mitchell, we infer that it ended, at least for any practical purpose, before that suit was filed.

The will of Aurelia Mitchell named two classes of beneficiaries of the trust. To one class, who may be called the life tenants, it was directed that the income from the principal of the trust be paid during the life of said tenants, and to the other class, who may be called the remaindermen, it was directed that the principal of the trust be paid when the life tenancies ended. Among the life tenants were the surviving children of Aurelia Mitchell, and, as we have stated, the trustees were some of these children.

For a space of time the trustees collected royalties under an oil and gas lease; and on the advice of counsel treated these royalties as income under the will of Aurelia Mitchell and paid them to the life tenants. The Trustees, themselves, were members of this class, as we have stated, and thus paid themselves a part of these royalties. The evidence does not show exactly what the royalties paid out amounted to but the sum approximated $100,000, and of this sum each of the trustees Leon Mitchell and Vick Mitchell received about $8,000 or $10,000.

Mitchell v. Mitchell was filed in 1949 as a class suit in behalf of the remaindermen and in this suit it was claimed by the plaintiffs therein that the royalties which the trustees had been paying to the life tenants were not income within the meaning of Aurelia Mitchell's will but, under a proper construction of that will were a part of the principal of the estate and should be paid eventually to the remaindermen. The pleadings in Mitchell v. Mitchell are not in the statement of facts filed on this appeal, although apparently put in evidence; but the statement of facts contains some information about that suit and the contentions of the parties makes it necessary to determine the nature of that suit. The trustees Leon Mitchell and Vick Mitchell were defendants in Mitchell v. Mitchell and we infer that they were the sole defendants and that the other life tenants were not parties to the suit. These trustees were sued both in their capacity as trustees and as individuals. It was claimed by the plaintiffs that the payments of royalties to the life tenants amounting, as we have stated, to about $100,000, was a misappropriation of funds of the trust by the trustees, and plaintiffs sought relief which would prevent any more payments of royalties to the life tenants and which would restore to the trust fund the royalties which had been paid to said life tenants. The plaintiffs also sought removal of the trustees Leon Mitchell and Vick Mitchell, or else that they be required to give security. We note the following sentence of the Supreme Court's opinion as reported at 244 S.W.2d 804, the same also being in evidence: 'The suit was brought to require the trustees to carry out the alleged terms of the will with respect to the testamentary trust, and to hold large sums of money received by said trustees as oil royalties intact, and to require said royalties to be accumulated for the benefit of the trust estate, and to prevent the trustees from distributing said royalties to themselves and other children of the testatrix and to the children of the daughter of the testatrix who had been excluded.' We note that this sentence also appears in the opinion of the Court of Civil Appeals. See: 235 S.W.2d at page 745.

However, it also appears that plaintiffs asked for a construction of the will. One of counsel for the remaindermen testified:

'Q. The trustees did not bring the action? A. Leon and Vick Mitchell did not. We sued Leon and Vick for misappropriating funds. * * *

'Q. I assume that you prepared the pleadings in that case? A. Yes.

'Q. Leon and Vick Mitchell were sued in this estate, as trustees? A. They were sued both ways, as trustees to keep them from distributing any more of this money, and individually.

'Q. It was an action actually, to determine the status of the estate, whether this royalty was corpus or income? A. That is right.

'Q. So far as the $100,000 is concerned, the suit was not brought for the recovery of that? A. We didn't bring it as such, but it turned out to be.'

The first sentence of the Supreme Court's opinion reads: 'This suit was brought by Raymond Mitchell, a grandson of Aurelia Mitchell, as a class suit under Rule 42, Texas Rules of Civil Procedure, for construction of a will executed by Aurelia Mitchell, wherein plaintiffs' attorneys intervened and sought to have their rights in the suit determined and protected.' We think these matters necessarily show that the plaintiff remaindermen also prayed for a construction of the will.

The statement of facts shows in only a general way what response the trustees Leon Mitchell and Vick Mitchell made to the suit against them. Their counsel filed an answer for them both in their capacity as trustees and in their capacity as individuals. The only liability to remaindermen which the trustees had purely as individuals, apart from liability as trustees, was liability for the money they had received as members of the life tenant class of beneficiaries, but we infer that this liability as life tenants was not claimed in the petition. It was necessary for them, as an incident of the suit, to file an account, and they did so with the assistance of their counsel.

The trustees contested the suit. There is evidence that a few days after they were served with process, they went to the lawyer who had construed the will for them and employed him to represent them in the suit. The evdence shows what this lawyer and the associate counsel employed by him did, and the trial court was authorized to conclude that Leon Mitchell and Vick Mitchell were guided by the advice of counsel in determining what they should do about the suit and what cause of action in the suit they should pursue. Since they answered as trustees, the trial court was authorized to conclude that they acted as trustees in contesting the suit, that is, that they purported and undertook to act for the trust estate, and that their position in the suit was only an assertion of their previous construction of the will, or a consequence of that construction. In the absence of findings of fact, we assume, in support of the trial court's judgment, that the trial court so found.

The royalties which were disputed in Mitchell v. Mitchell were not all of the principal of trust estate. The circumstances suggest that the royalties, accruing and to accrue, did constitute the most valuable part of the principal while Mitchell v. Mitchell was pending but the value of the rest of the principal really was not proved.

After return of the Supreme Court's mandate and pursuant to a hearing, the trial court rendered a decree, which, among other matters, (a) declared that all mineral production and the proceeds thereof were a part of the principal of the trust estate; (b) appointed The American National Bank of Beaumont a co-trustee with Leon Mitchell and Vick Mitchell, who were retained in office (and thus had a partial success in the suit against them); (c) assessed a fee for the attorneys for the plaintiffs in Mitchell v. Mitchell (as directed by the Supreme Court's mandate); and (d) provided as follows:-'the issues that may properly arise on the obligation and duty of-Leon Mitchell and Vick Mitchell to render an accounting, and of the amount of their liability individually and as trustees on account of past conduct, and of the liability of other persons for monies heretofore distributed to them by said trustees are-severed-and-transferred into a new cause to carry the same style as this, but separately docketed as-No. 13751A-. This judgment-shall be-final-as to matters and issues herein expressly adjudged. All issues not so finally disposed of or transferred into shall be disposed of in No. 13751A, and this court retains continuing jurisdiction in said cause over the administration of the trust estate-and grants to the trustees the right to apply to this court in the-transferred cause for such orders as may be necessary for the court to enter in said cause relating to further administration of the estate in accordance with the mandate of the Supreme Court * * *.'

This judgment was dated either June 5 or June 11, 1952. On July 14, 1952 the lawyers who had represented the trustees in Mitchell v. Mitchell filed a motion in No. 13751A (which, according to the part of the decree of June 5/11 just...