Baird's Estate, Matter of

Decision Date28 August 1980
Docket NumberNo. 2-177A3,2-177A3
Citation408 N.E.2d 1323
PartiesIn the Matter of the ESTATE of Eleanor M. BAIRD, Deceased. Thomas A. WALING, Nominated Executor under the Last Will and Testament of Eleanor M. Baird, Deceased, Respondent-Appellant, v. Eleanor B. MILFORD, Individually and as Executrix of the Estate of Eleanor M. Baird, Deceased, and Lafayette National Bank, Special Administrator and Administrator With Will Annexed of the Estate of Eleanor M. Baird, Deceased, Petitioners-Appellees.
CourtIndiana Appellate Court

Vaughan, Vaughan and Layden, Lafayette, Young and Young, Indianapolis, for respondent-appellant.

Baker and Daniels by Karl J. Stipher, Charles A. Hessler, Indianapolis, for petitioners-appellees.

SHIELDS, Judge.

CASE SUMMARY

Thomas A. Waling appeals the trial court's judgment finding him unsuitable to serve as co-executor of the Last Will and Testament of Eleanor M. Baird.

We affirm.

FACTS

The facts favorable to the trial court's judgment disclose Eleanor M. Baird died testate in Lafayette, Indiana on May 5, 1976. She was survived by one daughter, Eleanor B. Milford, her sole heir and only residuary beneficiary.

Mrs. Baird named Waling trustee of a trust created in her will and additionally bequeathed him 2,000 shares of common stock of TRW, Inc. The residue of her estate was bequeathed to Milford. Mrs. Baird named Waling and Milford to serve as co-executors.

Waling had been associated with the Baird family for many years, beginning as secretary to Mrs. Baird's husband in March of 1937. His responsibilities included keeping records and accounts of the Baird property, collecting rents, paying bills, and preparing federal income tax returns. He began keeping records for Mrs. Baird in 1942, and in 1946 took over management of her farms. Waling also served on the Board of Directors of the Fairfield Manufacturing Company, the family-owned business, from 1950 until 1976. For nine months before Mrs. Baird's death, Waling served with Milford as co-guardian of Mrs. Baird, keeping the records for the guardianship.

The day following Mrs. Baird's death the Lafayette National Bank was appointed special administrator in response to a petition by Milford objecting to Waling's appointment as co-executor. Milford alleged Waling's appointment would

"result in serious and recurring conflicts and disagreements between the co-executors; unduly delay and prolong the administration of the estate; cause the estate to incur unnecessary cost and expense; and prevent a harmonious and effective administration of the estate all to the detriment of the estate and to the interest of petitioner therein as sole heir-at-law and sole residuary beneficiary under decedent's purported will."

After qualification of a special judge, the Bank requested an order requiring Waling to transfer to the special administrator Mrs. Baird's assets, which he was holding as former co-guardian. On the same day Waling requested the court to limit and restrict the powers of the special administrator pending determination of his qualifications as an executor. This petition was granted after a hearing by a second special judge qualified at Waling's request.

After the Bank submitted Mrs. Baird's will for probate, the trial court heard evidence concerning objections to Waling's appointment and entered the following order:

"Comes now Eleanor B. Milford, in person and by her counsel, and comes also Thomas A. Waling, in person and by his counsel.

"And the court having had under advisement the petition of Eleanor B. Milford charging that Thomas A. Waling is unsuitable to act as co-executor, the Court now finds that antagonism and animosity exists (sic) between the persons From this judgment Waling perfected his appeal.

who were named as co-executors and that Thomas A. Waling is a legatee under the terms of the will, both in his individual capacity and as trustee of a certain fund provided for by the terms of the will and that the residuary legatee of the estate is Eleanor B. Milford and that the evidence shows that Thomas A. Waling is a prospective claimant, if he so desires, in the estate and that he therefore is not suitable to act as co-executor with Eleanor B. Milford and that the costs of this proceeding should be paid as the Court in the administration of the estate shall determine. Judgment and Order accordingly."

ISSUES

Waling presents the following issues:

I. Whether the trial court abused its discretion in finding Waling unsuitable to serve as co-executor, therefore erroneously denying his appointment;

II. Whether the trial court erred in denying Waling a new trial because of misconduct by Milford's counsel;

III. Whether the trial court erroneously denied Waling a new trial because the trial court failed to disclose an alleged conflict of interest.

IV. and V. Whether the trial court erroneously denied Waling a new trial because the trial court was biased and prejudiced and failed to disclose an alleged conflict of interest.

ISSUE I Waling's Unsuitability to Serve as Co-executor.

A testator has a right to name an executor, thereby placing his property in the hands of one in whom he has confidence. In re Estate of Workman, (1970) 147 Ind.App. 523, 262 N.E.2d 408; First National Bank of Moline v. Muscio, (1972) 5 Ill.App.3d 216, 283 N.E.2d 42. Testator holds this power coextensive with his power to devise or bequeath the estate. Farmers Loan and Trust Co. v. Security Trust Co., (1923) 79 Ind.App. 437, 138 N.E. 97; In re Estate of Murphy, (1976) Fla.App., 336 So.2d 697. However, exercise of this power is conditioned by the trial court's authority to find a nominated executor disqualified under IC 29-1-10-1 (Burns Code Ed.Supp.1979).

The Indiana Probate Code (IC 29-1-1-1 et seq. Burns Code Ed.1972) empowers the trial court to deny appointment as executor to one "whom the court finds unsuitable." IC 29-1-10-1(b)(6) (Burns Code Ed.Supp.1979). 1 This determination rests within the sound discretion of the trial court and will be set aside only if Waling establishes an abuse of that discretion. Cf. Studabaker v. Faylor, (1917) 66 Ind.App. 175, 114 N.E. 772 (applying the same standard of review under the prior statute).

Essentially Waling urges the trial court could disqualify him as unsuitable under IC 29-1-10-1 only if it found him to be dishonest or guilty of misappropriating testator's assets. 2 Therefore, because the evidence fails to support this kind of misconduct, the trial court abused its discretion in finding him unsuitable. We do not agree with Waling's interpretation of the statute.

Prior to 1954, the trial court was required to appoint the person or persons named in the probated will "who (were) competent by law to serve as such, and who (should) appear and qualify." Acts 1881 (Spec.Sess.) Ch. 45, § 6, p. 423. 3 Hamilton v. Huntington, (1945) 223 Ind. 143, 58 N.E.2d 349; In re Stahl's Estate, (1942) 113 Ind.App. 29, 44 N.E.2d 529; Farmers' Loan and Trust Co.; Studabaker. Those persons defined as incompetent to serve were those (1) under the age of 21 years, (2) convicted of a felony, or (3) adjudged incompetent to discharge the duties of an executor by reason of improvidence, habitual drunkenness, or other incapacity. Acts 1881 (Spec.Sess.) Ch. 45 § 6 at 423; In re Stahl's Estate, (1942) 113 Ind.App. 29, 44 N.Ed.2d 529. Because these grounds were inclusive of the trial court's statutory authority to disqualify a nominated executor as incompetent, this court strictly scrutinized a trial court's finding of incompetency. In re Stahl's Estate, Farmers' Loan and Trust Co. 4

By substituting unsuitability for incompetency, and deleting its limited definition the legislature has enlarged the trial court's authority to disqualify a nominated executor. See Merimee v. Brumfield, (1979) Ind.App., 397 N.E.2d 315, 317-18. Exercise of that discretion must still, however, be reasonable. In re Estate of Workman, 147 Ind.App. at 529, 262 N.E.2d at 411.

Since its inclusion as a basis for disqualification, unsuitability has not been defined either by the Probate Code or by the courts. 5

Jurisdictions with similar statutes have defined suitability to describe a person who is considered to have the capacity and the will to discharge the duties in the particular case with fidelity and efficiency. Grossman v. Grossman, (1962) 343 Mass. 565, 179 N.E.2d 900.

In reviewing the determination of a person's suitability to serve as executor, other appellate courts have held the trial court should carefully inquire into the person's character, integrity, soundness of judgment, general capacity, possible conflicts of interest, as well as additionally consider the special conditions of the estate and those interested therein creditors, legatees, and next of kin. In re Quirin Estate, (1976) 116 N.H. 845, 367 A.2d 594; In re Crosby's Estate, (1944) 218 Minn. 149, 15 N.W.2d 501. The Massachusetts Supreme Court described unsuitability as "not (being) restricted to instances of absolute unfitness but (as) including an unfitness arising out of the situation of the person in connection with the estate." Comstock v. Bowles, (1936) 295 Mass. 250, 260, 3 N.E.2d 817, 822-23. (Citations omitted.) Unsuitableness of one to act as a fiduciary may exist although actual misconduct or dereliction of duty is not shown. Id., Quincy Trust Co. v. Taylor, (1944) 317 Mass. 195, 57 N.E.2d 573. 6 See generally Annot., 18 A.L.R.2d 633 (1951).

With these considerations in mind, we now examine the trial court's finding of unsuitability. Because this determination is placed within the trial court's discretion, in reviewing the reasonableness of the court's determination, we must examine it in the light of its given reasons. City of Elkhart v. Middleton, (1976) 265 Ind. 514, 518, 356 N.E.2d 207, 210. This standard requires that a reason stated by the trial court justify the manner in which it exercised its discretion. 7 However, here, the trial court gave several...

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