Becker's Estate, In re
| Decision Date | 28 November 1972 |
| Docket Number | No. 139,139 |
| Citation | 202 N.W.2d 681,56 Wis.2d 356 |
| Parties | In re ESTATE of Ray J. BECKER, Deceased. Carl R. BECKER et al., Trustees under Will of Roy J. Becker, deceased, Appellants, v. Joseph BECKER, Jr., et al., Respondents. |
| Court | Wisconsin Supreme Court |
James R. Mattison, Milwaukee, for appellants.
Ray T. McCann, Milwaukee, for respondents.
The contentions of the appellants-trustees raise the following issues:
1. Does the county court have subject-matter jurisdiction of this proceeding?
2. Did the trial court properly deny the trustees' motion for summary judgment, motion to quash, and the plea in bar?
The facts as they appeal in the pleadings, affidavits and documents in support and in opposition to the motions are as follows:
J. H. Becker & Sons, Inc., is a corporation which owns and operates a funeral home in Milwaukee, Wisconsin. The founder, J. H. Becker, Sr., died in 1949. After his death all of the corporate stock (250 shares) was owned and held in equal proportions by his five children, Roy J. Becker, Joseph A. Becker, (Carl R. Becker, Mary Helen Peters and Louis A. Becker. These children were not only the sole stockholders but each one was a director and officer of the corporation.
Roy J. Becker, the president of the corporation, died on July 21, 1965. He had never married and left a will which, after providing for a few relatively minor bequests, created a testamentary trust with two major objectives. He was 'anxious to have one of . . . (his) nephews engage in . . . (his) profession to-wit: that of mortician.' One of his nephews, Charles J. Peters, III, had completed his education and training as a mortician and was employed by the corporation as a mortician at the time of the testator's death. The county court held that Charles J. Peters, III, qualified under the terms of the will and that upon the termination of the trust he was to receive all of the stock of the testator in the corporation. The will further provided that income of the trust (if not needed for the education of the nephew who qualified as a mortician) was to be divided annually and equally among his remaining twelve nieces and nephews. The trust is to terminate in 1975 and the corpus is likewise to be distributed to the remaining nieces and nephews.
The appellants, Carl R. Becker, an attorney and a stockholder, and Mary Helen Peters, a stockholder, were named executors and trustees.
The net estate after the payment of the specific legacies, debts, inheritance tax and costs of administration was approximately $250,000. The stock in the Becker corporation was appraised at $50,000. 1
On November 10, 1965, the four remaining directors of the corporation executed new employment contracts for themselves. Carl R. Becker and Mary Helen Peters voted as executors of the Roy A. Becker estate as well as in their individual capacity. It is also claimed that Carl R. Becker usurped the functions of president of the corporation by designating himself chairman of the board, a nonexistent position.
These contracts called for a yearly salary of $30,000 to be paid to Louis A. Becker, Joseph A. Becker and appellant Carl R. Becker, and a yearly salary of $10,000 to be paid to appellant Mary Helen Peters, all commencing on January 1, 1966. The contracts also provided for an annual bonus of five percent of the gross sales of the corporation to be paid to Louis A. and Joseph A. Becker; plus the contracts required the corporation to pay health and life insurance premiums for the four directors-officers.
For comparison purposes, the recprds of the corporation on file herein reveal the following compensations paid by the corporation in the years 1964, 1965 and 1966:
Person Salary Bonus Dividend
-------------------------------------------------------------
Roy J. Becker
In 1964 $30,000 5% gross profits $4,000
In 1965 ? ?
In 1966 Deceased
-------------------------------------------------------------
Louis A. Becker
In 1964 $30,000 5% gross profits $4,000
In 1965 same same
In 1966 same same
-------------------------------------------------------------
Joseph A. Becker
In 1964 $30,000 5% gross profits $4,000
In 1965 same same ?
In 1966 same same ?
-------------------------------------------------------------
Carl R. Becker
(Appellant)
In 1964 $ 3,300 $2,000 $4,000
In 1965 at least 3,300 ? ?
In 1966 30,000 ? ?
-------------------------------------------------------------
Mary Helen Peters
(Appellant)
In 1964 $ 2,520 $2,000 $4,000
In 1965 2,520 ? ?
In 1966 10,000 ? ?
-------------------------------------------------------------
In 1964 and 1965 Salaries, bonuses and dividends were declared by corporate resolution. Only the 1966 salary was entered into by contract on November 10, 1965. Thereafter the corporation sustained a severe operating loss and this included a substantial loss of income to the Roy J. Becker trust. In March of 1970, all of the salaries were renegotiated after a lawsuit was instituted by the corporation against all of its directors and officers. 2 Carl R. Becker took a reduced salary of $22,500 per year, effective date July 1, 1969. Louis and Joseph's salaries were increased to $36,500 and their bonuses were changed from five percent of the gross profit to 10 percent of the net profit. Generous retirement benefits were also provided. The record indicates no change in Mary Helen Peters' $10,000 salary.
The petition filed by the respondents as beneficiaries of the trust alleged, among other things, that the trustees hold legal title to 50 shares of stock of the corporation, and individually they each own 50 shares, so that together they have voting control of 150 shares of stock. Further, that the trustee, carl R. Becker, controls the voting of his co-trustee, Mary Helen Peters, so that in fact he controls all 150 shares; and that they have both used their power and control for their own benefit and to the detriment of the trust. The petition also alleges that the salary, bonus, and health and life insurance contracts are detrimental to the trust and beneficial to the trustees individually. The amended petition sets forth that appellants are not only trustees but also stockholders, officers and directors of the corporation. Their actions in respect to these positions caused a conflict of interest since their acts were inconsistent with their respective duties; and their actions as trustees were done in bad faith, were willful and intentional--all being to the detriment of the trust.
The appellants' first contention is that the county court does not have subject-matter jurisdiction over the claims against them as trustees.
Sec. 253.10, Stats., gives the probate division of the county court subject-matter jurisdiction to hear the instant case. Sec. 253.10(1) and (2) (a), provides in part:
'Probate jurisdiction. (1) The jurisdiction of the county court shall extend to the probate of wills . . . and of administration on the estates . . . and to any other cases authorized by law; . . . to all cases of constructions of wills admitted to probate in such court; and to all cases of trusts and trust powers created by will admitted to probate in such court, including administration under ch. 323 of trusts created in accordance with s. 231.49(1); . . .
'(2)(a) The county court shall have concurrent jurisdiction to hear, try and determine all matters and controversies which may arise between any . . . trustee appointed by such court and any other person telating to title to or interest in real and personal property so far as such matter or controversy is incidental to and necessary for the complete administration of the estate, . . . or trust, and regardless of who has possession of the property or in whose name it may be, to the same extent and with like effect as such matters and controversies may be heard, tried and determined in courts of general jurisdiction.'
The action here is against the trustees of the Roy J. Becker Trust. It is not a stockholders' derivative suit, nor an action against the corporation nor against its directors or officers. The action seeks only the trustees' removal and an accounting therein for their bad faith acts in respect to administering the trust.
The trust in question was created by Becker's will and admitted for probate in the county court in 1965. We believe the appellants have misconstrued the action and the nature of relief sought. The fact that the trustees also acted in other capacities and participated in the management of the corporation does not cause the respondents' action to fail nor taint the probate court's jurisdiction. In such management the appellants are still trustees and accountable as such. Estate of Teasdale (1952), 261 Wis. 248, 52 N.W.2d 366. A trustee in operating a business is still also acting as a trustee. Estate of Teasdele, supra, at p. 263, 52 N.W.2d 366, citing Estate of Peabody (1935), 218 Wis. 541, 546, 260 N.W. 444.
Sec. 253.10, Stats., gives the county court jurisdiction to hear, try and determine this controversy.
The appellants have moved to quash the petition upon the grounds the facts stated are insufficient to constitute a cause of actionand a defect of parties in that the corporation was not named.
The appellants' motion to quash is equivalent to a demurrer. Estate of McKillip (1971), 53 Wis.2d 202, 191 N.W.2d 856, citing In re Estate of Holden (1875), 37 Wis. 98. When a motion to quash a petition has...
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