Becker v. Becker Bros.

• Decision Date: 21 June 1926
• Docket Number: 37303
• Citation: 209 N.W. 447,202 Iowa 7
• Parties: LOUIE BECKER et al., Appellees, v. BECKER BROS. et al., Appellants
• Court: Iowa Supreme Court

209 N.W. 447

202 Iowa 7

LOUIE BECKER et al., Appellees, v. BECKER BROS. et al., Appellants

No. 37303

Supreme Court of Iowa, Des Moines

June 21, 1926

Appeal from Webster District Court.--SHERWOOD A. CLOCK, Judge.

Action in equity for an accounting. Decree as prayed. The defendants appeal.--Modified and affirmed.

Modified and affirmed.

Healy Thomas & Healy and Hanson & Schaupp, for appellants.

Kelleher & Mitchell, for appellees.

STEVENS J. DE GRAFF, C. J., and EVANS, VERMILION, ALBERT, and MORLING, JJ., concur.

OPINION

STEVENS, J.

John and C. F. Becker, in 1885, purchased a tract of seven or eight acres near the Des Moines River in the city of Fort Dodge, and engaged in the business of gardening under the firm name and style of Becker Bros., until October, 1917, when John died. John Becker died testate, and by his will devised all of his property, of every kind, nature, and description, to his brother and business partner, C. F. Becker, in trust, for the exclusive use and benefit of his five children, Helen, Fred, John, Christ, and Louie, and designated C. F. Becker as executor of the estate, requesting that he be permitted to serve both as trustee and executor without bond. The will gave the trustee full power to continue the business, and to sell and dispose of property, real and personal, without order of court, and whenever and at whatever price he should deem fit and proper, and further authorized him to invest and reinvest the proceeds and to manage and control the same, "being held accountable only for the just and honest administration of the estate" and trust funds. The trust was to continue until Louie should attain the age of 25 years, "unless my said trustee shall decide that said trust shall be sooner terminated and distributed."

C. F. Becker qualified as executor, and assumed charge and management of the partnership business, which was continued as before, the children of John taking his place in the firm. The brothers and their families resided together in the residence on the property, when purchased, in separate apartments, for several years, and until C. F. Becker erected for himself a new house on the same tract. John's wife died several years prior to 1917, but the two families continued to reside upon the premises. John always kept the books, and drew all checks on the firm accounts. Since his death, the checks have been signed by C. F. Becker. After her father's death, Helen assisted in the business by keeping account of sales, making statements, and receiving orders by telephone. For these services she was paid $ 8.00 per week. John and Christ joined the army, in 1919, and John returned in 1921. Fred worked for the firm for a short time after his father's death, and resided in the home until he was married. Louie, who was employed away from home, worked in the garden evenings. Fred was employed by a telephone company, and also did work in the garden evenings. During all of the time while John lived, the brothers withdrew a small weekly amount from the partnership funds, and this was continued after his death, payments being made to the respective parties upon a basis of equality. The wages paid to the members of the families were small, Carrie Becker, the wife of C. F., receiving 10 cents per hour for labor performed by her in the gardens. C. F. Becker did not keep books. Reliance was placed largely upon the balance shown by the bank books, for knowledge of the firm's condition. During a portion of the time, Louie collected the accounts for produce sold, and deposited the money in the bank. Statements of the accounts were kept and furnished him by Helen. During the winter seasons, the firm bought and sold potatoes and other vegetables. Louie was a minor at the time of his father's death, and C. F. Becker was appointed guardian. $ 2,000 life insurance upon the life of John Becker was paid to the executor.

In April, 1918, John and Fred, who were married, with their wives and Christ conveyed all of their interest in the real estate owned by the partnership to Helen and Louie, for a separate consideration of $ 1,000. In September, 1921, Helen, who in the meantime had married, her husband joining, conveyed her interest in the property to her brother Louie, for a consideration of $ 3,400; and on September 16, 1922, Louie sold the same to W. F. Becker for a consideration of $ 6,500. Helen and her husband, however, continued to reside in the old home until the fall of 1924.

C. F. Becker, in due time, filed an inventory of the real and personal property of the estate. The only personal property listed in the inventory was an "undivided one-half interest in the property and business of Becker Bros." Shortly after the deeds were executed to Helen and Louie, C. F. Becker filed his final report as executor, without any details or statement of account further than that the debts of Becker Bros., amounting to $ 3,144.70, had all been paid, and distribution made to the beneficiaries, for which vouchers were filed, showing payments of $ 561.29 to each. On May 11, 1920, the final report was approved, and the executor discharged.

This action for an accounting was commenced in 1923. Appellees alleged in their petition that C. F. Becker received and has not accounted for $ 1,500 life insurance; that he requested and induced Fred, John, and Christ to convey their undivided interest in the real estate of the firm to Helen and Louie; that, to accomplish this purpose, he asserted that he had the right to do so, and would himself sell the property if they did not sign the deeds; that he fixed the consideration arbitrarily, and to suit himself; that, at the time, he sustained confidential and fiduciary relations with all of the parties; that he had not previously disclosed, and did not then disclose, to the three brothers any facts concerning the property of the estate or business of the firm; and that, but for his acts and conduct, the deeds would not have been executed. It is further charged in the petition that the conveyance from Helen and her husband to Louie, and that from Louie to W. F. Becker, were brought about and induced by him and his father, C. F. Becker, and that the title to the property conveyed thereby was obtained fraudulently, and without adequate consideration.

After a trial lasting many days, during which all of the parties, except Christ, who was absent, were examined and cross-examined with reference to the various transactions and affairs of the copartnership, the court found that C. F. Becker had made no accounting, as testamentary trustee or as executor, except as stated above; that he has never been excused from making an accounting; that all of the conveyances above mentioned were secured and induced by the wrongful conduct of C. F. and W. F. Becker, as alleged in the petition; that the distribution made to the heirs was of a portion only of the profits of the business, and did not include the personal property of the estate; that C. F. Becker abused his trust and ignored his fiduciary relations to appellees. It was directed that the order of the court approving the final report and discharge of the executor be set aside, and that said executor be required to file an account and make full accounting as such executor, and to report the same to the next term of the district court of Webster County, and to give a ten days' notice thereof; that, within 30 days from the date of the decree, he make and render an accounting, as surviving partner, of the copartnership, pursuant to the court's finding. It was further decreed that W. F. Becker might, if he elected, within 30 days from the entering of the decree, reconvey the property to Louie Becker, and demand and receive back the consideration paid him, with 6 per cent interest from the date of such payment; and that, in the event that he failed to do so, he be not permitted to participate in the earnings or profits of the partnership. The decree also made provision as to permanent improvements, special assessments, etc. The court specially reserved jurisdiction of the case until a final report and accounting should be filed, so as to make further necessary orders in the premises.

This appeal is from the above judgment and decree. We shall not attempt to make a detailed statement of the record, but shall refer only to such matters as we deem necessary to the disposition of the questions before us.

The rule that a trustee must act at all times in perfect good faith in administering the trust and in dealing with the beneficiaries thereof is too familiar to call for the citation of authorities to sustain it. He cannot take advantage of his confidential and fiduciary relations with the beneficiaries for his own profit or in aid of third parties. It is likewise true that the final report of an executor which has been approved, and the executor discharged, will be set aside only upon a clear and...