Brown v. Bishop Trust Co.

• Decision Date: 16 August 1960
• Docket Number: No. 4158,4158
• Citation: 44 Haw. 385,355 P.2d 179
• Parties: Alice C. BROWN, Gertrude K. Humphries, Lila Kistemaker, Gordon Brown, Wilfred Hayden Humphries, Gertrude Ann Humphries and Clifford Kempton Humphries, v. BISHOP TRUST COMPANY, Ltd., Successor Trustee of the Sarah Brown Trust.
• Court: Hawaii Supreme Court

Page 179

355 P.2d 179

44 Haw. 385

Alice C. BROWN, Gertrude K. Humphries, Lila Kistemaker,

Gordon Brown, Wilfred Hayden Humphries, Gertrude

Ann Humphries and Clifford Kempton Humphries, v. BISHOP TRUST COMPANY, Ltd., Successor Trustee of the Sarah

Brown Trust.

No. 4158.

Supreme Court of Hawai'i.

Aug. 16, 1960.

Syllabus by the Court.

1. A summary judgment may be entered on the ground of laches if the pleadings, affidavits and other documents which may properly be considered on a motion for entry of such judgment show that there is no genuine issue as to any material fact regarding the laches.

2. A beneficiary may be barred by his laches from holding a trustee liable for a breach of trust if he fails to sue the trustee for the breach for so long a time and under such circumstances that it would be inequitable to permit him to hold the trustee liable.

3. In an action against a trustee for breach of trust, death of a material witness during the period that a beneficiary has delayed in bringing his action is an important circumstance to be considered in determining whether the beneficiary is guilty of laches.

4. A beneficiary may not avoid laches on the ground of lack of knowledge of facts regarding the breaches of trust where the evidence shows that he could have informed himself of the facts by the exercise of reasonable diligence or the circumstances of which he was cognizant were such as to put a man of ordinary prudence on inquiry.

5. On a motion for summary judgment, the court may not consider hearsay and conclusion in an affidavit filed in support of the motion.

Brahan Houston, Honolulu, for appellants.

Gilbert E. Cox, Smith, Wild, Beebe & Cades, Honolulu, for appellee.

Before TSUKIYAMA, C. J., MARUMOTO, CASSIDY and LEWIS, JJ., and Circuit Judge HAWKINS in place of WIRTZ, J., disqualified.

MARUMOTO, Justice.

This is an appeal by Alice C. Brown, Gertrude K. Humphries, Lila Kistemaker, Gordon Brown, Wilfred Hayden Humphries, Gertrude Ann Humphries and Clifford Kempton Humphries, plaintiffs, from a summary judgment in favor of Bishop Trust Company, Limited, defendant, in a civil action for accounting and other relief in connection with two trusts created by Sarah E. Brown, settlor, by trust deeds dated August 26, 1921, and June 9, 1927, respectively.

In both trust deeds, settlor named Henry Waterhouse Trust Company, Limited, as trustee. Henry Waterhouse Trust Company, Limited, was merged with Bishop Trust Company, Limited, on December 30, 1933. Hereafter, the word 'trustee' will be used to refer to Henry Waterhouse Trust Company, Limited, only, and Bishop Trust Company, Limited, will be referred to as 'defendant.'

Plaintiffs brought their action as beneficiaries of both trusts. The earlier trust deed provided for the payment of a portion of the trust income, upon settlor's death, to settlor's children in equal shares, and, if any of settlor's children should die leaving issue, to such issue per stirpes. It also provided for the distribution of the corpus to settlor's grandchildren per stirpes upon the death of the last survivor of settlor's children. The trust deed contained similar provisions. Settlor died on November 11, 1937. Alice C. Brown and Gertrude K. Humphries are settlor's daughters. Lila Kistemaker and Gordon Brown are children of settlor's son, Kenneth F. Brown, who died in May 1933. Wilfred Hayden Humphries, Gertrude Ann Humphries and Clifford Kempton Humphries are children of Gertrude K. Humphries. We shall hereafter refer to plaintiffs, other than Clifford Kempton Humphries and Gertrude Ann Humphries, by their first names. Clifford Kempton Humphries and Gertrude Ann Humphries will be referred to as Kempton and Gertrude Ann, respectively. We shall refer to Kenneth F. Brown as Kenneth.

Plaintiffs predicated their claim for relief upon alleged breaches of trust on the part of trustee in the administration of both trusts, and upon defendant's liability for such breaches of trust under S.L.H.1931, c. 169, as successor trustee upon merger. S.L.H.1931, c. 169, provided that 'The rights, obligations, trusts, liabilities and relations of every nature of the trust company being merged to any * * * beneficiary of any trust * * * shall remain unimpaired, and the trust company into which it shall have been merged shall by such merger succeed to all such rights, relations, obligations, liabilities and trusts, and shall execute and perform all the same in the same manner as though it had itself originally acquired the right, assumed the relation or trust, or incurred the obligation or liability; * * *.'

The claim for relief was set forth in a lengthy amended complaint of twenty-three pages typewritten in elite type. The complaint appears to run afoul of the provision of H.R.C.P., Rule 8(a), that a pleading shall contain 'a short and plan statement of the claim showing that the pleader is entitled to relief,' and the provision of H.R.C.P., Rule 9(b), that 'In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity'. However, we make this observation only in passing, for here the form of the complaint is not in question. Defendant moved for a summary judgment on two grounds: first, that a legally sufficient release had been executed by certain of plaintiffs; and, second, that the doctrine of laches precluded plaintiffs from asserting any right at the time that they brought their action. The trial court granted defendant's motion on the second ground.

The propriety of entering a summary judgment on the ground of laches of the party seeking relief is no longer an open question in this jurisdiction. We recently held in Yokochi v. Yoshimoto, 44 Haw. 297, 353 P.2d 820, 824, that summary judgment may be entered 'where, as here, all the elements of laches are apparent from the pleadings and no question of fact remains to determine the existence of the defense.'

Under H.R.C.P., Rule 56(c), summary judgment will be granted 'if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.' Here, the pertinent pleadings consisted of plaintiffs' amended complaint and defendant's motion for summary judgment. The amended complaint referred to numerous documents which were attached thereto as exhibits. The motion was supported by affidavits of defendant's counsel and officers and pertinent exhibits which were duly certified. In opposition to the motion were counter affidavits of Alice, Gertrude and Kempton.

Thus, the sole question for decision on this appeal is whether the amended complain, affidavits, counter affidavits, and exhibits on file raise any genuine issue of material fact regarding plaintiffs' laches. In deciding this question, only the facts concerning laches are material. But such facts must be considered in their setting if their meaning is to be properly understood. Consequently, we shall set forth the history of the two trusts and the events which led to the present controversy.

By the trust deed of August 26, 1921, settlor conveyed Puuohoku Ranch on Molokai and her real estate on Kalia Road, Honolulu, to trustee in trust, subject to mortgage liens aggregating $80,000. Settlor reserved the right to revoke the trust so created by delivering a written notice to trustee.

Trustee sold a portion of the Kalia Road property on May 13, 1926, and the remainder on June 5, 1926. Settlor joined in the deeds which were executed in connection with these sales. A part of the proceeds of such sales was used to purchase an addition to Puuohoku Ranch and also to purchase residential properties on East Manoa Road and Kakela Drive, Honolulu. The balance was used to pay off the mortgage liens.

On June 1, 1927, trustee reconveyed Puuohoku Ranch to settlor. The reconveyance left the trust without any corpus. Thus, its practical effect was to terminate the trust without complying with the formality for revocation specified in the trust deed. On the same day, immediately after the reconveyance, settlor mortgaged to trustee the properties which she then owned, including the ranch, to secure a loan of $75,000.

By the trust deed of June 9, 1927, settlor conveyed in trust to trustee the properties which she mortgaged to trustee on June 1, 1927, subject to such mortgage. Under the trust so created, settlor was entitled to the payment of $250 monthly from the income of the trust, and from the corpus if the income should be insufficient for the purpose. She also had the right to reside at the East Manoa Road residence or at any other premises of the trust which she might designate. Her written consent was required for the sale or exchange of any land by trustee. Trustee had the authority to borrow money for the purposes of the trust from any person, including itself, and to give security for the repayment of such borrowings. It was empowered to operate Puuohoku Ranch, but was required, in that connection, to employ Kenneth as manager so long as he lived and desired to hold such position. The trust was subject to amendment by settlor but was irrevocable.

As of June 30, 1929, in addition to the sum of $75,000 mentioned in the trust deed of June 9, 1927, trustee had advanced $74,565.37 for the purposes of the trust and for the benefit of settlor and her children. So, on July 2, 1929, Kenneth, Alice, and Gertrude assigned their contingent interests in the Maria King Trust to trustee as security for such additional advances. Maria King was settlor's mother. She had left her estate in trust to pay the income to settlor for life and the corpus to settlor's children upon settlor's death. Also, on July 2, 1929, settlor executed an amendment of the trust deed which recognized the additional advances as an obligation of the trust and granted to trustee a lien upon all trust property to secure such...