Cameron Trust Co. v. Leibrandt

• Decision Date: 13 May 1935
• Citation: 83 S.W.2d 234,229 Mo.App. 450
• Parties: CAMERON TRUST CO., RESPONDENT, v. IDA C. LEIBRANDT ET AL., APPELLANTS. AND IDA C. LEIBRANDT ET AL., APPELLANTS, v. CAMERON TRUST CO., RESPONDENT
• Court: Kansas Court of Appeals

83 S.W.2d 234

229 Mo.App. 450

CAMERON TRUST CO., RESPONDENT, v. IDA C. LEIBRANDT ET AL., APPELLANTS. AND IDA C. LEIBRANDT ET AL., APPELLANTS, v. CAMERON TRUST CO., RESPONDENT

Court of Appeals of Missouri, Kansas City

May 13, 1935

Appeal from Circuit Court of Clinton County.--Hon. R. B. Bridgeman Judge.

REVERSED AND REMANDED (with directions).

Culver & Phillip for respondent.

H. G Leedy for appellant.

CAMPBELL C. Reynolds, C., concurs.

OPINION

CAMPBELL, C

The cases above styled were consolidated and tried as one case. The case in which Cameron Trust Company was plaintiff and Ida C. Leibrandt was defendant was based upon a promissory note executed by the latter on which liability is confessed. In the suit in which Ida C. Leibrandt et al., were plaintiffs and Cameron Trust Company was defendant the plaintiffs sought to surcharge Cameron Trust Company as trustee with a loss alleged to have resulted from the failure of said trustee to perform the trust properly. The cause was submitted upon an agreed statement of facts. The judgment was in favor of the Cameron Trust Company, from which judgment Ida C. Leibrandt and her coplaintiffs have appealed.

Charles A. Leibrandt, Jr., died testate March 20, 1923. The will of decedent, in which the Cameron Trust Company was nominated as executor, was proven and admitted to probate in the Probate Court of Clinton County, Missouri, May 11, 1923. The Cameron Trust Company qualified as executor, administered the estate and made final settlement thereof in May, 1924. The inventory and final settlement show that the testator owned twenty-four shares of the capital stock of the Cameron Trust Company of the value of $ 300 a share. The pertinent part of the will follows:

"Second: I give, devise and bequeath all of my property of every kind and description and wherever situate to my wife, Ida C. Leibrandt, to have, hold and enjoy for and during her natural life.

"Third: After the death of my wife, I give, devise and bequeath my said property as follows: (To the Cameron Trust Company in trust certain real estate for the son and daughter of the decedent.)

"Seventh: . . . All the remainder of my property of every kind and description, and wherever situate, I give, devise and bequeath to the Cameron Trust Company, in trust, to be disposed of equally for the benefit of my said son and daughter and their heirs and my heirs, upon the same terms, conditions and limitations, as provided in Paragraphs Four and Five of this will.

"All personal property, money, notes and bonds shall be loaned out by said Trustee, at interest under the rules regulating Trust Companies in the investment of such funds, and the net income therefrom shall be paid to my said son and daughter for and during their natural lives, with the remainders upon the same terms, conditions and limitations as above provided."

(It is not claimed by either party that paragraphs 4 or 5 are material in the determination of the appeal.)

In the final settlement the executor prayed the court for "an order to assign, transfer and set over to the Cameron Trust Company, Trustee under the last will and testament of the deceased, all the items of stocks, bonds, loans and accounts . . . to be handled, collected and reinvested in accordance with the provisions of said will. . . ." The probate court in approving the final settlement found "that, under terms of the will of said deceased, the said Cameron Trust Company is appointed as trustee of said estate to handle, collect and reinvest stocks, bonds and notes, it is ordered by the court that the said balance be paid over to the Cameron Trust Company, Trustee." The Cameron Trust Company, as trustee, executed to itself as executor a receipt covering all of the property in the estate and thereafter "certificates evidencing such stock (the twenty-four shares) were issued by said Cameron Trust Company to itself as trustee under said last will and testament. . . ."

The will gave the twenty-four shares of stock and other property to Ida C. Leibrandt "to have, hold and enjoy" during her life. The estate in remainder was "what remained unexpended" at the time of her death. [Board of Trustees v. Dimmitt, 87 S.W. 536; 113 Mo.App. 41; Russell v. Eubanks, 84 Mo. 82.] It was the duty of the executor under the terms of the will upon final settlement to deliver the certificates evidencing the twenty-four shares of stock to the testator's widow. This duty the executor failed to perform. On the contrary, it wrongfully induced the probate court to order that it assign, transfer and set over the certificates of stock to itself as trustee. The trustee accepted the estate and assumed to act as trustee for a period of about seven years and until the stock became worthless. Ida C. Leibrandt and her coplaintiffs say that under such circumstances the Cameron Trust Company became a trustee de son tort . We need not determine whether or not the Cameron Trust Company, strictly speaking, was a trustee de son tort for the reason it took possession of the property of the estate and continued as above stated to act as though it were rightfully in possession of the property as trustee under the terms of the will. In these circumstances the Cameron Trust Company cannot say it was not an express trustee nor can it escape the liabilities which it would have incurred had the trust been created by the terms of the will of the decedent. [1 Perry on Trusts and Trustees (7 Ed.), sec. 245; Thornton v. Gilman, 39 A. 900; Putnam v. Lincoln Safe Dep. Co., 191 N.Y. 166, 83 N.E. 789; Moulden v. Train, 204 S.W. 65.] The question which will determine the case is, when the Cameron Trust Company as trustee received the certificates could it retain them as it did or was it charged with the duty to sell the stock represented by the certificates within a reasonable time? The precise question, so far as the writer of this opinion is advised, has not been ruled in this jurisdiction. Courts in other jurisdictions hold that absent a provision in the instrument creating the trust a trustee may not lawfully retain investments received from the creator of the trust unless the trustee has the right to use trust funds in his hands in purchasing like investments. [65 C. J., p. 812; Ashhurst v. Potter, 29 N.J.Eq. 625; Ward v. Kitchen, 30 N.J.Eq. 31; Cannon v. Quincy, 121 N.Y.S. 752; In re Booth's Estate, 264 N.Y.S. 773; In re Leitsch, 201 N.W. 281; In re Taylor, 277 Pa. 518, 121 A. 310.]

In the case at bar both reason and authority say that neither the law governing the duties of a trustee nor the facts which we will presently state allowed the Cameron Trust Company as trustee to invest trust funds in its hands in the stock of the Cameron Trust Company and that in failing to sell the twenty-four shares of stock within a reasonable time after it received the certificates it incurred the same liability which it would have incurred had it used trust funds in purchasing capital stock of the Cameron Trust Company. [Sec....