Cornet v. Cornet

• Citation: 190 S.W. 333,269 Mo. 298
• Decision Date: 01 December 1916
• Docket Number: No. 18973.,No. 18971.,18971.,18973.
• Parties: CORNET et al. v. CORNET et al.
• Court: United States State Supreme Court of Missouri

190 S.W. 333

269 Mo. 298

CORNET et al. v. CORNET et al.

No. 18971.

No. 18973.

Supreme Court of Missouri, Division No. 1.

December 1, 1916.

Rehearing Denied December 20, 1916.

Appeal from St. Louis Circuit Court; Kent K. Koerner, Judge.

Suit by George A. Cornet and others against Henry L. Cornet and others. From the judgment on accounting, all parties appeal. Reversed and remanded, with directions.

Ryan & Thompson, of St. Louis, for plaintiffs. Smith & Pearcy, of St. Louis, for defendants.

BROWN, C.

This suit was instituted in said circuit court on the 13th day of June, 1908, by a petition in equity filed by George A. Cornet and Tillie Cornet, his wife, against Henry L. Cornet as trustee under the last will of Francis Cornet, deceased, and in his individual capacity. The relief asked was that the court decree that plaintiff George A. Cornet was entitled to appoint and dispose of the estate devised and bequeathed to him in said will by his father, the testator therein; that a certain deed executed by the said George A. Cornet to the defendant, his brother, dated January 14, 1892, be canceled and declared void for fraud; that the defendant be removed as trustee under said will; that an accounting be taken of the trust estate; and that the defendant pay over to the said George A. Cornet what shall appear to be due to him upon such accounting.

The answer put in issue the fraud charged in the petition, and averred that the instrument of January 14th was made in full recognition of the terms and provisions of said will as giving to the said George A. Cornet only the net income from the share of the testator's estate left to defendant in trust for him during his life, and that defendant accepted said trust and ever since continued to discharge his duties thereunder.

The cause having been put at issue by replication, was tried and the bill dismissed upon the merits. An appeal was taken by the plaintiffs to this court, where, upon hearing, the judgment dismissing the bill was reversed and the cause remanded to the St. Louis circuit court, with directions that the said deed of January 14, 1892, be set aside; that the defendant be removed as trustee; that a successor be appointed to administer the trust according to the provisions of the will; and that an accounting be had as prayed.

The opinion of this court, with its directions, setting forth the issues and findings in detail, is published in volume 248 of our Reports at pages 184 to 243, inclusive, 154 S. W. 121. This renders it not only unnecessary, but improper, that we should incumber our records with a restatement of the same matters to which we shall refer in this opinion.

Upon the return of the cause and on June 20, 1913, the circuit court entered its decree in accordance with the directions of this court canceling the deed of January 14, 1892, removing the defendant as trustee under the will of Francis Cornet, appointing the St. Louis Union Trust Company successor to the trust, and appointing B. D. Kribben, Esq., special master to settle the accounts of the removed trustee and determine all issues relating thereto. Thereupon the new trustee entered its appearance, accepted the appointment, and is appellant and respondent in connection with the original plaintiffs. This court directed, and it was, in pursuance of such direction, ordered, among other things:

"That said Henry L. Cornet be allowed the legitimate expenses paid or incurred by him as such trustee on account of said trust property, including reasonable compensation for whatever services he has performed for the trust estate under the direction of said will, and be allowed credit for all proper disbursements from said property made by him to the said George A. Cornet or for the latter's benefit."

The concluding paragraph of said interlocutory decree is as follows:

"It is further ordered by the court that all of the costs of this proceeding as well as the cost of said accounting herein ordered and taken be taxed against and paid by the said Henry L. Cornet."

The will of Francis Cornet was executed January 31, 1891, and the testator died December 20th of the same year in his seventy-second year, leaving surviving him his widow and six children, including the plaintiff George A. Cornet and the defendant Henry L. Cornet.

The defendant took possession of his estate, both real and personal, of which the share of George A. Cornet was one-seventh. Upon the division of the personal estate the defendant, as his trustee, received Leavenworth bonds of the par value of $14,000, with accrued interest amounting to $303.33, Ray county bonds of the par value of $2,500, with $140 interest accrued, and $135.97 in cash, aggregating $17,079.30. After the execution of the deed of January 14, 1892, he proceeded from time to time to sell real estate devised by the will, realizing for the share of George A. Cornet $7,629.20. These amounts, aggregating $24,708.50, constitute the investment fund in the hands of the defendant trustee which, with the income of real estate unsold (some of which still remains undisposed of), constitute the subject of the accounting to which all the errors assigned by parties to this appeal are directed.

The defendant testified in his own behalf in the hearing before the master. He said, in substance, that he was, during the time covered by the trust, a member of the firm of Cornet & Zeibig, a partnership engaged in the real estate and loan business, composed of himself and Mr. F. G. Zeibig, having equal interests. The Standard Realty Company was a corporation organized by them and of which they owned the stock in equal pro portions. It was engaged in the real estate business. Cornet & Zeibig kept a single bank account, in which all the trust funds held by defendant, of which there were others than the fund in controversy, were deposited, and paid out on the checks of the partnership and loans of such funds by defendant were charged to his account on the partnership books, while loans made by the firm went to the account of bills receivable. Sometimes Mr. Cornet would purchase a number of bonds in a single transaction and then distribute them among the funds he had on hand for investment. He bought 15 or 20 of the Jalisco bonds, which we shall have further occasion to mention, distributing them among these funds. For several years Cornet & Zeibig had received interest from its bankers on average monthly balances at the rate of 2 per cent. credited to the account monthly. At all times during these transactions there was sufficient funds of the partnership account to make good the trust funds in defendant's hands for investment. It was contended by the defendant upon the hearing that the amount paid by him for attorney's fees and expenses of this entire litigation, amounting, with interest, to $1,128.57, together with the costs of the accounting, amounting to $1,326.50, and all taxable costs of this proceeding should be adjudged and taxed against the trust estate. These contentions were disallowed by the master, and all taxable costs were adjudged against the defendant.

Certain loans were made through the office of Cornet & Zeibig for which commissions were charged by that firm against the trust fund amounting to $298.75. This was disposed of by the special master in his report as follows:

"Your special commissioner finds that the trustee received one half of these commissions in the distribution of the profits of the firm of Cornet & Zeibig, and that he is not entitled thereto and should be excluded therefrom, but that he is entitled to credit in his accounting to the other half thereof which Zeibig received for his services, amounting to $149.38."

The plaintiff contends that the trustee should not only be charged with interest at the rate of 6 per cent. per annum compounded annually on the loans made to the Standard Realty Company, but he should also be charged with the further sum of $260.50 which seems to be admitted as the amount of the usual commissions charged to borrowers by loan brokers for obtaining such loans, and renewals thereof. This was disallowed by the special master in his report.

The special master charged the trustee with the amount of interest received by Cornet & Zeibig on the amount of the trust fund included in their average monthly bank balances, but refused to charge interest at the legal rate either simple or compound for which the plaintiff contended. He allowed the trustee commission at the rate of 5 per cent. on the income from investments of the personal property received by him under the will, amounting to $899.08, and also commission at the rate of 2½ per cent. on the corpus of the personal estate turned over to the new trustee, amounting to $426.18.

Among the investments made by the trustee were certain bonds called the Alton Bridge bonds; being two bonds, each of the par value of $1,000, bearing interest at 5 per cent. purchased by him in 1894 for $1,840, making an income rate of 5.28 per cent. These were a part of an authorized issue of $1,000,000, of which $600,000 at least were sold, and were secured by first mortgage on a railway bridge with its terminal, under construction across the Mississippi river at Alton, Ill. Its prospect of earnings consisted of what is called in the record a "contract" with the Chicago, Burlington & Quincy Railroad Company to use it, which was expected to yield a gross income of $80,000 per year. The bridge was completed and was used for about three years when the Burlington refused to further carry out the arrangement, and the property went into the hands of a receiver. It was reorganized in 1901 with an issue of 4 per cent. bonds which were substituted for the original bonds and accrued interest. At the time of the hearing these bonds were worth, about 75 per cent. of their face.

The plaintiff insisted that the trustee be required to take these bonds from the estate, at cost and interest. The special master...