Engelsmann v. Holekamp, 51303

• Decision Date: 09 May 1966
• Docket Number: No. 51303,No. 1,51303,1
• Citation: 402 S.W.2d 382
• Parties: Lucille ENGELSMANN and Elsa Engelsmann Ferry, Plaintiffs-Appellants, v. Carl H. HOLEKAMP, Jr., as Executor Under the Last Will and Testament of Carl H. Holekamp, Sr., Defendant-Respondent
• Court: Missouri Supreme Court

Page 382

402 S.W.2d 382

36 A.L.R.3d 1056

Lucille ENGELSMANN and Elsa Engelsmann Ferry, Plaintiffs-Appellants, v. Carl H. HOLEKAMP, Jr., as Executor Under the Last Will and Testament of Carl H. Holekamp, Sr., Defendant-Respondent.

No. 51303.

Supreme Court of Missouri, Division No. 1.

May 9, 1966.

Newell S. Ferry, Clayton, Paul Taub, Overland, for plaintiffs-appellants.

Harry S. Kramer, Walter M. Clark, Armstrong, Teasdale, Kramer, & Vaughan, St. Louis, for defendant-respondent.

HENLEY, Judge.

This is a suit in equity against the executor of the estate of Carl H. Holekamp, Sr., to compel an account of the administration of a certain trust. Plaintiffs pray that they may have judgment against the executor for, and the estate be surcharged with, the amounts determined by the accounting to be due them. The fundamental averments of the petition are that Carl H. Holekamp, Sr., was in his lifetime trustee of a testamentary trust valued in May, 1919, at $49,960, of which plaintiffs are beneficiaries subject to a life estate of their mother, now deceased; that the deceased trustee commingled trust funds with his own property and otherwise violated the trust; that the mother of plaintiffs died shortly after the death of the trustee, and that the executor of the trustee's estate has failed and refused to distribute the trust funds to plaintiffs as required by the trust instrument. The court made and entered findings of fact and conclusions of law. The decree was for defendant and plaintiffs appeal.

Plaintiffs claim that at time of trial the trust fund exceeded $90,000 and that no less than that sum is due them; hence, the amount in dispute is in excess of $15,000 and this court has jurisdiction. Article V, § 3, Constitution of Missouri, V.A.M.S.; § 477.040, RSMo 1959, V.A.M.S.

The following facts are not in dispute. Herman E. Engelsmann died testate on April 22, 1918, leaving surviving him Amalie H. Engelsmann (his widow) and the two plaintiffs, Lucille Engelsmann and Elsa Engelsmann Ferry (his daughters). By his will and a codicil he left his residuary estate in trust for the benefit of his widow and daughters. Named in the will as executors, and as trustees of the trust were his brother, George Engelsmann, Amalie H. Engelsmann, and Carl H. Holekamp, Sr., his brother-in-law, and brother of his widow. George Engelsmann and the widow declined to serve as executors, and Carl H. Holekamp, Sr., was appointed executor and served as such until the estate was closed on May 27, 1919. The will directed that the trustees invest the funds of the trust '* * * in income bearing securities, at the highest rate of interest consistent with perfect security.' The will provided that the net annual income of the trust be paid in installments of unspecified amounts to Amalie H. Engelsmann for her life and upon her death to his daughters until they attained the age of 35 years at which time, the widow not living, the trust fund was to be distributed to the daughters. The will also provided that the trustees might encroach upon the principal, if necessary, in case of sickness or other distress of any of the beneficiaries. By the codicil the testator authorized the trustees to encroach upon the principal, if necessary, to pay his widow an income of $300 per month, but limited those payments to her for life and provided that any excess of income over that sum be paid one-half to each of his daughters upon their marriage or reaching the age of twenty-five years. Lucille Engelsmann attained age twenty-five in 1929, and Elsa Engelsmann Ferry in 1931. George Engelsmann did not serve as a trustee. Although Amalie H. Engelsmann declined in writing to serve as trustee she did, as a trustee, join with Carl H. Holekamp, Sr., in executing a receipt to the executor for $49,960. This sum represented the balance in the estate as shown by the executor's final settlement and constituted the corpus of the trust. George H. Holekamp, Sr., died June 16, 1960, and his sister, Amalie H. Engelsmann, widow of Herman E. Engelsmann, died December 22, 1960. The defendant, Carl H. Holekamp, Jr., is the executor of the estate of Carl H. Holekamp, Sr. No part of the trust estate has been paid to plaintiffs.

Plaintiffs' petition, with copies of the will and codicil attached, was filed March 22, 1961. It alleges substantially all of the above facts and further alleges that Carl Holekamp, Sr., as trustee, violated the trust by: (1) commingling assets of the trust estate with his own properties and funds, and (2) investing assets of the trust in properties other than income bearing securities by reason of which losses were suffered. Plaintiffs further allege: (1) that they are entitled to an accounting of the administration of the trust and distribution of its assets, their mother being deceased; (2) that no part of the assets of the trust have been distributed to them; and (3) that they have demanded distribution of said assets from defendant, executor of the estate of the deceased trustee, Carl Holekamp, Sr., but defendant has failed and refused to make distribution.

By his second amended answer defendant admits so much of the facts stated above as are pleaded in plaintiffs' petition, and by way of affirmative defense states: (1) that Amalie Engelsmann did not decline to act as trustee, but did in fact so act; (2) that Carl Holekamp, Sr., made payments to Amalie Engelsmann at the rate of $300 per month from 1919 through 1930 and from 1931 until his death in 1960 at the rate of $150 per month for a total sum in excess of $90,000; (3) that these monthly payments, and other assets of the trust received by Amalie Engelsmann, exhausted the trust estate several years before the death of Carl Holekamp, Sr., and that payments made to Amalie after exhaustion of the trust were from his personal funds; (4) 'that payments made to Amalie Engelsmann * * * throughout the years far exceed the amount contained in the trust, taking into consideration a reasonable yield to the trust from investments prudently made'; (5) that Amalie Engelsmann, as co-trustee, consented to and acquiesced in all investments of the trust fund, and consented to and acquiesced in all payments and distributions made to her; (6) that plaintiffs had the right to seek an accounting of the administration of the trust beginning in about 1925, but failed to do so and 'slept on their rights' and 'acquiesced in the handling of the trust * * * for a period of 35 years' during which period '* * * records have been lost or destroyed, and both Amalie Engelsmann and Carl H. Holekamp, Sr., have died * * *', by reason of which '* * * plaintiffs' claims are barred by laches.'

At the beginning of the trial defendant withdrew his second amended answer and the trial proceeded on the petition and the first amended answer. This answer did not plead the defense of laches. At the close of the trial defendant requested leave to refile his second amended answer and the court took this request under advisement along with the whole case. The findings of fact and conclusions of law do not indicate a ruling on this request, but for the purposes of this opinion we will treat the pleadings as though the second amended answer had been refiled. We note this defense merely in passing for defendant's brief is silent on the defense of laches. Defendant has abandoned this defense by failing to brief it; it is not before us; and we will not consider it in determining the issues. Stark v. Cole et al., Mo.App., 373 S.W.2d 473, 475(1); State ex rel. Webster Groves Sanitary Sewer District v. Smith, 337 Mo. 855, 87 S.W.2d 147, 154(11); City of Webster Groves, to use of Wise v. Taylor et al., 321 Mo. 955, 13 S.W.2d 646(1).

This trial, consuming nearly nine days, produced a transcript of more than seven hundred pages and more than two hundred exhibits. We will not attempt to summarize all the evidence. A statement of the positions and general contentions of the parties with a brief account of the substance of evidence pertinent to these contentions will suffice. Plaintiffs contend that as remaindermen beneficiaries they have a right to an accounting of the administration of the trust; that Carl Holekamp, Sr., was in truth and practical effect the sole and only trustee; that said trustee having died without accounting to them, it is the duty and obligation of his personal representative to account. Plaintiffs also contend that since the executor of the trustee's estate has failed to account, they are entitled to proceed as follows: first, to inquire into the business affairs of Carl Holekamp, Sr., individually, as executor of the estate of Herman Engelsmann, and as trustee, insofar as they pertain to and would produce an accounting of his administration of the trust; second, to show breaches of the trust by the trustee resulting in losses to the trust estate. On the theory that this inquiry would show that there are, or should be, trust assets in a certain amount remaining on the death of their mother in the hands of the executor of the estate of this deceased trustee, they contend that they are entitled to judgment against his estate for that amount and interest. Plaintiffs proved the will and codicil of Herman Engelsmann and the provisions thereof with respect to the trust, the trustees and the beneficiaries. They also proved that Carl Holekamp, Sr., administered the estate of Engelsmann as executor; that the estate was closed in 1919 and that their mother and Carl Holekamp, Sr., received from the estate as trustees $49,960 as the corpus of the trust; that Carl Holekamp, Sr., as trustee, made monthly payments to their mother in amounts corresponding to the amounts specified in the trust instrument from a trust bank account in the names of Amalie Engelsmann and Carl Holekamp, Sr., as trustees, and after that account was closed in January, 1925, from other bank accounts until his death; that their mother, the life beneficiary of the trust, is...