Fairleigh v. Fidelity Nat. Bank & Trust Co. of Kansas City

• Citation: 73 S.W.2d 248,335 Mo. 360
• Decision Date: 12 June 1934
• Docket Number: 31243
• Parties: Emily K. Fairleigh and Virginia Lee Fairleigh, an infant, by Emily K. Fairleigh, her guardian, Appellants, v. Fidelity National Bank and Trust Company of Kansas City
• Court: Missouri Supreme Court

73 S.W.2d 248

335 Mo. 360

Emily K. Fairleigh and Virginia Lee Fairleigh, an infant, by Emily K. Fairleigh, her guardian, Appellants, v. Fidelity National Bank and Trust Company of Kansas City

No. 31243

Supreme Court of Missouri

June 12, 1934

Motion for Rehearing Overruled June 12, 1934.

Appeal from Jackson Circuit Court; Hon. Denton Dunn, Judge Opinion filed at September Term, 1933, April 19, 1934; motion for rehearing filed; motion overruled at May Term, June 12 1934.

Affirmed.

Charles C. Madison and Harry Howard for appellants.

(1) Appellants represent the full estate in question. Schee v. Boone, 243 S.W. 882; McFarland v. Bishop, 282 Mo. 552; McClure v. Baker, 216 S.W. 1018; Oldaker v. Spiking, 210 S.W. 50; 20 R. C. L., sec 9, p. 670; Lilly v. Tobbein, 103 Mo. 488; Downey v. Seib, 185 N.Y. 427; 16 Am. Ann. Cas. 1913C, 659; State ex rel. v. Security Co., 323 Mo. 158; Eagan v. Woelfel, 323 Mo. 27; Wilson v. Ins. Co., 300 Mo. 1. (2) The defense of estoppel cannot be maintained. White v. Sherman, 168 Ill. 589; 16 A. & E. Ann. Cas. 72; Garesche v. Inv. Co., 146 Mo. 436; Cornet v. Cornet, 248 Mo. 234; Ryan v. Ryan, 174 Mo. 279; Studybaker v. Cofield, 159 Mo. 596. (3) The evidence does not sustain the issue of estoppel. (4) The will requires that the stock in question be sold. (5) The stock in question is not a security. Thayer v. Wathen, 44 S.W. 906; Bank v. Hart, 55 N.W. 631; In re Mildeberger's Will, 209 N.Y.S. 649; In re Stark's Will, 134 N.W. 389; Drake v. Crane, 127 Mo. 103; Loud v. Trust Co., 298 Mo. 170; Loud v. Trust Co., 313 Mo. 552; Sec. 1132, R. S. 1909; Sec. 5423, R. S. 1929. (6) The stock is a speculative, non-legal investment, which should have been sold. Rapp v. Trust Co., 229 S.W. 1105; Sec. 559, R. S. 1919; Cornet v. Cornet, 269 Mo. 298; 39 Cyc. 401-2-6-9; Taylor's Estate, 277 Pa. St. 518, 121 A. 310; 37 A. L. R. 553; Randolph v. Land Co., 16 So. 126; 12 A. L. R. 569; 26 R. C. L., p. 1309, sec. 162, p. 1311, sec. 165; 16 Ann. Cas. 72; Babbitt v. Fidelity Co., 72 N.J.Eq. 745; Goodman v. Howe, 62 How. 134; White v. Sherman, 168 Ill. 589; Robertson v. Robertson, 130 Ky. 293, 113 S.W. 138; Ward v. Kitchen, 30 N.J.Eq. 31; In re Buhl, 211 Mich. 124, 178 N.W. 651; In re Parson's Estate, 257 N.Y.S. 339.

Bowersock, Fizzell & Rhodes for respondent.

(1) Virginia Lee Fairleigh is not a proper party plaintiff. (a) The will of Emily K. Fairleigh purporting to bequeath an interest in the trust estate to Virginia Lee Fairleigh is without legal effect until the death of Emily K. Fairleigh. Dickerson v. Dickerson, 211 Mo. 495; Hannibal Trust Co. v. Elzea, 315 Mo. 504. (b) The plaintiff, Emily K. Fairleigh, is the only party in interest. Stephens v. Moore, 298 Mo. 227. (2) The defendant trustee, in retaining the stock of the Central Coal & Coke Company as a part of the trust estate, properly discharged its duties as trustee. (a) The retention of the stock was expressly authorized and recommended by the will of Richard H. Keith. (b) The construction which the parties placed upon the will is conclusive. Thompson, Construction of Wills, chap. 1, sec. 9; Bacon v. Sayre, 84 Misc. 462, 147 N.Y.S. 552; In re Oltman's Est., 53 Misc. 208, 104 N.Y.S. 472; Hagerty v. Albright, 52 Pa. 274; Follmer's Appeal, 37 Pa. 121; Dorrance v. Dorrance, 238 F. 524. (c) The stock in question constitutes a proper investment within the language of the will. Fox v. Harris, 141 Md. 495, 119 A. 256; In re Pierce Estate, 177 Wis. 104, 188 N.W. 78. (d) Wholly apart from the specific language of the will, the trustee was justified in retaining the stock of the Central Coal & Coke Company. Taylor v. Hite, 61 Mo. 144; Cornet v. Cornet, 269 Mo. 318; In re Clark's Will, 257 N.Y. 132, 177 N.E. 397; Jones v. Jones, 2 N.Y.S. 844; Bowker v. Pierce, 130 Mass. 262; Green v. Crapo, 181 Mass. 55, 62 N.E. 956; Lyon v. Forscue, 60 Ala. 486; In re Dauler's Estate, 247 Pa. 356, 93 A. 511; Creed v. McAleer, 275 Mass. 353, 175 N.E. 761; In re Chapman, Law Reports (1896), 2 Ch. 763. (3) The plaintiff, having acquiesced in the retention of the stock by the trustee and having actually requested such retention, cannot now complain of the trustee's action. Phillips v. Burton, 107 Ky. 88, 21 Ky. L. R. 720, 52 S.W. 1064; Watson v. Conrad, 33 W.Va. 536, 18 S.E. 744; Skelding v. Dean, 141 Mich. 143, 104 N.W. 410; In re Hall, 164 N.Y. 196, 58 N.E. 11; Hoyt v. Sprague, 103 U.S. 613; 39 Cyc. 413.

Ferguson, C. Sturgis and Hyde, CC., concur.

OPINION

FERGUSON

This is a suit in equity brought by the beneficiary in a testamentary trust against the trustee. Plaintiff, Emily K. Fairleigh, is a daughter of Richard H. Keith, deceased. It is alleged that by his will Richard H. Keith "bequeathed and conveyed" a certain share in his estate in trust to the defendant as trustee and directed that such part of his estate "be invested by defendant as sole trustee in safe securities and the income thereof be paid at convenient periods to the said Emily K. Fairleigh;" that on or about July 8, 1913, and as a part of said trust estate, defendant as such trustee received certain shares of stock of the Central Coal & Coke Company; that said shares of stock "were not at any time on or after July 8, 1913, safe securities, and defendant instead of selling said stock and reinvesting the proceeds thereof in safe securities, as it was the duty of said trustee to do . . . has kept and is keeping said stock on hand in total disregard of its obligation as trustee and the market value of said stock after July 8, 1913, has greatly depreciated and the income therefrom . . . has not equaled the income which would have been derived from safe securities if said stock had been sold and the proceeds invested in safe securities." The prayer of the bill is that "defendant be required to dispose of" said shares of stock "to the best advantage . . . account for depreciation in value of the principal and loss of income . . . and that so much of the proceeds of the sale and recovery . . . as may be principal be invested in safe securities . . . and so much thereof as may be income be ordered paid to the plaintiff Emily K. Fairleigh." The answer is that defendant "did at all times fully perform its duties and obligations as Trustee under the will . . . and at all times acted in strict conformity to the terms thereof" and further that in continuing to hold said shares of stock it acted "at the special instance and request of the plaintiff, Emily K. Fairleigh; that said plaintiff fully acquiesced therein and is estopped to complain thereof."

The testator was a resident of Jackson County. Defendant at all times located at Kansas City, Missouri, was originally incorporated as The Fidelity Trust Company under the laws of this State relating to trust companies but at a later time, not shown by the evidence, was converted into a National Bank, under the acts of Congress, but qualified, and with the right, to act as trustee under the laws of this State. We shall hereinafter frequently refer to defendant merely as the trust company. The cause was tried in the Circuit Court of Jackson County. The finding and judgment of the chancellor was for defendant and plaintiffs appeal.

Richard H. Keith entered the coal business in 1871; later a partnership composed of Richard H. Keith and W. C. Perry was formed, the firm name being Keith & Perry. In 1893 the partnership business was incorporated under the name of Central Coal & Coke Company. Keith was the first president of the Central Coal & Coke Company and continued in that position until his death in 1903. The Central Coal & Coke Company had a capital stock of $ 7,000,000. It owned 66,000 acres of coal lands and mined and sold coal; it also owned a large acreage of timber lands in Louisiana and Texas and engaged on an extensive scale in the manufacture and sale of lumber. The annual production of the company was about four million tons of coal and 160,000,000, to 170,000,000 feet of lumber. Keith seems to have been eminently successful in the business field and while the evidence does not show the extent and value of the property composing the Keith estate at the time of his death enough appears here and there in the record to indicate that he possessed large and valuable property interests. It appears that he owned a large number of the shares of stock of the Central Coal & Coke Company (the number thereof or per cent is not shown). We note that it was developed that he owned one-third of the stock of another corporation, the Louisiana & Texas Lumber Company, which was also engaged in the lumber business. It also appears that he owned an undivided one-half interest in the Keith-Perry Building in Kansas City. The value of that interest is not shown but some years after Keith's death his heirs purchased the other undivided one-half interest in that property at a valuation of $ 250,000. A property designated as the Keith homestead was a part of the estate. It is apparent too that at the time of his death Keith had some considerable amount of cash on hand and other investments, in addition to those mentioned, in the form of bonds and corporate stocks. With this general summary indicating the form and nature of the property holdings of the testator, both at the time the will involved was executed and at the time of his death, we submit an abstract of the will:

Paragraph 1.

Revokes "all former wills."

Paragraph 2.

Directs all just debts be paid.

Paragraph 3.

Bequeaths $ 10,000 to Laura Lee, a Niece.

(By codicil bequeaths $ 20,000 to his sister, Vir-

ginia Lee.)

Paragraph 4. Bequeaths all household furniture, horses, carriages and vehicles to his wife, also a sum of money "which added to such life insurance as she may collect on my life shall make the sum of $ 25,000."

Paragraph 5. (As amended...