First Wis. Trust Co. v. Schultz (In re Church's Will)
Decision Date | 31 March 1936 |
Citation | 266 N.W. 210,221 Wis. 472 |
Parties | IN RE CHURCH'S WILL. FIRST WISCONSIN TRUST CO. v. SCHULTZ ET AL. |
Court | Wisconsin Supreme Court |
OPINION TEXT STARTS HERE
Appeal from a judgment of the County Court of Milwaukee County; John C. Karel, Judge.
In the matter of the trust created by the will of George W. Church, deceased, wherein Susan Schultz and others filed objections to an account filed by the First Wisconsin Trust Company, as trustee. From a judgment surcharging the trustee's account, the trustee appeals.--[By Editorial Staff.]
Affirmed.
Upon a final accounting by the First Wisconsin Trust Company as a testamentary trustee, objections to the allowance of the account were filed by the beneficiaries of the trust. Upon findings of fact and conclusions of law, made by the court after a trial on the merits, the court entered judgment surcharging the trustee's account for the amount lost to the estate as the result of the failure and neglect of the trustee to present certain bonds for payment. The trustee appealed from that judgment.Miller, Mack & Fairchild and Leon F. Foley, all of Milwaukee, for appellant.
Timothy J. Hannan, of Milwaukee (Marvin M. Fein, of Milwaukee, of counsel), for respondents.
The following facts, established without dispute, suffice for a consideration of this appeal. In 1930, the appellant, First Wisconsin Trust Company (hereinafter called the trust company), was appointed trustee of a trust under the will of George W. Church, deceased, and acted in that capacity until 1933. Among the assets of the estate received by the trust company, as trustee, were two bonds of the par value of $1,000 each, maturing October 1, 1937, and issued by the St. Mary Magdalen Congregation (hereinafter called the congregation) as part of an issue secured by a trust mortgage or deed to Hackett, Hoff & Thiermann, Inc. (hereinafter called Hackett, Inc.), as trustee. Provisions in the bonds stated that they were issued under and secured by the trust mortgage or deed, “to which deed of trust reference is hereby made with the same effect as though recited at length herein, for the description of the property mortgaged, the nature and extent of the security, the rights of the holders of the bonds, and the terms and conditions upon which the bonds are issued, held and secured, and may, before their fixed maturities, be declared at once due and payable and the manner of prepayment before maturity;” and that the bonds “may be redeemed by St. Mary Magdalen Congregation prior to maturity at any interest payment date upon payment of the principal hereof, all interest due and accruing to the date of such respective redemption, and if redemption shall be made before maturity hereof, a premium of one per cent (1%) of the principal hereof, as in said trust deed provided.” Among the “terms and conditions” in the trust mortgage, and by reference thereto in the bonds made part of the latter, and upon which they were “issued, held and secured,” and by virtue of which they could “before their fixed maturities be declared at once due and payable,” and which related to “the manner of prepayment before maturity,” there were the following provisions: and notify the holders of such allotted bonds by mail
On January 28, 1931, the congregation duly served written notice on Hackett, Inc., pursuant to the trust mortgage, that it would exercise its right to and would, on the next interest paying date, April 1, 1931, pay all of its outstanding bonds, then amounting to $113,000, by paying the principaland interest, and the premium due on such prepayment. Thereupon, in accordance with the provisions of the trust mortgage, notice of call for redemption was published by Hackett, Inc., on March 4, 11, and 18, 1931, in the “Legal Proposals” section of the Milwaukee Journal, which was a prominent newspaper of general circulation in the city of Milwaukee.
On January 31, 1931, the congregation paid $14,000 to Hackett, Inc., to pay on bonds and interest; and by March 30, 1931, Hackett, Inc., had paid out $15,300 for that purpose. On March 31, 1931, the congregation paid to Hackett, Inc., $99,000, plus $3,035 for interest, and $1,100 for the premium to redeem the balance of the bonds. Out of that $99,000 payment, Hackett, Inc., used either $22,000 or $23,300 immediately in redeeming bonds, and deposited $55,000 in an account called “Trust Account No. 1,” which it had at the Marine National Exchange Bank. Other funds were also deposited in that trust account, and Hackett, Inc., issued checks against it for other purposes than the payment of the congregation bonds, but $33,000 of that $55,000 deposit were checked out to redeem congregation bonds up to April 23, 1931; and, until April 27, 1931, there remained a balance of $5,982.27 in that account. Then, on April 27th and 28th, Hackett, Inc., checked out $5,685 for other purposes, leaving a balance of $297.27, which remained in that account when Hackett, Inc., was adjudicated a bankrupt on June 8, 1931. Between April 1 and April 23, 1931, Hackett, Inc., had paid $60,100 in 30 separate payments on the presentation of the congregation bonds. No bonds were redeemed after that date, and $37,600 remained outstanding.
On March 31, 1931, Hackett, Inc., as trustee under the trust mortgage, executed a release and satisfaction thereof. That release was recorded in the office of the register of deeds of Milwaukee county on April 1, 1931, and was included the next day in a list of recorded releases published in the Daily Reporter, a newspaper circulated in the city of Milwaukee.
Through the First Wisconsin National Bank, the trust company promptly collected from Hackett, Inc., the interest due April 1, 1931, but it never presented the bonds for payment; and it did not learn of the notice and the proceedings for the prepayment thereof until after Hackett, Inc., was adjudged a bankrupt. It received $43 on each bond as a dividend paid in October, 1932, by the trustee in bankruptcy of Hackett, Inc.
During the months of March and April, 1931, the trust company had one of its employees examine publications in the Chicago Journal of Commerce, Chicago Tribune, Milwaukee Sentinel, Daily Reporter, and the Sinking Fund Notices and Redemption Calls Section of the Standard Statistics Company, Inc., and...
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