Frech's Estate, In re

• Decision Date: 12 June 1961
• Docket Number: No. 1,No. 48374,48374,1
• Parties: In re Estate of Alvina FRECH, Deceased. Edward E. MURPHY, Jr., Administrator C.T.A., Appellant, v. MERCANTILE TRUST COMPANY and James H. Hetzel, Trustees, Respondents
• Court: Missouri Supreme Court

Page 224

347 S.W.2d 224

In re Estate of Alvina FRECH, Deceased.

Edward E. MURPHY, Jr., Administrator C.T.A., Appellant, v. MERCANTILE TRUST COMPANY and James H. Hetzel, Trustees, Respondents.

No. 48374.

Supreme Court of Missouri, Division No. 1.

June 12, 1961.

Murphy & Kortenhof, St. Louis, Edward W. Fredrickson, St. Louis, for appellant.

Thompson, Mitchell, Douglas & Neill, James M. Douglas, William G. Guerri, W. Stanley Walch, St. Louis, for respondent, Mercantile Trust Co.

Wilbur B. Jones, Martin Schiff, Jr., St. Louis (Husch, Eppenberger, Donohue, Elson & Jones, St. Louis, of counsel), for respondent Hetzel, Trustee.

HOUSER, Commissioner.

This is a proceeding in the probate court to discover assets. Sec. 473.340, RSMo 1959, and V.A.M.S. On February 25, 1959 Edward Murphy, Administrator of the Estate of Alvina Frech, Deceased, filed an affidavit in the Probate Court of the City of St. Louis stating that decedent executed an indenture of trust on March 15, 1951 naming the corporate predecessor of Mercantile Trust Company, and an individual, as joint trustees of bonds, stocks and moneys (worth $98,000 as of April 20, 1951); that on or about July 9, 1952 decedent revoked said trust; that the trustees still hold, possess and control this property of decedent, which belongs to and is being wrongfully withheld from the estate.

The fact that decedent executed the trust indenture is undisputed. It gave the trustees full power to hold and manage the property, invest and reinvest in their absolute discretion, and required them to pay the net income to settlor Alvina Frech for life and thereafter of Elenore F. Hetzel for life, and then to deliver and convey the trust estate to Ralph Hetzel, whereupon the trust was to terminate. Other provisions were made for the devolution of the property in the event Elenore and Ralph should die before receiving their share of the trust estate. The settlor reserved the right at any time to revoke the trust in its entirety by instrument, in writing, signed by the settlor and delivered to the trustees.

The trustees, after answering the interrogatories, alleged that the indenture of trust had been executed on March 15, 1951 and that assets in excess of $98,000 had been transferred to the trustees as of April 20, 1951. They set out Article 10 of the indenture (the provision prescribing the method by which the indenture could be revoked). Then they alleged that:

'Alvina Frech never at any time during her lifetime delivered and instrument to the Trustees either amending or revoking said Trust, but said Trust remains unrevoked and is and remains a valid, subsisting Trust according to the terms of said Indenture.

'Mercantile Trust Company and James H. Hetzel as Trustees pursuant to said Indenture of Trust, are presently administering said Trust and have been doing so for the more than eight years since its creation and for the more than seven years since July 9, 1952, and in the course of such administration the Trustees have done numerous acts and things and engaged in and performed numerous transactions including the investment and reinvestment of assets of said Trust, and the making of payments therefrom including income payments as provided in said Indenture, all of which acts were done under the authority of and as authorized by said Indenture of Trust, which Indenture was at all times and now is and will remain valid and subsisting according to its terms, and unrevoked, and not subject to attack in this proceeding.'

The corporate trustee filed with its answer copies of correspondence between trustees and settlor indicating that the settlor recognized the continued existence of the trust after the date of the alleged revocation.

The probate court overruled motions to dismiss on the ground of lack of jurisdiction; heard the matter on the merits; found that the trustees were not wrongfully withholding assets belonging to the estate and dismissed the citations for concealment of assets. On appeal to the circuit court the trustees renewed their motions to dismiss the proceeding on the ground that the probate court lacked jurisdiction over the subject matter; that the issues are of equity jurisdiction; and that as a result neither the probate court nor the circuit court (a court of derivative jurisdiction) had jurisdicton. The motions were sustained and the cause dismissed for lack of jurisdiction, whereupon the administrator appealed to this Court.

We have jurisdiction, since the amount in dispute (the value of the property allegedly wrongfully withheld, In re Clinton's Estate, 223 Mo. 371, 123 S.W. 1) is in excess of $15,000.

Appellant-administrator contends that the pleadings disclose a proper situation for a discovery of assets proceeding, of which the probate court has exclusive original jurisdiction

Respondents-trustees maintain that neither the probate court nor the circuit court on appeal had any jurisdiction; that the pleadings and record as a whole show conclusively that this proceeding was solely and only an equitable suit to cancel, revoke and set aside the terms of a valid, subsisting express trust under the guise of an attempt to discover assets; that a probate court has no jurisdiction to entertain such a purely equitable proceeding, which is cognizable only in a court of equity jurisdiction.

Appellant-administrator replies that upon revocation of a trust by the settlor equity has no further jurisdiction in the matter; that when a trust is terminated by the exercise of a power of revocation, and where under the terms of the trust nothing remains to do but surrender and physically deliver up the trust property, the trustee is under a duty enforceable in an action at law (and enforceable here by proceeding under Sec. 473.340), to pay the money or transfer the chattels immediately and unconditionally; that the only real dispute is whether settlor revoked the trust on July 9, 1952; that this is a simple fact issue, easily determinable by a court of law, and not requiring the interposition of a court of equity; that the fact that the original securities may have been disposed of and converted into other property or that it will be necessary to have an accounting of the income received and the payments or disbursements made, does not limit the power of the probate court to require the present assets of the trust to be returned to the estate.

A proceeding under Sec. 473.340 for the discovery of assets is an action at law, Courier v. Scott, Mo.Sup., 336 S.W.2d 375, in which the probate court has exclusive jurisdiction to determine whether there has been any property concealed, embezzled, or wrongfully withheld from an estate, except in cases of purely equitable cognizance. State ex rel. Nute v. Bruce, 334 Mo. 1107, 70 S.W.2d 854; State Bank of Willow Springs v. Lillibridge, 316 Mo. 968, 293 S.W. 116; State ex rel. Lamm v. Lamm, Mo.App., 216 S.W. 332. The probate court, however, is a court of limited, statutory jurisdiction, without power to entertain a suit or proceeding based upon strictly equitable principles, State ex rel. North St. Louis Trust Co. v. Wolfe, 343 Mo. 580, 122 S.W.2d 909, unless such jurisdiction is expressly conferred by statute or is necessarily incident to the proper exercise of duties directly imposed. Ford, Adm'r v. Talmage, 36 Mo.App. 65, 71. No statute confers upon the probate court jurisdiction over matters pertaining to inter vivos trusts. Jurisdiction over trusts has always been regarded as 'one of equity's original and inherent powers.' Rawlings v. Rawlings, 332 Mo. 503, 58 S.W.2d 735, 737; State ex rel. and to Use of Clay County State Bank v. Waltner, 346 Mo. 1138, 145 S.W.2d 152, 155. Equity has jurisdiction of all questions relating to the establishment, enforcement, protection, preservation, ¹ and the termination and revocation, ² of inter vivos trusts. On the other hand, it has been affirmed and reaffirmed that the probate court lacks jurisdiction in matters involving trusts and trustees. State ex rel. North St. Louis Trust Co. v. Wolfe, supra; State ex rel. and to Use of Clay County State Bank v. Waltner, supra; Hedrick v. Wright, 239 Mo.App. 488, 191 S.W.2d 372; Bond v. Unsell, Mo.App., 72 S.W.2d 871; Hess v. Sandner, 198 Mo.App. 636, 198 S.W. 1125; In re Schield's Estate Mo.Sup., 250 S.W.2d 151; Howard's Estate v. Howe, 344 Mo. 1245, 131 S.W.2d 517; Butler v. Lawson, 72 Mo. 227; Dietrich v. Jones, 227 Mo.App. 365, 53 S.W.2d 1059, and cases cited, loc. cit. 1062; In re Franz' Estate, 359 Mo. 362, 221 S.W.2d 739. These decisions hold that the probate court has no power to establish, declare, enforce and execute trusts or supervise trustees.

The ultimate issue framed by the interrogatories and answers is whether the assets in question constitute trust property the title, possession and control of which is properly vested in the trustees under an existing, continuing, active express inter vivos trust, or whether the assets constitute property of the decedent the delivery of which to the administrator should be compelled because wrongfully withheld on the theory that the 1951 trust was revoked and is no longer in existence. While the administrator does not pray for the cancellation, revocation or setting aside of the trust, his objective is to compel the trustees to deliver and yield up the trust assets upon the basis of a probate court finding and adjudication that the trust was previously revoked by the act of the settlor. And while the trustees do not pray for an order establishing the trust, their aim is to secure a judicial confirmation of the integrity and continued existence of the trust. The powers of the probate court are thus invoked to investigate and adjudicate the question whether the assets in question, which admittedly constituted a trust res in 1951, are still affected with a trust under the trust indenture, by operation of law or act of the parties, or whether the title and estate...