Garesche v. Levering Investment Company

• Decision Date: 08 December 1898
• Parties: Garesche et al. v. Levering Investment Company et al., Appellants
• Court: Missouri Supreme Court

48 S.W. 653

146 Mo. 436

Garesche et al. v. Levering Investment Company et al., Appellants

Supreme Court of Missouri, First Division

December 8, 1898

Appeal from St. Louis City Circuit Court. -- Hon. John A. Talty Judge.

Affirmed.

A. & J F. Lee for appellants.

(1) Upon the formation of the company the property of the estate was represented by the stock of the company, which was under the joint control of both trustees, and Mrs. Levering was not in any way excluded from the trust. (2) First. No excessive commissions have been charged. The stock of the company having come into the hands of the executors as such, and been distributed by them, they were entitled to commissions on that stock. Jacobs v. Jacobs, 99 Mo. 436; R. S 1889, sec. 222. Second. The final settlement is conclusive on Mrs. Garesche, and the allowance to the executors can only be set aside for fraud. Miller v. Major, 67 Mo. 247. Third. The commissions were due and paid equally to both executors. In re Seitz, 6 Mo.App. 253; Schoenick v. Reed, 8 Mo.App. 357. Fourth. If the executors were not entitled to commissions on the stock of the company, then for all of the services rendered by them in the organization of the company and the purchase and sale of real estate, they should have received compensation as trustees. (3) The cardinal rule for the interpretation of Mr. Levering's will is his intention as gathered from the whole will, and his surrounding circumstances. McMillan v. Farrow, 141 Mo. 62; R. S. 1889, sec. 8916; Mersman v. Mersman, 136 Mo. 244; Garth v. Garth, 139 Mo. 465. (4) The power to convey to the corporation was given by Mr. Levering's will. Black's Law Dictionary "Dispose;" Webster "Dispose of;" Granger v. Scott, 1 C. B., 448; Gordon v. Preston, 1 Watts, 385; Phelps v. Harris, 101 U.S. 370; Bullene v. Smith, 73 Mo. 161; Drake v. Crane, 127 Mo. 85. (5) The words "invest and reinvest" do not limit the transaction to one dealing in cash proceeds. Phelps v. Harris, 101 U.S. 370; Drake v. Crane, 127 Mo. 85. (6) The court will not review discretionary powers exercised in good faith. Perry on Trusts [Ed. 1889], secs. 452-511; Haydell v. Hurck, 72 Mo. 257.

Silas B. Jones for respondents.

(1) Under the English equity law a trustee, holding funds for investment for his cestui que trust, in the absence of directions on the subject in the trust instrument, is bound to make the investment in the public debt, for the safety whereof the faith of the government is pledged; or in loans, for which real estate is pledged as security. King v. Talbot, 40 N.Y. 83; White v. Sherman, 168 Ill. 589. Under the English rule trustees can not invest the trust funds in the stock or shares of any trading, manufacturing, or other private corporation. 1 Perry on Trusts [4 Ed.], sec. 455; Lamar v. Micou, 112 U.S. 452. And to this extent the English rule is now adopted by the decided weight of American case law. King v. Talbot, 40 N.Y. 76; Adair v. Brimmer, 74 N.Y. 539; Tucker v. State, 72 Ind. 242; Simmons v. Oliver, 74 Wis. 633; White v. Sherman, 168 Ill. 589; Randolph v. East Birmingham L. Co., 104 Ala. 355; Lamar v. Micou, 112 U.S. 452. (2) Trustees have no power to invest trust funds in the bonds or stocks of new corporations, where the success of the business has not become established; that trustees have no power to embark trust funds in new enterprises, when the undertaking must, in the nature of things, be experimental. 1 Perry on Trusts [4 Ed.], sec. 459; Mattocks v. Moulton, 84 Me. 545; Adair v. Brimmer, 74 N.Y. 539; Tucker v. State, 72 Ind. 242; Kimball v. Reding, 11 Foster, 352; Simmons v. Oliver, 74 Wis. 633; Randolph v. E. B. Land Co., 104 Ala. 355; Ihmsen's Appeal, 43 Pa. St. 431. (3) There are no direct adjudications in this State declaring specifically in what trust funds may be invested; but in so far as any intimations are given in the decided cases in this State, there is no disposition here to in any manner relax the rules on the subject declared by other courts. Drake v. Crane, 127 Mo. 85; Garesche v. Priest, 9 Mo.App. 263; S. C., 78 Mo. 126; Gamble v. Gibson, 59 Mo. 585; R. S. 1889, secs. 102-5318. (4) If the instrument creating the trust commits the investment in general terms to the discretion of the trustees, that discretion is controlled by the rules of law on the subject of the investment of trust funds, and must be exercised within the limits which they prescribe. King v. Talbot, 40 N.Y. 76; Mattocks v. Moulton, 84 Me. 545; Kimball v. Reding, 11 Foster, 352; Randolph v. E. B. Land Co., 104 Ala. 355; Butler v. Butler, 164 Ill. 171; 1 Perry Trusts, sec. 460; 2 Pom. Eq., sec. 1073. (5) The duties and powers of trustees can not be delegated to others, unless there is express authority for that purpose given in the instrument creating the trust. The office of trustee is one of personal confidence and can not be delegated. 1 Perry Trusts [4 Ed.], sec. 287; 2 Pom. Eq., sec. 1068; Whittelsey v. Hughes, 39 Mo. 13; Graham v. King, 50 Mo. 22; Howard v. Thornton, 50 Mo. 291; Bales v. Perry, 51 Mo. 449; Buckenkamp v. Rees, 69 Mo. 426; Cassady v. Wallace, 102 Mo. 575. (6) Trustees can not use their power to invest trust funds in any manner whatever, directly or indirectly, for their own personal gain or advantage; and no disguise whatever of a transaction will be permitted to give it validity, if the substance of the transaction be a use by a trustee of trust funds for his personal advantage. 1 Perry Trusts, sec. 464; 2 Pom. Eq., sec. 1075; Bermingham v. Wilcox, 52 P. 822; Thornton v. Irwin, 43 Mo. 153; Gamble v. Gibson, 59 Mo. 585; Patterson v. Booth, 103 Mo. 402; Ward v. Davidson, 89 Mo. 445; Bent v. Priest, 10 Mo.App. 543; State ex rel. v. Jones, 53 Mo.App. 207. (7) A remainderman can not by mere silence acquiesce in an investment, until his interest falls into possession so as to be bound. 1 Perry Trusts, sec. 467; Bispham's Hill Trustees, star p. 528; Bennett v. Colley, 5 Simons, 181; Brown v. Cross, 12 Beavan, 105; White v. Sherman, 168 Ill. 589; Lindell R. E. Co. v. Lindell, 142 Mo. 61.

OPINION

Marshall, J.

This is a proceeding in equity to divest the title to property, real and personal, out of the Levering Investment Company, and vest it in the devisees under the will of Lawrason Levering, and to secure an accounting.

On the 20th of September, 1889, Lawrason Levering died, testate, and seized of a large estate, real and personal. After specific legacies, not here involved, the will provided: "All the rest and residue of my estate, real, personal and mixed, of whatever kind, and wherever situated, I give, devise and bequeath to my wife, Brianna Levering, and Robert B. Whittemore, and the survivors or survivor of them, upon the following uses and trusts: In trust to pay my wife, Brianna Levering, in cash, so long as she shall live, and for uses and support, and in such sums and such times as she may desire and deem proper. I also give my executors, hereinafter named, full authority to sell, exchange, lease, convey, or in any other way dispose of the property, real, personal and mixed, given to my wife during her life, and to invest and reinvest the proceeds arising therefrom as they may deem best for the interest of my wife and others interested in this, my last will and testament. It is my will and desire upon the death of my wife, and I give, devise and bequeath all the remainder of the property given to my wife, during her life, real, personal and mixed, to be equally distributed among my daughter, Kate Whittemore, and our grandchildren, share and share alike," etc. He appointed his wife, Brianna Levering, and his son-in-law, Robert B. Whittemore, executors, to serve without bond.

The will was duly admitted to probate, and letters testamentary granted to the executors selected by the will in September, 1889. The devisees were a daughter (Katie Whittemore) and fourteen grandchildren. Mrs. Levering took no active part in the management of the trust estate, but let Mr. Whittemore control it, ratifying, however, whatever he did. The executors, pending the administration, without permission of any court and pursuant to the power contained in the will, sold parts of the real estate and reinvested the proceeds in other real estate.

Before the close of the administration, and on June 23, 1890, Robert B. Whittemore (the co-executor), his two sons, Robert B Jr., and Lawrason L., together with John S. Parrish, a clerk and stenographer in the office of Mr. John F. Lee, attorney for the executors, organized the Levering Investment Company, under article 8 of the corporation laws of this State, with a capital stock of $ 300,300, divided into 3,003 shares of a par value of $ 100 each, of which Mr. Whittemore and his two sons subscribed for one share each, and John S. Parrish subscribed for 3,000 shares of the par value of $ 300,000, and it was stated in the articles of agreement that one half of the stock was paid up in lawful money of the United States and was in the custody of the first board of directors. Mr. Parrish was not a capitalist, and was used as a means of organizing the corporation, and was to profit or lose nothing by the transaction. To secure the money to pay up the fifty per cent of the three thousand shares subscribed for by him, Mr. Whittemore and his two sons made their joint note to a bank, the proceeds of which were placed to their credit, they three being the first board of directors of the new company. The said board of directors then purchased from Mrs. Levering and Mr. Whittemore, as executors and also as trustees under the will, practically all the property of the Levering estate, at the price of $ 150,000, and the property was conveyed by them to the company, and the company turned over to them the $ 150,000, which was secured...