Hail v. Nashville Trust Co.

• Court: Tennessee Court of Appeals
• Writing for the Court: FELTS, Judge.
• Citation: Hail v. Nashville Trust Co., 212 S.W.2d 51, 31 Tenn.App. 39 (Tenn. App. 1948)
• Decision Date: 28 February 1948
• Parties: HAIL et al. v. NASHVILLE TRUST CO. et al.

212 S.W.2d 51

31 Tenn.App. 39

HAIL et al. v. NASHVILLE TRUST CO. et al.

Court of Appeals of Tennessee, Middle Section.

February 28, 1948

Certiorari Denied by Supreme Court June 12, 1948.

Appeal from Chancery Court, Davidson County; William J. Wade Chancellor.

Suit by Egbert O. Hail and others against Nashville Trust Company and others to recover for breaches of trust. From a decree ratifying a compromise settlement, authorizing it to be carried out and fixing solicitors' fees, the guardian ad litem for minor beneficiaries under trust appeals, and from so much of decree as fixed solicitors' fees, adult complainants appeal.

Decree affirmed and cause remanded for further proceedings.

W. P. Cooper, of Nashville, for adult complainants.

A. T Adams, of Nashville, guardian ad litem.

William Hume, of Nashville, for Nashville Trust Co.

Norvell & Minick, of Nashville for Fourth & First Nat. Bank and Fourth & First Banks, Inc.

Walker & Hooker and David M. Keeble, all of Nashville, pro sese.

FELTS Judge.

This suit was brought in 1937 by the widow, children, and grandchildren of Eustice A. Hail, deceased. They were the beneficiaries in six separate spendthrift trusts which he had created for them before his death in 1927. They sued to recover large losses which they charged had been caused by numerous breaches of trust by defendants over a period of several years in the administration of these trusts.

The defendants were the Nashville Trust Company, the trustee in each of these trusts, and two of its officers, Charles Nelson and A. B. Benedict, who had been authorized by the trust instruments to direct sales and reinvestments by the trustee. In their answers defendants denied any liability, explained the numerous transactions, and averred that all of them had been done in strict accord with the terms of the trusts and in the exercise of the utmost good faith.

In 1941 by amended and supplemental bill the Fourth & First National Bank and the Fourth & First Banks, Inc., were brought in as additional defendants. The former was charged with participation in some of the wrongs sued for; and the latter was averred to be the parent, or holding company, owning all the stock of the other two corporate defendants, and to have made a certain written contract by which it had assumed all the liabilities of both its subsidiaries.

After the suit had been pending some ten years and after the complainants had taken a large amount of proof by depositions, the parties reached a compromise settlement of all matters between them. The gist of this settlement was that the Nashville Trust Company and the Fourth & First Banks, Inc., would pay to the clerk and master the sum of $340,000 to be allocated to five of the trusts named, and would take out of them certain stocks which had been alleged to be of little value, speculative, and improper investments for the trusts; that the trustee would pass its accounts resign, and a new trustee would be appointed; and that all the defendants would be fully discharged and the suit dismissed with prejudice at their cost.

A petition was filed in the cause by all the complainants except three who were minors and who were made defendants to the petition and represented by guardian ad litem. The petition exhibited the writings containing the terms of the settlement, and asked the Chancellor to ratify it and authorize it to be carried into effect by proper decree. The petition also asked him to determine the proper compensation to be paid from the fund to complainants' solicitors, Walker & Hooker (a partnership composed of Mr. Seth M. Walker and Mr. John J. Hooker) and Mr. David M. Keeble, for their services in recovering such fund. For this phase of the case complainants employed other counsel.

After hearing oral testimony for some two weeks, the Chancellor found that the compromise settlement was for the manifest interest of all the beneficiaries, both those now in being and those that may hereafter be born; and he entered a lengthy decree ratifying all the terms of the settlement, authorizing it to be carried out, setting forth its numerous details, and allocating the remainder of the $340,000, after payment of solicitors' fees and expenses, to the five trusts in certain proportions set out.

He found the reasonable compensation of Messrs. Walker, Hooker, and Keeble to be $95,000, and decreed that they be paid that amount plus $1,852.21, expenses paid or incurred by them, $10,000 to be paid from the Maxwell House trust and the balance from the $340,000 going to the other five trusts. He decreed them a lien on the fund and that the sums to be paid them should bear interest from the date of the decree till payment.

The guardian ad litem prayed a broad appeal from the whole decree. The adult complainants prayed a limited appeal from so much of the decree as fixed the solicitors' fees. The transcript was sent up embracing the large record that had already been made before the compromise agreement and also the bill of exceptions including all the testimony adduced upon the oral hearing. All the appellants have assigned errors, and the solicitors have also assigned an error. So the questions presented are (1) those made by the guardian ad litem upon the whole decree and (2) those made by him and the others upon the part of it relating to the solicitors' fees.

(1) The compromise settlement is very advantageous to all the beneficiaries. It is shown to be so by all the proof without dispute. All the adults are very anxious for it to go through. On behalf of the minors, however, the guardian ad litem raises a number of questions as to the Chancellor's jurisdiction to enter the decree authorizing the settlement.

None of them, however, goes to the jurisdiction of the subject matter. Nor could such an objection be maintained. Trusts have long been one of the most important heads of inherent equity jurisdiction, and the Chancellor has very broad powers in the administration of trusts. See Henshaw et al. v. Flenniken et al., 183 Tenn. 232, 241, 191 S.W.2d 541, 545, 168 A.L.R. 1010, and cases there cited. He had jurisdiction of the subject matter and the parties to this suit. He had power to try the cause and proceed to a proper decree. It is equally true that he had jurisdiction to enter the compromise decree, even though three of the parties were minors represented by guardian ad litem. Boyd v. Robinson, 93 Tenn. 1, 29, 23 S.W. 72; Puckett v. Wynns, 132 Tenn. 513, 178 S.W. 1184; Thompson v. Maxwell Land-Grant & R. Co., 168 U.S. 451, 18 S.Ct. 121, 42 L.Ed. 539.

All the beneficiaries were before the court as complainants. They were the widow Lizzie J. Hail, the son Egbert O. Hail and his four children, the daughter Elizabeth Hail Smith and her husband Frank C. Smith and their two children, and the other daughter Avon Hail King and her child. It is true under the terms of the trusts, if other grandchildren should hereafter be born, they would be let in as beneficiaries. But the interests of the complainant grandchildren were such as to give the court jurisdiction to bind the contingent interests of after-born grandchildren. This under the doctrine of virtual representation. Jordan v. Jordan, 145 Tenn. 378, 417, 239 S.W. 423; cf. Barnett v. Daniels, 11 Tenn.App. 443, 450.

It is urged, however, that the trustee was not before the court. It is said that the Nashville Trust Company was sued merely as 'Nashville Trust Company,' i. e., only in its proper character and not in its representative character as trustee; that as trustee it was not a party to the bill, the amended bill, or the petition; and that it did not enter any appearance as trustee.

While it was not named as 'trustee' in the caption of the bill, the averments of the bill stated causes against it in both its capacities--charged it with breaches of trust as trustee and called on it to pay therefor out of its own property. This brought it before the court both individually and as trustee in each of the trusts. Rose v. Third National Bank, 27 Tenn.App. 553, 183 S.W.2d 1; Altman v. Third National Bank, Tenn.App., 203 S.W.2d 701.

It is insisted that in the earlier part of the decree the Chancellor dismissed the bill and the amended bill, and that this deprived him of jurisdiction of defendants to enter the later parts of the decree. After setting out the settlement, adjudging it to be for the manifest interests of the beneficiaries, fixing the solicitors' fees, allocating the rest of the $340,000 to the five trusts, and ratifying the settlement, the decree stated that the bill and the amended bill 'are hereby dismissed.' Then followed the rest of its numerous provisions embracing eight more pages.

The argument is that after dismissing the bill and the amended bill the Chancellor had no further power to enter any decree except to adjudge the costs; that such dismissal put defendants out of the case, they not being parties to the petition, and ended the Chancellor's jurisdiction to make any further decree affecting them.

The decree, however, must be read as a whole. It is not to be broken up into its numerous parts and each of its separate provisions treated as successively coming into operation in the order in which they appear in the decree. Each of its parts is conditioned upon all the others and all become operative at one and the same instant. So the provision for dismissal did not put defendants out of the case of deprive the Chancellor of jurisdiction of them to make the rest of the decree. The decree required a number of things to be done. While final in the sense of being appealable, it will become final in the sense of ending the cause only when all the things it requires to be done have been done.

Another like objection is...