Ingalls v. Ingalls

• Decision Date: 26 June 1952
• Docket Number: 6 Div. 194
• Citation: 257 Ala. 521,59 So.2d 898
• Parties: INGALLS et al. v. INGALLS.
• Court: Alabama Supreme Court

Page 898

59 So.2d 898

257 Ala. 521

INGALLS et al. v. INGALLS.

6 Div. 194.

Supreme Court of Alabama.

June 26, 1952.

Lange, Simpson, Robinson & Somerville, Reid B. Barnes and Jas. A. Simpson, all of Birmingham, for appellants Robt. I. Ingalls, Sr., and Ellen Gregg Ingalls.

Cabaniss & Johnston, Birmingham, for appellant First Nat. Bank of Birmingham.

Waites & Tucker, Birmingham, for appellant Pixton.

Chas. W. Greer and Francis H. Hare, Birmingham, for appellee.

LAWSON, Justice.

The important question in this case is whether appellants have been rightly removed from the office of trustee under several of the so-called Ingalls Trusts.

The trusts from which appellants insist they have been incorrectly removed have been designated for convenience as Trusts C, D, E, F, and G.

The original bill was filed in the circuit court of Jefferson County, in equity, on June 17, 1949. It was amended several times, the last amendment coming after the testimony was all in.

The complainants in the bill as amended are: (1) Elesabeth Ridgely Ingalls and Barbara Gregg Ingalls, minors, who sue by their guardian, Robert I. Ingalls, Jr.; (2) Robert I. Ingalls, Jr., as trustee for the use and benefit of Elesabeth Ridgely Ingalls and Barbara Gregg Ingalls. The respondents are Robert I. Ingalls, Sr., Mrs. Ellen Gregg Ingalls, The First National Bank of Birmingham, and M. F. Pixton.

Elesabeth Ridgely Ingalls and Barbara Gregg Ingalls are the daughters of Robert I. Ingalls, Jr., by his first wife, from whom he was divorced in June, 1947. Robert I. Ingalls, Jr., married for the second time on September 30, 1948.

The respondents Robert I. Ingalls, Sr., and Ellen Gregg Ingalls, husband and wife, are the parents of Robert I. Ingalls, Jr., and the grandparents of Elesabeth Ridgely Ingalls and Barbara Gregg Ingalls. The First National Bank of Birmingham is a corporation organized and existing under the laws of the United States of America. M. F. Pixton has been for a number of years connected with the Ingalls business interests and has served for many years as the agent of the trustees of the several Ingalls Trusts.

For present purposes it may be said that Elesabeth Ridgely Ingalls and Barbara Gregg Ingalls are the sole beneficiaries of all the trusts directly involved here.

Robert I. Ingalls, Jr., to whom we may sometimes refer as the complainant, was a cotrustee of all the trusts except Trust D, of which he was the settlor. The cotrustees of Trust D were Robert I. Ingalls, Sr., and The First National Bank of Birmingham.

The cotrustees of Robert I. Ingalls, Jr., in the other trusts were as follows: Trust C, his father, Robert I. Ingalls, Sr.; Trust E, his mother, Ellen Gregg Ingalls, and the First National Bank of Birmingham; Trust F, his mother, Ellen Gregg Ingalls, and M. F. Pixton; Trust G, his father, Robert I. Ingalls, Sr., and M. F. Pixton.

Trusts C and D were each created in December, 1938, the respondent Ellen Gregg Ingalls being the settlor of Trust C and, as we have shown above, complainant Robert I. Ingalls, Jr., was the settlor of Trust D. The original corpus of each of these trusts consisted of 500 shares of the capital stock of Ingalls Iron Works Company.

Trust E was created in December, 1941, by the respondent Robert I. Ingalls, Sr. The original corpus was 1,000 shares of the capital stock of Ingalls Iron Works Company.

Trusts F and G were each created in March, 1943. Robert I. Ingalls, Sr., was the settlor of Trust F and Ellen Gregg Ingalls was the settlor of Trust G. The original corpus of Trust F was 2,000 shares of the capital stock of Ingalls Iron Works Company and the original corpus of Trust G was 500 shares of the capital stock of that company.

There are two more of the so-called Ingalls Trusts, A and B, of which we think we should make certain observations, although they are not directly involved on this appeal.

Trust A was created in 1932 by the respondent Robert I. Ingalls, Sr., with an original corpus consisting of 1,800 shares of capital stock of Security Realty & Investment Company. In December, 1938, Mr. Ingalls, Sr., donated 1,000 shares of the stock of Ingalls Iron Works Company to this trust. The beneficiaries of this trust are named as Mrs. H. B. Ingalls, Mrs. Ellen Gregg Ingalls, and Robert I. Ingalls, Jr., the mother, wife, and son, respectively, of the settlor. Following their deaths, the trust estate is to be held for the benefit of the lineal descendants of Robert I. Ingalls, Jr. The trustees are Robert I. Ingalls, Jr., Mrs. Ellen Gregg Ingalls, and the First National Bank of Birmingham.

On the same day the bill in the case here under review was filed, Robert I. Ingalls, Jr., filed another suit in the circuit court of Jefferson County, in equity, against the First National Bank of Birmingham and his mother, Mrs. Ellen Gregg Ingalls, seeking their removal as trustees of Trust A. The two suits, involving the same parties, seeking identical relief on substantially the same grounds, were consolidated for trial. See §§ 221 and 259, Title 7, Code 1940.

Trust B was created in December, 1938, by the respondent Robert I. Ingalls, Sr. The original corpus consisted of 500 shares of the capital stock of Ingalls Iron Works Company. It appears that 750 shares of the capital stock of that company have been added to the corpus of the trust, making a total of 1,250 shares. The beneficiaries are named as Elesabeth Ingalls and any other such grandchild or descendant of the donor who may thereafter be born. The trustees serving at the time this proceeding was instituted were the complainant, Robert I. Ingalls, Jr., and the First National Bank of Birmingham. As originally filed, the bill in this case involved Trust B, but subsequent to filing of the bill the First National Bank of Birmingham was removed as trustee of Trust B by action of Robert I. Ingalls, Jr., by virtue of provisions in the indenture of trust giving him the right, without cause, to effect such removal. No question as to this action is involved on this appeal.

The trusts directly involved here hold 4,500 shares of the capital stock of Ingalls Iron Works Company. Trust A holds 1,000 shares and Trust B 1,250 shares. Thus it appears that the so-called Ingalls Trusts hold 6,750 of the 15,000 shares of the capital stock of Ingalls Iron Works Company. The other shares of capital stock of that company at the time this suit was filed and trial had were held as follows: Robert I. Ingalls, Sr., 2,287 shares; Ellen Gregg Ingalls, 1,407 shares; Robert I. Ingalls, Jr., 4,501 shares; and Elesabeth Ridgely Ingalls, 55 shares.

The Ingalls Iron Works Company was organized about the year 1909 by Robert I. Ingalls, Sr. From the time of the organization of the company until the time of the trial below Robert I. Ingalls, Sr., served as its managing head and chief executive officer and under his leadership it has grown and prospered. For approximately ten years prior to the time this litigation was instituted, the company paid dividends of $5 a share on its 15,000 outstanding shares of capital stock, and since its organization it has accumulated assets worth millions of dollars. For a number of years Robert I. Ingalls, Sr., has served as chairman of the board of directors of Ingalls Iron Works Company and its subsidiary, Ingalls Shipbuilding Corporation.

For several years prior to May 10, 1948, Robert I. Ingalls, Jr., served as president of Ingalls Iron Works Company and as vice-chairman of the board of directors of Ingalls Shipbuilding Corporation. He had been a member of the board of directors of Ingalls Iron Works Company for a good many years and was also a member of the board of directors of other companies which appear either to have been subsidiaries of Ingalls Iron Works Company or companies in which Ingalls Iron Works Company owned stock. He received the sum of $45,000 a year. But Robert I. Ingalls, Sr., as chairman of the board of directors of Ingalls Iron Works Company and chief executive officer of that company and its subsidiaries, seems to have been the dominant figure in the business affairs of the company and its subsidiaries.

In the early part of 1948 a serious personal difficulty arose between Robert I. Ingalls, Sr., and Robert I. Ingalls, Jr., and on May 10, 1948, the elder Ingalls discharged his son from the office of president of Ingalls Iron Works Company and ordered him to leave the company's premises. The younger Ingalls left and has received no salary from the company since. On November 9, 1948, a special meeting of the board of directors of Ingalls Iron Works Company was held and the action of the elder Ingalls in removing his son as president of the company was ratified, the removal being made retroactive to May 15, 1948. On February 25, 1949, the membership of the board of directors of Ingalls Iron Works Company was reduced from five to three and Robert I. Ingalls, Jr., was not reelected to the board of directors.

Subsequent to May 10, 1948, the day on which the younger Ingalls was discharged, and prior to June 17, 1949, the date on which this suit was filed, numerous other suits were instituted, most of which were filed by the younger Ingalls. The relationship between father and son was far from cordial.

We have indicated heretofore that the purpose of the bill in this cause is to have the respondents removed as trustees of the several trusts involved. Unquestionably, the bill as amended sought to have Robert I. Ingalls, Sr., removed as trustee of Trusts C, D and G, although the amended prayer does not seem to specifically pray his removal as trustee of Trust C. However, no point is made of this omission and it is clear from the averments of the bill that such relief was sought, all the parties and the trial court seeming to have so construed the bill, and under the general prayer, in view of the averments of the bill, such relief could be granted upon proper proof. The bill specifically prays that Mrs. Ellen Gregg...