Koplar v. Rosset

• Citation: 196 S.W.2d 800,355 Mo. 496
• Decision Date: 09 September 1946
• Docket Number: 39714
• Parties: Nat Koplar v. Barnet L. Rosset, Individually; Boyle G. Clark, Individually; Barnet L. Rosset and Boyle G. Clark, Voting Trustees; Metropolitan Trust Company, Individually; Metropolitan Trust Company, Corporate Trustee; and Marmaduke Apartments, Inc., Appellants, Lawrence E. Mahan, Voting Trustee, and Hugh Monnig, Co-Trustee, Defendants
• Court: Missouri Supreme Court

196 S.W.2d 800

355 Mo. 496

Nat Koplar v. Barnet L. Rosset, Individually; Boyle G. Clark, Individually; Barnet L. Rosset and Boyle G. Clark, Voting Trustees; Metropolitan Trust Company, Individually; Metropolitan Trust Company, Corporate Trustee; and Marmaduke Apartments, Inc., Appellants, Lawrence E. Mahan, Voting Trustee, and Hugh Monnig, Co-Trustee, Defendants

No. 39714

Supreme Court of Missouri

September 9, 1946

Rehearing Denied October 14, 1946.

Appeal from Circuit Court of City of St. Louis; Hon. William H Killoren, Judge.

Affirmed.

Thompson Mitchell, Thompson & Young, Forder Buckley and William H. Becker for appellants.

(1) The trial court, Division No. 3 of the Circuit Court of the City of St. Louis, erred in finding and adjudging that it had jurisdiction to entertain plaintiff's suit, and erred in rendering the judgment and decree of July 13, 1945, because Division No. 2 of the Circuit Court of St. Louis had previously acquired and had retained jurisdiction over the administration of the voting trust and mortgage trust created pursuant to the plan of reorganization. State ex rel. Sullivan v. Reynolds, 209 Mo. 161, 107 S.W. 487; 54 Am. Jur., sec. 277, p. 220. (2) In the foreclosure suit Division No. 2 had the power to establish trusts as part of a plan of reorganization. Warner Brothers Pictures v. Lawton-Bryne-Bruner Ins. Agency Co., 79 F.2d 804. (3) Each division of the Circuit Court of the City of St. Louis is regarded as a separate and distinct court, as if it were the court of another county. Fenn v. Reber, 153 Mo.App. 219, 132 S.W. 627; Haehl v. Railroad Co., 119 Mo. 325, 24 S.W. 737; State ex rel. McCaffery v. Eggers, 152 Mo. 485, 54 S.W. 498; Goddard v. Delaney, 181 Mo. 564, 80 S.W. 886. (4) The trial court erred in finding and adjudging that it had jurisdiction over all necessary parties and that all the parties were properly before the court, and erred in rendering the decree of July 13, 1945, for the reason that the holders of income bonds and "A" voting trust certificate holders were not joined as parties. Leyden v. Owen, 150 Mo.App. 102, 129 S.W. 984; Sampson v. Mitchell, 125 Mo. 217, 28 S.W. 768; Riggs v. Moise, 344 Mo. 177, 128 S.W.2d 632; Franz v. Buder, 11 F.2d 854; 65 C.J. 630. (5) A party having interest adverse, antagonistic, or hostile to the parties he purports to represent, cannot maintain a representative or class suit in behalf of the latter. 39 Am. Jur., sec. 47, p. 921; Note 132 A.L.R. 749. (6) The court can take judicial notice of a related petition for prohibition filed in this court. W.A. Ross Construction Co. v. Chiles, 344 Mo. 1084, 130 S.W.2d 524. (7) The court erred in finding that the appellants Rosset and Clark were acting against the best interests of the beneficiaries of the trust, and erred in appointing new trustees with directions to submit a plan of refinancing because the lower court had no right to substitute its discretion for the discretion of the trustees, or to interfere with the exercise of the discretionary powers of the appellants Clark and Rosset as trustees. Dickey v. Volker, 321 Mo. 235, 11 S.W.2d 278, 62 A.L.R. 858; Boland v. Mercantile-Commerce Bank & Trust Co., 349 Mo. 731, 163 S.W.2d 597; Elward v. Elward, 117 Kan. 458, 232 P. 240; 1 Restatement of Trusts, sec. 187; 54 Am. Jur., sec. 287, p. 228. (8) The terms of the trust agreement defining the powers of the trustees are controlling. Kerens v. St. Louis Union Trust Co., 283 Mo. 601, 223 S.W. 645, 11 A.L.R. 288. (9) The court erred in removing the appellant voting trustees Rosset and Clark because: (a) said trustees were not guilty of any misconduct showing want of capacity or fidelity putting the trust in jeopardy; (b) the appellant trustees managed the trust, confided to them with fidelity and to the best interest of the beneficiaries; (c) their decision to submit a proposal of sale of the trust property, rather than plaintiff's plan of refinancing was well within the discretion vested in them. State ex rel. Caulfield v. Sartorius, 344 Mo. 919, 130 S.W.2d 541. (10) The court erred in finding and adjudging that the plan of refinancing submitted by the plaintiff was feasible and workable and should have been submitted to the holders of trust certificates; and erred in finding and adjudging that the refusal of the appellant Rosset and Clark to submit plaintiff's plan of refinancing to the certificate holders was arbitrary and unwarranted and that said appellants should be removed as trustees. Dickey v. Volker, 321 Mo. 235, 11 S.W.2d 278, 62 A.L.R. 858; Boland v. Mercantile-Commerce Bank & Trust Co., 349 Mo. 731, 163 S.W.2d 597; 54 Am. Jur., sec. 287, p. 228; 1 Restatement of Trusts, sec. 187. (11) The court erred in ordering the appellant Rosset to refund to Marmaduke Apartments, Inc., the sum of $ 5000 received by him as salary for acting as President of Marmaduke Apartments, Inc., and erred in taxing all costs of this cause against the appellant Rosset. Dickey v. Volker, 321 Mo. 235, 11 S.W.2d 278, 62 A.L.R. 858. (12) There is no legal prohibition against the payment to a voting trustee of a salary for managing the affairs of the corporation owned by the trust. Rossi v. Davis, 345 Mo. 362, 133 S.W.2d 363, 125 A.L.R. 1111; In re Dover Coalfields Extension Ltd., 2 Ch. 76, (1908) 1 Ch. 65; In re Lewis, 103 L.T. 495; Matter of Berri, 130 Misc. 527, 224 N.Y.S. 466; Sueske v. Schofield, 376 Ill. 431, 34 N.E.2d 399. (13) The trustee has the right to receive additional compensation for services rendered in excess of those contemplated when his original compensation was fixed. State ex rel. Caulfield v. Sartorius, 344 Mo. 919, 130 S.W.2d 541. (14) The court erred in removing the defendant Metropolitan Trust Company as trustee in the deed of trust and chattel mortgage for the reason that said trustee was guilty of no misconduct showing want of capacity or fidelity, putting the trust in jeopardy. State ex rel. Caulfield v. Sartorius, 344 Mo. 919, 130 S.W.2d 541. (15) The court erred in adjudging that the plaintiff is entitled to the payment of his counsel fees and expenses out of the trust fund, because the suit was wrongfully brought and was brought to serve plaintiff's personal interests. Drake v. Crane, 66 Mo.App. 495; Hobbs v. McLean, 117 U.S. 567, 29 L.Ed. 940. (16) The court erred in finding and adjudging that the appellant trustees, Rosset and Clark, were not entitled to payment of their legal and other expenses in connection with the defense of this suit out of the trust property because, as trustees, they were entitled to reimbursement of their costs. 54 Am. Jur., Trusts, sec. 523, p. 415; 1 Restatement of Trusts, sec. 188b. (17) The plaintiff was not entitled to complain of any alleged irregularities occurring before he became a certificate holder and of which he was cognizant at the time that he purchased his certificates. Sec. 19b, Civil Code of Missouri. (18) Plaintiff is estopped to complain of mismanagement occurring before his acquisition of stock, acquiesced in by his predecessors in title. Schilling & Schneider Brewing Co. v. Schneider, 110 Mo. 83.

J. L. London for respondent.

(1) The trial court, Division No. 3 of the Circuit Court of the City of St. Louis, had full and complete jurisdiction. The court of the City of St. Louis is but one circuit court composed of eighteen parts, called divisions. Each division has all jurisdiction of the circuit court, unless otherwise provided by law. State ex rel. MacNish v. Landwehr, 332 Mo 622, 60 S.W.2d 4; Goddard v. Delaney, 181 Mo. 564, 80 S.W. 886; Graff v. Cont. Auto Ins., etc., Mo.App. 85, 35 S.W.2d 926; Secs. 2218-2219, R.S. 1939. (2) Upon the rendition of the final decree in the foreclosure suit, Division No. 2 lost jurisdiction. It did not and could not retain jurisdiction in litigation between other parties and involving different issues. 30 C.J.S. 434-435. (3) The trust was not created by Division 2 sitting as a Court of Equity. The trust was created by contract between the bondholders and the Bondholders' Committee. (4) The decree of the court, in Division No. 2, does not purport to retain jurisdiction over anything other than the foreclosure suit, filed in March, 1934, nor could it do so. (5) No decree can go beyond the issues made up by the pleadings in the cause or grant relief beyond that provided in the pleadings. Here there are different issues, different parties, an entirely new cause of action. 30 C.J.S. 434-435. (6) It was not necessary to join the holders of Income Bonds and "A" Voting Trust Certificate Holders as parties. White v. McQueen, 195 N.E. 832; Eurengy v. Equitable Realty Co., 341 Mo. 341, 107 S.W.2d 68; Mercantile Trust Co. v. Schlafly, 299 F. 202; Kerrison v. Stewart, 93 U.S. 155; 2 Perry, Trusts, sec. 873, p. 1490. (7) Where a trustee's position is inconsistent with his personal interests he should be removed, and where a trustee dislikes and is hostile to a cestui que trust, he should be removed as trustee. Gartside v. Gartside, 113 Mo. 349, 20 S.W. 669; Selleck v. Hawley, 331 Mo. 1038; 26 R.C.L. 1276, sec. 126; York v. Guaranty Trust Co. of N.Y., 143 F.2d 503. (8) A Court of Equity will not permit trustees to abuse their discretion. Siegle v. First Natl. Co., 338 Mo. 417, 90 S.W.2d 776; Scott on Trusts, sec. 18, pp. 986, 987. (9) In determining whether the trustee is acting within the bounds of reasonable judgment the following circumstances may be relevant: (a) the extent of discretion intended to be conferred upon the trustee by the terms of the trust; (b) the existence or non-existence, the definiteness or indefiniteness of an external standard by which the reasonableness of a trustee's conduct can be judged; (c) the circumstances surrounding the exercise of the power; (d) the motives of the trustee in exercising or refraining from...