Liberty Title & Trust Co. v. Plews

• Decision Date: 10 September 1948
• Docket Number: No. 158/135.,158/135.
• Parties: LIBERTY TITLE & TRUST CO. v. PLEWS et al.
• Court: New Jersey Court of Chancery

60 A.2d 630

LIBERTY TITLE & TRUST CO.

v.PLEWS et al.

No. 158/135.

Court of Chancery of New Jersey.

July 15, 1948.

Subsequent Opinion Sept. 10, 1948.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

See 61 A.2d 297.

Proceeding in the matter of the estate of Gustavus C. Seidel, deceased, by Liberty Title & Trust Company, trustee under the will of Gustavus C. Seidel, deceased, against Louise Plews and others for confirmation of trustee's final account wherein exceptions were interposed. After trial in the Orphans' Court, the cause was transferred to Court of Chancery.

Decree advised in accordance with opinion.

Syllabus by the Court

1. A decree of the Orphans' Court approving an intermediate account of a trustee where a list of investments was attached, does not ipso facto act as a bar to a subsequent contest upon a final account of investments so shown in the intermediate account.

2. When a trustee raises as a defense to exceptions upon a final account the plea of estoppel, predicated upon res adjudicata resulting from a decree of the Orphans' Court approving an intermediate account, the list of securities with their disclosures must be examined and analyzed in the light of the nature of the exceptions taken upon a final account.

3. In order to obtain the repose of estoppel from a decree of the Orphans' Court approving an intermediate account, a trustee must have made a full and complete disclosure of pertinent investment facts.

4. A cestui will be estopped from contesting investments upon a final accounting by a prior intermediate decree of the Orphans' Court only where he knew or should have known the pertinent facts and failed to except to such facts as were disclosed upon the intermediate account.

5. Acquiescence of a cestui, either actual or tacit, to the conduct of a trustee will estop him from excepting to investments when he knew or should have known all the facts, was apprised of his legal rights, and acted freely and advisedly with the intention of confirming the acts which constitute a breach.

6. Liability imposed upon and accepted by a trustee may be limited by the terms of the instrument creating the trust.

7. Where exoneration is sought by a trustee under a clause in the instrument creating the trust, the liability of the trustee is to be found in such a clause, properly construed.

8. A rule strict construction should be applied as against a claim of restriction where a clause in a trust investment allegedly limits a trustee's liability.

9. Clauses in an instrument creating a trust which relieve a trustee of liability ‘for any depreciation * * * in the value of any of my investments' and which permit said trustee ‘to retain any inves tments I may have at my death and from time to time to invest in such securities * * * as they may deem safe and proper, but without confining them to what are technically known as legal investments' does not relieve them in the retention or making of investments of the duty to use that degree of care, prudence and skill, and to exercise that fidelity normally and generally required of a trustee.

10. Retaining investments is in effect making them.

11. Ordinarily a trustee is obliged to exercise the degree of care, skill, diligence and caution that a man of ordinary prudence would exercise in like matters of his own, but where a trustee possesses greater skill than a man of ordinary prudence, he is under a duty to exercise such skill as he has.

12. In the absence of gross misconduct or an improper investment in a trade or speculative investment, the trustee, who is chargeable for errors, must account for the actual income received from an illegal investment and in addition, such a rate of interest on the corpus as the court may deem equitable under the particular circumstances of the case.

13. A trustee is entitled to an allowance for commissions and counsel fees in the management of the estate in spite of surcharges resulting from a conduct of the estate other than what could be classed as wilful, gross or fraudulent, but is not entitled to counsel fees and costs in connection with exceptions to its own account resulting in surcharges because of a misconception of its duties.

Starr, Summerill & Lloyd, of Camden (Allen B. Endicott, Jr., of Atlantic City, of counsel), for complainant.

Charles C. Babcock, of Atlantic City, for defendants Lillian Welzel and Vera Welzel Gentsch.

Wm. Elmer Brown, Jr., of Atlantic City, for defendant Louise Plews.

Bolte & Repetto, of Atlantic City, for defendants Joseph W. Wells, and others.

Albert N. Shaadi, of Atlantic City, for defendants Frank P. Wells and Anna Wells, and pro se guardian ad litem for Mary Wells.

Lloyd, Horn & Perskie, of Atlantic City, for defendant Childrens Seashore House Fund Club.

HANEMAN, Vice-Chancellor.

Gustavus C. Seidel died on September 23, 1922 leaving a last will and testament in which appeared the following provision:

‘Third: I give and bequeath to the Liberty Title and Trust Company, its successors and assigns, the sum of Two Hundred and Fifty Thousand Dollars, in trust, nevertheless, for the following uses and purposes, namely; to invest and reinvest the same changing said securities according to their best judgment and to collect the rents, issues and profits thereof and after the payment of necessary charges and expenses to pay the net income thereof, quarterly, to my wife Lillian W. Seidel, in quarterly installments, for and during all the term of her natural life. At and immediately upon the decease of my said wife, Lillian W. Seidel, I direct that the sum of One Hundred and Fifty Thousand Dollars shall be paid by my said Trustee to such person or persons and for such trusts as my said wife shall, by her last will and testament direct and provide, and the remaining One Hundred Thousand Dollars I direct shall go to and become a part of my residuary estate, to be paid to and distributed among the same persons as are entitled to my said residuary estate under the provisions of this will.’

‘Twentieth: All the rest, residue and remainder of my estate, of whatsoever the same may consist and wheresoever situate, whether real, personal or mixed, I give, devise and bequeath unto my nieces, Louise Plews, Lillian Welzel and Vera Welzel in equal shares absolutely, their heirs and assigns.’

‘Twenty-second: Neither my said Executors nor Trustees shall at any time be liable for any depreciation in the value of any of my investments nor shall the retaining of said investments by my said Executors or said Trustees be held or construed at any time to be negligence by them or any of them no matter what may be the depreciation in the value of any of said investments or the change in their market prices.’

‘Twenty-fourth: I give to my Executors and also to the Trustees under every trust created by this will the following powers in addition to and not in diminution of the powers incident to their office, viz:

‘b. To retain any investments I may have at my death and from time to time to invest in such securities including in that term well secured ground rents, either within or without the State of Pennsylvania as they may deem safe and proper, but without confining them to what are technically known as legal investments.’

This will was duly probated, after an appeal, on April 4, 1923. In accordance with the provisions of said will, the trust above referred to was duly set up on September 26, 1923. The first account of the trustees was filed on May 27, 1932 and was allowed and confirmed by a decree of the Orphans' Court on December 24, 1932. Lillian W. Seidel having died May 14, 1944, the final account was filed herein on February 6, 1945 in the Orphans' Court of Attlantic County. To this account various exceptions were taken.

After a prolonged trial before the present Vice Chancellor, who was then the Judge of the Orphans' Court of Atlantic County, briefs were finally filed. The case was thus in complete position for final adjudication shortly before the appointment of the writer to the Chancery Bench, but the intervening time did not permit of final disposition. Thereafter, by consent of all parties, the matter was transferred to the Court of Chancery with the stipulation that the testimony taken before the Orphans' Court should be used in the Court of Chancery. The case was so removed by reason of the inherent authority of the Court of Chancery to determine probate matters.

The exceptions common to all of the exceptants, when finally analyzed, complain of the conduct of the trustee in that (1) it made improper, imprudent and illegal investments; (2) it carelessly and improperly managed the investments included in the trust; (3) it retained certain investments received from testator which it should have liquidated; (4) it failed to properly diversify investments.

The following exceptants, Joseph W. Wells, Harry L. Wells, William L. Lovett, Viola Lovett, Arthur H. Leigh, Arthur Leigh, Ellen Leigh, William L. Leigh, Annie C. Ross, James Stuckey, Maud Seidel, Maria Lewis, Iona Busch, individually and Iona Busch, as executrix and trustee of the last will and testament of Lillian W. Seidel, Harry Fort Busch, and Lillian Emily Wells and Patricia Anna Wells, minors, by their guardian ad litem, Augustine A. Repetto, in addition except to the account in that it is alleged that the accountant, from July 2, 1934 to June 13, 1944, at various times made charges to income for expenditures which should have been properly charged as against the corpus of said estate. These exceptants are the executrix and appointees of Lillian W. Seidel. They contend that the apportionment made by the accountant was improper. In this there is a contest not only between the accountant and these exceptants but between the latter and the other exceptants as well.

For the purpose of clarity insofar as the exceptions are concerned which are common to all of the exceptants, the various parties so excepting will be referred to as...