Loud v. St. Louis Union Trust Co.

• Decision Date: 12 April 1926
• Citation: 281 S.W. 744,313 Mo. 552
• Parties: IDA MARY LOUD v. ST. LOUIS UNION TRUST COMPANY, Appellant. IDA MARY LOUD, Appellant, v. ST. LOUIS UNION TRUST COMPANY
• Court: Missouri Supreme Court

281 S.W. 744

313 Mo. 552

IDA MARY LOUD v. ST. LOUIS UNION TRUST COMPANY, Appellant.

IDA MARY LOUD, Appellant, v. ST. LOUIS UNION TRUST COMPANY

Supreme Court of Missouri

April 12, 1926

Motion for Rehearing Denied March 12, 1926.

Appeal from St. Louis City Circuit Court; Hon. M. Hartmann Judge.

Reversed and remanded (with directions).

Bryan Williams & Cave, Foristel, Mudd, Hezel & Habenicht and James T. Blair for St. Louis Union Trust Company.

(1) The trustee having filed its accounts as trustee, the burden is on the plaintiff when she seeks to surcharge its items. Offenstein v. Gehner, 223 Mo. 318; Vance's Estate, 141 Cal. 624; Estate of Johnson, 11 Phila. 83; Dolenty's Estate, 53 Mont. 33; Woerner on Law of Administration (3 Ed.) p. 1847; Kramme v. Mewshaw, 128 A. 468. (2) Safety is the first consideration in the investments of trust estates. Mining is a highly speculative enterprise. Mines are exhausted in the process of working them. They are a wasting investment. Stock in the Granby Mining & Smelting Company was not a proper investment for trust funds. The law imposes upon every trustee a duty to sell all wasting investments, including investments in stock of mining companies, and reinvest in sound securities. Plaintiff admits it. The authorities are a unit. Lamar v Micou, 112 U.S. 476; Loring's Trustee's Handbook (3 Ed.) 106; Cornet v. Cornet, 269 Mo. 298; Underhill on Trusts & Trustees, p. 232; 1 Perry on Trusts (6 Ed.) sec. 439; In re Est. of Buhl, 211 Mich. 124; 28 Halsbury's Laws of Eng., pp. 128, 129. (3) Notwithstanding the fact that the Granby stock came to the trustee from Mrs. Blanke, nevertheless it was still the duty of the trustee to dispose of it and dispose of it promptly. "Retaining improper investments is in effect making them." Plaintiff's admission included that. The authorities are uniform. Babbitt v. Fidelity Trust Co., 72 N.J.Eq. 745; Villard v. Villard, 219 N.Y. 483; In re Hammersley's Estate, 180 N.Y.S 887; In re Jarvis' Estate, 180 N.Y.S. 324; 39 Cyc. 410, n. 31; 17 Am. & Eng. Ency. Law, p. 454; 1 Perry on Trusts (6 Ed.) secs. 454, 465; Loring's Trustee's Handbook, p. 106; Willis v. Braucher, 79 Ohio St 290. (4) A failure to sell in such circumstances would, in this case, have rendered the Trust Company liable. Babbitt v. Fidelity Trust Co., 72 N.J.Eq. 745; Villard v. Villard, 219 N.Y. 483; Furniss v. Cruikshank, 181 N.Y.S. 522; In re Hammersley's Est., 180 N.Y.S. 887; In re Jarvis' Est., 180 N.Y.S. 324; Loring's Trustee's Handbook (3 Ed.) p. 106; In re Estate of Buhl, 12 A. L. R. 569, note, p. 574; 2 Perry on Trusts (6 Ed.) sec. 547; 1 Perry on Trusts (6 Ed.) sec. 439; Clough v. Bond, 3 Myl & C. 491. (5) Even without the express power given in the will, an authority and duty to sell speculative and wasting property would have been implied from the purpose of the testatrix to have the estate preserved for the benefit of the cestuis que trustent in succession. It was a duty incidental to the trust. Underhill on Trusts, p. 232; 26 R. C. L. p. 1285, sec. 136; 1 Perry on Trusts (6 Ed.) sec. 439; 39 Cyc. 346, 347, 409, 410; 28 Halsbury's Laws of England, pp. 128, 129, 31, 32. (6) The trustee, in making the sale of the Granby mining stock, was only called upon to act honestly and in good faith, and exercise such common care, common skill and common caution as an ordinary business man would exercise under similar circumstances and conditions, and it not only acted honestly and in good faith, but exercised more care and skill than a man of ordinary prudence would exercise under similar circumstances and conditions, and it is not responsible merely because other stockholders of the Granby Mining Company received more for their stock. Taylor v. Hite, 61 Mo. 142; Bates v. Hamilton, 144 Mo. 16; 26 R. C. L. 1280, sec. 130; In re Detre's Estate, 117 A. 54; Owen v. Campbell, 100 Mich. 34; Lathrop v. Tracy, 24 Colo. 382; Morrow v. County Commrs., 21 Kan. 484; Franklin v. Osgood, 14 Johns (N. Y.) 526. (7) "Infallibility is not exacted of trustees. They must form their best judgment in the light of existent facts." Their actions must be judged in the light of the situation at the time they acted. "It is very easy to be wise after the event; but in order to exercise a fair judgment with regard to the conduct of trustees at a particular time, we must place ourselves in the position they occupied at that time, and determine for ourselves what, having regard to the opinion prevalent at that time, would have been considered the prudent course for them to have adopted." In re Chapman, 65 L. J. 892, 75 L. T. (N. S.) 196; Owen v. Campbell, 100 Mich. 34; Lyon v. Foscue, 60 Ala. 481; Bowker v. Pierce, 130 Mass. 264; Green v. Crapo, 181 Mass. 58; Johns v. Herbert, 2 Apps. D. C. 485. (8) By her will testatrix vested the title in the Trust Company with the duty to manage the estate and keep its funds properly invested, and expressly gave it power to sell "at any time and from time to time . . . any of the trust property or estate for such price or prices and upon such terms and conditions as it may determine." "The legal title vested in the trustees with power to sell and convey, invest the proceeds, manage the estate and pay the income to the persons designated. The power was, therefore, coupled with an interest." The power given the trustee by the will was not a mere naked power. Wallace v. Foxwell, 250 Ill. 616, 50 L. R. A. (N. S.) 632, and note; Wilson v. Snow, 228 U.S. 223. (9) Where the authority is general to perform and carry out a particular object, a resort to the ordinary and usual methods or means comes within the scope of the power. Faulk v. Dashiell, 62 Tex. 648; Smith v. Allen, 86 Mo. 189; 2 C. J. 578, 579, 580; 39 Cyc. 351; Constant v. Servoss, 3 Barb. 141; Cardon's Estate, 278 Pa. St. 157. (a) It will always be inferred that a testator means to give his trustee "every authority which is necessary for his declared purpose." Drake v. Crane, 127 Mo. 85; Schoendorn v. Schmidt, 115 Md. 79; Preston v. Safe Dep. Co., 116 Md. 217; Peck v. Haricott, 6 S. & R. 146. (b) Even a power of sale, itself, will be implied in every case whenever a trustee is directed to do something, the doing of which cannot be accomplished otherwise than by a sale. And this rule applies even to real estate. 26 R. C. L. p. 1285, sec. 136; Robinson v. Robinson, 32 L. R. A. (N. S.) 675, and note p. 676; Porter v. Schofield, 55 Mo. 303; Preston v. Safe Dep. Co., 116 Md. 216; 2 Perry on Trusts (6 Ed.) secs. 764, 765, 766; 39 Cyc. 351. (10) In the circumstances in this case, as the evidence plainly shows, the option to Walker & Company was: (a) A usual and customary means employed in effecting sales under like conditions, and also: (b) It was a means which was proper and, in fact, necessary as a part of the mechanism of the sale. Without it the trustee would not have been able to bring about the sale which it was his duty to make. The option to Walker & Company not only did not defeat the object of the trust, but it was necessary to prevent its defeat. (11) The trustee was given express power by the will "at any time and from time to time to sell any of the trust property or estate for such price or prices and upon such terms and conditions as it may determine." As a necessary preliminary power it had the right to make an executory contract for sale, and also to do as it did in this case -- give to a prospective purchaser, for a consideration and for a reasonable time, the privilege or option of purchasing the property. Newman v. Trust Co., 189 Mo. 423; Connely v. Haggarty, 65 N.J.Eq. 596; Crown Co. v. Cohn, 88 Ore. 642; Meister v. Cleveland Dryer Co., 11 Ill.App. 227; Yerkes v. Richards, 170 Pa. St. 346; Judge v. Pfaff, 171 Mass. 195; Iles v. Martin, 69 Ind. 114; Constant v. Servoss, 3 Barb. 141. (12) No officer, director or stockholder in the Trust Company who was in any way interested in Walker & Company either advocated or took any part in the making of the contract with Walker & Company or the sale made in pursuance thereof. The trustee in that transaction was in no sense dealing with itself, directly or indirectly, and the transaction is certainly not either constructively or presumptively fraudulent. Cornet v. Cornet, 269 Mo. 298; Hardwick v. Jones, 65 Mo. 54; Wann v. Scullin, 210 Mo. 485; Cummings v. Parker, 250 Mo. 427; Hill v. Gould, 129 Mo. 106; Van Dusen-Harrington Co. v. Jungblut, 75 Minn. 298; Van Huesen v. Van Huesen Charles Co., 74 Misc. (N. Y.) 292; Warren v. Pazolt, 203 Mass. 328. (13) The consideration moving from Walker & Company for their contract with the trustee was the promise of Walker & Company to use their best endeavors to bring about a sale of the stock or property of the Granby Mining Company. Warren v. Coal Co., 200 Mo.App. 442; Emerson v. Packing Co., 96 Minn. 1; Mueller v. Bethesda Springs Co., 88 Mich. 390; Spencer v. Taylor, 69 Kan. 493. (14) Even if, however, there had been no consideration for the contract in its inception, nevertheless the minute Walker did any work or suffered any detriment in reliance upon that contract, the contract became bilateral and binding on the trustee. Typewriter Co. v. Realty Co., 220 Mo. 522; Mercantile Trust Co. v. Lamar, 148 Mo.App. 353; Strode v. Transit Co., 197 Mo. 616; Typewriter Co. v. Realty Co., 118 Mo.App. 197; Martin v. Ray County Coal Co., 288 Mo. 255; Green v. Cole, 127 Mo. 587; Glover v. Henderson, 120 Mo. 367; School District v. Sheidley, 138 Mo. 672; Christian University v. Hoffman, 95 Mo.App. 488; Los Angeles Traction Co. v. Wilshire, 135 Cal. 654; Wachtel v. National Journal Co., 176 N.W. 801; Plumb v. Campbell, 129 Ill. 101; Braniff v. Baier, 101 Kan. 117; Corder v. O'Neill, 176 Mo. 401. (15) Plaintiff acquiesced in the sale made by the trustee of the Granby mining stock...