Morrow v. Detroit Trust Co.

• Decision Date: 04 June 1951
• Docket Number: No. 18,18
• Citation: 48 N.W.2d 136,330 Mich. 635
• Parties: MORROW v. DETROIT TRUST CO. et al.
• Court: Michigan Supreme Court

Page 136

48 N.W.2d 136

330 Mich. 635

MORROW v. DETROIT TRUST CO. et al.

No. 18.

Supreme Court of Michigan.

June 4, 1951.

Iverson & Allin, Detroit, for appellant.

Voorhies, Long, Ryan & McNair, Detroit, for appellee Detroit Trust Co. Paul Franseth, Detroit, of counsel.

Wendell Brown, Detroit, Attorney for appellee, Alice Green Otis.

Before the Entire Bench.

SHARPE, Justice.

This case involves an appeal from an order of the circuit court of Wayne county affirming an order of the probate court construing article 9(b) of the will of Henry Otis.

The facts have been stipulated and are not in dispute. Henry Otis died September 29, 1940. His will was admitted to probate by the probate court of Wayne county on November 14, 1940. The Detroit Trust Company was appointed successor executor and trustee under the will.

Article 9 of the will provides in part:

'I give, devise and bequeath to my Executor and Trustee hereinafter named, and his or its successors in trust, all the Rest, Residue and Remainder of my property * * * to have and to hold the said Rest, Residue and Remainder upon and for the following trusts and purposes, that is to say: Upon Trust, to hold, invest and keep the same invested; * * * to use, disburse and pay out and dispose of said income and to dispose of, divide, distribute, transfer, convey, deliver and pay out the principal thereof as follows: * * *

'(b) I direct that my Executor and Trustee shall set apart and hold as upon a separate trust shares aggregating a total par or face value of Twenty-five Thousand ($25,000.00) Dollars of the common capital stock of the Detriot Lumber Company, a Michigan corporation, and that my said Executor and Trustee shall, beginning one year after the date of my death, pay to my sister, Alice Otis Morrow, so long as she may live, all cash dividends thereafter declared and paid upon said stock or, in the event said stock shall be sold, all the income received from the proceeds of the sale thereof. Any cash dividends received upon said stock within one year after the date of my death shall be considered and treated as part of the income from my general estate. * * * In the event I dispose of my stock holdings in the said Detroit Lumber Company prior to my death, then and in such event I direct my said Executor and Trustee to set spart and for the trust fund in this sub-paragraph 'b' created other personal property or cash, of his or its selection, of the value of Twenty-five Thousand ($25,000.00) Dollars that I may die seized or possessed of and distribute and pay out the income therefrom and the principal thereof as hereinabove in this sub-paragraph 'b' directed.'

The will was executed August 23, 1930, at which time Mr. Otis owned 3,067 shares of stock in the Detroit Lumber Company which had a par value of $100 per share. The will recites that testator had been an officer of the company for many years. It appears that on December 9, 1938, at a special meeting of stockholders, the corporation by resolution adopted by a majority vote amended its articles of incorporation to decrease its authorized capital by one-half by leaving the number of shares as before, but decreasing the par value of each share from $100 to $50; and that the old stock certificates were impressed with a stamp setting forth that the par value was reduced to $50 per share. Testator owned 2,237 shares of Detroit Lumber Company stock when he died, 1,533 of which had been purchased prior to August 23, 1930, the date the will was executed.

The trust company, as successor executor, filed with the probate court its fifth and final account and asked that the court interpret article 9(b) of the will and determine whether the deceased intended that 250 shares or 500 shares of the Detroit Lumber Company stock by set apart in the trust for the life of Alice Otis Morrow, sister of decedent.

The will also provided:

'IX * * * (c) I direct that my Executor and Trustee shall pay to my wife, Alice Green Otis, so long as she may live the sum of Five Hundred ($500.00) Dollars per month out of the income from and/or the principal of said Rest, Residue and Remainder of my estate and, if and in the event, after paying and providing for the expenses in connection with my dwelling house, hereinabove in sub-paragraph 'a' of this Section IX directed to be paid, the net income from said Rest, Residue and Remainder of my estate shall during any calender year exceed the sum of Six Thousand ($6000.00) Dollars, then and in such event I direct that my Executor and Trustee shall also at the end of each year pay to my wife, Alice Green Otis, so long as she may live all net income from said Rest, Residue and Remainder of my estate in excess of said sum of Six Thousand ($6000.00) Dollars per year, hereinabove directed to be paid, it being my intent that my wife shall have and receive all of the net income from said Rest, Residue and Remainder of my estate so long as she may live, and that in the event that such net income does not during any year amount to as much as Six Thousand ($6000.00) Dollars the difference between the income realized during the year and the sum of Six Thousand ($6000.00) Dollars shall be paid to her out of the principal. * * *

'X. Should the income from my estate hereinabove directed to be paid to my wife, Alice Green Otis, be at any time, in the absolute and uncontrolled judgment and discretion of my Executor and Trustee, in whichever capacity he or it may for the time being be acting not sufficient to provide for the reasonable needs and comforts and proper support and care of my wife, Alice Green Otis, my said Executor and Trustee is hereby authorized and empowered to pay to my wife or for her use and benefit out of the principal of the trust hereinabove created for her such additional sums as may in his or its judgment from time to time be necessary to provide for the proper support of my wife, Alice Green Otis.'

Upon appeal from the probate court, the cause came on for trial in the circuit court. The court determined that the subject matter of the trust provided for under article 9(b) of the will is 250 shares of stock of the Detroit Lumber Company. In an opinion filed, the court stated:

'The court, placing itself then, in the position in which the testator was in August, 1930, must attempt to ascertain the intention of the testator from the language used in the entire will, in the light of the surrounding circumstances, known to him, and with reference thereto.

'The first thing to be considered is what the testator intended to do with reference to the means at hand with which to accomplish such purpose. From a study of the entire will, one cannot escape the conclusion that, nearly to a point of anxiety, he was primarily concerned with the giving of a life income to the first and foremost natural object of his bounty, his wife. This income was to come from the trust to be created from the residue of his estate. She was to receive all of the net income derived from such trust, and if the trust failed to earn at least $6,000.00 per year, sufficient of the assets in the trust were to be sold to pay her a minimum of $6,000.00 per year at the rate of $500.00 per month. It is interesting to note that the only provision in the will preventing the sale of all the assets in the estate to accomplish this purpose is the provision (Article IX(b)), creating the trust to provide a much lesser income for the next natural object of his bounty, his sister, Alice Otis Morrow. The court is mindful that, at the time, the testator was creating trusts to provide like incomes for the two closest objects of his affection. Hence, when he used the language, 'shares aggregating a total par or face value of $25,000.00,' he was thinking, not of the value of such shares primarily, but of the income producing ability of such shares. This is borne out by the language used in the remainder of the article in question--specifically, 'in the event said stock shall be sold, all the income received from the proceeds of the sale;' 'any cash dividends received upon said stock within a year of my death shall be treated as part of the income of my general estate;' 'In the event my sister does not survive me or, my wife, the income from the trust created in this sub-paragraph 'b'.' And he concluded the article with a provision to pay his sister the income from $25,000.00 in the event the stock was sold prior to his death.

'The testator's bequests to others than those mentioned heretofore shows that, at the time of the execution of the will, he believed his net worth to be well in excess of $250,000.00. The major portion of his holdings at the time consisted of 3069 shares of the capital stock in question. Obviously he believed these shares to be worth more than their par or face value. As president of the corporation, he was conversant with the earning capacity of such shares. Consequently, it is reasonable and possible to infer that when assigning these shares to the trust created in subparagraph (b), the words used were words of description and identification of a specific number of shares assigned to such trust, namely, the number of 'shares aggregating a total par or face value of twenty-five thousand ($25,000.00) dollars,' or exactly 250 shares.

'After arriving at the conclusion that it was the intention of the testator to assign 250 shares only to the trust created for the benefit of the appellant, Alice Otis Morrow, there is little or no room for the argument that the corporate action taken December 9, 1938, reducing the...