Nutt v. State

• Citation: 96 Miss. 473,51 So. 401
• Decision Date: 21 February 1910
• Docket Number: 14,188
• Court: United States State Supreme Court of Mississippi
• Parties: JOHN K. NUTT ET AL. v. STATE OF MISSISSIPPI ET AL

51 So. 401

96 Miss. 473

JOHN K. NUTT ET AL. v. STATE OF MISSISSIPPI ET AL

No. 14,188

Supreme Court of Mississippi

February 21, 1910

FROM the chancery court of Adams county, HON. J. S. HICKS Chancellor.

The state of Mississippi and one Dagg, trustee of the estate of Mary Ella Nutt, appellees, were complainants in the court below; John K. Nutt and the United States Fidelity & Guaranty Company, appellants, were defendants there. The suit was upon a bond payable to the state. From a decree in favor of complainants the defendants appealed to the supreme court. The opinion of the court states the facts.

Decree affirmed.

Percy Moody & Percy, for appellant, Nutt.

The decree of the court below is erroneous and should be reversed, first, because the chancery court of Adams county in which the suit was instituted, was without jurisdiction to entertain the same; and secondly, because it does not appear that the suit is maintainable by the state of Mississippi for the use and benefit of J. L. Dagg, trustee; and thirdly because it does not appear that the right of John K. Nutt to hold the trust fund in controversy has been divested.

Opposing counsel contend that the word "administrator" used in Code 1906, §§ 2038, 2035, 2123, is broad enough in meaning, to include John K. Nutt as trustee, and that the court below had the right to remove him with or without notice. It is a sufficient answer to this argument to say that John K. Nutt was not an administrator at all. He was simply acting as trustee of a fund created by the will of Mary Ella Nutt, deceased. He was not the kind of administrator referred to in those code-sections. They refer to administrators proper, county administrators and temporary administrators, and it was never intended by the legislature to include persons acting in the capacity of a testamentary trustee. This is made more evident when we glance at Code 1906, § 2138, wherein it is provided that "the word, administrator, in this chapter shall embrace a temporary administrator whenever the contrary is not clearly inferrable from the context."

John K. Kutt holds this money under the last will and testament of Mary Ella Nutt, deceased, and by virtue of a decree of the chancery court of Adams county. It is unnecessary to determine whether the court ordered this money paid to Nutt as trustee by virtue of the power granted it under Code 1906, § 2135, which provides that, "if any person entitled under a decree of the chancery court to a distributive share of an estate, or any other funds under the control of the court, shall not, within six months after the decree of the court adjudicating his right thereto, apply for it, a custodian of such share or interest may be appointed by the court, "or whether the court acted by virtue of its inherent power to appoint a trustee for a fund in a case therein pending." It is sufficient that he receive the money under a decree of the court, and his right to the same continues until it is made to appear that his right thereto as trustee has been divested and vested in the person who claims the same. The burden is on Dagg, the beneficiary in the suit, to show that Nutt is not entitled to the money, and that he is entitled to the same.

Being entitled to hold the money as trustee, how can the right of Nutt thereto be divested and vested in another? In other words, how can he, as trustee, be removed and another appointed in his stead? Our answer to this inquiry is, that, in the absence of a statute on the subject, and there is not such statute on the subject in this state, the proceedings must be by formal bill in equity.

Some courts hold that a trustee may be appointed upon a mere petition as well as by more formal bill, but no court holds, in the absence of a statute on the subject, that such a trustee can on petition of one of the beneficiaries, and without notice, be by the court removed, and another trustee appointed.

That the trustee can only be removed and another appointed in his stead by a formal bill in equity is supported by both reason and authority. It is but fair to him as well as to all the beneficiaries that he and they should have the right to be heard. He should have the right to be heard in answer to the charges made against him for his removal; and the other beneficiaries should have the right to be heard on that question as well as on the question as to who shall be appointed his successor. In the instant case Nutt was removed merely upon the filing of the petition of Miss Julia W. Nutt, only one of the beneficiaries. The other beneficiaries were not made parties to this proceeding, and so far as the record discloses had no notice thereof; and neither was Nutt informed of the filing of the petition, and had no notice whatever, legal or otherwise.

A formal bill in equity or an equitable action under the code, may be maintained for the sole purpose of removing a trustee, and in the absence of statute, it has been held by numerous decisions that the proceedings must be by bill, and not by petition. Zehnbar v. Spillman, 25 Fla. 591; Matter of Cain Waich, 1 Barb. Ch. (N. Y.) 565; Guion v. Melvin, 69 N.C. 242; Ex parte Knust, Bailey Eq. (S. C.) 489; In re Livingston, 34 N.Y. 568.

An application for the removal or change of a trustee and the appointment of a new one should, in the absence of statute authorizing a simple application by petition, be by bill, but where there is no trustee and one is to be appointed by the court to fill the vacancy, the proceeding by petition is regular and is the usual course. Milbank v. Crane, 25 How. Pr. (N. Y.) 193.

Whether the proceeding is by bill or by petition so far as the instant case is concerned, it is necessary in either event that the defendant should be notified of the application. Where the proceeding is by formal bill or by an ordinary petition in equity, the defendant should be served with a subpoena, and not with a mere notice. 22 Ency. Law & Pr. 43, and cases cited.

Surely in this case Nutt was entitled to notice of the application to remove him as trustee, and not only was Nutt entitled to notice but the other beneficiaries were, and inasmuch as neither Nutt nor the other beneficiaries ever had notice of the filing of this petition it would be void for that reason if for no other. As to whether Nutt has or has not violated the condition of his bond is immaterial, for J. L. Dagg, as trustee, is not entitled to reap the benefits thereof.

It surely cannot be successfully contended that, if the bond was breached, the state of Mississippi has the right to sue thereon, and pay the money over either to Dagg, as trustee, who is not entitled to it, or into the state treasury until after it shall be determined to whom it is to be paid.

It would not be seriously contended that the state of Mississippi could institute this suit for the use and benefit of the king of Siam, and if J. L. Dagg, as trustee, is not entitled to the fund, the state could no more recover for his benefit than it could for the king of Siam, who is not entitled to it.

Reed & Brandon, G. Q. Hall, and Hall & Jacobson, for appellant, United States Fidelity & Guaranty Company.

The setting down of the cause by appellee for final hearing on bill and answers before the expiration of the time allowed for taking testimony, admitted, under Code 1906, § 603, the truth of the facts upon which the two questions of law arise, namely, (1) whether the venue of the suit was Washington county where Nutt resided, or Adams county where he was appointed trustee; or (2) whether Nutt was removed by a valid order when made on the petition of one beneficiary without the joinder of others and without notice to Nutt of the filing of such a petition. The determination of these questions is respectfully submitted to the court.

Ernest E. Brown, for appellee.

The appellant, Nutt, made no denial of the allegations of the bill that he had breached his bond by failing to pay over annually to Miss Julia Nutt and Mrs. Ward the interest of the funds in his hands and by failing to file an account after having been twice summoned to file his account. The United States Fidelity and Guaranty Company merely set up the insufficient defense that it had no notice as to whether or not Nutt had breached his bond, and it demanded strict proof of these allegations without further stating that it had no information or belief as to whether its principal had breached the bond. It is well settled in this state that facts within the personal knowledge of the defendant must be explicitly admitted or denied, and if not within his knowledge, he must deny all information and belief, also that if a defendant denies personal knowledge and demands strict proof, he in effect admits the allegations of the bill of complaint. Mead v. Day, 54 Miss. 58; Hopper v. Overstreet, 79 Miss. 241, and the other cases cited under Code 1906, § 584.

The authorities cited by counsel for appellant have no bearing upon the case now before the court, as they relate to trustees different from an administrator, executor, receiver or other person appointed by the court to administer an estate in accordance with a will or laws of the land. Our statute law covers the whole subject matter. See Code 1906, § 554.

If Brandon as administrator of the estate had failed to account to the court after having been summoned so to do, surely the court, under Code 1906, § 2123, in addition to punishing him for contempt could have removed him from office. Nutt succeeded Brandon in the administration of the estate, and it would certainly be in the face of common sense as well as of Code 1906, § 554, to hold that, although Nutt had held the trust for over two years and had twice been summoned to file an account, and twice failed, the court...