Perrin v. Lepper
| Decision Date | 28 November 1888 |
| Citation | 72 Mich. 454,40 N.W. 859 |
| Court | Michigan Supreme Court |
| Parties | PERRIN v. LEPPER ET AL. |
(Syllabus by the Court)
A testator, by his last will, gave to his son and only child, a minor at the age of 21, $3,000 and $1,000 annually thereafter, until 25 years old, when he was to have $10,000 more, if, in the opinion of the executors named, he had used the amounts received in a judicious, frugal manner; and at the age of 35 years, or sooner, if the executors thought best, and upon the same conditions, he was to receive the possession of the balance of his father's estate, both real and personal, not otherwise disposed of under the will but if at 25, and after the receipt of the $10,000, the son had squandered and wasted what he then had received, and if in the opinion of the executors he would continue to do so he then was to receive but the $1,000 annually, and the estate, subject to the other provisions of the will, was to go to the legal issue of the son, and, if he died without issue, it was then to pass to the testator's legal heirs. Held, that such will did not convey the estate to the executors named in trust, but only made them executors with certain additional powers, under which, in certain contingencies, the estate might be made to pass from the son to others after the son had arrived at the age of 35 years.
There were five persons named as executors in the will, but one of whom qualified. He was a surviving partner of the intestate and acted for 15 years as executor, and died without having rendered any account of his trust, and without paying the son anything after he was 24 years of age, who married and died without issue, leaving all his estate to his wife by will. The sole executor never passed upon the son's habits or conduct, and never undertook to exercise the power given to all the executors in the regard. Held, assuming the power given by the will to be valid, it could not be executed by the sole executor, and after the death of the son could not be executed by any one; that upon the death of the father the title to the real estate vested in the son, and the son became the owner of all testator's personal property, subject to the debts of the estate and the special legacies, and under the son's will, upon his death, passed to his widow, and the heirs of the father had no interest in the estate whatver; that it was not necessary for the son to reduce the estate willed to him to his possession before he could dispose of it, by will, to his wife.
Paper Co. v. Fisk, 47 Mich. 212, 10 N.W. 344, which construes the last will and testament of Joseph Sibley, considered, and followed.
An executor's obligation to account in the proper court rests, on his decease, upon his personal representative, who should observe the same rules in so doing as the executor, and should be held to the same strictness, so far as he has knowledge, or with a reasonable degree of diligence can obtain the same.
On the death of a surviving partner, who was also executor of the estate of his deceased partner, the representative of the former has no more right to the exclusive control of the copartnership books, papers, and property of the partnership estate than has the representative of the deceased partner.
The refusal of the trustee while living, and his representative after his death, to furnish information regarding the condition and management of the estate, and exhibit his accounts showing the result of the same, and the amount of the estate, after the trust had expired, to those entitled thereto, when properly requested, severely criticised and condemned. Fairness between tenants in common, a relation creating the lowest grade of trusts, requires that this should be done.
A surviving partner who is also made executor of the last will and testament of the deceased, and who assumes the guardianship of his only son, takes upon himself the most sacred obligations that can be imposed upon any trustee; and when the authority of a court of equity is properly invoked it will take care that the interests of the beneficiaries are protected, and will exercise great diligence in scrutinizing the manner in which the trustee had discharged his trust obligations.
It is the duty of one assuming to act as guardian of a minor, and the only son of his decased partner, whose executor he also is, to look after his habits and education, and to secure for him the best advantages for business instruction, and at least to give him such an insight into the estate of his father, and such instruction in relation thereto, as will best qualify him for its successful management.
Among the indispensable duties and obligations imposed upon a surviving partner, who is also the executor of the last will and testament of his deceased partner, are the following: To file in the probate court, not only a true and correct inventory of the individual property and assets of the estate, but also of the partnership property; and the latter should show who are the partners, the place where the firm carried on business, and the nature and character of the same, the terms of the copartnership, the capital contributed by each partner, and some statement of the assets and liabilities, so far as he knows them, or can ascertain them with any reasonable certainty.
To keep accurate and correct acounts of the estate, and all the assets thereof, showing the accumulations or losses thereon, keeping separate and distinct the individual estate from the partnership interest, and to exhibit such account or accounts whenever called upon to the heir or his attorneys, and to all persons interested in the estate. In the shortest time reasonably consistent with the best interests of the estate, to collect in a sufficient amount of the assets to pay the just debts of the estate, and the specific bequests mentioned in the will; to defend the estate against all unjust claims; to ascertain and collect in all outstanding claims not well secured; and to ascertain and settle the net amount of the assets, and report the same, with a full account of his doings in relation thereto, to the probate court, and obtain its order for such further disposition of the same as may be proper to make. To work for the best interests of the estate at all times, and to so keep, manage, and invest the property of decedent, that it can be turned over to the persons entitled to it, freed from complications with his own, or the property of others, at the earliest moment consistent with good management. In case of doubt as to the proper construction of the will in regard to final disposition of the estate, to apply to the proper court, and have the matter settled, and take its direction in reference thereto.
Where the representative of the surviving partner files a bill offering to account for his intestate's administration of the firm assets, and the account he presents is so imperfect, confused, and manifestly fraudulent as to be an insufficient basis for accounting, and unfit for judicial investigation, and it appears that the surviving partner trafficked with the firm assets, and made large profits therewith, but has destroyed or suppressed the evidence, so that the amount of such profits cannot be ascertained with any degree of certainty, the rules of equity will not require the share of the deceased partner to be ascertained from such fragmentary and imperfect evidence as remains, or as the trustee or his representative sees fit to furnish.
In such case, where the share of the deceased partner in the firm at his death is known or can be ascertained with reasonable certainty, the court will apply the well-known rule that a cestui que trust may either follow the fund, and take it and the profits, or take the fund, with interest, in lieu of profits, to be computed in such manner and at such rate as will, in view of all the facts and circumstances, be in accordance with the principles of equity and justice. In such case the fraudulent trustee must be held to have elected, in taking the course he did, that this rule might be applied in case equity should be resorted to in the settlement of his accounts, and his estate must abide thereby. But in giving such summary relief the court will not omit to take into consideration the consequences of its decree, and will consider them in connection with the other circumstances in the case, and see to it that an oppressive or unjust result shall not be reached.
The precise sum the cestui que trust should receive or the trustee should pay is that which the former has lost by the failure of the latter to honestly and properly administer the trust. Where the trustee has misappropriated the funds, or neglected to properly invest them, the cestui que trust will be presumed to have lost at least the lawful interest upon the same; and, if the fund has been so used that the accumulations in the hands of the trustee reached beyond interest upon the fund, the court will decree to the cestui que trust as his loss whatever may have been so received.
If a trustee fails or refuse to account, he may be charged with the trust fund, and such accumulations thereon as the best management of the most successful business man would be likely to secure for it. It will be presumed he has received so much or he would have reported his gains. If such gains be greater than compound interest, that may be allowed to the beneficiary; not on the ground that the fund is presumed to have earned a larger sum, but because the court will not allow the trustee to profit by his own wrong, and because as between him and the beneficiary the latter has the better right to the excess.
Where a trustee has shown an utter disregard for the interests of the beneficiary, and has deliberately planned to absorb...
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