Rossi v. Davis

• Decision Date: 22 November 1939
• Docket Number: 34925,34926,34927,34928,34929,34930
• Parties: Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Frank R. Dallavalle, Appellant. Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Frank R. Dallavalle, Guardian, etc., Appellant. Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Clara R. Dallavalle, Appellant. Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Walter T. Davis, Appellant. Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Theresa R. Davis, Appellant. Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Theresa R. Davis, Guardian, etc., Appellant
• Court: Missouri Supreme Court

133 S.W.2d 363

345 Mo. 362

Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Frank R. Dallavalle, Appellant. Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Frank R. Dallavalle, Guardian, etc., Appellant. Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Clara R. Dallavalle, Appellant. Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Walter T. Davis, Appellant. Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Theresa R. Davis, Appellant. Victor D. Rossi et al., Respondents, v. Theresa R. Davis et al., Defendants, Theresa R. Davis, Guardian, etc., Appellant

Nos. 34925, 34926, 34927, 34928, 34929, 34930

Supreme Court of Missouri

November 22, 1939

Appeal from Circuit Court of City of St. Louis; Hon. Robert W Hall, Judge.

Affirmed.

Jones Hocker, Gladney & Grand for Theresa R. Davis, Walter T Davis and Theresa R. Davis as guardian of her minor children.

(1) The plaintiffs' attempted plea of estoppel by former judgment is on its face fatally defective. The petition in explicit terms shows (a) that the former judgment was between Theresa R. Davis as administratrix of the estate of Simon D. Rossi and Victor D. Rossi and Mae R. Haseman as trustees, whereas this action is between the latter and Theresa R. Davis in her individual capacity; (b) that the issues here sought to be adjudged were not adjudicated in the former case, have never been adjudicated in Missouri, and as to which the plaintiffs ask the instruction of the court. These averments preclude the notion of estoppel by the former judgment. Cromwell v. County of Sac, 94 U.S. 351, 353; State ex rel. v Eastin, 278 Mo. 70; State ex rel. v. Mining Co., 262 Mo. 501; McKenzie v. Donnell, 208 Mo. 64; Garland v. Smith, 164 Mo. 22; Russell v. Place, 94 U.S. 610; Aurora City v. West, 7 Wall. 94. (2) The former judgment cannot be invoked as persuasive or circumstantial evidence against the defendant Theresa R. Davis. It is either absolutely conclusive upon her in this litigation or it is wholly irrelevant. There is no middle ground. Miller v. White, 50 N.Y. 143; Russell v. Place, 94 U.S. 610; Handlan v. Wycoff & McMahon, 293 Mo. 696; Black on Judgments (2 Ed.), sec. 505. (3) The former judgment was against Theresa R. Davis as administratrix of the estate of Simon D. Rossi. This action is against her in her individual capacity. But in the latter capacity she is a stranger to the former judgment. In order to have an estoppel by former judgment four conditions must concur: (a) Identity of the thing sued for; (b) Identity of the cause of action; (c) Identity of the persons and the parties to the action; and (d) Identity of the quality of the persons for or against whom the claim is made. Not one of the identities appears in the case at bar. On the contrary, plaintiffs affirmatively allege their absence. Scheurich v. Empire Dist. Elec. Co., 188 S.W. 117; Terrell v. Boulware, 24 Mo. 254; Hospes v. Branch, 134 Mo. 604; Dibert v. D'Arcy, 248 Mo. 661; Womack v. St. Joseph, 201 Mo. 476; Kirk v. Met. Life Ins. Co., 225 Mo.App. 759; Collins v. Hydorn, 135 N.Y. 325; Leonard v. Pierce, 182 N.Y. 432; Rollins v. Shaner, 316 Mo. 958; Freeman on Judgments (5 Ed.), sec. 418; Appeal of Clark, 70 Conn. 195, 39 A. 159; 15 R.C.L., pp. 1012-13. (4) In the former case the probate court, after a full hearing, adjudged the issues in favor of the administratrix and ordered the assets in question turned over to the administratrix by the defendants (plaintiffs here). Such judgment (unless shown to have been improperly induced -- and there is no such showing) is conclusive proof of the existence of probable cause for questioning the validity of said trust instrument. Wilcox v. Gilmore, 320 Mo. 987; Randol v. Kline's Inc., 330 Mo. 350; Wilkinson v. McGee, 265 Mo. 586; Crescent Live Stock Co. v. Butchers Union, 120 U.S. 160. (5) The noncontest clause is in the nature of a condition subsequent. A breach of it results in forfeiture of the interest of the offending beneficiary. Such clauses are to be strictly construed. Nevitt v. Woodburn, 190 Ill. 283, 60 N.E. 502; Chew's Appeal, 45 Pa. 228; New York Indians v. United States, 170 U.S. 26.

Edwards, Metcalf & Strong for Clara R. Dallavalle, Frank R. Dallavalle and Frank R. Dallavalle, guardian, etc.

(1) Extraordinary or unusual expenses, which include the costs of litigation incident to an attack on the validity of the trust instrument, are chargeable against the corpus of the trust fund. In re Duffill's Estate, 206 P. 42, 188 Cal. 536; Cogswell v. Weston, 228 Mass. 219, 117 N.E. 38; In re Eddy's Will, 201 N.Y.S. 760; In re Gartenlaub's Estate, 198 P. 212, 185 Cal. 648; Gould v. Gould, 213 N.Y.S. 303; In re Suydam's Estate, 248 N.Y.S. 177; In re Scott's Estate, 240 N.Y.S. 706; In re Pitney, 99 N.Y.S. 590; Steinway v. Steinway, 98 N.Y.S. 100; In re Cornell's Estate, 41 N.Y.S. 457; In re Bechtoldt's Estate, 266 N.Y.S. 408. (2) Equity derives the intent of the settlor from the four corners of the trust instrument, and the instrument must be so construed as to give effect to the intent as deduced therefrom. Selleck v. Hawley, 331 Mo. 1038, 56 S.W.2d 387; Krause v. Jeannette Inv. Co., 333 Mo. 509, 62 S.W.2d 890. (3) When a trust instrument fixes the compensation to be paid to trustees, the trustees are bound thereby and may in no manner derive any direct or indirect profit from the estate by reason of their connection therewith. Marshall v. St. Louis Union Trust Co., 209 Mo.App. 13, 236 S.W. 692; Oppliger v. Sutton, 50 Mo.App. 439; Pyle v. Pyle, 122 N.Y.S. 259; Perry on Trusts & Trustees, p. 710; Clark v. Clark, 144 S.E. 789, 167 Ga. 1; In re Runyon's Estate, 57 P. 784, 125 Cal. 195; Smith v. Stover, 262 Ill.App. 440; In re Hays Estate, 184 Pa. 386, 39 A. 623; James v. Echols, 183 Ark. 826, 39 S.W.2d 292; In re Whitney's Estate, 78 Cal. 638, 248 P. 759; 3 Bogert on Trusts & Trustees, p. 1728; Broughton v. Broughton, 5 DeG. M. & G. 160. (4) Since the trust instrument directs the distribution of the net income of S.D. Rossi, Inc., the trustees have no right or discretion to withhold any of the net income from distribution as a reserve for depreciation or otherwise, and if any of the net income is withheld the trustees are accountable and should be removed. Orr v. Yates, 209 Ill. 222, 70 N.E. 737; In re Chesterman's Estate, 78 N.Y.S. 345; Smith v. Keteltas, 70 N.Y.S. 1065; McMullen v. Sims, 37 S.W.2d 141; Haight v. Brisbon, 3 N.E. 74, 100 N.Y. 119; Gould v. Gould, 178 N.Y.S. 37; In re Elton's Estate, 24 Pa. Dist. Ct. 574; Robinson v. Cogswell, 78 N.E. 389, 192 Mass. 79; Jones v. Jones, 30 N.Y.S. 177; McCrillis v. McCrillis, 149 A. 799; Brahmey v. Rollins, 87 N.H. 290, 179 A. 186; Rayburn v. Wallace, 93 Mo. 326; Bone v. Tyrrell, 113 Mo. 175; Laflin v. Commr. of Internal Rev., 69 F.2d 460. (5) Where the trust instrument completely directs the acts of the trustees in the management of a corporation, all the stock of which is held by the trust estate, the acts of the trustees in respect thereto can be inquired into by an action brought by the beneficiaries against the trustees and the corporation is not an indispensable party in such action. State ex rel. v. Liberty Nat. Bank, 53 S.W.2d 899, 331 Mo. 386; Jackson v. Thomas Inv. Co., 46 F.2d 252; Snider v. St. Louis S.W. Ry. Co., 72 S.W.2d 504, 228 Mo.App. 626. (6) A case will be reviewed upon appeal only upon the theory by which it was tried by the parties below. Buxton v. Kroeger, 219 Mo. 224, 117 S.W. 1147; Shelton v. Franklin, 224 Mo. 342, 123 S.W. 1084; Franklin v. Hume Consol. School Dist., 217 Mo. 585, 197 S.W. 345; Leader Realty Co. v. Markham, 163 Mo.App. 314, 143 S.W. 1104.

Polk & Williams for Marie Rossi, Stanley A. Rossi, Elvira Rossi, Ida Rossi, Lillian Rossi, John B. Rossi, James F. Rossi, George W. Peters, Sophia R. Peters and Harold E. Johnson.

(1) The "no-contest" clause of the trust instrument is valid. In re Chambers, 322 Mo. 1086. Regardless of probable cause. Rudd v. Searles, 262 Mass. 490; Schiffer v. Brenton, 247 Mich. 512; Bender Bateman 33 Ohio App. 626; In re Miller, 156 Cal. 119; Moran v. Moran, 144 Iowa 451; Hoit v. Hoit, 42 N.J.Eq. 388. (a) It unquestionably appears from the evidence that the clause has been violated. (2) The owner of property may control its destination and disposition. Under the settlor's intent, the expenses of litigation, including counsel fees, should be paid out of income. Melvin v. Hoffman, 290 Mo. 464. (3) The trustees acted rightfully and wisely in reserving disposition of the income of the trust pending the litigation attacking its validity, and pending the receipt of the advice of the court. (4) The money paid, for special services, to Victor D. Rossi, was paid by agreement and consent of all competent beneficiaries. Its payment by S.D. Rossi, Inc., was justified. Kinsella v. Marquette Finance Corp., 16 S.W.2d 619; Bassett v. Fairchild, 132 Cal. 637; Fitzgerald Const. Co. v. Fitzgerald, 137 U.S. 112. (5) The voting and payment of reasonable salaries, commensurate with services, to the plaintiffs as officers and employees of S.D. Rossi, Inc., was not unjust or illegal. In re Berri, 224 N.Y.S. 466; In re Gerberen, 266 N.Y.S. 134. (6) A rule of law makes indispensable the presence of the corporation as a party, before the questions raised and discussed with respect to special compensation and salaries, supra, can be considered and adjudged. 6 Thompson on Corporations (3 Ed.), sec. 4650; 4 Cook on Corporations, sec. 738, pp. 3225-6; 3 Fletcher on Corporations (Last Ed.), sec. 1313; 6 Fletcher on Corporations (Last Ed.), sec. 5997. (7) The court is simply requested to lay down a proper rule and guide as to depreciation reserves. (8) There is no requirement...