Sensenbrenner, Matter of, 75-382

• Decision Date: 29 March 1977
• Docket Number: No. 75-382,75-382
• Parties: In the Matter of the Trust f/b/o John S. SENSENBRENNER created under the Will of Frank J. Sensenbrenner, Deceased. F. James SENSENBRENNER, Sr., Objector-Appellant, v. J. Leslie SENSENBRENNER et al., Trustees-Respondents.
• Court: Wisconsin Supreme Court

Page 47

252 N.W.2d 47

76 Wis.2d 625

In the Matter of the Trust f/b/o John S. SENSENBRENNER created under the Will of Frank J. Sensenbrenner Deceased F. James SENSENBRENNER, Sr., Objector-Appellant, v. J. Leslie SENSENBRENNER et al., Trustees-Respondents.

No. 75-382.

Supreme Court of Wisconsin.

Argued Feb. 28, 1977.

Decided March 29, 1977.

This matter is before the court on appeal from a judgment which terminated a testamentary trust for the benefit of John S. Sensenbrenner; approved and allowed all the accounts of the trustees thereof; approved and allowed closing trustees' fees and attorneys' fees; and assigned remaining trust assets in equal shares to the remaindermen entitled thereto. The judgment further provided that upon the filing of receipts showing compliance therewith, the trustees be discharged.

Harold J. McComas, Milwaukee, for appellant; Keith A. Christiansen and Foley & Lardner, Milwaukee, on brief.

F. Joseph Sensenbrenner, Neenah, for respondents; Remley, Sensenbrenner, Stein & Cummings, S. C., Neenah, on brief.

CONNOR T. HANSEN, Justice.

Frank J. Sensenbrenner died in 1952. His last will and testament created four equal trusts for the benefit of his four children: John S. Sensenbrenner, J. Leslie Sensenbrenner, Margaret Sensenbrenner Gilbert, and Gertrude Sensenbrenner Bergstrom. The trusts created separate limited life estates for each child with the remainder interest passing to either the child's descendants or to one of the other trusts created by the will. John S. Sensenbrenner, J. Leslie Sensenbrenner and William H. Clifford were designated as the trustees of all four trusts. John S. Sensenbrenner and J. Leslie Sensenbrenner thus held the positions of both trustee and beneficiary under their respective trusts.

Gertrude Sensenbrenner Bergstrom died in 1973. Pursuant to the last will and testament of the senior Sensenbrenner, on June 25, 1973, the assets of her trust were assigned in equal shares to the trusts created for the then three surviving children of the original settlor.

John S. Sensenbrenner died October 8, 1973, and this litigation arises out of the settlement of his trust. The will of the settlor provided that the trust terminate at the death of John S. Sensenbrenner, and, insofar as this case is concerned, that the assets be distributed among his then living children in equal shares. He was survived by four children, one of whom was F. James Sensenbrenner, Sr., the appellant in this case.

On October 8, 1973, the trust fund corpus had a market value of $2,545,545.16; comprised of stocks valued at $2,072,300.88; bonds valued at $446,646.20; and $26,598.08 cash. These assets were distributed to the remaindermen in kind. The actual transfer of the common stock occurred on April 30, 1974, and of the bonds on June 14, 1974. During the time between the death of John S. Sensenbrenner on October 8, 1973, and the actual transfer of the securities to the remaindermen, the common stock declined in value by $568,035.79, and the bonds by $26,846.61. The appellant asserts that the total loss of trust assets during this period was $595,000 and that his one-quarter interest in the trust was thus diminished by $148,750.

The appellant filed an "OBJECTION TO FINAL ACCOUNT AND DISCHARGE OF TRUSTEES." Appellant alleged that the loss in value of trust assets was occasioned by ". . . reason of the failure, refusal and neglect of the Trustees of said Trust promptly to allocate, pay and distribute said trust assets to the remaindermen beneficiaries. . . ." He also objected to the allowance of a trust termination fee and to the discharge of the trustees until such time as they ". . . repay, reimburse, satisfy and indemnify . . ." the appellant for his alleged loss.

Judgment was entered approving and allowing the account of the trustees and trustees' termination fees. This appeal follows. Three issues are presented:

1. Under the circumstances, was the time taken by the trustees to distribute the trust assets unreasonable, so as to subject the trustees to surcharge for the depreciation in value of those assets which occurred between termination of the trust and distribution?

2. Was the termination fee allowed to the trustees fair and reasonable?

3. Were any issues regarding the Gertrude Sensenbrenner Bergstrom Trust before the trial court?

REASONABLENESS OF TIME FOR DISTRIBUTION.

The initial three trustees administered the trust assets at all times until the death of John S. Sensenbrenner. Immediately upon his death attention was given to the termination of his trust. The First National Bank of Neenah (hereinafter custodian) had long been custodian of the securities and for ease of transfer the securities were registered in the name of one of its nominees. Shortly after the death of John S. Sensenbrenner, the two remaining trustees, ¹ caused to be prepared a valuation of the trust account as of the date of death and a distribution schedule making equal allocations to the four remaindermen.

The valuation process took the balance of the month of October. During the process, the trustees concluded that a possible tax throwback problem existed and they decided to secure a legal opinion from a law firm in Chicago. The opinion was requested by the custodian bank in November, 1973, and was received in April, 1974. The final accounting was completed and submitted to the trustees on a computer print-out form.

Sometime subsequent to the submission of the valuation, the trustees or the custodian bank penciled out a proposed distribution schedule. A meeting to implement or discuss the distribution was held in late November or early December, 1973. Present were: F. Joseph Sensenbrenner, then attorney for the trustees (later to become a trustee); William H. Clifford and J. Leslie Sensenbrenner, the two surviving trustees; and representatives of the custodian bank, including James H. Lewis, vice president and trust officer of the custodian bank. As a result of that meeting, the penciled-out distribution schedules were agreed to. On or after November 8, 1973, several odd-lot sales of stocks and bonds, noted in the distribution schedule, were made.

Whether the agreement constituted a directive to the custodian bank to implement the transfers of the other securities to effectuate the distribution is a subject of controversy. At the subsequent hearing in this case, J. Leslie Sensenbrenner testified that it was his understanding that the transfer and distribution of the securities were to proceed directly as a result of the meeting, with the custodian bank handling the mechanics necessary to accomplish the distribution. Lewis was of the opinion that the agreement of the beneficiaries was needed before the actual transfer took place. The specific instructions to accomplish the required transfers were not forthcoming until late February or early March, 1974. The custodian bank sent the stocks in for transfer in late February or early March, 1974. The bonds were sent in for transfer around the middle of April, 1974. The stocks were actually distributed to the remaindermen on April 30, 1974; the bonds were distributed on June 14, 1974.

The record reflects that trustee Clifford entered the hospital in mid-December, 1973, suffering from cancer. During January and February, 1974, he sought treatment for his illness in Texas and died of a heart attack on February 5, 1974. ² J. Leslie Sensenbrenner, the other surviving initial trustee was eighty years of age. He was present when the preliminary distribution schedule was developed in November of 1973, but apparently left shortly thereafter to spend the winter in Florida.

At the hearing on the final account, Lewis, trust officer of the custodian bank, testified that actual transfer of the securities would take six to eight weeks. Harold J. Luedeman, expert witness for the appellant, testified that the normal amount of time for such transfers was two to three weeks. Subsequent events showed that Lewis was correct. The trust consisted of 37 stock issues and 21 bond issues.

On the foregoing facts and the provisions of the will of Frank J. Sensenbrenner the trial court made its decision and entered the following conclusions of law:

"1. That the Trustees of the John S. Sensenbrenner Trust did not, after the death of life tenant, John S. Sensenbrenner, unreasonably delay the distribution of the Trust's assets to the remaindermen-beneficiaries entitled thereto;

"2. That the Trustees of the John S. Sensenbrenner Trust are not liable for any loss of the market value of said Trust's assets from the time of the death of life tenant, John S. Sensenbrenner, until the times of the distributions thereof to the remaindermen-beneficiaries;

"3. That the Trustees of the John S. Sensenbrenner Trust are entitled to a reasonable fee for their services in terminating said Trust."

Judgment was entered terminating the John S. Sensenbrenner Trust; allowing all accounts and trustees' fees in the amount of $5,795.55, which the trial court found to be fair and reasonable; and assigning assets of the trust. The trial court viewed all of the facts and circumstances and determined that the trustees did not unreasonably delay in the distribution of the trust assets to the remaindermen. That finding and the findings of fact upon which it was based, will not be disturbed on this appeal unless contrary to the great weight and clear preponderance of the evidence or unless based upon an error of law. Estate of Scheibe, 35 Wis.2d 89, 94, 150 N.W.2d 427 (1967); Will of Mueller, 28 Wis.2d 26, 40, 135 N.W.2d 854 (1965); Estate of Gehl, 5 Wis.2d 91, 96, 92 N.W.2d 372 (1958); Welch v. Welch, 235 Wis. 282, 307, 290 N.W. 758, 293 N.W. 150 (1940); Estate of Allis, 191 Wis. 23, 33, 34, 209 N.W. 945, 210 N.W. 418 (1926).

We believe the law is clear that upon the event terminating a trust, the trustees must use due care and diligence to distribute the trust assets. The distribution must be...