Smith v. Perry

• Decision Date: 19 June 1906
• Citation: 95 S.W. 337,197 Mo. 438
• Parties: SMITH v. PERRY et al.
• Court: Missouri Supreme Court

95 S.W. 337

197 Mo. 438

SMITH v. PERRY et al.

Supreme Court of Missouri. Division No. 2.

June 19, 1906.

1. TRUSTEES — CONVEYANCE OF PROPERTY— CONSIDERATION—ACCOUNTING.

Where a deed by a trustee recited a consideration for the conveyance of $12,500, the trustee was prima facie liable to account for such amount in the absence of further evidence that a less sum was actually received than a letter written by the trustee to the cestui que trust, some time after the sale, stating that the land was sold for $11,450.

2. SAME—REFERENCE—FINDING OF REFEREE.

Where a referee, to whom an accounting by a trustee was submitted, found that the trustee's estate was not entitled to certain equitable set-offs as against the cestui que trust because of certain unidentified sales of real estate alleged to have been made by the trustee and unaccounted for, it devolved on the referee to ascertain approximately the amount of the trustee's indebtedness for such sold lands to plaintiff.

3. SET-OFF AND COUNTERCLAIM—EQUITABLE SET-OFFS—MUTUALITY.

Where the estate of a cestui que trust was insolvent, the trustee's estate in an action for an accounting, in the absence of fraud, was entitled to set off in equity certain claims held by the trustee individually against the cestui que trust.

Appeal from St. Louis Circuit Court; John A. Talty, Judge.

Action by Willard Smith, as administrator de bonis non of the estate of James W. Lewis, deceased, against Lewis Perry and others, as executors of the estate of John D. Perry, deceased. From a judgment sustaining exceptions to a referee's report in favor of plaintiff, he appeals. Reversed and remanded.

B. D. Kribben, H. K. West, and C. B. Crawley, for appellant. Boyle & Priest and Morton Jourdan, for respondent.

BURGESS, P. J.

This is a suit for an accounting, brought August 23, 1894, in the circuit court of the city of St. Louis, by Virginia V. Lewis, as administratrix of the estate of James W. Lewis, her deceased husband, against John D. Perry. Defendant, on February 11, 1895, filed an amended answer, to which plaintiff filed replication on March 12th next thereafter. John D. Perry having in the meantime died, his death was suggested and the suit revived against the defendants David R. Francis, Lewis Perry, and Richard E. Perry, his executors. On February 1, 1896, the cause, upon stipulation between the parties, was referred to Charles W. Bates, a member of the St. Louis bar, for trial of both the law and the facts, who, on July 21, 1902, after having heard the testimony, made and filed his report as such referee in the circuit court where the cause was then pending. The referee found that the defendants, as executors of the Perry estate, were indebted to plaintiff in the sum of $9,976.31½ and recommended judgment for that sum, with interest at the rate of 6 per cent. per annum from the date of filing suit, and for costs. Within four days after the referee's report was filed the defendants filed exceptions thereto, assigning various grounds therefor, some of which were sustained as shown by the judgment rendered, which is as follows: "Now at this day the court, having duly considered the defendants' exceptions to the referee's report heretofore filed and submitted herein, doth order that said exceptions be sustained as follows, to wit: The item of $2,500 ($12,500) found against defendants should be $11,450, making the total proceeds of sale $18,902,63, one-half of which, $9,451. 31, defendants should be charged with. The defendants should be allowed the amount of and given credit for the two notes, one for $10,000 with interest, amounting to $20,249.70, and the other for $3,320 with interest, amounting to $6,142, making a total of $26,391.70, and the same charged against plaintiffs. Deduct from this the $9,451.31, leaves a net balance in defendant's favor of $16,940.39, for which sum there is judgment in favor of the defendants and against the plaintiffs. It is therefore considered and adjudged by the court that the defendants, Lewis Perry, Richard E. Perry, David R. Francis, as executors of the estate of J. D. Perry, deceased, recover of the estate of James W. Lewis, deceased, in the hands of John F. Lewis, administrator de bonis non of the estate James W. Lewis, deceased, the said sum of $16,940.39, together with the costs herein expended, and that the clerk of this court certify to the probate court within and for Howard county, state of Missouri, a copy of this judgment." In due time plaintiff filed motions for new trial and in arrest, which were overruled, and he appeals to this court.

The case is brought before us by the short method; that is by filing a certified copy of the judgment, order of appeal, and abstract of the record. Defendants challenge the sufficiency of the abstract upon the ground that none of the evidence is contained in or copied into the bill of exceptions as it appears in the abstract, which simply directs the clerk as follows: "Clerk here copy said transcript of the evidence and proceedings before said referee, inserting in their proper place, as indicated in said referee's transcript, the various documents and exhibits filed by said referee as aforesaid." But, for the purpose of a full understanding of the issues involved in this appeal, we think the abstract and report of the referee sufficient. The referee's report, omitting formal preliminary matters, is as follows:

"This suit was instituted by the administratrix of James W. Lewis, on August 23, 1894, against John D. Perry, then living. The original petition calls for an accounting for sale of lands, the legal title to which had been in Perry upon a trust alleged to have been begun in 1886, in equal shares for Perry and for Lewis, deceased. Perry's first answer, filed October 8, 1894, denies all allegations of the petition, setting up independent offsets. An amended petition, alleging the same trust, was filed October 23, 1894. The answer thereto filed October 8, 1894, again denies the allegations of the petition and pleads offsets. On February 11, 1895, an amended answer to this amended petition was filed. Offsets were pleaded, to be discussed hereafter. The answer admits the trust gives a list of lands asserted to be a true list and a complete one of the lands covered by the trusts, admits a sale of a definite part of this land for $11,450, and alleges that Perry placed half the proceeds to the credit of said James W. Lewis in a book kept by him, the said defendant, and notified said Lewis of placing the same to his credit. The reply, in substance, claims more land in the trust, and more sales; admits the sale alleged, but questions the consideration, and denies that Lewis ever received any part thereof. Mr. Perry died in August, 1895, about a year after the institution of the suit. The suit proceeded against his executors. At the hearing plaintiff introduced evidence tending to prove the sales by Perry under the trust outside of the admitted sale. In the sale admitted in the answer, consideration shown by the deed was $12,500. While it is quite possible that the net proceeds were only $11,450, corresponding with the allegation of the amended answer to the amended petition, defendants offered no evidence to account for the difference, nor did they do anything to substantiate the allegations about placing half the proceeds to the credit of James W. Lewis in a book kept by Perry, and notifying Lewis that the same had been placed to his credit. Not only was no account submitted on behalf of the trustee, but no evidence in the case is offered explanatory of the sales of the land. Comparing the realty described as belonging to the trust, in the amended answer, with the realty set forth in the inventory of Mr. Perry's estate, filed in the probate court, there remain tracts unaccounted for, listed in the first paper and not in the second, of which the evidence tells us nothing. On this branch of the case, the trust, the defense limited itself to the introduction of a number of tax receipts, many of which have no color of being credits in a trust account. In the foregoing, the status of the defense toward an accounting in the trusteeship is alluded to chiefly for its bearing on the question whether the defendants are in a position to be heard on the three counterclaims or set-offs (be they in law or equity) which are set forth in their above-mentioned answer, on which the issues are joined. That amended answer claims set-offs as follows: (1) A note of Lewis and of J. S. Thomson to the Laclede Bank for $10,000 at four months, dated May 22, 1886, guarantied by Perry, and taken up by the latter March 9, 1892. (2) A note of Lewis to Perry, dated April 19, 1887, one day after date, for $411.82. (3) A note of Lewis and the above-mentioned J. S. Thomson, as partners, under the firm name of Thomson & Lewis, to Perry for $3,320, on demand, dated October 10, 1888.

"I make the following finding of facts: Both Thomson and Lewis lived in Glasgow, Mo., both well to do, and interested in various business matters. For several years they were associated as partners in buying, packing, and selling leaf tobacco. The tobacco of any given year comes to the market only during the year following its growth. Shortly after the middle of the succeeding year, say 1884 for the crop of 1883, the tobacco is out of the grower's hands, so that each year's purchases are clearly separated from those of other years. Thomson and Lewis, as partners, handled the crop of 1883. On December 10, 1884, Thomson and Lewis, calling themselves by the firm name of Thomson, Lewis & Co., formed a partnership with Perry, `for the purpose alone of buying leaf tobacco at such times and in such place as they may think to their best interest.' The crop of 1884 was handled under this partnership agreement, resulting in heavy losses. Thomson and Lewis, in the hope of making good the loss, carried on the business, with the same factories, etc., for the crop...