State ex rel. Anderson-Madison County Hospital Development Corp. v. Superior Court of Madison County, ANDERSON-MADISON

• Decision Date: 04 June 1964
• Docket Number: No. 30579,ANDERSON-MADISON,30579
• Citation: 245 Ind. 371,199 N.E.2d 88
• Parties: STATE of Indiana on the Relation ofCOUNTY HOSPITAL DEVELOPMENT CORPORATION and Mary E. Lee, Individually and as Trustee of the Trust Created under the Last Will and Testament of Maggie McLaughlin, Deceased, Relators, v. SUPERIOR COURT OF MADISON COUNTY and Henry P Schrenker, as Judge of the Superior Court of Madison County, Respondents.
• Court: Indiana Supreme Court

Page 88

199 N.E.2d 88

245 Ind. 371

STATE of Indiana on the Relation of ANDERSON-MADISON COUNTY HOSPITAL DEVELOPMENT CORPORATION and Mary E. Lee Individually and as Trustee of the Trust Created under the Last Will and Testament of Maggie McLaughlin, Deceased, Relators, v. SUPERIOR COURT OF MADISON COUNTY and Henry P Schrenker, as Judge of the Superior Court of Madison County, Respondents.

No. 30579.

Supreme Court of Indiana.

June 4, 1964.

Robert L. Austin, Anderson, for relator, Mary E. Lee, individually and as trustee.

John W. Houghton, Indianapolis, for relator Anderson-Madison County Hospital Development Corporation; Barnes, Hickam, Pantzer & Boyd, Indianapolis, of counsel.

Henry P. Schrenker, Judge of Superior Court of Madison County, pro se.

ARTERBURN, Judge.

In this case, on the petition of the relator, Mary E. Lee, as trustee under the will of Maggie McLaughlin, deceased and the Anderson-Madison County Hospital Development Corporation, we issued a temporary writ of prohibition and an alternative writ of mandate against the defendant court and judge to expunge certain records made by the court holding the relator, Mary E. Lee, trustee under the will, in contempt of court, and to require the respondent judge to permit the filing of an amended petition to distribute the trust corpus and requiring the respondent judge to disqualify himself because of bias and prejudice.

We now have before us the question of making the writ absolute and permanent.

The record shows that Maggie McLaughlin died on July 8, 1952. She designated Mary E. Lee, one of the relators, as trustee under her will. The will provided that the proceeds remaining after the payment of all claims against the estate 'shall be used for the erection, construction and maintenance of a hospital or medical clinic at the discretion of the trustee and with the approval of the Court, said hospital to be constructed in Madison County, Indiana.' The will refers to the Madison Circuit Court.

The Madison Circuit Court at the time had exclusive probate jurisdiction. In 1955, probate jurisdiction was transferred to the Superior Court of Madison County. [Acts 1895, ch. 26, § 10, p. 52; 1955, ch. 14, § 1, p. 23; 1959, ch. 131, § 1, p. 333 being Burns' § 4-1310 (1963 Supp.)] The Honorable Henry P. Schrenker is the duly qualified and acting judge of the Superior Court of Madison County and respondent herein.

On September 2, 1958 the relator, Mary E. Lee, as trustee, filed with the Madison Circuit Court her designation and appointment of a beneficiary under the terms of the will, naming Anderson-Madison County Hospital Development Corporation (the other relator herein) as the hospital to be constructed in Madison County. This selection and designation as a beneficiary under the will by the trustee was approved by the Madison Circuit Court. Upon receiving such approval, the relator, Mary E. Lee, as trustee, filed a petition 'To Distribute Trust Corpus' in the respondent court (Superior Court of Madison County), in which she designated as beneficiary Anderson-Madison County Hospital Development Corporation (the co-relator herein), for the construction of a hospital out of the proceeds of the estate of the decedent.

The respondent court thereafter, on November 13, 1958, sua sponte without notice or hearing, entered an order designating, along with the co-relator (Anderson-Madison County Hospital Development Corporation) two other hospitals already constructed and in existence, to share in the benefits of the trust, and ordered the trustee to divide the corpus of the trust equally among the three hospitals. Immediately thereupon, the relator-trustee herein filed a petition with the respondent court to set aside such order. The respondent court held such order under advisement until March 22, 1962, at which time it entered an order setting aside and vacating the prior order designating the three hospitals as beneficiaries. Again on September 4, 1962 the trustee filed an amended petition to distribute the trust, against designating the co-relator herein, Anderson-Madison County Hospital Development Corporation, as a beneficiary to receive said trust funds, also stating that such beneficiary had accepted its designation as a beneficiary. The relators complain that the respondent judge prevented the clerk from noting the filing of this amended petition. After the application for and the issuance of the temporary writ herein, the respondent judge, in his return, states that the clerk has entered of record the filing of this amended petition.

On December 27, 1963, the designated beneficiary, Anderson-Madison County Hospital Development Corporation, filed a complaint in the office of the clerk of the respondent court entitled 'Complaint To Enforce Trust', in which the relator, Mary E. Lee, as trustee, was made defendant.

After issuance of process, plaintiff filed a motion for a change of judge, which was granted, and the Honorable George B. Davis was appointed and qualified as special judge in that proceeding. On December 30, 1963 the respondent judge, Honorable Henry P. Schrenker, sua sponte, issued a contempt citation against the relator-trustee, Mary E. Lee. The citation did not state any charges or set forth any specific facts to constitute contempt. On January 3, 1964, the date fixed in the citation, the relator, Mary E. Lee, appeared with counsel in the chambers of the respondent judge and asked to be informed as to the alleged charges of contempt. No witnesses were sworn, no reporter was present and no evidence was presented. The respondent judge stated that the relator-trustee had not carried out or complied with the terms and provisions of the respondent's order dated November 13, 1958, which directed her to divide the proceeds from the estate among the three hospitals designated by the judge. Thereupon the judge was informed that he had previously rescinded and vacated such order on March 22, 1962. After the relator, Mary E. Lee, and her counsel had departed, the respondent judge then sua sponte entered an order on the same date to reinstate 'nunc pro tunc' the order of November 13, 1958 in which the court designated three hospitals to share in the estate, and set aside his order of March 22, 1962 (which had previously vacated the order of November 13, 1958). The court also at the same time found the relator, Mary E. Lee, in contempt of court for violation of orders of the court, including that of March 22, 1962, and made an order to remove her as trustee. This removal was made sua sponte, without notice to the parties concerned, and without a hearing. On April 14, 1964 the relators filed written motions pursuant to the rules of this court, which attacked the want and excess of jurisdiction of the respondent judge. The beneficiary's motion was entitled 'Plaintiff's Motion to Vacate Purported Order Dated January 3, 1964.'

Thereafter, on April 17, 1964, the respondent court entered another order in which it:

1. Expunged the reinstatement of the order of November 13, 1958 (which designated three hospitals as beneficiaries).

2. Continued the order of removal of the trustee.

3. Ordered the beneficiary's motion to vacate be stricken from the files because not verified.

The motion of relator, Mary E. Lee, Trustee, to vacate, was not stricken.

The relators most vehemently argue that the controversy before us arises solely because the respondent judge is trying to superimpose his personal selection of beneficiaries under the will over that of the trustee designated in the will. This position of the relators is supported by the respondent judge's own statement in his response to the effect that 'Actually the Judge of The Superior Court is a Co-trustee of this fund.' (His italics)

We are persuaded that this case does resolve itself basically into one between the judge of the court and the trustee of an estate as to who shall make the decision in appointing or designating a beneficiary under a will. The law provides for the making of wills in order that the desires and objectives of a deceased testator may be carried out in the disposition of his or her property. It is the 'will' of the deceased, not the court's, which is to be carried out.

The relator, Mary E. Lee, was a personal friend of the creator of the trust. She was given the discretion and the 'trust' of the decedent to carry out her desires and wishes. The trustee is the one to exercise the discretion and make the appointment or designation, not the court. The court may not interfere with this discretionary power of the trustee in the absence of a showing of fraud, bad faith or an arbitrary abuse of such discretion.

'The court is less ready to remove a trustee who was named by the settlor than it is to remove a trustee appointed by the court or by a third person in the exercise of the power to appoint trustees.' 1 Scott, The Law of Trust 781 § 107.1 (2d ed. 1956).

In State ex rel. Heddens v. Rusk (1911), 236 Mo. 201, at 215, 139 S.W. 199, at 203, where a writ of prohibition was issued in a case such as we have here, the court said:

'* * * nor may he (the Judge) substitute his own judicial power or discretion for the discretion or power of those trustees in whom the creator of the public trust vested title and lodged the powers of management, supervision, and control.'

See also: Taylor v. Baldwin (1952), 362 Mo. 1224, 247 S.W.2d 741; Hills v. D'Amours (1948), 95 N.H. 130, 59 A.2d 551; Wesport Bank & Trust Co. v. Fable (1940), 126 Conn. 665, 13 A.2d 862; Sandusky, Exr., v. Sandusky (1915), 265 Mo. 219, 177 S.W. 390.

It is true, actions of a trustee, executor or administrator and such similar fiduciaries should normally be approved by the court. This approval is not for the purpose of giving the court the right to exercise its own personal desires or preferences, but rather to guard against a fiduciary acting in fraud, bad faith or arbitrarily contrary to the directions of the...