Tarbox v. Tarbox

• Decision Date: 07 January 1914
• Citation: 111 Me. 374,89 A. 194
• Parties: TARBOX v. TARBOX.
• Court: Maine Supreme Court

89 A. 194

111 Me. 374

TARBOX

v. TARBOX.

Supreme Judicial Court of Maine.

Jan. 7, 1914.

Exceptions from Supreme Judicial Court, Sagadahoc County, in Equity.

Suit by Aramede S. Tarbox against Alfred L. Tarbox. Case transferred from the trial term on exceptions by both parties. Exceptions overruled, and decree affirmed.

Argued before SAVAGE, C. J., and SPEAR, CORNISH, KING, and HANSON, JJ.

William T. Hall, of Richmond, and Barrett Potter, of Brunswick, for plaintiff. Symonds, Snow, Cook & Hutchinson, of Portland, for defendant.

HANSON, J. This is a bill in equity to enforce an alleged trust, and comes to this court on exceptions by both parties. The original bill was dated October 14, 1909, and related to bonds aggregating in amount $64,500. The plaintiff alleges "that the defendant held the bonds in trust to pay the income thereof to the plaintiff during her lifetime, and that the defendant disregarding his duty had paid only a portion of said income, and neglects and refuses to pay the balance, denies the trust relation, and declares that he will pay no more of said income hereafter."

The prayer of the bill is, "that the bonds and the proceeds thereof may be charged with a trust in favor of the plaintiff for the payment to her of the income thereof during the term of her natural life," for an injunction, an accounting, and other relief.

The writ of injunction was thereupon granted, and $57,000 of the fund was turned over to the Lincoln National Bank of Bath, as commanded therein, to await the further order of court.

On March 22, 1910, a master was appointed. The record discloses that the parties were thus far acting under, and governed by the following facts:

Alfred Lemont, of West Bath, a widower, died August 21, 1896. The plaintiff was his only child. The defendant was his grandson, and is the oldest son of the plaintiff. Alfred Lemont left an instrument purporting to be his last will, in which he named the plaintiff and her husband, since deceased, executors, and in which he bequeathed to Hurry R. Tarbox, the second son of the plaintiff, all of the testator's bank stock, and to the defendant his entire holdings of bonds. The plaintiff, being dissatisfied with the provisions of the will upon presentation of the same for probate, appeared as a contestant There was a compromise, and the will was admitted to probate in October, 1896. By the compromise, as appears by the pleadings, Harry R. Tarbox agreed to assign to the plaintiff the income of the bank stock mentioned in the will, and the defendant agreed to assign to the plaintiff the income of the bonds bequeathed to him in the will, for and during her natural life. This arrangement was perfected, and from that time until after the filing of the bill, the parties believed that the bonds belonged to the defendant, and that income only had been assigned to the plaintiff.

The original bill proceeded upon that theory, and alleged that the defendant held the bonds in trust to pay the income to the plaintiff during her lifetime.

The answer denied a trust, but admitted the assignment of income, and also admitted that the defendant had refused to pay over a portion of the income for reasons set out in the answer, and offered to make good any shortage.

While the accounting was in progress, the original assignment, which had been lost for many years, was found in the plaintiff's possession. It was then discovered that the assignment included principal as well as income, and that the plaintiff had executed an irrevocable will, bequeathing the bonds to the defendant at her decease. The bill was then amended, the amendment setting out the discovery of the assignment, and alleging that, "as a result of the mutual mistake as to the rights of the parties in the bonds, the defendant took possession of them, and became and remained a trustee of the same, and of their accumulations, and reinvestments, for the benefit of the plaintiff, and became subject, in respect thereto, to the usual duties and obligations of a trustee." The amended bill prayed that the bonds may be declared the absolute property of the plaintiff, subject to the provisions of the will, and that the defendant be held to the standard of due care in the investment of trust funds, and that he be required to make good any losses of principal or income resulting from lack of such care, and that he be required to pay interest on principal and income lost or withheld.

The defendant demurred to the amended bill on the ground that its allegations were not sufficient to establish a trust. The demurrer was sustained, and the plaintiff excepted, and again amended her bill, alleging "that the bonds have never been in the physical possession of the plaintiff, and that she had never seen them, or any of them, prior to the commencement of this suit, and that at the time of the decease of said Alfred Lemont they were in a safety box in the Lincoln National Bank of said Bath, which had been used by the said Alfred Lemont in his lifetime, and they remained in said box, together with certain other bonds, some of which belonged to the plaintiff, and others to the defendant, for some time after the decease of the said Alfred Lemont, and until removed by the defendant. From time to time after the decease of said Lemont, the defendant, with the acquiescence of the plaintiff, took possession of the bonds in said list, to hold and manage the same, and reinvest the proceeds thereof, in trust for the plaintiff, finally obtaining possession of all of them, but without any waiver or surrender by the plaintiff of any rights belonging to her under the defendant's said assignment."

"And the plaintiff further avers, not waiving any rights under the general allegations of the preceding sentence, that as the result of mutual mistake on the part of the plaintiff and defendant, as to their respective rights in said bonds, each supposing that the defendant was the owner of the same, subject to the right of the plaintiff to receive and enjoy the income thereof during her life, the defendant took possession of said bonds, and became, and remained up to the time of the commencement of this suit, a trustee of said bonds and their accumulations and reinvestments, for the benefit of the plaintiff, and became subject in respect to the same to the usual duties and obligations of a trustee."

The amended bill charges conversion by the defendant of part of principal and income, investments in speculative stocks for his own use and benefit, and in particular an attempted investment through J. M. Fisher & Co., through whose failure the sum of $950 was lost by the defendant from the fund in question.

The prayer was amended by adding to paragraph 1 the words: "And that said bonds, with their accumulations and reinvestments, be declared to have been trust funds in the hands of the defendant, and the defendant to have been a trustee in respect to the same."

The defendant demurred and answered to the bill as thus amended, the demurrer was overruled, and defendant excepted. The answer to the amended bill denies that a trust existed for the reasons alleged in the bill as amended.

Upon request by the plaintiff, the court instructed the master, among other things, "that if he found there was such a mutual mistake as alleged in the third paragraph of the amended bill, and that as a result of that mistake the defendant took possession of and held and controlled the bonds described in the bill, or any of them, or the accumulations and reinvestments thereof, as alleged in said bill, the defendant was a trustee of the same, and said bonds, or the accumulations and reinvestments thereof, were trust funds in his hands." To which instruction the defendant excepted.

The defendant asked for instructions as to the care and judgment to be exercised in making investments, as to the degree of care, and for what negligence he would be liable, the extent of his liability thereunder, when interest was to be computed, the rate of interest, and especially that compound interest shall not be paid on any sum for losses or shortages or for any purpose. Such instructions were given to the master, and the plaintiff excepted. The master found as follows:

"Under this ruling, and after consideration of the evidence and testimony presented at the several hearings, the master finds that the defendant was a trustee, and the bonds described in the bill, and the accumulations and reinvestments thereof, were trust funds in his hands."

The master also found that all reinvestments were made in the individual name of the defendant, including an attempted investment of $950 in stock of the United Fruit Company, which sum was a total loss to the trust fund by reason of the failure of his Boston agents, who conducted a bucket shop, but defendant does not appear to have known that they were not conducting a legitimate business, and also an investment of $3,565 in the stock of the Amalgamated Copper Company, and that these investments were not authorized or ratified by the plaintiff.

The master also found that, as a result of the mutual mistake alleged in the amended bill as to the ownership of the bonds, the defendant paid taxes on the trust fund to and including 1909, which, with interest added to December 1, 1912, amounted to $3,634.44. And the court ruled pro forma, upon motion of defendant's counsel, that the defendant was entitled to a commission of 1 1/2 Per centum on income coming into his hands, which, if he was finally found to be a trustee, would amount to $553.53.

Decree was entered sustaining the bill, and confirming the master's report in detail.

The exceptions taken before the master are again presented to certain findings of the final decree. The defendant excepts to so much of the final decree as finds that he was a trustee, and in respect to investments, and the plaintiff excepts to the allowance of commission, and as to certain taxes charged to her as...