Taylor v. Welch

• Decision Date: 03 February 1913
• Citation: 153 S.W. 490,168 Mo.App. 223
• Parties: JOHN W. TAYLOR, Appellant, v. JAMES WELCH, VIRGINIA A. WELCH, and L. W. SCOTT, Trustee, Respondents
• Court: Kansas Court of Appeals

153 S.W. 490

168 Mo.App. 223

JOHN W. TAYLOR, Appellant, v. JAMES WELCH, VIRGINIA A. WELCH, and L. W. SCOTT, Trustee, Respondents

Court of Appeals of Missouri, Kansas City

February 3, 1913

Appeal from Saline Circuit Court.--Hon. Samuel Davis, Judge.

REVERSED AND REMANDED (with directions).

Judgment reversed and cause remanded.

T. H Harvey for appellant.

L. W Scott for respondents.

OPINION

JOHNSON, J.

--This is an action in equity begun in the circuit court of Saline county, December 9, 1910, to obtain a decree declaring a trust in favor of plaintiff and ordering the defendant Scott as trustee, to pay plaintiff the sum due him as such beneficiary.

The answer, which is voluminous, denies the existence of a trust in favor of plaintiff and interposes the additional defense of res adjudicata. Defendants prevailed in the circuit court and the cause is before us on the appeal of plaintiff.

The defendants, James Welch and Virginia A. Welch, husband and wife, live in Saline county where the husband owned a valuable farm. He became an invalid, unable to attend to business and placed his affairs in the hands of an agent to whom it appears he gave very wide and comprehensive authority. The agent first appointed resigned in 1906 and defendant Scott was appointed in his stead. The authority with which Welch invested Scott included the power to lease the farm, to collect rent, pay taxes and interest on certain notes the Welches had executed and to divide the remainder of the income equally between Welch and his wife. This arrangement continued until March 14, 1910, when defendant Welch sold the farm for $ 19,923.75. A warranty deed was executed and delivered to the purchaser and Scott received the payment of the purchase money. Mrs. Welch joined in the execution of the deed for the purpose of conveying her inchoate right of dower. On March 14, 1910, and immediately after the consummation of the sale and the payment of the purchase money to Scott, the defendants executed the following instrument in writing:

"This instrument of writing, made and entered into by and between James Welch and Virginia Welch, his wife, of the county of Saline, State of Missouri, parties of the first part, and L. W. Scott, of said county and State, party of the second part,

Witnesseth, That whereas the said parties of the first part have sold their farm in Saline county, and now have on hand a large sum of money, the proceeds of said sale, and whereas there are several debts which the parties of the first part now owe, and whereas it is the wish and desire of the parties of the first part to pay off and discharge all debts now due and outstanding, and to make provision for the support and maintenance of their family for the ensuing year, and whereas it is the wish and desire of the parties of the first part to make a lifetime provision for the support and maintenance of themselves and their family for and during the period of their natural life and the lifetime of the survivor of them and whereas, the said James Welch, by reason of a stroke of paralysis by which he was afflicted some years ago, has become so feeble and infirm of body as to render him unable to attend to business and, having now reached such an advanced age in life that he can never hope to resume business again even though he should recover entirely from his partial paralysis from which he has so long suffered, and whereas the parties of the first part desire to place this money in the hands of a safe and discreet business man to take care of, to manage, loan out, and collect all interest which shall accrue therefrom, out of the principal remaining after certain expenditures hereinafter set forth are made, and believing that the said L. W. Scott, party of the second part is such a person, qualified to discharge the trust herein and hereby created, therefore, he said James Welch and Virginia Welch, his wife, parties of the first part, do by these presents, assign, transfer and set over unto the said L. W. Scott, party of the second part, all the money derived from the sale of the farm aforesaid, heretofore mentioned, to have and to hold to him and his successors in trust, however for the following purposes:

"Said party of the second part shall out of said money turned over to him as aforesaid, pay all debts now due and owing by said parties of the first part or either of them, in whatsoever form said debts are now in. Further, said trustee shall deposit the sum of two hundred dollars ($ 200) in the Wood & Huston Bank to the credit of the said James Welch, one of the parties of the first part, for his own individual use and benefit. And the sum of $ 100 shall be turned over to Virginia Welch, one of the parties of the first part, by said trustee. Further, said trustee shall set aside out of said sum of money, a fund to the amount of three hundred dollars ($ 300), to be applied from time to time by the party of the second part to the support and maintenance of the parties of the first part during the ensuing year. Further, said trustee, party of the second part, after paying off all debts now due and outstanding, and after making said deposit in said bank as aforesaid, and after setting aside said fund as aforesaid, shall adopt and use the balance or surplus remaining as the stable or perpetual principal that is to be kept intact and preserved until the time of its final distribution, as hereinafter provided, arrives.

"The said trustee, party of the second part, shall have full power and authority to loan out said principal or any part thereof to any person or persons, on good real estate security, or with said principal or any part thereof purchase notes from others that are so secured, said loans and notes so purchased shall bear the best rate of interest obtainable by said trustee, regard being had to the security offered. And the said trustee shall collect the interests on said loans or notes annually or at such time as said interest is collectible, out of which said interests he shall first pay the taxes on said principal, and second, he, the said trustee, shall reserve for himself a reasonable fee for his services, and third, he shall pay the premium on the bond of the trustee, if such bond is required, as hereinafter provided, and the balance or remainder of said interests shall be applied, first to the payment and discharge of all debts made or created by the parties of the first part or either of them, if the balance remaining of such interests is sufficient for such purpose, and if not sufficient for such purpose, then said trustee is hereby vested with full and discretionary power to pay off and discharge such of said debts as he himself shall determine were created for the support and maintenance of the parties of the first part or their family. And if after the payment and discharge of the debts as above provided, there shall remain a balance in the hands of said trustee, such balance, if any, remaining shall be turned over to the parties of the first part equally. The income from said principal as above provided shall be expended as above directed for and during the joint lives of the said parties of the first part, for and during the lifetime of the survivor of them, and upon the death of said survivor, the said trustee shall collect and gather in all outstanding loans, and divide said principal among the children and descendants of the said parties of the first part, according to the laws of the descents and distribution of the State of Missouri, the said trustee reserving for himself, however, a reasonable amount to compensate himself for collecting in said loans and distributing the money as above provided. It is hereby further provided that the parties of the first part may at any time hereafter as they see fit, require the party of the second part or his successor to give a good and sufficient bond, conditioned for the faithful discharge of the trust herein created, which said bond as herein provided for shall be passed upon and accepted by the judge of the circuit court within and for Saline county, Missouri. If so required by parties of the first part, the trustee shall pay for the premium on same out of the interests derived from the principal as above provided.

"It is further provided and agreed upon by the parties hereto, that the parties of the first part, or the survivor of them, shall have the right to require the trustee to make an accounting of this trust to the circuit court aforesaid. It is further provided that the party of the second part shall have the right at any time to resign from the trust herein created by presenting his resignation to the said circuit court and making final settlement of this trust. It is further provided that in event of the death, resignation, or inability of the trustee, party of the second part, to discharge this trust, the judge of the said circuit court for the time being shall have the power to appoint a successor, and the right to appoint a trustee at any time a vacancy occurs in the said office of trustee.

"And the said party of the second part...