Teasdale's Estate, In re

• Decision Date: 07 March 1952
• Citation: 52 N.W.2d 366,261 Wis. 248
• Parties: In re TEASDALE'S ESTATE. TEASDALE et al. v. TEASDALE et al.
• Court: Wisconsin Supreme Court

Page 366

52 N.W.2d 366

261 Wis. 248

In re TEASDALE'S ESTATE TEASDALE et al. v. TEASDALE et al.

Supreme Court of Wisconsin.

March 7, 1952.

As Amended on Denial of Rehearing June 3, 1952.

The trustees of the trust estate of Howard Teasdale, deceased, filed their report and plan for the liquidation of the estate to which three persons with interests in the residuary estate objected. On July 13, 1951 the court entered a judgment in which certain parts of the trustees' proposals were disapproved and disallowed and the trustees have appealed from those parts of the judgment. Howard Teasdale, a lawyer and a former member of the Wisconsin senate, executed his will November 7, 1932 and died January 14, 1936. The will was admitted to probate and the court appointed as executors the persons nominated by the testator. They were the testator's widow, her brother, Lester Morrill, and the testator's nephew, Howard Teasdale. Those individuals were also named as trustees and were given power to fill vacancies in their ranks. In due course the county court appointed them as trustees and on November 16, 1939 they began to administer the trusts created by the will. In 1944 Howard Teasdale resigned under pressure by the other trustees who accused him of malfeasance, and who then appointed Mr. Morrill's wife in his stead. The will directed distribution of the trust estate not later than fifteen years from the date when letters testamentary were issued to the executors. Such time was reached March 3, 1951.

Mr. and Mrs. Teasdale were married in 1916. They had no children. Before the marriage they entered into an antenuptial contract and the will made more generous provision for her in lieu of her contract and dower rights, and it recited that the fifteen year time which the trustees were given in which to liquidate and distribute the estate was to avoid the loss and sacrifice which would necessarily occur if the estate had to be liquidated promptly after his death. After provision for certain specific legacies, including a number to the widow, Item 9-B of the will sets up a method by which the amount of a cash payment to Mrs. Teasdale is to be determined. The formula was intended to produce the same result as the antenuptial contract, the other provisions of the will for her being in addition thereto. The formula required the trustees to 'determine and state the gross cash value of my estate on the day prior to my death' and to add thereto 'the value of my wife's interest in such lands in the State of Texas and elsewhere, as she and I own jointly * * *. From this gross value so determined by them there shall be deducted the amount of my debts and other obligations, and from the resulting figure there shall be deducted the further sum of One Hundred Thousand Dollars ($100,000). The resulting net value, after these deductions, shall be divided by two, and the amount determined by such division shall be the sum of money to be paid and set over by my said trustees to my wife * * * as her sole and separate property. * * * In the carrying out of this provision the determination by my said trustees of any and all values of my property shall not be open to review, but final and conclusive.' The trustees were then directed to distribute the residue of the estate in equal shares among Mrs. Teasdale, Howard Teasdale, a nephew, and Joseph Teasdale, another nephew. Howard and Joseph are respondents here, as is Loretta Teasdale, Joseph's former wife, to whom there was assigned a part of Joseph's interest by a decree of divorce.

In 1932 when the will was drawn, and in 1936 when Mr. Teasdale died, values were much depressed. In regular course the executors filed an inventory and appraisal of the gross estate as of the day of death. In 1939, the executors filed with the court and with the department of taxation a schedule of property and a calculation of the value of the share of the estate which Mrs. Teasdale would take under the will. This document, signed by Mrs. Teasdale and Howard Teasdale, stated under oath that the property was appraised at its clear market value to the best of their knowledge, information and belief. It was not signed by Mr. Morrill but he acquiesced in it. According to this document the market value of the gross estate, exclusive of property which Mrs. Teasdale took as joint tenant, on the day of Mr. Teasdale's death was $154,543.44. In the same document for the information of the department of taxation the executors calculated Mrs. Teasdale's inheritance according to the terms of the will, stating that the gross value of the estate on January 13, 1936 (the day before the death) was $159,378.45. To this they added Mrs. Teasdale's interest in the jointly-owned properties and reached a figure of $164,529.80 for the total gross estate contemplated by Item 9-B of the will. This amount was not satisfactory to the state and federal taxation authorities who insisted on revaluations which brought the gross value to $186,933. The executors did not contest this figure.

Upon the settlement of the estate the residue was assigned to the three executors as trustees in accordance with the terms of the will. They prepared and filed an inventory with values assigned to each item of property as of November 16, 1939. The corporate stocks were given the same values which were given them by the appraisers of the estate in 1936. The real estate was given somewhat higher values than it had originally, incorporating the increases which the tax people insisted on.

In 1950, when the time of compulsory distribution of the trust estate was nearly at hand, the trustees, who were now Mrs. Teasdale, Mr. Morrill and Mrs. Morrill, considered it advisable to make a determination, as trustees, of the gross cash value of the estate on the day preceding Mr. Teasdale's death so that the cash payment provided by clause 'B' of the will to Mrs. Teasdale might be determined. Disregarding the sum of $164,529.80 which they had used when, as executors they calculated this legacy and reported to the department of taxation the gross market value of the estate on the day preceding Mr. Teasdale's death, they now reported the cash value as of that date, was $327,828.57. This revision gave Mrs. Teasdale a one-half instead of a one-third interest in a large part of the distributable trust estate at the expense of the other residuary legatees, the respondents. This is one of the items to which such residuary legatees objected. The county court found that in determining the gross cash value of the estate to be $327,828.57 the trustees acted arbitrarily, in bad faith, and beyond the bounds of a reasonable judgment, and found that they had previously determined that value to be $186,933. The higher figure was set aside and judgment was entered repeating the charge of bad faith and declaring that the trustees had determined $186,933 to be the gross cash value as of the date of death and adjudging that sum to be in fact its value on the day prior to the death. The trustees have appealed from this part of the judgment.

A large part of the estate consisted of capital stock of the Monroe County Telephone Co. Mr. Teasdale owned 97% of all the stock outstanding and his trustees, voting that stock, elected themselves directors and officers of the company and fixed their own salaries. While Howard Teasdale was a trustee he was manager of the telephone company. After he was replaced as trustee another manager was hired and the trustees exercised supervisory control. The present trustees voted compensation to themselves over the fifteen year period amounting to $84,383. Objection was made to this and the court found $37,500 would have been reasonable and fair compensation for the services of all trustees, including Howard Teasdale, as officers of the telephone company, apportioned that amount among them according to length of service, and the judgment ordered those other than Howard to refund the excess $46,883 to the trust estate. The present trustees have appealed from this part of the judgment.

The trustees requested trustees' fees of $25,000 for the eleven years during which they have administered the trust estate. The county court allowed $12,000. They appeal from this.

Other material facts will be stated in the opinion.

Aberg, Bell, Blake & Conrad and Charles P. Seibold, all of Madison, Rice, Rice & Rice, Sparta, for appellants.

Donovan, Gleiss, Goodman, Breitenfield & Gleiss, Sparta, for Howard Teasdale and Joseph Teasdale.

Winton & Winton, Shell Lake, for Loretta Teasdale.

BROWN, Justice.

Findings of fact by the trial court will not be set aside unless they are contrary to the great weight and clear preponderance of the evidence. Swazee v. Lee, 1951, 259 Wis. 136, 47 N.W.2d 733; In re Estate of Witwer, 1948, 253 Wis. 536, 34 N.W.2d 671. The court found that in fixing the gross cash value of the estate at $327,828.57 the trustees acted arbitrarily and disregarded the testator's plainly expressed intention to determine the gross cash value on the day prior to death; that they acted so unreasonably that they are found to have acted in bad faith; and that they had in fact already determined that such value was $186,933 as of the date of death and found that such sum was the value of the gross estate on the day preceding death.

The appellant trustees submit that the will provided the determination of value by the trustees shall not be open to review but shall be final and conclusive, and therefore the court must observe the prohibition. In re Estate of Wells, 1914, 156 Wis. 294, 144 N.W. 174, the will made the determination of executors and trustees 'final' upon certain apportionments. We said that words could go no further in the effort to place absolute discretionary powers in the hands of his executors in this regard. And we then said, 156 Wis. at page 306, 144 N.W. at page 178, '* * * In the absence of bad faith, fraud, or mere arbitrary action * * * ...