Wehrhane v. Peyton .

• Decision Date: 27 March 1947
• Citation: 52 A.2d 711,133 Conn. 478
• Court: Connecticut Supreme Court
• Parties: WEHRHANE et al. v. PEYTON (two cases).

133 Conn. 478

52 A.2d 711

WEHRHANE et al.

v.PEYTON (two cases).

Supreme Court of Errors of Connecticut.

March 27, 1947.

COPYRIGHT MATERIAL OMITTED.

Appeal from Superior Court, Fairfield County; O'Sullivan, Judge.

Final account by Henry H. Wehrhane and another as executors of the estate of William C. Peyton to which Anne duPont Peyton filed objections and on the death of the objectant Bernard Peyton, as executor of her estate, was substituted as a party. Appeals by the executors in representative and individual capacities from a decree of the Court of Probate for the district of Greenwich partially disallowing the account, were dismissed by the Superior Court, O'Sullivan, J., and the executors, etc., appeal.

Error and new trial ordered.

Raymond E. Hackett, of Stamford, and William G. Chambers and Archibald H. Cashion, both of New York City, for appellants.

Philo C. Calhoun, of Bridgeport, and Otis T. Bradley and Alfred W. Haywood, both of New York City, for appellee.

Before MALTBIE, C. J., and BROWN, JENNINGS, ELLS and DICKENSON, JJ.

MALTBIE, Chief Justice.

These cases are appeals taken by the executors under the will of William C. Peyton and by the same persons individually from the refusal of the Probate Court of the district of Greenwich to approve their final account as executors. By stipulation of the parties the only issue presented to the trial court was the correctness of a ruling of the Probate Court that certain dividends received by the executors upon stock forming a part of the estate were payable to the testator's widow as life tenant and not to the executors as individuals to whom in the latter capacity the property was given at her death. See Peyton v. Wehrhane, 125 Conn. 420, 435, 6 A.2d 313. The trial court sustained the ruling of the Probate Court and the executors as such and as individuals have appealed to this court. The widow died during the pendency of this action and her executor was substituted as a party, but we shall speak of the interest she had as that of the life tenant.

The testator died April 4, 1936, leaving a will dated October 29, 1934. A part of the residue of his estate consisted of 20,000 shares of Peyton-duPont, Inc., a Delaware corporation, to which we shall refer as the Peyton corporation, and notes aggregating about $100,000 executed by the corporation and payable to him. In 1937 the executors accepted 1,527 shares of stock of the corporation in satisfaction of these notes. Between the time of Mr. Peyton's death and the dissolution of the corporation in 1941, the executors received as dividends upon its stock an aggregate amount of $571,178.71; of this sum they allocated $156,313.98 to the life tenant and $414,864.73 to themselves as remaindermen. The issue before us arises out of the decision of the Probate Court, sustained by the Superior Court, that the latter sum also represented income to which the life tenant was entitled.

The trial court has made the exhibits offered at the trial a part of the finding. They include the principal account books of the Peyton corporation, the minutes of the meetings of its board of directors, and a financial statement of a corporation the assets of which were taken over by the Peyton corporation in the process of the reorganization hereinafter described. We shall use them to explain and supplement the finding and in testing certain statements in it assigned as error.

In 1931 there were in existence two corporations in which the testator was interested and in which he owned stock, the Standard Stoker Company and the Peyton-duPont Securities Company. The assets of the securities company consisted of its ownership of a majority of the outstanding stock of the stoker company and interests in various other properties. In 1931 the Peyton corporation was organized under the laws of Delaware and a series of transactions occurred of which, for our purposes, it is only necessary to note certain results. All of the assets of the securities company except the stock in the stoker company were transferred to the Peyton corporation, which assumed all the liabilities of the former; and by agreement with the stockholders of the securities company they delivered 11,900 shares of its stock to the Peyton corporation and received in exchange an equal number of shares of its stock. The authorized capital stock of the securities company was increased and the additional stock was issued in part to the Peyton corporation and to holders of stock in the stoker company in exchange for that stock; and, as a result, the Peyton corporation became the owner of almost one-half of the stock of the securities company, which owned all the stock of the stoker company. The testator and his wife owned enough of the stock of the Peyton corporation to control that company and, by reason of their and its ownership of stock in the securities company, to control the latter company also. In his will the testator provided for the organization by his executors of another corporation under a written agreement made by him with his wife, a copy of which was attached to the will, but after his death she refused to join in the plan. About seven months after he died, a further change in the corporations was made by which the entire assets of the stoker company were transferred to the securities company; the stoker company was dissolved; the name of the securities company was changed to the Standard Stoker Company; and it thereafter operated the business formerly carried on by the original stoker company. After that time the two corporations with which we are concerned were the second stoker company, which operated the stoker business, and the Peyton corporation, which owned stock in the stoker company, as well as certain other properties. Substantially all of the income of the Peyton corporation came of it through dividends it received from the stoker business.

If Mr. Peyton in his will expressed an intent as to the disposition of the dividends, that intent would control. Spooner v. Phillips, 62 Conn. 62, 65, 24 A. 524, 16 L.R.A. 461; 12 Fletcher, Corporations (Perm.Ed.) § 5391. The trial court based its decision upon a conclusion that the will read in the light of surrounding circumstances disclosed an intent that the securities company and the Peyton corporation were to be regarded as mere conduits through which the profits of the stoker business were to pass to the life tenant, except when the demands of reasonable business caution otherwise required, even though under ‘the conventions and rules of accountancy’ a depletion in the capital assets of the Peyton corporation might result. The construction of a will presents a question of law to be determined in the light of facts which are found by the trial court or are undisputed or indisputable. Spurr's Appeal, 116 Conn. 108, 111, 163 A. 608.

The only relevant facts and circumstances presented on this record are as follows: For many years before Mr. Peyton's death the development of the stoker business had been the chief concern of his life and he had brought that business to a high state of efficiency. He was a principal party to the reorganization of the corporations in 1931 by which the securities company became owner of all the stock of the stoker company. He was president and a director of the Peyton corporation from its origin until he died. From the accounts with the various companies the management of its interests in which constituted the business of the Peyton corporation, it appears that, except as to the securities company, it was continuously making expenditures in connection with them and getting very little return, and the minutes of the meetings of the directors of the Peyton corporation at which Mr. Peyton was present show that the affairs of these companies were continuously under consideration. He knew that substantially all the income of the Peyton corporation came to it as dividends resulting from the profits of the stoker business, and he must have anticipated that this would continue to be so after his death. He disposed of the residue of his estate in a long article in which he provided, as already noted, for the organization of another corporation after his death which, had the plan been carried out, would have given his executors or trustees control of the stoker business. In that article he stated that he proposed to cause to be delivered to his wife before his death a letter in which he would make recommendations as to the way in which she should dispose of the income she would receive, and a letter to his executors in which he would make recommendations as to the disposal of principal and income after her death, and that, while these letters were not to be regarded as derogating from the respective powers of his widow or the executors over the interests given them, he had full confidence that they would carry out his desires. He gave as his reasons for the disposition he made of the residue that the members of his immediate family neither needed nor desired financial benefit from his estate and that he wished to leave the control and direction of the stoker business in the hands of those who had been associated with him in the development of that business, that is, the executors, thus showing his confidence in them and his appreciation of their co-operation.

We can see nothing in these facts taken by themselves which would afford a basis for an inference that Mr. Peyton, in disposing of the income and principal of the residue of his estate, intended to include in the income given to his widow any dividends of the Peyton corporation to which, under the application of established tests, the life tenant would not be entitled.

We cannot determine the rights of the parties upon a conclusion as to the actual intent which Mr. Peyton might have had but must look to the intent he has expressed in his will. Bronson v. Pinney, 130 Conn. 262, 268, 33 A.2d 322. In the first paragraph of the...