Weidlich v. Comley
| Decision Date | 29 May 1959 |
| Docket Number | Docket 25045.,No. 291,291 |
| Citation | 267 F.2d 133 |
| Parties | Clifton F. WEIDLICH, Appellant, v. Arthur M. COMLEY, Appellee. |
| Court | U.S. Court of Appeals — Second Circuit |
Clifton F. Weidlich, New York City, pro se.
Frederick L. Comley, Bridgeport, Conn., for appellee.
Before HAND and LUMBARD, Circuit Judges, and ANDERSON, District Judge.
This is an appeal from a judgment of the District of Connecticut (Smith, J. presiding) approving the accounts filed by the defendant, as trustee for seven shareholders of a dissolved Connecticut corporation, in an action brought by the assignee of one of the shareholders. The seven shareholders of the corporation, Weidlich Bros. Mfg. Co., had decided to wind up its business, and three of them to wind up the business of a partnership that they had been conducting separately. For tax purposes the seven shareholders decided to keep a part of the corporate assets in the corporation and to distribute the remaining assets among themselves. The corporate assets so distributed they in turn transferred to Comley, the defendant, as trustee, to sell. The three partners also dissolved the partnership, naming one of the three as liquidator, whom they authorized to appoint Comley as his agent. Comley took charge of the corporate and firm assets in 1950, and proceeded to liquidate both. The plaintiff who, as we have said, is the assignee of one of the shareholders — also a partner — brought this action against Comley, as trustee for the shareholders and as agent of the partners, charging him with mismanagement; largely because he disposed of the assets piecemeal instead of in bulk. The defendants other than Comley were charged as parties to his mismanagement.
The action came on for trial before Judge Smith, who granted judgment in 1952 disposing of a number of contentions that had arisen, and in addition deciding "all of the issues between the plaintiff and the defendant, Arthur M. Comley individually * * * in favor of said defendant." The fourth paragraph of the judgment directed the defendant to distribute the assets "of said trust * * * in accordance with the terms and provisions of said trust agreement and thereupon render to the beneficiaries of said trust a final accounting," and it is from the order approving the account so filed that this appeal arises.
The plaintiff's first point is that Judge Smith did not retain jurisdiction, supplementary to his original judgment, to pass on the account. However, since it was the plaintiff who challenged the propriety of the defendant's conduct as trustee, it would be strange if the court who had been asked to pass on the controversy did not have power finally to decide the issues it involved. Indeed, it is not necessary to depend upon that circumstance, for a "trustee is entitled to have the accounts of his administration of the trust examined and settled by the court." Restatement of Trusts § 260. One of the chief sources of equity jurisdiction was the supervision of trusts, themselves the creation of the court of chancery. We can understand that in an action brought by a trustee to have his account passed it might be thought a valid objection that he had not joined all the beneficiaries; but in the case at bar that is not the situation. It is the plaintiff, as beneficiary, who is seeking to charge the trustee for his malfeasance. He brought his action for himself alone, and, as the defendant does not object, it is impossible to understand on what theory the plaintiff can complain that the decision will not extend beyond those whom he has himself selected as his target.
Coming then to the merits of the dispute, the plaintiff's first complaint is the allowance to the defendant out of the trust assets of his expenses in defending himself in the action. The argument is that these expenses were incurred in the defendant's individual interest, and may not be charged against the trust. That completely misses the true situation: a trustee was appointed to administer the assets; the settlor selected him to do...
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