From
Lake Superior Court; Virgil S. Reiter, Judge.
Action
by William J. Whinery against the Hammond Trust and Savings
Bank, Trustee, and others. From the judgment rendered, the
former appeals.
Reversed with directions.
William
J. Whinery, for appellant.
C. B
Tinkham, for appellee.
In the
year, 1911, Walter H. Hammond and his wife Miami J. Hammond
executed a deed to the Hammond Savings and Trust Company (now
the Hammond Trust and Savings Bank) whereby they conveyed to
the grantee lots 30 and 31 in Columbian addition to the city
of Hammond, in trust for the use of the several beneficiaries
therein named. In December, 1920, the trustee filed in the
Lake Superior Court a complaint averring facts in substance
as follows:
"That
the plaintiff holds the legal title to the real estate for
the uses and purposes stated in the deed; that certain
ambiguities in the deed have heretofore been construed by the
court, but that there still remain certain clauses of
doubtful and ambiguous meaning; that there are at least two
clauses which seem to conflict, viz.: the eighth and the
eleventh; that clause eight gives the trustee the undoubted
right to sell the real estate upon the consent of certain
persons therein named; that clause eleven in terms denies the
trustee's right to sell the real estate, and therefore
the trustee is in doubt as to its power under the deed with
reference to the sale of the real estate.
"That
the twelfth clause of the deed makes it the duty of the
trustee to create a special fund by setting aside a portion
of the income from the real estate, which fund is to be used
first for the payment of taxes, special assessments
insurance, repairs, and other incidental expenses on two
other certain lots in the city of Hammond; that the remainder
of the special fund shall be held inviolate until the final
distribution of the trust estate, except that the trustee
from time to time may distribute to the beneficiaries any
excess thereof. That the trustee is in doubt whether the
provision with respect to the duty of the trustee to pay the
taxes, etc., on the other lots would remain a charge against
the trust estate if the trust estate should be sold by the
trustee, or whether that charge, in the event of the sale of
the trust estate, would be transferred to the fund derived
from the sale; that, if the charge should continue against
the real property now held in trust after sale thereof, it
would be a serious handicap to the sale; that the trustee
believes that it would be to the interest of the
beneficiaries if that charge would be transferred from the
real estate held in trust to the proceeds of the sale
thereof, provided a sale is duly authorized and consummated.
"That
on May 19, 1917, the trustee leased the real estate which it
holds in trust, consisting of two lots with a three-story
brick building thereon, to one Eben N. Bunnell, for a term of
twelve years from June 1, 1917, for a rental of $ 250 per
month to June 1, 1919, and $ 300 per month thereafter until
the expiration of the lease; that the lease grants an option
to the lessee of extending the lease for a further period of
ten years at a rental of $ 325 per month; that by the terms
of the lease the trustee is required to pay all taxes and
assessments against the property, to keep the building
insured, and to keep the fire escapes, the roof, and the
plate glass windows in repair; and that the expense and
charges which the trustee is thus required to pay, absorb a
large portion of the rent received.
That
there are two mortgages on the trust property, which secure
an indebtedness amounting in the aggregate to $ 19,500; that
the income from the trust property, after deducting the
charges and expenses and interest which the trustee is
compelled to pay, is not sufficient to discharge the mortgage
indebtedness or any part thereof; that unless the mortgages
are renewed or paid they will be foreclosed; that the
plaintiff is unable to pay any part of the principal of the
mortgage indebtedness unless the trust property is sold, and
that until it is sold the mortgages must be renewed from time
to time, and that quite a large expense attaches to each
renewal or is occasioned by the procurement of other loans
with which to pay the existing mortgages.
"That
the trustee believes that it would be for the best interest
of the beneficiaries of the trust to sell the trust property
that Eben N. Bunnell, the lessee of the property, has offered
to purchase the real estate at and for the price of $ 38,500
in cash; that the trustee believes that sum to be as large
if not larger, than it could procure from any other person;
and that the trustee believes that, in these circumstances, a
sale for the sum offered by Bunnell would be advantageous to
all interested parties.
"That
the trustee is now, and since the date of the trust deed has
been, administering the trust in accordance with the terms of
the deed; that it has had full and complete control of the
trust estate, has collected all rents and paid taxes and
other expenses, including interest on loans, as in its
discretion were proper to be paid; that it has turned over to
Louis M. Heintz, who is still living, the net proceeds of the
estate; that it has not now, nor has it any prospect of
having, sufficient money to pay the indebtedness against the
trust property; that, unless paid, the mortgagees will no
doubt foreclose their mortgages, in which event the objects
and purposes of the trust will be defeated, the corpus of the
trust estate will pass out of the hands of this trustee, and
the beneficiaries will thereby lose any and all interest they
may have therein; that on such account and for the reasons
hereinbefore stated, the trustee believes that it would be
for the best interest of all concerned to sell the trust
estate at the price offered by Eben N. Bunnell, or to such
other person as may offer a reasonable price therefor; that
unless a sale is made the indebtedness and liens against the
premises will continue to accumulate to the great injury of
the interested parties; that Louis M. Heintz who is named in
the eighth clause of the deed now expresses his willingness
to file herein his consent to the sale of the real estate.
"That
Laura Gould Rief is the mother of Lew F. Heintz; that Lew F.
Heintz is now eleven years of age, resides with his mother in
the city of Chicago, and is made a party to answer to his
interest."
The
prayer of the complaint is as follows: "That the trust
deed be so construed as to give the trustee power and
authority to sell the trust estate thereunder; that an order
be entered authorizing the trustee to make such sale free
from liens; that the trustee be authorized to pay the
mortgage indebtedness out of the proceeds of the sale; that
the trustee be authorized to continue as trustee under the
terms of the deed and to hold the balance of the fund for the
uses and purposes named in the deed; that the charge created
against the trust fund by the twelfth clause of the deed be
transferred to the net proceeds of the sale and that the
trust property be sold free from any lien on that account;
and for all other proper relief. "
Frederick
L. Heintz filed his consent to the sale of the trust
property; Laura Gould Rief filed answer; William J. Whinery,
a member of the bar, was appointed guardian ad litem for the
child, Lew F. Heintz; all other defendants were defaulted.
The
guardian ad litem filed an answer in two paragraphs, the
first being the general denial. A demurrer was sustained to
his amended second paragraph of answer and thereupon the
guardian ad litem prepared and filed a pleading denominated
"cross-complaint" in which the infant defendant
appeared as cross-complainant by his mother as next friend.
The
so-called cross-complaint contains the following averments:
"That
the trustee has no power to sell the trust property without
first procuring from the court an order of sale; that a sale
can lawfully be made only by complying with the statute
governing sales of trust property (§ 4032 Burns 1914)
that in construing the portions of the trust deed which the
plaintiff asks to have construed, the entire deed should be
considered and every clause and sentence thereof should be
given its true legal effect; that the true meaning and intent
of the deed is that the property shall not be sold so long as
any one of the following persons is living, viz.: Louis M.
Heintz, Johanna Heintz, Frederick L. Heintz, Laura Gould
Rief; that the three last named persons are now living; that
the true meaning of the deed is that the trust property shall
be preserved intact for the infant defendant; that by the
terms of the deed it is provided that the trust property
shall become the property of the infant defendant upon the
death of the four persons above named; that after the death
of said four persons the trustee can retain control of the
property until the infant defendant reaches the age of
twenty-one years, and no longer; and that the infant now has
a vested interest in the property.
"That
the option in the lease which gives Bunnell the right to a
further period of...
