Whinery v. Hammond Trust and Savings Bank

• Court: Indiana Appellate Court
• Writing for the Court: DAUSMAN, J.
• Citation: Whinery v. Hammond Trust and Savings Bank, 80 Ind.App. 282, 140 N.E. 451 (Ind. App. 1923)
• Decision Date: 28 June 1923
• Docket Number: 11,479
• Parties: WHINERY v. HAMMOND TRUST AND SAVINGS BANK, TRUSTEE, ET AL

140 N.E. 451

80 Ind.App. 282

WHINERY v. HAMMOND TRUST AND SAVINGS BANK, TRUSTEE, ET AL

No. 11,479

Court of Appeals of Indiana

June 28, 1923

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 ten years as tenant is void; that the lease contains a further provision which gives Bunnell an...