Wood v. Honeyman

• Decision Date: 30 April 1946
• Citation: 169 P.2d 131,178 Or. 484
• Parties: WOOD et al. v. HONEYMAN et al.
• Court: Oregon Supreme Court

169 P.2d 131

178 Or. 484

WOOD et al. v. HONEYMAN et al.

Supreme Court of Oregon

April 30, 1946

Appeal from Circuit Court, Multnomah County; Robert Tucker, Judge.

Suit by Charles Erskine Scott Wood and others against David T Honeyman to remove the defendant from office of trustee, for an accounting of two trusts, and to recover amounts converted, wherein Nan Wood Honeyman and another were made parties defendant and wherein Elisa Wood Smith and others were made parties plaintiff. From a decree removing defendant David T. Honeyman from office of trustee and entering money judgment against him, David T. Honeyman and Nan Wood Honeyman appeal.

Affirmed.

See also 169 P.2d 168.

Elton Watkins, of Portland, for appellants.

George Mowry and Erskine Wood, both of Portland (John Mowry, of Portland, on the brief), for respondents.

Before BELT, C.J., and ROSSMAN, BAILEY, BRAND, and HAY, JJ.

ROSSMAN Justice.

This is an appeal by David T. Honeyman and Nan Wood Honeyman, husband and wife, two of the three defendants, from a decree which held that the defendant, David T. Honeyman, wrongfully breached the terms of two trusts which were created by Colonel C. E. S. Wood, one of the plaintiffs. One of the trusts was created April 15, 1918, and the other March 1 1923. The defendant, David T. Honeyman, to whom we shall refer as the defendant, became the trustee of one of these trusts in November, 1921, and of the other at the time of its creation, March 1, 1923. The decree found that the defendant failed to account for and converted to his own use the sum of $107,859.54, assets of the one trust, and $730.63, assets of the other, both of which sums came into his hands in his capacity as trustee. The decree removed the defendant from his office of trustee of each of the trusts and entered judgment against him for the sums of money just mentioned. After finding that he had wrongfully converted to his own use assets of the trusts, it denied the defendant compensation for his services as trustee.

No decree of any kind was awarded against the defendant, Nan Wood Honeyman. No one charged her with any wrong whatever. Although the joint answer filed by her and her husband did not ask for the relief which was awarded, the decree says:

'The said defendant, Nan Wood Honeyman, is entitled to have and recover of and from said defendant, David T. Honeyman, the remaining one-fifth of said sum of $91,659.54.'

That provision, which is criticized by no one, will be explained later in this opinion. We have mentioned two of the defendants. The third was James McI. Wood, a brother of Colonel Wood. No one claims that he had done any wrong. Concerning him the decree says:

'Although he duly and regularly entered his appearance as a defendant in the above-entitled suit, he has not alleged or asserted herein any claim whatsoever to or upon any of the funds or property which are the subject and/or subjects of said suit.'

No relief was awarded against him and he is immaterial to this appeal.

As already indicated, two trust funds are the subject matter of this suit. Each constituted a gift of Colonel C. E. S. Wood, an outstanding member of the Oregon bar until 1918, when he retired from the practice of law and moved to California. The one trust is identified by the parties as the Wood Trust and the other as the Educational Trust.

The trust res of the Wood Trust was a fund of $172,412.80. The trust instrument which created that trust was signed by Colonel Wood April 15, 1918, and provided that the income produced by the fund should be paid to Colonel Wood's wife, Nanny Moale Wood, during her lifetime, and that upon her death the fund should be distributed among the five children of Colonel and Mrs. Wood and to any children of any child who might die prior to distribution. The rest of the Educational Trust was a fund of $15,000 which was provided by Colonel Wood. The trust instrument which created that trust was signed March 1, 1923, by Colonel Wood and all of the beneficiaries of his bounty, with the exception of his wife and one of his sons, William Maxwell, who died November 4, 1921. The beneficiaries of the Educational Trust were the three sons of William Maxwell, who were then eight, five and three years of age. A desire to make provision, in part at least, for their education was the circumstance which prompted the creation of the Educational Trust.

Colonel Wood's wife, Nanny Moale Wood, died December 18, 1933. Their children were Nan, Elisa, Erskine, Berwick Bruce and William Maxwell. Nan is the wife of the defendant, and Elisa is the wife of one Kirkham Smith. William Maxwell died in November, 1921, and we shall refer to him as William Maxwell, Sr., so as to distinguish him from one of his three sons who was named in his honor. The ages of the three boys of William Maxwell at the time of their father's death were seven, four and two years. Those three grandsons of Colonel Wood, together with their grandfather, as plaintiffs, instituted this suit.

When this suit was filed the plaintiffs were the four persons whom we have just mentioned: The creator and three of the beneficiaries of the two trusts. During the course of the trial the aforementioned Elisa, Erskine and Berwick Bruce became plaintiffs. When the complaint was filed the aforementioned David T. Honeyman was the sole defendant. At the conclusion of the taking of the evidence the trial judge, acting upon his own motion, entered an order requiring the aforementioned Nan Wood Honeyman and James McI. Wood to be made defendants. The plaintiffs complied with the order and at the same time made appropriate amendments to the complaint. The purpose was to render possible a complete adjudication of title to the trust funds.

There are nine assignments of error. The first two attack the legality of the summons. The third claims that the 'court never acquired jurisdiction as all beneficiaries of trusts were not made parties to suit.' The fourth is: 'Court is powerless to authorize amendments to Complaint after trial nor can it bring in new parties without issuing alias summons and Amended Complaint, giving such new party usual time allowed by statute to original parties in which to answer.' The fifth says that the complaint does not state a cause of suit. The sixth, which pertains to the construction of the trust instrument, thus expresses itself: 'The intention of the creator of the trust must prevail.' The seventh invokes a defense of laches. The eighth claims it was error 'to remove the trustee summarily and give judgment against him and subject his property to sale upon execution and order execution thereon without at least giving him reasonable opportunity to comply with the orders of the court, and try to save his property from sale on execution.' The ninth, being the last assignment of error, follows: 'It was error to enter the decrees as rendered in these two suits in the forms as entered and for the relief granted. The intent of Trustor is supreme and the sole guide.' Before considering the assignments of error we shall state matters which constitute some of their background. The Wood Trust was created by the assignment to William Maxwell, Sr., by Colonel Wood of one-sixth of a large fee due to Colonel Wood from Lazard Freres, of France, whose agent in the United States was a Mr. Charles Altschul. The assignment was accompanied by a letter, signed by Colonel Wood and addressed to the trustee, which outlined the latter's duties. From the letter we quote the following parts:

'* * * This assignment is made to you, and any sums by you received under it shall be received and held by you, upon the following trust and conditions:

'First: The whole thereof, principal and interest, is for your mother's use and benefit during her lifetime upon the plan as hereinafter outlined, the details of which I reserve the right to modify during my lifetime, but I do not reserve any right to change or alter the general intention and condition, but this assignment is made irrevocably for your mother's use and benefit.

* * *

* * *

'Fourth: All moneys received by you under this assignment as principal, * * * you are to safely invest for your mother's use and benefit during her lifetime, paying over to her the net income therefrom at some reasonably certain and convenient intervals, for her own use and benefit, and if she shall save from this income any moneys and invest the same, even though gone through you, such shall be her own individual property.

'Fifth: At your mother's death this trust is to cease and you are authorized, though not directed, to make some provision, in case there is any necessity for so doing, to relieve the want of your mother's cousin Lucy Lanier, of Baltimore, and my brother, your Uncle Jim, during their respective lifetimes if such arrangement has not been made by your brother Erskine out of a certain trust-fund which I have this day vested in him and on which any provision for said Lucy Lanier or your Uncle Jim shall be a charge prior in obligation as between that trust and this one. All such moneys, properties or proceeds as you may have in your hands or under your control in this trust shall, at your mother's death, and after taking care of her cousin Lucy Lanier, and my brother, your Uncle Jim, as above provided in case it is necessary so to do, be divided among yourself and your brothers and sisters, as soon as conveniently may be, but not necessarily equally. What I aim at, and constitute you my agent or trustee to accomplish, is an equity in love and justice rather than mathematical equality between my children. Real equity between you children can, in my opinion, never be reached by an exact arithmetical equality. The needs of some of you will be unequal, your

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