Woodard v. Mordecai

• Decision Date: 21 November 1951
• Docket Number: No. 456,456
• Citation: 67 S.E.2d 639,234 N.C. 463
• Court: North Carolina Supreme Court
• Parties: WOODARD et al. v. MORDECAI et al.

Page 639

67 S.E.2d 639

234 N.C. 463

WOODARD et al. v. MORDECAI et al.

No. 456

Supreme Court of North Carolina.

Nov. 21, 1951

Bunn & Arendell and Harris & Poe, Raleigh, and Taylor & Allen, Goldsboro, for plaintiffs, appellants.

Fuller, Reade, Umstead & Fuller, Durham, for defendant, W. G. Mordecai, cotrustee, appellee.

Brassfield & Maupin, Raleigh, for defendant, Moses W. Woodard, Jr., appellee.

T. Lacy Williams, Raleigh, for defendants, Moses W. Woodard III, Mary White Woodard McDonald, and Nancy Elizabeth Woodard, appellees.

ERVIN, Justice.

The plaintiffs make these assertions by their assignments of error:

1. That the judge did not observe the provisions of G.S. § 1-185, specifying that 'Upon trial of an issue of fact by the court, its decision shall be given in writing, and shall contain a statement of the facts found, and the conclusions of law separately.'

2. That the judge committed prejudicial error in admitting certain testimony tendered by the defendants.

These objections will be considered in their numerical order.

The contention of the plaintiffs that the judge did not comply with G.S. § 1-185 is epitomized in their brief in this fashion: 'An examination of the judgment fails to disclose any separate finding of facts, or any finding of material facts.'

This contention presents these problems: (1) What does G.S. § 1-185 require of the judge? (2) What are the material facts in this litigation? The first problem necessitates a construction of the statute; and the second involves a consideration of the rules under which courts require trustees to exercise powers granted by trust instruments.

Where a jury trial is waived by the parties to a civil action, the judge who tries the case is required by G.S. § 1-185 to do three things in writing: (1) To find the facts on all issues of fact joined on the pleadings; (2) to declare the conclusions of law arising upon the facts found; and (3) to enter judgment accordingly. Dailey v. Washington Nat. Insurance Co., 208 N.C. 817, 182 S.E. 332; Shore v. Norfolk Nat. Bank, 207 N.C. 798, 178 S.E. 572. In addition, he must state his findings of fact and conclusions of law separately. Foushee v. Pattershall, 67 N.C. 453. The judge complies with this last requirement if he separates the findings and the conclusions in such a manner as to render them distinguishable, no matter how the separation is effected. 64 C.J., Trial, § 1091.

There are two kinds of facts: Ultimate facts, and evidentiary facts. Ultimate facts are the final facts required to establish the plaintiff's cause of action or the defendant's defense; and evidentiary facts are those subsidiary facts required to prove the ultimate facts. Long v. Love, 230 N.C. 535, 53 S.E.2d 661; Brown v. Hall, 226 N.C. 732, 40 S.E.2d 412; Hawkins v. Moss, 222 N.C. 95, 21 S.E.2d 873. G.S. § 1-185 requires the trial judge to find and state the ultimate facts only. Eley v. Atlantic Coast Line R. R., 165 N.C. 78, 80 S.E. 1064; Bloss v. Rahilly, 16 Cal.2d 70, 104 P.2d 1049; McCarty v. Sauer, 64 Idaho 748, 136 P.2d 742; Blake v. Gunderson, 46 S.D. 642, 195 N.W. 653; Sandall v. Hoskins, 104 Utah 50, 137 P.2d 819; Gerue v. Medford Bridge Co., 205 Wis. 68, 236 N.W. 528; 64 C.J., Trial, § 1099.

The powers of a trustee are either mandatory or discretionary. A power is mandatory when it authorizes and commands the trustee to perform some positive act. Brummett v. Hewes, 311 Mass. 142, 40 N.E.2d 251; In re Carr's Estate, 176 Misc. 571, 28 N.Y.S.2d 12, 15. A power is discretionary when the trustee may either exercise it or refrain from exercising it, Welch v. Wachovin Bank & Trust Co., 226 N.C. 357, 38 S.E.2d 197, Bennett v. Norton, 171 Pa. 221, 32 A. 1112; or when the time, or manner, or extent of its exercise is left to his discretion. Doe ex dem. Gosson v. Ladd, 77 Ala. 223; City of San Antonio v. Zogheib, Tex.Civ.App., 70 S.W.2d 333.

The court will always compel the trustee to exercise a mandatory power. Albright v. Albright, 91 N.C. 220. It is otherwise, however, with respect to a discretionary power. The court will not undertake to control the trustee with respect to the exercise of a discretionary power, except to prevent an abuse by him of his discretion. The trustee abuses his discretion in exercising or failing to exercise a discretionary power if he acts dishonestly, or if he acts with an improper even though not a dishonest motive, or if he fails to use his judgment, or if he acts beyond the bounds of a reasonable judgment. The American Law Institute's Restatement of the Law of Trusts, section 187; Carter v. Young, 193 N.C. 678, 137 S.E. 875; 65 C.J., Trusts, § 539.

The will expressly authorizes the successor trustees to exercise all the powers conferred by it upon the original trustees. The power to convey parts of the trust corpus to the widow and children of the testator free from the trust is clearly discretionary. The trustees are permitted to make such conveyances, but they are not required to do so. The plaintiffs recognize the discretionary nature of the power. They predicate their causes of action on the theory that the court must compel the individual trustee to join the corporate trustee in conveying parts of the trust corpus to them free from the trust to prevent an abuse by the individual trustee of the discretion reposed in him. Properly interpreted, their complaints allege that in refusing to exercise his discretionary power in their favor the individual trustee abuses his discretion in these respects: (1) That he acts with an improper motive, to wit, prejudice; and (2) that he fails to use his judgment, i. e., he bases his refusal upon an arbitrary decision or whim rather than upon a consideration of the relevant circumstances.

When his written decision is read aright, it appears that the trial judge found and stated these things: (1) That the individual trustee has not abused his discretion or acted arbitrarily in respect to the matters mentioned in the complaints, but, on the contrary, has 'acted * * * with discretion, reasonableness, and good judgment'; (2) that the conclusion reached by the individual trustee, on his disagreement with the corporate trustee, i. e., that the trustees ought not to convey one-third of the trust corpus to each of the plaintiffs at this time, is 'the correct one * * * and is consistent with the intentions of the trustor, Moses W. Woodard'; and (3) 'That it is not necessary nor best for the welfare of the plaintiffs nor either of them, nor to their best interest, nor consistent with the welfare of the family and the estate of the trustor, Moses W. Woodard, that a one-third part of the corpus of the * * * trust estate be * * * distributed to each of' the plaintiffs.

We are confronted at this point by the question whether these statements of the judge are ultimate facts or legal conclusions. Ultimate facts are those found in that vaguely defined area lying between evidential facts on the one side and conclusions of law on the other. Christmas v. Cowden, 44 N.M. 517, 105 P.2d 484; Scott v. Cismadi, 80 Ohio App. 39, 74 N.E.2d 563. In consequence, the line of demarcation between ultimate facts and legal conclusions is not easily drawn. 54 C.J., Trial, § 1151. An ultimate fact is the final resulting effect which is reached by processes of logical reasoning from the evidentiary facts. Rhode v. Bartholomew, 94 Cal.App.2d 272, 210 P.2d 768; Citizens Securities & Investment Co. v. Dennis, 236 Ill.App. 307; Mining Securities Co. v. Wall, 99 Mont. 596, 45 P.2d 302; Christmas v. Cowden, supra; Oregon Home Builders v. Montgomery Inv. Co., 94 Or. 349, 184 P. 487. Whether a statement is an ultimate fact or a conclusion of law depends upon whether it is reached by natural reasoning or by an application of fixed rules of law. Maltz v. Jackoway-Katz Cap. Co., 336 Mo. 1000, 82 S.E.2d 909; Tesch v. Industrial Commission, 200 Wis. 616, 229 N.W. 194.

When the statements of the judge are measured by this test, it is manifest that they constitute findings of ultimate facts, i. e., the final facts on which the rights of the parties are to be legally determined. They settle all the material issues of fact raised by the pleadings. In addition, they warrant the readily distinguishable conclusion of law 'that the plaintiffs do not have the right to require a division of the corpus of the trust estate * * * as requested and demanded by them,' and the judgment denying the plaintiffs the relief sought by them. These things being true, the judge complied with all the...