Young v. Young

• Decision Date: 25 June 1931
• Docket Number: No. 147.,147.
• Citation: 237 N.W. 535,255 Mich. 173
• Parties: YOUNG et al. v. YOUNG et al.
• Court: Michigan Supreme Court

255 Mich. 173

237 N.W. 535

YOUNG et al.

v.YOUNG et al.

No. 147.

Supreme Court of Michigan.

June 25, 1931.

Appeal from Circuit Court, Kent County, in Chancery; William B. Brown, Judge.

Suit by Leland N. Young and another, trustees of the estate of Charles F. Young, deceased, against Mary R. Young and others, for the purpose of securing an order for the sale of trust premises. Order authorizing sale, and, from a subsequent order requiring the Iosco Land Company to complete purchase of property and pay balance of amount of bid, the purchaser appeals.

Appeal dismissed, and case remanded.

Argued before the Entire Bench.

Bernard J. Onen, of Battle Creek, for appellant.

Travis, Merrick, Johnson & McCobb, of Grand Rapids, for appellees.

BUTZEL, C. J.

Charles F. Young, of Grand Rapids, Mich., died testate on March 16, 1916, and, on the probating of his will, Leland N. Young of Grand Rapids, Mich., and Cornelius Gerber of Fremont, Mich., were appointed trustees of the estate. The will provided that the Michigan Trust Company of Grand Rapids should fill any vacancy in the trusteeship. The largest individual asset of the estate consisted of the Livingston Hotel property at the southeast corner of South Division avenue and Fulton street in the business district of Grand Rapids. Under the express provisions of the will, the trustees were directed to hold this particular piece of property intact for a period of ten years, unless the trust were sooner terminated by the death of both of testator's children, plaintiff Leland N. Young and his sister Mary R. Young, referred to also as Mary Young Chambers; that should either or both of the two children be living at the end of the ten years, they or their survivor should have a life estate in the property, but they were to hold the property intact, and, upon the death of their survivor, it was to go to their issue, or, if they had none, then to their legal heirs, in accordance with the laws of the state of Michigan. The life tenants were to receive the income, use, management, and control of the property in every way, with the exception of the power to sell or mortgage it. The hotel building on the property was insured for $50,000, approximately its full insurable value. On April 1, 1924, it was so badly damaged by fire that the trustees were obliged to raze the remaining walls at an expense of $4,540.82. The insurance moneys were insufficient to construct a new hotel or any other building that would yield even a fair return on the value of the land and a new building, if erected. The will forbade the mortgaging of the premises. The taxes and other charges against the property each year amount to over $3,000 a year, while the income, even before the fire, was small, and since then has become almost negligible.

On June 20, 1924, the trustees filed a bill of complaint setting forth the conditions with which they were confronted, and asked that the premises be sold at public auction, by and under the direction of the circuit court commissioner, and, that in the event that the sale be not confirmed, the court order a resale or authorize an approved lease of the premises for a term not exceeding 99 years, or the execution of a mortgage in order to provide funds with which to make improvements commensurate with the value of the land. The trustees further asked that the proceeds from the sale constitute a trust fund and take the place of the property, and be held subject to the orders and control of the court; that they continue to administer the trust fund, so created, until the termination of the ten-year term, when, in accordance with the will, the Michigan Trust Company be appointed successor to Mr. Gerber, who desired to withdraw as a cotrustee at the end of the ten years. They further asked that the moneys realized from the sale be invested in proper securities, subject to the approval of the court; that they be required to file a proper bond, annual accounts, etc., all to be approved by the court. The record indicates that all of the parties interested in the estate, either as devisees, legatees, heirs, or otherwise, including those who were actual heirs at that time, as well as those who might possibly become heirs, were made party defendants. Twenty-six of the adult heirs filed consents to the granting of the relief prayed for in the bill; five other adult heirs filed answers consenting to the relief prayed for, but asking that the proceeds be treated as real estate. A guardian ad litem for twenty-two minor heirs submitted their rights and interests to the protection of the court. Not a single defendant objected to the sale. On December 17, 1924, a decree was rendered, granting the relief prayed for in the bill, and, in accordance therewith, the property was duly advertised and offered for sale. It was sold for $105,000, but the same was disaffirmed. It was shown that the city commission of the city of Grand Rapids had instructed the building inspector not to issue any permits for building on the east side of South Division avenue, until the question of widening and improving said street was finally determined, and that the uncertainty arising out of these proceedings acted as a deterrent to prospective bidders. The order disaffirming the sale also contained a provision that the decree of December 17, 1924, be amended so as to provide that the rights of any persons who might thereafter become heirs of testator's children be barred by the sale of the property, but that their rights attach to the proceeds and that, in case a mortgage were executed, they be precluded from questioning its validity. On September 7, 1926, an order was entered appointing the Michigan Trust Company successor trustee to Mr. Gerber, and also as one of the parties plaintiff in the instant suit.

On September 26, 1930, Young and the Michigan Trust Company, trustees, filed a petiton showing that the widening of Division avenue had been completed; that a full settlement had been made for the 12-foot strip taken from the property. Stating that they believed that an advantageous bid could be obtained for the remainder of the property, they asked that it be put up for sale as provided in the previous order. Thereupon, an order to show cause, returnable on the 9th day of October, 1930, was issued, and, in accordance with its terms, a copy was served upon the defendants, or their duly authorized attorneys, either personally or by registered mail sent to the last-known address, at least ten days prior to the date of the hearing. On October 9, 1930, an order of sale was made in accordance with the prayer of the petition. After being duly advertised, the property was sold on December 1, 1930, to Iosco Land Company, sole appellant herein, for the sum of $125,000, but upon the condition that it be allowed a reasonable time, not to exceed ten days, within which to examine the title, and thus determine whether it was merchantable, and whether there were any incumbrances against the property; that if the title were found to be nonmerchantable, the $1,000 paid on account at the sale be returned to appellant, and it be released from its bid. On December 3, 1930, an order nisi confirming the sale was entered. On February 25, 1931, appellant Iosco Land Company filed a refusal to accept the deed that had been tendered. It claimed that the court could not legally give the trustees the power to sell that they lacked under the will. It further questioned the regularity of the proceedings. Thereupon, Leland N. Young and Michigan Trust Company, as trustees, filed a petition asking that the Iosco Land Company, appellant, be required to complete the purchase of the property and pay the balance of the amount bid. The petition set forth the proceedings in detail. It showed that in addition to the $50,000, the insurance moneys received by them, the trustees, after paying the assessment for street widening, realized the net sum of $41,686.34, through the condemnation proceedings by which South Division avenue was widened, and 12 feet taken from the property. It further showed that the income from the property was only $30 a month; that the taxes are very heavy, and that a large annual loss is incurred through the ownership of the property. The court granted this petition, ordering appellant to pay the balance of the purchase price. Plaintiff Leland N. Young and his sister, who are life tenants of the property, also filed a petition asking that they be joined as parties plaintiff, and offering to execute quitclaim deeds to the purchaser. The Iosco Land Company has appealed and raised objections that we shall discuss.

The first question presented is whether, when the will directs that the trustees and the life tenants shall not sell or mortgage property, but shall keep and hold it intact, a court of equity has jurisdiction and power to authorize a sale, when it appears that the building on the property has been destroyed by fire, the proceeds from the insurance are insufficient to rebuild, and the taxes and other charges each year are far in excess of the income. Frequently, through an over-abundance of caution, accompanied by a lack of foresight to provide for contingencies, the testator directs that his hand, though stilled by death, shall continue to conduct and control his property. When untoward and unforeseen conditions and exigencies arise, has a court of equity the inherent power to take into consideration, not only what would have been the wishes of the testator, but also what will safeguard the trust fund for the heirs? Under the circumstances presented in this case, may the court decree such changes as common sense and good reason dictate? A long line of cases has established the principle that, when such an unusual exigency arises in regard to the method of handling the property or the corpus of the trust fund, it is the right and duty of a court of equity to authorize such changes. Johns v. Montgomery, ...