May v. May - 167 U.S. 310 (1897)
U.S. Supreme Court
May v. May, 167 U.S. 310 (1897)
May v. May
Argued April 2, 5, 1897
Decided May 10, 1897
167 U.S. 310
The power of a court of equity to remove a trustee and to substitute another in his place is incidental to its paramount duty to see that trusts are properly executed, and may properly be exercised, whenever such a state of mutual ill feeling growing out of his behavior exists between him and his co-trustee or the beneficiaries that his continuance in office would be detrimental to the execution of the trust, even if for no other reason than that human infirmity would prevent them from working in harmony with him, and although charges of misconduct against him are either not made out or are greatly exaggerated.
A testator devised all his estate to his wife and a son, in trust to pay to the wife one-third of the income of the real estate for life, and one-third of the personal property absolutely; to divide the income of the other two thirds of the estate, after paying his debts and cancelling existing mortgages, among his children and their issue, and in certain circumstances to sell or mortgage the real estate, if necessary, the two trustees to exercise jointly all the powers conferred, except that the son should manage the real estate, collect the rents thereof, pay the taxes and other expenses thereon, and render monthly accounts to the wife, and gave the other children, "for good and sufficient cause," and with the widow's concurrence, power "by their unanimous resolution" to remove him from his office of trustee and to appoint another person in his stead.
Held that the other children, with the concurrence of the widow, had power to remove him, for what they determined to be good and sufficient cause, subject to the jurisdiction of a court of equity to restrain abuse of the power, and that his removal from the office of trustee terminated his authority to manage the real estate.
The filing of a bill by a trustee under a will to obtain the instructions of a court of equity in the execution of his trust does not suspend a power of removing him given to the beneficiaries by the will, but only subjects their action to the supervision and control of the court.
Upon a bill in equity by a trustee for instructions in the execution of his trust, the court will not decide questions depending upon future events and affecting the rights of parties not in being, and unnecessary to be decided for the present guidance of the trustee.
Under a will by which the testator devises and bequeaths all his estate in trust to pay to his widow one-third of the net annual income of the real estate during her life and one-third of the personal property absolutely, and to divide the income of the estate, with the exception of her thirds,
after paying his debts and cancelling existing mortgages, among his children, the widow is entitled to a third of the income of the real estate, deducting taxes, insurance and repairs, but without any deduction for interest on debts or mortgages.
This was an appeal from a decree of the Court of Appeals which affirmed a decree of the Supreme Court of the District of Columbia removing the appellant from the office of trustee under the will and codicil of his father, Dr. John Frederick May, of Washington, in the District of Columbia, who died there May 1, 1891, leaving a widow, Sarah Maria May, and six children, William and Frederick, and four daughters, all of age, a large estate, consisting mostly of real estate in the City of Washington, and a will and codicil, both of which were duly admitted to probate.
By the will, dated February 4, 1890, he devised and bequeathed all his estate, real and personal, to his wife and her heirs and assigns upon the following trusts: (1) that she should receive one-third of the net annual income of his real estate during her life, one-third of his personal property absolutely, and the use for her life of his dwelling house in Washington; (2) that his estate should be kept intact and undivided while any of his children lived, and the rents and profits, with the exception of his wife's thirds, be applied to the payment of his debts, and especially to the cancelling of any encumbrance or mortgage existing at the time of his death; and, after full payment and cancellation of such debts and encumbrances, be equally divided among his children; (3) that any part of the estate might be sold by the trustee if manifestly for the benefit of his heirs, and the proceeds reinvested in real estate or in mortgages of a particular kind, and that such parts of the estate as should at the time of his death be subject to mortgages might, upon the expiration of such mortgages, and if the trustee should be unable to pay or cancel them, be remortgaged; (4) that, upon the death of any child leaving issue, its share of the rents and profits should go to its issue. The testator also gave his wife "the power to appoint a trustee to succeed her should she deem it best at any time to do so," appointed her executrix of his will, and
directed that she should not be required to give bond as trustee or as executrix.
On December 17, 1890, the testator gave William May a power of attorney to lease or rent his real estate in the City of Washington, to recover possession of the same, and to collect the rents thereof.
The codicil was dated March 27, 1891, and, omitting the formal parts, was as follows:
"I hereby appoint my son, William May, co-trustee with my wife, Sarah Maria May, my said son and my wife to have and exercise the powers and authority in my said will mentioned and created, except as hereinafter otherwise directed. It is my further wish, and I hereby will and direct, that my said son, William May, shall take charge of my real estate (except my present dwelling house, which shall be and remain in the exclusive charge of my wife during her life), and care for and manage the same for the best interests of my said estate, and in accordance with the terms of my said will, and he shall collect the rents and income of my said real estate, and pay the lawful taxes and assessments and other expenses thereon, and shall keep the same in good repair. It is my will, and I so direct, that the taxes, insurance, and repairs of my said dwelling house shall be paid out of the general income of my other real estate."
"For the said service of my son, William May, in caring for and managing said estate, and for collecting the rents and paying the taxes and assessments, and other services, as hereinbefore directed, he shall and may retain from money so collected, as his compensation, a commission equal to five percentum of the amount of money by him collected from said estate, and the said William May shall render to my said wife full and true accounts of the rents by him collected, and of the disbursements by him made in the execution of this trust, such accounts to be rendered each and every month, and shall be accompanied by the vouchers for such disbursements. After the death of my wife, said accounts shall be rendered to my other heirs. It is my will that no commission shall be paid to my wife as a trustee. "
"I hereby further will and direct that, for good and sufficient cause, my other heirs, with the concurrence of my wife if she be living, shall have and they are hereby given the power, by their unanimous resolution, to remove my said son, William May, from his office as such trustee, and to appoint another person in his stead."
"It is my wish that neither of my said trustees shall be required to give a bond or other security in reference to the execution of the trusts created by my said will or this codicil."
On May 2, 1892, before the estate had been fully administered, William May, as "trustee of John Frederick May, deceased, and in his own right," filed in the Supreme Court of the District of Columbia a bill against his mother, brother, and sisters, to obtain the instructions of the court as to the execution of the trust, and especially upon the effect of the omission of the will to dispose of the principal of the estate after the termination of the trust, and upon the question whether the widow was entitled to a full third of the income without allowing for or deducting the interest upon outstanding mortgages.
On July 5, 1892, answers to the bill were filed in behalf of all the defendants, and on September 28, 1892, the plaintiff filed a general replication.
On November 25, 1892, an instrument was drawn up, purporting to be a "deed, declaration, and resolution made" by the four daughters and by Frederick May, and by the widow joining therein, as evidence of her concurrence, reciting the clause of the codicil authorizing the removal of William May from his office as trustee, and the appointment of another person in his stead, and further reciting that "good and sufficient cause exists for the exercise of such power of removal and substitution, for a number of reasons," some of which, without admitting it to be obligatory to state them, were stated to be that he had failed to render full and true accounts, as required by the codicil, that he had made excessive and improper charges against the estate, and that,
"by his intolerably domineering and disagreeable manner in discussing
the affairs of the trust with his co-trustee, displays of anger when questioned, and attempts to browbeat legitimate opposition and criticism, he has compelled said co-trustee to decline any direct communication with him upon business matters, and she is obliged to employ an expert accountant to examine and report upon the monthly accounts of said William May and act as her representative in relation to the affairs of the trust."
The instrument concluded with the statement that therefore the four daughters and Frederick May, with the concurrence of the widow,
"have unanimously resolved, and do hereby resolve, that said William May be, and he is hereby, removed from his office as trustee or co-trustee under the said codicil and the will of said John Frederick May, deceased, and further that they (the declarants aforesaid), by their unanimous resolution, have appointed and do hereby appoint William H. Dennis, of Washington, D.C., trustee in the stead of said William May, removed, to the fullest extent of the powers conferred by said first codicil."
This instrument was signed and sealed by the widow and the four daughters in person, and by the widow as attorney in fact of Frederick May, and was acknowledged before a notary public on November 26, 1892, by the widow and two of the daughters, and on December 3, 1892, by the other two daughters. The widow at that time held a power of attorney, executed July 2, 1891, by Frederick May, then residing at Valparaiso, in the Republic of Chili, appointing her his attorney "to do and perform any act or acts necessary to be done or performed to protect and care for" his interest in the estate of his father.
William H. Dennis, by writing upon the resolution of removal, accepted the appointment made and the trust conferred thereby, and on December 29, 1892, wrote and sent a letter to the plaintiff, enclosing a copy of the instrument, as well as a letter from the attorney of the defendants, requesting the plaintiff to turn over to Dennis the possession of all property of the testator in his possession or control, and all documents appertaining to the estate.
On January 3, 1893, the plaintiff filed a petition in the
cause alleging that the widow and daughters, in undertaking to remove him from the office of trustee and in making the resolution of removal, falsely and deceitfully pretended that the removal was for good and sufficient cause, and did not act with good faith, but from invidious motives; that they had no power to remove him pending this suit except upon application to the court, and that the signature of Frederick May by the widow, as his attorney, was nugatory and of no effect, specifically denying all the allegations of the resolution of removal, and praying for an injunction against the defendants and Dennis from claiming any right or doing any act under that resolution. On January 7, 1893, upon the plaintiff's motion, Dennis was made a party defendant to the suit, and on January 24, 1893, a temporary injunction was granted as prayed for.
On March 7, 1893, the defendants, by leave given January 21, 1893, filed a cross-bill praying that the plaintiff be decreed to surrender possession of the real estate and all moneys and documents in his charge as co-trustee to Dennis, as his successor, and to settle his final account.
Frederick May, on May 8, 1893, executed and acknowledged before a notary public in the City of Washington a deed ratifying, approving, and confirming the acts of the widow in voting for and executing in his behalf the resolution of removal, and also the filing of the prior answer and cross-bill in his behalf, and on June 6, 1893, personally appeared in the cause, and, by leave of court, filed a supplemental answer to the like effect.
After the filing of an answer to the cross-bill, and a general replication to that answer and other motions and pleadings not material to be stated, much evidence was taken (the substance of which is stated in the opinion of this Court), and the case was heard upon pleadings and proofs before the Supreme Court of the District of Columbia, and that court, on July 31, 1894, entered a final decree by which the injunction granted on the plaintiff's petition was dissolved.
"And it appearing to the court that the heirs of John Frederick May, deceased, other than said William May, with the concurrence of Sarah
Maria May, widow of said deceased testator, proceeded rightfully and within the power conferred by the first codicil to the will of said testator in removing, by their unanimous resolution dated November 25, 1892, for good and sufficient cause, said William May from his office as trustee or co-trustee named in said first codicil, and in appointing the defendant William H. Dennis in his stead, and it further appearing to the court from the proofs that there existed good and sufficient cause why the said William May ought to have been removed from said office of co-trustee, more particularly on account of the discordant relations between him on one side and his co-trustee and all the beneficiaries of the trust except himself on the other side,"
it was decreed that William May within twenty days surrender possession and control of the trust property in his hands, and all leases, papers, and books pertaining to the trust and all moneys of the trust estate, derived from the collection of rents or otherwise, to the widow and Dennis as co-trustees, and that all the powers and duties originally conferred upon him by the will and codicil be vested in them; that he be perpetually enjoined and restrained from acting as co-trustee and from interfering with their possession and management of the trust property,
"without prejudice, however, to the right of said William May to apply to this Court as he may be advised, in his quality as a beneficiary interested in said trust,"
and that he render a full and final account of all his receipts and disbursements as co-trustee. And it was further adjudged that the widow (in addition to the other provisions for her benefit) was entitled to receive for life to her own use one-third of the net income from the rents and profits of the real estate, after deducting taxes, insurance, and repairs, and without any deduction for interest paid or to be paid on debts of the testator or on any mortgages or encumbrances upon his estate.
The plaintiff appealed to the Court of Appeals, which affirmed the decree, with costs, and afterwards denied a motion to amend it so as to allow him his costs and counsel fees in the cause. 5 App.D.C. 552. Thereupon he appealed to this Court.