Opinion
June 3, 1953 —
July 3, 1953.
APPEAL from two orders of the county court of Milwaukee county: G. L. PATTISON, Judge, Presiding. Order of December 17, 1952, affirmed; order of January 8, 1953, reversed.
For the appellant there were briefs by Whyte, Hirschboeck Minahan, attorneys, and Victor M. Harding of counsel, all of Milwaukee, and oral argument by Mr. Harding.
For the respondents there were briefs and oral argument by Chester J. Niebler, attorney, and Lawrence J. Binder of counsel, both of Milwaukee.
This is the second appeal to this court involving the estate of Joseph A. Landauer, deceased. The decision upon the first appeal is reported in Estate of Landauer, 261 Wis. 314, 52 N.W.2d 890, 53 N.W.2d 627. The facts therein stated will not be repeated here.
Following that decision an affidavit of prejudice was filed by Holty's attorney against M. S. SHERIDAN, county judge of Milwaukee county, and G. L. PATTISON, county judge of Buffalo county, was called in to hear and determine the matters then pending, including the objections to the will and codicil, and a claim filed against the estate by Holty.
On September 24, 1952, there was a hearing upon the objections to the will. Harry V. Meissner, the attorney who had drafted the several wills of the testator that were the subject of the prior appeal, had died prior to that date. The executor of Meissner's will was subpoenaed and directed to produce the former wills of Landauer. They were produced and received in evidence over the objection of the attorney for the estate. Hearing in the matter of the objections to the will and the claim filed by Landauer was adjourned to November 5, 1952.
On October 15, 1952, the objector and claimant filed a petition amending his claim and combining his objections to the admission of the will and codicil and the claim. This petition alleged mismanagement of the estate by the executors and an improper diversion of funds from certain corporations controlled by the executors by virtue of stock therein held by the estate, and asked for the removal of said executors. By the amendment to his claim Holty alleged a written contract made with Landauer in 1943, confirmed by a will executed by Landauer on April 24, 1943. Holty asked for specific performance of the alleged contract.
On November 5, 1952, Holty's counsel stated on the record that he was withdrawing his objections to the admission of the 1949 will and was standing on his claim for specific performance. The hearing then proceeded on the question of the removal of the executors.
The principal asset of the Landauer estate consists of 2,281 shares out of a total of 2,933 shares of stock in A. Landauer Son, Inc., a corporation consisting of two divisions, one a wholesale business and the other the Marshfield Fair Division, operating a department store at Marshfield. This corporation in turn owns all of the outstanding stock of separate corporations operating the Fair Store at Wausau and the Fair Stores Appliance Company at Wausau. Shortly after Mr. Landauer died, the executors called a special stockholders' meeting of A. Landauer Son, Inc., and its subsidiary corporations. The directors of each of said corporations had been Mr. Landauer, Mrs. Landauer, and Mr. Weisberg, the manager of the Fair Store at Wausau. Mrs. Landauer, her brother Ronald Ostrander, and E. A. Gunsburg, manager of the Marshfield store, were elected as the new directors. These directors then elected Mrs. Landauer as president and her brother as executive vice-president. Thereafter the managers of the two concerns in Wausau resigned. All of the enterprises which had shown substantial profits in prior years showed losses in the year 1951. During 1951 Mrs. Landauer received no salary but was paid gratuities amounting to more than $30,000. The same gifts were voted to her for the year 1952. Her brother was paid a salary of $15,000 per year, plus a bonus and a percentage of profits.
The will and codicil admitted to probate herein provide for a testamentary trust. Out of the income Mrs. Landauer is first to be paid the sum of $750 per month. The next $100 per month is payable to Mrs. Landauer's mother, and if there is sufficient income left, Holty is to receive $400 per month. He claimed that the mismanagement of the estate and the improper diversion of funds would jeopardize his payments under the will and would prevent recovery of his claim if he is successful in establishing the same. The executors explained the various transfers of funds as tax-saving devices and testified that the businesses were prosperous and would make money.
In preparation for the hearing on November 5, 1952, Holty sought discovery of the records of the Landauer corporations. Two of the executors were served with notice s of adverse examinations and subpoenas were served upon them to produce certain corporate records. A motion to suppress the examinations was made by the executors, and it was argued that the county court had no power to compel the executors to produce corporate records. The adverse examinations were limited, although there was some testimony as to the corporate records.
Thereafter Holty commenced an action in the circuit court for Milwaukee county asking for specific performance of his alleged contract. In this action there were joined as defendants the executors, the directors of the corporations, and the corporations as well. A temporary restraining order was entered December 5, 1952, restraining the parties from proceeding further with Holty's claim in the county court. On December 17, 1952, Holty was directed to proceed with the trial of his claim. He declined on the ground that the circuit court order restrained such action. The matter was then adjourned to January 8, 1953.
On December 30, 1952, Holty's attorney filed an affidavit of prejudice as to Judge PATTISON, who refused to recognize the same on the ground that one affidavit had already been filed in the estate.
On December 17, 1952, an order was entered denying the petition to remove the executors. On January 8, 1953, an order was entered dismissing Holty's claim. Holty appeals from those orders. The respondents move for a review of the admission of the prior wills of Landauer and of the order directing the production of a portion of the corporate records without compliance with sec. 180.43, Stats.
Provision is made for the removal of executors by secs. 312.11 and 324.35, Stats. Both of said sections provide that executors "may be removed" if certain facts are established to the satisfaction of the court. It is the claim of the petitioner Holty that the court abused its discretion in refusing to remove the executors. We hold that upon the record before us the trial court did not abuse its discretion. We wish to make it clear, however, that the entire matter may be reviewed in a further proceeding or at the time the executors file their final account. It is apparent that the gratuities paid to Mrs. Landauer resulted in personal advantage to her, admittedly so because of tax advantages to be gained by her personally. If the advantages gained by any of the fiduciaries personally were detrimental to others interested in the estate as beneficiaries or otherwise, the rules set out in Estate of Peabody, 218 Wis. 541, 260 N.W. 444, and Estate of Teasdale, 261 Wis. 248, 52 N.W.2d 366, can be applied.
Because of the jurisdictional dispute, because petitioner's examination of corporate records was unduly limited, and because the matter will be heard in circuit court, we affirm the order, but what we have said shall not be considered the law of the case.
The petitioner further contends that the court was without jurisdiction to enter the order of January 8, 1953, dismissing his claim, because he filed the affidavit of prejudice on December 30, 1952. Sec. 253.07 (1) (b), Stats., covers the filing of affidavits of prejudice in county courts. That section provides that only one affidavit of prejudice may be filed in any matter. The petitioner had already filed one affidavit against Judge SHERIDAN. It is now his contention that the prior affidavit was filed in the matter of the objections to the will and that he is entitled to file a second affidavit in the matter of the claim. By his own petition he combined and consolidated both matters. Even though his contention might be correct, and we do not rule thereon, by his own action he consolidated the separate matters so that there was only one matter, and he was thereby limited to the filing of the one affidavit of prejudice.
However, because of the jurisdictional dispute the petitioner has had no hearing upon his claim and we hereby reverse the order of January 8, 1953, dismissing the claim under the discretionary powers afforded us by sec. 251.09, Stats., and direct that the claim be reinstated and held in abeyance pending the outcome of the suit in circuit court.
The executors contend that the court erred in permitting the executor of the Meissner will to testify and in admitting Landauer's prior wills. They claim that this matter is governed by our decision in Estate of Smith, 263 Wis. 441, 57 N.W.2d 727. We agree that said decision governs, but we do not agree with their analysis of what was said in that decision so far as it is applicable in this case. In the Smith Case, supra, this court said (p. 445):
"If such former wills and codicils had been found among the papers of the deceased, which were in her possession, at the time of death, such wills and codicils would be admissible in evidence if their contents were otherwise material or relevant to the issue of the controversy being tried, irrespective of the coincidence that the executor who took over the custody of said instruments after the death of testatrix was an attorney and said wills and codicils had been drafted either by him or one of his law partners. Under such a state of facts, the question of whether said wills and codicils constituted privileged communications between client and attorney would not be presented."
The prior wills were in the possession of Meissner at the time of his death. They were not his property, however. Certainly upon his death it was the duty of his executor to return such property to the respondents. As property of the deceased they were admissible so far as material or relevant to the controversy being tried.
The respondents also contend that the court erred in directing the production of corporate records without following sec. 180.43, Stats. Said section refers to the rights of stockholders to examine corporate records, and it is not applicable here. It is not an exclusive statute. The executors were and are directors of the several corporations only by virtue of the stock held by the estate. They are fiduciaries and should disclose all relevant information upon proper showing to the court. There was no error in directing them to produce such records, and in fact the petitioner's examination of such corporate records was unduly limited.
By the Court. — The order of December 17, 1952, is affirmed. The order of January 8, 1953, is reversed and cause remanded for further proceedings consistent with this opinion.