Opinion
No. 30912
Decided July 30, 1947.
Testamentary trusts — Probate Court without power to appoint successor cotrustee — Unless trust instrument provides for such appointment — Or application made by beneficiary or person interested to appoint successor cotrustee — Probate Court appointment of successor cotrustee arbitrary and abuse of discretion — No motion, notice or hearing — Expressed or implied intent of settlor disregarded, without sound reason.
1. Under Section 10506-56, General Code, where one of two cotrustees dies, the Probate Court does not have power to appoint a successor cotrustee unless the instrument creating the trust provides for such appointment or unless an application is made by one or more of the beneficiaries or other persons interested in the trust to have a successor cotrustee appointed.
2. The appointment by the Probate Court of a successor cotrustee, under the exceptions in Section 10506-56, General Code, on the court's own motion, without proper notice and hearing, and in the absence of a contrary intention expressed in the creating instrument and in the absence of an application by one or more of the beneficiaries or other persons interested in the trust in disregard of the expressed or implied intent of the settlor, is arbitrary and constitutes an abuse of the discretion of the court in the appointment and removal of trustees.
APPEAL from the Court of Appeals for Scioto county.
This is an appeal from a judgment of the Court of Appeals affirming the judgment of the Probate Court, appointing a testamentary trustee.
Leona Labold died in 1939 leaving a substantial estate. Her will, after making various specific bequests, devised and bequeathed the residue of her estate in trust and named a trustee.
The provisions of her will so far as pertinent here are as follows:
"Eleventh: All the rest, residue and the remainder of my estate, both real and personal, of whatsoever kind and nature and wheresoever the same may be situate, including lapsed and void legacies and bequests and including any property over which I may possess a power of appointment, I give, bequeath and devise unto my executor hereinafter named, in trust, nevertheless, to divide the same into three (3) equal portions or shares, and
"(a) To allot one of such equal portions or shares unto the Trustees of the University of Pennsylvanio, in the city of Philadelphia, state of Pennsylvania, to. whom I give and bequeath the same as a fund to be known as 'Simon and Lena R. Labold Memorial Fund' to be used by the said trustees for the carrying on of general research into the cause and cure of cancer; it being my wish and desire that the fund, insofar as this bequest may allow, be used by the said trustees for the specific purpose set forth in this article of my last will and testament, in such manner and under such auspices as the trustees of the university may direct; and
"(b) To allot another of such equal portions or shares to my uncle, Dr. David Riesman, now of the city of Philadelphia, state of Pennsylvania, to whom I give and bequeath the same, absolutely and forever. In the event my said uncle shall have predeceased me, I direct the portion or share to which he would have been entitled, if living, be divided among and paid to his children, David, Jr., John and Mary in equal parts or shares, to whom, in that event, I give and bequeath the same absolutely and forever.
"(c) To divide the third of such equal portions or shares into six (6) equal parts and to allot the same to and among the following named persons in the following designated shares:
"One-sixth (1/6) to my aunt, Rose Labold, of the city of Cincinnati, state of Ohio.
"One-sixth (1/6) to my aunt, Esther Labold, of the city of Cincinnati, state of Ohio.
"One-sixth (1/6) to my aunt, Clara L. Haas, of the city of Portsmouth, state of Ohio, to whom I give the same, absolutely and forever, in recognition of the fact that she has children.
"One-sixth (1/6) to my aunt, Gertrude L. Longini, of Los Angeles, California, and Cincinnati, Ohio.
"One-sixth (1/6) to my uncle, Dan Labold, of the city of Portsmouth, state of Ohio.
"One-twelfth (1/12) to my cousin, Fannie M. Marx, or, upon her death, to her daughter, Julianne.
"One-twelfth (1/12) to my cousins, Barbara Meyer and Allen Meyer, children of Jack Meyer, deceased, in equal parts.
"(1) I direct my executor to hold, manage, invest, reinvest and keep the above parts, allotted as above, invested (except that of Clara L. Haas, bequeathed as above) and to pay over the net income from each of such parts to each of the foregoing, in the shares and proportions above set forth, in monthly installments if convenient, for and during the terms of their natural lives. Upon the death of any of the foregoing, or if any of them have predeceased me, then upon my death, to allot the part to which he or she would have been entitled if living, to and among the surviving others in equal parts and to pay the income therefrom to them in the same manner and at the same intervals as the income to which they are entitled from the parts herein allotted to them.
"(2) Upon the death of the longest liver of those to whom this share or portion of my estate is allotted, I direct that the principal of such share, as then constituted, together with any unpaid income, be used in the following manner:
"First: Such amount thereof as, in the sole and uncontrolled judgment of my trustee, may be necessary or suitable, for the erection and dedication of public baths in the city of Portsmouth, state of Ohio, preferably upon or near the site known as 'Children's Home Park'; upon the condition, however, that the trustee shall succeed in making the necessary arrangements with the properly constituted officials and authorities of the city of Portsmouth, whereby said city will, after the erection of such baths, continue to suitably maintain them to the end and for the purpose that the residents of the city of Portsmouth, may, free of any charge, be afforded the facilities of such baths.
"Second: The balance thereof (or if for any reason the arrangements for the maintenance of the aforesaid public baths cannot be satisfactorily consummated, or if there are not sufficient funds in my estate with which to complete their erection, the whole of said part or share as then constituted) shall be then paid over unto the Trustees of the University of Pennsylvania, for the purposes set forth in the article of this, my last will and testament designated 'Eleventh (a).'
"Twelfth: I nominate, constitute and appoint my uncle, Dr. David Riesman, now of the city of Philadelphia, state of Pennsylvania, to be the executor of and trustee under this, my last will and testament; and in the event that he shall fail or be unable, for any reason whatsoever, to qualify, or having qualified shall die or be otherwise incapacitated from serving, I nominate, constitute and appoint his son, David Riesman, Jr., now of the city of Philadelphia, state of Pennsylvania, as such executor and trustee. In the event that either of the foregoing shall, either by reason of his nonresidence or otherwise, be unable to or fail to qualify as such executor and trustee, I direct that the person or institution nominated by Dr. David Riesman, or David Riesman, Jr., shall serve as such executor and trustee."
The Probate Court refused to appoint David Riesman, Sr., as sole executor and trustee on the ground that he was a nonresident of Ohio. Upon the application of Edward J. Daehler, the court appointed David Riesman, Sr., and Edward J. Daehler as cotrustees. Upon the death of David Riesman, Sr., David Riesman, Jr., was appointed as cotrustee to succeed David Riesman, Sr. The trust was administered for some time by David Riesman, Jr., and Edward J. Daehler. On May 7, 1946, Edward J. Daehler died and the court, after waiting approximately 10 days and without formal hearing or consulting the wishes of David Riesman, Jr., the surviving trustee, appointed A.D. Troxel as cotrustee.
On appeal on questions of law, the Court of Appeals affirmed the judgment of the Probate Court.
The case is before this court pursuant to the allowance of a motion to certify the record.
Messrs. Bannon, Bannon Howland and Messrs. Drinker, Biddle Reath, for appellants.
Messrs. Kimble, Kimble Schapiro and Mr. Emory F. Smith, for appellees.
The basic question involved in this case concerns the extent of the authority of the Probate Court in appointing testamentary trustees.
The primary powers and jurisdiction of the Probate Courts in this state arise from or through Section 8, Article IV of the Constitution of Ohio, which reads as follows:
"The Probate Court shall have jurisdiction in probate and testamentary matters, the appointment of administrators and guardians, the settlement of the accounts of executors, administrators, and guardians, and such jurisdiction in habeas corpus, the issuing of marriage licenses and for the sale of land by executors, administrators, and guardians, and such other jurisdiction, in any county, or counties, as may be provided by law."
The Constitution is supplemented by the Ohio statutes in general and in regard to this case specifically by Section 10501-53, General Code, pertinent parts of which are as follows:
"* * * the Probate Court shall have jurisdiction: * * *
"4. To appoint and remove guardians and testamentary trustees, direct and control their conduct, and settle their accounts; * * *
"13. To direct and control the conduct of fiduciaries and settle their accounts.
"Such jurisdiction shall be exclusive in the Probate Court unless otherwise provided by law.
"The Probate Court shall have plenary power at law and in equity fully to dispose of any matter properly before the court, unless the power is expressly otherwise limited or denied by statute."
The appellees in this case contend that where the court has originally refused to appoint a nonresident as sole trustee and has required and appointed a resident cotrustee, on the death of the resident cotrustee, the court may on its own motion appoint a new cotrustee pursuant to authority contained in Section 10506-55, General Code, which reads as follows:
"If a sole fiduciary dies, is dissolved, declines to accept, resigns, is removed, or becomes incapacitated or otherwise unable to act, prior to the termination of the trust, the Probate Court shall require a final account of all dealings of such trust to be filed forthwith by such fiduciary if a living person and able to act; or if such fiduciary be a living person but unable to act, by his guardian, if any, or if there be no guardian, by some other suitable person in his behalf, appointed or approved by the court; or if such fiduciary be a deceased person, by his executor or administrator; or if such fiduciary be a dissolved corporation, by such person or persons as may be charged by law with winding up the affairs of such corporation. Thereupon the Probate Court shall cause such proceedings to be had as are provided by law as to other accounts filed by fiduciaries.
"Whenever such a vacancy occurs and such contingency is not otherwise provided for by law, or by the instrument creating the trust, or whenever such instrument names no fiduciary whatever, the court shall, either on its own motion or on the application of any person beneficially interested, appoint and issue letters of appointment as fiduciary to some competent person or persons who shall qualify according to law and execute the trust to its proper termination. Such vacancy, and the appointment of a successor fiduciary shall not affect the liability of the former fiduciary, or his sureties, previously incurred."
Although it is true that Probate Courts have a wide discretion in the appointment and removal of trustees, that discretion is limited in certain instances by statute. Here, there is no doubt that if a sole trustee had been involved, the court under authority of Section 10506-55, General Code, could have, on its own motion, appointed a new trustee. However, this case does not involve a vacancy caused by the death of a sole trustee, but involves a vacancy caused by the death of a cotrustee. This situation is specifically dealt with by Section 10506-56, General Code, which reads as follows:
"When two or more fiduciaries have been appointed jointly to execute a trust, and one or more of them dies, declines, resigns or is removed, the title shall pass to the surviving or remaining fiduciary or fiduciaries who shall execute the trust, unless the creating instrument expresses a contrary intention or unless the court on the application of one or more of the beneficiaries or other persons interested in the trust otherwise determines. The surviving fiduciary or fiduciaries shall within ninety days after the death, resignation or removal of a cofiduciary, file in the court a complete account covering all matters to the time of such death, resignation or removal."
As may be seen by an examination of that section, the death of a cotrustee vests title in the surviving trustee, and a new cotrustee may not be appointed unless the trust instrument provides for such appointment or unless a beneficiary moves for the appointment of a new cotrustee. When two or more trustees are appointed to administer the affairs of a trust, the title to the trust res is vested in them jointly and, unless the intention of the settlor is otherwise manifested, the powers of the trustees are joint powers and can be exercised only by the joint action of all the appointees. 1 Scott on Trusts, 548, Section 103; 40 Ohio Jurisprudence, 429, Section 169; 1 Restatement of Trusts, 516, Section 194.
There is no authority granted in Section 10506-56, General Code, as there is in Section 10506-55, General Code, for the court on its own motion to appoint a new trustee. Whether cotrustees are designated by the instrument or whether, as in this case, the Probate Court, because of the nonresidence of the trustee appointed by the instrument creating the trust, required the appointment of a resident trustee, Section 10506-56 applies, and no exception is made in the case of a nonresident surviving trustee. The court by its own act brought itself under the provisions of Section 10506-56, and that section acts as a limitation on the power of the Probate Court to appoint testamentary trustees prescribed in Section 10501-53, General Code, unless the case be within one of the exceptions provided for in Section 10506-56, namely, "* * * unless the creating instrument expresses a contrary intention or unless the court on the application of one or more of the beneficiaries or other persons interested in the trust otherwise determines." The creating instrument expresses no contrary intention and there has been no formal application by beneficiary or other person interested in the trust. This being true, the Probate Court, in appointing the successor cotrustee on its own motion, exceeded its statutory powers.
Another question presented in this case for our consideration concerns the effect of the provision in the twelfth item of settlor's will in the event the appointment of a cotrustee may be deemed necessary under the exceptions contained in Section 10506-56, General Code. It is a well established principle of law that a testamentary instrument will be construed and applied so as to give effect to the desires of the testator. An examination of the provisions in this will clearly indicates that the testatrix reposed great confidence and trust in the persons selected by her and obviously intended that they or someone chosen by them should have control over her property. The settlor placed her faith and her confidence in members of the Riesman family to administer the trust and clothed them with broad discretion. As was said by the court in Madden, Exr., v. Shallenberger, Gdn., 121 Ohio St. 401, 410, 169 N.E. 450, "At any rate, whatever reason impelled the testatrix in the selection of the trustee, and in imposing broad discretion in him, if sufficient to her, must be Sufficient to everyone else, including the court."
The Probate Court, while it has broad discretionary powers, cannot without sound reason go directly against the expressed wishes of a settlor. Here, for no sound reason, the Probate Court acted on its own motion without proper hearing and without consulting the person who the settlor had said should designate the person to succeed him. The appellees argue that the provision in the will of testatrix said nothing about a cotrustee, but referred only to a trustee successor to the person named by her in her will. Nevertheless, it is obvious that her trust was reposed in certain named individuals and it was her intent that they or some person designated by them should control her property.
The provision in her will implies that, in the event a cotrustee is needed, the testatrix intended that the person designated in her will should choose him.
Under such circumstances it was the duty of the Probate Court to follow the recommendations of such person as to who should be a cotrustee unless the person chosen as cotrustee was incompetent to administer the trust and such appointment would be detrimental to the trust. Having failed to do so, it is our opinion that the Probate Court's action was arbitrary and constituted an abuse of discretion.
It follows that the judgment of the Court of Appeals must be and hereby is reversed.
Judgment reversed.
TURNER, MATTHIAS, ZIMMERMAN and STEWART, JJ., concur.
WEYGANDT, C.J., and HART, J., dissent.