Summary
explaining the conduct of any fiduciary must be judged in light of the principle that "[w]here discretion is conferred upon [the fiduciary] with respect of the exercise of a power, its exercise is not subject to control by the court, except to prevent an abuse by the [fiduciary] of his discretion"
Summary of this case from In re Guardianship of D.E.Opinion
Decided April 3, 1934.
A guardian is a fiduciary whose conduct is subject to regulation by a court of equity in cases where the remedy at law is inadequate. Jurisdiction over the conduct of fiduciaries which has not been definitely conferred by the statute exclusively upon the probate courts is within the equity jurisdiction of the superior court. Hence that court may entertain a bill for direction. The effect of Laws 1901, c. 6, s. 1; P. L., c. 291, s. 3 is to confer upon the guardian of an insane person the same rights of waiver of the terms of a will which his ward would have if sane; and hence the guardian should try to place himself as nearly as possible in the position of the ward and take such action as he would probably take if sane. The power conferred by the statute in such case is more than the discretion previously exercised by the probate court and the discretion of the guardian is not controled by the fact that a waiver by him will divert property from the objects of the testator's will; nor is his discretion limited by a consideration of only the personal interests of the ward without regard to the interests of his heirs.
BILL IN EQUITY, in which the plaintiff prays (1) that the waiver of the will of plaintiff's testator John N. Haines, filed by the defendant as guardian of the testator's widow, Matilda P. Haines, be declared null and void, and (2) that the defendant be enjoined from prosecuting against the plaintiff any demand for such portion of the estate of the testator as the widow would be entitled to receive under the statute (P. L., c. 306, ss. 10-11) after waiving the provisions of the will.
The case was referred to a master, who heard no evidence in support of the allegations of the plaintiff's bill, but made certain rulings of law, hereinafter stated, and in accordance therewith recommended that the bill be dismissed. To this action on the part of the master the plaintiff excepted. The questions of law thus presented were transferred without ruling by Sawyer, C.J.
The essential allegations of plaintiff's bill are as follows:
John N. Haines died May 27, 1931, leaving a widow, Matilda P. Haines, then 76 years of age. By his will, dated October 7, 1927, he devised and bequeathed his entire estate in trust, stipulating that the income be paid to his wife during her life and that if she should desire or require more than said income for her comfortable maintenance and support, then the trustees should pay to her, or use and expend for her benefit, so much of the principal of the estate as in their judgment she might require. The plaintiff Wentworth is executor and trustee under this clause of the will. Upon June 11, 1931, the. defendant Waldron was appointed guardian of the widow, Matilda P. Haines, who was found to be insane. The inventory of her estate showed real estate valued at $15,500 and personal estate valued at $37,324.12. June 17, 1931, the defendant filed, on behalf of the widow, a waiver of the will of John N. Haines and a release of dower and homestead. The inventory of the estate of John N. Haines showed real estate valued at $3,100 and personal estate valued at $143,763.45.
Plaintiff avers that the personal needs of the said Matilda P. Haines do not require the filing and allowance of the waiver and that said waiver is not to her advantage; that its effect will be to divert the property and estate of the said John N. Haines from the channels in which said testator intended it to go, and to increase the estate of the said Matilda P. Haines for the benefit of her heirs and beneficiaries, thus perpetrating "a fraud upon the estate of the testator."
In his answer the defendant denies the allegations that the waiver is not for the benefit of his ward and that its effect will be to perpetrate fraud upon the husband's estate. He asserts that under the provisions of P. L., c. 291, s. 3, he had the same right to file a waiver of the will and release of dower and homestead as would Matilda P. Haines, if sane, without regard to the effect such waiver might have upon the estate of the said John N. Haines. He further asserts that the court "is without authority to declare null and void and of no effect the waiver of the provisions of the will of said John N. Haines, or the release of her right of dower and homestead filed by said Jeremy R. Waldron; as guardian of Matilda P. Haines, or to enjoin said Jeremy R. Waldron, as guardian of said Matilda P. Haines from prosecuting any demand upon said Fred K. Wentworth. . . ."
The master ruled as matter of law, that the guardian has the same right to waive the provisions of the will and to file a waiver of dower and homestead, that the ward would have if sane, and that this right in no wise depends upon the needs of the ward for her support, comfort or maintenance, nor upon its effect in diverting the estate of the testator, or defeating his expressed intention to benefit other legatees or devisees.
The master further ruled that such waiver would entitle the guardian to acquire and to hold such estate for his ward, as the ward, if sane, could claim or acquire as surviving widow.
Hughes Burns and Dwight Hall (Mr. Burns orally), for the plaintiff.
Sewall Waldron and Oscar Neukom (Mr. Sewall orally), for the defendant.
The master ruled, in substance, that the allegations of the plaintiff's bill did not state a case for equitable relief. In considering the propriety of this ruling it is logically necessary to give attention first to the assertion made by the defendant in his answer that the superior court is "without authority" to nullify his waiver of the provisions of the will of John N. Haines or to issue the injunction prayed for. This position is untenable. A guardian is a fiduciary whose conduct is subject to regulation by a court of equity in cases where the remedy at law is inadequate. Sparhawk v. Allen, 21 N.H. 1; Dolbeare v. Bowser, 254 Mass. 57; 12 R.C.L. Tit, Guardian Ward, s. 60. The original equitable jurisdiction of the superior court over trusts (P. L., c. 317, s. 1) "extends to any fiduciary or trust relation where the remedy at law is not completely adequate." 21 C.J. Tit, Equity, s. 93, and cases cited.
It cannot be said that the remedies available against guardians in the probate courts are completely adequate. The jurisdiction of such courts is limited (P. L., c. 293) and they have not been clothed with general equitable powers, even with reference to those fiduciaries who are appointed by them. Matters affecting the conduct of fiduciaries which have not been definitely placed by statute within the exclusive jurisdiction of probate courts are still cognizable in equity. See Rockwell v. Dow, 85 N.H. 58, where the. cases are reviewed. "The general line separating probate jurisdiction from that of the superior court is not difficult of ascertainment. The distinction is that between things which are `incident to the business of conducting the administration' and `a settlement with the judge of probate' concerning administration already had. Patten v. Patten, 79 N.H. 388, 392, 393." Rockwell v. Dow, supra, 66.
There is still "undoubted jurisdiction in equity to advise the fiduciary as to all doubtful questions touching his duty to act" (Rockwell v. Dow, supra, 68) and the power to advise presupposes the power to direct and enjoin. Interested parties may maintain a bill to compel a fiduciary to perform his trust. The existence of this principle was apparently assumed by the court to be unquestioned in Greeley v. Nashua, 62 N.H. 166, 167, where we read:" Trustees are not required to incur risk in the management or distribution of the trust fund. In cases of doubt they may apply for the direction of the court, or they may decline to act without its sanction, leaving the parties interested to bring their bill to compel a performance of the trust." To the same effect is Dimmock v. Bixby, 20 Pick. 368, 375. In Patten v. Patten, 79 N.H. 388 such a bill was brought and maintained. We, therefore, conclude that the superior court has power to act in the premises.
The extent to which a court of equity may properly intervene to direct or regulate the action of a trustee or other fiduciary depends, however, upon the terms of the authority under which he acts. It is well settled law that "Where discretion is conferred upon the trustee with respect of the exercise of a power, its exercise is not subject to control by the court, except to prevent an abuse by the trustee of his discretion." Am. Law Inst. Restatement of Trusts, Tent. Draft No. 3, s. 181. The same rule is equally applicable to other fiduciaries. The conduct of the defendant must be judged in the light of this principle.
In Penhallow v. Kimball, 61 N.H. 596, it was held that a court of equity "may elect for the lunatic where the lunatic has the right of election" and this principle was restated in Page v. Library, 69 N.H. 575, decided in 1899. Some of the considerations which should govern a court in such a situation were stated in the Penhallow case as follows: "In making such election the court is guided by considerations for the benefit of the lunatic, without regard to what the advantage may be to his heirs. If, in this case, it is found that the effect of an election to waive the provisions of the will will be to divert property from the channel in which the testator intended it to go, and if the diversion is not required by the wants and circumstances of the widow, the prayer of the bill cannot be granted."
The statute under which the defendant acted was passed at the next session of the legislature following the decision in Page v. Library, and reads as follows:
"The guardian of an insane person shall have the same right that his ward would have, if sane, to waive the provisions of a will in favor of his ward, intended to be in lieu of dower, or curtesy, . . . and distributive share, and shall likewise have the power to release said ward's right of dower or curtesy and his homestead right, and take for his ward the same property and rights that the ward would take and have if sane; and the guardian. . . shall have the same right to an extension of the time within which such waiver may be filed, by permission of the judge of probate . . . that the ward, if sane, would have." Laws 1901, c. 6, s. 1; P. L., c. 291, s. 3.
The plaintiff argues that the purpose of this statute was merely "To obviate the necessity of petitioning the Court to waive the provisions of the will in favor of an incompetent person," and strenuously insists that the conduct of a guardian acting under authority thereof must be governed by the considerations enumerated by the court in the Penhallow case and others of a similar nature. In support of this contention he cites the following cases which seem to lend it support. Dolbeare v. Bowser, 254 Mass. 57; In re Connor's Estate, 254 Mo. 65; Primeau v. Primeau, 317 Mo. 828.
We think that the reason for the enactment of the statute above suggested is wholly inadequate and that the language used by the legislature clearly indicates a purpose to confer upon guardians a wider discretion than that which the court, in the Penhallow case, said it possessed. For this reason the Massachusetts and Missouri cases above cited are not to be followed. Whether the passage of this act was motivated by the decision in Page v. Library, supra, is a barren speculation.
In this connection it should be stated, however, that the principles enumerated in the Penhallow case for the guidance of a court of equity in making an election for a lunatic have been severely criticized, and that their soundness is open to serious question. The idea that the resultant diversion of property from the channel in which the testator intended it to go furnishes an equitable reason for refusing to permit waiver seems to be clearly unsound. As pointed out by the Illinois court in Emmert v. Hill, 226 Ill. App. 1, the right of a husband to dispose of his property by will is subject to the paramount legal rights of his widow in the estate, and there is no legal or equitable reason why his heirs or beneficiaries should reap an advantage because the widow is insane. Neither is there any legal or equitable principle by which he is empowered to satisfy her claims upon his estate by making suitable provision for her support in his will. A widow is not to be penalized because she is insane.
The soundness of the other declaration in the Penhallow case, i.e. that the court should consider only the personal interests of the widow, without regard to the interests of her heirs, has also been seriously questioned. Thus in the case of In re Stevens Estate, 163 Iowa 364, we read: "It is quite natural in such a case for a widow, if she has heirs, to take them into account when she makes a voluntary election, and, this being true, the court may do the same thing without being charged with an abuse of discretion."
It is unnecessary, however, for us to pass definitely upon the correctness of the rules laid down in the Penhallow case for, as indicated above, we think that in the statute of 1901 the legislature did something more than confer upon guardians the discretion previously exercised by the court.
In First Nat. Bank v. MacDonald, 100 Fla. 675, 681, which is one of the cases cited by the plaintiff, the Florida court drew a distinction between two possible situations as follows: "As to the same widow, we have shown that the act of renunciation is personal, absolute, and uncontestible. The same right might be exercised by her guardian for her if specifically directed by statute; but our statute not having so directed she is left to her remedy in a court of equity." We think that under our statute we have a case like that supposed by the Florida court where the guardian is specifically directed to exercise the same rights which the widow would have, if sane. The plain language of the act seems to compel this conclusion. "The guardian of an insane person shall have the same right that his ward would have, if sane, to waive the provisions of a will in favor of his ward. . . . ." In such a situation it seems clear that the guardian should try to place himself as nearly as possible in the position of the widow and take such action as she would probably take if sane. Such was the advice given to a guardian by a probate court in Michigan, and action in accordance therewith was sustained in the case of In re Andrews Estate, 92 Mich. 449.
With reference to the performance of this duty it has been well said that "If it were permissible to determine what she would do by the course which experience shows is pursued by the average of mankind, we would say unhesitatingly that she would take all she had a lawful right to." Trower v. Spady, 117 Va. 173.
Clearly the statute invests the guardian with discretion as to the exercise of the power to waive or accept the provisions of the will. There is nothing in the allegations of the bill which, if proved, would justify the conclusion that in making his election he has abused his discretion.
The allegations that the income from the estate of the husband is sufficient for the comfortable support and maintenance of the widow; that the waiver of the will and release of dower and homestead are not necessary in order to provide for her personal needs; that the effect of the election made by the defendant will be to divert property of the testator from the channels in which the testator intended it to go, and to increase the widow's estate for the direct benefit of her heirs and beneficiaries, are singly and collectively inconclusive upon the question whether the guardian's discretion has been legitimately exercised. The allegation that the guardian's election "is not to the advantage of his ward" is nothing more than a conclusion of fact drawn by the pleader from the other allegations of the bill, and serves only to indicate a difference of opinion upon this point between him and the guardian. The allegation that "the effect of said election is to perpetrate a fraud upon the estate" of the testator is merely a conclusion of law unsustained by the recital of any facts which lend it support. It therefore follows that the rulings of the master were correct, and in accordance therewith the order must be
Bill dismissed.
All concurred.