text:
    Moore, Appellee, v. The Travelers Ins. Co., Appellee; Freeman, Admr., et al., Appellants.
    (No. 6381
    Decided March 20, 1944.)

      Mr. David L. Falk, for appellee Virginia Moore.

      Messrs. Harmon, Colston, Goldsmith & Hoadly, for appellee The Travelers Insurance Company.

      Mr. Andrew W. Hops, for appellants, George Freeman, administrator, and Lizzie Freeman.
   Matthews, J.

In her petition the plaintiff stated a-, cause of action against the defendant insurance company for judgment for $2,000, as the beneficiary named in a policy upon the life of Robert Freeman.

The defendant insurance company filed an affidavit of interpleader admitting liability on the policy and alleging that the administrator of Robert Freeman and one Lizzie Pritchard Freeman, the latter claiming to be Robert Freeman’s widow, claimed an interest in the proceeds of the policy without collusion with it; that it was ignorant of the respective rights of the claimants; and that it was ready to pay the amount into court.

An order of interpleader was entered, the insurance company paid the money to the clerk of courts and was dismissed from the action. Robert Freeman’s administrator and Lizzie Pritchard Freeman filed answers and cross-petitions.

The plaintiff based her claim to the proceeds upon the terms of the policy naming her as the beneficiary and describing her as the insured’s “common-law wife.” The policy was dated December 1,1939, and the insured died on January 20, 1943.

In order to invalidate the designation of the plaintiff as beneficiary and to establish their rights under the law, the administrator and Lizzie Pritchard Freeman, by amended cross-petitions, alleged:

“And that on March 9, 1938, one Virginia Freeman, plaintiff, herein, did exercise, undue influence on said Robert Freeman and did illegally and fraudulently cohabit with said Robert Freeman and did by means of illegal and fraudulent and undue meretricious relationship and by exercising undue influence over him by reason of such relations and blandishments and by cowing the said Robert Freeman and by other means incident to such illegal and fraudulent criminal relationship did prevail upon the said Robert Freeman to change the beneficiary on said policies and to make the same payable to Virginia Freeman who now claims said policy as Virginia Moore. * * *

“That on December 1, 1939, the said 'plaintiff Virginia Moore did continue to exercise undue influence as above set forth and did by illegally, fraudulently, cohabiting with Robert Freeman and by the means above set forth did by such undue influence prevail upon the said Robert Freeman to convert the said two certificates of insurance into one for the sum of two thousand dollars ($2000) and did, by such means, prevail upon him to make said certificates payable to Virginia Moore. All of which occurred while Robert Freeman was under the undue influence of said Virginia Moore, and while she was practicing said fraud upon him.

“And that thereby the said Virginia Moore did defraud the said Robert Freeman and his estate, and this cross-petitioner.

“That the said certificates of insurance as written did not express the true intent and purpose of the insured, Robert Freeman. And that said policies should be made payable to the estate of Robert Freeman.”

Upon invalidation of the provision naming a beneficiary, each claimed the proceeds by operation of law. Lizzie Pritchard Freeman sought also to have a trust imposed.

The trial court sustained demurrers to these cross-petitions and upon proof of the allegations of the plaintiff’s petition, entered judgment in her favor. That is the judgment appealed from.

The question presented to this court is whether the allegations of the amended cross-petitions state causes óf action.

Of course the fact that an unlawful relation existed between the insured and the beneficiary furnishes no basis for the invalidation of the designation. Pierce, Admx., v. Metropolitan Life Ins. Co., 46 Ohio App., 36, 187 N. E., 77.

It is also clear that although the obligation of the insurer to pay is contractual, any right of the administrator or the widow is noncontractual. Their rights, if any, must be based-on a tortious act committed by the plaintiff to their damage.

A somewhat similar situation was presented in Lovelady v. Rheinlander, 66 Ohio App., 409, 34 N. E. (2d), 788, in which a devisee of real estate sought damages on the ground that the defendant had, through undue influence, caused the testator to sell the real estate in his lifetime for the purpose of causing an ademption of the devise. The claim of the widow in the case before us certainly is not stronger than that of the devisee in that case. At page 411 of the opinion in that case we said:

“This action falls within the category of tort actions described in 4 Restatement of the Law of Torts, 405, Section 870:

“ ‘A person who does any tortious act for the purpose of causing harm to another or to his things or to the pecuniary interests of another is liable to the other for such harm if it results, except where the harm results from an outside force the risk of which is not -increased by the defendant’s act.’

“Illustrating the application of the principle, at page 407, an example is stated where an heir murdered an ancestor in order to prevent the signing of a will, which the ancestor had prepared but not signed, thereby depriving the plaintiff of a legacy which he would otherwise have received, and, at page 586, an example is stated of a son, who, as an attorney, purposely drew an ineffective will for his mother in order to prevent a favorite nephew from receiving one-half .of the estate in accordance with instructions given by the mother.”

Applying the rule to the facts in that ease, we-said at page 416:

“This is not a case in which it appears that a defendant has frustrated the testamentary intention of a decedent by acquiring an undue influence over him, destroying his capacity to act as a free agent, and maintaining such mastery at all times thereafter to the time ,of his death, thus precluding the decedent from doing that which he desired.”

The necessity for the continuance of the undue influence during the remainder of the insured’s life is pointed out in Jeffords v. John Hancock Mutual Life Ins. Co., 19 Ohio Law Abs., 701, where the court, in referring to the language used by it in a former opinion, said:

“We meant to say by that language that the duress under which the change in beneficiary was made was continuing and acted as a potent and controlling force until the death of Mrs. Ford.”

See, also, Lewis v. Corbin, 195 Mass., 520, 81 N. E., 248, 122 Am. St. Rep., 261.

Assuming that the averments of the amended cross-petitions are sufficient, when liberally construed, to intend to allege that the plaintiff by unlawful means so dominated the will of the insured as to cause him, contrary to his desire and will, to name her as beneficiary, there is no allegation from which an inference could be drawn that such domination continued during the remaining more than two years of his life, in which he could have changed the beneficiary- had he so desired. Were there an allegation that the unlawful relationship continued until the insured’s death (which there is not) it would not imply continuance of the undue influence. The most that could be inferred would be that the relationship caused the insured to want the plaintiff to be the beneficiary. It would not indicate that he allowed her designation to stand against his will and desire.

For these reasons, the judgment is affirmed.

Judgment affirmed.

Ross, P. J., and Hildebrant, J., concur.


source: Caselaw Access Project

author: Matthews, J.

license: Public Domain

text:
    Albers, Admr., Appellant, v. Great Central Transport Corp., Appellee, et al. (Two Cases.)
    (Nos. 6416 and 6417
    Decided July 10, 1944.)

      Messrs. Stewart & Beirne, for appellant.

      Mr. John M. McCaslin, for appellee.
   Matthews, J.

In these actions, the trial court sustained demurrers to the third amended petitions on the ground of misjoinder of parties defendant, and, the plaintiff not desiring to plead further, dismissed the defendant Great Central Transport Corporation from the actions and entered judgments in its favor for its costs. The appeals are from those judgments and present the same question. One of the actions is for wrongfully causing the death of Joseph Murphy and the other is to recover damages for his pain and suffering.

According to the allegations of the third amended petitions, the Great Central Transport Corporation was, on February 25, 1943, an interstate common carrier of freight under authority of the Interstate Commerce Commission, and the defendant H. R. Dallas were engaged in the trucking business in Cincinnati, Ohio. We quote from one of the third amended petitions that portion which shows the nature of the operation in which the parties were engaged and their relation.

“On or about January 25, 1943, the defendant, the Great Central Transport Corporation, had transported a shipment of goods consigned to Knoxville, Tennessee, from its terminal in-Detroit. Michigan, to its terminal in Cincinnati, Ohio. For the purpose of transferring said goods from the defendant’s terminal in Cincinnati to the terminal of the carrier operating between Cincinnati and Knoxville, Tennessee, which terminal was also located in Cincinnati, the defendant, Great Central Transport Corporation engaged the defendant, H. R. Dallas, as its agent, servant and employee and authorized and required him to use his own truck and driver for said purpose, and exercised control over the manner and means by which said goods were transferred. Pursuant to said arrangement, defendant, H. R. Dallas, on said date at about 2:00 o’clock, p. m., caused one of his employees, Carl F. Moore, to call for said goods at the terminal of the defendant, Great Central Transport Corporation, and transfer them in one of defendant, H. R. Dallas’ trucks, to the terminal of the Bine & Gray Transportation Company, of Cincinnati, Ohio, a trucking company which operated between Cincinnati and Knoxville, Tennessee. Said truck was being backed to the loading platform of the Blue & Gray Transportation Company for the purpose of transferring said goods when the rear part of said truck collided with the person of plaintiffs decedent, Joseph Murphy, crushing decedent’s body between the rear of said truck and the loading platform.”

One of the negligent acts alleged was that the driver of the truck which collided with decedent’s person, was only seventeen years old, and that his employment was in violation óf a safety regulation promulgated by the Interstate Commerce Commission and the laws of Ohio, requiring drivers of trucks of common carriers to be not less than twenty-one years old.

It is clear that both defendants were engaged in interstate commerce at the time and place alleged. Therefore, to the extent that Congress has legislated on the subject, such legislation was controlling under Article VI of the Constitution of the United States. It was so decided in the early case of The Daniel Ball, 77 U. S. (10 Wall.), 557, 19 L. Ed., 999, and the decision has been approved and followed without exception in all subsequent cases. In 11 American Jurisprudence, 61, Section 65, the holdings of the cases are stated as follows:

“An agency operating entirely within the limits of a state may nevertheless be engaged in interstate or foreign commerce. Thus, when the ultimate destination is some point in another state, to be reached by a continuous journey, a shipment or transportation from one point to another within the same state is interstate commerce; and where there was an intention to make a through shipment to the point of final destination, a similar rule is usually held to prevail with respect to a shipment of goods from another state over a connecting line entirely within the state, irrespective of whether there was a common arrangement between the carriers. The interstate character of a through shipment is not affected by limitations on the liability of the several carriers to their own lines or by the fact that goods consigned to a point outside a state are delivered before the state line is reached.”

It, therefore, becomes necessary to examine the relevant act of Congress and regulations of the Interstate Commerce Commission to determine the legal status of the defendants, created by the arrangement between them as alleged in plaintiff’s third amended petition.

By the act of Congress (Title 49, Chapter 8, Section 302, U. S. Code) it was enacted that:

“(a) The provisions of this chapter apply to the transportation of passengers or property by motor carriers engaged in interstate or foreign commerce and to the procurement of and the provision of facilities for such transportation, and the regulation of such transportation, and of the procurement thereof, and the provision of facilities therefor, is hereby vested in the Interstate Commerce Commission. * * *

“(c) Notwithstanding any provision of this section or of Section 303, the provisions of this chapter, except the provisions of Section 304 relative to qualifications and maximum hours of service of employees and safety of operation and equipment, shall not apply — * * *

. “(2) to transportation by motor vehicle by any person (whether as agent or under a contractual arrangement) for a common carrier by railroad subject to Chapter 1 of this title, an express company subject to Chapter 1 of this title, a motor carrier subject to this chapter * * * in the performance within terminal areas of transfer, collection, or delivery service; but such transportation shall be considered to be performed by such carrier * * * as part of, and shall be regulated in the same manner as, the transportation by * * * motor vehicle, * * * to which such services are incidental.”

It is obvious from this quotation that, while the defendant Dallas was engaged in interstate commerce, he was excluded from direct regulation by the Interstate Commerce Commission and the commission’s power over that phase of interstate commerce was exerted through its control over the Great Central Transport Corporation, and to that end, and for the purposes of the law, Dallas’ acts are to be “considered to be performed by such carrier * * * as part of, and shall be regulated in the same manner as, the transportation by * * * motor vehicle, * * * to which such services were incidental.”

The act does not assume to alter the legal relation between the parties as fixed by their contract. The transfer, collection and delivery within terminal areas might be done through persons bearing the relation of agents or employees to the interstate carrier whose contract required the crossing of a state line, or by an independent motor carrier engaged exclusively in that phase of the interstate transaction' and, therefore, not required to cross a state line. In either event, the federal' power is to .be enforced under the act by regulating the interstate carrier for which the terminal transporting, collecting and delivering are done, and not by regulating the actual doer of- such transporting, collecting and delivering, unless he and such carrier are the sáme person.

At no place in the act is disclosed an intent to make the two agencies joint doers of the act of transporting, collecting and delivering; nor does the act affect in any way the degree of guilt in the event of wrongdoing.

We agree with plaintiff’s counsel that the transportation by Dallas became, under the act, the transportation of the Great Central Transport Corporation, and that “this was so whether Dallas acted as an agent or under a contractual arrangement.” We so held in Steffens v. Continental Freight Forwarders Co., Inc., 66 Ohio App., 534, 35 N. E. (2d), 734. Therefore, so the argument runs, the Great Central Transport Corporation’s liability is based on the statute and not on respondeat superior and for that reason the case of French, Admr., v. Central Construction Co., 76 Ohio St., 509, 81 N. E., 751, 12 L. R. A. (N. S.), 669, is not controlling.

We do not think the argument sound. It is true that in that case the court held that the master whose liability resulted solely under respondeat superior could not be joined with the servant who committed the-wrongful act. But it seems to us that the fundamental principle applied in that case is much broader. It is that wherever liability in tort rests upon two or more persons and there is no moral fault as to one, he cannot be joined with the one whose wrongful conduct created the liability. The one whose liability is imposed by law alone is not in pari delicto and should he be required to respond, he has an action for indemnity against the actual wrongdoer. In French, Admr., v. Central Construction Co., supra, the court emphasized the doctrine of respondeat superior, because it was that rule of law that imposed the liability under the facts in that case, and not because it was peculiar to the liability imposed by that special rule of law.

And joinder was not denied in that case because the employer’s liability was secondary. Both the employer and employee were primarily liable. Either could have been sued. The employer had no right to require the plaintiff to exhaust the employee before having recourse to it.

The reason given in both French, Admr., v. Central Construction Co., supra, and Clark v. Fry, 8 Ohio St., 358, 72 Am. Dec., 590, for denying the right to join is that the principal, in the event he is required to pay, has a right of action against the agent to recover for his loss resulting from the latter’s wrongful act, and that right arises because the principal is not in pari delicto. That that right of indemnity is not limited do the relation of principal and agent is shown by two recent Supreme Court cases: Maryland Casualty Co. v. Frederick Co., 142 Ohio St., 605, 53 N. E. (2d), 795, and Globe Indemnity Co. v. Schmitt, 142 Ohio St., 595, 53 N. E. (2d), 790. In the first named case the court held, as stated in the second paragraph of the syllabus, that:

“Where judgment in a tort action is had against a party only secondarily or vicariously liable for the violation of a common duty owed by two persons, upon the payment of such judgment and necessary expenses by such party, there arises an implied contract of indemnity in favor of the party secondarily liable against the person (or persons) primarily liable.”

In each case the liability resulted not from respondeat superior, but because of the occupancy of land in front of which the occupier maintained an opening in the public sidewalk, the covering of which had been removed by an independent contractor who had negligently failed to guard the opening, all without the knowledge of the occupier. In the last named case, the court quoted with approval from 40 L. R. A. (N. S.), 1148, this statement:

“ ‘The ground of the action is that the defendant has, by his own unauthorized act, exposed the plaintiff to a liability, and it is immaterial whether such liability is imposed by force of a statute or by the rule of the common law, for in either case the plaintiff is held liable by inference of law, and not by reason of his active participation in the act which was the occasion of the injury.’ ”

We think it is clear that whatever liability rests upon the Great Central Transport Corporation resulted solely by construction of law and not by reason of actual participation in either the employment by Dallas of a minor, or in the negligent conduct of the minor. The Great Central Transport Corporation was not a joint tort-feasor of either Dallas or Dallas’ minor employee or both. The elements of a joint tort did not exist. 26 Ruling Case Law, 766, Section 15.

We are aware that in a majority of the states and in the federal courts, a joinder of the employer and employee is permitted (35 American Jurisprudence, 1028, Section 592; Sherwood v. Huber & Huber Motor Exp. Co., 286 Ky., 775, 151 S. W. [2d], 1007, 135 A. L. R., 263), but the holding in French, Admr., v. Central Construction Co., supra, has stood as the unquestioned law of Ohio for thirty-seven years, during which the Supreme Court has on several occasions referred to it with approval. Baltimore & Ohio Rd. Co., v. Baillie, 112 Ohio St., 567, at 573, 148 N. E., 233; Landrum v. Middaugh, 117 Ohio St., 608, at 614, 160 N. E., 691; Goldberg v. Jordan, 130 Ohio St., 1, at 5, 196 N. E., 775; Losito v. Kruse, Jr., 136 Ohio St., 183, at 187, 24 N. E. (2d), 705, 126 A. L. R., 1194.

In the last named case the court said at page 187:

“Between them, as between tort-feasors in all the above named classes, there exists a primary and secondary liability to the injured party. In any such case the primary liability * * * rests upon the party who actually commits the wrong, while the secondary liability * * * rests upon the party who, by reason of his relationship to the wrongdoer, is also liable for the wrong committed. In such case there can be no joinder in a single action of the party primarily liable and the party secondarily liable because there is no joint liability. ’ ’

The last case in which French, Admr., v. Central Construction Co., supra, was cited and approved is Larson v. Cleveland Ry. Co., 142 Ohio St., 20, at 34, 50 N. E. (2d), 163. The defendants in that case did not bear the relation of employer and employee. However, one was charged with liability as the actual wrongdoer, whereas, the other liability arose solely by construction of law. The court held, as stated in the fifth paragraph of the syllabus, that:

“Where a primary liability for injury rests upon one party and a secondary liability for such injury rests upon another, and the breaches of duty of such parties to the injured party are not through concert of action, or independent and concurrent action, a joint judgment cannot properly be rendered against them.”

Counsel relies upon Liberty Highway Co. v. Callahan, Admx., 24 Ohio App., 374, 157 N. E., 708, in which French, Admr., v. Central Construction Co., supra, was distinguished on the ground that neither defendant in the Callahan case was an actual wrongdoer, but both were liable by construction of law only. In the case at bar we do not think that can be said in view of the allegation that Dallas employed a minor to do the work. In so doing he was an actual wrongdoer, whereas, the Great Central Transport Corporation’s liability resulting from that act would not arise because of any participation in the act, but solely by construction of law.

Counsel also relies on Wery v. Seff, 136 Ohio St., 307, 25 N. E. (2d), 692, in which the court held that the owner of an automobile who entrusted it to his fifteen-year-old son, contrary to law, was concurrently liable with the son for damages caused by the negligent operation of the automobile by the son; and that they could be joined in an action by the injured person. The court said the father was personally culpable and for that reason could have no cause of action for indemnity in the event of being required to pay the injured person.

While the allegations quoted from the third amended petition expressly state that Dallas was the agent of the Great Central Transport Corporation, at no place is it alleged that Moore was its employee. On the contrary, the averment is that Moore was 'Dallas ’ employee. It was Dallas and not the Great Central Transport'Corporation that caused Moore to call for the shipment. The personal culpability was that of Dallas and not that of the Great Central Transport Corporation.

There is no allegation that there was any other agent or officer of the defendant corporation present and participating either in Dallas’ employment of the minor or in directing the minor in the doing of the negligent act. Certainly, there is no averment that a corporate officer, with such broad authority as to make him the alter ego of the corporation, participated in either the minor’s employment or in his negligence.In the absence of such participation, the liability of the corporation must result by implication of law. It is, therefore, neither a joint nor concurrent tort-feasor and cannot be joined in an action with the other whose culpable conduct caused the injury.

For these reasons, the judgments are affirmed.

Judgments affirmed.

Ross, P. J., and IIildebrant, J., concur.


author: Ross, P. J.

text:
    Sedgwick et al., Trustees, Appellants, v. Sedgwick et al., Appellees.

      (No. 789
    Decided November 4, 1944.)

      Messrs. Heinlein, James & Jones and Mr. K. G. Cooper, for appellants.

      Mr. Gordon D. Kinder, for appellees.
   Ross, P. J.

This is an appeal on questions of law and fact from a decree of the Court of Common Pleas of Belmont county, construing certain trust provisions in the will of Ira B. Sedgwick.

The appeal was tiled by the trustees who are the only appellants, all other parties including all beneficiaries of the trust being satisfied with the decree of the trial court.

An action to construe the trust provisions of a will is a chancery case. Gearhart v. Richardson, 109 Ohio St., 418, 142 N. E., 890.

Trustees of such trust may file an appeal on questions of law and fact in this court from a decree of the Court of Common Pleas, construing trust provisions in a will, although all other parties including beneficiaries are satisfied with such decree, and such trustees are the only appellants; it being unnecessary in an appeal on questions of law and fact for this court to first determine that error prejudicial to appellants has intervened in the decree of the trial court, as is the case in appeals on questions of law only. First National Bank of Cincinnati, Exr., v. Rawson, 54 Ohio App., 285, 7 N. E. (2d), 6; In re Estate of Hoffman, 68 Ohio App., 47, 37 N. E. (2d), 646; Section 11364, General Code.

In an appeal to this court,on questions of law and fact, the case comes to this court upon the filing of the notice of appeal and the pleadings, and this court is not concerned with what decree was entered in the trial court, the same being suspended pending final action in this court. The case is tried ele novo- Questions might later arise as to the propriety of the appeal, upon questions of costs and compensation, if the appeal were frivolous in view of the decisive character of the construction of the will given by the trial court, or that the appeal was not in the interest of the trust. Under Section 11364, General Code, in an appeal on questions of law only, this court is required, first, to determine whether substantial justice has been given the appellants or, in other words, whether error, prejudicial to such appellants, has intervened in the judgment of the trial court. If substantial justice has been given appellants, the judgment must be affirmed.

No such inquiry in an appeal on questions of law and fact is required, for the reason that the judgment of the trial court, and the trial, resulting in such judgment, are not the subject of inquiry in an appeal on questions of law and fact.

Ira B. Sedgwick died testate on July 20, 1920. Item III of his will provided:

“Item III..I give, bequeath and devise to my brothers, A. L. Sedgwick and C. C. Sedgwick, in trust, the total number of shares of the capital stock of The Sedgwick Printing Company, a corporation, which I may own or have the right to dispose of at my demise; also all my right, title and interest in and to lot No. 55, at the corner of South Fourth and Hickory streets, in the city of Martins Perry, Belmont county, Ohio, and being the real estate used and occupied in part by said company; to be held, used and employed by my said trustees upon the trust and for the following purposes, to wit:

“1. I give, bequeath and devise to my said wife, Emily R. Sedgwick, if living, and after her death equally to my children then living, the entire net income or proceeds from said stock and real estate.

“2. I direct that my .said trustees shall pay to my said wife or to my children, as above provided, during the continuance of said trust, not less than seventy-five dollars ($75) per month, on the first day of each calendar month, as a part of said income or proceeds, and I hereby make the payment of said sums a charge upon my right, title and interest in said real estate.

“3. If, after the death of my said wife and at the time my youngest child then living shall arrive at lawful age, any of said stock or real estate remain in the possession of my said trustees, I direct my said trustees to transfer and convey the same to my said children in equal shares.

“4. I hereby empower and authorize my said trustees fully and completely to sell, convey, transfer, assign, mortgage, lease, rent, pledge, hypothecate, invest and reinvest the whole or any part of said stock or real estate, in such manner and form, upon such terms and conditions, and at such times, as to my said trustees may seem advisable, including, the right to terminate this trust at any time by the exercise of the said powers and authority.”

The trustees, in their petition for construction of the will and for instructions, say:

“Plaintiffs are in doubt as to what amount, if any, of premiums paid by them in the purchase of bonds and what amount, if any, of brokers’ fees, taxes and other charges paid by plaintiffs when purchasing bonds are chargeable to the corpus of said trust and what amount, if any, of said items is chargeable to the income arising from said trust, and whether and how the same should be amortized.

“Plaintiffs are in doubt as to whether the income fund found to be in their hands upon the settlement of their fourth partial account should be paid to said Emily R. Sedgwick, and, if so, when and how; or whether all or any thereof should be retained and kept invested by plaintiffs during her lifetime.”

Originally, the trust estate consisted of an undivided one-half interest in certain land and common stock of The Sedgwick Printing Company. Through various transactions, including the reorganization of the company, the sale of all its stock to purchasers and the conversion of the interest in real estate, first, into preferred stock, and then cash, the trustees were faced with the problem of reinvesting the trust estate which had ultimately been entirely resolved into cash.

In the fifth account filed by the trustees appears the following:

‘ ‘ Recapitulation — Principal Account.

Balance, fourth account $80,056.53

Deductions, less additions. 11/15/42-12/1/42 2,254.87

Balance, 12/1/42 $

“Recapitulation — Income Account. Balance, fourth account $ 24,474.11

Receipts, less disbursements 1,029.15

Balance, 12/1/42 $ 25,503.26

“Income Account — Investments, at cost.

4/25/35 — 1M U. S. Treas. 2-7/8s of 55-60 $ 1,001.87

5/1/36 — 1 % Fed. Land Bank 3s of 46-56 , 1,492.50

7/24/37 — 10M U. S. Savings Bonds, 1937 Series C 7,500.00

4/1/39 — 5M U. S. Savings Bonds, 1939 Series D 3,750.00

12/30/39 — 5M U. S. Savings Bonds, 1939 Series D 3,750.00

1/10/40' — 10M U. S. Savings Bonds, 1940 Series D 7,500.00

“$'24,994.37”

An examination of the list of assets in the principal account shows that such assets consist of cash, stocks, and bonds. The accumulated income appears to have been almost entirely converted into bonds.

The first question propounded deals with the right of trustees to charge income with necessary lawful expense incident to the conversion and reconversion of trust assets into stocks and bonds. Such expenses are mentioned as including premiums on bonds, brokers’ fees, taxes and other charges.

The weight of authority is to the effect that such expenses are a just charge against income of the trust.

The better authority, also, is to the effect that such expenses should be amortized during the life of the security. 40 Ohio Jurisprudence, 413, Section 160, citing New England Trust Co. v. Eaton, 140 Mass., 532, 4 N. E., 69, 54 Am. Rep., 493; In re Stevens, 187 N. Y., 471, 80 N. E., 358, 12 L. R. A. (N. S.), 814, 10 Ann. Cas., 511. See, also, Kemp v. Macready, 150 N. Y. Supp., 618.

The syllabus in In re Stevens, supra, is as follows:

“Where trust funds are invested by a testamentary trustee in bonds having a term of years to run and purchased at a premium, in the absence of a clear direction in the will to the contrary, such a proportionate deduction should be made from the nominal interest as will, at the maturity of the bonds, make good the premiums paid and thus preserve the principal of the fund intact; a surrogate’s decree, therefore, in a proceeding settling the trustee’s accounts awarding to a life tenant as income the whole amount of the interest coupons is erroneous.”

The next question propounded deals with the time when the income of the trust estate should be paid the beneficiaries. The terms of the trust instrument, the will, leave no doubt upon this question. The language is specific and unambiguous. It is provided, first, in paragraph one of item III, that the widow during her life is to receive the entire net income of the trust property. Obviously, this means she is to receive such net income as promptly as reasonable diligence in the administration of the trust will permit. Where the terms of a trust, therefore, provide that the beneficiaries are to receive ‘ ‘ the entire net income ’ ’ of a trust estate, no discretion is reposed in the trustees of such trust, to withhold from such beneficiaries any portion of such income except that required to defray necessary expense incident to the administration of the trust, including expenses incident to the acquisition or conversion of trust property and the payment of premiums on bonds, fees, taxes, and other charges arising from the purchase or conversion of such trust assets. 1 Restatement of Trusts, 467, Section 182; Davidson v. Miners and Mechanics Savings & Trust Co., Exr., 129 Ohio St., 418, 429, 195 N. E., 845, 98 A. L. R., 1318.

The answer to the second question is, therefore, that the life beneficiary, Emily R. Sedgwick, was entitled to the net income of the trust as it was earned, and that such payments should have been made at Qsuch times as reasonable diligence in the administration of the trust permitted. It will be noted that she was entitled only to the net income. The trustees were authorized to deduct amounts amortizing the expense incident to the acquisition of assets in the corpus of the estate. Such amounts should have been deducted, and the trustees are now permitted to deduct from payment of net income now due, an amount necessary to amortize incident expense in the acquisition of securities in the corpus of the trust estate, at this time. For instance, if such a security has run five years and has five more years before maturity, the trustees should have in the past five years deducted a proportional sum for amortization each year and incorporated such sum in the principal account. They, therefore, should at this time, out of accumulated income, take such five years ’ amortization and put the same in the principal account. Of course, the income of the trust is also chargeable with all necessary expense, including taxes, fees, etc., incident to the management and administration of the trust.

Some question is raised by the trustees as to the effect of the provision in paragraph two of item III of the will, providing for a minimum payment per month, and making such payment a charge upon the real estate now converted into securities.

Where, by the terms of the trust, the entire net income is directed to be paid to the beneficiaries, the duty to promptly pay all such net income to such beneficiaries is not in any respect abrogated or affected by a subsequent provision in the terms of the trust, requiring a minimum payment to such beneficiaries upon the first day of each calendar month, coupled with a provision to impair the corpus, to provide such minimum payment per month. The testator must be' taken to have anticipated the present contingency and if after payment of the net income, the trustees find it necessary to impair the corpus in order to continue monthly minimum payments, then instructions in this respect are clear and unambiguous.

• A judgment of the Probate Court, in a proceeding involving exceptions to an account of trustees, has been affirmed by this court in an opinion handed down with this opinion. The appropriate portion of such judgment so affirmed is as follows:

“It is further considered that the said Alvin L. Sedgwick and Chester C. Sedgwick be and they hereby are ordered to deliver to the exceptor Emily H. Sedgwick all securities and monies set out in their fifth account under the designation “income account” and there shown to be of the value of twenty-five thousand, five hundred and three dollars and twenty-six cents ($25,503.26), less such premiums, fees, taxes and other charges as were occasioned by and arose from the purchase of such bonds by them as trustees as are set out in said income account.” (Italics ours.)

As pointed out in that opinion, the charge for premiums and expenses incident to the purchase of bonds placed in the income account was improper. If net income had been paid as earned, it would have been unnecessary, except to a slight extent only, to impound the income from the trust. The judgment of the Probate Court upon exceptions to the account having been affirmed, the question of the propriety of that order now becomes a moot question in this appeal on questions of law and fact.

The construction placed upon item III of the will, although ineffective to disturb the judgment rendered upon the exceptions filed to the fifth account, which we have stated should be affirmed, will guide the trustees in future administration of the trust.

Decree accordingly.

Ross, P. J., Hildebrant and Matthews, JJ., concur in the syllabus, opinion and judgment.

Ross, P. J., Hildebra.nt and Matthews, JJ., of the First Appellate District, sitting by designation in the Seventh Appellate District.


text:
    In re Trusteeship of Trust Created by Will of Sedgwick.

      (No. 790
    Decided November 4, 1944.)

      Messrs. Heinlein, James & Jones and Mr. K. G. Cooper, for appellants, trustees.

      Mr. Gordon D. Kinder and Mr. W. G. Frasier, Jr., for appellees.
   Ross, P. J.

An appeal on questions of law and fact was filed by the appellant trustees to a judgment of the Probate Court of Belmont county, sustaining three out of sixteen exceptions filed by the beneficiaries of a trust created by the will of Ira B. Sedgwick.

Under date of March 4, 1944, there appears in the docket entries: ‘ ‘ Cause heard on exceptions to accounts exceptions sustained in part, overruled in part. ’ ’

There is nothing presented to indicate that at that time any action of the court was “filed for journalization.”

Motion, for a new trial was filed March 6, 1944.

The final judgment of the court was journalized April 29, 1944. In such journal entry, motion for a new trial was overruled.

The filing of exceptions in the Probate Court to an account of a trustee does not constitute a chancery case. Squire, Supt. of Banks, v. Bates, 132 Ohio St., 161, 5 N. E. (2d), 690.

An appeal on questions of “law and fact” to the Court of Appeals from a judgment of the Probate Court upon such exceptions will be dismissed sua sponte by the Court of Appeals for lack of jurisdiction. Squire, Supt. of Banks, v. Bates, supra; Section 6, Article IY, Ohio Constitution.

Such appeal on questions of “law and fact,” however, includes an appeal on questions of law from such judgment and the case in Court of Appeals will be heard upon such latter appeal. Section 6, Article IY, Ohio Constitution. Section 12223-22, General Code ; Nordin v. Coulton, 142 Ohio St., 277, 279, 51 N. E. (2d), 717.

This appeal will be, therefore, considered as an appeal on questions of law.

As the appellants rely strongly upon a claim that the judgment of the trial court is against the weight of the evidence, it becomes at the outset necessary to determine whether the appellants have taken the necessary procedural steps to present such assignment of error to this court.

Where an appellant from a judgment of the Probate Court sustaining exceptions to an account of trustees seeks to attack such judgment because the same is not 'sustained by the weight of the evidence, it is necessary that a motion for a new trial should have been filed, after a decision of the court, disposing of all the controlling issues in the case, had been “filed for journalization” in such Probate Court.

The notation that a decision was made on the trial docket does not constitute a filing for journalization. Krasny v. Metropolitan Life Ins. Co., 143 Ohio St., 284, 54 N. E. (2d), 952.

When the motion for a new trial was filed in the instant proceeding, no action of the court disposing of the controlling issues presented to it had been “filed for journalization” and no such entry appeared thereafter until the final judgment of the court. No motion for new trial was filed thereafter. The judgment of the court was unquestionably predicated upon the weighing of conflicting evidence upon- the issues presented. No motion for a new trial effective to present the weight of the evidence as an assignment of error in this court was duly filed. State, ex rel. Curran, v. Brookes, Jr., 142 Ohio St., 107; Eagle Savings & Loan Co. v. Hucke, 73 Ohio App., 1, 53 N. E. (2d), 537. The weight of the evidence will, therefore, not be considered by this court as an assignment of error, in its consideration of the appeal on questions of law.

What, therefore, remains?

It is also the claim of the appellants that the judgment of the Probate Court is not sustained by any evidence justifying the allowance of the three exceptions to the account of the trustees.

Whether there is any substantial evidence to support the judgment of the Probate Court, sustaining the exceptions to the account of the trustees, is a question of law, and the filing of a motion for a new trial is not necessary to present such question as an assignment of error to the Court of Appeals. Travelers’ Indemnity Co. v. M. Werk Co., 33 Ohio App., 358, 169 N. E., 584; Glen v. Aetna Life Ins. Co., 73 Ohio App., 452.

The rule involved is similar to that presented where a trial court takes the case from the jury and enters judgment upon the theory that there is no evidence to sustain a claim or defense. In such case, the question presented is one of law and does not require or permit a weighing of the evidence or filing of motion for a new trial. Maynard v. B. F. Goodrich Co., 144 Ohio St., 22.

Therefore, in order to disturb the judgment of the Probate Court in the instant case, it is necessary for this court to find, as a matter of law, that there is no substantial evidence in the record sustaining the judgment of the Probate Court. Bishop v. East Ohio Gas Co., 143 Ohio St., 541; Webb v. Champion Coated Paper Co., 68 Ohio App., 546, 31 N. E. (2d), 96.

These conclusions define the position of this court in approaching a consideration of the evidence and law involved in this appeal upon questions of law. Disposition has been made thereof at this time, for the reason that, in stating the facts and issues presented, the scope of investigation by this court is more limited than would otherwise be the case.

The three exceptions to the fifth account, filed by the beneficiaries of the trust under the will of Ira B. Sedgwick, sustained by the trial court are as follows:

“1. The said trustees, by collusion with one W. R. May, on or about the 2d. day of January, 1937, transferred ninety-three shares of the stock of The Sedgwick Printing Company, which was held by them in trust under said will for the exceptors, and received therefor approximately one-third of the true value thereof, and said trustees being officers and directors of said corporation and said May being a director of said corporation, and all having the means of knowing and knowing the true value of said stock, and said stock was transferred by the said trustees without consulting the exceptors, or any one of them and without giving notice to exceptors, or any one of them, that said sale was contemplated, or under consideration, without advising exceptors, or any one of them, of their legal rights, or making exceptors, or any one of them, aware of the material facts and without giving exceptors, or any one of exceptors an opportunity to purchase the same, or secure a buyer for the same, at the true value thereof.

‘ ‘ Said trustees do not in said account and did not in any account by them previously filed, charge themselves with the difference between what they received for said ninety-three shares of stock, to wit, twenty-one thousand two hundred and four dollars, and the true value thereof at the time of its transfer, which was approximately sixty thousand dollars ($60,000). # * #

“3. The trustees in said account show that they hold the-sum of twenty-five thousand five hundred and three dollars and twenty-six cents ($25,503.26), in what they designate as an income account and which represents income from said trust estate which should have been distributed to the exceptor Emily Sedgwick and which is her property, and, which, with interest, should be ordered distributed to said exceptor. * * *

“8. The exceptors except to the charge of $1,000 set up in said account against said trust for ordinary services rendered during the period covered by said fifth account and object to the allowance of the same for the reason that the trustees are entitled to no compensation in addition to what they have already received and are indebted to said trust for compensation which they have had allowed them by the court without divulging what they received as officers of The Sedgwick Printing Company and The Daily Times Company.”

Ira B. Sedgwick died testate July 20, 1920. By the terms of item III of his will, Alvin L. Sedgwick and Chester C. Sedgwick, his brothers, were named trustees of certain property. Emily R. Sedgwick, widow of testator, and her children were the beneficiaries of the' trust.

Item III of the will is as follows:

“Item III. I give, bequeath and devise to my brothers, A. L. Sedgwick and C. C. Sedgwick, in trust, the total number of shares of the capital stock of The Sedgwick Printing Company, a corporation, which I may own or have the right to dispose, of at my demise ; also all my right, title and interest in and to lot No. 55, at the corner of South Fourth and Hickory streets, in the city of Martins Ferry, Belmont county, Ohio, and being the real estate used and occupied in part by said company; to be held, used and employed by my said trustees upon the trust and for the following purposes, to wit:

“1. I give, bequeath and devise to my said wife, Emily R. Sedgwick, if living, and after her death equally to my children then living, the entire net income or proceeds from said stock and real estate.

“2. I direct that my said trustees shall pay to my said wife or to my children, as above provided, during the continuance of said trust, not less than seventy-five dollars ($75) per month, on the first day of each calendar month, as a part of said income or proceeds, and I hereby make the payment of said sums a charge upon my right, title, and interest in said real estate.

“3. If, after the death of my said wife and at the time my youngest child then living shall arrive at lawful age, any of said stock or real estate remain in the possession of my said trustees, I direct my said trustees to transfer and convey the same to my said children in equal shares.

“4. I hereby empower and authorize my said trustees fully and completely to sell, convey, transfer, assign, mortgage, lease, rent, pledge, hypothecate, invest and reinvest the whole or any part of said stock or real estate, in such manner and form, upon such terms and conditions, and at such times, as to my said trustees may seem advisable, including the right to terminate this trust at any time by the exercise of the said powers and authority.”

The corpus of the trust estate consisted of 93 shares of the common stock of The Sedgwick Printing Company and certain real estate. In a reorganization of the company, in 1923, the common stock was changed from $50 par value to no par stock and two shares no par issued for each par share, thus changing the holding in the trust estate to 186 shares of non par common stock.

The real estate consisted of an undivided one-half interest in the land upon which the company’s business was located.

In the reorganization of the company, provision was made for the issue of 300 shares of 8% preferred stock of the total par value of $30,000. One-half of such preferred stock was issued to the trustees in exchange for the conveyance of the undivided one-half interest in the real estate.

The holdings of common stock in the company were then in 1923: 186 shares in the trustees; 188 shares in Alvin L. Sedgwick, individually; 20 shares in Chester C. Sedgwick, individually; 2 shares in Sadie Sedgwick; 2 shares in F. K. Dixon; and 2 shares in Fanily R. Sedgwick, a total of 400 shares of common stock.

In 1935, F. K. Dixon transferred his 2 shares of common stock to W. R. May, general manager and director of the company.

Such holdings remained in this ratio until January 1937, when the trustees sold 93 shares of the no par common stock of the company to W. R. May, leaving 93 shares no par common stock still in the trust estate. May paid $228, ex-dividend, per share for the trust stock. A dividend declared shortly before made the price of such stock with dividend $303. No cash was paid by May for the trust' stock. His note bearing 6% interest, payable “on or before the death of Emily R. Sedgwick” was accepted by the trustees in payment for the stock. The stock so sold was pledged by May with the trustees as the only collateral to secure the payment of the note. This note was paid in December 1939, at the time of the sale to Dix and others. In that period $3,817.32 was paid to the trustees as interest on the note of May. The 93 shares of the common stock of the company transferred to May by the trustees and held as collateral earned for May dividends in the same period of $7,533. The stock was sold to May for $228-per share, and by him in December 1939, for $512.50 per share.

Approximately at the same time, Alvin L. Sedgwick sold to Chester C. Sedgwick 73 shares of his holdings of no par common stock at the same price as that of the stock sold by the trustees to May, to wit: $228; thus increasing the holding of Chester C. Sedgwick from 20 shares to 93 shares, and decreasing the holding of Alvin L. Sedgwick from 188 shares to 115 shares.

On December 29, 1939, the entire common stock of the company was sold to A. V. Dix .and his associates for the sum of $205,000, at the rate of $512.50 per share. The entire issue of preferred stock had shortly before been retired by payment in full of the par value thereof. An agreement by the trustees not to enter into the newspaper business was a part of the consideration.

There is nothing in the record to indicate that the trustees at the time of the sale of the trust stock to May, ill January 1937, had any reason to anticipate that in December 1939, a purchaser for the entire stock would appear and pay $512.50 per share therefor. On the other hand, there is substantial evidence to indicate that the stock sold to May in' 1937 was, at that time, worth the sum paid for it by Dix in December 1939, that is, $512.50 per share. This evidence is in direct conflict with other evidence of the trustees indicating the price paid by May was a fair price, but this court under the state of the record is bound to accept the evidence of the higher value, there being no showing -that it is not entitled to credence. In any event, this court is bound to accept under the circumstances the estimate of the trial court as to the credence to be given such evidence. The court found that the true value of the stock at the time it was sold to May by the trustees was $500 per share and allowed a recovery of the difference between the value of the stock at $228 per share and $500 per share. This appears from mathematical calculation of the figures set out.in the judgment entry of the court:

"It is therefore considered that the said Alvin L. Sedgwick and Chester C. Sedgwick be and they are hereby charged with the difference between the twenty-one thousand two hundred four ($21,204) dollars they received from W. R. May for the ninety-three shares of stock of The Sedgwick Printing Company belonging to and the property of said trust sold by them as trustees to the said W. R. May on or about the first day of January, 1937 and forty six thousand, five hundred ($46,500) dollars which the court finds was the true value of said stock at said time and which difference the court finds to be twenty five thousand two hundred and ninety six ($25,296) dollars * *

May, at the time he purchased the stock, was a director and general manager of the company. He was a nephew by marriage of the trustees. He first came to the company in 1923. He left and went to Cleveland, where he did well. He accepted an invitation to return to the company as its general manager in 1925, with the understanding he would be permitted to purchase stock in the company. In 1934, competition with the publications of the company became acute, and May, by resourceful measures, was able to preserve the successful status of the company as an advertising medium in the territory in which it operated. He made demands for stock during 1934 and the succeeding years. In 1936, the trustees, after making a computation of the value of the stock, offered it to May at a price of $228 per share, ex-dividend, or $303 per share if a contemplated dividend of $75 per share followed the stock. May elected to accept the stock at $228 per share, ex-dividend.

There can be no question that May was a valuable man and had he left the company his loss would have been severely felt. There also seems to be no question that if he had not been permitted to purchase the stock he would have severed his connections with the company. This is strenuously denied by the trustees. The sale of the trust stock was, therefore, a direct benefit to the beneficiaries, to Alvin and Chester Sedgwick, and to May, and it was also apparent that the benefit to all of those was a motivating influence in causing the trustees to sell the trust stock.

None of the beneficiaries were- consulted as to the advisability of the sale. The contemplated disposal of the trust stock was not communicated to the court, or its approval sought. The sale to May occurred on January 2, 1937. The first time anything appeared to put the beneficiaries on notice of this sale was when the third account of the trustees was filed November 15, 1938, in which appeared notations of receipts of interest from W. R. May, at various periods, and the following item under “Statement of Funds:”

“W. R. May

“Martins Ferry, Ohio, 1/2/37 — Note 93 shares S. P. Co. demand 21204 6% .........$8137.50.”

Apparently, this change in the status of assets was overlooked, for it was not until the filing of the fourth account on November 27, 1940, that any action was taken by the beneficiaries. Exceptions were then filed and later the beneficiaries were induced to withdraw the same.

It is asserted by the appellants that the rule of res judicata is applicable and bars the beneficiaries from again asserting exceptions which were previously filed and disposed of as indicated. No authority requires such a conclusion, but authority appears to the contrary. In re Estate of Russell, 60 Ohio App., 385, 21 N. E. (2d), 604; Crawford, Admr., v. Zeigler, 84 Ohio St., 224, 231, 95 N. E., 743.

In connection with the charge of concealment made by the beneficiaries, it appears that shortly before the sale of all the stock to Dix, and others, in December 1939, Ernest R. Hoge met Chester C. Sedgwick in the presence of Emily and her son James. Hoge asked Chester if the ratio of the trust stock remained the same as it was at the time of the death of Ira, the testator, and Chester replied that it had. Obviously, such was not the case, in view of the sale to May and the sale of Alvin to Chester in 1937. This evidence presents certainly an inference that the trustees desired secrecy to surround the May and Chester sales and only, as in the case of the notations in the account, permitted the most meager suggestion of the transaction to be known.

The trustees must be held to have assumed full responsibility for the fairness of the price accepted from May. The evidence shows no attempt of any kind to ascertain the fair value of the stock from any source except the calculations by one of the trustees.

There is substantial evidence, and the trial court evidently so found, that the situation of the company was not materially different in December 1939, from what it was in January 1937. The fortuitous circumstance of the purchase of the stock by Dix and others in 1939 cannot be taken as a controlling circumstance in fixing the value of the stock in 1937, but it is a circumstance to be considered with other evidence, in determining the value of the stock in 1937, it •being made to appear that no substantial change had occurred internally or externally in the status of the company between the dates involved. The trial court committed no prejudicial error in permitting the evidence of such later value, in view of the stability of all circumstances involving the company. This, in no way, affects the duty of this court to consider only the obligations resting upon the trustees at the time of the sale to May in January 1937.

The question presented is: Should they in all good conscience, looking only to the interest of the trust and the beneficiaries, permitting the interest of no other person to sway them, acting as reasonable men in the control of their own affairs, using any' special skill or knowledge they possessed, have accepted $228 per share as the fair value for the trust stock?

It is claimed by the trustees that the fairness of the sale price of the trust stock is shown in that Alvin accepted the same price at the same time in 1937 as that paid by May. But Chester, a co-trustee, paid only such price, and gave his note bearing no interest, payable upon the death of Alvin, the stock being pledged as collateral; but Alvin was to have control and receive all dividends until the note was paid.

The value of this evidence in favor of the trustees is at least questionable.

There is evidence that Emily constantly pressed the trustees for more income and that she told them at one time to sell the “whole works.”

The trustees have withheld from time to time income of the trust estate, so that at the time of the trial in the Probate Court there had accumulated in the “income account” of the trust $25,503.26. It is stated that it did not seem for the best interest of Emily to transfer this sum to her, but that it seemed better to pay her from time to time such sums as appeared required by her needs and to conserve the balance pending more severe demands, which might result from advanced age. It is sufficient to say that neither the terms of the trust nor the law justify the impounding of income.

Where a trust is created to pay the income to a beneficiary for a designated period, the trustee is under a duty to the beneficiary to pay to him at reasonable intervals the net income of the trust property. Restatement of Trusts, 467, Section 182; Davidson v. Miners & Mechanics Savings & Trust Co., Exr., 129 Ohio St., 418, 429, 195 N. E., 845, 98 A. L. R., 1318. A fortiori, where the express terms of the will indicate that iucome is to be paid promptly, the trustees have no alternative.

Reference to the terms of the will shows an intention on the part of the testator, clearly stated, requiring such immediate payment of net income. Item III, section 1, contains a specific bequest to the beneficiaries of “the entire net income or proceeds” of the entire trust property. The language of section 2 does not modify or limit this mandate in providing the trustees shall pay to the beneficiaries “not less than seventy-five dollars ($75) per month, on the first day of each calendar month as a part of said income or proceeds.” That immediate payment of net accumulated income may possibly cause impairment of the corpus by the application of the latter instruction may not be taken as a reason for failing to comply with the explicit terms of the trust. It must be presumed that the testator took such a contingency into consideration. The trial court committeed no error, prejudicial to appellants, in its decree on this point.

The trial court made the following order relative to the payment of net income to the beneficiaries:

“It is further considered that the said Alvin L. Sedgwick and Chester C. Sedgwick be and they hereby are ordered to deliver to the exceptor Emily H. Sedgwick all securities and monies set out in their fifth account under the designation “income account” and there shown to be of the value of twenty-five thous- and, five hundred and three dollars and twenty-six cents ($25,503.26), less such premiums, fees, taxes and other charges as were occasioned by and arose from the purchase of such bonds by them as trustees as are set out in said income account.” (Italics added.)

If the net income should have been paid the beneficiaries from time to time, it is difficult to see how the expense incident to the acquisition of bonds would be a just charge against such income. However, the beneficiaries, appellees, have not appealed from this order which certainly did not constitute error, prejudicial to the appellant trustees, and it cannot, therefore, be disturbed. 2 Ohio Jurisprudence, 770, Section 673. In other words, while the trial court was correct in ordering immediate payment of income to the beneficiaries and such order was adverse to the interest of the trustees, permitting them to charge for premiums and expenses incident to the purchase of bonds for the income account, was not adverse to their interests. Hence, this part of the judgment may not be disturbed in the absence of appeal by the beneficiaries.

Reference to the decisions of the courts of Ohio and other states indicates a growing tendency to require the utmost probity in the administration of trust estates. The settlor leaves to the trustees the interest of his beneficiaries. They may accept or reject the burden-of protecting these interests. If they do accept, they take upon themselves a rigorous task. It has been suggested that too strict rules applied to the actions of trustees will discourage the acceptance of such tasks. Willis, Admr., v. Braucher, Gdn., 79 Ohio St., 290, 303, 87 N. E., 185, 44 L. R. A. (N. S.), 873.

Does wisdom suggest that the high type of conduct now demanded should be modified so that those unwilling to be governed by such rigorous requirements may be employed as trustees?

The later decisions of our courts indicate that the rules governing the administration of trust property have become more and more rigid in favor of beneficiaries.

The settlor, especially if he be a testator, is entirely dependent upon a high sense of honor in his trustees. To them he leaves the task he can no longer perform. Is their good intent alone sufficient to justify calamitous consequences to the interest of beneficiaries which good judgment and care could have avoided? The rules applied by the courts in examining the management of trust estates by trustees indicate that good •intent is not sufficient.

The nature and extent of the duties and powers of a trustee are determined by the terms of the trust instrument, subject to limitations and requirements hereinafter mentioned. Restatement of Trusts 403 Section 164; Morris v. Mull, 110 Ohio St., 623, 634, 635, 144 N. E., 436, 39 A. L. R., 323; Willis, Admr., v. Braucher, Gdn., supra.

The trustee is under a duty to the beneficiary to administer the trust solely in the interest of the beneficiary. Restatement of Trusts, 431, Section 170; Moeller v. Poland et al., Exrs., 80 Ohio St., 418, 89 N. E., 100.

The trustee is under a duty to the beneficiary in administering the trust not to be guided by the interest of any third person. Restatement of Trusts, 440, comment, p.

The relation between the trustee and the beneficiary being a fiduciary relation, the standard of conduct required of the trustee is higher than that required of persons who are not in a fiduciary relation. Restatement of Trusts, 441, comment u; In re Estate of Binder, 137 Ohio St., 26, 47, 27 N. E. (2d), 939.

The trustee is under a duty to the beneficiary in administering the trust to exercise such care and skill as a man of ordinary prudence would exercise in dealing with his own property and if the trustee has greater skill than a man of ordinary prudence, he is under a duty to exercise such skill' as he has. Restatement of Trusts, 448, Section 174.

If there is more than one trustee, each trustee is under a duty to the beneficiaries to participate in the administration of the trust and to use reasonable care to prevent a co-trustee from committing a breach of trust. Restatement of Trusts, 468, Section 184.

The beneficiary has a right to receive promptly any information which will guide him in determining whether his interests have been properly served by the trustees. Restatement of Trusts, 447, Section 173, and comment C; Ohio Merchants Trust Co., Admr., v. Conrad, 42 Ohio App., 150, 181 N. E., 274; Beck v Fishel, 16 C. C. (N. S.), 130, 26 C. D., 616.

Such are tlie rules governing trustees in the administration of the trust and in their relation to the beneficiaries.

By these rules is the evidence in this case tested. They are hard and severe rules. But the duty is of high degree and the opportunity for injury great.

In reaching the conclusion that there was substantial evidence sustaining the judgment of the trial court upon all three of the exceptions, and that no error, prejudicial to the rights of the appellants, intervened in the trial, in view of the evidence and the law noted, the relative situation of the trustees and beneficiaries when- the ultimate realization upon their holdings occurred is considered. Alvin received $512.50 per share on 115 shares; Chester $514.50 upon 93 shares; and May $512.50 upon the 93 shares sold to him by the trustees. The beneficiaries alone suffered by the previous sale to May. Nothing has been shown indicating that the judgment of the Probate Court upon the question of trustees’ compensation was not sustained by substantial evidence.

The judgment of the Probate Court of Belmont county is affirmed.

Judgment affirmed.

Ross, P. J., and Matthews, J., concur in syllabus, opinion and judgment.

Hildebrant, J., concurs in syllabus.

Ross, P. J., Hildebrant and Matthews, JJ., of the First Appellate District, sitting by designation in the Seventh Appellate District. -


author: Hildebrant, J.

text:
    Wainscott, Appellant, v. Young, Appellee.
    (No. 6402
    Decided May 29, 1944.)

      Mr. John W. Cowell, for appellant.

      Mr. Raymond J. Dorger, for appellee.
   Hildebrant, J.

In a suit for partition of real estate, defendant denied plaintiff had any interest in the real estate described in the petition, alleging that the same had been awarded to her former husband, through whom defendant obtained title, as alimony in a certain divorce action filed and concluded in the Hamilton county Common Pleas Court. Plaintiff, by leave, filed a reply and amended reply, alleging that although the plaintiff here, defendant in the divorce action, was a resident of Hamilton county, Ohio, at the time and all during the time of the divorce action, no summons was ever issued in such action, and no service by publication, as required by law, was had and'the court was without jurisdiction to make any orders affecting any of plaintiff’s rights.

Defendant’s motion for judgment on the pleadings and opening statement of counsel was granted by the trial court, apparently on the theory that the proceeding here amounted to a collateral attack on the divorce decree and that the court was without power to set aside the decree of another court of concurrent jurisdiction or the same court in a former case.

This appeal is one on questions of law.

A motion for judgment on the pleadings is in substance both a demurrer and a motion, and is aimed at the substance, not the form of the pleadings and raises a question of law. 31 Ohio Jurisprudence, 877, Section 286.

In order to grant such a motion, it must appear, considering all the averments of the pleadings, that simply a question of law is presented. If an issue of fact, or a direct issue joined on any single material proposition is made, requiring the introduction of testimony by the moving party to sustain such issue, the motion will be denied.

Affirmative facts set up by the reply deemed as a matter of law to be denied, present a situation whereby the motion cannot be granted. Such is the case here. 31 Ohio Jurisprudence, 878 to 880, Section 287. The requirement of liberal construction in favor of a party against whom the motion is made, giving every reasonable inference in favor of the pleadings, is familiar to all.

Likewise, a motion to direct a verdict for defendant on the opening statement of counsel presents a question of law only. Such motion amounts to an admission by defendant of the truth of the whole statement and the trial court is required to liberally construe the statement in favor of plaintiff, to the end that every litigant shall have his day in court. See 39 Ohio Jurisprudence, 883, Section 225 et seq.

In 2 Ohio Jurisprudence, 1061, Section 832, it is stated:

“It is reversible error for the court to enter judgment for the defendant because of admissions made by plaintiff’s attorney in opening the case to the jury, where such admissions do not include every fact necessary to defeat the plaintiff; or to direct a verdict for the defendant because of the insufficiency of the opening statement of plaintiff’s counsel, if such statement is at least as broad as the petition and the petition states a good cause of action; or if, giving such statement a reasonable and liberal interpretation, it is sufficient to entitle the plaintiff to offer proof of his cause" of action and no motion has been made to make either the statement or the petition more clear and definite.”

Here, if the introduction of the record in the divorce proceedings would show on its face a lack of service of process, so that the court never acquired jurisdiction necessary to make any orders affecting plaintiff’s rights, plaintiff’s case would be established and on the motion, this being taken as true, it was error, to direct a verdict for defendant.

In 31 American Jurisprudence, 200, Section 604, it is stated:

“The rule permitting a collateral attack upon a judgment because of the absence of jurisdiction prevails where the want of jurisdiction appears upon the face of the record, or where the record affirmatively shows absence of conditions necessary to give the court jurisdiction to affect the rights of a party.”

Again, in Section 606, at page 201:

“* * * However, the rule that a judgment may be subject to collateral attack because of "its rendition against one who was never legally served with process of the court has been applied where the absence, or defect, of notice or of service of process appears upon the record.”

It would be error for the trial court to take judicial notice of the former divorce proceedings, even in a branch of the same court and, therefore, the introduction of evidence is necessary on the issue as raised by the pleadings.

The judgment is reversed and the cause remanded for further proceedings according to law.

Judgment reversed.

Ross, P. J., and Matthews, J., concur.