Corr Estate ( 1948 )

Removal of George Frederick Charles Franks as co-trustee under the will of Bernard Corr as appointed by Anna Corr Jones, deceased, constitutes an unwarranted exercise of power by the court below and is in conflict with prior decisions of this court. The findings of the master that the interests of the trust estate are likely to be jeopardized by continuance of appellant as co-trustee, although approved by the court enbanc, are not supported by the evidence and are, therefore, not binding upon this Court.

Analysis of the lengthy record makes readily apparent that existing acrimonious relations between petitioner, J. L. Bryant Jones, and appellant, arise principally from the unreasonable attitude of the petitioner as regards his interest in the trust. His actions precipitated litigation which has extended from July, 1945, to the present time, during which time he has sought by his demands to place appellant in a precarious position as regards the administration of the trust. By reason of the litigation, the adjudication of the President Judge of the court below, dated April 10, 1945, confirming the account of Charles J. Jones, J. Stanley Smith and the Pennsylvania Company for Insurances on Lives and Granting Annuities, appointing appellant co-trustee of the continuing trust of Anna Corr Jones and directing that a schedule of distribution be filed, has never been complied with. On October 22, 1945, the above named accountants filed a schedule of distribution which schedule has never been approved by the court. As a consequence, no assets have passed into the hands of appellant and his co-trustee. All assets remain in the hands of the prior trustee, physical possession being by the Pennsylvania Company which is continuing to act with regard thereto as theretofore with the exception that before it will distribute income in its hands, it has required authorization of appellant and his co-trustee. Notwithstanding the foregoing, petitioner has demanded that appellant execute an authorization to the former trustee to pay him a stated amount of income.

Appellant has refused to comply with that request principally because (1) no money or other property has come into his control as co-trustee; (2) he, and not the Pennsylvania Company, was the duly appointed co-trustee with Bernard Corr under the will of Anna Corr Jones and, therefore, he could not, in the exercise of his fiduciary duties, properly direct that company to determine and pay out income; and (3) if distribution of income were to be made prior to the approval of the schedule of distribution, it should be made by the Pennsylvania Company which should also assume sole responsibility therefor and which it has refused to do.

Distinction exists between the quality of evidence required to remove a testamentary trustee and a trustee appointed by the court. "A testator has, as a property right, the privilege and power to place the management of his estate in a selected person as a condition of his bounty. See Bailey's Estate,306 Pa. 334; Perry on Trusts, (6th ed.) 276; Boots Estate, 275 Pa. 366 ": Mathues's Estate, 322 Pa. 358, 359, 185 A. 768. "The status of such a fiduciary is not the same as that of a trustee, guardian or administrator appointed by the court":Crawford's Estate, 340 Pa. 187, 190, 16 A.2d 521. This Court has consistently stated that: "The removal of a trustee is a drastic action, which should only be taken when the estate is actually endangered and intervention is necessary to save trust property": Mathues's Estate, supra; Crawford's Estate, supra;Barnes's Estate, 339 Pa. 88, 14 A.2d 274.

In Hartman's Estate, 331 Pa. 422, 428, 200 A. 49, this Court adopted the opinion of the court below wherein it was said: "It has been held by the appellate courts that removal or limitation of a fiduciary appointed by will requires much stronger proof of lack of capacity or fidelity than trustees appointed by the courts: 'It is a serious matter to dismiss trustees appointed by will; much more should be shown by those who wish them dismissed than would be the case where the trustees are appointed by the court. Perry on Trusts, 6th edition, 276, says: "The power of removal of trustees appointed by a deed or will ought to be exercised sparingly by the courts. There must be clear necessity for interference to save the trust property. Mere error or even breach of trust may not be sufficient; there must be such misconduct as to show want of capacity or of fidelity putting the trust in jeopardy": Bailey's Estate, 306 Pa. 334 (337); Stevenson's Appeal, 68 Pa. 101; Neafie's Estate, 199 Pa. 307; Price's Estate, 209 Pa. 210. ' "

Notwithstanding recognition of the distinction and the imperious circumstances required to be shown before a testamentary trustee will be removed by a court, the majority opinion relies heavily upon Hodgson's Estate, 342 Pa. 250,20 A.2d 294, as a justification for the conclusion that appellant was properly removed as testamentary trustee. In so doing, this Court will have effectively removed the legal requirements of sufficiency of evidence heretofore established by the decisions of this Court as regards removal of trustees appointed by the creator of the trust and trustees appointed by the court. It will no longer be material that the trustee is one chosen by the creator and not the court.

The basic error of the majority opinion and the court below is a failure to recognize that which the record so clearly reveals — that appellant has never entered upon performance of his duties as trustee; that the Pennsylvania Company has never relinquished control of either the res or of the management of the trust; that J. L. Bryant Jones, the moving party to secure appellant's removal, has, by his obsession for litigation, not only successfully prevented appellant from ever performing any of his duties as regards administration of the trust, but also aggravated, if he has not created, unfriendly relations with appellant.

The conclusion of the majority must necessarily be that due to the appellant's conduct "the estate is actually endangered and intervention is necessary to save trust property," as required by Crawford's Estate, supra, and Barnes's Estate, supra. This conclusion cannot be reached from consideration of this record. Petitioner has involved the estate in litigation since July, 1945. There has been no loss to the estate by reason of appellant's administration thereof for petitioner has successfully prevented him from functioning as such. Appellant's abilities to manage and perform the duties of trustee have not been challenged except insofar as it is suggested that the Pennsylvania Company has greater bookkeeping facilities. This latter suggestion is unworthy of mention except for the fact that it is one of the many minor faults directed toward appellant.

Well settled is the rule that a fiduciary may not delegate to another performance of a duty involving discretion and judgment: Kohler Estate, 348 Pa. 55, 33 A.2d 920; Clabby'sEstate, 338 Pa. 305, 12 A.2d 71; Seamans' Estate, 333 Pa. 358,5 A.2d 208; Iscovitz's Estate, 319 Pa. 277, 179 A. 548;Bohlen's Estate, 75 Pa. 304; Restatement, Trusts, Section 171 (h). "This is true even though the one to whom the power is delegated is a co-fiduciary": Kohler Estate, supra, 58. It is most unreasonable to hold, in view of these established principles, that "A reasonable man in the position of this trustee would accept the figures furnished by the Pennsylvania Company and act on them unless something appeared to show that the company was irresponsible or unreliable."

The only evidence upon which the conclusion of the majority opinion could possibly be based is with regard to acrimonious relations between petitioner and appellant. In Hodgson'sEstate, supra, where a substituted trustee of a testamentary trust was removed, this Court said, page 257: "In Price's Est.,209 Pa. 210, 212, 58 A. 280, this court said: 'While inharmonious relations between trustee and cestui que trust, not altogether the fault of the former, will not generally be considered a sufficient cause for removal, yet where they have reached so acrimonious a condition as to make any personal intercourse impossible and to hinder the proper transaction of business between the parties, a due regard for the interests of the estate and the rights of the cestui que trust may require a change of trustee.' Scott on Trusts, Vol. 1, sec. 107, states: 'The question has not infrequently arisen whether the beneficiaries can force the removal of the trustee on account of friction or hostility between him and them. The mere fact that there is such friction or hostility is not necessarily a sufficient ground for removal, since otherwise the beneficiaries could by quarreling with the trustee force him out. Thus in Forster v. Davies, 4 DeG. F.J. 133, 139, Lord Justice TURNER said: "I certainly cannot agree with the argument at the bar that the mere fact of there being a dissension between one of the several cestuis que trust and the trustee is a sufficient ground for this court removing that trustee from the trust, because the consequence of that would be that one cestui que trust might at any time raise a quarrel with the trustee and thereupon come to this court to discharge the trustee and remove him from the trust upon the ground of the impossibility of their acting together. It would be the duty of the court, as I conceive, in all cases of that description, to inquire and ascertain from whose fault that dissension or that cessation of friendly intercourse has arisen." On the other hand, where there is such friction or hostility as seriously to impede the proper performance of the trust, especially if the trustee is at fault, the trustee will be removed.' "

A refusal to remove a testamentary trustee was affirmed inMathues's Estate, supra. This Court there held that active antagonism of the beneficiaries of an estate toward a trustee, while undesirable, is not sufficient to compel the court to order the latter's removal, unless provoked by him and likely to jeopardize the estate.

The statement in the majority opinion that: "It clearly appears that the interests of this trust estate are likely to be jeopardized by the continuance of appellant as co-trustee" is not explained. In what manner is the estate "likely to be jeopardized"? There is no finding that appellant is the cause of the acrimonious relations. The master has found that he is not the sole cause and the court below has remarked that the attitude of both petitioner and appellant was "childish." A most cursory reading of the record leaves no room for doubt that the actions about which petitioner complains are of his creation. He has prevented the one in whom testatrix reposed her confidence and trust from entering upon his duties. He has made numerous unreasonable demands and thereby prepared well in advance the evidence to be used against appellant. He failed in his first attempt to secure removal of appellant by order of court. He has sought to constitute appellant a mere figure-head who would nod approval to the administration of the trust estate by the Pennsylvania Company. Failing in the latter because of appellant's well-founded belief that he could not delegate the discretionary matters involved in the administration of the trust to another (Kohler Estate, supra), petitioner again renewed his attempt to secure his removal, having first secured his position by further written demands upon appellant.

The opinion of the majority sustains the action of the court below thereby permitting a beneficiary to bring about acrimonious relations between himself and trustee and to rely thereon as a cause for removal. It approves the practice of securing, by delay through litigation, administration of a trust by the person in whom the creator thereof has reposed confidence and it condemns a trustee for a reputed breach of trust occasioned in advance of his entry upon lawful performance of any duties thereunder. These results are clearly contrary to reason and to decisions of this Court.

The right of any person owning property to name his trustee-administrator has been sacredly guarded by the courts. Recognizing this right, the court below refused in the first instance to dismiss appellant-trustee. After a hearing upon the second petition, however, using the prior record not supplemented in any material respect, it entered a decree of discharge. This action necessarily defeated the intention of testatrix to have as a co-trustee an individual in whom she had the utmost confidence during her lifetime and to whom she entrusted the administration of her estate after her death. No sufficient cause for this drastic action appears in this record. The estate has not been jeopardized nor has any loss resulted from any act of appellant or his failure to act. Control of the estate has never passed into his hands and he has never had any opportunity to mismanage or in any way jeopardize the same.

The decree of the court below should be reversed and the petition dismissed. A schedule of distribution should be filed and approved and the trust res turned over to appellant and his co-trustee so that they may enter into their duties as trustees. If thereafter the estate is endangered and intervention becomes necessary to save trust property, proper proceedings may be instituted to effect appellant's removal as a co-fiduciary. Removal under the facts presented in this appeal is premature and constitutes an unwarranted abuse of discretion by the court below.