Edward Hines Lumber Co. v. Wiehe , 190 Wis. 622 ( 1926 )

The following opinion was filed June 21, 1926:

RosenbeRRY, J.

Claimant’s first contention is that the executrix was not' entitled to credit. for the item of $8,276.32, being a ten per cent, commission on the gross receipts from the Lorrington Apartments. It appears from the undisputed testimony that Wiehe as director and secretary of the claimant company was in charge of its records, accounts, collections, credits, collecting bad accounts, and payment of taxes in Chicago. For the performance of his duties he received a salary of $25,000 per year, $18,000 of which was for services as secretary of the Edward Hines Lumber Company and the remainder being salary received as one of the trustees of two subsidiary common-law trusts operated in connection with the claimant. Although he resigned and quit the employment of the company on April 28, 1923, he was paid his full salary for that year. It further appears that Wiehe had no personal interest in the Sparling account or in the Lorrington Apartments, but that that transaction was handled in the customary way for the benefit of his company. His right to this commission is based upon the language of the declaration of trust, set out in the statement of facts, in which it is said:

“After paying all charges against said property, including a fee of ten per cent, on all gross amounts collected, to C. F. Wiehe, to pay to Edward Hines Lumber Company the sum of $13,640.60, with interest,” etc.

The trust was for the benefit of Irene Sparling, the owner. After the account of the claimant had been paid, any balance was to be paid to her. The ten per cent, was to be paid to C. F. Wiehe, the representative of the claimant, upon an accounting between Wiehe and Irene Sparling. It is indicated in the evidence that the reason the title of the property was taken in the name of Wiehe was that under the laws of the state of Illinois a corporation was permitted to hold property of this kind but a limited time, and that in order to work out the account it was necessary that the legal title be taken in the name of some individual.

We are at a loss to understand upon what basis it can be claimed that an officer of a corporation, acting for it in its corporate capacity as its secretary and agent, should charge the corporation for the performance of services which come within the scope of his authority as agent and officer. An agent, even though he be an officer of the company, cannot deal with his principal’s business to his own profit or advantage. Pederson v. Johnson, 169 Wis. 320, 172 N. W. 723. All of the funds with which the transaction was carried on were advanced by the claimant except such as were derived from rentals paid to Wiehe in the course of his administration of the trust. If there had been a surplus after the claims were paid in an accounting between Wiehe and Irene Sparling, he would have been entitled to his commission, but when paid to him it would have belonged to his company. The trial court was therefore in error in allowing the executrix credit for the item of $8,276.32.

It is next claimed that the estate was not entitled to credit for attorneys’ fees and necessary accountant’s charges incurred in the defense of the litigation begun by Irene Spar-ling with reference to the Lorrington Apartments. The ordinary rule of law is that a trustee is entitled to reimbursement for necessary expenses incurred by him in litigation respecting the subject matter of the trust. The mere fact that the claimant had attorneys and accountants in its regular employment did not make it necessary for Mr. Wiehe to employ these attorneys in respect to this matter, and no reason appears why this item was not properly allowed.

It does not appear that the $300 item claimed to have been paid by Wiehe to J. C. Mossier on June 11, 1920, was paid to Mr. Mossier by Mr. Wiehe. The burden of proof as to that payment was upon the estate to show that it was paid from Mr. Wiehe’s personal funds. That burden' was not met and the item should not have been allowed.

It appearing quite conclusively that the taxes for the years 1918 and 1919 were paid by the Edward Hines Lumber .Company and not by the deceased, the trial court abused-its discretion in refusing, upon the showing made, to open proceedings for further accounting in respect to the taxes allowed as a credit to the estate, although the.claimant had through its attorneys stipulated as to the amount of the taxes. • ■

■ The fact that the taxes had been paid by the claimant instead' of by deceased was not discovered until some time later. Rules of procedure are formulated for the purpose of doing justice in an orderly way between parties properly before the court and should not be so applied as to constitute a trap and result in doing a plain injustice. The court 'seemed to be of the opinion that the burden was upon the claimant to establish a negative, that is, that 'Mr. Wiehe had not paid the taxes. That indicates a’ mistaken view of the law, and had the court properly appreciated the legal situation no doubt the matter would have been opened and further evidence received.' The action of the court in this respect should be reversed, and a hearing awarded both parties upon the matter of credit for taxes allowed to the estate. '■ . ■

On the sale of the property Wiehe demanded and received $500 in addition to the agreed purchase price on the'ground that he had been compelled to make extra trips' to Chicago. The estate should be charged with the amount and credited with such amount as Wiehe actually and necessarily expended in transacting the trust business.

With respect to the amount claimed to be due to the claimant as assignee of Irene Sparling and Jonas O. Hoover, the evidence is not sufficient to show a breach of trust. The mere fact that after the property had been sold and had been repaired and restored, placed in new hands and under new conditions, it sold for a larger amount than was procured for it on the first sale, is not proof of negligence of the trustee in making the sale, nor is there anything to indicate that the deceased violated his duty as trustee. There is no claim that he profited by the transaction in any way or derived any benefit from the sale or that the sale was made other than in good faith for the best price that the trustee could then obtain. The trial court’s determination is in this respect approved.

By the Court. — Judgment of the trial court is reversed, with directions to disallow as a credit to the estate the sum of $8,276.32 and the sum of $300, and to reopen the matter of the right of the estate to credit for the taxes for the years 1916 to 1919, inclusive, and for a retrial upon that matter, and the court should order an accounting as indicated as to the $500 item. The action of the court below is in all other respects affirmed.

The following opinion was filed July 1, 1926:

Per Curiam.

Since the mandate in this case was filed, the attention of the court has been called to the fact that the mandate might be construed as affirming the determination of the trial court as to the amount of interest which the claimant is entitled to recover from the estate. It appears that the trustee deposited $31,744.13, the amount admitted to be due the claimant, in the Continental & Commercial National Bank of Chicago, taking therefor a certificate bearing interest at the rate of three per cent. from June 21, 1924, and that the county court directed the amount of the certificate to be paid to' the claimant in full satisfaction of the claim.

Upon receipt by the trustee of the amount of the purchase price of the property held by him, it was his duty to account therefor to the claimant, and he is chargeable with interest from that date, November 27, 1923. 1 Perry, Trusts, § 468, and cases cited.

The mandate is therefore amended. to read as follows:

By the Court. — Judgment is reversed, with directions to disallow as a credit to the estate the sum of $8,276.32 and the sum of $300, and to reopen the matter of the right of the estate to credit for taxes for the years 1916 to 1919, inclusive, and for a retrial upon that matter, and the court should order an accounting as indicated as to the $500 item; claimant to recover interest on amounts found due from November 27, 1923, at the legal rate. The action of the court below is in all other respects affirmed.