Marshall & Ilsley Bank v. Perry

Wisconsin Supreme Court

Marshall & Ilsley Bank v. Perry

13 N.W.2d 66, 244 Wis. 519, 1944 Wisc. LEXIS 271

DecidedDecember 8, 1943

StatusPublished

This text of 13 N.W.2d 66 (Marshall & Ilsley Bank v. Perry) is published on Counsel Stack Legal Research, covering Wisconsin Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Marshall & Ilsley Bank v. Perry, 13 N.W.2d 66, 244 Wis. 519, 1944 Wisc. LEXIS 271 (Wis. 1943).

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Barlow, J.

The question is whether the carrying charges of the unproductive trust property are payable out of the principal thereof or whether they should be assumed and paid from the residue of the personal estate. Appellant contends that the order and judgment of the court under date of October 14, 1933, construes the will and determines that the carrying charges of the trust property are to be assumed and paid from the residuary personal estate, and no appeal having been taken, it is res judicata.

We consider the court did not intend to, nor did it, construe the will in the above order and judgment. The will was executed on August 28, 1928, and admitted to probate on April 3, 1929. Shortly prior to her death, testatrix sold some of the land which was a part of this tract at a very substantial price, and there was demand for the balance of the property. It was not unnatural for her to assume that these conditions would continue to exist, at the time she executed the will. Plowever, the depression followed shortly after her death and the court in its order and judgment of October 14, 1933, recognized this fact in the following language:

“That the said testator, Trowbridge, died on the 19th day of February, 1929, and that the present depression in busi *525 ness, and particularly in manufacturing industry, has combined to create such conditions as have destroyed any demand for the said trust property during the time intervening since the death of said testator, and that the carrying charges in taxes on said real estate have at all times continued and will continue until the sale of the same can be made with all other expense connected with carrying the same, which taxes and expense amount to a considerable sum annually.”

Title to the trust real estate passed under the will to the trustees without any order of the court assigning the property to them, notwithstanding that the appointment of the trustees was deferred until the executors had settled their final account. Will of Greene (1942), 240 Wis. 452, 3 N. W. (2d) 704.

Under paragraph forty-eight of the will, the residue of the personal property passed to William R. Childs. It is the general rule of the law of trusts that any charges incurred with respect to unproductive property are payable out of the principal thereof unless the settlor manifested a different intention in the instrument creating the trust. Restatement, 1 Trusts, pp. 733, 734, sec. 241 (1), (2), (3); 103 A. L. R. 1271, note; 2 Scott, Trusts, pp. 1270, 1271, sec. 233.4; Spencer v. Spencer, 219 N. Y. 459, 114 N. E. 849; Stone v. Littlefield, 151 Mass. 485, 24 N. E. 592; In re Trusteeship Under Will of Moore, 185 Minn. 342, 241 N. W. 63. It is evident this property had value under normal conditions and that it was advisable to save it if possible. As the property was unproductive, money to pay the carrying charges had to be obtained from somewhere, either by loans from strangers or the advancement of funds of the estate bequeathed to others. The safer and virtually the only place to obtain the money was to use, temporarily, funds in the residue of the personal estate which was to pass to Childs. If this was not done, the property would be sold for taxes, and the interest of the Mitchell beneficiaries in the trust would be entirely destroyed. At that time there was no equity from which *526 William R. Childs was going to benefit, because to do so the property had to produce $50,000, plus carrying charges from 1929. Five years’ taxes had already accumulated and were unpaid amounting to $4,301.01 at the time of filing the order and judgment. The order and judgment provided—

“. . . that until sale of the real estate charged with the trust provisions expressed in the forty-seventh (47th) paragraph of her said will, that all proper carrying charges, including taxes, of the real estate which is the subject of said trust provisions, and which real estate is vacant and devoid of income, should and shall be carried out of the residue of said estate. . . .”

This must be construed to mean that the carrying charges were to be carried by the residue of the estate only “until sale of the real estate charged with the trust provisions.’3 The use of the language “until sale of the real estate”, is highly significant when full consideration is given to the fact that it was a depression period, which the court clearly recognized, and everyone naturally assumed that it was not a permanent condition. Within a month the executors filed an account with the court and set forth the payment of the taxes on the trust property and designated it as an “advancementIn preparing and filing this account the executors were complying with the order and judgment of the court, and if the carrying charges of the trust property were to be a permanent charge against the personal estate there would have been no occasion to separate it from other allowable expenses and treat it under a separate subdivision as an advancement. All that the court did was to provide a method for the payment of the taxes on the unproductive trust property by using, for the present, funds in the residue in order to preserve the trust estate until the property could be sold, extend the time for closing the estate, and direct the filing of a supplemental account, holding the determination - of all other questions in abeyance until the sale of the real estate had been made. Un *527 der the doctrine of res judicata, a judgment is conclusive only as to matters which it decides. Willey v. Lewis (1902), 113 Wis. 618, 88 N. W. 1021. The court did not decide the residue of fhe personal estate, which was bequeathed to Childs, was to be considered ultimately liable for the carrying charges of the trust estate. That would have been beyond the power of the court under the provisions 6f the will, and its order and judgment of October 14, 1933, are not to that effect or res judicata in that respect.

With the sale of the trust real estate completed this estate is ready to be closed, and the court in this proceeding was required to determine the funds available for trust purposes under paragraph forty-seven of the will and the residuary personal estate under paragraph forty-eight of the will. In the earlier paragraphs of the will specific parcels of real estate and items of personal property were given to Ethel Childs Mitchell, and likewise certain real estate and personal property was given to William R. Childs. Under paragraph forty-seven of the will the remainder of the real estate was to be sold by the trustees as soon as they were able to obtain a fair and satisfactory consideration therefor, and $50,000 of the proceeds was to be invested in securities as a trust fund for the purposes therein set forth. This left the residuary personal estate to be disposed of, and under paragraph forty-eight of the will the testatrix gave the remainder of the personal estate to her nephew, William R. Childs. Testatrix had two purposes in view. One was to create a trust from the ■ proceeds of the sale of the real estate for the benefit of the Mitchells, and the other was to dispose of the residuary personal estate, which she gave to' William R. Childs. Each purpose was separate and distinct.

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Barlow, J.

The question is whether the carrying charges of the unproductive trust property are payable out of the principal thereof or whether they should be assumed and paid from the residue of the personal estate. Appellant contends that the order and judgment of the court under date of October 14, 1933, construes the will and determines that the carrying charges of the trust property are to be assumed and paid from the residuary personal estate, and no appeal having been taken, it is res judicata.

We consider the court did not intend to, nor did it, construe the will in the above order and judgment. The will was executed on August 28, 1928, and admitted to probate on April 3, 1929. Shortly prior to her death, testatrix sold some of the land which was a part of this tract at a very substantial price, and there was demand for the balance of the property. It was not unnatural for her to assume that these conditions would continue to exist, at the time she executed the will. Plowever, the depression followed shortly after her death and the court in its order and judgment of October 14, 1933, recognized this fact in the following language:

“That the said testator, Trowbridge, died on the 19th day of February, 1929, and that the present depression in busi *525 ness, and particularly in manufacturing industry, has combined to create such conditions as have destroyed any demand for the said trust property during the time intervening since the death of said testator, and that the carrying charges in taxes on said real estate have at all times continued and will continue until the sale of the same can be made with all other expense connected with carrying the same, which taxes and expense amount to a considerable sum annually.”

Title to the trust real estate passed under the will to the trustees without any order of the court assigning the property to them, notwithstanding that the appointment of the trustees was deferred until the executors had settled their final account. Will of Greene (1942), 240 Wis. 452, 3 N. W. (2d) 704.

Under paragraph forty-eight of the will, the residue of the personal property passed to William R. Childs. It is the general rule of the law of trusts that any charges incurred with respect to unproductive property are payable out of the principal thereof unless the settlor manifested a different intention in the instrument creating the trust. Restatement, 1 Trusts, pp. 733, 734, sec. 241 (1), (2), (3); 103 A. L. R. 1271, note; 2 Scott, Trusts, pp. 1270, 1271, sec. 233.4; Spencer v. Spencer, 219 N. Y. 459, 114 N. E. 849; Stone v. Littlefield, 151 Mass. 485, 24 N. E. 592; In re Trusteeship Under Will of Moore, 185 Minn. 342, 241 N. W. 63. It is evident this property had value under normal conditions and that it was advisable to save it if possible. As the property was unproductive, money to pay the carrying charges had to be obtained from somewhere, either by loans from strangers or the advancement of funds of the estate bequeathed to others. The safer and virtually the only place to obtain the money was to use, temporarily, funds in the residue of the personal estate which was to pass to Childs. If this was not done, the property would be sold for taxes, and the interest of the Mitchell beneficiaries in the trust would be entirely destroyed. At that time there was no equity from which *526 William R. Childs was going to benefit, because to do so the property had to produce $50,000, plus carrying charges from 1929. Five years’ taxes had already accumulated and were unpaid amounting to $4,301.01 at the time of filing the order and judgment. The order and judgment provided—

“. . . that until sale of the real estate charged with the trust provisions expressed in the forty-seventh (47th) paragraph of her said will, that all proper carrying charges, including taxes, of the real estate which is the subject of said trust provisions, and which real estate is vacant and devoid of income, should and shall be carried out of the residue of said estate. . . .”

This must be construed to mean that the carrying charges were to be carried by the residue of the estate only “until sale of the real estate charged with the trust provisions.’3 The use of the language “until sale of the real estate”, is highly significant when full consideration is given to the fact that it was a depression period, which the court clearly recognized, and everyone naturally assumed that it was not a permanent condition. Within a month the executors filed an account with the court and set forth the payment of the taxes on the trust property and designated it as an “advancementIn preparing and filing this account the executors were complying with the order and judgment of the court, and if the carrying charges of the trust property were to be a permanent charge against the personal estate there would have been no occasion to separate it from other allowable expenses and treat it under a separate subdivision as an advancement. All that the court did was to provide a method for the payment of the taxes on the unproductive trust property by using, for the present, funds in the residue in order to preserve the trust estate until the property could be sold, extend the time for closing the estate, and direct the filing of a supplemental account, holding the determination - of all other questions in abeyance until the sale of the real estate had been made. Un *527 der the doctrine of res judicata, a judgment is conclusive only as to matters which it decides. Willey v. Lewis (1902), 113 Wis. 618, 88 N. W. 1021. The court did not decide the residue of fhe personal estate, which was bequeathed to Childs, was to be considered ultimately liable for the carrying charges of the trust estate. That would have been beyond the power of the court under the provisions 6f the will, and its order and judgment of October 14, 1933, are not to that effect or res judicata in that respect.

With the sale of the trust real estate completed this estate is ready to be closed, and the court in this proceeding was required to determine the funds available for trust purposes under paragraph forty-seven of the will and the residuary personal estate under paragraph forty-eight of the will. In the earlier paragraphs of the will specific parcels of real estate and items of personal property were given to Ethel Childs Mitchell, and likewise certain real estate and personal property was given to William R. Childs. Under paragraph forty-seven of the will the remainder of the real estate was to be sold by the trustees as soon as they were able to obtain a fair and satisfactory consideration therefor, and $50,000 of the proceeds was to be invested in securities as a trust fund for the purposes therein set forth. This left the residuary personal estate to be disposed of, and under paragraph forty-eight of the will the testatrix gave the remainder of the personal estate to her nephew, William R. Childs. Testatrix had two purposes in view. One was to create a trust from the ■ proceeds of the sale of the real estate for the benefit of the Mitchells, and the other was to dispose of the residuary personal estate, which she gave to' William R. Childs. Each purpose was separate and distinct. We find nothing in the terms of the will to indicate that she desired to enrich the 1 Mitchells at the expense of Childs. It cannot be contended B that, because the real estate failed to produce $50,000, this 1 was to be supplemented from the personal estate, in order to *528 provide* this amount. If we were to hold that the taxes which were advanced from the personal estate, or the unpaid taxes at the time of the sale, are to be paid from the personal estate, we would be indirectly doing what we consider was not intended by the testatrix. The trust fund was to consist of the proceeds of the sale of the real.estate less the carrying charges, and not to exceed $50,000.

The administrator de bonis non concedes that the inheritance taxes advanced for the Mitchell interests should be repaid, but contends that no interest should be allowed. They had the benefit of 'all the moneys advanced for them, and Childs, as residuary legatee of the personal estate, was therefore unable tO' have the use of these funds. It is proper that interest should be allowed on all advancements.

By the Court. — Order affirmed.

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