Billings v. Billings

An award made without; hearing one of the parties is void as to him, unless he has agreet. that there shall be no hearing. A testator gave property in trust to pay the income to J. S. for his life, and then over. Held, that, under the Gen. Sts. c. 97, § 23, J. S. was entitled to the income from the testator’s death. A trustee who has intentionally appropriated to his own use the profits arising from the change of stocks in which the trust fund is invested, and from the rights to purchase new shares accruing to such stocks, should be removed from his trust.

Bill in equity against the trustee under the "will of Samuel Billings, praying for an account, for the defendant’s removal, and for further relief. The case was referred to a master, the material parts of whose report were substantially as follows: Samuel Billings died in May 1868, leaving a will, proved in the following June, by which he gave $5000 to the defendant, in trust to invest it in productive stock, to pay the income to the plaintiff, who was the testator’s nephew, during his life, and on his death to pay over the trust fund to Mary A. Cummings; he gave the residue of his estate, after payment of debts and legacies, to the defendant; and he appointed the defendant executor. The estate of the testator at his death comprised a large number of shares of the stock of the Boston and Albany Railroad Company. Of these the defendant, soon after the testator’s death, appropriated 34{-|, which at $144, the market price, were worth $5000, to be the trust fund. In July 1869 the company issued new shares, which the stockholders had a right to take at the par value of $100, at the rate of one new share for every five old shares held by them. The new shares were worth more than the par value, so that the right to subscribe was valuable, and such right, which accrued to the shares constituting the trust fund, was worth $312.50, and this sum ought to have become a part of the trust fund. But the defendant appropriated the right to his own benefit, by using it to take new shares on his own account. The defendant, in October 1869, sold the 34-f| shares of the stock of the Boston and Albany Railroad Company, and, after paying expenses of sale, bought 59 shares of the stock of the Pitta burg, Fort Wayne and Chicago Railroad Company, at $85.87$ a share, and held them on the same trust. In May 1870 he sold 50 of these shares at $94.75 a share, amounting, less expenses of sale, to $4723.72, and on the same day purchased 33 shares of the stock of the Boston and Albany Railroad Company, for $4974.75, which now stand in his name as trustee. He paid, in making this exchange, a balance of $251.03, and he also paid a succession tax to the United States of $100. For these two sums, amounting to $351.03, he was entitled to be reimbursed out of the trust fund, Deducting from this the sum of $312.50, the value of the right to subscribe for new shares of the Boston and Albany Railroad Company, wrongfully appropriated by him, there was left due to him the sum of $38.53. Of the remaining 9 shares of the stock of the Pittsburg, Fort Wayne and Chicago Railroad Company, one half of a share was needed to repay the defendant this $38.53; and the master found that the remaining 8$ shares were part of the trust fund. A question arose between the plaintiff and defendant as to whether the income of the trust fund for the first year after the testator’s death belonged to the one or the other, and they agreed orally to refer the point for decision to Henry Chapin, Esquire, as referee; but there was no agreement between them as to a hearing before him, or whether any notice of a hearing should be given to them. The plaintiff desired and understood that an opportunity to be heard should be given. The defendant understood that the referee was to decide the question on the will without a hearing. No hearing was had, and no notice thereof given, and the referee decided for the defendant. The master found that the award was not binding on the plaintiff, and that he had a right to the income from the testator’s death. The plaintiff was a person of feeble intellect, without skill or experience in business. The defendant was accustomed to business. The defendant claimed not only the first year’s income of the trust fund, but also the rights accrued on the shares of the stock of the Boston and Albany Railroad Company, and whatever remained of the shares of the stock of the Pittsburg, Fort Wayne and Chicago Railroad Company, after the sale of a sufficient number to realize $5000; and, these claims caused great embarrassment and delay in the proper execution of the trust. The defendant did not state a clear or satisfactory account of the income or profits of the trust, and, as residuary legatee, was opposed in interest to the plaintiff; and, without asking the direction of the court, constantly acted on a construction of the will most favorable to his own interests. The defendant alleged exceptions to the master’s report, and the case was reserved by Gray, J., on the pleadings, master’s report and exceptions, for the consideration of the full court.