Borga v. Hendrickson , 120 Colo. 294 ( 1949 )

HIRSHORN in his will provided that his one-half interest in the Algerian Club be disposed of in the following manner: He directed his executor to ascertain all bona fide employees who had worked in the club regularly for a period of not less than one year immediately prior to his death "and to all employees who have been determined by my executor to be bona fide employees of the Algerian Club for more than one year prior to my death" he bequeathed his interest. Petitioner Hendrickson sought, in the county court of the City and County of Denver by petition filed in the estate, a construction of her rights under the will, alleging that she was a bona fide employee and entitled to participate, and that the executor "has arbitrarily and capriciously extruded your petitioner as said beneficiary."

The record fails to disclose what parties, other than Borga, were joined in this proceeding, but no question is raised as to the parties joined or sufficiency of service or as to the timeliness of this proceeding. By joining issue herein the executor admits the finality of his decision.

After determination of the matter in the county court before an outside judge sitting for the Denver County Judge, it was tried de novo on appeal, in the district court where the court made finding essentially as follows: "In my judgment the petitioner, Georgetta Hendrickson, was a bona fide employee of the Club Algerian. The evidence establishes, I think, that she had worked there regularly for a period of not less than one year prior to the death of Hyman Hirshorn." * * * "I think the county court was right in its adjudication that petitioner was entitled to share. The judgment of the county court finding that petitioner was one of the employees mentioned in the will * * * is affirmed * * *. Then I find the issues joined in favor of the petitioner and against the respondents and render judgment in her favor."

[1] The important thing which the court seems to have overlooked is that Hirshorn did not bequeath his interest to the bona fide employees who had worked in the club regularly for a period of not less than one year. In such case the judgment of the court as to who were such employees should prevail. What he did do was to direct his executor to ascertain such bona fide employees and to bequeath his interest "to all employees who have been determined by my executor to be bona fide employees." The issue tendered by the petition was not whether in the judgment of the court petitioner was an employee, but whether the executor "has arbitrarily and capriciously extruded your petitioner as said beneficiary." Under such testamentary provision, it is the judgment of the executor and not the judgment of the court which must prevail.

American Board of Com'rs of Foreign Missions v.Ferry, Ex'r., 15 Fed. 696, was a suit by beneficiaries against the executor for construction of the amount of a legacy. The will provided that in case of any doubt or uncertainty touching any matter contained in the will the existing male executor should act as umpire and his determination and decision should be accepted as final. Upon dispute as to interpretation of the will the court found such designation not unreasonable and said: "The rule, as we conceive it, is, when an arbiter honestly and in good faith exercises his power and passes upon a doubtful question, either of law or of fact, his decision will not be revised by a court, notwithstanding the court, whose interposition is invoked, may think his decision erroneous. As a rule the courts will not interpose to correct a mere mistake in the judgment of an arbitrator. But if the arbitrator refuses to act, awards upon a matter not submitted, makes an incomplete determination, or commits a gross mistake or error of judgment, evincing partiality, corruption, or prejudice, transcends his authority or violates some statutory requirement on which the dissatisfied party had a right to rely, or commit some other like error, courts of equity may interfere and correct the error." The court further said that there, "the decision made, if erroneous, is not so manifestly wrong as to evince prejudice, partiality, or corruption."

Wait et al., Executors v. Huntington, 40 Conn. 9 (1873), was an action by an executor for advice as to the construction of a will. The will provided that should any questions arise as to the meaning of the instrument, the distribution of the estate should be made "to such persons and associations as my executors shall determine to be my intended legatees and devisees, and their construction of my will shall be binding upon all parties interested." The court determined: "That it was the clear wish of the testator that the executors of his will should be a domestic tribunal to settle the meaning and legal construction of the instrument;" that the interest of the executors having been known to the testator would not disqualify them, and that under the power conferred upon them their construction of the will would be binding upon the beneficiaries, except in case of clear abuse of their power, in the event of a bona fide question and in the absence of arbitrary action.

Talladega College v. Callanan, 197 Ia. 556,197 N.W. 635, was a proceeding by a legatee against executors to construe a will. Testator constituted his executors as final arbiters to determine the meaning of his will and the amount due a legatee. The court said the decisive feature of the case was "whether the decision of the executors is final and binding upon the plaintiff of the dispute presented by it;" that, "This provision of the will is one which has been universally sustained by the courts in the comparatively few cases wherein the question has been raised," and that the court had only to decide whether the decision of the executors was "an abuse of their power, in that it is arbitrary and contradictory to the clear terms of the will; or whether it is honest and in good faith, in that it is sustained by theory and argument reasonably plausible."

Buchar's Estate, 225 Pa. 427, 74 Atl. 237, was an appeal by an executrix from the auditor's report. Testator devised an interest to his son at such time when the executors or survivors of them should decide that in their judgment he was competent morally to have control of it. On the evidence submitted, the trial court found that the decision of the executrix "was not an honest exercise of such discretion, but rather from caprice, ill will and in wanton disregard of the interests" of the testator, and this was affirmed on appeal.

In re DeBancourt's Estate, 279 Mich. 518,272 N.W. 891, 110 A.L.R. 1346, was an appeal by an executor and residuary legatee from order entered on final accounting. The court said: "The discretion vested by the testator, by his will, in his executor is under the circumstances not subject to review by the court. So long as the executor exercises or attempts to exercise the power and discretion vested in him by the testator, it is none of the court's business. The court may interfere only in case the executor has proceeded from selfish, corrupt, or improper motives. And under such circumstances the burden is not upon the executor to prove and establish the reason for his action, but is upon the legatee to prove and establish such motives."

National Metropolitan Bank v. Joseph Gawler's Sons,Inc., 168 F.2d 571, United States Court of Appeals, District of Columbia, was an action against executors. The court said, "The testator left the matter to their discretion. Therefore, their action must stand unless arbitrary or abusive. Only in such circumstances has a court power to interfere. [citing cases]. Nor was the burden upon the executors to establish good faith and sound discretionary action. He who attacks must prove the charge."

In 21 Am. Jur., p. 492, § 213, is the following: "The reason for this hesitancy on the part of the court to interfere is that the testator has a right to dispose of his property as he pleases, and he may subject all, or any part, of it to the discretion of his executor or trustee. This discretion, properly exercised, will not be interfered with by the courts. Where the power given to an executor to do, or not to do, a particular thing is wholly discretionary, the court has no jurisdiction to lay a command or prohibition upon him as to the exercise of that power, provided his conduct is bona fide and his determination is not influenced by improper motives."

The rule above enunciated seems to have been universally followed, as we have found no authority to the contrary. Accordingly, the question involved here is not whether in the judgment of the court petitioner should have been included, but whether the action of the executor in excluding her was arbitrary and capricious. That this was understood by petitioner's counsel is evidenced from the petition in which is tendered the one issue that the executor "has arbitrarily and capriciously extruded your petitioner as said beneficiary."

[2, 3] In considering this issue, — that the executor has arbitrarily and capriciously excluded petitioner as beneficiary: 1. The presumption is that the executor acted fairly, and the burden of proof is upon petitioner.National Metropolitan Bank v. Joseph Gawler's Sons,Inc., supra; In re DeBancourt's Estate, supra. 2. The conclusion as to arbitrary and capricious action must necessarily be determined, not from the evidence now submitted to the court, but from the facts known or called to the attention of the executor. Here the executor was not even called as a witness to testify as to the reasons for his decision, nor was any showing made as to why he was not called or as to what facts, if any, he considered or refused to consider or of any further evidence he should consider in making his decision. 3. If we assume that, by reason of the failure of the executor to take the stand voluntarily and testify as to the reason for his decision, he must be considered as accepting the evidence introduced at the trial as constituting the evidence upon which he made his decision, still, in order for petitioner to prevail, the evidence must with such certainty contradict the determination of the executor as to convince the court that there was not merely a mistake of judgment on his part, but arbitrary action without basis of reason.

4. In the case before us there is no such positive, certain and convincing evidence. Here, the testimony in substance was as follows:

Hirshorn's partner testified as a witness for petitioner that Hirshorn died March 5, 1946; that the club was closed on account of damage from fire in latter March or early April, 1945, and was again opened the first of August; that petitioner was then employed elsewhere and did not return to work until October; that she worked from then until sometime in January, at which time she quit; that she was employed as hat check girl and her compensation consisted of one-half of the tips she received, and as such was not under social security; that at the time Mr. Hirshorn died she was not working there in any capacity and had not been for a period of two months; that when she quit work in January "she told me her husband didn't want her to work any more. Besides, she was not feeling well, either, and she wants to give the job up;" that she did not work thereafter until about September following Hirshorn's death. Petitioner's husband testified that she returned to work on September 9, 1945, after having remained at home through August and until then, because of his return from the service, and that she was then employed there "until about the middle of February." It is undisputed that she did not work through the month of August or until the 9th of September, except for two Saturday nights, and that she did not work from the middle of February until after Hirshorn's death. Petitioner, whose testimony was received only concerning matters subsequent to the death of Hirshorn, testified that after Hirshorn's death "I worked extra, more or less, right after he died. In March I worked several nights for the girl who had taken my place, then I went to work the middle of April and worked steady." Her own testimony, that she returned to work as an extra following Hirshorn's death, is not very convincing that she worked there regularly for a period of not less than one year immediately prior to his death.

[4] This uncertain and conflicting testimony makes decision difficult. It involves interpretation of the word "regularly." In the words of the Iowa court, in TalladegaCollege v. Callanan, supra, there is "theory and argument reasonably plausible" to support the finding of the court that petitioner had worked regularly and been a bona fide employee for more than one year prior to Hirshorn's death, and there is "theory and argument reasonably plausible" to support the finding of the executor to the contrary. It is certainly not so plain and convincing as to justify a finding of bad faith, improper motive or arbitrary action on the part of either, and such finding is essential to petitioner's claim.

5. The court made no finding that the action of the executor was arbitrary and capricious. The record shows that no such finding was made by the county court and the finding of the district court was that, "In my judgment the petitioner * * * was a bona fide employee * * *. The evidence establishes, I think, that she had worked there regularly * * *. The judgment of the county court finding that petitioner was one of theemployees * * * was right * * * and * * * is affirmed."

[5, 6] Stress is laid by the trial court on the fact that shortly after Hirshorn's death his partner brought action for dissolution of partnership, confirmation of sale of the club and declaratory judgment, in which he included petitioner Hendrickson as a defendant, alleging that to the best of plaintiff's knowledge, information and belief and according to the payroll records of the club she was among those entitled to take as beneficiaries. It is difficult to find any probative force in such evidence. (1) The plaintiff in that action was not the executor, and evidence of the opinion of another person as to who were beneficiaries was incompetent and not properly admissible on the issue of the executor's good faith; (2) the partner testified that his attorneys, not he, determined who should be joined as defendants in that action; and (3) such an action is in the nature of an action to determine interests in property, wherein a cautious attorney would join as defendants all who might have even a remote claim to an interest, without passing judgment thereby on the merits of such claim.

Accordingly, the judgment is reversed and the cause remanded with instructions to dismiss the petition.

MR. CHIEF JUSTICE HILLIARD, MR. JUSTICE HAYS and MR. JUSTICE HOLLAND dissent.