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ROCKEFELLER v. FIRST NATIONAL BANK OF BRUNSWICK, Trustee, et al.
19753.
Equitable petition. Before Judge Thomas. Camden Superior Court. April 9, 1957.
HAWKINS, Justice.
1. Code 37-1301, 37-1303, 37-1304, 81-204, 81-205, and 108-408 prescribe the manner and procedure to be followed in applications for sales of property belonging to trust estates; provide that the application for such authority may be made to the judge of the superior court in vacation on full notice to all parties in interest and in at the order for such sale may be granted at chambers; and empower a court of chancery, upon such an application, to authorize a trustee to sell and convey the corpus of his trust estate, where such sale is authorized or is not prohibited by the instrument creating the trust.
2. Minerals in place are a part of the land, and authority conferred by the instrument creating the trust to sell all or any portion of the trust property includes the right to sell or lease the minerals in place thereon.
3. Where the beneficiary of a trust has been adjudged incompetent, and is not capable of giving his valid consent to the conveyance of property which has been placed in trust for him prior to his becoming incompetent, and which may be conveyed by the trustee with his consent, a court of equity, in the exercise of its broad, comprehensive, and plenary jurisdiction of trusts and the estates of wards of chancery, may make the election for such incompetent, and authorize the trustee to convey the property.
4. The petition stated a cause of action, and the trial judge did not err in overruling the general demurrers thereto.
The First National Bank of Brunswick, as Trustee for the Cumberland Island property under the last will and testament of Mrs. Lucy C. Carnegie, deceased (hereinafter called the trustee), filed its petition in Camden Superior Court asking authority to execute a mineral lease covering a portion of the lands on Cumberland Island in Camden County which it held as such trustee. Service of the petition upon the beneficiaries of the trust was provided for by order of the court, and some of the beneficiaries and remaindermen, Mrs. Nancy C. Rockefeller, Mrs. Margaret J. Wright, et al., and Mrs. Lucy C. Rice, filed their separate general demurrers to the petition which the lower court overruled, and to this judgment the plaintiff in error excepts.
The petition of the trustee alleged its appointment as such trustee by Camden Superior Court and its qualification; all of the land so held by it in trust is in Camden County and the only beneficiary of the trust who resides in Georgia is a resident of Camden County. The petition alleges that shortly after its appointment the trustee learned that there was likelihood that ilmenite and other heavy minerals such as luecoxene, rutile, zirconium, staurolite and associated minerals in similar sandlike scattered grains were located upon the trust lands in sufficient quantity to make their mining profitable. The trustee then contacted some six or more companies interested in some or all of these minerals and was able to work our an agreement whereby, without any substantial expense to the trust estate, three of the larger users of such minerals conducted explorations on a tract of 7,000 acres comprising a portion of the lands of the trust. This exploration disclosed that the said minerals were present in commercial quantities. The trustee then called a meeting of the beneficiaries of the trust to secure their advice as to whether proposals to mine this tract should be invited from the three companies so conducting the exploration. A majority of the beneficiaries were present in person or represented by attorneys at law at this meeting. These beneficiaries unanimously approved the action taken to that time by the trustee and asked the trustee to call for bids for the mining of the land in accord with a form submitted to the meeting. A copy of the invitation was attached to the petition. At the request of the beneficiaries the trustee also invited alternative bids including a bid for a fee-simple conveyance to all of the real property of the trust. Bids were originally invited from American Cyanamid Company, National Lead Company, and Union Carbide & Carbon Company, but later bids were invited from American Smelting & Refining Company and The Glidden Company, and the time to submit bids was extended so that these latter companies could have time to prepare their proposals.
American Smelting & Refining Company bid $2,000,000 for a fee-simple conveyance of all real property of the trust estate. National Lead Company bid $1,650,000 for a conveyance in place of the minerals on the tract of approximately 7,000 acres that could be mined, separated and concentrated therefrom during a period of thirty years. The Glidden Company offered $1.20 a gross ton royalty for ilmenite and luecoxene and 10% of the market price of the other minerals. This bid guaranteed that the minimum total royalty payments would be $1,250,000. Three days later Glidden increased its minimum guaranteed royalty to $2,250,000. Subsequently American Smelting & Refining Company supplemented and enlarged their bid, the principal result being to reduce the area to be purchased. American Cyanamid Company and Union Carbide & Carbon Company did not bid.
After the bids were received the trustee filed an ex parte petition in Camden Superior Court, the court of its appointment, reciting the foregoing facts, and that court entered an order and judgment thereon which directed the trustee to evaluate the three proposals and, if the trustee was of the opinion that there was likelihood that a lease or conveyance of the mineral rights or a fee simple conveyance of the real property might be made on terms that would be of advantage to the trust estate and the beneficiaries, the trustee was directed to proceed with negotiations with the company which had submitted the most advantageous proposal. When the bids were evaluated the trustee found the bid of The Glidden Company to be the best and the one which would give the trust estate and the beneficiaries thereof a greater return than either of the other proposals. Negotiations were then conducted with Glidden resulting in the preparation of a form of a mineral lease which met the terms of the bid and properly protected the trust estate and the beneficiaries, and which Glidden had agreed to execute.
The petition also alleged that Mrs. Florence C. Perkins is the only child of Mrs. Lucy C. Carnegie still in life, who is incompetent, and that her son, Coleman C. Perkins, is her duly appointed, qualified and acting guardian.
The petition prayed that the court authorize the trustee to execute the lease covering the real property described therein. The will of Mrs. Lucy C. Carnegie was attached to the trustee's petition as an exhibit, the portions thereof material to the questions here presented being as follows:
"Item One. I designate and appoint my five (5) eldest children living at my death, executors of this my will, and I give, devise and bequeath unto my said executors in the capacity of trustees, upon the uses and trusts and for the purposes hereinafter mentioned, the following property, to say: My real estate in the State of Georgia, located on Cumberland Island; and this I direct my said executors in their capacity as trustees to hold during the lives of my children, to wit: William Coleman Carnegie, Frank Morrison Carnegie, Andrew Carnegie, the 2nd, Thomas Morrison Carnegie, George Lauder Carnegie, Margaret Carnegie Ricketson, Florence Carnegie Perkins, Nancy Carnegie Johnston, and the survivor of them, maintaining the same out of the general income of the trust estate hereinafter created, and permitting such of my children as desire to do so to occupy the same free of rent; the children so occupying said Island property shall pay all of the expenses of the households and stables, it being my intention that my said executors, in their capacity as trustees, shall, out of the income of that portion of my estate specifically described herein after, pay only the expenses of maintaining the said Island property and improvements thereon, with taxes and insurance, subject to the following directions, limitation and powers of sale, to wit:
"(a) If any one or more of my said children desire to sell his or her undivided interest in said Island property unto any one or more of my said children, upon such desire expressed in writing directed to said trustees, and having likewise the written consent of a majority of my said children living at the time thereof, then said trustees shall convey said undivided interest to the purchaser thereof, provided the same is sold subject to the limitation on said estates so conveyed, and likewise a limitation on the right of such purchaser, his heirs or assigns, expressed in such conveyance, to wit: that the purchaser, his heirs or assigns, shall not have or exercise the right to have said property divided, nor shall the same be subject to division by any means whatsoever until the death of the last survivor of my said children, having a right to use and enjoy the same or any portion thereof during his or her lifetime. The net proceeds realized from such sale shall be paid over by said trustees unto him or her of such children requesting his or her interest so to be sold.
"(b) If any one or more of my said children desire to sell his or her undivided interest in said Island property unto any person or persons other than my said children, upon such desire expressed in writing, directed to said trustees, and having likewise the written consent of all of my said children living at the time thereof, then said trustees shall convey said undivided interest to the purchaser thereof, provided the same is sold subject to the limitation on said estate so conveyed, and likewise the limitation on the right of such purchaser, his heirs or assigns, expressed in such conveyance, to wit: That the purchaser, his heirs or assigns, shall not have or exercise the right to have said property divided, nor shall the same be subject to division by any means whatsoever, or have the use and occupation thereof, until the death of the last survivor of my said children having a right to use and enjoy the same or any portion thereof during his or her lifetime. The net proceeds realized from such sale shall be paid over by said trustees unto him or her of such children requesting his or her interest so to be sold.
"(c) If at any time all of my said children desire and consent to divide said Island property among themselves and in such proportions as they as a whole may elect, the same shall be divided by said trustees in such manner as stated in said request, and thereupon the said trustees shall make and execute to each of my said children a deed of conveyance in accordance therewith, and the said trust shall then terminate as to said Island property.
"(d) If at any time a majority of those of my said children then living (other than those who may have disposed of their interest as provided in subsections (a) and (b) of this item) shall in writing request my said trustees to sell the said Island property or any portion thereof, the trustees shall comply with such request as soon as can be done to advantage, and the proceeds of the sale shall be paid as received to my said children then living, and to the children of such other of my said children as are then dead who have not heretofore sold their interest in said property, the children of such deceased children taking the parent's share, and also the purchaser of the interest of any one or more of my said children who may have disposed of his or her share as described in subsections (a) and (b) of this item, in such proportion as said interest may be entitled to.
"(e) The power of sale herein given to my said trustees may be exercised by them either at public or private sale and upon such terms of sale as their best judgment may dictate, without the necessity of an order from any court or tribunal whatsoever.
"(f) In the event the trust herein created for said Island property, or any portion thereof, has not terminated before the death of the last survivor of my said children, the said trust shall then terminate and the whole or any portion thereof remaining unsold shall be vested, but not before, absolutely in such persons and for such estates and proportions as would take the same under the intestate laws of the State of Pennsylvania had I died intestate possessed thereof, and all my named children had survived me and died intestate, except that the husband of any of my said daughters shall be excluded from the right to any portion thereof as tenant by courtesy.
"Item Two. I direct my office building and real estate upon which the same is located on Fifth Avenue, Pittsburgh, Pennsylvania, between Scripp and Cherry Alleys, known as the 'Carnegie Building,' to be held add kept rented by my said executors in their capacity as trustees upon the following uses and trusts: To use so much of the yearly income as received as may be necessary for the purposes and expenses of the trust herein created as to my real estate located on Cumberland Island, Georgian as long as the trust to said Island property continues; and to pay the surplus of said income, if any, yearly during the life of the trust as to said Island property to my said children then living, and to the children of such of my named children as are then dead, the children of every deceased child taking their parent's share.
"In the event the trust created for said Island property terminates by reason of the sale of said entire Island property, or by a division in kind among my said named children, then said 'Carnegie Building,' and the land upon which it is located, shall be held in further trust and be kept rented by my said trustees, who shall pay the net rents therefrom at least yearly to my children then living, and to the children of such of my named children as are then dead, the children of every deceased child taking their parent's share, and shall so continue until and at such time as a sale can be consummated of said 'Carnegie Building' and the real estate upon which it is located, upon the request in writing from a majority of my children then living, directed to said trustees that said property be sold; whereupon said trustees shall sell the same as soon as practicable, and the net proceeds shall be divided and paid over as received to my said children then living, and to the children of such of my named children as are then dead, the children of every deceased child taking their parent's share.
"In the event that the said 'Carnegie Building' and the real estate upon which the same is located is not sold as hereinabove provided before the death of the last survivor of my said children, then, and not until then, the same shall vest absolutely in such persons and for such estate and proportions as would take the same under the intestate laws of the State of Pennsylvania had I died intestate possessed thereof, and all my named children had survived me and died intestate, except that the husband of any of my said daughters shall be excluded from the right to any portion thereof as tenant by courtesy.
"The power of sale herein given to my said trustees may be exercised by them either at public or private sale and upon such terms of sale as their best judgment may dictate, without the necessity of an order from any court or tribunal whatsoever.
"Item Six . . . [Paragraph two] In all cases where I have authorized and directed my executors as trustees to make the sale of real estate, including my Island property and the 'Carnegie Building' and the real estate upon which the same is located, I authorize my trustees to lay out said real estate in such plan as they may deem most advantageous for its sale and to acquire or create such ways and other easements therein or in relation thereto as seem to them advantageous, and to make sale of such real estate without any proceedings in court, for that purpose, and to convey the same for such price, for such covenants of title and upon such terms of payment or security as they may deem to be for the best interest of my estate, and to receive and receipt for the purchase money and proceeds of sale without any duty arising on the purchaser to see to the application of the purchase money. My said executors in their capacity: as trustees may sell such of my stocks, bonds or other securities as they are herein authorized to sell, at either public or private sale, and without any obligation to obtain an order of any court whatsoever."
The plaintiff in error demurred generally to the petition on the grounds: (1) it fails to set out any cause for the granting of the relief sought; (2) that the petition and the will set out as exhibit A show on their face that the relief sought is contrary to the intent and purpose of the trust created by Item One of said will; (3) that the relief sought requires the exercise of powers and performance of acts not authorized by the terms of the trust created by the said will, and is clearly beyond the scope of any power granted by the instrument creating the trust; and (4) that the relief prayed and the order sought would authorize and direct the petitioner to commit waste of the trust assets. There are other grounds of demurrer attacking the act of the General Assembly approved February 10, 1953 (Ga. L. 1953, Jan.-Feb. Sess., p. 44), as not being applicable, and as being violative of stated provisions of the State and Federal Constitutions. The trial court overruled the demurrer, and to this judgment the plaintiff in error excepts.
(After stating the foregoing facts.) 1. While the petition of the trustee refers to the act of 1953 (Ga. L. 1953, Jan.-Feb. Sess., p. 44) as authority for the court to approve the execution of what is termed a lease of a portion of the trust property, and counsel for the plaintiff in error insist that the petition is thus confined to whatever authority may be conferred by this act, which is attacked as being unconstitutional and void, and that for this reason the petition fails to state a cause of action, we cannot agree that the proceeding is so limited in its scope. The petition is addressed to the Superior Court in and for Camden County, Georgia, and the Honorable Douglas F. Thomas, Judge of said Court. The superior courts have exclusive jurisdiction in equity cases (1945 Constitution of Georgia, Art. 6, Sec. 4, Par. 1; Code, Ann., 2-3901), and authority to exercise the powers of a court of equity (Code 24-2615 (2), 37-101, 37-124, 37-901), and the judges thereof have authority "To grant all other writs, original or remedial, either in law or equity, that may be necessary to the exercise of their jurisdiction, which is not expressly prohibited." Code 24-2616 (3). Where a petition is filed relative to an infant's or incompetent's estate or person, which seeks relief against several persons, one of whom is a resident of the county where the petition is filed, the superior court acquires jurisdiction, and the infant or incompetent immediately becomes a ward in chancery, and under the general powers of a court of equity, the judge of the superior court, presiding as chancellor, is specially vested with authority and power to superintend and care for both the person and property of the ward. Chase v. Bartlett, 176 Ga. 40 (2) (166 S. E. 832); Dooley v. Scoggins, 208 Ga. 200 (2) (66 S. E. 2d 62). Code 37-1301, 37-1303, 37-1304, 81-204, 81-205, and 108-408 direct the manner and procedure to be followed in applications for sales of property belonging to trust estates, and provide that the application for such authority may be made to the judge in vacation on full notice to all parties in interest, and that the order for such sale may be granted at chambers, and clearly empower a court of chancery upon such an application to authorize a trustee to sell and convey the corpus of his trust estate. In the present case the trustee has followed these rules of law governing such applications; the application is filed in the county where the trust property is located, in the county where one of the beneficiaries of the trust resides, and all interested parties were required to be served, the nonresident parties as provided for by Code 81-204, 81-205, and by the clerk of court mailing by registered mail to them at their respective addresses as shown by the petition a copy of the petition and the order of court thereon, and by the
clerk of court mailing to them at the same address a copy of the newspaper in which the citation appears with the same plainly marked; and a guardian ad litem was appointed for all minor beneficiaries under the will, born and to be born. The proceeding is, therefore, sufficient to invoke the general equity power of the court, irrespective of the act of 1953, supra, and the questions raised by the demurrer as to the validity of that act will not be determined. Richards v. East Tennessee, Va. & Ga. Ry. Co., 106 Ga. 614 (5) (33 S. E. 193, 45 L. R. A. 712); Mitchell v. Turner, 117 Ga. 958 (44 S. E. 17), and cases there cited; Sparks v. Ridley, 150 Ga. 210 (103 S. E. 425); Gilmore v. Gilmore, 208 Ga. 245, 247 (655. E. 2d 813).
2. We come now to the main questions raised by the general demurrer in the case, namely, whether the grant by the Superior Court of Camden County, acting under its general equity power, of authority to the trustee to execute the instrument disposing of the minerals located on a portion of the trust property is contrary to the intent and provisions of the trust created by the will; beyond the scope of any powers granted by the will creating the trust, and whether the order sought would authorize and direct the trustee to commit waste of the trust assets.
We think it proper first to determine the nature and character of the instrument here involved and the transaction here sought to be authorized. It is clearly not a lease or rental of property such as was dealt with by this court in First National Bank of Atlanta v. Robinson, 209 Ga. 582 (74 S. E. 2d 875), relied upon by the plaintiff in error, nor are the wills in the two cases, or the trusts created by them respectively, at all similar. As pointed out in the Robinson case, supra, the will there involved expressly limited the duration of the trust and the power of the trustee to lease the property, and provided that at the time fixed for termination of the trust and the distribution of the corpus of the estates the property was to go to the designated beneficiaries "in fee simple and free from any and all trusts of every character," and expressly limited the power of the trustees to execute rental leases on the property "beyond the several dates . . . for the distribution thereof." We there held that to authorize the lease sought, extending over a period of more than one hundred years, would violate the express limitations fixed by the will itself. But as we construe the present will, that case, and the ruling there made, has no application here. In the first place, the authority here sought is not for such a lease or rental of the property as was involved in the Robinson case, supra.
In Georgia, minerals in place are a part of the land -- they are real estate. Code 85-201 provides: "Realty or real estate includes all lands and the buildings thereon, and all things permanently attached to either, or any interest therein or issuing out of or dependent thereon. The right of the owner of lands extends downward and upward indefinitely." While Code 85-806 refers to the grant of a mining interest in land as a "lease," the authorities uniformly hold that minerals in place are a part of the real estate, with all the attributes and incidents peculiar to the ownership of land. 58 C. J. S. 212, 133; LaRowe v. McGee, 171 Ga. 771, 775 (156 S. E. 591); Wright v. Martin, 149 Ga. 777, 782 (102 S. E. 156). In United States v. Shoshone Tribe of Indians, 304 U. S. 111, 116 (58 Sup. Ct. 794, 82 L. ed. 1213), it is held that "Minerals and standing timber are constituent elements of the land itself." See also Davison v. Reynolds, 150 Ga. 182 (103 S. E. 248). In 36 Am. Jur. 301, 30, it is said: "Contracts for the sale of mineral lands or minerals are governed in the main by the principles applicable to sales of real property generally." Thus a "lease" of the minerals in place is a sale of a portion of the land, and authority to sell all or any portion of the trust property includes the right to sell or lease the minerals in place thereon. See in this connection Brown v. Mathis, 201 Ga. 740, 744 (41 S. E. 2d 137); Layman v. Hodnett, 205 Ark. 367 (168 S. W. 2d 819); Avis v. First National Bank, 141 Tex. 489 (174 S. W. 2d 255); Franklin v. Margay Oil Corporation, 194 Okla. 519 (153 Pac. 2d 486); Heyl v. Northern Trust Co., 312 Ill. App. 207 (38 N. E. 2d 374).
Under Item One of the will of Mrs. Carnegie she left her Cumberland Island real estate in trust during the life of the survivor of her children therein named, and provided a substantial income by Item Two of the will to be used to maintain the property, and directed her trustees to permit those of her children who desired to do so to occupy the land free of rent. It was clearly not the intention of the testatrix that this property should in all events be held until the death of the last surviving child. On the contrary, she provided two ways by which her children could terminate the trust and take the corpus themselves. The first of these, Item One (c), provides that her children could claim possession of the corpus and terminate the trust by unanimous agreement for a division of the property in kind, in which event each received fee-simple title to his or her portion of the land. The second method for terminating the trust is contained in Item One (d), which provides that if at any time a majority of her children then living who had not disposed of their interest under Items One (a) and One (b) requested the trustees to sell all or any portion of the trust property, it thereupon became the trustees' duty to comply therewith, the proceeds derived from the sale to be paid to her children then living, the descendants of deceased children, or to the purchasers of the interest of any of her children who had sold their interest in the trust lands under the authority so to do conferred by Items One (a) and One (b).
Subparagraphs (e) and (f) of Item One further demonstrate that the testatrix intended to provide for the sale of the Island property in whole or in part, subparagraph (e) providing that the power of sale given the trustees might be exercised at public or private sale "and upon such terms of sale as their best judgment may dictate, without the necessity of an order from any court," and subparagraph (f) provides that "In the event the trust herein created for said Island property, or any portion thereof, has not terminated before the death of the last survivor of my said children, the said trust shall then terminate and the whole or any portion thereof remaining unsold shall be vested, but not before, absolutely in such persons" as are therein described as remaindermen.
Similar provisions are found in Item Two, which established the trust of the Carnegie Building. There she anticipates a sale of the Island property, and provides for the subsequent sale of the Carnegie Building and for a disposition of the proceeds. Then by paragraph two of Item Six the testatrix provided: "In all cases where I have authorized and directed my executors as trustees to make the sale of real estate, including my Island property and the 'Carnegie Building' and the real estate upon which the same is located, I authorize my trustees to lay out said real estate in such plan as they may deem most advantageous for its sale and to acquire or create such ways and other easements therein or in relation thereto as seem to them advantageous, and to make sale of such real estate without any proceedings in court for that purpose, and to convey the same for such price, for such covenants of title and upon such terms of payment or security as they may deem to be for the best interest of my estate, and to receive and receipt for the purchase money and proceeds of sale without any duly arising on the purchaser to see to the application of the purchase money."
Under the foregoing provisions of the will there can be no doubt that Mrs. Florence C. Perkins, the only surviving child of the testatrix, is clothed with the right to require the trustee to sell all or any portion of the Island property, but having been adjudged incompetent, she is not capable of making that election for herself. Under such circumstances, a court of equity, in the exercise of its broad, comprehensive, and plenary jurisdiction of trusts and the estates of wards of chancery, may make the election on her behalf, if it finds such to be to her best advantage, and to the best interest of the estate. Ansley v. Pace & Co., 68 Ga. 402; Richards v. East Tennessee, Va. & Ga. Ry. Co., 106 Ga. 614 (33 S. E. 193, 45 L. R. A. 712); Sangster v. Toledo Mfg. Co., 193 Ga. 685, 691 (19 S. E. 2d 723); Palmer Brick Co. v. Woodward, 135 Ga. 450 (69 S. E. 827); Palmer Brick Co. v. Woodward, 138 Ga. 289 (75 S. E. 480); Philadelphia Trust, Safe Deposit & Insurance Co. v. Allison, 108 Me. 326 (80 Atl. 833, 39 L. R. A. (NS) 39). See also Cooney v. Walton, 151 Ga. 195 (106 S. E. 167); Orr v. Orr, 197 Ga. 866 (30 S. E. 2d 900); Turner v. Prigmore, 202 Ga. 377 (43 S. E. 2d 259); Dooley v. Scoggins, 208 Ga. 200 (66 S. E. 2d 62).
Applying the foregoing authorities to the provisions of the will here involved, and to the allegations of the petition, a cause of action was stated, and the trial court did not err in overruling the general demurrers thereto.
Bouhan, Lawrence, Williams & Levy, Gowen, Conyers, Fendig & Dickey, Hugh Dorsey, Jones, Williams, Dorsey & Kane, William B. Watson, Jr., Spencer Connerat, Malcolm Maclean, Shouse & Barker, Reese, Bennett & Gilbert, Shearman, Sterling & Wright, Beer, Richards, Lane, Haller & Buttenwieser, Nightingale & Liles, contra.
B. D. Murphy, James N. Frazer, Edward E. Dorsey, Nightingale & Liles, for plaintiff in error.
ARGUED JULY 8, 1957 -- DECIDED SEPTEMBER 6, 1957 -- REHEARING DENIED OCTOBER 11, 1957.
Saturday May 23 02:01 EDT


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