Richardson v. Kenworthy, Et Al., [1951] CTC 87

GORDON, J.A.:—This is an appeal from the judgment of Davis, J., in which he. ordered an accounting in the estate of Mary Ann Richardson, deceased, and made certain findings of fraud against her.

The facts are very much involved and I do not propose to set them out at length because, on the hearing, the court expressed the opinion that an accounting must be made and, as this will involve some of the issues which were tried in this action, I do not wish to say more about them than is necessary.

Mary Ann Richardson was domiciled in Iowa, U.S.A. She made her will in Iowa on June 22, 1916. She appointed as her Executor one G. S. Toliver. She died at Des Moines, Iowa, on February 7, 1921, and letters probate were issued to Toliver, her executor, shortly thereafter. By her will she directed all her debts to be paid and then directed that her husband should receive one-third of her estate, and that certain of her children should be paid certain sums because they had worked for her. The balance of her estate she directed to be equally divided between her six children, three boys and three girls.

Her property consisted of assets in the state of Iowa and two sections of land in Saskatchewan. The American executor, Toliver, wound up the estate in so far as it consisted of American assets and was discharged in the month of March, 1928. He took no steps whatever to have the letters resealed in Saskatchewan and it was not until October 17, 1928, that letters of administration with will annexed were issued to the defendant, Margaret Ann Kenworthy, in respect to the Saskatchewan assets.

The material before us discloses that at the present time the only ones interested in the estate are the plaintiff, George W. Richardson, who is described in the will as William M. Richardson, Martin Lee Ausberger, Bethel Shriver and Mary Ausberger, children of Elizabeth J. Ausberger who died on September 29, 1946, and the defendant Margaret Ann Kenworthy. The other daughter, Mary E. Kershner, got a quarter section of the Saskatchewan land and gave the administratrix, Margaret Ann Kenworthy, a full release. The two other brothers also appear to have had their claims satisfied. The deceased’s husband is dead. Shortly before her death, Mary Ann Richardson made a most unfortunate investment and after her death a judgment was obtained against her by the receiver of the Selway Steel Corporation for over $25,000. Margaret Ann Kenworthy and Elizabeth J. Ausberger bought this judgment for $4,000. It is contended on behalf of the plaintiff that they bought it as trustees for the beneficiaries under the will and that the $4,000 has been repaid. The purchasers, Margaret Ann Kenworthy and Elizabeth J. Ausberger, deny this and say that they bought the judgment in their own right and that the $4,000 has not been repaid. The attorney-at-law for Margaret Ann Kenworthy, who was acting for her in connection with the administration of the estate, wrote a letter to Mary Etta Kershner which is dated April 16, 1929, and in my view it bound the defendant, Margaret Ann Kenworthy. He was certainly her attorney looking after the estate and it was written to pacify Mary Etta Kershner, one of the beneficiaries who was evidently causing Margaret Ann Kenworthy considerable trouble. Whether it binds Elizabeth J. Ausberger and her estate will have to be decided when all the evidence is adduced.

This letter led the trial judge to believe that the Saskatchewan government had been defrauded of succession duty payable by the estate. It is only necessary for me to say that there was no foundation whatever for this charge. Succession duty is payable on the net value of the estate at the time of death and at the time of her death Mary Ann Richardson was insolvent.

After letters of administration with will annexed had been issued to Margaret Ann Kenworthy in her mother’s estate, title to the two sections of land in this province was transmitted to her and on March 14, 1929, she, in her capacity as administratrix, transferred all the land to herself and Elizabeth J. Ausberger in their personal capacities. The interest transferred to Margaret Ann Kenworthy was 63/ 100ths and that to Elizabeth J. Ausberger 37 / 100ths. There is no doubt that this transfer was put through in alleged satisfaction of the Selway Steel Corporation judgment which the two women had bought, as the total consideration shown in the two transfers is $25,000. That, in the transfer to Elizabeth J. Ausberger, is $9,600 and that, in the transfer to Margaret Ann Kenworthy, is $15,400. Of course such a transaction was wholly unauthorized by law and was a breach of trust on the part of Margaret Ann Kenworthy and I am also convinced that Elizabeth J. Ausberger must have known all about it. See Osadchuk v. National Trust Co., [1943] S.C.R. 89 (affirming, with a variation, [1942] 1 W.W.R. 163).

On December 18, 1939, Margaret Ann Kenworthy and Elizabeth J. Ausberger transferred to their sister, Mary Etta Kershner, a quarter section of land which was stated at the trial to be her full share in the Canadian estate. On December 10, 1940, an adjustment took place between Margaret Ann Kenworthy and Elizabeth J. Ausberger with the result that they became the registered owners of the seven remaining quarter sections in equal shares.

Elizabeth J. Ausberger died on September 29, 1946, and by her will named her son, Martin Lee Ausberger, her executor. Letters probate were duly issued to him in the United States and resealed in the Surrogate Court of the judicial district of Wilkie on September 19, 1947. On December 17, 1946, the undivided half interest in the lands standing in the name of Margaret Ann Kenworthy was transferred to her two daughters, Dorothy Clara Modeer and Mary Richardson Naylor. It is admitted that this transfer was voluntary. On March 13, 1948, the undivided half interest which had been in the name of Elizabeth J. Ausberger and later transmitted to her executor, Martin Lee Ausberger, was transferred to Martin Lee Ausberger, Bethel Shriver and Mabel Marie Ausberger, jointly. This transfer was also voluntary.

Between the death of Mary Ann Richardson and the issue of letters of administration with will annexed to Margaret Ann Kenworthy, that is, from 1921 until 1928, the deceased Elizabeth J. Ausberger managed the two sections of land in this province. She was an "‘executrix de son tort.’’ It was during this time that land in this province could have been easily sold.

On September 1, 1948, this action was brought for an accounting in the estate of Mary Ann Richardson, for an order vesting the lands in a judicial trustee and a declaration that the plaintiff was entitled to a sixth share of the Saskatchewan lands. I am not dealing with the pleadings at length because when the matter came up for trial on October 17, 1949, a lengthy discussion took place between counsel and the court and a consent judgment or order was agreed upon in the following words:

"‘1. It Is Hereby Declared that the Plaintiff is the person named as William M. Richardson in the Will of Mary Ann Richardson, deceased.

"2. It Is Hereby Ordered that the Defendant Margaret Ann Kenworthy as Administratrix of the estate of Mary Ann Richardson, deceased, so file with the Local Registrar and verify an account, with vouchers, of all her receipts and disbursements and the proceeds of the Canadian estate of Mary Ann Richardson, deceased, from the time when she first took charge of the said estate until the time when she transferred the lands described in paragraph 5 of the Statement of Claim to herself and to Elizabeth J. Ausberger and that such account be referred to the Local Registrar of this Honourable Court for his audit and report.

"‘3. And It Is Further Ordered that Margaret Ann Kenworthy and the estate of Elizabeth J. Ausberger do file with the Local Registrar and verify an account with vouchers, of all their receipts and disbursements and the proceeds of the Canadian estate of Mary Ann Richardson, deceased, and that such account be referred to the Local Registrar of this Honourable Court for his audit and report.

"‘4. And It Is Further Ordered that the remaining Defendants do and each of them does file with the Local Registrar and verify an account with vouchers, of all their receipts and disbursements and the proceeds of the Canadian estate of Mary Ann Richardson, deceased, and that such account be referred to the Local Registrar of this Honourable Court for his audit and report.

"5. And It Is Further Ordered that any party shall have leave to call on the references for the said accounts, witnesses viva voce and to read affidavit evidence and to cross examine as may be necessary to ascertain the true accounts.

"‘6. And It Is Further Ordered that all parties hereto do have leave to apply further in respect of the said accounting.

"7. And It Is Further Ordered that the said accounting by all the defendants be completed and audited on or before the 15th of January, A.D. 1950.

" " 8. And It Is Further Ordered that the appointment of a Judicial Trustee, the matter of a declaration that the conveyances referred to in the Statement of Claim are a fraud on the Plaintiff, the making of an Administration Order, the making of a vesting Order, the question of costs and all other matters arising out of this action be reserved to be spoken to if no settlement is arrived at on the 15th day of February, A.D. 1950, or so soon thereafter as counsel can be heard, and the Trial of this action be adjourned accordingly. ‘ ‘

It should be noted that the defence of the Statute of Limitations had been struck out for failure to deliver certain particulars so that was not gone into.

It will be noted that this consent judgment provided for the accounting by the defendants to be completed and audited on or before January 15, 1950. This date arrived and no accounting had been made. The lands were still in the names of the defendants above referred to so the action was set down again for trial on April 25, 1950. Following this hearing the judgment appealed from was given.

This case is yet another example of how estates can be dissipated by the appointment of personal administrators who have interests contrary to those of the beneficiaries in the estate.

Had the American executor proceeded with dispatch following his appointment as executor, the Saskatchewan lands could have been sold to great advantage. The beneficiaries would have received their share of the money and the estate wound up. Now, 29 years after the death of the deceased, the court is called upon to do what could have been done in two years without the slightest effort.

In my view the judgment appealed from should be set aside in all respects other than the appointment of the Toronto General Trust Corporation as judicial trustee, and the judicial trustee should now be given complete control of the seven quarter sections and placed in receipt of the rents and profits thereof. The defendant Margaret Ann Kenworthy shall file with the local registrar of this honourable court at Saskatoon her complete accounts in connection with the Mary Ann Riehard- son estate on or before March 1, 1951; the estate of Elizabeth J. Ausberger shall file with the said registrar her accounts as executrix de son tort covering the period between the death of Mary Ann Richardson and the appointment of Margaret Ann Kenworthy as administrator with will annexed; within one month thereafter the plaintiff shall file his objections thereto and in ease the parties are unable to agree thereon an issue shall be prepared, if necessary to be settled by a judge of the Court of King’s Bench, and the same shall be tried before a judge of the Court of King’s Bench.

On the failure of Margaret Ann Kenworthy or the estate of Elizabeth J. Ausberger to file the accounts within the time so limited the letters of administration with will annexed shall be revoked, and the Toronto General Trust Corporation shall be appointed judicial trustee to wind up the estate as soon as possible.

The question of the costs of these proceedings has caused me great concern. Had the plaintiff come in promptly the matter could have been disposed of years ago. On the other hand we know that he spent five years in a mental hospital and his evidence testifies to the fact that he is not mentally alert. Had Margaret Ann Kenworthy carried out her oath of office the matter could have been disposed of over 20 years ago. The plaintiff was driven to exasperation; he could not get anywhere and, even after a consent order is made for an accounting, nothing is done. I do not believe that a just order as to costs can be made until the facts have been fully found and I would reserve all the costs until the final disposition of the matter by a judge of the Court of King’s Bench, when an application therefor may be made to this court.

The judgment herein should be settled by the registrar of this court and if further directions are necessary leave to apply is hereby given.

If ever there was a case which in the interests of the litigants should be settled, this is it.

Appeal allowed.