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Ewing v. Ruml

decided: December 13, 1989.

MICHAEL EWING, PLAINTIFF-APPELLANT, CROSS-APPELLEE,
v.
ALVIN RUML AND LYNDA EWING AS EXECUTORS OF THE ESTATE OF ALEXANDER EWING, DEFENDANTS-APPELLEES, CITYTRUST, DEFENDANT-APPELLEE, CROSS-APPELLANT



Appeal from dismissal of claims alleging mishandling of two estates and two trusts and cross-appeal from an award of $81,769.58 for mishandling of a third trust. Dismissals affirmed. Award vacated and matter remanded for further consideration.

Van Graafeiland, Meskill and Kearse, Circuit Judges.

Author: Van Graafeiland

VAN GRAAFEILAND, Circuit Judge:

On June 19, 1986, Michael Ewing ("Michael") brought the instant action against Citytrust alone in the United States District Court for the Southern District of New York, alleging that the Bank breached its fiduciary duty to him in the administration of two estates and three trusts. The estates in question were those of Michael's grandmother, Myra, and his grandfather, George. Citytrust and Michael's father, Alexander, were co-executors of both estates. The trusts in question were a testamentary trust created by Myra, of which Citytrust was the sole trustee, a testamentary trust created by George, of which Citytrust was co-trustee with Alexander, and an inter vivos trust created by George, of which Citytrust was the sole trustee.

When Citytrust moved to join Alexander's Estate as an additional defendant, Alvin Ruml and Lynda Ewing, as Executors of the Estate of Alexander Ewing, were included as defendants pursuant to stipulation. The action thereafter was transferred to the United States District Court for the District of Connecticut. Michael now appeals from Chief Judge Daly's dismissal of Michael's claims involving Myra's estate and trust and George's inter vivos trust. Citytrust cross-appeals from an $81,769.58 judgment against it on Michael's claim involving the George Ewing testamentary trust. Although Michael's notice of appeal is general in scope, the relief he seeks is limited to his claim against Citytrust. Alvin Ruml and Lynda Ewing, as Executors of the Estate of Alexander Ewing, have not appeared in this appeal. The sole issue before us then is the conduct of the Bank.

Myra died on January 22, 1967. George died on June 3, 1967, leaving an only son, Alexander. Myra's trust named Alexander as the income beneficiary, with the remainder upon his death going to Alexander's issue [Michael] if he survived. Citytrust, as co-executor with Alexander and as sole trustee, was given the power "[to] invest and reinvest without restriction or limitation" and to hold and retain stocks, bonds or other securities "whether or not the same shall be an investment of the character deemed to be legal and proper for Trust investments under the laws of the State of Connecticut." Myra's estate was made up largely of common stocks. Because they produced only modest income, the Bank sold them and invested the proceeds in tax-exempt bonds which produced substantially higher income. The original trust corpus consisted of approximately $400,000 of these bonds.

George Ewing's inter vivos trust also consisted largely of common stocks. These stocks, having an approximate value of $1.5 million, were sold, and the proceeds invested mainly in bonds providing a higher rate of return. The income from this trust and so much of the principal "as may in the judgment of the Trustee be desirable to or for the benefit of [Alexander or Michael]" was to be paid to them "in such amounts and proportions as my said corporate Trustee in its sole and absolute discretion shall deem advisable from time to time without regard to equality of distribution." The Trustee also was empowered "to invest and reinvest in any property or security" and "to make, retain or change any investment without liability on account thereof."

George Ewing's will named Citytrust and Alexander as co-executors and as co-trustees of a trust, the corpus of which was approximately $283,497. However, Alexander delegated his responsibilities as co-trustee to Alvin Ruml, a New York City stockbroker, and Ruml thereafter offered his investment counsel and advice to Citytrust. The will empowered the corporate Trustee to pay so much of the net income to Alexander and Michael "in such amounts and proportions as my said corporate Trustee in its sole and absolute discretion shall deem advisable from time to time without regard to equality of distribution." It also authorized the corporate Trustee "to invade the principal for any reason in its discretion for the benefit of [Alexander or Michael]".

Michael argued in the district court that the defendants breached their fiduciary duties to him by (1) engaging in an investment policy favoring income production over principal appreciation; (2) delegating investment strategy decisions to Alvin Ruml; and (3) distributing $111,000, the balance remaining in George's testamentary trust, to Alexander without Michael's knowledge or consent. Both sides moved for summary judgment. The district court granted summary judgment in favor of the defendants on the first two claims and in favor of Michael and against Citytrust on the third.

Before we can address the merits of the two appeals, we must determine whether the case comes to us in proper posture for review. The district court's disposition of the summary judgment motions is entitled "RULING ON CROSS-MOTIONS FOR SUMMARY JUDGMENT." The decretal portion of this "RULING" provides that "partial summary judgment shall enter for the plaintiff only on the question of liability with regard to [the invasion of principal in the George Ewing testamentary trust]." With regard to Michael's remaining claims, the RULING provides that "partial summary judgment shall enter in favor of defendants Citytrust and the Estate of Alexander Ewing."

Citytrust moved for reconsideration of the portion of the district court's ruling that was in favor of Michael, and Michael moved for entry of final judgment and damages. On January 25, 1989, the district court denied Citytrust's motion for reconsideration and granted Michael's "application for damages . . . to the extent of $55,500 plus pre-judgment interest. . . ." The order stated in conclusion that "upon the entry of final judgment, this matter is hereby closed of record." The judgment, entered on February 10, 1989, referred simply to the court's January 25th "Ruling" on plaintiff's motion for final judgment and then stated, it is "ORDERED and [ADJUDGED] that judgment be and is hereby entered for the plaintiff in the amount of $81,769.58." This abbreviated judgment was signed and entered by the district court clerk.

Where a separate judgment thus is entered as required by Fed.R.Civ.P. 58, the preferred procedure is to make it self-sufficient and complete. 11 C. Wright and A. Miller, Federal Practice and Procedure ยง 2785 at 15-16, Reytblatt v. Denton, 812 F.2d 1042, 1043-44 (7th Cir. 1987). If this is done, it is readily apparent to all what relief has been granted and what has been denied and the date when this has occurred for purposes of appeal. See Cardillo v. United States, 767 F.2d 33 (2d Cir. 1985). However, where, as here, the appeals are timely and the district court's disposition of the case is undisputed, we may accept the appeal and interpret the judgment in the light of the district court's opinions, findings and conclusions of law. See Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 295, 87 L. Ed. 1407, 63 S. Ct. 1070 (1943); National Railroad Passenger Corp. v. City of New York, 882 F.2d 710, 713 (2d Cir. 1989); Security Mutual Casualty Co. v. Century Casualty Co., 621 F.2d 1062, 1066 (10th Cir. 1980). Any other disposition would result in a spinning of wheels for no practical purpose. See Bankers Trust Co. v. Mallis, 435 U.S. 381, 385 , 55 L. Ed. 2d 357, 98 S. Ct. 1117 (1978). Upon dismissal by this Court, the district court simply would enter a new judgment incorporating all the dispositive provisions of its summary judgment order, and review would be sought once again. Id. Accordingly, we treat the district court's disposition of the issues before it as a final dismissal of all claims made by Michael against the defendants, except that Michael was awarded judgment against Citytrust alone in the amount of $81,769.58 because of the distribution of principal to Alexander Ewing from the George Ewing testamentary trust. We affirm the district court's dismissal of the several claims that it found to be without basis. We vacate the $81,769.58 award against Citytrust and remand for further proceedings with respect to this claim.

THE DISMISSED CLAIMS

In dismissing Michael Ewing's claims based on alleged improper investment policies, the district court correctly noted that the issue of the defendants' breach of fiduciary duty was a matter of state law. Erie R.R. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938). Where, as here, the interpretation of state law is made by a district judge sitting in that state, it is entitled to great weight and should not be reversed unless it is clearly wrong. Lomartira v. American Automobile Ins. Co., 371 F.2d 550, 554 (2d Cir. 1967). Michael has not convinced this Court that the district ...


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