Equity Jurisdiction, Accounting, Discovery. Trust. Agency. Equity Pleading and Practice, Appeal.
Where the owners of improved real estate appoint an agent to manage the property under an irrevocable power for a term of years, accounting to them for the rents after retaining in his discretion such sums as may be required for the disbursements enumerated in the instrument of appointment, a fiduciary relation is created which entitles the owners of the real estate to an accounting in equity.
In a suit in equity by the owners of improved real estate against an agent appointed by them to manage the property under an irrevocable power for a term of years, accounting to them for the rents after retaining in his discretion such sums as might be required for the disbursements enumerated in the instrument of appointment, for an accounting, and seeking discovery as to the amount of insurance procured and placed by the defendant on each parcel of real estate, giving the rates paid and the names of the companies which issued the policies, the judge found that the insurance companies were solvent and declined to order the defendant to disclose their names or to give further information concerning the insurance. Held, that the plaintiffs were entitled to a full discovery to ascertain whether the disbursements charged by the defendant actually had been made, including the names of the companies and the premiums paid for insurance to companies of which the defendant was the local agent in which it appeared that so far as possible he had placed the insurance. Held, also, that the judge's finding of financial soundness did not involve a finding that the defendant was not obliged to account further by stating the names of the companies, and that the refusal to order a disclosure of the names was a ruling of law, which on appeal could be reversed.
BRALEY, J.
Under the agreement between the parties the defendant while authorized to act as their agent also was given an irrevocable power for a term of five years to manage their property consisting of improved real estate, accounting to each of the plaintiffs for one third of the rents, after retaining in his discretion such sums as might be required for the disbursements enumerated in the instrument. The bare relation of principal and agent may be insufficient to maintain a bill in equity by the principal for an accounting unless the account is so complicated that it cannot conveniently be stated or settled at law, but the fiduciary character of the relations created by this agreement constituted the defendant, who has accepted the appointment, a trustee. R.L.c. 159, § 3, cl. 6. Badger v. McNamara, 123 Mass. 117. Pratt v. Tuttle, 136 Mass. 233. Brown v. Corey, 191 Mass. 189. Makepeace v. Rogers, 4 DeG., J. S. 649. Sawyer v. Cook, 188 Mass. 163, 165. By his acceptance it then became his duty faithfully to administer the property, to keep accounts of all expenditures, and to render an account to the plaintiffs at reasonable times with full information as to all details of his management. The bill charges that in addition to the statement contained in the accounts rendered the plaintiffs requested that the amount of insurance procured and placed on each parcel of the estate, might be further itemized by including the rates paid, and the names of the companies which issued the policies. The presiding judge having found that these corporations were solvent declined to order the defendant to disclose their identity. No satisfactory reason, however, appears why this information should not be given. The plaintiffs were entitled to a full discovery, which was not limited to the financial soundness of the insurers, to be determined by the opinion of their agent, although this opinion, upon his testimony alone, was confirmed by the court. It was the money of the plaintiffs that had been paid, and they had a right fully to explore the entire field of their agent's operations for the purpose of ascertaining whether the disbursements charged had actually been made, and this would include the premiums paid for insurance to companies of which the defendant was the local agent, and in which as far as possible he had placed the insurance.
In a suit in equity a finding of fact upon conflicting evidence, especially where the credibility of witnesses is involved, will not be reversed on appeal even if all the evidence is reported unless clearly wrong. Poland v. Beal, 192 Mass. 559. Harvey-Watts Co. v. Worcester Umbrella Co., ante, 138. This rule of practice, however, has no application in the present case, for the finding of financial soundness did not involve a finding that the defendant was not obliged to account further by stating the names of the companies. Such a conclusion is in the nature of a ruling of law, which for the reasons given cannot be sustained. The decree of the Superior Court must be reversed, and the case is to stand for further hearing.
Ordered accordingly.
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