Law: Busby Victory

When Leonard Asbury Busby, Chicago lawyer and tractionman, died in 1930, he left an estate of $1,635,000 and debts to banks and brokerage houses of nearly $1,000,000. Named executor was the trust affiliate of Chicago’s big First National Bank, of which his good friend the late Melvin Alvah (“Mel”) Traylor was president. Busby’s will set up a trust for his widow and two children, gave the executor full power to sell any property “upon such terms as … may seem desirable.” President Traylor, who assumed direct supervision of the estate, was thus supposedly empowered to buy for as well as sell from a big portfolio of stocks without court order.*

Final accounting of the estate in September 1932 revealed that none of the legacies and only a few claims had been paid. Furthermore, the estate was hope lessly insolvent. Widow Esther C. B. Busby filed objections to the accounting, sought removal of the bank as executor and payment to her of surcharges equal to losses sustained during the bank’s stewardship. She lost her suit after hearing her friend “Mel” Traylor admit he had made a bad guess by not liquidating the estate to get it out of a dangerous speculative position in a falling market (TIME, Nov. 20, 1933). Widow Busby went to the Cook County Circuit Court, but lost again. Still unimpressed, she appealed to the State Appellate Court.

Last week, on the day before the court’s decision was to be handed down, ruddy-faced Royal Freeman Hunger, financial editor of the Chicago News, gave his version of what has become a cause celebre in Chicago trust circles. Wrote he: “The [First National] bank gave his [Mr. Busby’s] affairs close consideration. . . . The stocks . . . are still held today. Those dumb securities, a little pile of stock certificates with gilt edges, have reached out of the obscurity of the vaults to vindicate Traylor and cover the trust department of the bank with laurels. . . .”

Next day the Appellate Court handed down a unanimous decision favoring Widow Busby, reversing the inferior court decisions. Lectured Presiding Justice John J. Sullivan:

“Mr. Traylor knew that the assets of her deceased husband’s estate were all that stood between Mrs. Busby and her children and comparative privation. Yet he was willing to stake their all on a rise in the market. . . . His conduct . . . was not only imprudent and negligent but positively reckless. . . .”

Jubilant at the turn of their fortunes after six long years were Widow Busby and her children, Son John who returned home from Princeton for the decision, and pretty Daughter Janet (Mrs. Philip Walsh) of Philadelphia. Best estimates were that Mrs. Busby would recover between $250,000 and $400.000, unless the State Supreme Court upset the verdict.

*Illinois law permits trustees to hold any investments received under the trust, but like the law of Pennsylvania and many another State, specifies how trust funds may be invested when not otherwise provided by a will or trust instrument. Last week in Philadelphia, a 3-10-2 decision by the Orphans’ Court permitting the investment in corporate stocks of unrestricted trust monies created a sensation among sensation-proof Philadelphia lawyers. Wrote New-Dealing Judge William Curtis Bok, grandson of the late great publisher Cyrus Herman Kotzschmar Curtis: “Fiduciaries cannot be put in vacuum and set apart from other investors. They too mutt scan the turbulent horizon of our financial and industrial life and do the best they can.”