181 N.W.2d 413 | Wis. | 1970
The trial court was correct in holding it had jurisdiction to decide the issue, but we do not agree it was bound by the rules of unjust enrichment and not by the trust instrument. The provisions of see. 231.36 (2) and (4), Stats., created in 1959, relating to a nontestamentary trust proceeding in the county and circuit courts, do not prevent a county court in probate from, passing upon a claim based upon a trust instrument. The county court may hear and decide claims even though based upon the provisions of a trust agreement. Sec. 313.05 (1), Stats.; Bostwick v. Estate of Dickson (1886), 65 Wis. 593, 26 N. W. 549. Nor does sec. 313.05 (1) providing claims must be just to be allowed require the application of the doctrine of unjust enrichment.
The gist of the position of the executor of the estate is that the payments made to the decedent were in accordance with the terms of the trust instrument, that the fees were not excessive, and the trustees were not guilty of any bad faith, fraud, or breach of trust. Claimants take the view the payments were in direct violation of the provisions of the trust instrument and that the decedent received compensation without earning it, and therefore she breached her trustee’s duty of loyalty and her duty to keep and render accounts. The claimants further argue that because the decedent breached the trust, she is entitled to no compensation as trustee or as employee.
The trust instrument, Section 3, provided “compensation of the personal trustees shall be on a per diem basis for the time spent.” The instrument then set forth the compensation for the certified public accountant should be at the rate of the then prevailing charge of the best certified public accountants in the city of Madison. Professional work as an accountant was to be compen
The decedent was paid a flat rate of $5,000 per year as trustee. Although no fraud or bad faith is shown on the part of the decedent or other trustees and none may be implied, nevertheless the trust instrument was breached in the manner in which the decedent’s compensation as trustee was determined. A trustee has a duty of loyalty and a standard of conduct of a fiduciary is higher than that required of persons not in a fiduciary relationship. Restatement, 1 Trusts 2d, comment w, p. 373, sec. 170. Being one of several beneficiaries only emphasized the care which the decedent should have exercised as trustee
Since the standard of compensation for trustees was fixed in the instrument on a per diem basis and not in relation to net income, the reasonableness of the decedent’s compensation as trustee does not depend upon the trust income. Restatement, 1 Trusts 2d, comment f, pp. 607, 608, sec. 242; 3 Scott, Trusts (3d ed.), p. 2119, sec. 242.4. It is plain the decedent was not paid as trustee upon any per diem basis and while her compensation may be reasonable by other standards, the payment to her of a flat $5,000 per year was a breach of the provisions of the trust instrument. She, as trustee, accepted it and knew it was arrived at for the most part because she gave up her position as manager of the Jeffcott Painting Company, for which job she received a $5,000 yearly salary.
In respect to decedent’s salary for active management of the Tenney Building, she was entitled under the express provisions of the trust instrument to receive a salary over and above her compensation as a trustee. As an employee of the Davis Company while her husband was living, she had received a salary of $4,000. When the Davis Company was dissolved and the management of the building fell directly upon the trustees,
It is argued the decedent did very little work and most of the managemént was done by another employee; and therefore the payment was excessive. We think the trial court was correct in finding that the salary for the decedent’s work in supervising and managing the building for the trustees was not an unreasonable amount of compensation. The salary did not require the decedent as an employee to account for every hour of her time. She had general responsibility and daily supervised the more detailed work of the other employee. She was paid for judgment, not time. The fact she was also a trustee did not require her as an employee on salary to put in a claim on a per diem basis as claimed by the beneficiaries.
Consequently, the beneficiaries’ argument the decedent breached her trust obligation by her failure to keep books and records is without merit. By the nature of her employment, the decedent, as beneficiary, had no duty to keep books and records. The trust books in respect to trust activity were kept in detail and there is no failure by the trustees in this respect as there was in the Estate of Martin (1963), 21 Wis. 2d 334, 124 N. W. 2d 297, relied on by the beneficiaries. Here, the difficulty is not in the failure to keep books but in the method of determining the decedent’s compensation as trustee and the consequential lack of records showing per diem charges.
We do not agree the decedent as trustee could not accept a salary as an employee and that this work is governed by the same tests as her work as trustee. The trust instrument contemplated three trustees, each to be paid on a per diem basis for trustee work and for other services by a particular standard applicable to each trustee. While the decedent’s compensation as trustee was
The case must be sent back to the trial court for further proceedings in respect to the compensation as trustee for the period from January 1, 1962, to July 1, 1966. Although the decedent breached her trust, she did not forfeit all compensation as a matter of law. While we consider the payments made a trustee as compensation void under sec. 231.21 (1), Stats., this does not mean the decedent is not entitled to compensation correctly determined for services proved. Undoubtedly the court has the power to deny all compensation to a trustee who breaches his trust, but this penalty has heretofore been reserved for wilful and intentional violations. Here, the decedent did not fix her trust compensation; no bad faith is shown; she is a laywoman, the wife of the settlor of the trust, and relied on her cotrustees who were a certified public accountant and an attorney. This is not a case to which to apply Chief Judge Cardozo’s rule of “uncompromising rigidity” and deny all compensation for disloyalty in order to deter disloyal acts on the part of other trustees. Meinhard v. Salmon (1928), 249 N. Y. 458, 164 N. E. 545; Bogert, Trusts & Trustees (2d ed.), p. 480, sec. 543; see also: Will of Leonard (1930), 202 Wis. 117, 230 N. W. 715.
On remand, the estate will have the burden, however, of showing services performed as a trustee by the decedent for compensation on a per diem basis. Since the trustees fixed pursuant to the trust a per diem rate of compensation for the decedent on July 1, 1966, that rate should be used for the period commencing July 1, 1961. The beneficiaries have met the burden of proof on their
The claimant-beneficiaries argue they are entitled to interest on their claim, but we do not agree this is a case in which interest should be allowed.
By the Court. — Judgment reversed, and the cause remanded for further proceedings not inconsistent with this opinion.
