419 Pa. 176 | Pa. | 1965
Opinion by
Joe La Rocca is the trustee of certain real estate for the benefit of his grandson.
Primarily, the contest involves moneys allegedly expended by the trustee in improving real property
Appellant first asserts that the payments for the cost of construction were presumptively gratuitous additions to the trust corpus, on the grounds that there was a prior written declaration of trust establishing a donative intent ab initio, a prior oral declaration of intent to construct this building, and no indication, oral or written, to establish that the trustee intended these expenditures as “advances”. None of the cases,
The court below was amply justified in determining that these expenditures were considered by the trustee as advances, and for which repayment was expected and justified. The record and the nature and character of the settlor-trustee justify this conclusion, and that the trustee was permitted to look to the increased rentals for recompense.
Appellant’s second contention is that the costs of construction were paid by the La Rocca Supply Co., Inc.
Finally, appellant claims that the auditing judge erred in granting unproved claims, or in allowing too much credit for certain of the items. While recognizing the difficult task which faced the auditing judge and the admirable manner in which the knotty questions were unraveled, we conclude that certain objections are meritorious, and that the decree is in need of modification.
Our studied consideration of the record compels the conclusion that the total credit for construction expenditures properly allowable is $9,972.22.
We also find no error in the court’s refusal to remove the trustee. As stated in Fraiman Estate, 408 Pa. 442, 449, 184 A. 2d 494, 497 (1962), “. . . the ‘removal of a trustee is a drastic action, which should only be taken when the estate is actually endangered and intervention is necessary to save trust property’. [Citing cases] . . .; in the second place, the removal of a trustee is a matter which lies in the discretion of the court below and, in the absence of an abuse of discretion, that court’s action will not be disturbed: [citing cases].” Restatement 2d, Trusts, §107, comment c, states that “mere friction between the trustee and the beneficiary is not a sufficient ground for removing the trustee unless such friction interferes with the proper administration of the trust.” Furthermore, comment f to that section states that the court should remove the trustee less readily when he has been named by the settlor. And this is even more apparent when the settlor himself is the trustee. Suffice it to say that we find no abuse of discretion in the lower court’s action in failing to remove Joe La Rocca as trustee, in view of its finding that his administration of the trust has resulted in substantial benefit to the estate rather than to place it in jeopardy of dissipation.
Instead of removing the trustee, the court below deemed it wise to appoint a disinterested party, the Industrial Bank and Trust Company, as co-trustee. No one challenges this action as such. However, we state in passing that we approve of such action, in view of past indications of failure to keep exacting records and of the intra-family friction which now exists. See, Restatement 2d, Trusts §108, comment e.
Accordingly, the trustee is charged with the following income and credited with the following expenses:
Year Income Taxes Balance Interest (3% through 1958)
1954 $ 560. $ 88.93 $ 471.07 $ 56.53
1955 630. 100.45 529.55 47.66
1956 840. 117.18 722.82 43.37
1957 840. 136.60 703.40 21.10
1958 570. 21.23 548.77
$3440. $464.39 $2975.61 $168.66
Thus, the estate should have shown a balance of $3,-144.27 in 1958, representing income receipts, less expenses, plus simple interest on the various balances. As above pointed out, the allowable credits for the construction of the building total $9,972.22. Thus, the trustee advanced the difference, or $6,827.95, to the estate from his own funds.
The status of the income account as of September 30, 1963, as modified by the changes herein made, is reflected by the chart below:
Year Income Taxes Repairs Interest at 3% To Trustee Reduction of Advance Balance to Corpus Interest at 3% To Beneficiary Through September 1963
1959 § 3420. § 366.71 § 75, §204.84 §2773.45
1960 0420. 395.84 75. 121.64 2827.52
1961 3420. 407.80 75. 36.81 1226.08 §1673.41 § .87.82
1962 3420. 439.19 75. 2905.81 65.34
1963 2505. 466.07 2098.93
§16245. §2075.01 §363.29 §0827.95 §6678.15 8153.16
There should, therefore, be a balance of income, as of September 30, 1963, of §6,831.31. Against this, trustee
The decree, as modified herein, is affirmed. Each party to bear own costs.
The facts incident to the creation of the trust are set forth in La Rocca Trust, 411 Pa. 633, 192 A. 2d 409 (1963).
Pavlinko Estate, 399 Pa. 536, 160 A. 2d 554 (1960); Rodgers Estate, 374 Pa. 246, 97 A. 2d 789 (1953); Brown v. Monaca Federal Savings & Loan Ass’n, 352 Pa. 1, 42 A. 2d 50 (1945); Merigan v. McGonigle, 205 Pa. 321, 54 A. 994 (1903); Gaffney’s Estate, 146 Pa. 49, 23 A. 163 (1892); and, Krewson Estate, 154 Pa. Superior Ct. 509, 36 A. 2d 250 (1944).
The Company is a Pennsylvania business corporation organized for the general purpose of selling building and construction material to the public. While there is some dispute in the record as to the identity of the corporate officers, it is apparent that the Company was a closely held family corporation with the majority of the shares being held by settlor and the minor beneficiary’s father.
We refrain from discussing each construction cost item to avoid an unwarranted lengthy opinion.
Advance completely repaid at this point.