60 P.2d 264 | Wash. | 1936
The appellant John Davis Thomas, Jr., is one of the beneficiaries under a trust created by the will of his grandmother Mattie A. Thomas. He instituted this action to procure the removal of the trustees and to correct a number of claimed irregularities in the administration of the trust. Respondents National Bank of Commerce and George C. Wheeler are the trustees. Others whose names appear as appellants and respondents were ultimately joined as beneficiaries, contingent beneficiaries, or as having some interest in the subject matter. The cause was tried to the court, resulting in a decree disposing of all matters in issue. Certain of the beneficiaries and contingent beneficiaries have appealed while others have not.
The pleadings are voluminous, consisting of the complaint, various cross-complaints, and complaints in intervention, with answers to each, and the only error assigned is one to the effect that the trial court erred in making and entering its decree. Hence, we have *523 had some difficulty in determining just what questions are now presented for decision. However, having finally concluded that five possible questions should be discussed, we proceed to quote from the decree entered by the trial court, both for the purpose of presenting the necessary facts and as showing the rulings complained of. The facts therein stated are now to some extent admitted, but where disputed they are accepted by us because the evidence does not preponderate against any. Where insufficiently stated, we will enlarge upon or state additional facts as we discuss particular questions.
The pertinent parts of the decree read:
March 2, 1931 — Interest $3,900.00 September 1, 1931 — Interest 3,900.00 _________ Total ...................... $7,800.00Said property during said period was used partly for business purposes and under said decree in cause No. 213421 the trustees were entitled to compensation in the amount of 8.75% of said total collections. The court finds that by reason of said erroneous computation the trustees have received compensation in the amount of $1,485.66 in excess of the fees properly chargeable according to the terms of said decree, and the said trustees are ordered and required to credit the trust in the amount of said overcharge: that is, The National Bank of Commerce of Seattle is required to refund $848.95 and George C. Wheeler is required to refund $636.71.
"For the future and until further order of this court, the compensation to be paid the trustees for their services in respect of the administration of the real estate belonging to said trust shall be at the rates provided in said schedule applied to the value of said *527 real estate as inventoried `In the Matter of the Estate of Mattie A. Thomas, Deceased,' No. 38579, with the exception that the following reductions are made:
"It is further decreed that at any time hereafter any of the parties to this action may under this cause number file a petition with the clerk of this court praying for a revision for the future of such fee basis or schedule. The court shall immediately, upon the filing of such petition, require such notice to be given to the other parties as the court may, in its discretion, consider proper, and after proof of the giving of such notice shall proceed to hear and determine the matters presented by such petition.
[1] The first question raised is as to the status of George C. Wheeler as trustee. The first subdivision *530 of paragraph X of the will of Mattie A. Thomas bequeaths the bulk of her estate to the National City Bank of Seattle in trust for the uses and purposes specified in the subdivisions immediately following. The seventh subdivision of paragraph X reads:
"It is my will that George C. Wheeler of Seattle serve as a joint trustee with my trustee above named, with equal authority but the title and possession of the trust estate and of its securities and accumulations shall be vested in my first named trustee solely."
The appellants seem to contend that a trust cannot be created except by the vesting of the legal title to the property covered in a trustee; that no title was vested in Wheeler, and that, therefore, he cannot be a trustee.
The title to the property was bequeathed to the bank as trustee, and under that bequest legal title passed and a trust was created. It is not necessary to determine whether the words of the will
". . . so long as said Wheeler shall remain trustee, his joinder shall be necessary in all conveyances or transfers of any part of the trust estate,"
shall prevail over the preceding words excluding him from title and possession. It is sufficient for present purposes to determine what was the intention of the testatrix, and that, reading paragraph X of the will as a whole, is clear and free from doubt. Though, strictly speaking, Wheeler may not in all respects be a trustee as defined by the authorities, yet he is "a joint trustee" or a quasi-trustee charged with all of the duties and entitled to all of the benefits which the will in clear language imposes and bestows. If necessary to sustain the trust, the will would bear the construction that title vested in both trustees. Caylor v. Cooper, 165 Fed. 757.
We conclude that, though the language of the will *531 may be contradictory or lacking in formality, yet the intention being clear, George C. Wheeler is entitled to act as a joint trustee in the manner directed by the will.
[2] 2. As already indicated, the National City Bank was named in the will as trustee, and it was so recognized in the decree of distribution. It, together with Mr. Wheeler, entered upon and performed the duties devolving upon the trustees under the will. After the lapse of some time, the trustees brought an action in the superior court of King county, being cause No. 213421, in which a construction of the will in certain particulars was sought. The decree in that case recites that all parties interested were made parties to the action, and that each appeared in the action or was duly served with process. When the decree in that action was about to be entered, the fact that the National City Bank had consolidated with the National Bank of Commerce and that the consolidated business was being carried on under the name of the National Bank of Commerce, was reported to the court, whereupon at the foot of the decree there was added, above the signature of the court, a provision reading:
"At the time of the entry of the foregoing decree, it is made to appear to the court that since the commencement of this action, the plaintiff, the National City Bank of Seattle, has been consolidated with the National Bank of Commerce of Seattle. It is now, with the consent of all the parties to the action, ORDERED that the National Bank of Commerce of Seattle be and is hereby appointed Trustee under the Will of Mattie A. Thomas, Deceased, in place of the plaintiff, National City Bank of Seattle, and that it be substituted in this action and in the foregoing decree in place of the said National City Bank of Seattle."
The National Bank of Commerce thereafter continuously served as trustee without objection from any one *532 until the present action was brought, almost exactly six years later.
If the recitals in the decree, that all interested persons were parties to the action and that all consented, may be now attacked, a question we do not decide, then, the consolidation of the banks having been approved by the comptroller of the currency, his approval is final and is not here subject to review. First Nat. Bank v. Murray, 212 Fed. 140.
But, in either event, by the consolidation, the National Bank of Commerce succeeded to the rights of the National City Bank by operation of law, and if there was anything informal in the record of its right to act as trustee, the present decree properly cures that defect.
[3] Finally, if the National Bank of Commerce had been a defacto trustee only, the present decree would, by its terms, properly construed, make it a trustee de jure, because it was within the power of the court to appoint if there was a vacancy.Portland Trust Sav. Bank v. Rosenberg,
3. The third question goes to the acts of the trustees. It is urged (a) that the trustees paid to themselves excessive fees; (b) that the National Bank of Commerce made a secret profit by dealing with the trust; (c) that the trustees caused loss to the trust by the neglect and failure to act in the matter of enforcing the terms of a lease on real property belonging to the trust estate; and (d) that there was a failure to file reports; any or all of which, it is argued, was sufficient cause for the removal of the trustees. These matters are all covered by those parts of the decree which are entitled "Past Compensation of Trustees," "Leasehold held by Arthur G. Dunn," "Filing Reports," and the provisions of the final paragraph quoted. All of these *533 matters, with one exception presently to be noted, present only questions of fact. A study of the record convinces us that nothing was established reflecting on the good faith of the trustees, and that there is no ground for the removal of either of them.
[4] The exception mentioned has to do with the fees claimed by the trustees and allowed by the trial court. The decree in cause No. 213421, entered on February 26, 1929, fixes the trustees' fees at certain percentages of the principal, of stocks, bonds, and mortgages, and fixes the fees of the corporate trustee on real estate belonging to the trust as follows:
"Annual fee:
On total value of improved property, without deduction for encumbrances — 1/5 of 1%
On total value of unimproved property, without deduction for encumbrances — 1/10 of 1%
"Additional Charges:
(a) Management of Improved Property 5% of gross income from property used wholly or partly for business purposes.
5% of gross income from residential property.
(b) Management of Unimproved Property 2 1/2% of amount paid out for general and special taxes." and to the individual trustee an amount equal to 75% of the annual compensation of the corporate trustee was allowed.
The prior decree, which thus fixed percentages, made no reference to the appraisement and fixed no method of determining values for the purpose of computing the percentages and ascertaining the amount of the fees. The word "value" as used in the decree can only mean the fair and reasonable value at the time the services are rendered and the fee is payable. The trustees seem to have proceeded in good faith upon the *534 theory that the appraised value must govern until the court, by some appropriate order, might fix different values.
We think the position cannot be upheld. The appraised value is, of course, the fair and reasonable value as of the time it was made, and, conditions remaining the same, it may be the presumptive value for a considerable period of time; but, apparently, here the appraisement was made while the estate was in probate and before the trustees took possession of the property. Years with their changes have intervened, bringing a period of depression which has shattered values generally and especially real estate values. There can now be no presumption that the appraised value is, or that during the past several years it has been, the actual or reasonable value of the real estate belonging to the trust.
The primary duty of a trustee is to deal fairly and justly with his cestui que trust. He may not help himself at the expense of the trust estate simply because no one protests. Where, as here, a trustee's fees are to be determined by values, it is the duty of the trustee to fairly fix and determine just and reasonable values before attempting to compute his fee. We do not mean that every slight fluctuation in value calls for a new appraisement, but in times of rapid and extreme changes annual valuations would be but fair, while in more settled times valuations less frequently made should suffice. The trustees should exercise the same good faith in ascertaining changes in value as is required of them in accounting for money received.
The trial court did fix the value of the different parcels of real estate as of the date of its decree. Presumptions do not run backward, and we cannot say that the values thus fixed should control over a period running back to the time of the entry of the decree in *535 cause No. 213421. The evidence here is in such condition that we do not feel justified in fixing values for the intervening years. This question must be remanded so that further evidence may be taken and the trial court may pass on values and fix the trustees' fees for each of the years which are questioned in this proceeding.
[5] 4. What we have just said must be applied to future compensation. The decree fixes a reduced value on many if not all of the parcels of real estate belonging to the trust, and requires that these values shall be used in computing the trustees' fees until the further order of the court. We approve the values as fixed by the decree as of the time the decree was entered, but we cannot approve of those values being used beyond the time when they may remain fair and reasonable values. In other words, the decree should not place a burden upon the beneficiaries of the trust which requires them constantly to keep watch of changing conditions and to promptly report changes in values and petition for relief. The primary duty in this respect rests upon the trustees. That provision of the decree relating to future compensation should be modified to meet these views.
[6] 5. Finally, complaint is made of the allowance for attorney's fees to the attorney for the plaintiff below and for the appellants here. The trial court allowed to the attorneys for the trustee $1,000, to the plaintiffs' attorney $750, and to the attorneys for a cross-complainant who has not appealed $750. The combined allowance to those attacking is one-third more than to the defending attorneys, and yet the appellant John Davis Thomas, Jr., urges that the allowance of a less sum to his attorney than was given to those defending shows a spirit of unfairness. We do not think so. *536
Even if we disregard the allowance to the attorney for the cross-complainant who has not appealed, still the broad attack here made was by the trial court no doubt felt to be unjustifiable. In this, we agree. There was no reasonable basis for an attack on the authority of the trustees, or either of them, and little, if any, cause to ask for removal. That being so, the fee allowance was properly limited to the accounting features of the action. To both attacking attorneys, the allowance was more than the gain to the trust estate. To appellants' attorney, the allowance was slightly more than fifty per cent of the gain. As the decree stood, the allowance was ample, but if, on a retrial of the issue remanded, a further reasonable recovery is had, the court may make a further allowance to appellants' attorney in a sum commensurate with the gain or benefit to the trust estate.
The judgment must be reversed and remanded so far as it affects the trustees' fees for past services. It must be modified as herein indicated as to valuations upon which to compute future fees. In all other respects, it will stand affirmed.
MILLARD, C.J., STEINERT, GERAGHTY, and HOLCOMB, JJ., concur. *537