From Casetext: Smarter Legal Research

Bissinger's Estate

California Court of Appeals, Second District, Fourth Division
Oct 10, 1963
34 Cal. Rptr. 219 (Cal. Ct. App. 1963)

Opinion

John G. Grant, Los Angeles, for appellants.

Lawler, Felix & Hall and John G. Wigmore, Los Angeles, for respondent.


KINGSLEY, Justice.

The appeal before us was taken by Robert Keith Grant and Peter Cole Grant, minors, by the guardian of their respective estates, Barbara Bissinger Grant. Appellants are presumptive remainder beneficiaries of a testamentary trust under the will of Frederick M. Bissinger, and are appealing from certain parts of an order overruling their objections to the Eighth Account Current of Security First National Bank, trustee, and from certain parts of an order settling such accounts.

The order overruling objections to a trustee's account, not being one of those orders enumerated in section 1240 of the Probate Code, is non-appealable. (Estate of Schechtman (1955) 45 Cal.2d 50, 54, 286 P.2d 345.) Therefore, that part of the present appeal must be dismissed. Had appellants not so specifically enumerated those parts of the order settling the trustee's Eighth Account Current from which they are appealing, these contentions could have been passed upon by this court in reviewing the order settling the trustee's account current. However, our jurisdiction is limited by the notice of appeal. (3 Witkin, California Procedure, p. 2290.)

The appeal from the order setting, approving and confirming the trustee's Eighth Account Current specifies the following particulars as those raised before us:

'(a) That the 'reasonable value of the corpus of the trust estate' during the period covered by the Eighth Account Current was $887,331.00 or any such sum.

'(b) That the Bank as Trustee is entitled to $9,435.00 as a fee for services rendered during the period covered by the Eighth Account or any such sum.

'(c) That the Bank has the right to petition the Superior Court sitting in probate for fees which are greater than or computed in a manner different from that specifically contracted for by the decedent in his will and expressly agreed to by the Bank when it consented to act as trustee thereunder.

'(d) That the Superior Court sitting in probate has the right either on its own motion or otherwise to enter an order changing or contradicting any final judgment theretofore entered and thereby award fees to the Bank as trustee which are either greater than or computed in a manner different from that specifically set forth in said final judgment.' I

During the period covered by the Eighth Account Current, the bank sold 119 1/2 shares out of 619 1/2 shares of International Business Machines Corporation stock and 300 shares out of 1500 shares of Minnesota Mining and Manufacturing Company stock belonging to the trust estate. The sale realized a gain of $84,399.60 over the carrying value of said shares, and resulted in a capital gains tax liability under the federal and California tax laws of $20,665.29.

Appellants contend that, in determining the reasonable value of the trust estate for the purposes of computing the trustee's annual fees, there should not have been included in the valuation of the trust assets an amount equal to the capital gains tax liability precipitated by the sale of the appreciated International Business Machines and Minnesota Mining and Manufacturing Company stock. We cannot agree.

We believe that the correct measure for computation of the trustee's fees should be on the gross corpus of the trust estate. The rule as to trustees in this regard should be no different than that for computing commissions to be paid executors and administrators, which is based on the value of all property accounted for and charged against the representative. (Estate of Lampman (1940) 15 Cal.2d 212, 216, 100 P.2d 488; Estate of Carver (1898) 123 Cal. 102, 55 P. 770; 4 Witkin, Summary of California Law, Wills and Probate, p. 3212.)

II

Although appellants discuss the matter under a different heading, our duty to construe liberally the notice of appeal (California Rules of Court, Rule 1(a)) requires us to consider also their contention that the trustee exceeded its powers in making the two sales involved, since, if these sales are disregarded, the profit therefrom would not have been included in the computation of the gross estate. However, appellants may not now question the authority or propriety of these sales. In the proceedings incident to the settlement of the trustee's Seventh Account, objections were raised as to the right and power of the trustee to sell securities and reinvest the proceeds. A review of the records disclose that these objections were made by Barbara Bissinger Grant individually and by the present appellants through Mrs. Grant as their guardian. The trial court overruled the objections and Mrs. Grant only appealed. On appeal, the actions only appealed. On appeal, the actions of the trustee were held to be proper. (Estate of Bissinger, 212 Cal.App.2d 831, 28 Cal.Rptr. 217.) Having once litigated this matter, the present appellants were bound by the order settling the Seventh Account once that order became final. Even if the matter were not foreclosed, we see no reason for departing from the sound decision on this same issue as set forth in the carlier appeal.

Not having appealed, the order itself became the law of the case as to the minors; the decision on appeal had the same effect as to Mrs. Grant. (Prob.Code, § 1123; Security-First Nat. Bank of Los Angeles v. Superior Court (1934) 1 Cal.2d 749, 37 P.2d 69.)

III

The testator in his will stated 'For serving as testamentary trustee hereunder my Corporate Trustee shall receive an annual fee equivalent to one half of one per cent of the reasonable value of the corpus of the trust estate.' Paragraph 8 of the decree of final distribution sets out verbatim such percentage formula for compensating the trustee.

The law is well settled that, where a testator in his will specifies an exact and definite percentage formula for compensating his testamentary trustee, and where the decree of distribution, which has become final, sets out such percentage formula, the probate court may not, in settling the trustee's account, establish a new and different measure for compensating the trustee, since the decree of distribution is a The court awarded the trustee $4,435.00 as compensation for the period covered by the Eighth Account Current. This amount is equal to one-half of one per cent of what it determined to be the reasonable value of the trust estate. The court also awarded trustee $5,000.00 as extraordinary compensation for its services rendered in court litigation dealing with the Seventh Account Current.

Appellants argue that the superior court sitting in probate lacked jurisdiction to award trustee extraordinary fees over and above the compensation fixed by the testator's will and the final decree of distribution. For this position appellants rely heavily upon Estate of Bodger (1955) supra, 130 Cal.App.2d 416, 279 P.2d 61, and section 2274 of the Civil Code. We find this contention to the without merit.

The second sentence of section 2274 provides: 'If it [the trust instrument] specifies the amount of his [trustee's] compensation, he is entitled to the amount thus specified and no more.'

The trial court found that the measure of compensation fixed by the trust instrument, and by the final decree of distribution, pertains only to ordinary and recurring services, and did not include or contemplate a measure of compensation for extraordinary nonrecurring services.

Counsel have cited us to no case wherein the exact problem herein involved was considered or decided, nor has our own research discovered any direct holdings. In Estate of Bodger, supra, 130 Cal.App.2d 416, 279 P.2d 61, the question before the court was the power to modify the fees for routine, recurring and ordinary expenses, not, as here, for an extraordinary service of a nonrecurring nature.

In Robinson's Ex'rs v. Robinson (1944) 297 Ky. 229, 179 S.W.2d 886, the court limited an executor to the fees set forth in the will, there being no showing of the performance of any services 'which were not within the contemplation of the testator when he wrote the will or not within the contemplation of the executors when they qualified.' The case, however, recognizes an exception in cases of 'unusual services not contemplated by the testator.'

We think that any construction of the will and of the decree which would deny to a probate court jurisdiction to pass on an application such as here presented would result in potential harm to a trust estate. It is the duty of a trustee to exercise its powers in the manner contemplated by the trust instrument. If those powers include the exercise of discretion as to investments, or as to other actions, the trustee should not be put in a position where its exercise of discretion adversely to the wishes or desires of a beneficiary might be influenced by the fear that action which it deemed proper and required would involve it in unreimbursable extraordinary services if the dissatisfied beneficiary engaged in lengthy litigation. A trustee's duty to protect a proper exercise of its powers is as great as its duty to protect the corpus against adverse claimants and the court may consider an application by trustee for an allowance of fees for necessary extraordinaly services rendered by the trustee in connection therewith.

The problem presented to us in this case is purely one of the power of the probate court to entertain and act on an application reasons indicated we hold that it has such reasons indicated we hold that it has cuh power. Whether fees applied for are justified and, if so, in what amount, is a question for the determination of the probate court and will not be upset by an appellate court except for an abuse of discretion. Thus, the probate court must be alert to prevent any abuse of the power and to restrict its use to situations in which the services for which compensation is sought are both extraordinary and essential. In this case, whether or not the litgation over the Seventh Annual Account was essential, The appeal from the order overruling objections to the Eighth Annual Account is dismissed; the order settling, approving and confirming that account is affirmed.

BURKE, P.J., and JEFFERSON, J., concur.


Summaries of

Bissinger's Estate

California Court of Appeals, Second District, Fourth Division
Oct 10, 1963
34 Cal. Rptr. 219 (Cal. Ct. App. 1963)
Case details for

Bissinger's Estate

Case Details

Full title:In the Matter of the ESTATE of Frederick M. BISSINGER, Deceased. v…

Court:California Court of Appeals, Second District, Fourth Division

Date published: Oct 10, 1963

Citations

34 Cal. Rptr. 219 (Cal. Ct. App. 1963)