Greenleaf's Estate, In re

• Decision Date: 10 January 1951
• Citation: 225 P.2d 945,101 Cal.App.2d 658
• Parties: In re GREENLEAF'S ESTATE. GREENLEAF v. FIRST NATIONAL BANK IN SANTA ANA. Civ. 4161.
• Court: California Court of Appeals Court of Appeals

Page 945

225 P.2d 945

101 Cal.App.2d 658

In re GREENLEAF'S ESTATE GREENLEAF v. FIRST NATIONAL BANK IN SANTA ANA.

Civ. 4161.

District Court of Appeal, Fourth District, California.

Jan. 10, 1951.

Hearing Denied March 8, 1951.

Rutan & Tucker, Forgy, Reinhaus & Forgy and Arthur M. Bradley, all of Santa Ana, for appellant.

Head, Jacobs & Corfman, Santa Ana, for respondent.

GRIFFIN, Justice.

In a will of W. A. Greenleaf, deceased, dated March 20, 1941, a trust was created which provided in part:

'During the life of this trust, the net income derived from the trust property, and at the closing of this trust the trust property and principal sums derived from the sale thereof, shall be paid and distributed as follows, to wit:

'During the life of my wife Annie Greenleaf, there shall be paid to her monthly, if possible, if not, as soon as funds are available, a sum amounting to $60.00 per month. In addition to the sum of $60.00 per month to be paid my said wife during her lifetime, said Trustee shall at the time of her death pay all costs of her last illness and burial expenses. If my said wife during her life time, by reason of sickness or other good cause, needs additional funds over and above the monthly amount hereinbefore referred to in order to provide her with the proper care and comforts, then I direct my Trustee to use and apply sufficient of the income and principal of my trust property so that my said wife shall have sufficient money to provide for her support, comfort and needs to the end that she shall be fully and properly cared for and provided for.'

During the administration of the estate the wife was granted $100.00 per month family allowance. On February 4, 1946, the seccessor trustee, First National Bank in Santa Ana, petitioned the court for instructions as to administration of the trust, in which petition the trustee asked the court for authority to pay the beneficiary $150 per month under the provisions of the trust. The petition was granted. On February 4, 1947, the wife filed her petition for instructions to the trustee, asking for instructions from the court that the trustee be instructed and authorized to pay her $1500 for clothing and expenses for a trip, $300 for dental work, $600 for an eye specialist, $600 to repair and refurnish her home, plus the sum of $300 per month. On the hearing of the petition, the trustee orally objected to the petition. The objection was overruled and the court granted the petition. No appeal was taken by the trustee from that order and the payment of $300 per month has been made by the trustee to the beneficiary since that date.

On May 16, 1949, Mrs. Greenleaf filed her petition for instructions to the trustee to provide her with additional sums totaling $4500 to renovate, paint and refurnish her home, to provide her with clothes and traveling expenses, and to provide her with a new automobile. Written objections were filed by the trustee and by ten of the twenty-two named distributees in the trust. The court granted petitioner's request in part and made its written findings and ordered the trustee to continue to pay to the beneficiary (now aged 77 years) $300 per month, and in addition thereto to pay (a) for the installation of a shower in the home of the beneficiary; (b) for certain furniture and furnishings; (c) a sum not to exceed $2500 for an automobile; and then provided that the trustee should retain title to the furniture and furnishings and the automobile as property of the trust.

Only the trustee appealed from this order, and contends that the court by such order erroneously superseded the exercise of the trustee's discretion allowed by the trust since the trustee fixed the sum of $200 per month as a proper allowance to the wife and no more.

At the hearing on the petition, petitioner testified that she needed the additional funds requested. The trustee showed that the remaining property in the trust consisted of a one-story business building in Santa Ana with a vacant lot adjoining it and it carried, on the books of the trustee, a valuation of $50,000, in addition to cash not exceeding $500. The property brought in a rental of $400 a month under a lease expiring in 1952. The annual taxes on the property amounted to about $1200, insurance $188, trustee's fees $375, and attorneys' fees in preparing annual account $100. The total amount of annual expenditures of the trust estate, including the wife's allowance, amounts to about $5600, and the receipts amount to about $4800, leaving a deficit of about $800. The trustee argues that to comply with the present order it would be compelled to sell the corpus of the trust or, if possible, obtain a loan upon it for that purpose. It is argued that it would be improbable that such a loan could be obtained by the bank due to the fact that the trust would be unable to repay the amount loaned under the present income.

After a visitation of the home of the widow and an inspection of the conditions under which she was living, the trial judge made the order above mentioned. The main argument of the appellant trustee is that under the trust, the trustee has the discretion to determine the amount of money to be paid the life beneficiary, subject to the standard imposed by the testator; that since the trustee, after considering the net income from the trust and the needs of the beneficiary, determined that $200 per month was a sufficient amount to maintain her in accordance with the standards prescribed, the trial court had no authority or discretion to make additional allowance in the absence of any showing of an abuse of discretion on the part of the trustee, citing Restatement of the Law of Trusts, Sec. 187, p. 479; Ellison v. Ellison, Tex.Civ.App., 1942, 164 S.W.2d 775; Atwood v. Kleberg, 5 Cir., 163 F.2d 108; and Hallinan v Hearst, 133 Cal. 645, 66 P. 17, 55 L.R.A. 216.

It is also argued that the amount awarded by the court to the life beneficiary was unreasonable; that under the trust provisions of the will the testator had two purposes in mind; that one was the care of the life beneficiary and the other was to make a gift to his other heirs; that the trust gave an external standard that should be considered in determining the amount to be paid to the life beneficiary and accordingly the remainder should go to the heirs.

Both counsel agree that the governing principle must be the intention of the settlor, which intention must be gathered from the general purpose and scope of the agreement, as indicated in Title Insurance & Trust Co. v. Duffill, 191 Cal. 629, 642, 218 P. 14. In that case it is stated that if there be any doubt or uncertainty in the trust it will be construed, if possible, in favor of the beneficiary and against the trustee. See, also, Williams v. MacDougall, 39 Cal. 80; and In re Estate of Canfield, 80 Cal.App.2d 443, 181 P.2d 732, where it is stated that the basic inquiry, whenever the exercise of a trustee's discretion, absolute or otherwise, is challenged, is always whether the trustee acted in the state of mind contemplated by the trustor.

The trustee also contends that there was no evidence or finding by the trial court that the trustee acted in bad faith or abused...