Campbell's Estate, In re

• Decision Date: 31 May 1963
• Docket Number: No. 4159,4159
• Citation: 46 Haw. 475,382 P.2d 920
• Parties: In the Matter of the ESTATE of James CAMPBELL, Deceased.
• Court: Hawaii Supreme Court

Page 920

382 P.2d 920

46 Haw. 475

In the Matter of the ESTATE of James CAMPBELL, Deceased.

No. 4159.

Supreme Court of Hawai'i.

May 31, 1963.

SYLLABUS BY THE COURT

1. An appellate court will consider only such questions as were raised and properly preserved in the lower court.

2. When an accounting proceeding has been commenced by trustees who die while the proceeding is pending, it is appropriate for the successor trustees to continue the proceeding.

3. Contentions preserved for review by trustees in the trial court as to the correctness of accounts being settled, may be presented in the appellate court by appealing beneficiaries whose income has been ordered withheld to restore corpus as the result of errors found in the accounts, when the record shows that the beneficiaries did not waive their right to present or become estopped to present their position with respect to the sustaining of the accounts but accepted the representation of the trustees in that regard.

4. A trial court may permit a beneficiary to present, by a motion to amend the findings of fact and conclusions of law, his contention that he is not subject to withholding of his income for reimbursement of corpus for overpayments made to a predecessor income taker.

5. Where errors have been found in accounts and a contingent beneficiary seeks redress by recoupment from income of present income takers or against the trustees in the alternative, it amount to a conflict of interest for the trustees to represent the income beneficiaries in the trial court in the matter of redress.

6. Trustees are not aggrieved by a judgment which merely determines the rights of one beneficiary or class of beneficiaries as against other beneficiars, and may not appeal from it.

7. Successor trustees, though not held personally liable, have an appealable interest in a judgment which ascertains a deficiency in corpus as the result of erroe in the accounts of thier predecessors, when there is reasonable ground for apprehension that the recoupment ordered by the trial court from the income of appealing beneficiaries may fail and the trustees will be faced with the possibility of further and expensive litigation against their own best judgment to obtain other redress for the deficiency, they contending that there is no deficiency and no occasion for further litigation.

8. A successor income taker, who takes upon the ending of the equitable life estate of a predecessor by gift of the same donor and under the same trust instrument, is not subject to recoupment out of his income to restore overpayments to the predecessor. Instead, he is among those wronged by the overpayments and the consequent depletion of corpus.

9. If minors and those unborn were virtually represented in a previous proceeding they are bound thereby, and a court in a subsequent proceeding has no discretion as to whether the doctrine of virtual representation should be invoked.

10. When, at the time of various proceedings the effect of which is in question, there was no statute or rule of court providing for an order of class representation, such an order was not necessary to bind the unborn under the doctrine of virtual representation.

11. Findings of the trial court are 'clearly erroneous' within the meaning of Hawaii Rules of Civil Procedure, Rule 52 (a) when based entirely on judicial records which, upon the application of correct principles of law, rationally forbid such findings.

12. A court which has before it the trustees and all the beneficiaries of a testamentary trust, including the unborn by virtual representation by those in being, can proceed with binding effect not only to decide the point at issue concerning the administration of the trust, but also to award fees.

13. Minors in being, contingent beneficiaries of a testamentary trust who might become remaindermen as well as income takers, parties to a bill for instructions filed by the trustees, virtually represented the unborn who likewise might become remaindermen as well as income takers, because (1) the relationship was such that an adequate presentation of the legal position of the minors in being would be an adequate presentation of the legal position of the unborn, (2) the action taken by the guardian ad litem in behalf of the minors in being was not hostile to the unborn and (3) the decree operated equally on minors in being and the unborn.

14. When a guardian ad litem has been appointed for minors in being, who are contingent beneficiaries of a testamentary trust and virtually represent the unborn in a proceeding concerning the administration of the trust, and the court upon due consideration has awarded a guardian ad litem's fee out of corpus, such action is binding though erroneous in the particular case in which the litigation was unnecessarily caused by a particular income beneficiary to whose income the guardian ad litem's fee should have been charged.

15. When litigation concerning the administration of a testamentary trust is unnecessarily caused by a particular income beneficiary, the expenses ordinarily chargeable to some part of the trust estate such as the fees of the trustees' attorney should be charged to her income, but the fee of the attorney for other beneficiaries, who filed an answer in their behalf but rendered no services of benefit to the estate, is governed by the general rule that each party to litigation must bear his own expense.

16. Fees for services of attorneys for trustees and beneficiaries, rendered in connection with the selection of a successor trustee, ordinarily should be paid from income.

17. Fees for services of attorneys for trustees and beneficiaries, rendered in litigation concerning the validity of a provision of the will as to the manner of appointment of a successor trustee, are a proper charge against corpus.

18. When, after litigation concerning the person to be selected as a successor trustee and the validity of a particular provision of the will having to do with such appointment, a guardian ad litem for minor contingent beneficiarles and those unborn entered into a stipulation with the four present income takers for the payment out of corpus of $15,000 in legal fees, $3,000 to each, it appearing that an order awarding these fees out of corpus was based entirely on the stipulation without a hearing having been held or any consideration given to the reasonableness of the fees or the allocation thereof, the presumption of regularity is rebutted and the award of fees will be reviewed in a subsequent accounting proceeding wherein the payment of these fees out of corpus has been attacked.

19. A fee for services of the attorney for trustees of a testamentary trust, who filed a bill for instructions as to whether a certain share of the income should be paid to the beneficiary designated in the will--which contains a spendthrift clause--or to her trustee in bankruptcy, should be paid from that beneficiary's share of the income when only said beneficiary and the trustee in bankruptcy were joined as respondents and there was no benefit to the estate as a whole.

20. A fee for services of the attorney for trustees of a testamentary trust in defending the trust against an attack made on its validity by the trustee in bankruptcy of one of the life beneficiaries is a proper charge against corpus though the litigation was caused by the bankruptcy, where from the provisions of the will it appears that the testator contemplated that his beneficiaries might be spendthrifts.

21. When litigation involves solely the division of trust income the expense of the proceeding should be paid out of the income involved.

22. When improvements made by a trustee are not of a permanent nature provision must be made for amortization of the cost out of income.

23. The proceeds of sale of building materials constituting part of the original corpus of a testamentary trust should be credited to corpus, it not appearing that corpus already had been reimbursed by amortization of the amount involved out of income.

24. The proceeds of sale of firewood may be credited to trust income when there are not involved any timber trees or any growth other than such as would rapidly replace itself, as such cutting of firewood has no permanent effect on the corpus.

25. As a general rule, in the absence of any evidence by which to judge the situation differently, the proceeds of the commercial exploitation of timber trees which are cut from lands held in trust should be credited to corpus.

26. A lump sum payment to trustees in the nature of a minimum royalty, including the right of removal of timber trees up to a specified amount without further royalty, should be credited to corpus.

27. Proceeds of sale derived from the removal of rock, sand, coral and soil from lands held in trust should be credited to corpus, in the absence of special circumstances calling for a different result.

28. When the power to dispose of rock, sand, coral and soil is found in the general power to sell conferred upon a testamentary trustee by the testator's will, such general power of sale does not signify any intent on the part of testator that the royalties be treated as income.

29. In determining whether the proceeds of sale of rock and coral by trustees should be credited to corpus, it is not material that this was loose rock and coral the removal of which did not damage the surface.

30. As a general rule, in the absence of evidence calling for a different result, brokers' commissions paid by trustees in connection with the purchase and sale of stocks and bonds are payable out of principal.

31. Expenses incurred by trustees for land court proceedings for registration or subdivision of lands are a proper charge against principal.

32. Expenses incurred by trustees in condemnation proceedings are expenses of the sale of the property involved and are chargeable to corpus.

33. As a general rule, in the absence of special...