Estate of Cassity

• Decision Date: 05 June 1980
• Citation: Estate of Cassity, 165 Cal.Rptr. 88, 106 Cal.App.3d 569 (Cal. App. 1980)
• Court: California Court of Appeals
• Parties: In the Matter of the ESTATE of Ellen Louise CASSITY, aka Ellen L. Cassity, Deceased. James A. DEAK, Special Administrator of the Estate of Lewis J. Deak, Deceased, Appellant, v. Ellen Marguerite CASSITY, George Redmond Cassity and Camilla Catherine Cassity, Respondents. Civ. 56292.

Page 88

165 Cal.Rptr. 88

106 Cal.App.3d 569

In the Matter of the ESTATE of Ellen Louise CASSITY, aka Ellen L. Cassity, Deceased James A. DEAK, Special Administrator of the Estate of Lewis J. Deak, Deceased, Appellant, v. Ellen Marguerite CASSITY, George Redmond Cassity and Camilla Catherine Cassity, Respondents.

Civ. 56292.

Court of Appeal, Second District, Division 3, California.

June 5, 1980.

Mitchell, Silberberg & Knupp, Charles A. Collier, Jr., Los Angeles, for appellant.

Charles A. Druten and Myers & D'Angelo, Los Angeles, for respondent Camilla Catherine Cassity.

ALLPORT, Associate Justice.

In a petition filed in superior court sitting in probate Lewis J. Deak, a resigned trustee ¹ of trusts created by will of Ellen Louise Cassity, deceased, seeks an allowance of costs and trustee's fees and in a supplemental petition seeks an allowance for attorney's fees and costs, all of which were allegedly incurred in defending litigation commenced by a beneficiary attempting to reopen the Eighth, Ninth, Tenth, Eleventh and Twelfth Accounts previously filed and approved and involving objections and exceptions to the Thirteenth, Fourteenth and Fifteenth Accounts, petition for his removal and an accounting as one of the trustees of the Camilla Cassity Trust. Deak's petitions were denied. In accordance with the request therefor on March 15, 1978, the court below made the following findings of fact and conclusions of law:

"In accordance with the Requests of Co-Trustees Deak and Sternberg for Findings of Fact and Conclusions of Law on the Court's Order denying their Petitions for Attorney's Fees and Costs, the Court hereby makes the following Findings:

"1) In the 8th through 15th Accounts, Trustee Deak made extensive and large purchases on margin and short sales, which resulted in extensive losses to the trust estate.

"2) These transactions were without authority and constituted a breach of trust.

"3) Trustee Deak was surcharged in the amount of $14,116.80, plus interest, for some of these transactions, and would have been surcharged for the balance, except for the fact that the beneficiary Camilla Cassity had no actual notice of these transactions, and for that reason did not object until after the 8th through 12th Accounts were approved.

"4) Even if Trustee Deak had not resigned as Trustee, the petition of beneficiary Cassity for his removal as Trustee would have been granted due to his breaches of trust.

"5) Beneficiary Cassity sought no relief against Trustee Sternberg.

"6) It would be inequitable to allow either Trustee Deak or Sternberg to recover his attorney's fees and costs.

"On the basis of the above Findings, and in the exercise of its discretion, the Court concludes that neither Trustee Deak nor Sternberg should recover attorney's fees or costs herein."

Deak appeals from the denial of his petitions. ²

CONTENTIONS

Briefly stated Deak contends the trial court abused its discretion in denying him any trustee or attorney's fees or costs and committed reversible error in failing to make findings of fact on all material issues. We agree and for reasons to follow will reverse.

DISCUSSION

Probate Code section 1122 provides that: ". . . On settlement of each account the court shall allow the testamentary trustee his proper expenses and compensation for services . . . ." Allowance of compensation rests in the sound discretion of the trial court, whose ruling will not be disturbed on appeal in absence of a manifest showing of abuse. (Estate of McLaughlin (1954) 43 Cal.2d 462, 465, 274 P.2d 868; Estate of Vokal (1953) 121 Cal.App.2d 252, 260, 263 P.2d 64.) In determining compensation for trustee and attorney fees the court has the right to consider actions of the trustee in improper use of trust funds. (Estate of McLellan (1936) 8 Cal.2d 49, 55, 63 P.2d 1120.) An estate may not be charged with fees incurred in unsuccessfully contesting a trustee's surcharge. (Metzenbaum v. Metzenbaum (1953) 115 Cal.App.2d 395, 401-402, 252 P.2d 966.)

In the instant case an order surcharging the trustee, settling the 13th, 14th and 15th accounts and accepting Deak's resignation as trustee was filed October 5, 1977. With the exception of a surcharge of $4,971.29 resulting from an improper short sale of Research Cottrell during the Tenth Account and further surcharges of various items in the Thirteenth Account, all of which aggregated $14,116.80, the order denied the beneficiary's attempt to reopen the Eighth through Twelfth Accounts and settled the Fourteenth and Fifteenth Accounts as filed. Among the factual findings in the order were: ". . . the Court finding that notice of each of said petitions and accounts has been given to the persons, for the time and in the manner required by law; that co-Trustee, Thomas H. Sternberg, is not subject to any surcharge to the beneficiary, Camilla Cassity, nor liable for any contribution as a co-Trustee to Lewis J. Deak on matters of surcharge; . . . that the Trustees were authorized to purchase speculative securities by the decree of distribution; that securities purchased, except Research Cottrell on a short sale, were not purchased in reckless disregard of the effect on the trust estate; that Lewis J. Deak did not abdicate authority to determine what securities be purchased, retained or sold and did not improperly delegate his authority as a Trustee; that Lewis J. Deak at all times acted conscientiously and in good faith and was not negligent; that the matters referred to or necessarily included in the Eighth through Twelfth Accounts, including purchases of...