In re Tone's Estates
| Decision Date | 18 October 1949 |
| Docket Number | 47508. |
| Citation | 39 N.W.2d 401,240 Iowa 1315 |
| Parties | In re TONE'S ESTATES. |
| Court | Iowa Supreme Court |
[Copyrighted Material Omitted]
J M. Chamberlin and Waldo M. Wissler, both of Davenport, for appellant.
Ed R. Brown and W. M. Carron, both of Des Moines, for appellee.
William and Mattie M. Tone, husband and wife, died early in 1943 leaving wills which create a spendthrift trust in favor of their foster daughter for life with remainder to the daughter's three children. The trust provisions of each will are identical and the Central National Bank and Trust Company of Des Moines is trustee under each. The daughter filed application to require the trustee to pay expenses and attorney fees incurred by her in litigation against her and her husband. Trial was had, the application denied and the applicant has appealed to us.
The wills provide the trustee shall pay the beneficiary or beneficiaries the net income from the trust and in Item IV(d) Loretta Thiessen is now Loretta Darnell and Barbara, Patricia and William are her children.
This is the last paragraph of Item IV(d) of the wills which the daughter Loretta claims entitles her to the relief now applied for: 'If at any time or times, on account of serious illness or other unforeseen emergency, any beneficiary * * * shall, in the opinion of said Trustee, imperatively require the expenditure * * * or part of the accumulated * * * income or of the principal, said Trustee is hereby authorized to * * * expend for such purpose such an amount as in its discretion and judgment, it may think wise, prudent and necessary under the circumstances.'
These are the matters giving rise to the application which Loretta contends create such an 'unforeseen emergency': Late in 1946 the trustee purchased a home in Davenport for the daughter where she lived about 13 months. She desired to go to Arizona for a time about March 1, 1948, and authorized a Mr. and Mrs. Vanderipe to stay in the house during her absence. The daughter returned from Arizona April 18th but Mrs. Vanderipe refused to surrender possession before June 1st.
On the evening of Decoration Day, with the consent of Mrs. Vanderipe, Loretta and her then husband, William Darnell, and one Hashaw went to the house to get some clothing. Darnell and Vanderipe got into a fight, the police were called and Loretta, Darnell and Hashaw were placed in jail, charged by the Vanderipes with breaking and entering.
Loretta called Mr. Chamberlin, an attorney, borrowed some money, was released from custody and 'got Mr. Darnell out.' She later testifies she borrowed $550 to get them out of jail, from whom does not appear. Loretta was discharged from the criminal complaint upon preliminary hearing before a justice of the peace. She says she 'went to J. P. court just once.' Darnell was held to answer the criminal charge but was released on bond. At the hearing upon her application in the fall of 1948 (the exact time is not shown) Loretta testifies, 'Think the criminal charge against my husband that time has been dropped, or is being dropped now.'
On June 28, 1948, because of the fight on Decoration Day, Mr. and Mrs. Vanderipe brought a damage action against Darnell, Loretta, and Hashaw which asked the tidy sum of $50,000. The damage suit was aided by attachment and Loretta 'had to borrow another $130 for a bond premium to discharge the attachment.'
Defense of the damage action was entrusted to Mr. Chamberlin and Mr. Wissler, associates at least in this litigation. They filed answer and counterclaim therein. Basis for the counterclaim does not appear but perhaps it may be inferred to be a claim for malicious prosecution or upon the attachment bond under section 639.15, Code 1946, I.C.A., or both. When this appeal was submitted to us on September 23, 1949, the damage action had not been brought on for trial and there is no evience as to when if ever trial may be expected.
Mr. Wissler says the services of himself and Mr. Chamberlin in the above matters down to September 8, 1948, are worth $1,300. Loretta paid them $70. What she did with the rest of the $550 borrowed by her does not appear. On August 9, 1948, Mr. Wissler wrote the trustee for an advance of at least $1,000 and asked that it agree to pay them 'whatever sum may be reasonable for work done hereafter.' This letter states Loretta was then indebted to the attorneys for at least $1,000 'and we would estimate this is about 1/3 the total work which needs to be done.' Eight days later the trustee wrote the attorneys it was unwilling to accede to their request for funds.
This application was filed August 27, 1948, alleging applicant's predicament is an "unforeseen emergency' within the provisions of the will' and 'it is an abuse of discretion by the trustee to refuse to pay applicant's attorney fees, costs and expenses.'
The trust estate is of the approximate amount of $300,000. Prior to June, 1944, more than $15,000 was advanced out of the corpus of the estate for inheritance and estate taxes chargeable to Loretta. By arrangement with her and her then attorney and pursuant to court order this amount was to be restored to the trust out of the income therefrom. Complete reimbursement for this advance will not be made until two years after the hearing upon the application herein. No question is raised and no pronouncement is made upon this appeal as to the propriety of this use of part of the income but it is mentioned in explanation of the status of the trust and Loretta's financial condition.
After this advance for taxes is restored much larger payments from the income can be made Loretta. Until such time, under the arrangement with her and her then attorney, only $50 a month is regularly paid her from the income, in addition to $1500 to $1800 federal income taxes annually assessed against her. Some other amounts have been paid for Loretta as for hospital and doctor bills and railroad fares to Arizona when her boy had meningitis, $436 for an oil burner and an undisclosed amount for a daughter of Loretta to granduate from school. It was stated in argument the gross annual trust income is about $6000.
In addition to her monthly income of $50 from the trust Loretta receives $290 a month from annuities left by her parents. Her husband is a railroad brakeman and gets $280 a month. One of Loretta's daughters works in a post office in Arizona. The other daughter is a telephone operator in Hawaii. Loretta has bought clothes for them and given them money. Her son attends the state school for deaf children. Loretta gives him an allowance of $2.50 (how frequently does not appear) and buys his clothes.
One of the preliminary findings in the order denying the application is, in substance, that the court would not be justified in concluding the testator did not intend the opinion of the trustee to be final as to whether an unforeseen emergency required the expenditure of accumulated income or principal. Appellant has construed this as a holding that the trustee's decision as to what is such an emergency is final and not reviewable by the court. So construed, the finding is erroneous. No such finding is contained in the trial court's Findings of Fact and Conclusions of Law which state, as does the order appealed from, no abuse of discretion by the trustee was shown that would justify interference by the court.
However, if error in the above finding be conceded, it is of no avail to appellant. If the order denying the application is right any error in the findings is deemed not prejudicial. In re Estate of Hale, 231 Iowa 1018, 1024, 2 N.W.2d 775, 779, and citations; Roth v. Headlee, 238 Iowa 1340, 1348, 29 N.W.2d 923, 927. See also Creel v. Hammans, 232 Iowa 95, 5 N.W.2d 169.
The exercise of discretion by the trustee is subject to review by the court and to correction in a proper case. Sections 604.4 and 633.32, Code 1946, I.C.A.; In re Roberts' Estate, 240 Iowa 160, 35 N.W.2d 756, 759, and citations; In re Trusteeship of Clark, 174 Iowa 449, 454, 455, 154 N.W. 759, 156 N.W. 353; Restatement, Trusts, section 187; 54 Am.Jur., Trusts, section 180.
It is apparent these wills confer upon the trustee a wide discretion as to when 'serious illness or other unforeseen emergency * * * imperatively require the expenditure' of 'such an amount as in its discretion and judgment, it may think wise, prudent and necessary * * *.'
Restatement, Trusts, section 187, comment d, lists these relevant circumstances in determining whether there has been an abuse of discretion: '(1) The extent of the discretion intended to be conferred upon the trustee by the terms of the trust; (2) the purposes of the trust; (3) the nature of the power; (4) the existence or non-existence * * * of an external standard by which the reasonableness of the trustee's conduct can be judged; (5) the motives of the trustee in exercising * * * the power; (6) the existence or non-existence of an interest in the trustee conflicting with that of the beneficiaries.'
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