In re Whitman's Estate

• Decision Date: 17 March 1936
• Docket Number: 43356.
• Citation: 266 N.W. 28,221 Iowa 1114
• Parties: In re WHITMAN'S ESTATE.
• Court: Iowa Supreme Court

266 N.W. 28

221 Iowa 1114

In re WHITMAN'S ESTATE.

No. 43356.

Supreme Court of Iowa.

March 17, 1936

Appeal from District Court, Polk County; F. S. Shankland, Judge.

An appeal from a judgment and decree construing the terms of a trust created by the will of Ellen T. Whitman. The facts appear in the opinion.

Reversed and remanded.

Lehmann, Hurlburt & Hossfeld, of Des Moines, for appellant Nellie Whitman Taylor.

Lappen, Carlson & Clarke, of Des Moines, for appellee and cross-appellant Mary E. Whitman.

E. D Samson and Lehmann, Hurlburt & Hossfeld, all of Des Moines, for appellee E. D. Samson.

ANDERSON, Justice.

This appeal presents the construction of the will of one Ellen T. Whitman creating a trust estate and questions raised on the reports of trustees and the disbursement of the income of the trust estate.

On June 2, 1919, the will of Ellen T. Whitman was admitted to probate in the district court of Polk county, Iowa. The provisions of the will pertinent to a determination of the issues here presented are as follows:

" Second. I give, devise and bequeath to my daughters, Nellie Whitman Taylor and Mary Whitman, and to Jesse F. Stevenson, in trust, however, for the persons hereinafter designated, during the term defined, with the powers granted, and subject to the limitations and conditions herein imposed, the following described real property in the city of Des Moines, Iowa, namely: [Here is described two separate tracts of real estate situated in the business district in the city of Des Moines, and a certain residence property also situated in the city of Des Moines, Iowa.]

Third. The duration of the trust period shall be the lives of my daughters, Nellie Whitman Taylor and Mary Whitman."

" Fourth. Upon the termination of the trust period all the property of the trust estate, with accumulations, additions, thereto, and accrued income, shall vest in the children of my daughter, Nellie Whitman Taylor and her deceased husband, David Lee Taylor. * * *"

" Fifth. Of the net income of the trust estate one-half shall be paid to my daughter, Mary Whitman, during life, and one-half to my daughter, Nellie Whitman Taylor, during life, provided always, that my daughter, Mary Whitman, shall receive annually not less than two thousand dollars as her portion of the income from the trust estate. The distribution of the net income shall be made monthly, if possible. If my daughter, Mary Whitman, should survive her sister, Nellie Whitman Taylor, then the share of the net income that Nellie Whitman Taylor would have been entitled to receive, if living, shall, from her death, be paid to the beneficiaries designated in paragraph numbered ‘ Fourth’, above, who, if the trust were then terminated would be entitled to the vested remainder. And, from then on, until the termination of the trust period such beneficiaries and their lineal descendants shall be entitled to such net income and in the proportion specified in paragraph number ‘ Fourth,’ above. If Nellie Whitman Taylor shall survive her sister Mary, she shall be entitled to the entire net income from the trust estate."

" Sixth. The trustees are authorized and empowered to immediately take possession of all property herein devised to them in trust, and, thereupon and thereafter, to collect the income, rents, and profits therefrom; to pay all necessary and proper charges; to lease any or all of the properties of the trust estate for such term, and without limitation as to time, as may seem best to them; to make repairs, alterations, and additions, or to erect new buildings. They are also authorized and empowered to sell and to convey, and to mortgage any or all of the properties of the trust estate, and to execute all necessary and proper instruments for the accomplishment of such purposes. But the proceeds of mortgage loans shall be expended on properties of the trust estate for their betterment. The principal of the trust estate shall be kept intact as far as may be possible under the exercise of careful and judicious management. The principal sum of the trust estate shall at all times be invested in income bearing real property or in conservative income bearing securities. In short, my trustees are given full power and authority to do all things that I might or could do, if living and possessed of the fee title to the property conveyed to my trustees, subject only to the purposes intended to be accomplished by the trust, and subject only to expressed limitations upon their power and authority."

" Seventh. * * * Nor order of court shall be necessary for the performance of any act, whether of conveyance, mortgage, lease, or otherwise, which the trustees are authorized to perform. * * * Nor shall the trustees be required to make reports or statements of accounting to the court."

" Ninth. All instruments whether of conveyance, mortgage, lease, or otherwise, shall be sufficiently executed if duly signed by two trustees, and, when so executed shall be binding upon the trust estate. * * *"

" Tenth. As long as the trustees are faithful in the execution of this trust, exercising ordinary care and diligence, they shall not be liable for any errors in judgment."

On June 10, 1919, the trustees named in item 2 of the will of Ellen T. Whitman accepted the trust created by the will and duly qualified as trustees.

On March 29, 1921, Jesse F. Stevenson tendered his resignation as trustee, and on April 9, 1921, the court accepted his resignation and appointed E. D. Samson as trustee in his stead. Samson accepted the appointment and qualified, and he, with the two daughters named, continued to act as trustees from that date to the present time. No report of the present trustees seems to have been filed until October 8, 1931, when E. D. Samson filed what is designated in the record as his " First Report." This report covered transactions from the beginning of the trust, including June 2, 1919, to the date when the report was filed. There was a prior report, however, made by Jesse F. Stevenson on March 29, 1921, showing the transactions of the estate from June, 1919, to April 11, 1921. The report of Stevenson shows that he disbursed $166.67 to Mary Whitman each month for twenty-three months, or a total of $3,833.41, and that during that time he had disbursed to Nellie W. Taylor $2,266.61, and, after the payment of taxes and expenses, the balance of the trust funds in his hands amounted to $49.19. This report of the trustee, Stevenson, was approved by the court, his resignation was accepted, and E. D. Samson was appointed as his successor.

The first report of Samson as trustee shows a receipt by him of $49.19 from his predecessor and the collection and disbursement of the rents and profits accruing from said trust estate from the time of Samson's appointment to and including June, 1931. During this period the report shows that of the net income derived from said estate Mary Whitman received the sum of $20,500.41 and Nellie W. Taylor received the sum of $21,898.50. The two reports of Stevenson and Samson, here referred to, combined, shows total disbursements to the beneficiaries from the commencement of the trust to the date of the first report of Samson as follows: To Mary Whitman, $24,333.82; to Nellie W. Taylor, $24,165.11.

This first report of the trustee, Samson, shows that during the entire period from the commencement of the trust to the date of this report Mary Whitman had been paid $166.67 each month, and that such amount was ordinarily one-half of the net income from the trust estate. The report further shows that one-half of the net monthly income from the estate was sometimes more and sometimes less than the $166.67, and the balance, if any, was disbursed to Nellie W. Taylor. The report further shows that, when extraordinary expenses were incurred, Nellie W. Taylor advanced funds for their payment, and such advances were repaid to her from the later accruing net income, after payment, however, of $166.67 each month to Mary Whitman.

In an application attached to this first report of Samson, trustee, he reports that question has arisen as to whether the trustees should balance the distribution when funds permitted them to do so without reducing the income of Mary Whitman below $2,000 a year, so as to permit Nellie W. Taylor to receive as nearly as possible a full one-half of the net income; that such has been the practice of the trustee, and he asked the court to instruct as to his conduct in relation thereto in the future.

In the application the trustee also states that question has arisen as to whether or not the trustee should charge to the account of Mary Whitman a reasonable rental for the trust property she occupies as a residence, or, if not rental, the actual expenses incurred by the trust estate for taxes and insurance on this property, and asked the court for instructions on this question. It appears from later reports that the residence property which forms a part of the trust estate has been occupied during the entire existence of the trust by Mary Whitman without the payment of any rent, and that the taxes and insurance and repairs have been borne by the trust estate.

On October 13, 1931, Mary Whitman, as trustee, filed what is designated in the record as " Separate Report and Application of Mary Whitman, Trustee." In this report Mary Whitman states that she believes the accounts of items of receipts and disbursements as contained in the report of Samson, trustee, are correct, but she questions the propriety and correctness of the distribution of the net income. She complains that, contrary to the provisions of the will, there has not been a distribution of the net income monthly, and that there has not been paid to her one-half of the annual net income...