Kinney v. Uglow

• Decision Date: 06 February 1940
• Parties: KINNEY ET AL. <I>v.</I> UGLOW ET AL.
• Court: Oregon Supreme Court

163 Or. 539

98 P.2d 1006

KINNEY ET AL.v.

UGLOW ET AL.

Supreme Court of Oregon.

Argued October 10, 1939.

Modified February 6, 1940.

Wills — Construction — Intention

1. In construing a will, the first duty of the court is to ascertain, if possible, the intention of testator, and in ascertaining that intention, the court would take will in its entirety.

Wills — Property in trust

2. Generally, when property is bequeathed in trust to pay the income therefrom to a beneficiary for life, or for a limited time, such beneficiary is entitled to payment of the income from the death of the testator unless otherwise provided in will.

Wills — Property in trust

3. The fact that testator devised residue of estate to trustee, with direction to pay income to designated beneficiaries, did not alter general rule that such income shall accrue to beneficiaries as of date of testator's death rather than date of delivery of his estate to trustee.

Trusts — Accounting

4. Whether income realized by executor should have been divided by him as such executor among six beneficiaries rather than four, could not be litigated in proceeding for an accounting by testamentary trustee, since such question was a matter within province of probate court, and trustee was not concerned with income earned by estate during probate and distributed by executor prior to time that corpus of trust estate was delivered to him.

Homestead — Statutes

5. The right to have homestead set aside to widow was abrogated in 1919 and was not restored until 1927, and hence under law in effect at time of husband's death in 1925, order of the probate court attempting to set aside property to widow as a homestead was void.

Judgment — Trusts — Accounting

6. In suit for accounting by testamentary trustee, where defaulting heirs were not apprised by complaint that questions other than those pertaining to trust estate would be litigated, decision with respect to whether "home place" ever became part of trust estate, and as to time when right to possession thereof accrued to heirs, would not be binding upon them, nor would decision as to time when right to possession accrued to heirs be binding even upon heirs by whom suit was brought, since such was matter for determination in proceeding in which all persons interested were made parties, and not in suit involving trust estate.

Trusts — Maintenance of trust property

7. Where total disbursements by testamentary trustee purportedly for maintenance of trust property was in excess of $14,000, and inclusion therein of $601.68 paid out of trust funds on special assessment against residential property owned by trustee individually was due to carelessness rather than a wrong intention, trustee's account was not subject to surcharge in entire amount purportedly expended for maintenance, but trustee was entitled to credit for the amount actually expended to maintain the trust properly.

Trusts — Accounting

8. Where it was sought to surcharge trustee's account with certain items of rental, and brief stated that widow was paid a certain sum by trustee, but neither the brief nor record indicated basis for such payment, trustee would be charged with total amount of rentals and any adjustment to be made between beneficiaries and trustee, in event it were determined that widow was entitled to one-half the rentals, would be left to the circuit court to determine in appropriate proceedings.

Trusts — Uncollected rentals

9. Deficiencies in rental collections by testamentary trustee could not be explained by application of reduced rate of rental which did not become effective until following year, as respects surcharge of trustee's account.

Trusts — Accounting

10. Testamentary trustee's account was subject to surcharge in amount of rentals which had been collected from trust property but which had not been accounted for.

Trusts — Accounting — Rent

11. Testamentary trustee was prima facie accountable for all rents of all trust properties during whole period of trusteeship and could not be relieved from liability therefor except by proof that he did not collect the rents, and that he was unable to collect them in the exercise of due diligence.

Trusts — Due diligence

12. Where professional practice of tenant occupying trust property was limited, and testamentary trustee took over from tenant and collected certain accounts receivable, and applied the collections to rentals due from the tenant, trustee used "due diligence" so as to preclude surcharge of his account for balance remaining unpaid at time of tenant's removal from city.

Trusts — Accounting — Rent

13. Where certain trust property had been vacant for some time, and testamentary trustee permitted tenant to occupy premises

without payment of rent for limited period to assist tenant in establishing his business, but tenant was obliged to abandon his business, and subsequent tenant had done all that could reasonably be expected from him in paying past rentals, trustee was not accountable for balance of rental due from such tenants.

Trusts — Accounting — Rent

14. Testamentary trustee who himself testified that doctors by whom trust property was occupied as tenants were property owners and that the one had a good practice could not rely on depression as excuse for laxity in collection of rent from them.

Trusts — Accounting — Rent

15. Testamentary trustee who himself testified that doctors by whom trust properties were occupied as tenants owned property of their own, and that the one had a good practice, but who permitted rental accounts to become delinquent, and made no attempt to obtain security for past-due accounts, would be charged with whole amount of the rental balances owed and uncollected.

Trusts — Accounting — Rent

16. Where paint and hardware merchant occupying trust property as tenant was in arrears in rental in sum of $1039.98, but tenant testified that he would have been unable to continue in business had trustee not been lenient with him, and both tenant and trustee were of opinion that balance would be paid in view of improvement in business, trustee's account would not be surcharged with amount of arrearage.

Trusts — Uncollected rentals

17. The account of testamentary trustee would not be surcharged in amount of rentals not collected from property which tenant had improved under agreement with executor permitting tenant to offset cost of improvement against future rentals, in absence of injury to the trust estate from trustee's recognition of agreement between executor and tenant.

Trusts — Uncollected rentals

18. Where tenant occupying trust property was engaged in prune business and received most of his annual income at approximately the same time of the year, at which time he would pay trustee for many months past, the trustee in permitting delayed payment did not fail to exercise "reasonable judgment" so as to require that his account be charged with interest on deferred payments.

Trusts — Trustees — Investments

19. A testamentary direction that surplus income be added to principal and reinvested in some safe, interest-bearing securities approved by the court having jurisdiction thereof, required that

not only surplus income but also principal of trust estate be invested by testamentary trustee in safe, interest-bearing securities.

Trusts — Trustees — Investments

20. Generally, when a testamentary trustee in good faith applies to the court having jurisdiction over the trust for instructions as to the making of investments within contemplation of the trust instrument, and in so doing makes full disclosure of all pertinent facts within his knowledge, acquired after a reasonably diligent investigation, he will be protected against liability in following the advice of the court.

Trusts — Trustees — Investments

21. "Shares of stock" in a corporation are not "interest-bearing securities" within testamentary direction that trustee invest funds in "interest-bearing securities" and hence court on petition presented to it by trustee had no authority to permit trustee to make purchase of stock.

Trusts — Trustees — Investments

22. Where will required investment of funds in "interest-bearing securities", trustee who without applying for construction of the will, or for permission to make investments other than those specified in will, procured ex parte order authorizing investment in corporate stock, was liable for amount invested in such stock and his account would be surcharged with amount paid therefor with interest thereon from respective dates of purchase less amount he had received as returns from the stock prior to insolvency of the corporations.

Trusts — Trustees — Investments

23. Shares of stock in an investor's trust were not "interest-bearing securities" within contemplation of will requiring investment of funds by testamentary trustee in "interest-bearing securities", and hence trustee's account would be surcharged with amount thus invested with interest from date of payment, less amounts received as dividends.

Trusts — Trustees — Investments

24. First mortgage bonds were "interest-bearing securities" within contemplation of will requiring investment of funds by trustee in "interest bearing securities" and where such bonds were purchased by trustee acting in good faith pursuant to court order, trustee's account would not be surcharged with amount thus invested.

Trusts — Trustees — Sale of stock

25. Testamentary trustee who did all that he could to sell stock owned by testator before his death was unable to do so in absence

of market therefor, was not negligent so as to require that his account be surcharged for failure to dispose of the stock and invest proceeds in interest-bearing securities.

Wills — Distribution

26. Under will directing payment of $25 per month by trustee to each of six beneficiaries and payment of one-sixth of net income of trust to each beneficiary after beneficiary reached designated age, but in event of...