McCallum v. Anderson

• Decision Date: 10 January 1945
• Docket Number: No. 2934.,2934.
• Citation: 147 F.2d 811
• Parties: McCALLUM v. ANDERSON et al.
• Court: U.S. Court of Appeals — Tenth Circuit

147 F.2d 811 (1945)

McCALLUM v. ANDERSON et al.

No. 2934.

Circuit Court of Appeals, Tenth Circuit.

January 10, 1945.

Earl Pruet, of Oklahoma City, Okl., for appellant.

Earl Q. Gray and John M. Poindexter, both of Ardmore, Okl., for appellees.

Before PHILLIPS, HUXMAN and MURRAH, Circuit Judges.

MURRAH, Circuit Judge.

The appellant, Effie Anderson, now McCallum, prosecutes this appeal from a judgment of the trial court denying recovery in a suit against Nettie Anderson as the widow; Hoxie Anderson as the surviving son of C. L. Anderson; and Hoxie Anderson as the executor of the estate of Charles Anderson, a deceased son of C. L. Anderson. The suit seeks to recover $76,317.35 as principal and interest alleged to be owing her from a trust fund created by the will of her father, J. F. Anderson, in which her share of his estate was conveyed to her brother, C. L. Anderson, in trust for her use and benefit.

Jurisdiction is based upon agreed diversity of citizenship and requisite amount in controversy. The complaint alleges breaches of the trust obligation, and in addition to the recovery of the trust fund prays for $50,000 damages for the alleged breaches. The appellees are sought to be held liable on the theory that the trust funds sought to be recovered descended to them as heirs of the estate of the trustee, subject to the equitable lien of the appellant as beneficiary of the trust.

In 1909, J. F. Anderson died leaving a will by the terms of which, subject to enumerated legacies, he bequeathed his entire estate in equal parts to his children or their issue. However, the appellant's share was conveyed to her brother, C. L. Anderson, in trust for her use and benefit, with full power to sell, manage, and control the same during her lifetime. He was specifically authorized to invest the estate in such property and securities as would in his judgment safely yield a reasonable "rent and revenue", and to pay the same or so much thereof to the beneficiary as might be necessary for her support and maintenance; provided however if in his judgment the rents and revenue derived from the trust were insufficient for her support and maintenance, the trustee was authorized to use such portions of the principal as in the exercise of his discretion was necessary for the beneficiary's economical support and maintenance during her lifetime, even if it were necessary to use all of the said trust estate.

Subsequent to the execution of the will, certain properties were conveyed to C. L. Anderson for the use and benefit of the appellant, and by a codicil to his will, the testator provided that all the notes, accounts, and monies which may have theretofore or thereafter been conveyed to C. L. Anderson in trust for the appellant, should be "managed, controlled, used and finally disposed of" in accordance with and as specifically directed in the body of the will.

On March 17, 1910, the trustee rendered to appellant a statement of the assets he had received from the estate of his father as trustee for her use and benefit. Specifically he acknowledged having received $5,000 from his father before his death, and $8,829.37 from the estate since his death. He detailed the manner in which the assets had been invested in the form of loans, the parties to whom the loans had been made, the amount of each, which, with accrued interest thereon, amounted to a total of $14,473.35. The appellant was informed that this statement reflected all of the assets he had received, and exactly where and how they were invested; that it would be a "great pleasure" to furnish any other information concerning the matter; that he wished he did not have the responsibility, but under the terms of his father's will, he was forced to accept and handle it to the very best of his ability; and that he would do his best to handle her affairs with more caution than he would his own. In January, 1911, the appellant was advised that the balance of the trust fund was $13,929.57, and on January 11, 1912, that he held notes and cash amounting to exactly $14,000, after having disbursed $1,380.94 to the beneficiary during the year 1911.

According to the record, after December 28, 1915, the trust fund was evidenced by an entry upon the books and records of the trustee, by which he charged himself with $14,000, and credited the beneficiary with the same amount. In other words, by this book entry, the trustee acknowledged his indebtedness to the beneficiary in the amount of $14,000, and the trust fund thereupon became commingled with the general assets of the trustee, and was never thereafter identified as a separate and distinct trust fund, except as an entry upon his books. From time to time, the appellant was informed of the credits to the trust fund from interest on the investments, the disbursements to her, and the balance after such debits and credits. The correspondence between the trustee and the beneficiary in the years 1916, 1918 and 1919, show conclusively that the trust fund remained at $14,000, and that it yielded 7 per cent interest annually during this period. In 1928, the trustee informed the beneficiary, in response to a telegram for money, that the balance in the trust fund was "only a little more than $6,000.00", and that at her present rate of expenditures, the fund would soon be exhausted.

The trustee died in 1931, and his sons Hoxie and Charles Anderson were duly appointed executors of his estate, which was administered in the states of California and Oklahoma. During the years 1910 to 1931, the beneficiary never challenged the correctness of the trust account as submitted to her by the trustee from time to time; neither did she file a claim with the estate of the trustee for the amount of the trust, or assert any breach or discrepancy in the administration thereof. But apparently by common consent the executors of the trustee's estate, nephews of the appellant, assumed the obligation of the trusteeship, and on November 18, 1931, Charles Anderson, one of the executors, informed appellant that "the amount my father held in trust on your account on the date of his death" was $4,843.02, including interest; that since that time, she had received from the estate $1,090, leaving "to your credit now $3,827.18". On January 5, 1932, Charles Anderson again wrote to the appellant calling attention to his previous letter, in which he advised her of the balance in the trust account, and "in keeping with the policy followed by my father, would advise that you endeavor to keep your expenses down as much as possible inasmuch as at the rate of $100.00 or so a month, the money you have remaining on our books will soon be entirely spent". On the following June 17th, appellant was informed that the balance of the trust fund amounted to $2,923.02, and that she had received $1,920 since the trustee's death in 1931. On October 28, 1933, the beneficiary was informed that the balance remaining in the trust account was $1,700; that it was earning 5½ per cent interest per annum, and that at the rate of her expenditures, the fund would soon be exhausted. On the following November 22d, the beneficiary wrote to Charles Anderson asking for another $100, and thanked him for the statement of account.

On August 5, 1935, the appellant received an itemized statement of the account from January 1, 1926, to August 1, 1935, which reflected all debits and credits to the trust estate during this period, and the respective dates of each and every item charged or credited. This statement showed a balance in the trust of $93.79, which was paid to the appellant by a check of $75 on September 3, 1935, and a check for $18.79 on the following October 1st. After the rendition of the account and its payment, the appellant made no protest of its correctness, but she continued to importune Charles Anderson for additional money, and he did send her some small checks from time to time, for which he was partially reimbursed out of his father's estate, but as the trial court found, the appellant understood that these payments were wholly gratuitous, and were not made upon any liability arising out of the trust.

C. L. Anderson's estate was finally closed in 1938, and at that time the appellant had not filed any claim with the estate, or asserted any breaches or discrepancies in its administration, either by C. L. Anderson as trustee, or by his sons as executors and successor trustees. Charles Anderson died in 1941, and Hoxie Anderson was appointed as executor of his estate. The first manifestation of dissatisfaction over the administration of the trust estate was the filing of this suit in 1941, ten years after the death of the trustee, and more than five years after the rendition of the final account and its payment by the successor trustees.

The trial court held that the remedy of the appellant against the estate of the trustee was to file a claim against his estate as a creditor, and having failed to do so in the manner provided by law, she was without a remedy for any alleged breach of the trust obligation during the trusteeship of C. L. Anderson. This holding is based upon the factual finding to the effect that from and after December, 1915, the trust estate became commingled with the property of the trustee, and was thereafter identifiable only as a debt upon which he credited the beneficiary with interest; that the trust fund was not traceable to or identifiable in the hands of his administrators, and consequently equity was...