Powell's Trust Estate, In re

• Decision Date: 17 February 1966
• Docket Number: No. 37951,37951
• Citation: 68 Wn.2d 38,411 P.2d 162
• Parties: In the Matter of the TRUST ESTATE of Mary A. POWELL, Deceased. Charles O. POWELL, Trustee, Respondent, v. WESLEY GARDENS, Appellant.
• Court: Washington Supreme Court

Page 38

68 Wn.2d 38

411 P.2d 162

In the Matter of the TRUST ESTATE of Mary A. POWELL, Deceased.

Charles O. POWELL, Trustee, Respondent, v. WESLEY GARDENS, Appellant.

No. 37951.

Supreme Court of Washington, Department 1.

Feb. 17, 1966.

Rehearing Denied April 19, 1966.

Clinton, Moats, Andersen & Fleck, Gordon S. Clinton, Seattle, for appellant.

L. Edward Brown, Elma, for respondent.

HILL, Judge.

This is an appeal from an order approving the 1963 account of the trustee under a testamentary trust and the allowance of fees to the trustee and his attorney in the amounts of $8,000 and $3,250 respectively.

Mary A. Powell, deceased, by her will left the residue of her estate to Charles O. Powell as trustee. Under the terms of the trust, a daughter and two brothers were each to receive $250 a month 'throughout the lifetime of each'; and 'After all of said payments have been made in the manner herein specified,' the trust property then remaining in the hands of the trustee was to be distributed one-fourth to each of the following: First Methodist Episcopal Church of Vancouver, Washington; Vancouver Chapter of American Red Cross; Wesley Gardens; and Vancouver Chapter of the Young Women's Christian Association.

The appraised value of the residue of the Mary A. Powell Estate, which came into possession of Charles O. Powell as trustee on the 27th day of February, 1950, was $224,173.73.

Wesley Gardens, one of the four ultimate beneficiaries, filed exceptions to the 1963 report, protesting the fees of the trustee ($8,000) and his attorney ($3,250) and asking for the removal of the trustee and the appointment of a corporate trustee--the latter on the ground that a corporate trustee would receive a lower fee ¹ and would do the work better.

All of the beneficiaries to whom monthly payments were to be made are still living. These payments aggregate $9,000 each year. The value of the trust property, as shown by the 1963 report, had increased to $724,242.85.

The income for 1963 was $25,441.45. The expenditures (the trustee's fee of $8,000 and the attorney's fee of $3,250; the $9,000 distributed in monthly payments to the three beneficiaries named; an income tax on 1962 income of $1,582.05; miscellaneous $257.45), totalled $22,089.50. The net figure was $3,351.95.

This suggestion, that the trustee be changed, seems to us sheer effrontery. Mary A. Powell had as much right to choose her trustee as she did her beneficiaries. If she had wanted a corporate trustee, she could have named one; instead, she named her nephew, Charles O. Powell an elementary school principal, in whom she obviously place confidence. There is not the slightest suggestion of any lack of fidelity to this trust or incompetence in the performance of it. The lone objector says, in effect, that a corporate trustee would do it 'cheaper and better.' If that be true, the fact remains that Mary A. Powell had the unquestioned right to select an individual to be the trustee, even if an individual administration of the estate would be more expensive and less efficient than an administration by a corporate trustee. The request for a change of the trustee was properly denied.

Mary A. Powell was specific as to how her trustee was to be compensated. He was, by the terms of her will, to

(R)eceive a just and reasonable compensation for his services * * * the same to be fixed and allowed by the Court in which this will is probated. ²

The testatrix, and not one of the beneficiaries, determines the trustee; the superior court, and not one of the beneficiaries, determines his compensation.

It is clear from the memorandum opinion and from the findings that the fee fixed represented the considered judgment of the superior court as to what was a just and reasonable compensation to the trustee for his services in 1963. At the same time, it was indicated that there had been considerable soul searching in arriving at that result and that a review by the supreme court would be welcomed.

Even though giving the trustee full credit for a dedicated endeavor and an excellent performance, no member of the court hearing this appeal would have allowed a fee of $8,000. It seems to us that a fee more than double what the trust department of a bank ³ would have charged and amounting to practically a third of the annual income of the trust, could be approved only under very exceptional circumstances which do not exist here.

We agree with the respondent trustee that the charges made by trust companies and trust departments of banks for similar services are not controlling in the present case, but they certainly are to be included in the factors going into a determination of what constitutes a just and reasonable fee.

The trustee's briefs cite no cases upholding an $8,000 award to a trustee in such an estate, and the fees allowed in the cases which we have examined indicated that an allowance of $8,000 would be so far out of line that it should be held to be unjust and unreasonable.

The Arizona Supreme Court in In re Estate of Dunlap, 38 Ariz. 525, 2 P.2d 1045 (1931), states that the elements to be considered in fixing a proper fee are: (1) The amount of risk and responsibility involved, (2) the time actually required of the trustee in the performance of the trust, (3) the size of the estate, (4) the amount of income received, and (5) the manual and overall services performed.

The elements which should be considered in arriving at a just and reasonable fee, as announced in the Arizona decision, are universally the standards. See Restatement (Second), Trusts § 242; Bogert, Trusts & Trustees §§ 975, 977 (2d ed.); 3 Scott, Trusts § 242 (2d ed.).

The material facts in the Dunlap case were that, for the fiscal year involved, the trust had earned $46,941.94 (Powell trust $25,441.45). At the beginning of the fiscal year, the Dunlap trust was valued at $1,090,062.96 (Powell trust...