U.S. Nat. Bank v. First Nat. Bank

• Decision Date: 02 November 1943
• Citation: 172 Or. 683,142 P.2d 785,143 P.2d 909
• Parties: UNITED STATES NATIONAL BANK OF PORTLAND <I>v.</I> FIRST NATIONAL BANK OF PORTLAND ET AL.
• Court: Oregon Supreme Court

172 Or. 683

142 P.2d 785

143 P.2d 909

UNITED STATES NATIONAL BANK OF PORTLANDv.

FIRST NATIONAL BANK OF PORTLAND ET AL.

Supreme Court of Oregon.

Argued September 15, 1943.

Modified November 2, 1943.

Opinion amplified December 14, 1943.

Wills

1. Generally, if valid provisions of will can be separated from invalid, and upheld without doing injustice to beneficiaries or defeating general intent of testator, will must be sustained insofar only as it is valid.

Wills

2. A will speaks from the time of testator's death.

Trusts

3. Where testator, imposing duties regarding investments upon consultant bank for beneficiaries' protection, stated that testamentary trustee had given assurances that charges for consultant bank's services would be paid from regular trust fee, but trustee had not given such assurances, provision imposing duties on consultant bank was not invalid, but testator's dominant intent of protecting beneficiaries would prevail over subordinate intent of securing such protection without additional expense.

Trusts

4. Where will vested in consultant bank veto power over testamentary trustee as to all changes in investments or new investments, the consultant bank was a "fiduciary" having responsibilities analogous to those of a trustee and subject to control of court of equity.

Trusts

5. In determining extent of duties imposed upon consultant bank given veto power over acts of testamentary trustee as to all changes in investments or new investments, entire will was required to be examined.

Trusts

6. Where will gave testamentary trustee full power regarding investments, but vested veto power in consultant bank as to all changes in investments or new investments, duty of initiating all changes in investments or new investments was on trustee and not on consultant bank.

Trusts

7. Where will directed that all investments and reinvestments by testamentary trustee should be in securities generally regarded by "conservative bankers" as constituting high grade investments

and vested veto power in consultant bank as to all changes in investments or new investments, when making of investments was under consideration both trustee and consultant bank were required to exercise prudent discretion, not only in confining choice within conservative banker test, but also in selecting appropriate security within that class.

Trusts

8. A trustee does not perform his duty merely because he has made an investment in type of security which is authorized, but he must use care and skill and caution in selecting the particular investment.

Trusts

9. Where will required approval by consultant bank not only of new investments by testamentary trustee but also of changes in investments, approval of change could not be made without considering to what and from what change was proposed.

Trusts

10. Where will required approval by consultant bank of new investments and changes in investment by testamentary trustee, and proposed change involved only sale of securities to realize cash, question to be submitted to consultant was which of assets of trust should be sold and required consultant to consider entire trust portfolio.

Trusts

11. A testamentary trustee, in exercising power over investments, should take into consideration circumstances of particular trust, both as to size of estate and requirements of beneficiaries, and he should consider each investment not as an isolated transaction but in its relation to the whole of the trust estate.

Trusts

12. Where will gave consultant bank veto power over acts of trustee in connection with all changes in investments or new investments, duties of the consultant included approval of sales as distinguished from purchases and scope of the consultant's duties was not limited to application of "conservative banker test".

Trusts

13. Where will gave consultant bank veto power over trustee's acts regarding changes in investments and new investments, and trustee after receiving consultant's proposal as to measure of compensation for first year commenced consulting the consultant, an agreement regarding compensation resulted.

Trusts

14. Where will gave consultant bank veto power over trustee's acts regarding changes in investments and new investments, and trustee after receiving consultant's proposal as to measure of compensation

for first year commenced consulting the consultant, the trustee became personally liable to pay that compensation regardless of whether agreement was in excess of trustee's authorized powers and whether trustee was entitled to indemnity from trust estate.

Trusts

15. Where testator, imposing duties upon consultant bank, stated that testamentary trustee had given its assurances that consultant's charges would be paid from regular trust fee, but trustee had not given such assurance, consultant's compensation was required to be paid out of the trust estate.

Trusts

16. Where will imposed duty on consultant bank regarding testamentary trustee's acts as to changes in investments or new investments, but did not make valid provision for compensating consultant, the trustee would be authorized, in accordance with wishes of beneficiaries, to pay consultant's compensation out of principal rather than from income.

Trusts

17. Where will imposed duties on consultant bank but did not make valid provision for compensating consultant, record was insufficient to sustain order fixing compensation at one-eighth of one per cent of corpus of trust estate for years subsequent to first for which testamentary trustee and consultant had made agreement.

Trusts

18. Where will imposed duties on consultant bank regarding trust estate but did not make valid provision for compensating consultant as to years for which consultant and trustee had not agreed, consultant's compensation was required to be reasonable.

Trusts

19. Where will gave consultant bank veto power over testamentary trustee's proposed changes in investments and new investments, offer of two beneficiaries to waive veto power provision of will was properly rejected by court where persons other than those making offer had interest in the trust estate by way of remainder.

ON AMPLIFICATION OF OPINION

Trusts

20. Where decree involving trust provided that agreed compensation of consultant bank for first year should be charged against corpus of estate and beneficiaries who were parties to cause did not appeal such agreed compensation will be made a charge against corpus of estate.

Trusts

21. Where trial court retained continuing jurisdiction of cause involving trust, any issue in respect to compensation of consultant bank in event of disagreement in respect thereof should be submitted in such cause by motion and affidavit and on such further evidence as court may permit or require.

Trusts

22. Reviewing court on appeal involving trust will not decide in advance what if any reasonable attorney's fees should be allowed in event of future controversy nor whether if allowed they should constitute a charge against trust estate.

Trusts

23. Where trustee and consultant bank having rights and duties similar to those of express trustee were justified in seeking directions of court concerning their respective duties under will they were both entitled to reimbursement out of corpus of trust for reasonable and necessary expenses including attorney's fees.

Trusts

24. Consultant bank which was defendant in proceeding seeking directions from court concerning duties of trustee and consultant bank under will was entitled to a reasonable attorney's fee when prevailing in lower court and substantially prevailing on appeal.

Trusts

25. Where consultant bank which was defendant in proceeding concerning duties of trustee and consulting bank under will was actuated in part by self-interest as well as by a sense of obligation under will, an attorney's fee for services in reviewing court in the amount of $250 would be allowed.

                  Duty of trustee to diversify investments, note, 131 A.L.R
                1158. See, also, 21 Am. Jur. 526
                  Allowance of attorney's fee for services in protection of trust
                fund or estate, notes, 49 A.L.R. 1161; 107 A.L.R. 756. See, also
                26 R.C.L. 1385
                  68 C.J., Wills, § 224.
                  65 C.J., Trusts, § 672.
                

Before BAILEY, Chief Justice, and BELT, ROSSMAN, KELLY, LUSK, BRAND and HAY, Associate Justices.

Appeal from Circuit Court, Multnomah County.

MacCORMAC SNOW, Judge pro tem.

Action by the United States National Bank of Portland, Oregon, a testamentary trustee under the last will and testament of Alexander M. Clark, deceased, against the First National Bank of Portland, Oregon, and others, for construction of certain provisions of the deceased's will. From a decree sustaining the contentions of the named defendant, the plaintiff appeals.

MODIFIED. OPINION AMPLIFIED.

Wilber Henderson, of Portland (Platt, Henderson, Warner, Cram & Dickison, of Portland, on the brief) for appellant.

R.R. Bullivant, of Portland (Pendergrass, Spackman & Bullivant, of Portland, on the brief) for respondent First National Bank.

The pleadings and evidence disclose a controversy between the plaintiff, The United States National Bank of Portland, herein to be designated the trustee bank, and the defendant, The First National Bank of Portland, which we shall describe as the "consultant" bank. Both parties seek a decree construing certain provisions of the will of Alexander M. Clark, deceased, and determining the duties and rights, if any, of the consultant bank under that instrument. Defendants, Grace E. Clark and Ruth A. Clark, are beneficiaries under the will. They appeared and answered, taking a position in opposition to the defendant consultant bank and substantially in accord with the contentions of the plaintiff trustee bank. The decree of the lower court sustained in full the contentions of the defendant, and the plaintiff appeals. The individual defendants have not appealed.

BRAND, J.

After making certain specific bequests, the...