Reset A A Font size: Print

District Court of Appeal, Second District, Division 1, California.

IN RE: the ESTATE of Joseph GILMAKER, Deceased. Joseph Louis GILMAKER, Contestant and Appellant, v. BANK OF AMERICA, NATIONAL TRUST AND SAVINGS ASSOCIATION, Petitioner and Respondent.*

Civ. 25218.

Decided: May 26, 1961

Eric A. Rose, Long Beach, for appellant. Johnson & Johnson, Long Beach, for respondents.

This is an appeal from an order which in effect instructed the trustee with reference to the administration of a trust.

The Bank of America, National Trust and Savings Association (hereinafter referred to as ‘bank’), as trustee under the will of Joseph Gilmaker, had distributed to it certain property by a decree of distribution. The bank had certain cash in its hands and set forth in a petition to the court the fact of its appointment as trustee, that it had certain cash on hand, that the decree of distribution gave the trustee certain general powers as follows:

‘To invest and reinvest principal and income if accumulated, and to purchase or acquire therewith every kind of property, real, personal, or mixed, and every kind of investment, specifically including, but not by way of limitation, corporate obligations of every kind, and stocks, preferred or common, but excluding stock of the trustee corporation, all in a manner conforming with then existing law; and to invest in any common or commingled trust fund or funds now or hereafter established by said Bank of America National Trust and Savings Association, and operated by and under the control of said Bank solely for the investment of trust funds, all in conformity with the express provisions of the instruments establishing such common trust fund or funds and all amendments thereof.’

The decree of distribution provided in part as follows:

‘Decedent's said son, Joseph Louis Gilmaker, is appointed as Consultant, and the Trustee shall not sell, lease, exchange, hypothecate or improve any property which is a part of the trust estate, or invest or reinvest any trust estate funds until it has first notified said Consultant in writing of its intention so to act and received from said Consultant his written approval of the action so proposed. Notices given pursuant to this requirement shall be addressed to the Consultant at his last known address and deposited in the United States mail registered, postage prepaid. If thirty days from the date of mailing of such notice no written reply has been received from the Consultant the Trustee shall mail a duplicate notice and if no written reply has been received from the Consultant within ten days from the date of mailing of such duplicate, the Trustee may construe Consultant's silence as approval of the proposed action and proceed accordingly; provided, however, that in the event the Consultant shall have notified said Trustee in writing of his intention to be absent from the Continental United States, said Trustee shall at the expiration of sixty days from the mailing of such notice mail a duplicate notice, and if no written reply shall have been received from the Consultant within thirty days from the mailing of such duplicate notice the Trustee may construe Consultant's silence as approval as to the proposed action and proceed accordingly. Upon receipt of written approval of any proposed action the Trustee may proceed immediately with the action concerning which such notice has been given, but in the event the Trustee shall receive written disapproval from the Consultant of any such intended action within the time provided for herein, the Trustee shall have no power to take such action. The Consultant shall be provided semi-annually with an itemized statement setting out income and expense for each parcel of improved real estate in the trust estate, and shall be consulted regarding the amount of fire and other insurance carried on each parcel.’

The petition further set forth that since the commencement of the trust, the trustee repeatedly had proposed to the consultant the reinvestment of trust funds held in the savings account, that it had been proposed that the funds be reinvested in municipal bonds, corporate bonds and promissory notes secured by deeds of trust and that the consultant had rejected all of such proposals. The petitioner also stated that it was ‘concerned with its continuing inability to invest and reinvest trust funds in accordance with the principles of good trust administration because of Consultant's unreasonable refusal of his approval.’

The court was requested to hear the petition and make an order instructing the trustee as to its further exercise of its power to invest and reinvest the trust funds.

Exceptions and objections to the petition were filed. It was alleged therein that the court had no jurisdiction over the subject matter, that it was an attempt to have the trustee violate its duties under the terms of the trust. There was no denial of any allegation of facts set forth in the petition of the bank.

After a hearing in which no evidence was introduced, the court made an order:

‘* * * trustee has the sole power to propose the investment and re-investment of trust funds, but provided that all such proposals must be submitted to Joseph Louis Gilmaker, as consultant, and such proposals may not be acted upon by trustee until it has first obtained the written approval of said Joseph Louis Gilmaker, and if said Joseph Louis Gilmaker shall refuse to give his written approval to any such proposal, the same shall be abandoned by the trustee.

‘3. It is the duty of the trustee at reasonable times and intervals to suggest a program of investment of surplus funds of the trust to the Consultant in order that such trust shall be so administered as to provide the best return consistent with safety of the principal and the prudent investment of the funds thereof.

‘4. In accordance with the terms of said Decree of Distribution, the trustee shall comply with any written instructions of said Joseph Louis Gilmaker, relating to the selection of banks in which trust funds shall be deposited, and shall secure them, through insurance of deposits by the Federal Deposit Insurance Corporation, against loss by bank failure.’

The appeal is from the order so made.

The appellant now asserts that the order is in excess of the court's jurisdiction and attempts to modify a final decree of distribution and that the court's finding that the petition is not an attempt by the trustee to violate its duties under the decree of distribution, is not supported by any substantial evidence.

It is to be noted that the bank was not seeking any particular form of instructions from the court. It is apparent that the bank was confronted with a recalcitrant beneficiary consultant which made for an unusual situation and the bank decided to place the matter fully before the court and ask the judge for guidance for future reference.

Section 1120 of the Probate Code provides in part:

‘When a trust created by a will continues after distribution, the superior court shall not lose jurisdiction of the estate by final distribution, but shall retain jurisdiction for the purpose of determining to whom the property shall pass and be delivered upon final or partial termination of the trust, to the extent that such determination is not concluded by the decree of distribution, of settling the accounts and passing upon the acts of the trustee and for the other purposes hereinafter set forth. Any trustee appointed by will, or appointed to execute a trust created by will, may, from time to time pending the execution of his trust, or at the termination thereof, render for settlement his accounts and report his acts as such trustee, before the superior court in which the will was probated. For that purpose, the trustee, or, in case of his death, his legal representatives, shall present to the court his verified account and report, setting forth his accounts in detail, reporting his acts as trustee, and showing the condition of the trust estate, and giving the names and post-office addresses, if known, of the beneficiaries. The trustee may also petition such court, from time to time, for instructions as to the administration of the trust. The clerk shall set the account and report or petition for settlement or hearing by the court and give notice thereof for the period and in the manner required by Section 1200 of this code. The trustee shall cause notice of the hearing to be mailed to the beneficiaries at their last known addresses, as provided in said Section 1200, whether they have requested special notice or given notice of appearance or not.’

The court did have jurisdiction to hear the matter. The bank sought a judicial determination of the respective roles of the parties concerned with the trust. The bank did not seek and the court did not have the power to alter or modify the decree of distribution. Estate of Bodger, 130 Cal.App.2d 416, 424, 279 P.2d 61.

The only question was as to the role of the trustee and of the consultant in the investment of trust funds and the court confined its order accordingly.

Appellant makes mention of the provisions of Section 1700.6 of the Code of Civil Procedure, which section reads as follows:

“Consultant' means a person not a trustee designated in a trust to advise or direct the trustee in respect of any matters or things connected with the trust, or whose consent or approval is required to purchases, sales, exchanges, or other transactions on the part of the trustee. It includes a trustor who reserves any such powers of direction or control.'

In this case, the trustor saw fit to define consultant; furthermore the definition in the will meets very closely with the underscored part of the above section set forth.

The claim that the court's finding that the petition is not an attempt by the trustee to violate its duties under the decree of distribution, is not supported by any substantial evidence. The petition, the exceptions and objections to the petition and the argument of counsel in the matter constitute the entire record before this court.

The court had jurisdiction to hear the petition; the order of the court neither modified nor altered the decree of distribution but construed and interpreted it. There was no attempt by the bank in filing the petition to violate its duties as a trustee.

The order is affirmed.

FOURT, Justice.

WOOD, P. J., and LILLIE, J., concur.