Estate of Ferrall

California Court of Appeal Jul 1, 1949 No. Civ. No. 16447Published

Before: Wood

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Holding. A court may not interfere with a trustee's exercise of absolute discretion regarding the distribution of trust corpus unless there is a finding of bad faith, fraud, or abuse of discretion. The trial court erred by ordering specific payments from the corpus without making the necessary findings regarding the trustees' conduct.

Issues

Whether a court may control a trustee's exercise of absolute discretion in distributing trust corpus without a finding of bad faith, fraud, or abuse of discretion.
Whether the trial court erred in failing to make findings regarding the trustees' alleged abuse of discretion.

Disposition. reversed

Quotations verified verbatim against the opinion

“An absolute discretion, exercised in good faith by a trustee, cannot be controlled by a court on considerations going to the soundness of the discretion so exercised.”

“It is well settled that the courts will not attempt to exercise discretion which has been confided to a trustee unless it is clear that the trustee has abused his discretion in some manner.”

92 Cal.App.2d 712 (1949) Estate of JOHN C. FERRALL, Deceased. FAYE F. HAMILTON, Respondent,

BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION et al., as Trustees, etc., Appellants.

Civ. No. 16447. California Court of Appeals. Second Dist., Div. Three.

July 1, 1949. Earle M. Daniels, Burdette J. Daniels and Hallam Mathews for Appellants.

Potter, Potter & Rouse for Respondent.

WOOD, J.

Appeal by trustees from a judgment directing them to pay to a beneficiary $400 per month from the corpus of a testamentary trust.

The testator, John C. Ferrall, who died October 9, 1940, left surviving him a son, George D. Ferrall, and a daughter, Faye F. Hamilton. Under the provisions of his will, which was made April 15, 1938, he gave $2,000 to each of George D. Ferrall's three sons, and gave one-half of the remainder (after paying said $6,000, his debts and expenses of administration) to George D. Ferrall, and gave the other one-half of the remainder to the Bank of America and George D. Ferrall as joint trustees and in trust for the following uses and purposes:

"(d) After payment of any expenses of management of the trust estate and administering this trust, including the compensation for the services of the trustees, all income from the trust which is available for distribution shall be distributed monthly to and for the use and benefit of my daughter, Faye F. Hamilton during her lifetime, or unless sooner terminated in accordance herewith. That if at any time the income from the corpus of the trust herein created is insufficient to meet the needs of my daughter, Faye F. Hamilton, then and in that event, in the sole discretion of the trustees herein, the trustees may pay to my said daughter, Faye F. Hamilton, such amounts from the principal or corpus of the trust sufficient to meet her needs, care and comforts."

"(e) ...."

"(f) Anything herein contained to the contrary notwithstanding, this trust shall cease and terminate upon the following conditions:"

"(1-a) Provided my daughter, Faye F. Hamilton, be living, this trust shall terminate upon the death of Alex C. Hamilton, or his divorce from my said daughter, Faye F. Hamilton, in which event all the property held by the trustees herein shall be distributed to my daughter, Faye F. Hamilton, or

Estate of Ferrall

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WOOD, J.

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