Estate of Guasti

California Court of Appeal May 4, 1953 No. Civ. No. 19462Published

Before: Moore

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Holding. The court held that a testamentary trustee is justified in re-evaluating trust assets annually to determine its fees, as such a practice is consistent with local custom and the parties' long-standing conduct under the trust agreement.

Issues

Whether a trustee is authorized to re-evaluate trust assets annually for the purpose of computing its fees when the trust instrument is silent on the frequency of valuation.
Whether evidence of local custom and the parties' prior conduct is admissible to interpret an ambiguous compensation provision in a testamentary trust.

Disposition. affirmed

Quotations verified verbatim against the opinion

“it is the general custom of testamentary trustees to evaluate the assets of the trust funds yearly in order to derive a new basis for computing the trustee's fees.”

“the conduct of appellants in consenting to such procedure over a period of 10 years amounts to a fixed policy and an acceptance of the custom as a guiding rule for the trustee.”

117 Cal.App.2d 612 (1953) Estate of LOUISA GUASTI, Deceased. TITLE INSURANCE AND TRUST COMPANY, Respondent,

SECONDO GUASTI III et al., Appellants.

Civ. No. 19462. California Court of Appeals. Second Dist., Div. Two.

May 4, 1953. Royal M. Galvin and George C. Bliss for Appellants.

O'Melveny & Myers, Louis W. Myers and Adrian C. Stanton for Respondent. [613]

MOORE, P. J.

By her last will probated June 18, 1937, decedent created a testamentary trust for the benefit of two grandsons, the appellants. By paragraph XXV she provided:

"The following schedule of charges has been agreed upon between Title Insurance and Trust Company and myself for its services as such Trustee hereunder: Two-fifths (2/5) of one per cent (1%) for all moneys that are invested in government securities, and three-fifths (3/5) of one per cent (1%) where the trust fund is composed of other and different securities or other property of every character. I furthermore direct that said Title Insurance and Trust Company, as Trustee, present and serve upon each other co-Trustee a semiannual statement of the condition of said trusts at the time of the rendering of such statement."

On December 4, 1951, Title Insurance and Trust Company filed its eleventh account current with petition for approval and allowance of trustee's fees. Objections thereto were filed by appellants on the ground that in fixing its fees, the trustee had reevaluated certain assets of the trust estates based on their market value in 1951. The objections were overruled and the court heard proof of the circumstances surrounding the publishing of the will and ultimately determined that it is customary in Los Angeles for trust companies, banks and like institutions in handling testamentary trusts to re- evaluate the assets in the trust estate at least once a year for the purpose of assisting them in determining their annual fees, and held that the trustee was justified in re-evaluating the assets of the trust estate herein for the purpose of computing the trustee's fees due on the eleventh account current.

Estate of Guasti

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MOORE, P. J.

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