McLellan v. McLellan

California Court of Appeal May 26, 1936 No. Civ. 10113Published

Before: Nourse

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Holding. The probate court lacked jurisdiction to collaterally attack a final decree of distribution regarding trust corpus, but the court properly scrutinized the trustees' self-dealing regarding a promissory note and erred in awarding unreasonably low trustee fees.

Issues

Whether a probate court may collaterally attack a final decree of distribution to charge trustees for interest on trust corpus.
Whether a trustee's renewal of their own promissory note to the trust constitutes an invalid act of self-dealing.
Whether the probate court abused its discretion in setting the amount of trustee compensation.

Disposition. reversed

Quotations verified verbatim against the opinion

“The decree of distribution became a final and conclusive judgment more than seven years before this collateral attack was made upon it.”

“The authorities are uniform in holding that the general jurisdiction of the probate court is confined to the settlement of estates and that such court has no general equity jurisdiction.”

“The unreasonableness of the fee allowed the trustees is obvious.”

NOURSE, P. J.

This is an appeal by the trustees from an order of the probate court disallowing and disapproving their first and final account.

Mary Belle McLellan died on January 15, 1927, leaving a will in which she designated the three appellants herein as executors and also as trustees of certain trusts created by the will. One of such trusts was for the benefit of Mary Bates McLellan with remainder on her death to Asher Bates Mc-Lellan. On January 23, 1928, a decree was duly entered settling the final account of these executors and for final distribution and discharge. By the terms of the decree of distribution the sum of $3,941.21 was distributed to the three appellants as trustees for Mary Bates McLellan. As part of the

corpus

of this trust there was distributed under the decree of distribution a promissory note and deed of trust executed by one of the trustees in favor of the deceased in the sum of $3,500. The decree of distribution became final, and thereupon the trustees regularly paid to Mary Bates Mc-Lellan during her life the income of the trust and on June 3, 1929, paid her $500 on account of principal. She died on December 29, 1934, and thereafter the trustees paid the income derived from the balance of the trust to her son Asher Bates McLellan. In 1933 the note and deed of trust which had been distributed to the trustees by the decree of distribution was renewed but with a reduction of interest from seven per cent to six per cent per annum. On April 15, 1935, the entire amount of the note with interest was paid to the trustees and was ready for payment to the beneficiary at the time of settlement of the account.

The beneficiary objected to the approval of the account on the grounds:

(1) That the trustees should have received from the estate of Mary Belle McLellan interest on the

corpus

of the trust from the day of her death to the day of distribution, and, not having done so, they should be charged personally to account for that amount with compound interest.

(2) That the renewal of the promissory note of one of the trustees was an invalid act on the part of all and that they

[273]

McLellan v. McLellan

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NOURSE, P. J.

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