Security-First National Bank v. Bixby

California Court of Appeal Dec 18, 1936 No. Civ. 1661Published

Before: Marks

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Holding. A trustee is entitled to reimbursement from the trust estate for reasonable and necessary expenses incurred in good faith to defend the trust, regardless of whether those expenses were previously taxed as costs in the underlying litigation.

Issues

Whether a trustee may be reimbursed for litigation expenses that exceed the costs taxed in the underlying civil action.
Whether a trustee is entitled to reimbursement for attorney fees incurred in successfully defending the trust against an attack on its legality.

Disposition. Affirmed

Quotations verified verbatim against the opinion

“The amount of the costs actually taxed in favor of the trustee in the civil action is not the limit of the reasonable expenditures that may be incurred by the trustee in the defense of the action”

“When the trust is attacked in a civil action the trustee may employ counsel to defend it and a reasonable fee for the services of such counsel may be allowed by the court having jurisdiction over the trust estate.”

MARKS, J.

This is an appeal from an order settling the first annual account current of the Security-First National Bank of Los Angeles as trustee of a trust created by the decree of distribution in the estate of Fanny Bixby Spencer, deceased.

Appellants complain of two items of expense included in the account' of the trustee and allowed by the trial judge who overruled objections to them. They are, $2,471.56, expended by the trustee for a daily transcript in an action brought against it in the Superior Court of Los Angeles County, wherein appellants and another attacked the legality of the trust, and, $2,500, allowed as fees for the attorneys who successfully defended the action for the trustee.

[222]

The trustee ordered, procured and paid for a daily transcript of the evidence in the civil action and actually expended the sum of $2,471.56 for this purpose. It filed its cost bill which included the several payments making up this total. As the trial court had made no order for a daily transcript the amount was reduced to $269.45 which was taxed in favor of the trustee. Appellants urge that the probate court could not allow the trustee in its accounting anything more than the costs actually taxed and allowed by the superior court in that ease. ■

Section 2273 of the Civil Code provides as follows:

“A trustee is entitled to the repayment, out of the trust property, of all expenses actually and properly incurred by him in the performance of his trust. He is entitled to the repayment of even unlawful expenditures, if they were productive of actual benefit to the estate. ’ ’

Section 1122 of the Probate Code contains the following:

“On the settlement of each such account the court shall allow the trustee his proper expenses and such compensation for services as the court may deem just and reasonable.”

It is said in

Estate of Gartenlaub,

185 Cal. 648, at page 654 [198 Pac. 209, 211, 16 A. L. R. 520], that “It is a general rule that trustees are entitled to reimbursement for expense incurred in good faith in the execution of the trust. ’ ’

Security-First National Bank v. Bixby

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MARKS, J.

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