Stanton v. Preis

WOOD (Fred B.), J.

Two of the beneficiaries of a testa- . mentary trust instituted a proceeding against the other beneficiaries, the contingent remaindermen, and the trustees, to modify the terms of the trust by removing certain investment limitations, including the deletion of the requirement that investments be limited to federal, state and municipal bonds, and other bonds (excluding those of foreign governments or municipalities) rated at least “AA” by Moody’s Investors Service, and to substitute therefor the power to

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invest in such notes, bonds, mortgages, trust deeds, debentures, preferred or common stocks, investment trust or other trust certificates, bank accounts or other property, real or personal, as the trustees may deem advisable and in accordance with the provisions of the “Prudent Man Rule.”

Prior to the trial, it happened that one of the plaintiff-beneficiaries, Helene Preis, was substituted for one of the two trustees and was made a party defendant (as a beneficiary and as a trustee) instead of a party plaintiff.

It appears also that all of the beneficiaries and the contingent remaindermen filed answers consenting to the proposed modification. Helen Preis, as trustee and as beneficiary, filed an answer in propria persona in which she prayed that the modification be made. She did not appear at the trial.

The court made the requested modification and the corporate trustee, Wells Fargo Bank, appealed. It claims that the evidence does not show a proper or sufficient basis for the exercise by the court of its power to authorize the trustees to deviate from the terms of the trust.

Helene Preis, as cotrustee and as a beneficiary under the trust, and some of the other respondents moved to dismiss the appeal, claiming it a nullity because both trustees did not join in exercising the power of appeal. Their theory is that the taking of this appeal is the exercise of a “power” which is “vested in several persons” and that “all must unite in its execution” (Civ. Code, § 860); also, that Civil Code, section 2268, here applies: “Where there are several co-trustees, all must unite in any act to bind the trust property, unless the declaration of trust otherwise provides.”

Wells Fargo Bank contends the joint-action rule does not apply because the action here involved is not within the framework of the powers conferred in the trust instrument; especially, in view of the fact that appellant trustee seeks to abide by the mandate of the trust and the respondent trustee seeks to deviate therefrom.