Hinkel v. American Trust Co.

SHENK, J.

This is an appeal by Ada M. Hinkel, former trustee under a testamentary trust, from a judgment in favor of American Trust Company, her successor as such trustee, and Undine H. Hinkel, the beneficiary of the trust. The court sustained objections of American Trust Company, as such successor, and of the beneficiary, to the report of the testamentary trustee, established the account of said trustee, and judgment was entered for the sum of ¡$21,237.14 found to be due from said Ada M. Hinkel to American Trust Company as the balance remaining in the trust fund.

On May 25, 1926, John Hinkel, husband of Ada M. Hinkel, died testate. To his will was attached a codicil which provided that “in case Undine H. Hinkel’s, my son’s wife, shall survive me, I hereby give, bequeath and devise to my wife, Ada M. Hinkel”, the sum of $30,000 in trust to be invested and re-invested by the trustee and, in accordance with the terms of a certain property settlement agreement entered into between Undine H. Hinkel and the decedent’s son, Hulbert, to which the decedent was also a party, to pay to Undine H. Hinkel the sum of $200 per month out of interest and principal, if necessary, until she remarried and in any event until her younger son attained the age of twenty-one years. Upon the termination of the trust the funds remaining were payable to Ada M. Hinkel or the legatee entitled thereto under her will. Undine H. Hinkel has not remarried. Ada M. Hinkel was named the trustee, and the execútrix of her husband’s will. At the time of the distribution of the estate of John Hinkel, the value of the estate approximated a sum between $600,000 and $700,000.

By the terms of the decree of distribution the sum of ¡$30,000 was ordered distributed to Ada M. Hinkel in trust to carry out the provisions of the codicil. Prior to dis

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tribution the executrix had expended the sum of $1725 as the proportion of the inheritance tax payable out of said trust property, and the sum of $2,400 to Undine H. Hinkel pursuant to the provisions of the trust. At the time of distribution there was due to the trust from the distributee the sum of $25,875.

The first and only report and account of Ada M. Hinkel as trustee was filed on January 15, 1932. By her second amended first report she admits that at the time of the distribution of the estate the decedent’s estate was not possessed of cash in the sum of $30,000 and that she received no money from the estate as such trustee, but that nevertheless she, as trustee, executed a receipt to the estate for that sum. It is alleged in the report that, upon the advice of her attorney, in lieu of converting securities into cash, she selected from the estate distributed to her and set apart thirty $1,000 irrigation and reclamation district bonds which she designated as the “Undine H. Hinkel Trust”. It was found by the court that said bonds could at that time have been sold for $28,500 or more and that on that date Ada M. Hinkel was willing to set apart said bonds as trust property in lieu of the sum of $25,875. The report accounts for interest received from said bonds and for payments of $200 per month made to Undine IT. Hinkel to February, 1932. The report further shows that in November, 1930, five of said bonds were sold for $1600; that in December, 1930, ten were sold for $3,000; and that in February, 1931, ten were sold for $3,700. The cash balance on hand as of the date of the report is alleged to be $2,046.56, and possession of the remaining five bonds at a valuation of $4,112.77 is also alleged. It is stated in the report that the trustee conferred in good faith with her attorney and was acting in good faith and with the intent to serve the interests of the beneficiary; and that such breaches of trust as occurred were committed without any wrongful intent, guilty knowledge or consciousness of wrong-doing, and in reliance upon advice of counsel.