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In re Dunlap's Estate

Supreme Court of Arizona

September 17, 1931

In the Matter of the Estate of AUSTIN BYRON DUNLAP, Deceased. MAUD DUNLAP SHELLABARGER, Appellant,

APPEAL from a judgment of the Superior Court of the County of Maricopa. Joseph S. Jenckes, Judge. Affirmed.

Messrs. Sloan, Holton, McKesson & Scott, Mr. Charles C. Le Forgee and Mr. Thos. W. Samuels, for Appellant.

Messrs. Chalmers, Fennemore & Nairn and Mr. Henry W. Allen, for Appellees.


[38 Ariz. 526] ROSS, J.

This is an appeal from an order approving the ninth annual report of the trustees of a testamentary trust created by the will of Austin Byron Dunlap, including a claim for compensation of trustees during that accounting period.

Austin Byron Dunlap, a resident of Phoenix, Arizona, died testate in 1919 leaving an estate of approximately a million dollars, consisting, principally, of high-class listed stocks and United States government bonds. The Phoenix Savings Bank & Trust Company was nominated by the will the executor thereof. The will provided for two testamentary trusts. Into one the executor was directed to pay the sum of $300,000, and there were named as trustees thereof the Fidelity Trust Company, of Kansas City, Missouri, and Clarence A. Jemison, of Glendale, Arizona, the former being designated as custodian of the corpus. The will further provided that the balance of the estate, which (exclusive of some real estate in [38 Ariz. 527] Oklahoma not yet distributed) amounted to $604,530.50 after deducting the above $300,000, the funeral, and other expenses, should be paid over to the Phoenix Savings Bank & Trust Company and Clarence A. Jemison, in trust, with directions that certain named portions of the net income thereof be paid in monthly installments to certain named beneficiaries and the balance to Maud Dunlap Shellabarger, his daughter. The Phoenix Savings Bank & Trust Company was designated by the will as the custodian of the corpus of this trust.

Page 1046

It is the compensation allowed to the trustees for their services in connection with the trust estate here in Arizona, for the period from August 23, 1928, to August 20, 1929, that is involved in this appeal. The trustees claimed and were allowed by the court $5,473.20, apportioned between them 70 per cent. to the Phoenix Savings Bank & Trust Company and 30 per cent. to Jemison. This demand was objected to below by Maud Dunlap Shellabarger, the principal beneficiary, on the ground that it is excessive, unreasonable, and exorbitant, and the same objection is urged here. The court, after hearing evidence in behalf of the trustees, the objector offering no evidence, found therefrom that the charge was reasonable and properly apportioned between the trustees according to the services rendered.

It appears that the trust property at the beginning of the accounting period, August 23, 1928, was valued at $1,090,062.96, of which $458,716.25 were in United States government bonds and the balance in high-class stocks listed on the New York exchange. At the close of the accounting period, August 20, 1929, the estate inventoried $1,222,659.54. The gross income of the trust estate for the accounting period was $46,941.94, and consisted of interest on United States bonds and cash dividends received on stocks owned by the estate. This income, after deducting expenses, [38 Ariz. 528] was all paid out during the year in monthly payments to eight beneficiaries located in different parts of the country. The appellant being the principal beneficiary, the will required the trustees to render to her monthly balanced accounts of the estate and also to pay her any balance after deducting other gifts and expenses. Annual fiduciary income reports were made to the United States Revenue Department showing receipts and disbursements. Under the terms of the trust the trustees are authorized to sell at any time they think proper any of the listed stocks belonging to the trust, and when and if they sell any of such stocks they must invest the proceeds in United States government bonds. In 1928 the trustees sold some mining stocks at a profit of some $222,000, which was invested in United States bonds. During the ninth annual accounting period the trustees were called upon by the United States Revenue Department for information concerning said stock sale, with a view of collecting the profit tax, and, because of allowance for depletion of capital, some three or four weeks were consumed in obtaining such needed information.

The directions to the trustees as to their handling of the estate are very simple and not necessarily onerous, although they might be under some circumstances. According to these directions the trustees were to take possession of the estate property, manage and control same. They were to invest and re-invest and keep invested all cash that should come into their possession in income-bearing bonds issued by the United States, and to exercise their discretion in selling the stocks belonging to the estate.

Appellant says the duties thus imposed are largely clerical; that no particular knowledge or skill is necessary in their accomplishment; that anyone could collect the stock dividends and clip the United States bonds, make deposits thereof, and record in proper [38 Ariz. 529] books of account the receipts and disbursements and make all necessary reports to the courts, to the government and to the beneficiaries. Much of this work is, indeed, ministerial and probably someone could be obtained for a few hundred dollars a year to do it, but it is conceivable that in handling a million dollar trust estate many complicated and involved questions of fact and law might arise in the course of a year. That none did in this accounting period, except perhaps the income profit tax on the mining stocks sold in 1928, does not lessen the responsibility or constant vigilance required to protect the estate. Similar questions might arise at any time. The testator was not willing that just anybody handle the trust he had created for his child, relatives and others. He, rather, selected a financial institution in whose stability and reliability he had faith. He wanted more than a bookkeeper or someone to clip coupons and receive dividends. The administration of the trust was to extend over a series of years, and he wanted it to be in safe, conservative, and skilful hands. In his will he said: "It is my Will and I direct that whether heretofore expressed or not, my Executor and my Trustees of the two trusts created in this Will, shall, prior to distribution of any amount hereunder, whether principal or income, be entitled to expend reasonable sums for expenses incurred in the administration of either of the trusts as the case may be, and shall be entitled to reasonable compensation for their and each of their services." In two other places he recognizes that the trustees are to be paid compensation.

Section 4083, Revised Code of 1928, provides that the court in which an estate has been administered shall, if the will create a trust, retain jurisdiction after the final distribution for the purpose of the settlement of the accounts under the trust. And the following section, 4084, reads as follows:

[38 Ariz. 530] "On the accounting the court shall allow the trustee the proper expenses and such compensation for services as the court may adjudge to be just and reasonable, and shall apportion such compensation among the trustees, if more than one, according to the services rendered and may fix a yearly ...

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