R. G. DARROW, as Trustee of the Town of South Tucson, Appellant,
JOHN L. VAN BUSKIRK, Appellee
APPEAL from a judgment of the Superior Court of the County of Pima. Henry C. Kelly, Judge. Judgment reversed and cause remanded with directions to dismiss the complaint.
Messrs. Misbaugh & Fickett, Messrs. Krucker & Fowler and Mr. H. C. Diehl, Jr., for Appellant.
Mr. H. O. Juliani and Mr. John L. Van Buskirk, for Appellee.
[57 Ariz. 2] ROSS, J.
The Town of South Tucson was, on January 18, 1938, by an order of the Board of Supervisors of Pima county, disincorporated. In the same order [57 Ariz. 3] the board appointed R. G. Darrow trustee with authority, as provided in section 16-219, Arizona Code, 1939,
"to wind up the affairs of the corporation, sell and convey its property,
real and personal, pay the debts of the town, and return the surplus of the proceeds of the property of the town into the county treasury, to be there disposed of for the improvement of roads in the vicinity wherein such town is situated." (Italics ours.)
The town brought an action in the superior court of said county against the board of supervisors contesting the order of disincorporation and in such action John L. Van Buskirk, with the town's regular attorney, represented the town. They also represented the town in the Supreme Court on appeal. Town of South Tucson v. Board of Supervisors, 59 Ariz. 575, 84 P.2d 581.
This is an action by attorney. Van Buskirk for compensation for his services to the town in resisting the order of disincorporation, and in some other litigation subsequent to such order. He alleges in his complaint an agreed fee of one thousand dollars, also that one thousand dollars was the reasonable value of his services. The court gave him judgment for that amount, and the trustee has appealed.
Defendant admits that the plaintiff rendered the services for which he claims compensation and makes no point upon the quantum allowed but (1) denies the power of the town to employ plaintiff after it was disincorporated. He also defends on the ground (2) that none of the assets in his hands was budgeted by the town to pay for the services of an attorney during 1938-1939 to assist the town attorney in litigation against the town. Also, under his general denial, he claims (3) the evidence shows plaintiff was never employed [57 Ariz. 4] in accordance with the requirements of the town's charter and ordinances.
It should be observed that the trustee's power is limited. He has authority under the statute to wind up the town's affairs and to that end may sell its property and "pay the debts of the town." If there is any surplus after its debts are paid, it is to be paid into the county treasury and used for the improvement of roads in the vicinity of the town's location. Those persons to whom the town owed "debts" when it was ordered disincorporated, the trustee may pay, but, as we construe this provision of the statute, he was given no authority to pay "debts" contracted by the town through its mayor and council after the order of disincorporation.
If the town through its officers wanted to contest the order of disincorporation, as we have held in Kenney v. Bank of Miami, 19 Ariz. 338, 170 P. 866, and in Town of South Tucson v. Board of Supervisors, supra, it had that right, but the statute does not require the trustee to finance such litigation out of the town's assets. He can pay only the debts of the town that it owed when its "affairs" were turned over to him. The town's assets being a trust fund to be devoted to a specific purpose, the trustee would have no authority or right to use the fund for any other purpose. Of course the court will, in its discretion, allow the trustee to incur debts for the protection and preservation of the property and make reasonable allowances therefor, but no one but the court would have that power. We take it that a statutory trustee, like other trustees, is bound by the limitations placed upon him in the order or instrument appointing him.
" It is an elementary principle in the law of trusts that in the execution of a trust, the trustee is bound to comply strictly with the directions contained in the trust instrument, defining the extent and limits of his [57 Ariz. 5] authority, and the ...