Atwood v. Holmes

35 N.W.2d 736, 227 Minn. 495, 9 A.L.R. 2d 1126, 1949 Minn. LEXIS 504
CourtSupreme Court of Minnesota
DecidedJanuary 28, 1949
DocketNo. 34,719
StatusPublished
Cited by21 cases

This text of 35 N.W.2d 736 (Atwood v. Holmes) is published on Counsel Stack Legal Research, covering Supreme Court of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Atwood v. Holmes, 35 N.W.2d 736, 227 Minn. 495, 9 A.L.R. 2d 1126, 1949 Minn. LEXIS 504 (Mich. 1949).

Opinion

Matson, Justice.

Appeal from an order directing defendant trustees to pay to Arthur G. Eyan, respondent, the sum of $4,000 as attorneys’ fees and $814.58 as expenses incurred by him in litigation seeking the construction of a trust instrument.

The attorneys’ fees and expenses were incurred by respondent in respect to an action brought by the surviving spouse of one of the original beneficiaries of the living trust created by Herbert J. Atwood in his lifetime. The settlor by establishing the trust intended to provide support and maintenance for his four children. Within a comparatively short time after his death three of these children died. Plaintiff (in her own behalf as the surviving spouse of one of settlor’s children and in behalf of three minor grandchildren) , in order to secure a declaratory judgment as to the meaning and proper construction of the trust instrument, brought the action against the trustees and joined as defendants therein William E. Atwood, one of the original beneficiaries and a residuary legatee, and respondent, Arthur G. Eyan, in his capacity as administrator of the estate of Eoland H. Tietze, deceased. The decedent Eoland H. Tietze, who was the surviving husband of Eva Atwood Tietze, one of the original beneficiaries, survived his wife by only a few hours. In her complaint, plaintiff alleged that she was entitled to the immediate distribution of a fractional share of certain corporate stock held by the trustees as part of the trust corpus, and further alleged:

“That because of the existence of doubt as to the intention of the donor and rights of the plaintiffs and the other parties hereto for whose benefit said trust was created, and the uncertainty as what [498]*498is the obligation and duty of the trustees in administering said trust according to the intent of the donor, each succeeding death presenting a different situation, and because of uncertainty as to the rights, status and obligations of and between the parties, in view of the ambiguity and equivocation in the language employed by the donor, it is necessary to obtain from this court, a declaration of the rights, status and obligations of and between the parties hereto, and a construction of the said trust.”

Respondent, as one of the answering defendants, asserted a similar right to an immediate distribution of certain corporate stock and expressly admitted as true the above quoted allegation of trust-instrument ambiguity. The ambiguity was also admitted by the trustees and by William E. Atwood in their joint answer. All defendants joined with plaintiff in asking for a declaratory judgment as to the meaning of the trust instrument. When the matter was originally heard, the trial court by its decision largely substantiated the asserted claims of plaintiff and of respondent to an immediate distribution of certain assets; but, upon a reopening of the case, in order to afford plaintiff’s minor children an independent representation in the action, the trial court upon further argument reversed its position and held that plaintiff and respondent were in error as to their interpretation of the trust instrument. Respondent then appealed to this court, and upon such appeal the trial court was affirmed. A more complete statement of the facts is set forth in the decision of this court in Atwood v. Holmes, 224 Minn. 157, 28 N. W. (2d) 188.

In the proceedings for the allowance to respondent of attorneys’ fees and expenses, the trial court specifically found that (a) the terms of the trust instrument were ambiguous and uncertain in meaning and that they had been construed at different times in different ways; (b) that litigation was necessary to resolve these ambiguities in meaning as a prerequisite to a determination of the present and future rights of all parties concerned; (c) that respondent in his representative capacity was a necessary and proper [499]*499party to this litigation; (d) that all litigation in which respondent participated and all the legal services performed and expenses incurred in connection therewith were necessary and proper and were of benefit to all the beneficiaries and to the trustees in resolving the trust-instrument ambiguities and in procuring a final adjudication of the respective rights of the beneficiaries and of the duties of the trustees; and (e) that the respective sums of $4,000 and $814.58 for attorneys’ fees and expenses were reasonable.

Appellants contend that costs such as attorneys’ fees and other expenses incurred in litigation by a beneficiary of a trust may in no event be allowed and paid out of the trust fund corpus unless such beneficiary thereby confers a benefit upon the trust as a whole by either preserving it from dissipation or by increasing its corpus. They further assert that where one brings adversary proceedings to take possession of trust property from those entitled to it, in order that he may distribute it to those who claim adversely, and fails in his purpose, such person is not entitled to reimbursement for his expenses out of the trust fund. In seeking to apply these principles to the instant case, appellants take the view that the legal services rendered in behalf of respondent, as well as the costs incurred in connection therewith, were devoted to the primary purpose of furthering respondent’s claim to certain trust assets, and not devoted to the protection of the trust for the benefit of all the beneficiaries. The trial court, however, found that the litigation was necessary and was of benefit to the entire estate for the purpose of adjudicating the rights of the beneficiaries and the duties and powers of the trustees with respect to trust provisions which were couched in ambiguous language. Although respondent failed in having his interpretation of the trust instrument adopted, he was not an interloper, but an essential party to a proceeding in which he was joined as a defendant. All parties recognized that the trust settlor’s language was ambiguous, and all parties requested the court’s aid in determining its meaning. An intricate and involved question of law was presented. Substantial interests and issues were at stake. The trustees were in no position to carry on the adminis[500]*500tration of the trust until the intent of the settlor, as revealed by his chosen language, could be finally determined. Obviously, a benefit to the entire trust, aside from benefits conferred by acts which protect or increase the trust corpus, may, in exceptional cases, also be conferred by litigation which is unquestionably essential to a judicial determination of the meaning of ambiguous language employed by the settlor, where the administration of the trust has broken down because the rights of the beneficiaries and the duties and powers of the trustees cannot with reasonable safety be ascertained without a judicial determination.

It is well established that when trustees are in reasonable doubt as to their official duties or powers they are entitled to instructions of the court in respect to such matters as the proper construction of the trust instrument, the extent of their powers and duties, who are beneficiaries of the trust, the character and extent of their interests, the allocation or apportionment of receipts or expenditures between principal and income, and as to the persons entitled to the income or to the trust property on the termination of the trust. Restatement, Trusts, § 259, comment a,; 3 Bogert, Trusts and Trustees, § 559; 2 Scott, Trusts, § 259; 2 Perry, Trusts and Trustees (7 ed.) § 476a; see, In re Trust Under Will of Schultz, 215 Minn. 313, 9 N. W. (2d) 773.

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Bluebook (online)
35 N.W.2d 736, 227 Minn. 495, 9 A.L.R. 2d 1126, 1949 Minn. LEXIS 504, Counsel Stack Legal Research, https://law.counselstack.com/opinion/atwood-v-holmes-minn-1949.