Opinion ID: 328520
Heading Depth: 2
Heading Rank: 2

Heading: Trustee's Compensation.

Text: 50 The trial court allowed trustee Clark 15% of the residue of the corpus of the estate after all creditors were paid. Appellants had demanded that the court compel Clark to forfeit this additional compensation which was provided in the arrangement. This compensation was in addition to the $500 per month paid to Clark throughout the administration of the trust. The arrangement contains no provision for reduction of the 15% interest on termination of the trust. The award of this compensation was at least consistent with the trial court's viewpoint that no surcharge was called for. The matter takes on a different flavor when the opposite result is reached on surcharge. 51 Whether a trustee who has committed a breach of trust is to be denied compensation in whole or in part is discretionary with the court. Restatement of Trusts 2d § 243, comment (a). Thus, the Bankruptcy Court is empowered to avoid paying the trustee more than his performance requires. Restatement, supra, § 243, comment (a). The trial court admitted that the operation of the trust was not ideal. This matter must also be reconsidered by the trial court in the light of this court's determination that surcharge of the trustee was necessary. 52 Finally, we view this as a clear case of misfeasance on the part of the trustee, since the evidence establishing it, although circumstantial, is strong. We are not here dealing with an isolated criminal incident by the bookkeeper but, rather, a repeated and continuous faithlessness and criminality over a long period of time. The trustee whose inactivity allowed this to happen cannot consistent with his fiduciary obligations be heard to say that he did not anticipate the misconduct or that the beneficiaries were themselves at fault for not having discovered the wrongdoing and called it to his attention. 53 Accordingly, the cause is remanded with directions to the trial court to vacate its judgment in whole and render a new judgment surcharging the trustee for the losses suffered as a direct result of the misconduct of Billingsley. The court is directed to reconsider the attorney's fees and costs and expense items as well as the extra compensation items in the light of this court's decision, and enter appropriate judgments consistent with the views expressed herein.