Opinion ID: 1246501
Heading Depth: 1
Heading Rank: 2

Heading: Defendant assumed to act as a trustee and was subject to the duties of a trustee.

Text: Defendant contends that no trust was created. In support of that contention defendant says that the fact that the settlor uses the word `trust' does not necessarily indicate that a trust was intended, quoting from 1 Restatement of the Law of Trusts 2d § 24, Comment b (1959). Defendant also says that many of the usual indicia of a trust are lacking in this case in that the provisions of the will do not vest title to the money in defendant, do not designate it as trustee, give it no powers to deal with the account and do not provide for compensation to it as a trustee. [4] Defendant also points out that as a savings and loan association organized under Oregon law it was and is prohibited by law from acting as a trustee and from buying stocks and bonds, citing O.C.L.A. 40-402 and 41-701 (see ORS 706.005(24); ORS 709.030 and ORS 707.030, repealed by Oregon Laws 1973, ch. 797, § 428). It is clear from the record, however, that defendant undertook and assumed the management of the $50,000 which, according to the terms of the will of Paul Stephan, was left as a trust fund for the benefit of his wife and children. It is also clear that in doing so defendant informed Mrs. Stephan that it was holding the $50,000 as a trust fund for her benefit and that it must rest as it is during your lifetime. A similar statement was made by defendant to Elsie Stephan, the daughter. It also appears that Mrs. Stephan and her daughter believed, acquiesced in, and relied upon those statements by defendant for many years. As stated by this court in Elliott v. Mosgrove, 162 Or. 507, 530, 91 P.2d 852, 860, 93 P.2d 1070 (1939):    A person who assumes the duties of a trustee and proceeds with their administration is as liable for their improper conduct as if he had been regularly appointed. The truth of this statement is illustrated by the many instances of implied trusts.    To the same effect, see Grandy v. Williams, 147 Or. 409, 417, 34 P.2d 622 (1934). As for defendant's contention that it was prohibited by law from acting as a trustee, it is well established in Oregon that a corporation which has entered into a contract in excess of its granted powers and has received the benefit of the contract is estopped to deny its power to do so or its liability for breach of the resulting duties. Seeck Mfg. Co. v. American Trust Co., 143 Or. 314, 322, 20 P.2d 1065, 22 P.2d 325 (1933); Roane v. Union Pac. Life Ins. Co., 67 Or. 264, 279, 135 P. 892 (1913). This court has not previously had occasion to apply this rule to a case involving facts similar to those of this case. However, in Secretary of Banking, Pennsylvania v. Taylor Discount and Deposit Bank, 41 Lack.Jur. 111 (Cty. 1932), an executor deposited funds under a trust agreement in a bank which had no authority to conduct a trust business. Under such facts the court held that:    [T]he fact that the Bank had no authority to carry on a trust business did not destroy the quality of the account as a trust rather than as a mere debtor and creditor relationship. Even if the Bank was not qualified to carry on trust functions, the acceptance of the deposit and the agreement to carry out the terms of the decedent's will set up at the very worst a resultant trust. Section 411, Re-Statement of Trusts. To the same general effect, although not involving a bank or financial institution, it was held in the leading case of Penn v. Fogler, 182 Ill. 76, 55 N.E. 192, 197 (1899), which involved an administrator with will annexed who exceeded his authority under a decree in the investment of trust funds, that: If the decree did not confer upon Brown, administrator    the authority to execute the trust in regard to the bank stock, his acts in so doing constituted him a constructive trustee or a trustee de son tort. Where one without authority undertakes to execute a trust requiring the investment of a fund, he must himself carry all the risks, and make good all the losses, and have none of the profits   . `A person may become a trustee by construction by intermeddling with, and assuming the management of, trust property without authority. Such persons are trustees de son tort.' Perry, Trusts (3d Ed.) § 245; Morris v. Joseph, 1 W. Va. 256; Piper v. Hoard, 107 N.Y. 73, 13 N.E. 626. `During the possession and management by such constructive trustees, they are subject to the same rules and remedies as other trustees; and they cannot avoid their liability by showing that they were not, in fact, trustees,   ' See also Hirt v. Bucklin State Bank of Bucklin, 153 Kan. 194, 109 P.2d 171, 177 (1941), and 1 Restatement of Trusts 2d § 33 (1959). For all of these reasons, we hold that because defendant undertook and assumed to administer and manage the $50,000 trust fund in accordance with the provisions of the will of Paul Stephan, it cannot now deny its authority to act as a trustee but, on the contrary, is subject to all of the duties of a regularly appointed and fully qualified trustee, as well as liability for breach of any of such duties.