Opinion ID: 1197637
Heading Depth: 1
Heading Rank: 6

Heading: The Tapadera Motel loans.

Text: Plaintiffs' complaint sought to cancel loans made by Leo Gorger of trust funds to The Dalles Tapadera, Inc., and Lewiston Tapadera, Inc., and to require restitution to the trust for the amounts of the remaining balances due to it under these loans. Two hundred sixty thousand dollars was loaned to The Dalles Tapadera, Inc. Two loans, of $40,000 and $35,000, were made to the Lewiston Tapadera, Inc. Plaintiffs alleged that the loans were improper as investments of trust funds because they were made to businesses in which Leo Gorger had an interest, were speculative and were made without adequate security. Defendants contend, to the contrary, that the provisions of the trust specifically authorized the trustee to exercise his free and independent judgment in all such matters notwithstanding the fact that he had an interest as a stockholder or otherwise in corporations to which such loans were made. [7] The trial court held that the loan of $260,000 to The Dalles Tapadera was not improper under the circumstances, but that the loans to the Lewiston Tapadera were improper; that the balance due on the $40,000 loan must be repaid by Leo Gorger to the trust and that the balance on the $35,000 loan must be charged to his capital account. In view of the broad powers conferred upon the trustee by the terms of the trust, including the power to deal in good faith with corporations in which he is interested, we may doubt the correctness of this ruling. Cf. Stephan v. Equitable S & L Assn., 268 Or. 544, 564-65, 522 P.2d 478 (1974). See also Restatement 2d Trusts §§ 170 and 187 (1959). We need not decide this question, however, because the balances due under these loans have now been paid in full, according to exhibits filed since the entry of the decree under an order permitting the record to be supplemented by the filing of such exhibits.