Court Opinion

ID: 3860232
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:48:20.682258+00
Date Added: 2024-06-11T13:35:16.221269
License: Public Domain

If the question were whether a trustee who has exercised testamentary authority to pay out of corpus may arbitrarily charge such payments to income, I should not differ with my brethren in the disposition of this appeal. But the case is not so simple as that. The challenged decree surcharges the trustee not only with payments actually made out of corpus, but also with payments not in fact made but due the beneficiary under the agreement to pay him $25 monthly out of the principal of the trust. That the account should have shown the amounts paid out of corpus must be conceded. But it does not follow that, because the trustee made an agreement with the beneficiary to pay him a definite amount per month out of corpus, he can be compelled to carry out the agreement and should be surcharged with payments due thereunder, but not in fact paid. The court below grounded its decision on the proposition that the trustee, by making the agreement, exercised the discretionary powers given him under the will and that having paid Irvine for several months under the agreement he was obliged to continue the payments thereunder. With this I cannot agree. It was within the discretion of the trustee to make payments to Irvine from the principal without making any agreement so to do, if the necessities of the cestui que trust warranted it. "A court will not interfere with the discretion placed in a trustee without *Page 47 
clear and adequate cause. The presumption is in favor of the honest exercise of the discretion": Duchar's Est., 225 Pa. 427. But we have been referred to no authority, and I know of none, which holds that a testamentary trustee authorized to make payments of principal at his discretion may, by agreement with the beneficiary, bargain away and divest himself of the right to continue to exercise the discretion vested in him by the will. Such an agreement is not enforceable by the beneficiary and an order of court undertaking to enforce it cannot stand. Nor can the order be sustained on the theory that, as the trustee made at least ten different payments to the cestui que trust out of corpus on the basis of $25 per month, a presumption arises that subsequent undesignated payments included $25 per month on account of principal. The obligation of the trustee under the will was to pay the income annually or semiannually. Any other payments which he made were discretionary. In the absence of any evidence that specific payments were made under this discretionary power, it is to be presumed that payments not otherwise designated were payments of income. While I agree with the learned judge of the orphans' court that the trustee was derelict in the performance of his duties and that the cestui que trust has suffered annoyance on this account the order of the orphans' court made to enforce the agreement between the trustee and the cestui que trust cannot be sustained without doing violence to well-settled principles of law governing the duties and powers of trustees. The question involved is not whether the trustee will be permitted to repudiate his partly executed agreement, but whether the agreement so far as it was executory is enforcible. If a trustee does not honestly exercise his discretion or exercises it arbitrarily or unreasonably, the court will interfere. "The discretion of the trustee is but a legal one, and whenever the law determines that a proper case has arisen in which the trustee's discretion should have been exercised in a particular way, he will be constrained *Page 48 
to act in accordance therewith": Buchar's Estate, supra. The remedy of the cestui que trust was not to enforce the agreement, but to require the faithful performance of duty by the trustee as imposed by the will, including the exercise of his discretion in a manner not unreasonable and in wanton disregard of the necessities of the cestui que trust and to have the trustee removed for failure so to do. I would sustain the second and fourth assignments so far as they complain of the surcharge of the trustee with payments on account of principal, which were not in fact made, and remit the record for further proceedings along the line indicated herein.