Dillon v. North Carolina National Bank

MobRis, J.

Plaintiff raises two questions on appeal: whether defendant as trustee abused its discretionary powers and whether the court erred in taxing all costs against the plaintiff. Plaintiff concedes in her brief that defendant as trustee was given discretionary powers under the terms of the trust agreement, but contends that defendant abused this discretion in refusing to pay one-half of the mortgage debt. The trust instrument clearly vests the trustee with discretionary powers in the administration of the trust and specifically grants the trustee discretionary power to transfer to the estate “sufficient funds or property to pay or satisfy any debts, . . . including (but not limited to) mortgages, debts, testamentary expenses and all costs and expenses incident to the administration and settlement of his estate . . .”

In the light of this language and the fact that defendant as trustee transferred $1,546.92 to the decedent’s estate to pay numerous outstanding, and relatively small, debts of the estate, plaintiff contends that it was an abuse of discretion for defendant to refuse to pay one-half of the mortgage debt. We agree with the trial court that the discretionary payment of these estate liabilities did not obligate the defendant, as trustee, to pay $5,149.15 to satisfy one-half of the mortgage debt. It is' settled law that the courts may not control a trustee in the exercise of discretionary powers except to prevent an abuse of those powers. Woodard v. Mordecai, 234 N.C. 463, 67 S.E. 2d 639 (1951).

“The trustee abuses his discretion in exercising or failing to exercise a discretionary power if he acts dishonestly, or if he acts with an improper even though not a dishonest motive, or if he fails to use his judgment, or if he acts beyond the bounds of a reasonable judgment.” Id. at 471, 67 S.E. 2d at 644.

Applying this test, we find nothing in the record before us which would indicate that the trustee has acted dishonestly, or with an improper motive, or beyond the bounds of a reasonable judgment. On the contrary, it appears that the decision of the trustee to refuse to pay one-half the balance due when requested to do so by plaintiff was the result of an honest effort, based upon reasonable judgment, to protect the interests of the beneficiaries of the trust — the two minor daughters of decedent.

The court did not commit error in taxing all costs, with the exception of attorneys’ fees, against the plaintiff. Hoskins v. Hoskins, 259 N.C. 704, 131 S.E. 2d 326 (1963). G.S. 1-263 permits the court, in a proceeding under the Declaratory Judgments Act, to make such an award of costs as may seem equitable and just. G.S. 6-21(2) grants the court discretion to tax costs against either party in proceedings which require construction of a will or trust agreement.

For the reasons herein stated the judgment is

Affirmed.

Mallaed, C.J., and Hedricx, J., concur.