Tucker v. Brown

Simpson, C. J. —

This case involves an accounting of funds' and property belonging to the estate of Sarah E. Smith,, deceased, which have been in the possession of the estate of Reese B. Brown, deceased. Three cases involving the estate have been consolidated, and are before us for review:

(1) A suit in equity instituted October 23, 1934, by Wilmon Tucker, as administrator with the will annexed, of the estate of Sarah E. Smith, against Sadie R. Brown,, widow of Reese B. Brown, her son, Fred, and Guaranty Trust Company, as administrator

de bonis non

with the will annexed of the estate of Reese B. Brown, deceased. The purpose of the suit was to recover certain funds and' personal property claimed to have been owned by Sarah E. Smith and held by Brown in trust for her and for an accounting. The trust feature was decided in

Tucker v.

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Brown,

199 Wash. 320 , 92 P. (2d) 221 . The present appeal involves the accounting.

(2) The probate proceedings of the estate of Reese B. Brown involved in the final account, to which Tucker had filed objections.

(3) An action by Guaranty Trust Company, as administrator of the Brown estate, against Fred R. Brown to set aside transfers of property given without consideration by Reese B. Brown at a time when he was insolvent.

In addition to these cases, we have before us the objections of Bonsted & Nichoson and F. C. Palmer, Jr., attorneys for appellant, relative to the amount of attorneys’ fees allowed by the trial court.

The many issues and questions involved in this litigation are sufficient to make several large lawsuits.

Mr. Tucker died just prior to the argument in this court, and Mr. George H. Rummens, senior counsel for Tucker, was appointed in his stead.

Litigation involving the Smith and Brown estates has been considered by this court in

Tucker v. Brown, supra; In re Brown,

6 Wn. (2d) 215, 101 P. (2d) 1003 , 107 P. (2d) 1104 ; and

In re Brown’s Estate,

7 Wn. (2d) 717, 110 P. (2d) 867 . Most of the incidents relative to the activities of Brown and Mrs. Smith are mentioned in

Tucker v. Brown, supra.

However, it will be necessary to set out many additional facts in the course of this opinion.

Mrs. Smith died July 24, 1932, in a hotel in Montreal, Canada, where she had been taken by Brown in an endeavor to elude the United States marshal who had a warrant of arrest for her issued as a result of a Federal indictment charging a violation of the revenue acts. Brown died as the result of an accident January 24, 1934.

After the remittitur went down in

Tucker v. Brown, supra,

the trial court, September 13, 1939, entered its decree in accordance with the mandate of this court. That decree read as follows:

“It is Hereby Considered, Adjudged and Decreed as follows:

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“1. The judgment of dismissal entered herein on March 26, 1938, and the judgment for costs to the defendants in said judgment is hereby in all respects vacated, cancelled and set aside.

“2.

That upon the trial of this cause the defendants herein admitted the receipt and possession by Reese B. Brown of all of the property hereinafter described, alleging and contending possession thereof was justified by virtue of an alleged gift of all of said property from Sarah E. Smith to Reese B. Brown during their lifetime; that pursuant to the judgment of the Supreme Court of the State of Washington it is hereby adjudged and decreed that Sarah E. Smith did not in her lifetime make any gift of any property to Reese B. Brown or Sadie R. Brown or Fred R. Brown, and that plaintiff’s action against said defendants is not barred by any statute of limitations.

“3. That in 1929 and 1930 Reese B. Brown received from Sarah E. Smith, as trustee for her under an express trust substantially all of the property then owned by her (a partial list of which is set forth in paragraph 4 hereof) and that during the life of Sarah E. Smith said property received by Reese B. Brown as trustee was not returned to said Sarah E. Smith, and no accounting of said trust was made to her, and no accounting has been made by Reese B. Brown or by the administratrix, administrator, executrix or administrator de bonis non with the will annexed of his estate since the death of Sarah E. Smith.

“4. That among other property the following property of Sarah E. Smith was received by Reese B. Brown in 1929 and 1930, as trustee for Sarah E. Smith, and for which the plaintiff is entitled to an accounting against the defendants herein:

$203,000.00 First Liberty Loan Bonds

10,000.00 Minneapolis-Trust Joint Stock Land Bank

5,000.00 Pacific Coast Joint Stock Land Bank, Portland

20,000.00 Central Illinois Joint Stock Land Bank, Greenville

20,000.00 California Joint Stock Land Bank, San Francisco

20,000.00 Union Joint Stock Land Bank, Detroit

10,000.00 Iowa Joint Stock Land Bank, Sioux City

10,000.00 Southern Minnesota Joint Stock Land Bank, Redwood Falls

10,000.00 LaFayette Joint Stock Land Bank

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10.000. 00 Des Moines Joint Stock Land Bank

10.000. 00 First Trust Joint Stock Land Bank, Chicago

10.000. 00 County of Ramsey, Minnesota, Road and Bridge

10.000. 00 South Park Commissioners, Chicago

1.000. 00 North Shore Park District, Chicago

20.000. 00 Little River Drainage District, Missouri

3.000. 00 County of Pulaski

1.000. 00 State of Illinois Highway Bond

2.000. 00 State of Illinois Service Compensation Bonds

2.000. 00 St. Clair County, Illinois Road Bonds

20.000. 00 Yakima Special Water Works

10.000. 00 Public Service Company of Northern Illinois

4.000. 00 Metropolitan Building Company

43.000. 00 Dominion of Canada War Loan

3.000. 00 County of Bonner, Idaho, Road and Bridge “Together with all interest coupons attached thereto.

100 shares preferred stock Georgia Hotel Company, Ltd.

20 shares ordinary Georgia Hotel Company, Ltd.

$545,384.42 withdrawn from Metropolitan National Bank February 14, 1930

All household furniture, rugs, etc. owned by Sarah E. Smith

Lots 1, 2 and 3, Block 277, Seattle Tide Lands, King County, Washington

All of the lots owned by Sarah E. Smith in Bellingham, Whatcom County, Washington

“And in addition thereto during the existence of the said trust relationship between Reese B. Brown and Sarah E. Smith, and while the confidential and fiduciary relationship existed between them, Sarah E. Smith entrusted Reese B. Brown with $485,000.00 in money, which has not been repaid, and as to all of which the plaintiffs are entitled to an accounting from the defendants.

“5. That an accounting between the parties hereto with respect of all of the property owned by said Sarah E. Smith and received by said defendants or any of them, or by said-Reese B. Brown, be had at a trial in this cause at such time as the matter may be regularly assigned for trial by the above entitled court. At said trial the evidence heretofore introduced in this action shall be considered and may be supplemented by such evidence as the parties hereto shall

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produce. The nature and extent of plaintiff’s claim against the defendants and the property in their possession because of the fact that said trust property has not been fully accounted for and returned to the plaintiff, shall be determined at the trial to be had as herein provided.”

December 14, 1939, respondent filed a supplemental petition relative to the return of the trust property. That petition, in which D. H. Bonsted and A. J. Falknor were made additional defendants, contained many allegations relative to the trust funds and the actions of the trust company, the Browns, and the attorneys. The pertinent portions of the allegations contained in that supplemental petition are as follows:

“That all matters and things herein set forth are supplemental of, and in addition to, all the matters alleged in plaintiff’s Second Amended Complaint, which is on file herein, a copy of which is in the possession of each of the additional defendants.

“That the matters herein set forth are not pleaded for the purpose of changing or altering the nature of plaintiff’s cause of action or the remedy therein sought, but are pleaded solely for the purpose of making additional parties defendant, and for the purpose of alleging additional supplemental facts so that proper, complete and adequate relief may be rendered to the plaintiff, as directed in the judgment and decree referred to in paragraph III hereof. . . .

“That at no time during the administration of said estate have any of the personal representatives of said Reese B. Brown, deceased, or any of its attorneys, attempted to fairly, honestly or in any unbiased manner administer said estate as successor trustee of the trust existing between Sarah E. Smith and Reese B. Brown. . . .

“That said Guaranty Trust Company made no personal investigation of the merits of plaintiff’s claim, made no personal investigation of any of the facts surrounding the trust relationship existing between Reese B. Brown and Sarah E. Smith, and closed its eyes to all of the facts showing the merits of plaintiff’s claim, and left the matter entirely in the hands of D. H. Bonsted and A. J. Falknor, the representatives of Sadie R. Brown and Fred R. Brown.

“That said Guaranty Trust Company made no effort to ascertain the true facts involved in the relationship between Sarah E. Smith and Reese B. Brown and themselves as sue-

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cessor trustee, and if it made any inquiry of the said D. H. Bonsted and A. J. Falknor with respect to the facts disclosed by their investigation, the facts were concealed by said D. H. Bonsted and A. J. Falknor from the Guaranty Trust Company. . . .

“That each and all of the matters hereinabove set forth are a part of the general plan, scheme and design of the defendants, and each and all of them, to prevent the plaintiff and the heirs of Sarah E. Smith from receiving or obtaining the trust property herein referred to, and all of said acts were performed by said defendants with full knowledge of the facts herein alleged and alleged in the Second Amended Complaint, herein referred to, and that in all things herein referred to said defendants were engaged in collusion in an attempt to accomplish such purpose. . . .

“That the defendants Sadie R. Brown, Fred R. Brown, D. H. Bonsted and A. J. Falknor, well knowing that all of the properties in the possession of or claimed by the defendant Fred R. Brown were in truth and in fact properties which belonged to Sarah E. Smith, deceased, and properties which were required by the said Reese B. Brown to pay and satisfy his obligation to said estate of Sarah E. Smith, and unlawfully claimed by Fred R. Brown as a gift,

inter vivos,

falsely represented to the Superior Court aforesaid that the said Fred R. Brown was the owner, in his own right, of a large amount of real and personal property exceeding $200,000.00 in value, and represented to said Court that said, pretended estate should have the care of a general guardian; and thereby induced said Superior Court of Yakima County, Washington, to appoint the said Sadie R. Brown as such guardian; and further induced said Court to award to the said Sadie R. Brown a large amount of money, to-wit, the sum of $17,000.00, under the guise of fees, plus various other expenditures claimed to have been made to the said Sadie, as guardianship expenditures; and further induced said Court to award to the defendants, D. H. Bon-sted and A. J. Falknor large and exorbitant sums, under the guise of attorney fees for such guardian, exceeding $17,-500.00; and, also, further induced said Court to award to the defendant Guaranty Trust Company a sum of money, to-wit: $5,000.00, to be by said Guaranty Trust Company applied to the general expense of defeating plaintiff’s claim herein, that all of said sums of money were disbursed out of the trust property belonging to this plaintiff; that said

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order was obtained by the misrepresentations of the said defendants made to the Superior Court of Yakima County aforesaid to the effect that the said Fred R. Brown was in truth and in fact the owner of an estate inventoried at more than $200,000.00; that in truth and in fact all of the property held or claimed by the said Fred R. Brown was trust property belonging to the estate of Sarah E. Smith and held by the said Reese B. Brown in trust as aforesaid, all of which was known to said defendants, and all sums received by the said Sadie R. Brown, D. H. Bonsted, A. J. Falknor and Fred R. Brown, under the guise of fees, compensation, expenses, disbursements and allowances were properties and assets belonging to said trust fund created by said Sarah E. Smith and not to the defendant Fred R. Brown.

“That all such orders were made upon ex parte application; that by reason of such false representations aforesaid, the orders of the Superior Court aforesaid, directing the disbursements of said funds, were void and of no effect.”

The prayer of the petition or complaint was that each and all of the defendants therein named be held personally and individually responsible for the return of the property, and that respondent have judgment against them for the value of all the property not delivered to and received by respondent.

The trust company filed an answer and cross-complaint. The answer denied the allegations contained in the petition, and in a cross-complaint asked for judgment against the additional defendants in the event that the court should find against defendant on account of the actions of the attorneys. In an additional answer, the trust company pleaded estoppel, waiver, and laches on the part of respondent, and also

res judicata

and the statute of limitations. A reply put in issue the allegations to which we have last referred.

January 8, 1943, subsequent to the trial on the accounting phase of the case, the court entered its decree. The pertinent portions of that decree may be summarized as follows:

Paragraph 3. Sadie R. Brown was appointed administra-trix of the estate of Reese B. Brown, deceased, February 1, 1934. February 13, 1934, Mrs. Brown resigned and appellant was appointed administrator

de bonis non,

and served until May 22,1934, at which time the will of Reese B. Brown

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was admitted to probate and his wife was confirmed as executrix of that will. She continued to act in that capacity until October 1, 1934, when she resigned and appellant was appointed administrator

de bonis non

with the will annexed. Since the last appointment, appellant has acted as such administrator and has been, in fact, the successor trustee of the Smith-Brown trust.

“(6) That from time to time inventories were filed in said probate proceeding in the matter of the estate of Reese B. Brown, deceased, describing property purporting to be the property of the estate of Reese B. Brown, deceased; that all of said property was and is the property of the Smith-Brown trust.”

(8) In the years 1928, 1929, and 1930, Sarah E. Smith created and established an express trust of which she was the sole beneficiary and of which trust she appointed Reese B. Brown trustee. Thereafter, she delivered to Brown, as trustee, substantially all of her property of a value in excess of $1,600,000, and Brown acted as her trustee ■ until his death.

(10) Brown did not account to Mrs. Smith nor to her representatives for the whole or any part of the trust estate. He expended the sum of $1,607.32 from the funds of the trust in connection with Mrs. Smith’s last illness and the funeral expenses incident to her death.

Paragraph 11 held that, at the time of his death, neither Brown nor his wife nor his son owned any property of any kind, but that the property they possessed, controlled, or purported to own was that of the Smith-Brown trust; further, this paragraph quieted title to all of that property in Wilmon Tucker, as administrator with the will annexed of the estate of Sarah E. Smith.

Paragraph 12. Tucker filed a claim against the Brown estate in which he asserted that all the property in the possession of Reese B. Brown at the time of his death belonged to the Sarah E. Smith estate, and the claim was rejected by Mrs. Brown.

“(16) That on and since the first day of October, 1934, Guaranty Trust Company, as administrator aforesaid, took

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into and retained in its possession and under its control property of the Smith-Brown trust and used and applied the same in conducting and carrying on the business of farming and the marketing of livestock and continued in such business until all of the property of said Smith-Brown trust which had come into its possession and under its control was sold and liquidated into cash, (except certain property thereof which is referred to in paragraphs 23, 24 and 25 hereof), that the Guaranty Trust Company now has on hand the aggregate sum of $151,488.95, which is a part of the proceeds received by it from the operation of said business and from the sale of property of said Smith-Brown trust; that a part of said aggregate sum is represented by certificates of deposit evidencing the total sum of $81,121.92, issued by the Yakima Branch of the National Bank of Commerce of Seattle, Washington, payable to the order of Guaranty Trust Company, as administrator of the estate of Reese B. Brown, deceased, and Wilmon Tucker, as administrator of the estate of Sarah E. Smith, deceased, and the balance thereof, namely, $70,367.03, is represented by cash on hand and on deposit to its credit in banks; that the Guaranty Trust Company, individually and as administrator and successor trustee aforesaid, forthwith shall indorse and deliver to Wilmon Tucker, as administrator aforesaid, each and every of the aforesaid certificates of deposit evidencing $81,121.92 and forthwith shall pay to Sunnyside Land & Investment Company the sum of $970.00 thereof, as stated in paragraph 23 hereof and forthwith shall pay and deliver to Wilmon Tucker, as administrator aforesaid, the entire balance thereof, namely, $69,397.03.”

Paragraph 17. During the course of its administration of the Brown estate, defendant trust company expended $128,479.74 belonging to the Smith-Brown trust, which expenditures were not for the benefit of the trust and which defendant had no right to expend; and the court further held that defendant was not entitled to any credit for that amount, but that defendant

“ . . . be and is charged with the whole amount thereof; that said sum is not included in the aggregate sum stated in paragraph 16 hereof; that Guaranty Trust Company, a corporation, individually and as administrator and successor trustee aforesaid, shall account therefor to the plaintiff, Wilmon Tucker, as administrator aforesaid, in the following manner, namely:

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“ (a) It shall take credit for the sum of $121,494.09 thereof in satisfaction of the sums allowed and awarded to it under paragraph 20 hereof, and, out of the same, shall pay such sums as are necessary to satisfy the amount therein awarded to it for Bonsted & Nichoson and Fred C. Palmer, Jr. in the sum of $48,000.00 and the amount therein awarded to it for Cheney & Hutcheson in the sum of $7,000.00, as stated in paragraphs 20 and 21 herein, respectively; and

“(b) It forthwith shall restore to and replace in said Smith-Brown trust the balance thereof, namely, $6,985.65 and forthwith shall pay the same to Wihnon Tucker as administrator aforesaid.”

Paragraph 19. The trust company was held not liable for interest on the value of the funds belonging to the Smith-Brown trust.

Paragraph 20. It was allowed credit for the following items:

“(a) For services performed by Guaranty Trust Company in caring for and protecting the trust property of the Smith-Brown trust and operating the farms and all of the attendant service in connection therewith for 84 months commencing October 1st, 1934, at $750.00 per month, amounting to____ $63,000.00

“(b) For legal services rendered to Guaranty Trust Company by Bonsted & Nichoson and Fred C. Palmer Jr. in connection with preserving and pro- . tecting the property of the Smith-Brown trust.. 48,000.00

“(c) For legal services rendered to Guaranty Trust Company and Cheney & Hutcheson in connection with preserving and protecting the property of the Smith-Brown trust and effecting sales thereof and for services rendered it in Cause No. 31418...... 7,000.00

“(d) For expense incurred by it in connection with the accounting of Smith-Brown trust............... 2,500.00

“(e) Miscellaneous trust expenses .................. 994.09

$121,494.09”

Paragraph 23 recited that certain property had been surrendered to plaintiff.

Paragraph 25. The Brown estate was not liable for payment of inheritance taxes to the state, nor estate taxes to the United States; and that the trust company must account for and pay the Smith estate $6,115.32, which had been expended in payment of those taxes.

Paragraph 28. Certain property held by Fred R. Brown which was sold and the proceeds paid to the trust company in the amount of $11,573.31 belonged to the Smith-Brown

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trust, which sums were in the hands of the company and should be paid to plaintiff.

“(29) That plaintiff, Wilmon Tucker, as administrator aforesaid, is not entitled to recover from Guaranty Trust Company, in any capacity whatever, the whole or any part of any sum which it paid to Fred R. Brown and Sadie R. Brown, as his guardian, nor for any sum which it paid to Sadie R. Brown, nor for any sums which it paid to Poe, Falknor, Emory & Howe as attorney fees.”

Paragraph 30 approved and confirmed certain sales of real and personal property made by the trust company.

“(31) That the supplemental complaint, petition for return of trust property, etc. of the plaintiff in Cause No. 27543 against the additional defendants A. J. Falknor, D. H. Bonsted, et al., be, and the same hereby is dismissed with prejudice and without costs to either party, and that the cross-complaint of Guaranty Trust Company, as administrator aforesaid, in said Cause No. 27543 against D. H. Bonsted, V. O. Nichoson and Fred C. Palmer Jr. and Sadie R. Brown and Fred R. Brown, except as to matters covered by this decree, be and the same hereby is dismissed with prejudice and without costs.”

Paragraph 32 provided for the dismissal of the action brought by defendant against Sadie R. Brown and Fred R. Brown.

Paragraph 33. Neither the Brown estate nor defendant has any right to property which stood in the name of Sadie R. Brown or Fred R. Brown, but that property belonged to the Smith estate.

Paragraph 34 set over to Sadie R. Brown and her son Fred certain articles of personal property which had been given to them by a settlement entered into with plaintiff.

Paragraph 35 confirmed the settlement to which the reference has just been made, and then provided:

“(a) That immediately upon the entry of this decree dissolving the restraining order in Cause No. 31418, the Trust Department of the Seattle First National Bank shall deliver to Wilmon Tucker, as administrator aforesaid, all of the original instruments, A to E inclusive, therein referred to, together with all other property, documents and papers, if any, in connection therewith in the posses

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sion of said trust department of the Seattle First National Bank, as Escrow Holder; that the said Sadie ft. Brown and Fred R. Brown forthwith shall deliver unto Wilmon Tucker, as administrator aforesaid, all of the property which they have not heretofore delivered pursuant to the terms of said stipulation and agreement for settlement;

“(b) That upon the entry of this decree dissolving the restraining order in Cause No. 31418, said defendants Sadie R. Brown and Fred R. Brown shall deliver to Wilmon Tucker, as administrator aforesaid, all records, deeds, abstracts of title, insurance policies, fire insurance policies or other papers relating to the title of said property, all unrecorded deeds from Reese B. Brown and wife to Fred R. Brown, all safe deposit box keys in the possession of Sadie R. Brown, or Fred R. Brown, (except those for safe deposit boxes now rented by Sadie R. Brown or Fred R. Brown), together with all other miscellaneous papers or documents relating to any of the property heretofore standing in the name of Reese B. Brown, Fred R. Brown or Sadie R. Brown, except insofar as said papers refer exclusively to the property mentioned in paragraph 34 of this decree;

“(c) That pursuant to said stipulation and agreement for settlement (Exhibit 506), no statute of limitations shall apply to any action that may be brought by the plaintiff in said Cause No. 27543, or his successor, to recover any of the property to which the estate of Sarah E. Smith is entitled under the provisions of said stipulation and agreement for settlement. For the purpose of effecting recovery of such property, pursuant to the provisions of said stipulation and agreement for settlement, the court hereby retains jurisdiction of the persons of said Sadie R. Brown and Fred R. Brown and of the subject matter insofar only as it may afford the plaintiff in said Cause No. 27543 or his successors the opportunity to reopen said Cause No. 27543 for the purpose of procuring an adjudication of the status of any property hereinafter to be discovered, which should be applied toward such deficiency; notice of the application for the reopening of said Cause No. 27543 shall be given to Sadie R. Brown and Fred R. Brown in the manner specified in said stipulation and agreement for settlement.

“(d) That all claims which the said Sadie R. Brown and Fred R. Brown have, or claim to have, against the estate of Sarah E. Smith or Wilmon Tucker, as administrator

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of said estate, or against the estate of Reese B. Brown, or against the Guaranty Trust Company, as administrator de bonis non with the will annexed of said estate, have been waived, released, satisfied and discharged, and said Sadie R. Brown and Fred R. Brown have no claim of any kind or character whatsoever against them or either or any of them.

"(e) That Sadie R. Brown and Fred R. Brown and the Guaranty Trust Company, as administrator and successor trustee aforesaid, and each of them, have no right, title or interest in and to the following described property, as to most of which they, and each of them, have heretofore expressly disclaimed any interest:

Minneapolis-Trust Joint Stock Land Bank of Minneapolis, Minnesota, 1952 5% coupon bonds Nos. M151167-76, both inclusive at $1,000 each .............................. $10,000.00

Central Illinois Joint Stock Land Bank of Greenville, Illinois, 1952 5% coupon bonds Nos. M152016-24, both inclusive, M152349 and M185596-185605 at $1,000 each.... 20,000.00

Iowa Joint Stock Land Bank of Sioux City, Iowa, 1952 5% coupon bonds, Nos. M 180661-70, both inclusive, at $1,000 each ................................................ 10,000.00

Southern Minnesota Joint Stock Land Bank, Redwood Falls, Minnesota, 1952 5% coupon bond No. VM180001 at $5,000.00 .......................................... 5,000.00

Same, 1953, No. VM 21002............................. 5,000.00

First Trust Joint Stock Land Bank, Chicago, Illinois 1953 4%% coupon bond No. XM 215117 at $10,000............ 10,000.00

Little River Drainage District (Missouri) Nos. 2948-2051 incl. 3737-3744 incl. 4188, 4190-4192 inch 4195, 4198, 4201, 4204, 4206, 1932 5%% at $1,000 each................... 20,000.00

North Shore Park District No. 37 5% at $1,000 1932...... 1,000.00

Metropolitan Budding Co. Bonds Nos. 3477, 3483, 3486 and 3487 at $1,000 each............................... 4,000.00

and also all other property in the possession of Reese B. Brown or under his control at the time of his death, whether standing in his name or held in his name as trustee for Sarah E. Smith or her estate, which property has not heretofore come into the possession of any of the parties hereto, as well as all interest in and to the deposits or certificates evidencing such deposits issued by the Midlands Savings and Loan Association, and the Midland Federal Savings and Loan Association.”

Paragraph 36 commanded the defendant company to deliver all property of the Brown estate to plaintiff, including books of account and records, instruments, and documents, kept or used in relation to the activities of the Brown estate.

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Paragraph 37 held that the final report of defendant in the Brown estate should be considered as the report of defendant as successor trustee of the Smith-Brown trust, that there was no property in the Brown estate which could be used to pay the creditors of Reese B. Brown, and that there was no property for distribution to his heirs.

Paragraph 38 provided for the enforcement of the decree.

Paragraph 39 closed the Brown estate.

Paragraph 40 allowed respondent to collect costs from appellant.

The items included in the $128,479.74 charged to Guaranty Trust Company mentioned in the decree are as follows:

“(1) Vanderveer-Bassett judgment, ................. $41,696.36

(2) Fees paid Guaranty Trust Co.,.................. 10,500.00

(3) Bonsted & Nichoson payments.................. 42,175.26

(4) Brown Estate Taxes, .......................... 5,803.11

(5) Brown Inheritance Taxes, ...................... 1,090.93

(6) Accounting Expense, .......................... 4,913.54

(7) Interest charged and received by Guaranty Trust Company, ........................... 2,258.34

(8) Henly witness fees, Tucker v. Brown,........... 1,959.90

(9) Denny “ “ “ “ “ 1,248.21

(10) Harris “ “ “ “ “ 2,500.00

(11) Harris “ “ Newman v. Brown......... 2,273.00

(12) Transcripts and depositions, Tucker v. Brown, .......................... 1,454.57

(13) Printing Briefs, .............................. 1,005.89

(14) Montreal Depositions, Tucker v. Brown,......... 615.71

(15) Witness expenses, “ “ “ ......... 920.84

(16) “ fees “ “ “ ......... 619.72

(17) Miscellaneous expenses (Itemized on Exhibit ‘B’ attached hereto).............................. 3,849.85

(18) Premium on Bond of Guaranty Trust Company as administrator

de bonis non,

............... 3,588.00

(19) Telephone and Telegraph Co.,.................. 6.51”

Wilmon Tucker, as administrator of the Smith estate, the Guaranty Trust Company, and Bonsted & Nichoson and F. C. Palmer, Jr., have appealed. We shall refer to the Guaranty Trust Company as appellant, to Tucker as respondent, to the trial preceding our decision in

Tucker v. Brown, supra,

as the first trial, and to the hearing on the accounting as this or the present trial.

The trust company assigned as error the entry of paragraphs 2, 3, and 4 of the decree and judgment on the re-mittitur dated September 13, 1939; in dismissing the cross-complaint against the Falknor firm; in entering the final

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decree in favor of respondent and against appellant; in the making of surcharges and the rendering of personal judgment against appellant in its individual capacity; in making surcharges and rendering judgment against appellant as administrator; in the entry of paragraphs 3, 6, 8, 10,11,12,15,16, 17, 18, 20, 21, 23, 25, 28, 31, 32, 33, 34, 35, 36, 37, 38, and 39 of the final decree; the denial of appellant’s motion to strike the respondent’s cost bill; in denying appellant’s motion to retax costs; the failure and refusal to ratify, confirm, and approve appellant’s final account; the refusal to grant appellant full relief upon its cross-complaint; failure to hold that previous orders approving intermediate accounts in the Brown estate were final, conclusive, and binding; the failure and refusal of the court to adjudge that the settlement stipulation released appellant from all liability; the court’s refusal to allow appellant credit for the sum of $5,000 received by it from Mrs. Brown as executrix to apply on the cost of defending the Tucker suit; in failing to allow appellant credit for $1,607.32 paid by Brown for the funeral expenses of Mrs. Smith; the denial of appellant’s motion for dismissal of respondent’s supplemental petition; in rendering personal judgment against appellant for the Vanderveer judgment; in entering the decree against appellant for the expense of defending the Tucker suit; in rendering personal judgment against appellant for the expense of defending the Hudson-Newman actions; in rendering personal judgment against appellant for the estate and inheritance taxes paid; in rendering personal judgment against appellant for accounting expenses, for interest charges, and for bond premiums paid by appellant; in surcharging appellant with certain items referred to on Exhibits A and B attached to the final decree.

The representatives of the Smith estate made the following assignments of error: The allowance of compensation to appellant and its attorneys from the trust funds; the failure to require appellant to deliver to respondent all of the Smith-Brown trust property; in not allowing respondent interest upon the value of the trust property which was withheld from respondent, and in not allowing

*764

respondent reasonable expenses in making the accounting of the Smith-Brown trust; in failing to require appellant to pay respondent moneys and property paid to Sadie R. and Fred Brown; in failing to charge appellant with $6,-170 paid to J. W. Maxwell, a creditor of Reese B. Brown; in allowing appellant a credit of $5,064.60 on account of sums paid by it to the internal revenue department of the United States; and in considering the final report in the estate of Reese B. Brown as an account of the Smith-Brown trust and in ratifying and approving the account in part.

The assignments of error made by Bonsted & Nichoson and Fred C. Palmer, Jr., are: In denying their motion for a new trial; in allowing them a sum less than $65,000; in deducting from the allowance made the sum of $2,500 paid to them after October 1, 1940, under order of the court for services rendered prior to October 1, 1940; in deducting from the allowance made the sum of $7,219.17 on account of expenses incurred; and in not allowing a reasonable value of all services which the attorneys had in good faith rendered, and in failing to order payment out of any funds in the hands of the trust company, as administrator with the will annexed, or from funds of the Smith-Brown trust.

Reese B. Brown became acquainted with Mrs. Smith in the latter part of the year 1928. At that time he had no financial resources. He told a witness, A. C. Shallenberger, that at that time he “was broke.” At the time Mrs. Brown was appointed administratrix of her husband’s estate, she said, “Mr. Bonsted, you know that there’s nothing in this estate”; and in 1940 appellant alleged that “from and after July, 1928, the said Reese B. Brown was wholly insolvent.” The records in Yakima showed that in 1929 Brown had judgments against him in the total sum of over one hundred thousand dollars. From the beginning of their acquaintance until the death of Mrs. Smith, she and Brown were very closely associated and made trips to many cities on this coast and the middle west and eastern cities of the United States and finally to Montreal, Canada. In many of those cities, Brown deposited funds in rented safety deposit boxes and purchased cashiers’ checks. He invested in a

*765

large farm in Yakima county and stocked it with pedigreed horses and cattle which were brought from eastern states. He also purchased a farm in Virginia and stocked it in the same manner. He purchased two apartment houses in the city of Seattle and acquired a woolen mill and a large mercantile establishment. He deeded large tracts of real property and turned over personal property to his minor son, Fred, for whom a guardian was afterward appointed. We will refer to many other activities of Brown as we discuss the questions presented for consideration.

In order to get a picture of the various steps taken in the Smith estate and in the complicated and costly probate proceedings of the Reese B. Brown estate, we mention those which necessarily throw light upon this litigation.

In February, 1934, Wilmon Tucker was appointed guardian of Mrs. Smith, an incompetent person. In May or June, 1934, he was appointed trustee of the property of Sarah E. Smith, an absentee, and thereafter gave notice, as provided by Rem. Rev. Stat., § 1715-1 [P. C. § 9776], which notice requested “that all persons having knowledge concerning the absentee shall advise the court of the facts.” These proceedings were had in the superior court of King county. The notice came to the attention of Mrs. Brown, who neglected to notify Tucker, though she at that time knew of the death of Mrs. Smith. July 9, 1934, Tucker was appointed administrator with the will annexed of the estate of Sarah E. Smith.

January 31, 1934, Mrs. Brown was appointed adminis-tratrix of her husband’s estate in Yakima county. February 13, 1934, that court entered an order discharging Mrs. Brown and appointing appellant administrator

de bonis non.

On the 15th of that month, Mrs. Brown petitioned for a family allowance, and on the 23rd, an order for allowance was made to the attorney for the estate. May 22, 1934, Mrs. Brown was appointed executrix of Reese B. Brown’s last will and testament. June 25, 1934, a decree was entered discharging appellant as administrator. August 29, 1934, Tucker filed a claim for $5,250,000 and served it upon Mr. Bonsted, attorney for Sadie Brown,

*766

executrix. This claim was marked rejected September 22, 1934, by Mrs. Brown. October 1, 1934, an order was entered accepting the resignation of Mrs. Brown and appointing appellant administrator with the will annexed of the estate of Reese B. Brown. October 10, 1934, the Guaranty Trust Company notified respondent that his claim had been rejected by Mrs. Brown. October 23, 1934, respondent filed his action against Mrs. Brown and Guaranty Trust Company as administrator. That action was the one decided by this court in

Tucker v. Brown, supra.

December 14, 1934, the first and final account of Sadie Brown was approved.

The final account, made to the court in the probate proceedings and made up of former reports together with a history of the various events of the probating of the Reese Brown estate, takes up 196 pages of the transcript. From it we learn that at the beginning appellant was allowed $750 per month; Bonsted & Nichoson $500 per month; Mrs. Brown $500 per month, and Fred Brown was paid $7,000 yearly rental for the property standing in his name.

Attorneys’ fees had been paid from the Reese Brown estate as follows:

“Bonsted & Nichoson and F. C. Palmer Jr... $48,291.03

Poe, Falknor, Falknor & Emory.......... 9,461.30

Reba Hurn ............................ 494.87

J. O. Cull.............................. 15.00

Hugo Luhman ......................... 80.00

Raymond, Carlson & Langlois ........... 512.41

Hancox & Gowan....................... 105.00

$58,959.61"

Aside from these fees, Bonsted & Nichoson had received $17,500, and Poe, Falknor, Falknor & Emory had been paid $2,500 from the Fred Brown guardianship. Also the last named firm had received $3,000 from Fred Brown. Appellant reported that it had received $10,500 to apply on the account for services, and then asked to be allowed a total sum of $74,500. The report showed that many large sums had been paid for witness fees and their hotel expenses in the litigation with respondent.

*767

The proceeds from the sale of the estate property and the income from operations were set out in detail. The expenditures were also listed. Attorneys’ fees for Bon-sted & Nichoson were asked for in a reasonable amount and for Cheney & Hutcheson in the amount of $13,500. In addition, appellant asked for approval of all its expenditures, including the payment of fees and expenses in all its litigation, in the operation of the ranch, and for the preparation of the accounting report.

July 24, 1942, respondent filed objections to the report. He denied any matter or thing in the report which affected the property of the trust; denied that any valid order had been made approving any former account; denied that any item or sum referred to as having been expended was spent on behalf of or was chargeable to the trust fund. He also challenged the correctness of the report. Respondent alleged:

“ . . . that each and all of the orders referred to in the Final Account and Petition for Distribution have the effect only of interim orders entered during the course of the probate proceeding in the Estate of Reese B. Brown, deceased, and neither thereof is final, and that each thereof is subject to review and revision by this Court, and demand for review and revision and the vacating of each thereof hereby is made.”

Industrious counsel have cited an imposing number of cases from various jurisdictions bearing on the questions presented by this appeal. Such a formidable array has challenged the interest and industry of the writer to undertake the laborious but not unpleasant task of examining every case cited, together with others which we have collected.

Before proceeding to a discussion of the many controversies presented in this case, we find it necessary to mention some of the duties of trustees and successor trustees and then to ascertain from the facts and all the surrounding circumstances whether the parties to this action performed those duties in accordance with the rules relating to trus

*768

tees. . It must be borne in mind that appellant and respondent were each acting in a fiduciary capacity.

It is the duty of a trustee to administer the trust in the interest of the beneficiaries. The trustee must exclude from consideration not only his own advantage or profit, but also that of third parties in dealing with trust properties and in all other matters connected ¡with the administration of the trust estate. No exception can be made to this rule. Courts have fixed a very high and exceptionally strict standard for trustees to follow in the conduct of their trust activities.

“It is a general principle that a trustee must act with the most scrupulous good faith. The one great duty arising from this fiduciary relation is to act in all matters relating to the trust wholly for the benefit of the beneficiary. A trustee will not be permitted to manage the affairs of his trust, or to deal with the trust property, so as to gain any advantage, either directly or indirectly, for himself.”

Linsley v. Strang,

149 Iowa 690 , 126 N. W. 941 , 128 N. W. 922 .

In

Zimmerman v. Fraley,

70 Md. 561 , 17 Atl. 560 , the court says:

“It is of the most vital importance that trustees be held to a strict and rigid accountability; and however serious may be the consequences which in particular cases the application of this rule may entail upon the individual affected, or upon their heirs or sureties, insensibility to those consequences is a stern and an imperative mandate of judicial duty.” Cited with approval in

Haas v. McGinn,

64 R. I. 133, 11 A. (2d) 284.

The principle is well expressed in

Meinhard v. Salmon,

249 N. Y. 458 , 164 N. E. 545 , 62 A. L. R. 1:

“Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided

*769

loyalty by the ‘disintegrating erosion’ of particular exceptions.

(Wendt v. Fischer,

243 N. Y. 439, 444 ) [ 154 N. E. 303 ]. Only thus has the level of conduct for fiduciaries been kept at a level higher than that trodden by the crowd. It will not consciously be lowered by any judgment of this court.”

The rule as stated is a proper one, and we give it our unqualified approval by adopting it as written by Chief Judge Cardozo.

“Duty of Loyalty. ... (2) The trustee in dealing with the beneficiary on the trustee’s own account is under a duty to the beneficiary to deal fairly with him and to communicate to him all material facts in connection with the transaction which the trustee knows or should know.” Restatement, Trusts, p. 431, § 170. Cited in

Wool Growers Service Corp. v. Simcoe Sheep Co.,

18 Wn. (2d) 655, 140 P. (2d) 512 .

“The trustee is under a duty to the beneficiary to give him upon his request at reasonable times complete and accurate information as to the nature and amount of the trust property, and to permit him or a person duly authorized by him to inspect the subject matter of the trust and the accounts and vouchers and other documents relating to the trust.” Restatement of the Law of Trusts 447, § 173.

Where a trustee finds himself in the position where he has, either individually or as trustee for another, an interest which conflicts with that of the beneficiaries of the trust, he should resign from the trust so as not to attempt the impossible task of representing conflicting interests.

In re Brown's Estate, supra.

These principles apply to all trustees, regardless of whether they are original or successor trustees.

“Wherever property, real or personal, which is already impressed with or subject to a trust of any kind, express or by operation of law, is conveyed or transferred by the trustee, not in the course of executing and carrying into effect the terms of an express trust, or devolves from a trustee to a third person, who is a mere volunteer . . . , or who is a purchaser with actual or constructive notice of the trust . . . , then the rule is universal that such heir, devisee, successor, or other voluntary transferee, or such

*770

purchaser with notice, acquires and holds the property subject to the same trust which before existed, and becomes himself a trustee for the original beneficiary. Equity impresses the trust upon the property in the hands of the transferee or purchaser, compels him to perform the trust if it be active, and to hold the property subject to the trust, and renders him liable to all the remedies which may be proper for enforcing the rights of the beneficiary. It is not necessary that such transferee or purchaser should be guilty of positive fraud, or should actually intend a violation of the trust obligation; it is sufficient that he acquires property upon which a trust is in fact impressed, and that he is not a

bona fide

purchaser for a valuable consideration and without notice. This universal rule forms the protection and safeguard of the rights of beneficiaries in all kinds of trust; it enables them to follow trust property, — lands, chattels, funds of securities, and even of money, — as long as it can be identified, into the hands of all subsequent holders who are not in the position of

bona fide

purchasers for value and without notice; it furnishes all those distinctively equitable remedies which are so much more efficient in securing the beneficiary’s rights than the mere pecuniary recoveries of the law.” 4 Pomeroy’s Equity Jurisprudence (5th ed.) 102, § 1048; cited with approval in

Paysse v. Paysse,

86 Wash. 349 , 150 Pac. 622 .

These rules apply to the activities of appellant subsequent to the time it had notice of the trust relationship which had existed between Mrs. Smith and Brown.

Appellant, in assuming the duties of administrator

de bonis non

and administrator with the will annexed, stepped into the shoes of Reese Brown and became the successor trustee of the trust. As successor trustee, it assumed all the duties and was charged with all the obligations of the original trustee in so far as an accounting was concerned. This duty was not one imposed upon appellant as administrator of the Brown estate, but only incidental thereto.

It was the duty of appellant to make a full and correct accounting of all known assets of the Smith-Brown trust which had come into the possession or under the control of appellant. There are two reasons for the imposition of this duty: (1) appellant was commanded to make an accounting by this court in

Tucker v. Brown, supra;

(2)

*771

it is the general rule that all successor trustees must make an accounting of the trust.

“The personal representative of a deceased trustee must account for the period his decedent was in possession as well as for that during which he himself has held it.” 65 C. J. 890, Trusts, § 786.

“Where new or substituted trustees have been appointed, it is they or the survivor of them who is required to account rather than the original trustees. On the death of a trustee, where no successor has been appointed, the personal representative of decedent is under the duty of accounting under the trust, . . . ” 65 C. J. 886, Trusts, § 785.

“The decedent was the trustee of the fund. It was his duty to have made a settlement of his accounts as trustee, and when he died without having made a settlement it was the duty of his executors to make such a settlement. When they failed to make it, the only remedy for the present trustees was a suit to have the trust settled.”

Boreing v. Faris,

127 Ky. 67 , 104 S. W. 1022 .

“It appears to me quite clear that the testatrix imposed a trust upon this property and that the administrator’s duty was to carry out the terms of the trust. Of course, the proper course to have been pursued would have been to have had a trustee appointed to administer this trust, as, technically, it is no part of the duty of an administrator with the will annexed. However, having taken upon himself the burden of administering the trust, he will be required to account for his dealings with the business.”

In re Ludlow’s Estate,

3 N. J. Misc. 568, 129 Atl. 429 .

Accord:

In re Belt’s Estate,

29 Wash. 535 , 70 Pac. 74 , 92 Am. St. 916;

Lew You Ying v. Lew Kay,

174 Wash. 83 , 24 P. (2d) 596 . See, also,

In re Thurston,

104 N. J. Eq. 395, 145 Atl. 110 ;

State ex rel. Karrenbrock v. Mississippi Valley Trust Co.,

209 Mo. 472 , 108 S. W. 97 ; and

In re Olney Bank & Trust Co.,

116 Pa. Super. Ct. 438 , 176 Atl. 837 .

“It is not always that a trustee is permitted to urge, against the strict examination of his accounts, all of the rules of legal warfare governing in purely adversary proceedings. His duty to render an account not only mathematically correct, but equitably fair, and to submit his per

*772

•formances of the trust duties to examination, operates, often, to the advantage of the cestuis que trust, who might be, otherwise, considered to be irretrievably in default. This rule is also one largely of public policy.”

Pomeroy v. Noud,

145 Mich. 37 , 108 N. W. 498 .

This is an equity case and is tried

de novo

in this court.

It is argued by appellant that the judgment entered in compliance with the terms of the remittitur sent down in

Tucker v. Brown, supra,

was an interlocutory order only and was not supported by any evidence. It cites in support of its contention:

State ex rel. Seattle General Contract Co. v. Superior Court,

56 Wash. 649 , 106 Pac. 150 , 28 L. R. A. (N. S.) 516;

State ex rel. Robinson v. Superior Court,

134 Wash. 90 , 234 Pac. 1017 ;

Von Herberg v. Nelson,

175 Wash. 572 , 27 P. (2d) 1103 ;

Bishop v. Illman,

9 Wn. (2d) 360, 115 P. (2d) 151 ; and

Reif v. LaFollette,

19 Wn. (2d) 366, 142 P. (2d) 1015 . The cases are not in point, for the reason that they do not decide any question concerning judgments on remittitur, but only refer to orders made during the progress of the trial.

An appeal could not have been taken from the judgment entered by the trial court.

Frye v. King County,

157 Wash. 291 , 289 Pac. 18 . We quote the applicable rule from that case as follows:

“The mandate of this court is binding on the superior court, and must be strictly followed. Having reversed the judgment and remanded the case to the trial court with instructions to enter judgment in accordance with our opinion, that order is conclusive, and no judgment different therefrom can be entered by the trial court. 2 R. C. L., p. 289, § 244.

“Though the trial court misinterpreted the opinion of this court and entered a judgment contrary to the directions of this court, no right of appeal from that judgment exists. The statute gives none, nor does one obtain at common law. The remedy is not by appeal. This court lost jurisdiction of the case when the remittitur was sent down to the superior court. If, through some error, the decision, as remanded, does not express the real judgment of this 'court, we may recall the remittitur, if timely application

*773

is made therefor, for the purpose of correcting the mistake or enforcing the judgment.

Peabody v. Edmonds,

72 Wash. 604 , 131 Pac. 250 .

“If the superior court proceeds contrary to the mandate of this court, that would be an interference with this court’s jurisdiction, and the proper procedure for the aggrieved party to pursue would be to apply to this court for an appropriate writ requiring the superior court to enter judgment conforming to the mandate. To entertain this appeal, would be in effect, to grant a rehearing. The case has been decided once on appeal, petition for rehearing denied, and the remittitur sent down to the superior court; therefore we have no jurisdiction to grant such a rehearing. Certainly not until the recall of the remittitur by which we would reinvest ourselves with jurisdiction. That we have not been asked to do.”

Approved:

Morton Organ Co. v. Armour,

179 Wash. 392 , 38 P. (2d) 257 ;

Corbaley v. Pierce County,

197 Wash. 102 , 84 P. (2d) 666 ; and

Kosten v. Fleming,

17 Wn. (2d) 500, 136 P. (2d) 449 .

If appellant was not satisfied with the judgment entered by the trial court upon the remittitur, it could have petitioned this court to correct that judgment. Having failed to take appropriate action, appellant is foreclosed from in any way objecting to the judgment. The decision of this court in

Tucker v. Brown, supra,

is not an authority, but is a binding, conclusive judgment which determines that the funds and property turned over to Brown by Mrs. Smith were held by him as a trustee. The judgment of the trial court on remittitur carried into effect the judgment of this court with the same force and effect of any final judgment.

Whether or not the evidence was sufficient to warrant the entry of the judgment was immaterial, because the judgments of this and the trial court became the law of the case.

Cannon v. Seattle Title Trust Co.,

145 Wash. 691 , 261 Pac. 642 ;

Eyak River Packing Co. v. Parks,

148 Wash. 495 , 269 Pac. 807 ; and

Machenheimer v. Falknor,

151 Wash. 447 , 276 Pac. 297 .

Final judgments having been rendered, it was the

*774

duty of appellant to proceed with the accounting as directed by those judgments.

Appellant contends that this action was not commenced within the time limited by the three-year statute of limitations. It bases its contention on the fact that the complaint used the word “trust,” but did not designate the kind of trust claimed; further, that the action was to enforce a constructive trust “because all of the property inventoried in the Brown estate was subsequently acquired by Brown, and if plaintiff has any claim thereon whatever, it is solely by reason of a subsequent alleged purchase thereof by Brown with alleged trust funds.”

There are two answers to this argument: First, our opinion and the judgment on the remittitur state that respondent’s action is not barred by any statute of limitations. That judgment, as we have stated, was final and is the law of this case. Second, the complaint, while not giving any name to the kind of trust claimed, alleged an express trust which is not subject to the operation of the statute of limitations until it is terminated or is repudiated by the trustee.

Tucker v. Brown, supra;

34 Am. Jur. 86 , Limitations of Actions, § 107; 37 C. J. 905, Limitation of Actions, § 268(b).

At the time the complaint in this action was filed, October 22, 1934, the trust had not been terminated, and no repudiation was declared until the claim had been rejected by Mrs. Brown September 22, 1934, just prior to the time she resigned as executrix.

There is no diligence required of a

cestui que trust

until there is a repudiation of the trust.

Davies v. Metropolitan Life Ins. Co.,

189 Wash. 138 , 63 P. (2d) 529 .

Appellant claims that respondent cannot recover a personal judgment against it, for the reason that he made his election by filing his claim and beginning his action against appellant in its representative capacity and is therefore precluded from waging his action by way of supplemental petition for recovery of a personal judgment. It will be noted that the personal judgment sought by respondent was for trust funds unlawfully expended by appellant.

*775

Appellant supports its contention by citing the following cases:

Collins v. Denny Clay Co.,

41 Wash. 136 , 82 Pac. 1012 ;

Babcock, Cornish

&

Co. v. Urquhart,

53 Wash. 168 , 101 Pac. 713 ;

Kimble Motor Car Co. v. Androw,

125 Wash. 225 , 215 Pac. 340 ;

Hoskins v. Smith,

133 Wash. 90 , 233 Pac. 279 , 43 A. L. R. 175;

Rennie v. Washington Trust Co.,

140 Wash. 472 , 249 Pac. 992 ;

Briggs v. Ronald Township,

208 Mich. 603 , 176 N. W. 434 ;

Burrows v. Johntz,

57 Kan. 778 , 48 Pac. 27 ;

Homer v. McCormick,

8 Kan. App. 333 , 56 Pac. 1124 ;

In re Jacob Berry & Co.,

174 Fed. 409 ;

Shonkweiler v. Harrington,

102 Neb. 710 , 169 N. W. 258 ; and

Arroyo-Colorado Nav. Dist. v. State Nat. Bank,

90 S. W. (2d) (Tex. Civ. App.) 881.

Our attention is also called to the following statement of the rule in 65 C. J. 979, Trusts, § 904:

“As a general rule, where trust property has been diverted, and may still be traced, the cestui que trust has an election to either follow the res or to hold the trustee personally liable for the breach of trust; and if the cestui que trust has exercised his election, it is error to deny the relief sought and make a different election for him; but the cestui que trust is bound by an election one way or the other, and, although there is some authority to the contrary, it is usually held, unless the cestui has proceeded against the trustee personally before he knows that there is property into which the trust funds can be traced, that if the cestui que trust has first elected to hold the trustee personally liable, he cannot thereafter follow the res, while on the other hand, if he has first sought to follow the res, he cannot thereafter hold the trustee personally responsible. However, a previous suit, not to hold the trustee personally liable for breach of trust, but simply to establish the existence of the trust and the amount thereof, does not prevent the cestui que trust from following the trust property.”

In

Collins v. Denny Clay Co., supra,

this court held:

“ . . . if the executor converted this stock, or wrongfully received dividends thereon which belonged to others he is liable in his individual and not in his representative capacity. This stock stood in the name of the decedent at the time of his death, and came into the hands of his executor as a part of his estate. Under such circum

*776

stances the more equitable rule is that if the executor or administrator applies to the use of the estate money or the proceeds of property belonging to a third person, he is liable in both his individual and representative capacity, and the injured party may elect whether he will hold him in the one capacity or the other. Respondents elected to pursue the executor in his representative capacity, as they had a right to do; but having followed that course, they can only take such judgment as the law authorizes in such cases.”

This holding was followed in

Rennie v. Washington Trust Co.,

140 Wash. 472 , 249 Pac. 992 . Those two cases related to the conversion of personal property.

In the

Babcock

case the court simply held that an election of remedies once made is irrevocable. In the

Kimble Motor Car Co.

case, we decided that the filing of a claim against an estate of a deceased person for the value of property sold on conditional sales contract waived the right to reclaim the property. In the

Hoskins

case it was held that an action for damages for fraud bars a subsequent suit to impress a trust upon the property fraudulently acquired. We have examined the other cases cited by appellant and find that they simply adhere to the general rule expressed by this court. None of the cases cited are applicable to the facts present in the case at bar.

The rule applicable to the present situation is stated in

Title Ins. & Trust Co. v. Ingersoll,

158 Cal. 474 , 111 Pac. 360 . That case involved an action brought by a wife against her husband to recover property held in trust by him, the money being the separate property of the wife. The action was twofold: To recover the property in which the money had been invested, and for a money judgment for the balance. In passing, the court stated:

“The plaintiff had the right to allege the trust relation, the receipt of trust funds, the failure to account, and to recover in one action the specific property into which a portion of the fund is traced, and a personal judgment for the remainder which cannot be identified. The beneficiary of a trust, of course, cannot have a judgment declaring the defendant a trustee of specific property bought with, trust funds, and decreeing such property to be the property of

*777

the beneficiary, and also a personal judgment for the money invested by the defendant in that property. So far as the trust fund is traced to specific property which the beneficiary elects to take, the part of the fund thus accounted for constitutes a credit on the general account and personal judgment can be given only for the balance. This was the course followed by the court. There is no objection to the practice of trying the entire case in one action, and no inconsistency in the claims of plaintiff, provided the account is thus separated and judgment is not twice given for the same money.”

Respondent instituted his action for the purpose of recovering trust funds that were then in the possession of the personal representative of the Brown estate. Later, by supplemental pleadings, he sought to recover from appellant that portion of the trust funds which he claimed had been expended by appellant. The allegations were sufficient to show that appellant had received certain property which belonged to the Smith-Brown trust, and that after so receiving the property a portion of it had been dissipated or expended for purposes foreign to the trust.

Appellant cannot take trust funds after it has been sued for them, improperly expend those funds, and then hide behind the defense of election of remedies. A holding approving such procedure would be to invite fraud and render useless an action to recover trust property. In fact, there was no election of remedies. Respondent had two remedies: One to recover trust funds which were held by appellant; the other, to secure a judgment against appellant for that portion of the trust funds which had been improperly expended. He properly pursued both remedies.

It is next contended on behalf of appellant that it is released from any personal judgment because respondent released certain parties made defendants in the supplemental petition or complaint. Respondent’s supplemental petition, portions of which we have already set out, sought a personal judgment against Mrs. Brown, Fred Brown, and attorneys Bonsted and Falknor, and appellant. May 24, 1940, respondents entered into a settlement agreement with all the parties just named with the exception of Mr. Bonsted.

*778

Appellant argues that the action was one in tort; that the defendants were joint

tort-feasors-,

and that the release of Falknor and the Browns releases appellant. The rule with relation to the release of one joint

tort-feasor

and the effect of the release upon other joint

tort-feasors

is stated as follows in

Richardson v. Pacific Power & Light Co.,

11 Wn. (2d) 288, 316, 118 P. (2d) 985 :

“It is undoubtedly the rule in this state that the acceptance of a sum of money from one joint

tort-feasor

in satisfaction of a claim for damages, and the execution of a release of such joint

tort-feasor

from all damages by reason of the injuries inflicted, operate as a release of the other joint

tort-feasor,

even though the parties to the agreement stipulate that the release of one shall not discharge the other.”

See, also,

Larson v. Anderson,

108 Wash. 157 , 182 Pac. 957 , 6 A. L. R. 621.

Appellant cites many authorities which hold that a trustee who wrongfully handles trust property commits a tort. Standing alone, the allegations contained in the supplemental petition might be construed as charging a tort. In this case, however, we must consider the pleadings as a whole, having taken into consideration the nature and extent of the litigation. Respondent sued to establish a trust, and in this he was successful. It then became his duty as a representative of the Smith estate to ascertain the amount of money and property turned over to Brown, and to locate the property and trace the funds and find their ultimate destination. His duty in this regard is stated in 65 C. J. 898, Trusts, § 793:

“The bill or petition for the accounting should set forth enough to make clear the grounds upon which jurisdiction is invoked; it should contain a clear and orderly statement of the facts relied upon as the ground for relief, in accordance with the general rules governing equity proceedings. The trustee should allege and show the condition of the fund when it came into his hands, what changes, if any, it has since undergone, what has been done with it, and the present amount and character of the assets. Thereupon it is competent for defendant to falsify complainant’s statement, not only by direct denial of the allegations in the

*779

complaint, but by affirmative allegations, showing a disposition and present condition of the trust fund different from that which complainant insists upon.”

Respondent was faced with difficult and intricate problems in framing the allegations of the supplemental petition. He did no more than to allege facts additional to those in his original complaint, which advised the court concerning the situation surrounding the properties of the Smith-Brown trust. The settlement to which we will refer later in this opinion had only to do with the properties in the possession of Mrs. Brown and Fred Brown. The trial judge, in passing upon this question, very clearly stated proper reasons for his holding that there was no tort alleged or proved when he said:

“After that decision which found that there was a trust, the plaintiff filed some supplemental allegations, seeking to recover judgment against Mr. Bonsted and Mr. Falknor on the ground that their fees which were paid were trust funds, and that they were received knowing them to be trust funds. . . .

“Now, the gist of this entire matter still is — the gist of the amended complaint and the supplemental complaint still is what? It is, What is trust property? Who has it? I want it and I’m going to get it if I can prove my case. That is still the gist of the plaintiff’s position in this case. There is no question, in my opinion, of any tort at all. The substantiation of a trust is purely one of contract; it is not a tort at all; and whatever means or whatever allegations somebody employs to impress trust property and to recover trust property still it has its basis in contract, unless there is some fraud committed, and there is no evidence of fraud here.”

All that respondent asked for was that the Smith-Brown funds be returned to him intact, less whatever sums were legitimately expended in taking care of the trust property.

We hold that the settlement made with the Browns and Mr. Falknor did not in any way release appellant from accounting for all of the Smith-Brown trust funds and trust property.

Appellant maintains that the trial court, in entering its decree, did not take into consideration evidence

*780

relative to loans made by Mrs. Smith to Brown. The statement is made in appellant’s briefs that, “The conclusion that these loans were made is irresistible.” It then contends that Tucker has only a general creditor’s claim for $485,000, and that the expenses of administration have therefore a legal priority. The basis of this argument is Plaintiff’s Exhibit 12, which reads:

“State of Washingto

n

County of Spokane j ss

“Sarah E. Smith, being first duly sworn deposes and says: I have loaned R. B. Brown moneys in the aggregate of about $485,000.00. I have also entrusted him with moneys, securities and valuables to be kept in trust for me, and he has had the right to place the same in any bank or banks, or safe deposit vault as he saw fit. In loaning this money to him I reserved the right to receive from him such security for said loans as I might demand. . . . A certain deal including three lots in the Seattle Tide Lands was an accommodation deal. . . .

“Sarah E. Smith.

Subscribed and sworn to before me this 1st day of September, A. D., 1930.

“Miles F. Egbers

Notary Public in and for the State of Idaho, residing at Coeur d’Alene, Idaho; My commission expires on Feby. 7th, 1932.”

It will be observed that the above exhibit was signed September 1, 1930. Exhibit 50 was signed October 24, 1930, and Exhibit 52 was signed November 8, 1930, the last two being set out in

Tucker v. Brown, supra.

All of these exhibits were considered by this court in reviewing the first trial. The contents of Exhibit 12 relate to a loan, as do the contents of Exhibit 52, and therefore add nothing to the contention that money was loaned by Mrs. Smith to Brown. We considered these alleged facts in the prior opinion, and there held adversely to appellant’s contention that the money turned over to Brown was a loan. In speaking of the Smith-Brown performances, we stated:

“As a result of the transactions mentioned, it appears that Mrs. Smith had turned over to Mr. Brown all her

*781

money, securities, and property of every description.”

Tucker v. Brown, supra.

We hold that the question as to whether Mrs. Smith loaned money to Brown has been decided contrary to appellant’s contention and cannot be again litigated.

In any event, appellant would not be in a position to complain if it should be admitted that money was loaned Brown by Mrs. Smith. Brown secured over one and one-half million dollars in money and bonds from Mrs. Smith, a great portion of which he used for various purposes which have not been identified. Brown did not keep a set of account books. All money he used was held in his own name, and if he did have any money of his own or money that was borrowed from Mrs. Smith, that money was commingled with the trust funds of which he made no accounting.

In such cases it is presumed that expenditures made by a trustee were from his own funds, and that the balance remaining is trust property.

“If the trustee mingles money belonging to the trust estate with his own funds, and then pays out some of the fund, it will be presumed that he did that which was lawful, and therefore made his payments out of his own portion of the fund. [Citing cases.]”

People’s Nat. Bank v. Moore,

25 F. (2d) 599, 601.

Accord:

Republic Supply Co. v. Richfield Oil Co.,

79 F. (2d) 375;

Jarvis v. Hammons,

32 Ariz. 444 , 259 Pac. 886 ;

Brown v. Hammons,

32 Ariz. 456 , 259 Pac. 890 ;

Hammons v. National Surety Co.,

36 Ariz. 459 , 287 Pac. 292 ;

Live Oak Cemetery Ass’n v. Adamson,

106 Cal. App. 783 , 288 Pac. 29 ;:

Blackhurst v. Westerfeld,

111 Cal. App. 548 , 295 Pac. 863 ;

Glidden v. Gutelius,

96 Fla. 834 , 119 So. 140 , 120 So. 1 ;

People ex rel. v. People’s Bank & Trust Co.,

353 Ill. 479 , 187 N. E. 522 , 89 A. L. R. 1328;

General Motors Acceptance Corp. v. Larson,

110 N. J. Eq. 305, 159 Atl. 819 .

Appellant asserts that the final decree of the trial court holding the real property held in Brown’s name to be the property of the Smith-Brown trust was erroneous, because “there was no written trust instrument of any

*782

nature signed by Brown,” and respondent sought- to establish a trust in those properties by parol evidence. Appellant states that there is no distinction “between the establishment of a trust in real estate and tracing trust funds into real estate.”

The following cases and authorities are among those cited to uphold appellant’s argument:

Farrell v. Mentzer,

102 Wash. 629 , 174 Pac. 482 ;

In re Weir’s Estate,

134 Wash. 560 , 236 Pac. 285 ;

Pacheco v. Mello,

139 Wash. 566 , 247 Pac. 927 ;

Zioncheck v. Nadeau,

196 Wash. 33 , 81 P. (2d) 811 ;

In re Swartwood and Welcher Estates,

198 Wash. 557 , 89 P. (2d) 203 .

The cases correctly hold that an express trust in real estate cannot be established by parol evidence. However, none of them hold that trust funds cannot be traced into real estate by parol evidence. The question relative to the existence of an express trust is not before us. This court decided that question in

Tucker v. Brown, supra.

We do have before us the controversy relative to the tracing of trust funds into real property. What the trial court did was to allow a tracing of the trust funds into the real estate. In following trust funds, a court of equity will, so far as possible, aid the

cestui que trust

or his representative by indulging every reasonable presumption in his favor, and give consideration to every reasonable doubt. But, with all this advantage, the object of the pursuit must, in the end, in order to be charged upon or taken out of the fund, property, or estate in which it has been lodged, be definitely located therein.

The general rule is that the claimant of a trust must, in cases where the rights of creditors are affected, trace the fund by evidence that is clear and satisfactory

(Rugger v. Hammond,

95 Wash. 85 , 163 Pac. 408 ) and that, if he fails so to trace and identify the fund, his claim is that of a general creditor.

Davis v. Shepard,

135 Wash. 124 , 237 Pac. 21 , 41 A. L. R. 163;

In re Jordan’s Estate,

171 Wash. 624 , 18 P. (2d) 855 .

However, after the trust is proven and property and funds identified, the burden is on the trustee to account in

*783

a satisfactory manner for the property and funds. 65 C. J. 904, Trusts, § 799. The rule last mentioned applies with full force to those funds and securities named in the order on the remittitur set out in this opinion.

It is true that most of the evidence relative to the ownership of the property held by Brown and later by his estate was shown by circumstantial evidence. However, circumstantial evidence may be used to establish any fact. It is not only sufficient, but in many cases, of which this is an example, it is the only proof which can be adduced.

Abrams v. Seattle & Montana R. Co.,

27 Wash. 507 , 68 Pac. 78 ;

Hinckley v. Shell Co. of California,

127 Wash. 630 , 221 Pac. 594 ;

Nelson v. West Coast Dairy Co.,

5 Wn. (2d) 284, 105 P. (2d) 76 , 130 A. L. R. 606;

McFarland v. Commercial Boiler Works,

10 Wn. (2d) 81, 116 P. (2d) 288 ;

Vitalich v. Port of Seattle, ante

p. 182, 146 P. (2d) 819 . Circumstantial evidence is often the most satisfactory in the ascertainment of any fact and is quite as conclusive in its convincing power as direct evidence.

State v. Ito,

129 Wash. 402 , 225 Pac. 63 ;

State v. Bolen,

142 Wash. 653, 254 . Pac. 445.

In

Redfield v. Johnson,

159 Wash. 39 , 291 Pac. 1077 it appeared that a trustee of funds used those funds to purchase real property. The question before this court was whether the trust funds could be followed into the real property. In passing upon the question, the court stated:

“And no rule is more fully recognized than the rule that a

cestui que trust

may follow trust funds wrongfully diverted through all its changes, and recover from any property into which it has gone.”

“So long as the trust property can be traced and followed into other property into which it has been converted, it remains subject to the trust. The product or substitute has the nature of the original imparted to it.” 4 Pomeroy’s Equity Jurisprudence (5th ed.) 148, § 1058c.

See the same authority, p. 102, § 1048,

supra; Erie County v. Lamberton,

297 Pa. 406 , 147 Atl. 86 ;

Rednor v. First-Mechanics Nat. Bank of Trenton,

131 N. J. Eq. 141, 24 A.

*784

(2d) 850;

Wendell P. Colton Co. v. New York & Cuba Mail S. S. Co.,

27 F. (2d) 657; 65 C. J. 963, Trusts, § 888.

Trust funds or property do not lose their character by conversion into other funds, property, or investments. The basis of the claim is in the right of property. The right of property remains in the

cestui que trust

regardless of the nature or character of the funds or property into which the trust funds have been converted. In tracing trust property,

“The court proceeds on the principle that the title has not been affected; that the true owner of the fund traced to the possession of another has the right to have it restored, not as a debt due and owing, but because it is his property wrongfully withheld from him; the equity, springing as it does from the right to trace the funds as property, ...”

Northwest Lbr. Co. v. Scandinavian-American Bank,

132 Wash. 449 , 231 Pac. 951 .

“The right to follow trust property in equity being based on the theory that a right of property still exists in the cestui que trust, the equitable right of recovery or reclamation generally does not exist, or no trust or lien can be enforced, if the trust property cannot be identified, or traced into some specific fund or thing, which is sought to be charged, and into which the original trust property has gone in some form or other. The degree of identification required in an action between cestui and trustee is far less than that required where the rights of third persons are involved.” 65 C. J. 965, Trusts, § 889.

It would be a dangerous precedent to lay down as law that a trustee could take trust funds, invest them in real property, and thereby defeat the trust. Courts of equity will not tolerate under any circumstances that a trustee shall so procure a profit or advantage through the acquirement of an interest in conflict with his fidelity as a trustee.

The court’s action in allowing the funds to be traced into the real property by oral proof was entirely proper.

Throughout the trial of this case, the respondent was faced with many difficult problems, chief of which was the ascertainment of the location of the funds and

*785

securities which Mrs. Smith had turned over to Brown. Prior to the first trial, his counsel spent a number of weeks inquiring at banks and trust companies in this state and in Vancouver, British Columbia. Mr. Froude traveled to Montreal and Quebec, where he interviewed nearly one hundred fifty people. He then went to New York and made some investigation at banks and called on J. G. White & Co., bond salesmen. From New York he journeyed to Washington, D. C., and interviewed officials of the internal revenue department. He then visited banks, trust companies, and individuals in Chicago, Des Moines, Kansas City, Denver, Salt Lake, Sacramento, and San Francisco. In several of the places just mentioned, he received information concerning Brown’s transactions in the selling of bonds and the purchase of stock for his farms in Yakima county and in Virginia.

After the opinion in

Tucker v. Brown, supra,

was announced, respondent made further and more extensive investigations. From those investigations, respondent’s counsel were able to piece together many of the activities of Brown, with the result that the stipulated evidence of one hundred eight witnesses was introduced. The witnesses produced records, and identified Brown’s deposits in a large number of banks and trust companies, the sale of thousands of dollars worth of bonds which belonged to Mrs. Smith, and the purchase by him of the real property in this state and in Virginia and of personal property here and in eastern states.

The evidence also brought to light the bank accounts of Mrs. Smith. Brown had accounts in ten different banks, and had business relations with many others. His transactions with the National Bank of Commerce of Seattle were illustrative of his method of doing business. During the years 1931 to 1933, Brown left with the president of that bank numerous drafts and checks, drawn principally upon eastern and middle western banks, amounting to over $18,000; and during the same period of time he purchased cashiers’ checks in the approximate amount of $40,790. The drafts and checks were expended at Brown’s direction

*786

for various purposes. Most of the cashiers’ checks were split into two or more cashiers’ checks, and these in turn were used by Brown to pay for his numerous investments.

He operated a store and woolen mills at Kirkland under the assumed names of National Supply Company and National Woolen Mills.

Mr. Edward Chabot, a certified public accountant, assembled the records produced by the many witnesses, and summarized them in some nineteen different schedules, which of course are too voluminous to recite in this opinion. A study of the record, aided by the schedules, proves that Brown received funds from Mrs. Smith which were deposited in his bank accounts, and that he sold her bonds and placed the proceeds thereof in these banks.

Most of the bonds which he sold were traced by numbers which corresponded with the numbers on the bonds owned by Mrs. Smith. The record shows that he deposited in his various accounts checks from Mrs. Smith in the total sum of over $360,000. He made many cash deposits in banks, and paid cash for numerous cashiers’ checks. When he purchased the land in Virginia, one payment was evidenced by the delivery to the seller of a ten-thousand-dollar bill issued by the United States.

Respondent was able to identify many of the funds used to purchase the real and personal property secured by Brown and inventoried in the Brown estate and the Fred Brown guardianship as those of Mrs. Smith. An example of the tracing is shown by the following excerpt from the schedule of bond transactions, respondent’s Exhibit 533:

“5/27/32 Sale of 3V2% Liberty bonds to J. G. White & Co. (Ex. 118) 40,000.00 40,780.00

Check to George Vanderveer, Seattle (Ex. 130) ...... $2,500.00

Check to Whittlock, Indian Agent, Yakima (Ex. 131) as follows:

Applied on SE ¼ NW ¼ and NE ¼ SW ¼ 26-11-17 (Items 6 and 7 R. B. Brown estate inventory) ..................................... $6,345.90

Applied on NE ¼ NW ¼ 19-11-18 (Item 15 R. B. Brown inventory) ................ 2,716.30

Excess payment (Stip. 25)......................... 1.80

$9,064.00

*787

Check to Leigh Millikin and endorsed on back ‘SE

Vi

SW

Vi

10, and NE

Vi

NW

Vi

15-11-18’ (Items 3 and 4 oí Fred Brown Guardianship) (Ex. 132) ............ $5,000.00

Check to Mr. Reed, endorsed ‘SW

¼

NW

¼

17-11-18’ (Ex. 133) (Item 13, R. B. Brown estate inventory) (Stip. 14) ........................... 3,000.00

Traveler’s checks to Brown (Ex. 135) .............. 2,500.00

Check to Schwabacher Hardware Co. (Ex. 136) (Stip. 45) ............................ 3,905.98

Check to Nettleton Lumber Company (Stip. 70)...... 2,767.46

Unknown ........................................ 1,042.56

$40,780.00”

When Brown became acquainted with Mrs. Smith in the latter part of the year 1928, he had no financial resources. The records in the office of the county clerk of Yakima county showed judgments against him aggregating over one hundred thousand dollars. His income tax return dated March 13, 1929, for the calendar year 1928, states:

“Did not make my expenses in cash. Made some trades but trades would not make up for losses I have had on land for the last few years.”

Another exhibit, a petition filed by Brown and his wife with the Federal revenue department, shows that they were insolvent.

At the time he was negotiating for the purchase of the apartment hotels in Seattle during 1928, he told Mr. A. C. Schellenberger that “he [Brown] was broke and that unless he got this deal through with Marcus Daly, it would be ‘just too bad,’ ” and that he was going after Mrs. Smith’s fortune. Brown told several witnesses that he was looking after Mrs. Smith’s property.

At the time Mrs. Brown was appointed administratrix of her husband’s estate, she said that the estate was of little value, and in 1940 appellant alleged that “from and after July, 1928, the said Reese B. Brown was wholly insolvent.”

February 4, 1934, Mr. Bonsted received from the Yakima Abstract & Title Company a list of all real property in Yakima county standing in the name of R. B. Brown, Sadie Brown, and Fred Brown. That list showed that all of the

*788

property was deeded to Brown subsequent to November 20, 1929.

In passing upon this phase of the case, the trial court said:

“In fact, there is not any real or personal property inventoried in this estate but what was acquired by Brown after he began handling Mrs. Smith’s money and property as her trustee.”

Appellant has argued that insolvency does not prove that a man is without property. Such statement is true, of course, but no property belonging to Brown was ever brought to light in this litigation. Again we quote the trial court:

“It is unquestioned here that the trust company is successor trustee and, as a successor trustee, it has a duty to perform; and that duty, once a trust relationship is established, is for the successor trustee to proceed to determine just what is trust property and to account therefor. Now, the burden being on the plaintiff in this case to establish what property is trust property, I do not want to be understood in what I subsequently say that this burden shifts at any time, but there is or should be some effort upon the part of the trust company, if they are able to show in any respect that Brown had any property that belonged to him, to come forward with the proof; in other words, the trust company as successor has a duty to perform, but, if there was the slightest bit of property that belonged to Reese Brown, I feel that it was their duty to let us know about it and not merely sit still and say, ‘Well, you prove it.’ . . . Now, that is a significant fact to me, that it would be decidedly easy or should be — perhaps not with a man of Reese Brown’s habits of holding and disposing of property, maybe it wasn’t easy; but somewhere, somehow, there should have been some kind of a record that said, ‘No, Mr. Plaintiff, you are wrong about this; Mr. Brown owned this and this and this prior to the time this trust relationship was established.’ Now, that is an added circumstance to the court’s conclusion, and which I do find in this case, that all of this money that is claimed by the plaintiff, these two

items I

have heretofore mentioned, the $545,000 and the $485,000, and all these bonds, as well, were turned over by Mrs. Smith to Brown in trust, coupled with the fact that nobody could ever tell us where Reese Brown had any

*789

thing prior to the time he started throwing Mrs. Smith’s money around and buying all of this property. So my conclusion is that he did get it, and we have traced enough of it to satisfy most anyone, except Mrs. Brown, Fred Brown, and some of Brown’s creditors, perhaps, that he had nothing before and that he got it all from her.”

The factual situation present in the case at bar is in some respects quite similar to the facts related in

Mychel Co. v. Lashua,

124 Wash. 163 , 213 Pac. 917 . In that case, one Gardiner, who held mining claims in trust for another, sold them for $10,000. Gardiner died, and $8,160 was found in a San Francisco bank. The trial court found that the fund in the bank was the proceeds of the sale of the mining claim. In passing upon the sufficiency of the evidence to sustain the judgment of the trial court, we stated:

“The testimony shows that Gardiner was in financial difficulties to the extent that even his life insurance had been hypothecated; that he had made a contract for the sale of these claims for the sum of $10,000; that the deed showed that consideration; that the appellant, about the time the deed was made, deposited in the bank in San Francisco, far removed from the place of business of Gardiner, which was in Everett, in this state, and a bank in which he had never done business before, over $8,000, which was a large sum of money for Gardiner to be handling; that no other deposits had been made thereafter; that no withdrawals had been made, and that Gardiner had no other source of income from which this amount could have been realized. The trial court held that, under these facts and circumstances, the respondent had made out a

prima facie

case that this sum of money was the proceeds of the sale of the mining property and should be impressed with the trust which had been impressed upon the mining claims. The appellant introduced no evidence to overcome this

prima facie

case, and we are satisfied that the trial court was correct in thereupon entering the decree from which this appeal has been taken, and its action is therefore affirmed.”

As we view the record, the court was entirely correct in its conclusions.

The evidence, direct and circumstantial, proved beyond any doubt whatever that all of the property of every kind

*790

and nature which was handled by Brown subsequent to the commencement of his business relations with Mrs. Smith in 1928 belonged to Mrs. Smith. We are equally well satisfied that all the assets which came into the possession of Mrs. Brown, Fred Brown, and appellant belonged to the Smith-Brown trust. The court’s decree which determined that the property held by the Browns and appellant was that of the Smith-Brown trust will be affirmed.

Appellant urges error on the part of the trial court in considering oral statements claimed to have been made by Mrs. Smith concerning gifts of property made to Brown to be held in trust for her. In the brief, we find the following statement:

“Even if it were true that Mrs. Smith had told a hundred people that she had given her property to Brown to hold in trust, neither she nor her estate would have any right to sue Brown or his estate and predicate the action upon

her own oral

statements.”

In support of these contentions we have cited to us many decisions,

including Allen v. Dillard,

15 Wn. (2d) 35, 129 P. (2d) 813 , and

Doernbecher v. Mutual Life Ins. Co.,

16 Wn. (2d) 64, 132 P. (2d) 751 . These cases state the proper rule to the effect that hearsay testimony and the repetition of self-serving declarations on the part of one since deceased, are inadmissible. Again, we must decline to discuss the question, for the reason that we have decided it in

Tucker v. Brown, supra.

Aside from that fact, we are satisfied that other evidence contained in the record proves conclusively that Mrs. Smith turned over all of her assets to Brown to be held in trust for her. ^

The next question for consideration involves what is known as the Seattle tidelands property. The evidence relative to this transaction is quite definite. February 15, 1929, Mrs. Smith gave to C. J. Sims of Seattle a check for $30,000 which was used to purchase the property. Mr. Sims took title in his own name, thereafter transferring it to Mrs. Smith, who in turn deeded it to Brown.

February 5, 1940, appellant filed a petition in the Brown estate for instructions relative to the disposition of the

*791

tidelands property. A hearing was had on the petition, and the court entered an order directing the transfer of the property to respondent, reserving, however, without prejudice, the rights and contentions of all the parties with reference thereto. After the property was conveyed to respondent, he sold it for $11,632.

Appellant asserts that the tidelands property was not and never has been trust property, and that it is entitled to credit for the sale price as against respondent. The basis of the contention is the statement made by Mrs. Smith as contained in exhibit 12, already set out in this opinion. We have just decided that all of the property held by Brown and coming into the possession of appellant was trust property. That holding had reference to the tidelands property as well as to all other property. In this connection we again call attention to our holding in

Tucker v. Brown, supra,

in which it was said:

“As a result of the transactions mentioned, it appears that Mrs. Smith had turned over to Mr. Brown all her money, securities, and property of every description.”

The trial court properly refused to credit appellant with the sale price of the tidelands property.

Appellant presses upon us error of the trial court in not allowing credit for $41,696.36 paid by it to George F. Vanderveer and Samuel B. Bassett in satisfaction of a judgment held by them against Brown. The history surrounding the services of attorneys Vanderveer and Bassett for which the judgment was rendered may be summarized as follows:

During 1929, Brown was having some difficulty with Federal tax authorities relative to his income tax, and brought an action before the United States board of tax appeals (now the tax court) to have his tax redetermined. During the following year, the collector of internal revenue levied an assessment against Mrs. Smith for a deficiency tax aggregating several thousand dollars. She attempted to have the board of tax appeals review the action of the collector and in this action was represented by Mr. J.

*792

Marvin Haynes. Brown talked to Mr. Vanderveer about his and Mrs. Smith’s appeals. However, Mr. Vanderveer did not represent Mrs. Smith before the appeal board, because he did not have a power of attorney as required by the Federal body. Mrs. Smith had been dead for more than one year prior to the time he started to render these services in the tax appeal case. He appeared for Brown and earned the fees for which the judgment was rendered against Brown.

The action was begun in King county, and thereafter judgment was rendered against Brown and wife on January 5, 1934. January 23, 1934, an abstract of the judgment was filed in Yakima county and became a lien against any real property owned by Brown. December 7, 1934, appellant presented a petition to the superior court of Yakima county, asking permission to dispose of the woolen mill and store in King county, giving as reasons therefor:

“That said woolen mill had not been operated by the decedent for approximately three years prior to his death, during all of which time, it had remained idle. That said property is deteriorating in value, and is in need of some repair. That said decedent, in his lifetime, had, and your petitioner, since its appointment, has maintained day and night watchmen to guard said property. That the insurance rates on said property are excessive; that the property is non-income-producing and that it is costing said estate approximately $400.00 per month to care for and' maintain the same. That it will be for the advantage and benefit and best interests of the estate and of those interested therein that said real estate and the machinery and equipment therein installed, and the whole thereof, be sold, for the reasons aforesaid, and the proceeds applied to the payment of the judgment referred to hereinafter.-

“That the said George F. Vanderveer and Samuel B. Bassett, judgment creditors as aforesaid, threaten to proceed with a sale of said real estate, or portions thereof, to satisfy said judgment.

“That, in the opinion of your petitioner, it is for the best interest and advantage of said estate and of all persons interested therein that your petitioner be authorized and empowered to pay the aforesaid judgment of the said George F. Vanderveer and Samuel B. Bassett as a pre

*793

ferred claim, said payment to be made out of any funds belonging to said estate, and that, for the purpose of acquiring the necessary funds with which to pay said judgment, your petitioner be authorized and empowered to sell, at private sale, the above mentioned woolen mill and the machinery and equipment therein installed, . .

The record shows that respondent was notified by mail of the hearing upon the petition. The order authorizing the sale was entered December 18, 1934, and provided,

inter alia:

“It is Further Ordered that said Guaranty Trust Company be and it is hereby authorized and empowered to apply the proceeds of said sales, or either of them, as well as any funds in its possession, irrespective of the source thereof, toward the payment and satisfaction of the above mentioned judgment of said George F. Vanderveer and Samuel B. Bassett; . .

The order confirming the sale of the woolen mill was entered March 26, 1935, and the order confirming the sale of the Kirkland store property was entered March 29, 1935. The orders did not indicate the application of the proceeds of sale. A stipulation was signed by counsel for appellant and respondent which read:

“That Wilmon Tucker, as administrator with the will annexed of the Estate of Sarah E. Smith, deceased, has this day released and relieved the title to the lands and premises hereinafter described from the effect of the above entitled suit; to-wit: [property description]

“II. That the release of the fee title to said property from the effect of this litigation shall in no wise be held to prejudice any claim or demand that the plaintiff may have against the defendants, or any of them, and the purchaser shall not be required to see to the application of the proceeds of said sale, it being the intention of both parties that the lands should be sold at the present time to prevent waste to the estate of either Reese B. Brown, deceased, or Sarah E. Smith, deceased, whichever shall ultimately be entitled to receive the same.

“Dated this 16th day of April, 1935.”

*794

On the same day, respondent signed a release which read:

“Know all Men by These Presents:

“That I, the undersigned, as Administrator with the Will annexed of the estate of Sarah E. Smith, deceased, for valuable consideration and in pursuance of the stipulation bearing even date herewith between myself and the Guaranty Trust Company, a corporation, as Administrator de bonis non with the Will annexed of the Estate of Reese B. Brown, deceased, have released and by these presents do hereby release the following described real property, situate in the County of King, State of Washington, and more particularly described as follows, to-wit: [property description] of and from the claim or lien and all right, either legal or equitable, of the said Wilmon Tucker, as administrator aforesaid, in and to said described real property and do hereby Convey and Quit-Claim all my right, title estate and interest therein and thereto unto said Guaranty Trust Company, a corporation of Yakima, Washington, as administrator aforesaid, and to its successors and assigns forever.”

December 15, 1937, appellant filed its account current and report as administrator with the will annexed. In speaking of the judgment held by Vanderveer & Bassett, we find the following statement in the report:

“That at the time of the appointment of Guaranty Trust Company as administrator with the will annexed as aforesaid, the above mentioned Vanderveer & Bassett had a lien upon all of the real property belonging to the estate of said decedent by virtue of their aforesaid judgment, and shortly thereafter issued special execution thereon and threatened to sell said real property. That for the purpose of avoiding the sale of said property at forced sale, the said administrator with the will annexed petitioned the court for authority to sell certain real property situate in the county of King, state of Washington, together with any and all personal property belonging to said estate, for the purpose of using the proceeds of said sale toward the satisfaction and discharge of the aforesaid judgment in favor of said Vanderveer & Bassett. That the above entitled court upon the hearing of said petition granted an order of sale of certain real property, situate in the county of King, together with personal property, whereupon said administrator proceeded with the sale of said real property and

*795

certain personal property, and applied the proceeds thereof to the satisfaction and discharge of the aforesaid judgment of Vanderveer & Bassett, to the end that said judgment is now fully paid and satisfied and discharged of record.”

The payments were shown to have been made February 14, 1935, $5,000; March 1, 1935, $25,000; April 27, 1935, $11,696.36.

Respondent made the following appearance:

“ . . . herewith appear specially (and not generally) with reference to notice of hearing on report and account current and petition herein received by registered mail by the undersigned attorneys, and without taking specific exceptions or objections to any of the items of said account or any of the items referred to in said report and petition, or in any other interim account or report or petition filed or which may be filed herein, but expressly reserving the right to take exception to or objection to any such items upon the hearing of the final account and report herein, . . .”

January 10, 1938, the court commissioner entered an order approving the account current and report of the administrator. Among other things, the order recited: “That said account current and report be, and the same is hereby, in all things ratified, approved and confirmed; . . .”

Appellant bases its contention that it is not personally liable for payment of the judgment upon the following grounds: (1) That the attorneys’ fees for which Vander-veer & Bassett brought their action were proper expenses of the trust; (2) that the judgment was not paid with trust funds, for the reason that the Kirkland property did not belong to the trust estate; (3) that the payment was agreed to by respondent; (4) that the appellant was not liable for obeying the order of the court; (5) that there was no proof of knowledge on the part of appellant; (6) that the court approved the expenditures upon the hearing of the account which reported payment of the judgment.

Under its first assignment, appellant argues that:

“If as the trial court held, Brown had no property and the same was all trust property of Mrs. Smith, manifestly

*796

the legal services rendered were for the said trust and for the cestui Mrs. Smith.”

The conclusion sought by appellant does not follow from the facts. There is no evidence in this case that the acts of Brown in failing to pay his taxes were in any way chargeable to Mrs. Smith or were connected with the administration of the trust. It is well settled, as stated by counsel for appellant, that a trustee has the right and, at times it is his duty, to employ counsel to perform legal services for the trust. 65 C. J. 718, Trusts, § 583. However, the litigation was Brown’s, not Mrs. Smith’s, and the legal services were for the sole purpose of keeping Brown out of further trouble and reducing his tax. In this connection, the trial court said:

“Now, Mr. Vanderveer wasn’t entitled to any judgment against Mrs. Smith. She was dead. What he had a right to do was to put in a claim against her estate, if he had any rights in the matter at all. That he did not do.”

“Where a deed to a debtor conveys to him only a naked legal title, as a trustee for others, he takes under it no interest that can be seized under execution or attachment, nor can a judgment creditor have his claim satisfied out of property held in trust for another, no matter how completely his debtor may have exercised apparent ownership over it, unless it was on the faith of such ownership that the credit was given.” 26 R. C. L. 1261, Trusts, § 109.

There was no evidence in this case that credit was given to Brown in the belief that he owned the property in his possession.

The general rule is that an administrator is a trustee of the estate funds. He is bound by the statute, Rem. Rev. Stat., § 1484 [P. C. § 9835], relative to the filing of claims, and cannot waive, as against the rights of heirs or creditors, any requirement of the statute.

Ward v. Magaha,

71 Wash. 679 , 129 Pac. 395 ;

Seattle Nat. Bank v. Dickinson,

72 Wash. 403 , 130 Pac. 372 ;

Walters v. Christensen, 191

Wash. 602, 71 P. (2d) 664 .

We hold that the services rendered were neither for Mrs. Smith nor for the trust and were therefore not charge

*797

able to the trust estate, and in any event could not be allowed as against the Smith estate because no claim had been filed in that estate. It is not necessary to consider the question of ownership of the Kirkland property, because we have held that all of the property in Brown’s name belonged to the Smith-Brown trust.

Was the payment of the judgment agreed to by respondent? It is quite true that appellant petitioned the court for authority to sell the Kirkland property and apply the proceeds to the satisfaction of the judgment; that respondent was served with notice; that he failed to appear at the hearing upon the petition; that the court granted the petition and ordered the property sold and the proceeds of the sale applied to the satisfaction of the judgment. It is equally true that a claimant having a claim against an estate with notice cannot question a court order after having had proper notice.

Appellant’s representative knew that respondent was acting in a fiduciary capacity, as administrator of the estate of Mrs. Smith, and, as such, could not without permission of the superior court for King county, and after the claim had been filed and approved in the Smith estate proceeding, allow any of the assets of the Smith estate to be applied on a judgment against Brown. Respondent had permission from the King county court to agree to the sale of the property in order to preserve its value, but he did not have permission or authority to allow the proceeds of the sale to be applied to the payment of any obligation. Respondent, being unable to consent to the application of the proceeds, was not bound by the order.

But it is said that respondent consented to the payment of the judgment by the signing of the release or quitclaim deed. The fact of signing the deed was not sufficient to sustain the charge of consent by agreement, for the reason that the deed or release must be construed in connection with the stipulation of the parties signed on the same day. In giving total effect to the deed and stipulation, we must conclude that the deed or release did in no way affect any

*798

claim or demand that respondent had against appellant as successor trustee.

Appellant urges that it was an innocent holder of the trust property in that it had no knowledge of the existence of the trust or that the Kirkland property belonged to the trust estate. In support of its position, its counsel cite Restatement of Trusts, §§ 284, 296; 65 C. J. 988, Trusts, § 911; 4 Bogert on Trusts 2544, § 881; and 2 Scott on Trusts 1573, § 284. These authorities lay down the well-established rule that a purchaser who is ignorant of or has no reason to know of the trust, and who acquires the property for value, secures a good title which cannot be attacked by the

cestui que trust.

On the other hand, it is well established that a purchaser with notice takes subject to the trust.

“A purchaser is chargeable with constructive notice of the trust, and of the trustee’s breach, where he has knowledge of facts and circumstances, existing at the time of the purchase, such as would, or ought to, put a man of ordinary prudence upon inquiry and require him to make an investigation which would disclose the true title and authority of the trustee, but he fails to make such an investigation. However, if there is not a fraudulent or willful failure to ascertain the facts, a purchaser is not chargeable with constructive notice where he has no knowledge of facts sufficient to put a prudent man upon inquiry as to the existence of the trust; and he is chargeable with such notice only as to facts belonging to the subject of the inquiry and to the extent that the existence and nature of the trust would be discovered by the inquiry which he is put to by the facts he knows to exist at the time of the purchase. In making inquiry, it is ordinarily not sufficient for the purchaser to rely upon the statements of the trustee, but he must inquire of some one having no motive to misrepresent the facts.” 65 C. J. 991, 992, Trusts, § 917.

It must be pointed out, however, that appellant was not a purchaser for value. It was only a stakeholder, holding possession of the assets for the use and benefit of the one entitled to receive them, the administrator of the Smith estate, and therefore was not entitled to the benefit of the rule of law suggested by its counsel.

*799

But, if it be conceded that appellant is entitled to the benefit of the rule for which it contends, and, applying the principle of law thus stated to the particular facts shown here, the question arises as to whether the appellant can claim to be an innocent holder without notice of the properties inventoried in the Brown estate. We are unable to hold that appellant was an innocent holder without notice.

Actual knowledge is not necessary. It is only required that a party be shown to have actual notice of the trust; and actual notice, as used in this relationship, does not necessarily mean actual notice of the fact itself, but simply notice of facts which would, or ought to, put him upon inquiry in reference to it. He is bound to follow any path which circumstances point to as a way to ascertain knowledge of the facts.

In the case of

Knapp v. Bailey,

79 Maine 195 , 9 Atl. 122 , 1 Am. St. 295, the principle is so clearly stated, and its application seems so appropriate to the case under consideration, that we quote from it as follows:

“The doctrine of actual notice implied by circumstances (actual notice in the second degree) necessarily involves the rule that a purchaser before buying should clear up the doubts which apparently hang upon the title, by making due inquiry and investigation. If a party has knowledge of such facts as would lead a fair and prudent man, using ordinary caution, to make further inquiries, and he avoids the inquiry, he is chargeable with notice of the facts which by ordinary diligence he would have ascertained. He has no right to shut his eyes against the light before him. He does a wrong not to heed the ‘signs and signals’ seen by him. It may be well concluded that he is avoiding notice of that which he in reality believes or knows. Actual notice of facts which, to the mind of a prudent man, indicate notice — is proof of notice.”

In

Wood v. Carpenter,

101 U. S. 135 , 25 L. Ed. 807 , Mr. Justice Swayne, writing the opinion of the court, quoted with approval the following from

Kennedy v. Greene,

3 Myl. & K., 722:

“ ‘Whatever is notice enough to excite attention and put the party on his guard and call for inquiry, is notice of

*800

every thing to which such inquiry might have led. When a person has sufficient information to lead him to a fact, he shall be deemed conversant of it.’ ”

Certainly, such facts as have been pointed out in this opinion in our discussion relative to the property identification and tracing of the trust funds were sufficient to put any cautious or prudent man upon inquiry. In this case, appellant had actual notice of the claim of trust, and there were sufficient definite facts known to appellant which proved or strongly indicated that the property belonged to the Smith-Brown trust.

Appellant argues that the order of the court approving the current account of December 15, 1937, after actual notice to respondent, was conclusive and binding. The reason given for this stand is that the probate court had jurisdiction, and that its order, approving the account which reported the sale of the Kirkland property and the payment of the Vanderveer-Bassett judgment, was a final judgment and could not be attacked at the hearing upon the final report. The following cases are cited as upholding the argument:

Bostock v. Brown,

198 Wash. 288 , 88 P. (2d) 445 ;

In re Rabie’s Estate,

199 Wash. 207 , 90 P. (2d) 1011 ;

In re Larson’s Estate,

200 Wash. 318 , 93 P. (2d) 431 ;

In re Brown’s Estate,

7 Wn. (2d) 717, 110 P. (2d) 867 ;

In re Robinson,

9 Wn. (2d) 525, 115 P. (2d) 734 ; and

In re Krueger’s Estate,

11 Wn. (2d) 329, 119 P. (2d) 312 .

These cases hold that the superior courts sitting in probate are courts of general jurisdiction, including all matters in probate. That interim orders made during the course of probate after notice of the hearing are final in their nature and cannot be attacked or relitigated at the hearing upon the final report. There can be no quarrel with the rules of law put forth by appellant. The only question is, Do they apply to the facts present in the case at bar?

In all cases, the facts present determine the rule of law which must be applied by the courts. In order to apply the law as announced in prior opinions, we must match the color of the facts in the case at hand against those spread

*801

out in the opinions, and, if the facts do not match, the opinions are of little aid in arriving at a conclusion.

The facts in the cited cases do not match those present in the case at bar. In the cases just mentioned, the claims were paid from estate funds, while here the judgment was paid not from estate funds, but from assets of the Smith-Brown trust. Did the probate court have jurisdiction to order the payment of the judgment from the trust funds which came into the hands of appellant? In this connection, we have in mind that the representative of Mrs. Smith’s estate made a special appearance only, and entered into the stipulation regarding the Kirkland property that

“. . . the release to such property from the effect of this litigation shall in no wise be held to prejudice any claim or demand that the plaintiff [respondent] may have against the defendant [appellant].”

Jurisdiction of a court is said to depend upon various things — for instance, upon proper service of process as provided by statute, and that the subject matter be one upon which the court is given authority by the constitution or has implied power to exercise judicial authority. Jurisdiction does not depend upon whether a judgment is correct or not, but rather upon the question of whether the court has the power to hear and determine the subject matter in controversy.

State ex rel. Meyer v. Clifford,

78 Wash. 555 , 139 Pac. 650 ; 21 C. J. S. 29, Courts, § 15.

Art. IV, § 1, of our state constitution provides:

“The judicial power of the state shall be vested in the supreme court, superior courts, justices of the peace, and such inferior courts as the legislature may provide.”

Section 6 of the same article provides: “The superior court shall have original jurisdiction ... of all matters of probate, . . . ”

Rem. Rev. Stat., § 1371 [P. C. § 9929], states:

“The superior courts in the exercise of their jurisdiction of matters of probate shall have power to probate or refuse to probate wills, appoint administrators, executors and guardians of insane and incompetent persons and minors,

*802

and administer and settle all such estates, award processes and cause to come before them all persons whom they may deem it necessary to examine, and order and cause to be issued all such writs as may be proper or necessary, and do all things proper or incident to the exercise of such jurisdiction.”

This court has in some thirty-seven cases passed upon questions involving the jurisdiction of superior courts sitting in probate. The following cases indicate the extent of the jurisdiction of our probate courts:

“In this state we have no probate court, properly speaking, as distinguished from the court that entertains jurisdiction of other matters. The court of general jurisdiction also hears and determines probate matters. Matters pertaining to probate are referred to what is called ‘probate procedure,’ as distinguished from what is denominated ‘civil’ or ‘criminal procedure.’ But when the court, sitting in a probate proceeding, discovers in a petition the statement of facts which forms the basis of a controversy, we see no reason why it may not settle the issues thereunder when an appearance has been made thereto, and then proceed to try it in a proper manner, as any other civil cause. The court may require the proceeding to be separately docketed, if, when the issues are formed, it appears to be such as should be thus docketed. Whether a citation should have issued on the strength of this petition or not, it is nevertheless true that appellant responded to the citation, and

appeared generally by demurrer to the petition,

and asked its dismissal simply on the ground that the court could not hear it as a probate proceeding. We think it was not necessary to sustain the demurrer and dismiss the proceeding on that ground. But under our liberal practice as to the form of actions the petition could be treated as in the nature of a complaint. The issues could be framed thereunder, and the cause tried without requiring another statement of the same facts under some other form or name. If it developed that it was not properly a probate proceeding, it would not be treated as such. We think the court did not err in overruling the demurrer and in refusing to dismiss the petition.” (Italics ours.)

Filley v. Murphy,

30 Wash. 1 , 70 Pac. 107 .

“The contention that the court, in rendering the decree, erroneously determined who was entitled to the property

*803

as distributee upon distribution of the estate of Elsie Ost-lund, goes only to the merits of the question then before the court, and is wholly foreign to the question of the jurisdiction of the court to determine who was entitled to the property then being distributed.

“Counsel for respondent calls our attention to § 1366 of Rem. & Bal. Code, which provides:

“ ‘When a person dies seized of lands, tenements or hereditaments, or any right thereto or entitled to any interest therein in fee or for the life of another, his title shall vest immediately in his heirs or devisees, subject to his debts, family allowance, expenses of administration and any other charges for which such real estate is liable under existing laws;’

and, also, the case of

Griffin v. Warburton,

23 Wash. 231 , 62 Pac. 765 , where it was held, under this section, that a formal decree of distribution was not necessary to vest title in the heirs or devisees of the deceased, and wherein the court said: ‘As such a decree however neither creates their title nor their right of possession to the property a distribution made without it cannot be invalid.’ This language was used in discussing the validity of a voluntary distribution of the property by the heirs among themselves. The argument of learned counsel seems to be that, since the decree of distribution does not create the title in the dis-tributees, therefore, it can have no effect as an adjudication, if perchance, the court should therein erroneously determine who the distributees are. It is true the decree does not create the title in the distributees, but it is a solemn adjudication of who acquired the title of the deceased, and if rendered upon due process of law is final and conclusive upon that question. Its very object and purpose' is to judicially determine who takes the property left by the deceased.”

In re Ostlund’s Estate,

57 Wash. 359 , 106 Pac. 1116 .

Referring to the quotation from the

Ostlund

case, it was said in

Alaska Banking & Safe Deposit Co. v. Noyes,

64 Wash. 672 , 117 Pac. 492 :

“It was the purpose of the court in that case to forever set at rest the opinion, prevailing to some extent, that a probate proceeding was something of less importance than an ordinary civil action, and that a decree formally entered could be questioned by any one although a party, where, as in that as well as in this case, it was thereafter believed

*804

to have been entered upon a mistake of fact or an erroneous conception of the law.”

“It is next insisted that the trial court was without jurisdiction to hear the controversy upon its merits, and that this court is likewise without such jurisdiction, for the reasons stated in the motion to quash the citation. But a citation in a probate proceeding is only a means of giving a party notice of the pendency of adversary proceedings,

and service thereof is waived by a voluntary appearance of such party.

While the respondent in this instance did at first appear specially and object to the jurisdiction of the court because of defects in the citation, he also, when his special appearance was overruled, demurred generally to the petition without saving his special appearance. This was a general appearance, and waived any right thereafter to claim want of jurisdiction over his person, or want of regularity in the citation.”

In re Martin’s Estate,

82 Wash. 226 , 144 Pac. 42 . (Italics ours.)

“Under the constitution, the superior court is a court of general jurisdiction. It has jurisdiction of equity cases, actions at law, and proceedings in probate. . . . The constitution does not make the superior courts probate courts. On the contrary, it makes them courts of general jurisdiction including ‘all matters of probate.’ As a court of general jurisdiction, it has the power to construe wills at the suit of proper parties.”

Bayer v. Bayer,

83 Wash. 430 , 145 Pac. 433 .

“Contrary to the contention of respondent, this is not a will contest nor a claim against the estate upon a money demand.

Perkins v. Allen,

133 Wash. 455 , 234 Pac. 25 ;

McCullough v. McCullough,

153 Wash. 625 , 280 Pac. 70 .

“In the last cited case, we held that an action to enforce specific performance of an oral agreement to make a will is in the nature of recovery of property impressed with a trust, and not a contest of the will probated; and that Rem. Rev. Stat., § 1385, barring any contest of a will six months after notice, has no application. We also held that it was not necessary to file a claim in probate under the statute of non-claim, as a condition precedent to an action against executors to enforce specific performance of an

oral

agreement to make a will.

“Contrary, also, to a contention of respondent, an action like this is as much an action in equity to enforce such a contract as if brought separately and independently in some

*805

other proceeding than the probate matter. All adversaries brought in may have complete relief. It has long been held that a superior court sitting in probate may settle issues and try the case as in any other civil cause, in this state.”

In re Krause’s Estate,

173 Wash. 1 , 21 P. (2d) 268 .

Accord:

State ex rel. Keasal v. Superior Court,

76 Wash. 291 , 136 Pac. 147 ;

Meeker v. Waddle,

83 Wash. 628 , 145 Pac. 967 ;

State ex rel. Neal v. Kauffman,

86 Wash. 172 , 149 Pac. 656 ;

In re Babcock’s Estate,

112 Wash. 556 , 192 Pac. 939 ;

In re Wren’s Estate,

163 Wash. 65 , 299 Pac. 972 ;

In re Kelley, 193

Wash. 109, 74 P. (2d) 904 ;

Golden v. McGill, 3

Wn. (2d) 708, 102 P. (2d) 219 ;

In re Ivers’ Estate,

4 Wn. (2d) 477, 104 P. (2d) 467 ;

Tacoma Sav. & Loan Ass’n v. Nadham,

14 Wn. (2d) 576, 128 P. (2d) 982 .

From these cases, we find the rule to be that the superior court sitting in probate has the power to determine all controversies relative to the properties or interest of the estate or of the heirs or creditors, whether those controversies relate to civil, equity, or strictly probate cases. Further, that anyone responding by a general appearance in obedience to a legal notice or citation to appear cannot question the jurisdiction of the probate court even though he might be entitled to wage an independent action.

The probate court has no jurisdiction to try title to real estate as between the executor of an estate and the husband of the deceased. The law is stated as follows:

“In the case at bar, the person claiming adversely to the estate was the husband of the deceased party, and it appears that this fact was thought to affect the question. We, however, do not think so. For while it is true that the probate court has jurisdiction to determine the claims to property as between those interested in the estate, this authority only goes to the extent of determining their relative interests as derived from the estate, and not to an interest claimed adversely thereto. In the case before us the husband, though interested in the estate of his deceased wife, was, so far as the claim he was attempting to assert, an entire stranger thereto.”

Stewart v. Lohr, 1

Wash. 341, 25 Pac. 457 , cited in

Christianson v. King County,

239 U. S. 356 , 60 L. Ed. 327 , 36 S. Ct. 114 .

*806

“The respondent renews here the objection which he made in the trial court that the controversy over the title to the property between the parties to this appeal could not be litigated in the probate proceeding. This objection must be sustained. This is a controversy between outside parties which in no way affects the interests of the estate itself. In

In re Gorkow’s Estate,

28 Wash. 65 , 68 Pac. 174 , a similar question was presented. In that case a legatee had contracted with a firm of attorneys that she would pay them the sum of $500 when they should obtain for her a certain legacy contained in the will of Rudolph Gorkow. By the contract, the $500 was to be paid out of the legacy when collected. In due time, the right to the legacy was established and, with the exception of $500, was paid to the legatee, who refused to recognize the rights of the attorneys whom she had employed. The attorneys filed a petition in the probate proceeding asking that the $500 be paid to them. The legatee objected to the question being litigated in that proceeding because it was a matter which in no way affected the interests of the estate. The objection was sustained, and the court, in the course of the opinion, said:

“ ‘No powers are given to the court in its probate jurisdiction to hear and determine controversies between third persons which in no way affect the interests of the estate itself. It is constituted a tribunal to guard the interests of the estate only, and its powers cannot be invoked to determine outside controversies, the result of which can in no way affect the estate, either adversely or favorably. . .'

“The rule of that case is recognized in the case of

State ex rel. Keasal v. Superior Court,

76 Wash. 291 , 136 Pac. 147 , where it is referred to and distinguished.”

In re Decker’s Estate,

105 Wash. 221 , 177 Pac. 718 .

A decree of distribution, following the terms of a void attempt to devise land not owned by the administratrix, does not create a title, and is not binding on the owner who had no personal notice of, and made no appearance in, the proceeding.

“Nor did the decree of distribution in her estate create a title.

Kempf v. Michelbach,

115 Wash. 193 , 196 Pac. 661 ;

In re Ostlund’s Estate,

57 Wash. 359 , 106 Pac. 1116 , 135 Am. St. 990. The function of a decree of distribution is to de

*807

clare the title which accrues under the law of descents, or under the provisions of a will. Here, as to the property involved in this action, upon the death of Rosannah Parr, no title or interest accrued by either of those means. Nor was George W. Parr bound or estopped by the terms and provisions of her will nor of the decree of distribution in her estate. He entered no appearance in, nor did he have any personal notice of those proceedings. The terms of a will or a decree of a court in administering an estate cannot thus deprive a third person of his property.”

Parr v. Davi-son,

146 Wash. 354 , 262 Pac. 959 .

The superior court sitting in probate has no jurisdiction to try the title to property, but the court does have power to determine the fact whether or not property in dispute belongs to an estate as an asset thereof or for the purpose of inclusion in the inventory.

“Where a person dies possessed of trust funds, such funds do not, by reason of the death of the trustee, become liable for the debts of his estate. The relation of the

cestui que trust

is not changed. The property still belongs to him. While the administrator is no doubt entitled to the possession of the trust funds, he is liable to account therefor to his principal either in his individual or representative capacity.

De Valengin’s Admrs. v. Duffy,

14 Pet. 282 . He is not bound to proceed in the execution of the trust, but must preserve the fund for those entitled thereto. 2 Woerner, American Law of Administration (2d ed.) § 321. It has been held that an inventory is not conclusive as to the decedent’s ownership of the property, either against a third person or against an executor or administrator.

Lamme v. Dodson,

4 Mont. 560 ( 2 Pac. 298 );

Anthony v. Chapman,

65 Cal. 73 ( 2 Pac. 889 );

Baker v. Brickell,

87 Cal. 329 ( 25 Pac. 489, 1067 );

Fulcher v. Mandell,

83 Ga. 715 ( 10 S. E. 582 );

Stewart’s Estate,

137 Pa. St. 175 ( 20 Atl. 554 );

White v. Shepperd,

16 Tex. 163 . If the filing of an inventory is not conclusive against the claim of an administrator to property therein contained, certainly where the administrator comes into possession of property, and refuses to inventory it upon the claim that it does not belong to the estate, but belongs to some third person or to himself, no estoppel as to the title can be pleaded simply because, as in this case, the property was received in a representative capacity.”

In re Belt’s Estate,

29 Wash. 535 , 70 Pac. 74 , 92 Am. St. 916.

*808

“If appellant is the equitable owner of land the title to which was in the deceased, he has a right to his property without regard to administration. Where land is paid for with the funds of one person and title thereto is taken in the name of another, a resulting trust in such property may be established, and if established, enforced by the person whose money is thus applied, or, after his death by his heirs.

Reese v. Murnan,

5 Wash. 373 , 31 Pac. 1027 .

“

‘Where a person dies possessed of trust funds, such funds do not, by reason of the death of the trustee, become liable for the debts of his estate. The relation of the cestui que trust is not changed. The property still belongs to him. While the administrator is no doubt entitled to the possession of the trust funds, he is liable to account therefor to his principal either in his individual or representative capacity. . . .

He is not bound to proceed in the execution of the trust, but must preserve the fund for those entitled thereto.’

In re Belt’s Estate,

29 Wash. 535 , 70 Pac. 74 , 92 Am. St. 916.

“The last cited case is also authority to the effect that the superior court, sitting in probate, had no jurisdiction to determine the- title of third parties claiming the fund; that it has jurisdiction to determine

prima facie

the fact whether or not the property belongs to the estate and is ,an asset thereof.

Such adjudication is not binding upon any person afterwards claiming the property in another forum, but is for the purpose only of determining whether the administrator shall be forced to make an inventory thereof.” Lew You Ying v. Lew Kay,

174 Wash. 83 , 24 P. (2d) 596 . (Italics ours.)

See, also,

In re Williamson,

75 Wash. 353 , 134 Pac. 1066 ;

Scott v. Stanley,

149 Wash. 29 , 270 Pac. 110 ;

Perkins v. Allen,

133 Wash. 455 , 234 Pac. 25 ;

McCullough v. McCullough,

153 Wash. 625 , 280 Pac. 70 ;

De Valengin v. Duffy,

39 U. S. (14 Pet.) 282 , 10 L. Ed. 457 ;

In re Jacobsen’s Estate,

178 Misc. 479 , 35 N. Y. S. (2d) 40;

State ex rel. Kar-renbrock v. Mississippi Valley Trust Co.,

209 Mo. 472 , 108 S. W. 97 ; 26 R. C. L. 1260, Trusts, § 109.

Speaking directly on the question of the jurisdiction of the probate court in its relation to trust estates, Judge Dunbar stated in

Smith v. Smith,

15 Wash. 239 , 46 Pac. 249 :

*809

“ . . . for there is no case which goes to the extent of holding that where the decedent was himself a trustee of the property devised, either his executor or trustee, by whatever name he might be called, or the property so held in trust, would be subject to the jurisdiction of a probate court.”

In

Moore v. Kirkman,

19 Wash. 605 , 54 Pac. 24 , it is held:

“ . . . where trustees of the property of an estate, instead of executors, have been appointed by a will, the probate court has no jurisdiction of questions involving their management of the estate, but the same are cognizable in equity.”

See, also,

Schubach v. Redelsheimer,

92 Wash. 124 , 158 Pac. 739 ;

In re Megrath’s Estate,

142 Wash. 324 , 253 Pac. 455 , 256 Pac. 503 ;

In re Krueger’s Estate,

180 Wash. 165 , 39 P. (2d) 381 ;

Jones v. Peabody,

182 Wash. 148 , 45 P. (2d) 915 , 100 A. L. R. 64.

It is true that these cases refer to those trustees named in a will. However, we are unable to ascertain any essential difference in the power of the probate court to assume jurisdiction in trust estates, regardless of how the trusts are created. In the cited cases, the trusts were created by wills. Here the trust was created by contract between the parties. In neither event does the probate court have jurisdiction of the trust estate.

The cases to which we have referred lay down the rule that trust funds in the possession of a trustee do not change their character, but remain in the ownership of the trust; that the owner has the right to the property, regardless of administration. Further, that the superior court sitting in probate has no power to determine title to the property, nor subject it to the debts or obligations of the deceased trustee, nor may the trust funds be used to pay any of the expenses of probate.

It is true that, in

In re Brown’s Estate, supra,

we held that the probate court had jurisdiction to determine whether or not the trust fund should be charged with the expense incident to the litigation and accounting in the case of

Tucker v. Brown.

In that case, however, the repre

*810

sentative

of the

Smith estate made a general appearance and contested the request of appellant, which brought him within the rule laid down in the first series of cases just cited.

In this case, the property inventoried in the Reese B. Brown estate belonged to the Smith-Brown trust, which trust constituted an outside party claiming no interest in the estate being probated. The court ordered respondent to show cause why the trust fund should not be used to pay the Vanderveer judgment. Respondent made a special appearance and objected to all of the items of the account. In so doing, he did not subject himself to the jurisdiction of the probate court, and was not bound by its order approving the interim accounts. We hold that the probate court did not-have jurisdiction to order the Kirkland property sold for the purpose of satisfying the Vanderveer-Bassett judgment; further, that it did not have jurisdiction to determine the question of the application of the proceeds of the sale at the hearing had December 15, 1937.

Appellant, Bonsted & Nichoson, and Cheney & Hutcheson take the position that the court was in error in disallowing, as a charge against the funds in the possession of appellant, certain allowances for compensation and attorneys’ fees. Inasmuch as the errors of law complained of by appellant and its counsel are almost entirely alike, we shall discuss them together.

For a complete understanding of the issues involved in the controversy over the allowance of fees, costs, and expenses, and as the basis for decision, it is necessary to relate some of the various incidents attendant upon the activities of appellant and its attorneys.

Mrs. Smith’s body was cremated in Montreal during the month of July, 1932. Her ashes, the death certificate, and certificate of cremation were delivered to Brown, who brought them to his home at Brownstown, near Yakima, where they were retained in a bureau drawer. The ashes and certificates were delivered to Mr. Bonsted, attorney for appellant, in February, 1934, by Fred Brown. During the same month, Wilmon Tucker was appointed

*811

guardian of Mrs. Smith, an incompetent person. In June of the same year, he was appointed trustee of the property of Sarah E. Smith, an absentee, and thereafter gave notice as provided by Rem. Rev. Stat., §1715-1 [P. C. § 9776]. The notice was published in several papers, including one in - Yakima county, and read as follows:

“ a

request is hereby made that any and all persons having information or knowledge concerning the said Sarah E. Smith or her whereabouts, shall advise this Court, of any and all facts relating thereto within their knowledge; such information may be disclosed either by personal interview with the Presiding Judge of the above entitled Court or the Judge presiding over the Probate Department thereof or by written communication addressed to ‘The Judge of the Probate Department of the Superior Court of King County, State of Washington, Seattle, Washington.’ ”

The information contained in the notice came to the attention of Mrs. Brown and appellant.

June 11, 1934, appellant filed a supplemental report and final account in which it was stated:

“That subsequent to the preparation and prior to the filing of said first and final account and petition for discharge, to-wit, on June 8, 1934, your petitioner was served with a copy of a summons and complaint in an action in the Superior Court of the State of Washington, for King County, entitled as follows:

“ ‘Sarah E. Smith, by Wilmon Tucker, as Guardian of the Person and Estate of Sarah E. Smith, an Incompetent Person, and as Trustee of the Property of Sarah E. Smith, an Absentee from the State of Washington,

Plaintiff,

-vs-

Sadie R. Brown, Fred R. Brown, a Minor, and Sadie R. Brown, as Guardian of the Person and Estate of Fred R. Brown, a Minor, and Guaranty Trust Co. a corporation, as Administrator of the Estate of Reese B. Brown, Deceased, and Sadie R. Brown, as Executrix of the Estate of Reese B. Brown, Deceased,

• Defendants.’

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the gist of which action is that all of the property disclosed by the inventories filed in the above entitled estate is the property of one Sarah E. Smith, and prays for a decree that said Sarah E. Smith be adjudged to be the owner of all of said property and that defendants, and each of them, be restrained and enjoined from selling, transferring, encumbering or in any way disposing of any of the property and particularly that your petitioner be restrained and enjoined from selling, transferring, encumbering or in any way disposing of any of the property coming or to come into its hands or under its control as administrator of the estate of Reese B. Brown, deceased.”

It has never been explained why the court was not notified of the fact of Mrs. Smith’s death. At the time the report was made and filed, her ashes and the certificates were in the office of counsel for appellant.

The ashes and certificates were delivered June 22,1934, at the time a hearing was being conducted on the report of appellant, to attorney Reba J. Hurn of the Spokane bar, who was representing Mrs. Brown in relation to a claim against the Brown estate. Upon receiving the articles, attorney Hurn promptly delivered them to Mr. Rummens, counsel for respondent, who, evidently much surprised by the news of Mrs. Smith’s death, stated, “I came into court with a client — I have nothing but ashes.”

In its answer to the action instituted by respondent, appellant denied the trust and claimed that Mrs. Smith gave her property to Brown. Appellant refused to cooperate when, as will be shown later in this opinion, respondent secured the surrender of all the property held by Mrs. Brown and her son, Fred. Appellant refused to cooperate at a time when respondent had an opportunity to sell the Brown ranch properties.

The two trials consumed many weeks in the superior court. The trust company’s brief on the first appeal consisted of 410 pages, and its briefs presented in this appeal are 783 pages in length. The transcript has 1688 pages. We have, in addition, 680 exhibits, many of which contain numerous items. During the trial, in their briefs, and in their arguments to this court, counsel with marked ability

*813

contested every effort made by respondent to establish, the trust and to secure an accounting after the trust had been established and an accounting ordered. In this appeal, as shown' by the numerous questions raised, appellant has attempted to relitigate most of the questions considered and decided by this court in

Tucker v. Brown, supra.

The attitude of the trust company is made manifest by the following testimony of Mr. Boyle, its trust officer, given in November, 1939:

“Q. Of course, you knew during the trial and the preparation of the case for the Supreme Court and the presentation of the case in the Supreme Court that Falknor and Bon-sted’s firm were working together on it? A. I did. Q. And that they were doing everything they could to retain the property or to defeat the Tucker claim? A. And retain the property for the Brown heirs. Q. And retain the property for the Brown heirs, and nothing that you know of was ever produced in Court by either of those attorneys that would be helpful to the Smith heirs? A. That is quite difficult to answer, Mr. Gallagher. I was not at the trial, but I assume they were out primarily to protect the Brown interests. Q. That is right, and oppose the Smith? A. And oppose the Smith, yes. Q. That is right. Of course, their activity in that regard was manifested very early in the-case, wasn’t it, in the preparation of the case? A. Certainly. Q. And followed all through the case? A. Followed clear-through to the final decree.

“Q. Now, at the present time we have a judgment which provides that Reese Brown in his lifetime received in trust for Sarah Smith a large amount of money— I hate to keep mentioning this million six hundred thousand dollars; have you taken any steps or made any investigation to determine whether or not that money has been transmuted or traced into the present assets that you now have? A. No. . . . Q. Assuming that it can be demonstrated from a mathematical certainty that every dollar’s worth of property you have got up there was paid for with the property of Mrs. Smith, would you still want to retain the management of that property, or would you want to turn it back to us? A. If it is established-Mr. Bonsted: (Interposing) I don’t think he should be called upon to answer such a question. Mr. Gallagher: I want to know what his attitude is going to be. It is very material to us what his

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attitude is going to be, the attitude of the Trust Company. They have possession of this property, and it is ours, and I want to know how long we are going to have to litigate to try to get it back, and I want his attitude, then, as a basis for another question. Mr. Bonsted: I will answer it for him, that they will hold onto the property until the estate is closed. Mr. Gallagher: Until the Reese Brown Estate is closed? Mr. Bonsted: Until the estate is closed by proper probate proceedings. Mr. Gallagher: Even though your records show that this property you are now claiming as assets of the Reese Brown Estate was actually paid for with these trust funds? Mr. Bonsted: Yes, sir. Mr. Gallagher: And you don’t intend to yield up possession of them until you have closed the Brown Estate? Mr. Bonsted: Absolutely not. Q. Do you concur in that, Mr. Boyle? A. He has answered it for me, and we will follow his advice. Q. You are going to follow his advice? A. Yes.”

Appellant has never in any of this extensive litigation attempted to serve the two parties. Its services were at all times in aid of the Reese B. Brown estate. The trial court, in a comprehensive statement, demonstrated appellant’s stand on all the issues of this case:

“The .Court: I think the difficulty with the Trust Company’s position is purely and simply this, . . . they chose to occupy inconsistent positions. . . .

“They at all times purported to act for the estate of Reese B. Brown, never did concede that there was any trust relationship ever existing, and all of the acts that they have done must be considered as having been done on behalf of the estate of Reese B. Brown. . . .

“They had at all times denied that there was a trust and it wasn’t until the Supreme Court said there was a trust that anybody would ever admit it. Now, they at all times continued to act as administrator for Mr. Brown; denied the trust. Everything that the Trust Company did was on behalf of the estate of Reese B. Brown. Now, I don’t think that statement can be controverted, . . .”

Characterizing the trial court’s decree an “outrageous judgment,” counsel for appellant Guaranty Trust Company have argued at great length the question of the al

*815

lowance of costs, fees, and expenses in the defense of the action of Tucker against Brown. They state:

“The principal question in this case is simply this: Is it to be the law of this State that an administrator must cravenly abdicate his duties as such and submit to any claims filed against the estate, without a court adjudication thereof, upon penalty of being held personally liable if he does not successfully defend the suit? Is it to be the duty of an administrator to resign whenever anyone files a claim to the inventoried property? Is it to be the brave new American doctrine that an officer of the court must either resign and flee like a coward in dereliction of his duty — or else be mulcted in damages and required to personally guarantee the ultimate correctness of his attorney’s advice? Must an administrator be an insurer of the successful outcome of any contested lawsuit which he defends?”

Counsel’s criticism of the judgment is without any foundation.

The eminent trial judge gave every attention to the numerous details of the long and tedious trial, and allowed counsel every opportunity to submit any and all evidence they desired to introduce. At the close of the hearing, he made a learned summation of the evidence and the law applicable thereto. His judgment reflected a keen knowledge of the facts presented and the equitable principles applying to those facts.

Their argument includes a statement of the situation which faced appellant when it took over the assets of the Brown estate for the purposes of administration. We mention the principal facts as contended for by appellant: It had no knowledge then and none now of any facts justifying the conclusion that any property in the possession of the Brown estate was owned by the Smith-Brown trust. Appellant’s counsel state that no one expected or reasonably would have anticipated that appellant would deliver the valuable property to respondent in response to his rejected claim until the court should adjudicate that there was no valid gift, that the action was not barred by the statute of limitations, that a valid trust existed, and that

*816

Tucker had succeeded in proving that all or a definite part of the property belonged to the trust; that appellant and its attorneys acted in entire good faith and had reasonable grounds to contest the Tucker suit. That the superior court judge trying the first case gave the matter very fair and careful consideration and, after seeing and hearing the witnesses, decided that there was a valid gift and there was not a valid trust; that appellant had every reason to believe that there was a valid gift, as shown by the exhibits 50 and 52, and that this court, in

Tucker v. Brown, supra,

did not adjudicate that any specific property was held in trust. Counsel then point out that none of the property, real or personal, inventoried in the Brown estate, had ever been owned by Mrs. Smith.

Based upon these facts and contentions and those which we will mention in describing Mr. Bonsted’s activities, counsel earnestly contend that the costs and expenses of defending the case of

Tucker v. Brown

and the fees for the attorneys conducting the defense should be allowed and paid from the funds now in the possession of appellant.

On the other hand, respondent contends that neither appellant nor its attorneys are entitled to any compensation from the trust funds. He bases his contention on the attitude and conduct of appellant throughout the extended period of this litigation in denying the trust and expending large sums of money for purposes foreign to the trust. Respondent’s attorneys state:

“The record in this case does not justify the Court’s tolerant treatment of the acts of the Guaranty Trust Company, and the allowance of generous compensation to the Trust Company, after its continued repudiation of the trust and eight years of litigation against the appellant, is wholly unwarranted. It is entitled to no sympathy. It deliberately and wilfully assumed an attitude hostile to the trust and persisted in following that attitude after repeated demands for the return of the trust property and after it had in its possession facts conclusively demonstrating that the property was appellant’s trust property. . . .

“Its entire attitude from the beginning to the end of this case can produce only one result in an unprejudiced

*817

mind, and that is, that regardless of the merits of appellant’s claim and regardless of the duties imposed upon it by law, it had determined to secure this entire estate for the benefit of itself and its attorneys in fees, and the Browns.”

The same contention is made in regard to the activities and conduct of the attorneys for appellant.

Mr. Bonsted had been acting for Brown in certain matters prior to the time of his death, and was asked by Mrs. Brown to represent her and her husband’s estate. At the time, it was not known that a will was in existence, so Mrs. Brown, represented by Mr. Bonsted, was appointed as adminis-tratrix of her husband’s estate. Counsel ascertained in a short time that Brown was occupying a ranch in Yakima county upon which there were a great number of registered cattle and horses; also that Brown had a woolen mill and a general store at Kirkland. Mr. Bonsted had searches made in the auditor’s offices of Yakima and King counties to ascertain the extent of Brown’s holdings.

Shortly after her appointment, Mrs. Brown found that she was unable to handle the business of the estate, and asked to be relieved and that the Guaranty Trust Company be appointed in her stead. The court agreed, and the company succeeded Mrs. Brown.

The properties were varied in character and location, so that it was necessary to make inventories in separate sections. This required considerable work.

Shortly after the appointment of appellant, Fred Brown delivered documents known in this litigation as exhibits 50 and 52 to attorney Bonsted. Mr. Bonsted was advised that Fred Brown had found these instruments in a secret compartment in Brown’s desk located at his home in Seattle. Feeling that the documents evidenced a gift of a large amount of property from Mrs. Smith to Brown, Mr. Bonsted began an extensive investigation to find out the extent of the funds or properties that might have been given to Brown. He made a trip to Vancouver, British Columbia, where he secured some information concerning the execution of the exhibits. After his trip to Canada,

*818

Mr. Bonsted received a letter from a man named Kresge of Kansas City who had been at Yakima at the time of Brown’s funeral and had made some statements relative to Mr. Brown’s business. Bonsted was then requested by appellant to make a trip east for the purpose of investigating the facts concerning the death of Mrs. Smith and those concerning the execution of the exhibits 50 and 52, and also for the purpose of interviewing Kresge. Bonsted then made a trip east, visiting the cities of Chicago, Montreal and Thorold, Canada, New York City, Washington, D. C., Taze-well, Virginia, Kansas City, Missouri, and Des Moines, Iowa. Shortly before he started on the trip east, Mr. Brown’s will had been discovered, in which his widow was named as one of the executors. Upon his return to Yakima, Mrs. Brown requested counsel to have the will admitted to probate. This was done, and resulted, of course, in the termination of the administration by the trust company.

During the course of the administration up to this point, ninety-six claims of creditors had been filed, the greater portion of which were acted upon by Mrs. Brown. A large number were rejected. Among the claims presented was that of respondent involving approximately $5,250,000; the claim of Lybrand, Ross Bros., and Montgomery, involving $15,000; the claim of Harry Newman, involving $90,000; the judgment of Vanderveer & Bassett, involving $41,696.36; and the claim of Rummens & Griffin of $32,000. There was also pending in King county an action by John S. Hudson for approximately $220,000. All of these claims were rejected. There were also twelve additional suits involving smaller amounts.

While Mrs. Brown was acting as executrix, she retained the firm of Poe, Falknor, Emory & Howe, who joined with appellants Bonsted & Nichoson in the defense of the cases of Tucker and of Rummens & Griffin and Harry Newman against the Brown estate.

Due to the inability of Mrs. Brown to secure a satisfactory bond, she resigned as executrix and appellant was appointed administrator

de bonis non

with the will an

*819

nexed of Brown’s estate. Thereafter the suit on the Tucker claim was commenced, and Bonsted, in conjunction with the firm of Poe, Falknor, Emory & Howe, appeared for defendants and alleged, by way of affirmative defense, that all of the property obtained by Brown from Mrs. Smith was obtained as an absolute gift.

In the fall of 1935, Mr. Bonsted made a second trip east for the purpose of taking the depositions of witnesses in Montreal in support of appellant’s affirmative defense, and, second, to work out an adjustment of the contract between the Brown estate and W. R. Moss relative to the property in Virginia. In 1936, Mr. Bonsted made another trip east. At that time, respondent took the depositions of approximately one hundred twenty witnesses scattered throughout numerous cities and states. The eastern trips occupied more than two months of time.

The first trial occurred during the months of October and November, 1936, occupying approximately five weeks. At the conclusion of taking the testimony in the superior court, it was stipulated that additional depositions would be taken at Vancouver, British Columbia, and in Los An-geles. Mr. Bonsted attended the taking of these depositions. Final argument in the superior court extended over a period of two weeks. Then an additional trial was had which occupied three weeks of time. The decision of the trial court was favorable to appellant, being reversed in

Tucker v. Brown, supra.

In the meantime, the other cases were brought on for trial. Considerable work was devoted to the preparation of the defense in the Hudson and Newman cases, and many depositions were taken in the preparation of those trials. The Hudson case was settled by stipulation for $1,100 and the Newman case for $6,500. The case brought by a man named Thomas resulted in a verdict against the estate for $900.

Mr. Bonsted ceased his connection with the estate in January, 1940, since which time Cheney & Hutcheson have

*820

appeared for the trust company. Of course, Mr. Bonsted performed many other services not mentioned in the rés-umé which we have just given. He prepared many leases for Indian lands in connection with the operation of the stock ranch, made several trips to Kirkland, and was interviewed frequently by a representative of appellant.

Mr. Cheney of the firm of Cheney & Hutcheson has, since January, 1940, represented appellant in all of its litigation with respondent and acted as counsel in the affairs of the estate. He had many consultations with respondent’s counsel relative to the case and the management of the Brown stock ranch. At one time, it was agreed that an action should be brought in the name of appellant to recover the property which stood in the names of Mrs. Brown and Fred Brown. A draft of the complaint against the Browns was prepared by Mr. Froude. Mr. Cheney then drew a complaint based upon three theories:

“One, that the property was Reese Brown’s and Sadie and Fred were merely dummies; secondly, that there was a fraudulent conveyance and that it was a gift at the time Reese Brown was not solvent in view of the amount of the claim that had been established; and, thirdly, of the successor trustee recovering trust property if any of it appeared to be such.”

The complaint was filed and served. In addition, a show cause order was prepared for an injunction and the appointment of a receiver. The Browns were represented by the firm of Poe, Falknor, Emory & Howe. The cause came on for hearing March 18, 1940. By consent in open court, the Browns’ property was turned over to the management of áppellant without the payment of rent. Later, Mr. Cheney was notified by Mr. Froude that the respondent had “practically arrived at the point of consummation between them and the Browns for a settlement.”

To their credit, on May 24, 1940, the Browns, acting on the advice of Mr. Falknor, decided to turn over the property held in their name to respondent, acting in his capacity as administrator of the Smith estate. A stipulation

*821

approved by the probate court of King county provided for the entry of a decree which provided, among other things, for the surrender of all the real and personal property held by the Browns to the Smith estate. The stipulation further provided that the Browns would also, by quitclaim deed and bills of sale, convey title to that property. The real property consisted of twenty-three tracts. The personal property was made up of leases, accounts receivable, stock and supplies on the ranch, and their interest in bank deposits, and certain described bonds. The Browns retained some items of personal property.

Appellant refused to, dismiss the case, though requested to do so by respondent’s counsel. Respondent then filed a petition for intervention and a motion to dismiss. The petition and the motion to dismiss were denied. A restraining order against the Browns had been entered and remains in force. The reason for refusal to dismiss the action was stated as follows:

“It was my position that, first, in the event the estate was insolvent we were trying to recover all of that property that had been given by Brown to his wife or children for the benefit of all of the estate of Reese Brown, expenses of administration, general claims against his estate, and otherwise; that, from my information, at least half, if not more, of the property that was being transferred by Browns to Tucker was property that under no contention could be claimed to have been trust property and that, in the event that there was any merit to the position taken by Tucker, that property was entitled to be in the estate for all purposes upon the final accounting.”

A stipulation was entered into concerning the sale of property standing in the names of Sadie and Fred Brown.

During the years 1940, 1941, and 1942, Mr. Cheney contributed a great deal of legal work in connection with sales of the various assets in the possession of appellant and in the filing of petitions for instructions from the probate court. He asked for allowance of fees as follows:

*822

“Guaranty Trust Company v. Brown............ $4500.00

Services in connection with the care of the property and sales aside from litigation .......... 2500.00

Services in connection with petitions for instructions other than the one referring to defense of Tucker case........................ 750.00

Services in connection with petitions for instructions heard several times before Judge McGuire relative to defense of Tucker suit, which was appealed to Supreme Court ................. 750.00

Investigation of charges in plaintiff’s supplemental petition in Tucker v. Brown, and briefing in connection therewith, and preparation of final account ............................... 2500.00

Trial of this case and briefing in connection therewith .................................. 2500.00

Total .................................... $13,500.00”

The activities of appellant trust company

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