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Jimenez v. Lee - 274 Or. 457, 547 P.2d 126 (1976)

Rule:

It is the duty of the trustee to keep full, accurate and orderly records of the status of the trust administration and of all acts thereunder. The general rule of law applicable to a trustee burdens him with the duty of showing that the account which he renders and the expenditures which he claims to have been made were correct, just and necessary. He is bound to keep clear and accurate accounts, and if he does not the presumptions are all against him, obscurities and doubts being resolved adversely to him. He has the burden of showing on the accounting how much principal and income he has received and from whom, how much disbursed and to whom, and what is on hand at the time.

Facts:

The daughter's paternal grandmother and a client of the father both made separate gifts for the daughter's benefit. The father invested the proceeds of both gifts in bank stock. He took title thereto as custodian for his children. The daughter brought the present complaint against her father to compel him to account for assets, which she alleged, were held by her father as trustee for her. The trial court found that the father did not hold either the savings bond or the savings account in trust for the benefit of the daughter, and that the father held the shares of the Commercial Bank stocks as custodian for the daughter under the Uniform Gift to Minors Act. On appeal, the daughter contended that the gifts for her educational needs created trusts in each instance and that the trusts survived the father’s investment of the trust assets in the Commercial Bank stock.

Issue:

  1. Did the gifts in question create trusts in each instance?
  2. Did the father breach his duty to administer the trust for the benefit of his daughter?

Answer:

1) Yes. 2) Yes.

Conclusion:

On appeal, the Supreme Court of Oregon held that the intent of the donors was enough to vest beneficial ownership in the daughter, thereby creating a trust. The father, an attorney, also demonstrated that he knew the savings bond was held in trust. The Court found that the father breached his duty to the daughter to administer the trust solely in the interest of her as beneficiary where he never provided any accounting and used some of the money for purposes other than the daughter's educational needs.

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