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Petition for rehearing denied December 8, 1931

On Petition for Rehearing

KELLY, J.

The three parties litigant herein have filed petitions for rehearing. These petitions, and the briefs supporting them, merit and have received careful consideration on the part of the court.

The plaintiff urges that her brother should be summarily removed as trustee; that a judgment should be awarded to her against her brother for her share of the deceased mother’s interest in the trust estate as well as for her own interest therein, and that this judgment should constitute a first lien upon all of the brother’s property.

The defendant, Hull, reasserts that he is entitled to the seventy shares of corporate stock in the Pacific Warehouse Company.

The defendant, Heimrich, again urges that he was authorized by the terms of his father’s will to make the loans which, in our original opinion, we held were unauthorized. Defendant Heimrich also again asks for an allowance of an attorney’s fee.

As to the removal of the defendant Heimrich we think that, first, he should have an opportunity to comply with the decree of this court by discharging the *147 judgment rendered against Mm and distributing tbe other assets of the estate as ordered. In this connection, we expressly hold that, in addition to the distribution ordered, based upon appropriate and sufficient supplemental showing in support thereof, the circuit court may require distribution of any property of the estate not referred to in the original opinion as having value.

We further hold that no restriction is to be implied by reason of which the circuit court is to be deterred or prevented, upon appropriate and sufficient supplemental showing, from requiring other persons, than plaintiff and defendants, and, particularly, the executor of the estate of Elizabeth Heimrich, deceased, to be made parties thereto, to the end that their rights and interests, if any, in said trust estate may be determined and adjudicated.

The trustee should reimburse the estate as decreed; but it would be inconsistent with the spirit of equity and fair dealing to withhold from him a reasonable opportunity to comply with the order of the court before removing him as trustee and subjecting his property to sale upon execution.

We are unable to accept the testimony of defendant Hull as sufficient to establish Ms claim to the seventy shares of corporate stock mentioned. That issue has been carefully analyzed and our conclusions are as stated in the original opinion.

The brief of defendant Heimrich, in support of his motion for rehearing, fails to convince us that there was any authority given to the trustee to make the loans for which he claims credit. He cites Ranzau v. Davis, 85 Or. 26 (165 P. 1180). There, the directions given by the settlor, when he attempted to make the gift, were oral. His acts, which the court construed to *148 speak with greater clarity than his words, afforded concrete examples of the manner in which the trustee should use the property. These acts consisted of the purchase of a home in Grants Pass for his son and his wife and also a loan to pay the hop pickers.

In that case Mr. Justice (now chief justice) Henry J. Bean, speaking for the court, says:

“It is a general rule that the disbursements that would be allowed a trustee would depend very much upon the character of the trust and the directions given by the instrument of trust. ’ ’

As the writer construes the doctrine of that case, it does not extend the principle of implied authority of a trustee to cases where there is an instrument in writing definitely and expressly stating the terms of the trust.

The trustee urges that by waiting until the expiration of the term of his trust with respect to the general property of the estate as distinguished from the railroad property, before instituting proceedings for an accounting, plaintiff lulled him into a sense of believing that his management of the trust funds met with her approval. We are unable to draw such a conclusion from the record. To us it indicates that the trustee was not influenced at all by that circumstance. The plaintiff testified that at one time her brother, the trustee, told her that the railroad property was worth a million and a half dollars. She also testified that for her to have sought to obtain from the trustees more definite and specific information as to the true condition of the estate would have caused unpleasantness, and that plaintiff believed that she had to wait until the expiration of the stated term of fifteen years before asserting any right oyer the property of the estate.

*149 Where the trustee makes an improper investment of the trust fund, in order to relieve him from liability therefor, because-of the acquiescence of the cestui que trust, such acquiescence must be with full knowledge of the facts and circumstances and with knowledge of the legal rights of the cestui que trust: 39 Cyc. 414, note 52, and cases there cited.

The circumstances of the delivery by defendant Heimrich to his sister, the plaintiff, of the certificate of stock in the lumber company and its return by plaintiff to said defendant lead us to the conclusion that at most this was but an attempt on the trustee’s part to make a distribution to plaintiff of part of the alleged but not actual assets of the estate, and that upon their true nature becoming known to plaintiff she refused to acquiesce in such attempted distribution.

We are impressed with the justice of the plea, and we hold that the trustee should have an opportunity to show that a distribution of the lumber company’s corporate stock was accepted from the trustee by his mother as a portion of her distributive share of the trust estate, if, in fact, such a distribution was so made and accepted. If such a showing is made and the court so finds, it should enter an order of payment and satisfaction pro tanto upon the judgment entered herein. To support such a proceeding, the executor of the mother’s estate should be made a party to this suit, and appropriate supplemental pleadings filed.

It is ordered that all of the petitions for rehearing be denied and that this cause be remanded for further proceedings not inconsistent with the holdings of this court as herein and in the original opinion set forth.

Petitions for rehearing denied; decree modified and affirmed, and the cause remanded with instructions.

Bean, C. J., Rand and Rossman, JJ., concur.

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