In re Rolf H. Brennemann Testamentary Trust.
John E. Brennemann et al., trustees, appellees. Kim Abbott, beneficiary, appellant,
Appeal from the County Court for Grant County: JAMES J. ORR, Judge. Affirmed.
David A. Domina, Omaha, and Jeremy R. Wells, of Domina Law Group, P.C., L.L.O., for appellant.
Neil E. Williams, Ogallala, and Nathaniel J. Mustion, of Lane & Williams, P.C., L.L.O., for appellees.
Inbody, Chief Judge, and Moore, Judge.
Syllabus by the Court
1. Trusts: Equity: Appeal and Error. Absent an equity question, an appellate court reviews trust administration matters for error appearing on the record; but where an equity question is presented, appellate review of that issue is de novo on the record.
2. Attorney Fees: Appeal and Error. On appeal, a trial court's decision awarding or denying attorney fees will be upheld absent an abuse of discretion.
3. Attorney Fees: Appeal and Error. When an attorney fee is authorized, the amount of the fee is addressed to the discretion of the trial court, whose ruling will not be disturbed on appeal in the absence of an abuse of discretion.
Inbody, Chief Judge.
[21 Neb.App. 354] I. INTRODUCTION
Kim Abbott is a beneficiary of the testamentary trust created by the last will and testament of her grandfather, Rolf H. Brennemann. Abbott sued the trustees of the trust to compel an accounting of trust assets and liabilities. Abbott's complaint was dismissed by the county court, and she has now appealed to this court.
II. STATEMENT OF FACTS
1. BACKGROUND INFORMATION
On August 18, 1976, Rolf passed away, leaving a last will and testament. Under the terms of Rolf's will, 525 shares of the " Rolf H. Brennemann Company" (the company) were to be held in the Rolf H. Brennemann Testamentary Trust; however, since Rolf's wife, Bessie Brennemann, filed for an elective share of Rolf's estate, 325 shares of the company ended up being held by the trust, which shares constituted a 42.42-percent share of the company. The primary asset of the company was an approximately 5,425-acre ranch located in Grant and Cherry Counties, Nebraska.
Pursuant to the terms of Rolf's will, all of the net income of the trust was to be paid to Bessie for the duration of her life. Upon Bessie's death, the net income of the trust was to be distributed in equal shares to Rolf's three children: Edward Brennemann, Mamie Brennemann, and Rolf William Brennemann (Rolf William). Upon the death of Rolf's last surviving child, the corpus of the trust was to be distributed to Rolf's grandchildren. Bessie died in 1998.
Rolf's will appointed Edward, Mamie, and Rolf William as trustees. If any of the originally appointed trustees, i.e., Rolf's children, were unable to serve as trustee, the oldest son of the previously nominated trustee would serve as successor trustee. Edward passed away in 1982, at which time his children became qualified beneficiaries of the trust and his oldest son, John E. Brennemann, became a trustee. Rolf William passed away on June 1, 2002, at which time his children, including Abbott, became qualified beneficiaries of the trust and his [21 Neb.App. 355] oldest son, Rolf William Brennemann, Jr. (Rolf William Jr.), became a trustee.
In 1986, the trustees filed a petition to vote company stock, alleging that the company owed significant liabilities, had never paid dividends, and was not providing income to the trust. The petition alleged that John had offered to purchase the ranch, which offer was accepted; it was only after John's offer to purchase the ranch had been accepted that Abbott, one of Rolf William's daughters, also made an offer to purchase the ranch. Thereafter, the county court authorized the trustees to vote the company stock for the sale of the ranch to John pursuant to a June 10, 1986, purchase agreement. The court determined that the price paid for the real estate was at or above fair market value and constituted the most advantageous terms for the trustees to secure.
The 1986 purchase agreement set forth that John and his wife agreed to purchase the ranch on an installment payment basis for a total purchase price of $494,021. Payment of the purchase was to be made with $16,000 at the execution of the purchase agreement; $144,000 at closing; and $334,021 to be paid in nine annual payments, with a 10-percent interest rate and a balloon payment of the unpaid principal and interest on July 1, 1996.
In 1996, an agreement was executed, extending the original purchase agreement for 10 additional years, until July 2006.
The record indicates that these additional payments were made each year from 1996 to 2006 at an 8-percent interest rate. Records indicate that on July 11, 1996, the beginning loan amount on the extension agreement was approximately $209,420. Bank statements and canceled checks indicate that John paid those annual payments to the bank and to the trust. On July 14, 2006, the bank issued a trustee's deed of reconveyance for the ranch to John and his wife upon John's final payment in accordance with both the purchase agreement and the extension agreement.
2. PROCEDURAL HISTORY
On April 9, 2010, Abbott filed a " Complaint by Beneficiary to Compel Accounting by Testamentary Trustee" against the [21 Neb.App. 356] current trustees of Rolf's trust, namely John, Mamie, and Rolf William Jr. Abbott's complaint alleged that she had occasionally been paid small sums of money, but had never received any information regarding the trust. The complaint further alleged that in December 2009, she requested an accounting from the trustees and was refused. The complaint sought a full and complete accounting of the trustees' actions and payment of income derived from the administration of the trust, along with costs and attorney fees.
John, Mamie, and Rolf William Jr. filed an answer and cross-petition, denying many of the allegations contained within Abbott's complaint and petitioning the court for a termination of the trust. On July 12, 2010, the trustees filed a report including an 11-page accounting of trustee actions on the trust from January 1, 2002, through April 30, 2010, with updates on actions taken throughout the proceedings filed thereafter. The report indicated that the trust has four active bank accounts; sets forth moneys received in those accounts, including interest and John's payments pursuant to the purchase agreement; and also lists items paid out, including taxes, professional fees for the accountant, beneficiary distributions for each year, and various bank charges. The trustees' report indicated that the trust balance on January 1, 2002, was $10,917.36 and that through April 30, 2010, the trust had received a total of $208,560.47 and paid out $207,811.73, leaving an April 30 balance forward of $748.74.
In July 2010, Abbott filed a motion to amend her complaint, additionally alleging that the trustees had filed an accounting and that the accounting failed to fully account for trust assets. Abbott's amended complaint includes the original allegation that in December 2009, she requested an accounting and the trustees failed and refused to provide one, and additional allegations that the trustees have failed to maintain adequate records and breached their fiduciary duty to administer the trust in good faith. The amended complaint requested that the trustees be required to render a full and complete accounting, to pay Abbott all the income from the trust in the trustees' control, to redress the breaches by personally paying the amount required to restore the value of the trust property, to restore the [21 Neb.App. 357] principal of the trust, and to pay all attorney fees and costs, and any other appropriate relief.
3. TRIAL TESTIMONY AND EVIDENCE
Trial was held on the matter, during which Mamie, who was 74 years old, testified that she had been a trustee since the inception of the trust in 1976. Mamie believed that over the course of the life of the trust, the trustees had acted properly in their duties. Mamie testified that the trust paid income to her mother, Bessie, until Bessie died and that that was her only source of income. In the early 1980's, Mamie testified, the family ranch was indebted and should have been sold, which it
was pursuant to a court-approved sale in which John purchased the ranch. Many of the payments made from the sale of the ranch were also used to pay the debts of the ranch, which Mamie said " owed so much money then." Mamie indicated that she was certain all the payments required of John had been made but could not recall specifics about disbursement of the money. Mamie testified that the money from those payments was deposited with the Bank of Hyannis and that she had tried to get the corresponding records from the bank, but had been informed the records had been destroyed. Mamie testified that she did not keep any trust documents and did not know which other trustee or trustees did, though she was sure that such documents had been kept. Further, Mamie was aware that the various banks and accountants were all contacted to retrieve past trust documents and none had any of the requested documents archived. Mamie testified that prior to 2002, beneficiaries were always welcome to information regarding the trust but she did not know what her efforts were to inform the beneficiaries and did not recall making any efforts as a trustee. Mamie and the other trustees had annual meetings before the annual ranch payment was due, and all of the decisions made by trustees were unanimous.
Mamie agreed that many of the documents which predated 2002 were unavailable because they had been destroyed. Mamie testified that the trust, since its inception, had been managed by three separate accounting firms and that if she received any [21 Neb.App. 358] information regarding the trust, she took it directly to the bank or accounting firm in question.
Mamie testified that at the time of Rolf's death, her two brothers rented the land from the company, which rental continued after Rolf's death. However, Mamie explained that over time, the debt that the ranch incurred became unmanageable and she and her brothers determined that it was not feasible to keep the ranch, resulting in the sale of the ranch in 1986. Mamie testified that at that time, the ranch owed the Federal Land Bank of Omaha approximately $19,000 and Alliance Production Credit $100,000. Mamie testified that the Bank of Hyannis was handling the sale under the trust at that time.
Mamie testified that John and his wife sent the promissory note payments on the purchase agreement to the bank, which changed corporate names several times over the course of the trust. The bank disbursed the funds directly, including distributions. Mamie testified that all of the payments for the ranch were made by John and that the payments were extended, not because John was unable to pay but because her mother, Bessie, was still alive at that time and the extension would ensure that Bessie continued to receive income from the trust, which was a 42.42-percent shareholder in the company. Mamie agreed that regardless of who paid off the promissory note, the bank issued a trustee's deed of reconveyance once the extension agreement had been paid off. We note that after trial was held in this matter, Mamie passed away; however, the action was revived in the name of her personal representative, John. According to the will, after the death of Mamie, Rolf's last surviving child, the trust would terminate and the remaining corpus of the trust was to be paid in accordance with the will's directives.
John testified that he had been serving as trustee since his father, Edward, died in 1982. John testified that in 1996, when the original balloon payment on the ranch was due, he and his wife were in a position to make the ...