In re Will of Crabtree

Lotta M. Crabtree, a wealthy actress, died in 1924, leaving a will that created several charitable trusts. Seven of the trusts, each of which was a separate entity with its own distinct purpose, were active at the time of this litigation. All seven of the trusts were administered by a group of professional trustees (the trustees) (defendants). The largest of the trusts was the agricultural-fund trust, established to assist students and graduates of the University of Massachusetts. Crabtree directed that the trust was to provide loans from the trust income to graduates of the university who wished to engage in agricultural pursuits. Any remaining trust income was to be distributed semiannually as financial aid for current university students. In 1987, contrary to the terms of the trust and without seeking court approval, the trustees created the Lotta M. Crabtree Endowment. The endowment was funded with contributions from the agricultural-education trust and was administered by the University of Massachusetts Foundation, Inc. The endowment used only some of the funds to provide financial aid to students, and it failed to make the required semiannual distributions of trust income. The trustees used the agricultural-fund trust as an operating account for the other trusts. The assets of the agricultural-fund trust were used to pay the administrative fees for all seven trusts, as well as the trustee fees for all of the trusts. At the end of each year, the other six trusts reimbursed the agricultural-fund trust, without interest, for all expenses except for the trustee fees. A court-appointed guardian ad litem alleged that the trustees had breached their fiduciary duties in administering the trust and that they had charged excessive trustee fees. The trial court agreed, removing the trustees and surcharging them for excessive fees. The court of appeals affirmed, and the trustees appealed.