Jacob v. Davis

In 1994, John Jacob died, leaving a will that established two trusts. The trusts named John’s wife, Harriet Jacob, as income beneficiary and John’s son, Bill Jacob (plaintiff) as remainderman. Harriet was Bill’s stepmother. The trusts named Harriet and Michael Davis (defendant) as co-trustees. Section 10.02 of the will required the trustee to render an accounting of the trustee’s administration of the trust to the trust’s income beneficiaries. The section provided that if the income beneficiary signed off or consented to the accounting, the trustee was discharged from any further accounting. Section 10.08 of the will prohibited the trustee from making any decisions regarding discretionary payments for the trustee’s benefit or for the benefit of any person to which the trustee owed a duty. In 1996, Bill requested an accounting of the trusts. Davis declined, claiming that he could not provide the accounting without the approval of Harriet, the trust’s income beneficiary. In January 1997, Harriet died. In April 1997, Bill again requested an accounting of the trusts, believing that principal payments from the trust had been improperly made to Harriet. Davis gave Bill various documents in response to this request, but the documents frequently did not indicate whether distributions to Harriet were principal or interest. Bill sued Davis, alleging a violation of Davis’s fiduciary duties as trustee. The trial court found that Bill did not have a right to an accounting during Harriet’s life and that the information Davis provided after Harriet’s death was sufficient to satisfy Davis’s duty. Bill appealed.