Snyder v. Snyder, 2012 Cal. App. Unpub. LEXIS 1006 (Cal. App. 2d Dist. 2012)
Brothers Scott, Guy and Thomas Snyder were the settlors, beneficiaries and trustees of the Snyder Family Trust, which was used by the family to manage its real estate holdings in southern California. Beginning in 2008, Thomas began to suspect that Scott and Guy were mismanaging trust assets and committing fraud against the trust. Thomas requested that the trustees hire an auditor to investigate the actions of the trustees. Scott and Guy disagreed with Thomas’s proposal and refused to hire an auditor.
In 2009, Thomas unilaterally withdrew $20,000 from the trust account and hired a lawyer to investigate any breaches of trust and prepare an accounting. Scott and Guy objected and demanded that Thomas return the funds. Months later, Thomas withdrew an additional $60,000 to pay the attorney. In 2010, Scott and Guy filed a petition seeking an order stating that the trust instrument does not permit Thomas to unilaterally act over the objections of the other two trustees and ordering Thomas to return the $80,000. The trial court concluded that the trust instrument permitted unilateral action by a trustee. Scott and Guy appealed.
On appeal, the California Court of Appeals overruled the trial court and held that Thomas was not entitled to act unilaterally with respect to the withdrawal of trust assets on the grounds that: (1) although the trust instrument provided that any trustee “shall have the full and exclusive power to operate the business and affairs of the Trust as if such Trustee was the individual and absolute owner thereof,” the trust instrument later stated that “[i]f more than one Trustee is acting at any time, and a difference arises among the Trustees which affects the Trust, the decision of a majority in number of the Trustees then acting shall control”; (2) reading both provisions together, where the co-trustees have acting together to consider a proposed action and the majority of the trustees has expressly disapproved of such action, a single trustee may not take unilateral action in contravention of that majority decision; and (3) it was therefore not permissible for Thomas to withdraw the trust assets to pay the lawyer after the majority of the trustees decided against that action.