Jiminez v. Lee
274 Or. 457, 547 P.2d 126 (1976)

  • Jason had a baby daughter (Betsy). Jason received a $1k savings bond from his mother and a $500 savings bond from a business associate.
    • They testified that the gifts were to be used for Betsy’s education.
  • Jason put the money into a savings account in the name of his three children. Later he used the money to open a stock account with himself named as the custodian.
    • Jason testified that some of the money went to pay for the children’s clothes and to take a family vacation.
  • When Betsy was 31, she sued her father for breach of fiduciary duty.
    • Betsy argued that when Jason had taken custody of the savings bonds, he had formed a trust with himself as the trustee.
      • By not providing for her educational needs, and not keeping track of the money as is required of a trustee, he had breached his duty.
    • Jason argued that no trust had been formed.
  • The Trial Court found for Jason and said that no trust had been formed. Betsy appealed.
    • While the Trial Court found that the gifts were made to provide for educational needs, the donors did not expressly specify that they intended to create a trust.
  • The Oregon Supreme Court reversed and held that a trust had been formed.
    • The Oregon Supreme Court found that an express statement holding Jason to hold the gift in trust is not essential to create a trust relationship.
      • It is enough if the transfer of property is made with the intent to vest the beneficial ownership in a third person.
    • By merging the money with money for his other children, Jason breached his fiduciary duty to administer the trust solely in the interest of the beneficiary.
    • Jason argued that he paid for way more than $1.5k of Betsy’s educational expenses out of his own pocket and therefore what happened to the specific money from the savings bonds didn’t matter. But the Court found that while Jason could reimburse himself with money from the trust, he needed to keep careful bookkeeping records of the trust administration, which he failed to do.
      • This was not a case of Betsy not getting money from Jason, it was just his failure to properly account for what happened to the money.
    • The Court understood that Jason had an obligation as a parent to provide for Betsy, but that he also had an obligation to administer the trust properly. It would be a question of fact as to whether expenditures made by Jason should be considered parental expenses of legitimate trust expenses, but since there were no accounting records to examine the Court must rule against Jason by default.
      • Under the common law, the Court must resolve doubts against a trustee who maintains inadequate accounting system.
  • The basic rule is that when you determine whether or not a trust was intended, you must look at the intent of the settlor. In this case, the grandmother and the business associate intended that the money be put in trust for Betsy, therefore a trust was created.
    • The intent of the settlor. It doesn’t matter what the trustee or the beneficiary thinks, it’s only what the settlor thinks.