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Factual Background:

Decedent’s Trust provided upon his death, Defendant, as Trustee, was to divide the principal of the Trust into two equal shares: one in favor of Defendant and other in favor of Plaintiffs.  Decedent died in 2003, and in 2007, Plaintiffs filed a petition against Defendant, alleging he failed to distribute to Plaintiffs their fifty percent interest in the Trust real estate following decedent’s death.  Plaintiffs sought partition of the Trust real estate in kind, an accounting, and removal of Defendant as Trustee.

Defendant filed a counterclaim for quantum meruit, alleging that he performed valuable services and made material improvements to the Trust property that benefited all beneficiaries for which he has not received compensation or reimbursement.

Audrain County Circuit Court, J. Sutherland, Held:

The circuit court found that Defendant was owed $201,659.81, including $187,259.81 as reimbursement for uncompensated labor and expenses.  The court found that Plaintiffs were owed $152,184.15 in back rent and attorney’s fees.  After setting off these amounts, the court held that Plaintiffs were jointly and severally liable to Defendant for $49,765.66.  Plaintiffs appealed.

Court of Appeals, J. Sullivan, Held:

Reversed and remanded.  Plaintiffs argue that the trial court erred in entering the monetary award, in part because the trial court failed to apply the debits and credits on a consistent basis.  Specifically, the Plaintiffs contend the trial court’s accounting involving the actual and imputed trust rents were divided in half, since the parties were fifty percent trust beneficiaries, but Defendant received a 100 percent credit for his labor and expenses on behalf of the trust.

The net income for the property is gross income less the operating expenses.  The gross income for the property was $243,600.  The Defendant expended $187,259.81 in improvements and maintenance.  Therefore, the net income for the property was $56,340.19.  Each party had a $16,800 liability to the Trust for rental benefits they received, leaving $22,740.19 in undisbursed income.  As equal beneficiaries, Plaintiffs and Respondent were each entitled to half, or $11,370.09.  Therefore, Defendant was entitled to $11,370.09 in Trust income and $6,000 from Plaintiffs for the difference in the appraised values of the parcels after partition, for a total of $17,370.09.