Wilma Smith comes from a wealthy family and has a substantial amount of money through inheritance. Her will contains several specific bequests to family members and charity. It ends with the following provision:

I give, devise, and bequeath the rest, residue and remainder of my estate to the Total National Trust Company (“TNT”), in trust, to pay the net income to my beloved husband, Hugh. My trustee may also pay to my daughter Catherine as much of the principal as my trustee may in its sole and absolute discretion consider necessary in case of emergency. Upon the death of my husband, my trustee shall distribute the remainder to Catherine without trust. My trustee shall have the power to buy, sell, or retain any trust asset.

When Wilma dies, both Hugh and Catherine are still alive. Besides his interest in the trust, Hugh has inherited the couple’s house, fully paid off. Catherine, who is determined to become a successful theater actress, lives in San Francisco, where she gets minor roles in off-beat plays and has to make ends meet by waitressing at a restaurant.

TNT receives $1,000,000 (the residue of the estate) upon Wilma’s death. Because the stock market has been very volatile during the past few years, and has dropped the two previous years, TNT places the money in a savings account at Second National Bank. The bank pays 1% interest a year (i.e., $10,000), which TNT distributes to Hugh. The only other trust asset is Wilma’s coin collection. Wilma had been an avid coin collector who had put together a valuable collection of ancient Greek and Roman coins, worth around $100,000. Such coins have been going up in price recently, so TNT decides to retain the collection on behalf of the trust.

From time to time Hugh complains to TNT that he cannot pay his bills (including housing expenses, real estate taxes, and expensive prescription drugs) on the $10,000 that he receives per year, but TNT does nothing in response. Hugh has no other income and does not qualify for social security or other government benefits. Although he is 75 years old, he is forced to work as a night watchman in an empty warehouse, earning minimum wage, to get by.

One day, Catherine is late to her job at the restaurant, where she works the night shift, and speeds through San Francisco on her bicycle, which has no lights despite the pervasive darkness. She runs through a red traffic signal and smashes into Victor, an elderly man who is slowly making his way across the street in a crosswalk, where he had a green light. Catherine is convicted of a misdemeanor offense (reckless bicycling) and pays a $100 fine. Victor sues her and obtains a tort judgment for $100,000. Catherine has no assets, no insurance, and just enough income to get by on.

Please answer the following questions, in order. Do not try to calculate the amount of damages, if any.

1. Has TNT breached its fiduciary duties

(a) by putting $1,000,000 in the account at Second National Bank? (about 25% of total essay points)

(b) by retaining the coin collection? (about 25%)

(c) by not paying out more money to Hugh? (about 25%)

2. Can Victor compel TNT to pay, out of trust assets, the judgment that Catherine owns him? (about 25%)