Herring v. Herring
| Docket Number: | 2003-CA-02046-SCT Linked Case(s): 2003-CA-02046-SCT ; 2003-CA-02046-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 11-10-2004 Opinion Author: Dickinson, J. Holding: Affirmed |
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| Additional Case Information: |
Topic: Wills, trusts & estates - Breach of fiduciary duty - Authorization of trustee - Section 91-9-107 (2) - Section 91-9-111 Judge(s) Concurring: Smith, C.J., Waller and Cobb, P.JJ., Easley and Carlson, JJ. Non Participating Judge(s): Diaz, Graves and Randolph, JJ. Procedural History: Summary Judgment Nature of the Case: CIVIL - WILLS, TRUSTS AND ESTATES |
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| Trial Court: |
Date of Trial Judgment: 08-29-2003 Appealed from: Franklin County Chancery Court Judge: W. McGehee, II Disposition: Granted Appellee's motion for summary judgment. Case Number: 2000-0116 |
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| Party Name: | Attorney Name: | |||
| Appellant: | Steven Scott Herring |
PAUL M. NEWTON, JR.
JONATHAN FAIRBANK
MICHAEL MADISON TAYLOR |
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| Appellee: | Edward Graham Herring, Trustee | JOHN L. MAXEY, III MARJORIE SELBY BUSCHING |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Wills, trusts & estates - Breach of fiduciary duty - Authorization of trustee - Section 91-9-107 (2) - Section 91-9-111 |
| Summary of the Facts: | Herring Gas Company is a family owned company which was started by C. Graham Herring, with the help of his wife, Eugenie. After Graham died, Eugenie created four trusts: “Eugenie Teague Herring Irrevocable Trust,” “Eugenie Teague Herring Family Trust,” “Eugenie Teague Herring Irrevocable Trust No. 2," and “Eugenie Teague Herring Irrevocable Trust No. 3.” Trust No. 2 listed the couple’s son Steve as the sole beneficiary. The couple’s son Ed was named the executor of Eugenie’s estate, as well as trustee of all four trusts. Until the death of their mother, Steve was given $1,000 per month from her. At Steve’s request, Ed increased this to $2,000 per month. However, when Steve requested another increase in monthly disbursements, Ed, as trustee, refused. Ed filed a declaratory action, requesting that the court declare that the various actions he had taken as trustee were consistent with the provisions of the trust. Trust No. 2 owned 1,927 shares of stock in Herring Gas Co. While the declaratory judgement action was pending, Ed executed a Limited Power of Appointment in which he “appointed” 1,689 1/3 shares of 1,927 shares of stock held by Trust No. 2, to two other Herring siblings, giving them each 844 2/3 shares. Steve then filed a counterclaim alleging Ed breached his fiduciary duty as trustee. The chancellor granted Ed’s motion for summary judgment on Steve’s counterclaim. Steve appeals. |
| Summary of Opinion Analysis: | As creator of Trust No. 2, Eugenie, gave Ed discretion to distribute the assets of Trust No. 2. Since he was the sole beneficiary of Trust No. 2, Steve argues that Ed should not have used his power as trustee to transfer the shares from Trust No. 2, to his other siblings. Article II of Trust No. 2 provided that the “assets of this trust shall be paid over, delivered or conveyed to or among such appointee or appointees, and in such proportions as EDWARD GRAHAM HERRING shall appoint.” Steve argues that even though Trust No. 2 granted Ed the discretion to change the disposition of the trust assets, Ed was limited by Article V to the restrictions provided in sections 91-9-107 (2) and 91-9-111. Section 91-9-107 generally allows the trustee to act without court authorization, and section 91-9-111 mandates that the trustee petition for court authority prior to exercising a trust power which conflicts with his individual interest or his interest as trustee of another trust. Steve argues that Ed breached his fiduciary duty as trustee when he transferred the stock without court approval, because of his conflicts of interests. Ed’s power of appointment was limited by the statutes and case law which address the duties of a trustee. Therefore, if there was a conflict of interest between Ed, as trustee exercising the power of appointment, and his individual interests, Ed was required by statute to seek court approval, prior to the transfer of stock. Steve argues that Ed’s then-pending litigation against Steve, coupled with the transfer of Trust No. 2 stock and the subsequent purchase of some of the “transferred” stock leads to the conclusion of a conflict of interest between Ed, personally, and as trustee of Trust No.2. The standing offer by Ed to purchase shares of stock was made to all family members who owned stock, and it was made prior to the execution of the limited power or appointment. There was no evidence of a prearranged deal between Ed and any other family member. There is no evidence that Ed’s transfer of shares to equalize the number of shares held by his family was in any way connected to Ed’s purchase of shares from his sister, which took place a year and a half later. Ed did exactly what he had the authority to do and there was no conflict of interest with the transfer of the stock. Therefore, Ed did not breach his fiduciary duty to Steve. |
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