Title: ROCK SPRINGS LAND AND TIMBER, INC. v. LORE

State: wyoming

Issuer: Wyoming Supreme Court

Document:

ROCK SPRINGS LAND AND TIMBER, INC. v. LORE2003 WY 10075 P.3d 614Case Number: 01-158Decided: 08/26/2003
APRIL TERM, A.D. 2003

                                                                                                            

ROCK 
SPRINGS LAND AND TIMBER, INC.,

Appellant(Intervenor),

 

v.

 

BRENDAN 
LORE, as Successor Trustee

of 
the Colista Combs Clements Trust,

a/k/a 
The C.C. Clements Trust,

Appellee(Plaintiff),

 

and

                                                                                                

KATHLEEN 
LORE, BRENDAN LORE and

MICHAELA 
LORE KLAUSMEYER, individually,

Appellees(Defendants).

 

Appeal 
from the District Court of Converse County

The 
Honorable Nicholas G. Kalokathis, Judge

 

Representing 
Appellant:

            
Roger C. Fransen of Hickey, Mackey, Evans and Walker, Cheyenne, 
Wyoming  

 

Representing 
Appellees:

            
Walter Urbigkit of Frontier Law Center, Cheyenne, Wyoming  

 

Before HILL, C.J.; GOLDEN, LEHMAN, and KITE, JJ.; and 
JEFFREY A. DONNELL, D.J.

 
 
           

            
KITE, Justice.

 
 

[¶1]      Rock Springs Land 
and Timber, Inc. (Rock Springs) entered into a purchase agreement with American 
National Bank (ANB), as trustee (trustee), to purchase property owned by a 
trust. The agreement required court confirmation of the deal. The trial court 
declined to confirm the Rock Springs sale and, instead, confirmed a second 
purchase agreement with a higher price entered into by the trustee almost a year 
later.  This second agreement failed 
to close.  After considerable delay 
caused by intervening litigation, including an appeal to this Court, the trial 
court again rejected the Rock Springs agreement concluding that, although at the 
time it was signed it was a prudent decision by the trustee, the sale was no 
longer in the trust's best interests in light of the circumstances at the time 
of the court's decision.  The trial 
court also confirmed the beneficiaries' replacement of ANB as trustee with a 
beneficiary, Brendan Lore (Brendan), as successor trustee.  Rock Springs appeals from both the 
rejection of its purchase agreement and the appointment of Brendan as 
trustee.  We reverse and 
remand.  

 

ISSUES

 

[¶2]      Rock Springs presents 
the following issues for our review:

 
  
      

            
I.  Did the trial court err when it refused to confirm the 
purchase agreement between Rock Springs Land and Timber, Inc. and American 
National Bank?

            
II.  Did the trial court err when it approved the designation 
of Brendan Lore as trustee of the C.C. Clements Trust?

 
          
         

FACTS

 

[¶3]      Colista Combs 
Clements executed a trust agreement to provide for her financial needs until her 
death and for the financial needs of her beneficiaries thereafter.  The surviving trust beneficiaries were 
Kathleen Lore (Kathleen), Brendan, and Michaela Lore Klausmeyer, and the 
principal trust asset was 6,769 acres of ranch property located north/northwest 
of Douglas in Converse County.  The 
trust agreement directed "[t]he trust shall always be administered free from the 
active supervision of any court" and also had a "Spendthrift Clause" to preclude 
the beneficiaries' creditors from making claims on the beneficiaries' trust 
interests prior to actual receipt by the beneficiaries.  

 

[¶4]      In June of 1997, 
in the course of the administration of the trust long after Ms. Clements' death, 
ANB was appointed as trustee by court order.1  Thereafter, ANB sought to sell the ranch 
property in an effort to address the trust's significant liquidity problems 
resulting from the beneficiaries' income needs which exceeded the income 
generated by the trust property.  
The trust property was a portion of a ranch which had been partitioned in 
May 1999 pursuant to Wyo. Stat. Ann. § 1-32-108 (LexisNexis 2003) in settlement 
of other litigation.  During the 
partition proceedings, court-appointed commissioners determined the value of the 
trust property to be approximately $805,000.   In a June 29, 1999, letter to ANB, 
Kathleen and Brendan indicated they thought a fair valuation of the property was 
$1,065,000 based on prices of recently sold, neighboring properties.  

 

[¶5]      Charles Herron, 
president of Rock Springs, became aware through a third party that the trust 
property was for sale and, following a tour of the property with Brendan, 
negotiated a purchase agreement with ANB.  
This agreement, dated May 23, 2000, provided that Rock Springs would pay 
$1 million for the property, excluding mineral rights; make a $50,000 earnest 
money payment when the agreement was signed; and pay the balance in cash or 
certified funds at closing.  The 
purchase agreement also provided the sale was subject to "confirmation" by the 
Eighth Judicial District Court and, if for any reason it was not "confirmed and 
ratified by the appropriate judicial authority," Rock Springs would be entitled 
to a refund of all earnest money paid and to declare the agreement null and 
void.  The sale 
was originally scheduled to close "[w]ithin 30 days after June 26, 2000, at such 
time and place as mutually agreed by the parties."

 
  
              
         

[¶6]      ANB sought the 
beneficiaries' consent to the sale without success.  On June 6, 2000, 
ANB filed a declaratory judgment action naming the beneficiaries as defendants 
and requesting the court to confirm the sale and authorize ANB to sell the 
property pursuant to the agreement.  Kathleen filed an answer and counterclaim 
contending (1) the 1983 amendment to the trust entitled her to a greater portion 
of the proceeds from a sale than the other two beneficiaries would receive, (2) 
the Rock Springs sale amount was inadequate and not in the best interests of the 
trust or the beneficiaries, and (3) the court should reject the purchase 
agreement.  In 
addition, the three beneficiaries jointly filed a separate answer alleging the 
Rock Springs sale price was inadequate, the sale was not in the trust's or their 
best interests, and it should be rejected.  In December of 2000, the beneficiaries filed 
a motion requesting a scheduling conference and permission to file supplementary 
counterclaims.  
ANB filed a written objection to this motion, and, in April of 2001, the 
court set a hearing and scheduling conference for May 3, 2001.  

 

[¶7]      While the litigation 
was pending, Rock Springs and ANB extended the closing date at least three 
times.  Despite 
having signed the Rock Springs agreement and seeking court confirmation, ANB 
continued to offer the ranch property for sale.  Ultimately, ANB entered into a second 
purchase agreement on or about March 19, 2001, with Bruce Reed (Reed agreement) 
which provided a  
price of $1,800,000, $1,000 earnest money, and the balance of $1,799,000 
to be paid at closing on August 15, 2001.  However, the Reed agreement was contingent 
upon Mr. Reed selling certain coalbed methane leases for $10 million and 
included conveyance of twenty-five percent of the mineral rights.  
 

[¶8]      On April 16, 2001, 
ANB filed a "Motion to Approve Sale of Trust Property" requesting the court to 
authorize the sale of the trust property under either the Rock Springs agreement 
or the Reed agreement.  Rock Springs filed a motion for leave to 
intervene as a matter of right pursuant to W.R.C.P. 24(a) or, alternatively, by 
permission of the court under W.R.C.P. 24(b).  Over ANB's and the beneficiaries' objections, 
the trial court permitted Rock Springs to intervene "only for the limited 
purpose of determining the issue of whether the court is required as a matter of 
law to approve the agreement between [ANB] and Rock Springs."  The court ordered 
Rock Springs to file an appropriate complaint and dispositive motions and 
established a bifurcated process to hear its case and ANB's case 
separately.  On 
the day of the hearing on ANB's motion, ANB and the beneficiaries entered into a 
stipulation, supplemented several days later, by which they agreed the court 
could enter an order approving the Reed agreement and distribute the sale 
proceeds to satisfy Kathleen's individual claim.  The court issued an order rejecting the Rock 
Springs agreement "at this time" and authorized ANB to complete the sale with 
Mr. Reed with the proviso that, if the Reed agreement was not closed by August 
31, 2001, the court's approval would terminate.   On or about June 20, 2001, the court 
issued a separate written order denying Rock Springs' motion for summary 
judgment under W.R.C.P. 52(c).  Rock Springs appealed from both orders.  

 

[¶9]      While the appeal was 
pending, the Reed sale failed to close, and ANB filed another motion with the 
trial court requesting approval of the Rock Springs agreement.  Rock Springs also 
moved this Court to remand the matter to the trial court for consideration of 
ANB's motion.  
We granted the motion to remand, stayed the pending appeal, and ordered 
Rock Springs to report the status of the case to this Court within 150 
days.  

 

[¶10]   Before the hearing in the trial court 
on remand, the beneficiaries gave notice that they had removed ANB as the 
trustee and had designated Brendan, one of the beneficiaries, as the successor 
trustee.  ANB 
filed a motion with the trial court requesting resolution of its status as 
trustee.  Rock 
Springs responded contending Brendan was unqualified under the terms of the 
trust to act as trustee, Rock Springs was a bona fide purchaser, and ANB was 
trustee pending designation of a qualified trustee.  The trial court 
held a hearing on all the pending motions on December 20-21, 2001.  It determined ANB 
was no longer the trustee and Brendan had been properly designated as the 
successor trustee. The trial court also determined (1) at the time ANB signed 
the Rock Springs agreement, it was a "prudent and sound decision" by ANB as the 
trustee; (2) the Rock Springs agreement provided the court broad discretion to 
consider whether the sale was appropriate under the circumstances existing as of 
the hearing date, and not those present when the contract was signed; and (3) 
the trusteeBrendanwas not obligated to honor the Rock Springs agreement and 
was, therefore, relieved of that obligation. 

 

[¶11]   In compliance with the order on remand, 
Rock Springs filed a report of the proceedings on remand with this Court and 
requested a briefing schedule.  The beneficiaries filed a motion to dismiss 
the appeal, arguing Rock Springs failed to appeal from the trial court's order 
entered after the remand and contending the second order superseded the first 
and, therefore, the appeal of the first order was moot.  The beneficiaries 
filed a second motion to dismiss because Rock Springs had secured return of the 
$50,000 earnest money though the funds were placed in escrow with instructions 
pending this Court's decision. The beneficiaries also filed a motion to allow 
Brendan to be substituted for ANB as had already occurred in the trial court 
proceeding on remand.  
This Court denied the motions to dismiss, ruling it had retained 
jurisdiction over the appeal while the matter was on remand making a second 
notice of appeal unnecessary and finding the escrow arrangement was sufficient 
to preserve the earnest money.  In the same order, this Court permitted 
substitution of the successor trustee consistent with the trial court's order 
and established a briefing schedule permitting Rock Springs to refile its 
principal brief. 

 

[¶12]   The issues presented in this appeal 
require construction of the terms of the trust agreement.  This Court has 
stated, "The rules of construction of a trust agreement are simple. A trust 
agreement is governed by the plain meaning contained in the four corners of the 
document."  Hronek v. Saint Joseph's Children's Home, 866 P.2d 1305, 1307 (Wyo. 
1994).  In keeping with this premise, the following 
excerpt explains the applicable standard of review:

 
As a general rule, the interpretation of the language of a 
trust instrument constitutes a question of law. Matter 
of Home-Stake Prod. Co. Deferred Compensation Trust, 1979 OK 81, ¶8, 598 P.2d 1193, 1196.  
The "appellate court claims for itself plenary independent and 
non-deferential authority to reexamine a trial court's legal rulings" de novo. Kluver v. 
Weatherford Hosp. Auth., 1993 OK 85, ¶14, 859 P.2d 1081,1084;Corr v. Corr, 2001 OK CIV APP 31, ¶11, 
21 P.3d 642, 644.  The courts strive 
to ascertain and effect the intent of the settlor, but parole evidence may not 
be considered "where there is no ambiguity and the language of a declaration of 
trust is clear and plainly susceptible of only one construction[:] the plain 
provisions of the trust instrument . . . determine its construction." Home-Stake Production Co., 1979 OK 81, ¶8, 598 P.2d  at 
1196; Corr, 2001 OK 
CIV APP 31, ¶11, 21 P.3d  at 644.

 

Baldwin v. McCoy (Mary Opal E. Reid Living 
Trust), 2002 OK 
CIV APP 49, ¶7, 46 P.3d 188, ¶7 (Okla. Civ. App. 2002); see also Jeffs v. Stubbs, 970 P.2d 1234, 1251 (Utah 
1998) (review of a trust instrument is a question of law); Taliaferro v. Taliaferro, 7 P.3d 1241, 1245 (Kan. 2000) (review of a trust is a question of law).

 

DISCUSSION

 

A.        Rejection 
of Rock Springs Agreement

 

[¶13]   To address whether the trial court 
erred by refusing to confirm the Rock Springs purchase agreement, we must 
ascertain what standard the trial court should have applied by first examining 
the trust agreement's terms.  The trust agreement provided the trust was to 
be administered without the active supervision of the court2 and the 
trustee would be permitted to deal with the trust property as natural persons 
would deal with their own property including sale thereof.3  It also provided 
the trustee could exercise those powers set forth in the Uniform Trustees Powers 
Act.  Though 
the trust required a concurrence of a majority of trustees for certain matters 
pertaining to its administration, notably absent is any provision requiring the 
beneficiaries to approve a sale of trust property.  The provision 
regarding consent of the majority of the trustees has no application here 
because, at all times relevant to this appeal, there was only one trustee.  

 

[¶14]   The trust's plain language gave ANB 
authority to sell the ranch property without the beneficiaries' approval.  Hronek, 866 P.2d  at 1307; see also 
Parrette v. Hutchison, 211 Cal. Rptr. 313, 315 (Cal. Ct. App. 1985) (the 
trust document's language is the centerpiece of interpretation.  Words are to be 
taken in their ordinary and grammatical sense unless a clear intention to the 
contrary can be ascertained).  
While a trustee may sua sponte seek the 
beneficiaries' agreement, unless the trust agreement so provides, their consent 
is not required.  

 

[¶15]   In an apparent effort to avoid any 
question concerning the propriety of the sale, ANB sought the beneficiaries' 
consent to the sale pursuant to the Rock Springs agreement.  Unable to obtain 
that consent, and probably in an effort to foreclose future challenges to the 
sale, ANB included a clause in the Rock Springs agreement as follows:

 

APPROVAL BY THE COURT:  
This sale is subject to confirmation by the Converse County District 
Court, Eight[h] Judicial District, Probate No. 39-56 wherein [ANB] was appointed 
as Trustee of the Colista Combs Clements Trust.  If for any reason the sale is not confirmed 
and ratified by the appropriate judicial authority, [Rock Springs] shall be 
entitled to receive all earnest money paid to date as a total refund under the 
Agreement and the right to declare the Agreement null and void and of no further 
force or effect.  

 

[¶16]   ANB's and Rock Springs' rights and 
obligations under the sales agreement were not altered or suspended in any way 
pending the trustee's efforts to obtain court confirmation of the sale.  Both parties were 
bound by the agreement as any other seller and buyer would be.  However, since the 
Rock Springs agreement was conditioned upon court confirmation, the trustee 
continued to offer the property for sale and, ultimately, a year later, secured 
the second agreementthe Reed agreement.  While that agreement provided a higher 
purchase price, it had other less attractive terms including a minimal earnest 
money deposit, the inclusion of mineral rights, and the condition precedent that 
the buyer must first sell certain coalbed methane leases for a minimum of $10 
million.

 

[¶17]   The standard governing the trial 
court's consideration of the request to confirm the sale should be whether the 
trustee was acting in a reasonable and prudent manner at the time the agreement 
was executed, not whether it had obtained the highest price possible at the time 
the court acted. 

 

[M]ere inadequacy of price will not justify a court in 
refusing to confirm a sale, thus depriving the purchaser of the benefit of his 
bargain, unless the inadequacy is such as amounts to fraud. Where the inadequacy 
of price is accompanied by substantial irregularity which affects the rights of 
a party or parties to the proceeding, reviewing courts will sanction the 
disapproval of a sale.  In this case the only reason appellee seeks 
disapproval of the sale is because more money was offered. The fact that events subsequent to 
a sale in good faith result in the trust estate being deprived of a substantial 
sum of money, does not outweigh the injustice which a denial of confirmation 
would work upon appellant.

 

Evans v. Hunold, 65 N.E.2d 373, 376 (Ill. 1946) (emphasis added & 
citations omitted).  
This concept is reflected more recently in the following 
excerpt:

 

A trustee enjoys the discretion to make decisions regarding 
the disposition of the trust corpus, provided that he or she acts 
prudently.  He or she is not obligated to accept 
the highest offer, if there are advantages to accepting the offer of another 
bidder. He or she cannot, however, direct benefits to non-beneficiaries at the 
expense of the beneficiaries.  

 

Aloha Lumber Corporation v. University of 
Alaska, 994 P.2d 991, 1000 (Alaska 1999) (footnote omitted).  This standard is also referred to as the 
prudent investor rule.

 

Overall trust performance is a factor in evaluating the 
performance of the trustee. But it is not by itself controlling. "The court's 
focus in applying the Prudent Investor standard is conduct, not the end result." 
J. Alan Nelson, The Prudent Person Rule: A Shield for 
the Professional Trustee, 45 Baylor L. Rev. 933, 939 (1993). The American 
version of the prudent investor rule began with the Harvard College case:  "All that can be required of a trustee to 
invest, is, that he shall conduct himself faithfully and exercise a sound 
discretion. He is to observe how men of prudence, discretion, and intelligence 
manage their own affairs, not in regard to speculation, but in regard to the 
permanent disposition of their funds, considering the probable income, as well 
as the probable safety of the capital to be invested.'"  Nelson, 45 Baylor 
L. Rev. at 939 (quoting Harvard College v. Amory, 26 
Mass. (9 Pick.) 446, 460-461 (1830)).  In Harvard 
College, the court recognized that trust 

assets could never be fully protected from the 
uncertainties of the market place; thus, the prudent investor standard was 
necessarily flexible.  
Nelson, 45 Baylor L. Rev. at 938.

 

Johnston v. Cooper, 913 P.2d 393, 398 (Wash. Ct. App. 1996).  Likewise,  Wyo. Stat. Ann. § 4-8-103 (LexisNexis 2001) 
(repealed 2003) authorized trustees to "perform, without court authorization, 
every act which a prudent investor would perform for the purposes of the 
trust."

 

[¶18]   In this case, the trial court found 
ANB's acceptance of the Rock Springs agreement was a prudent decision at the 
time it was made.  
Whether such a decision was prudent or not is a question of fact.  Johnston, 913 P.2d  at 398.  The beneficiaries 
filed no appeal from that finding.  Substantial evidence supported the court's 
finding.  In 
May 1999, when the ranch was partitioned, the trust property was valued at 
approximately $805,000.  In the same time frame, two of the three 
beneficiaries indicated in a letter they thought a fair valuation of the 
property was $1,065,000.  A year later, Rock Springs offered $1 million 
and made a $50,000 earnest money payment. The mineral rights were not included, 
and no real estate commission was involved.  Considering the record as a whole, we agree 
with the trial court that ANB acted prudently and reasonably when it entered 
into the Rock Springs agreement.

 

[¶19]   However, since the Rock Springs 
agreement required court confirmation, we must determine whether that fact 
altered or diminished the trustee's authority. In D'Ottavio v. Union National Bank and Trust Company of 
Joliet (Estate of Masters), 505 N.E.2d 24, 27 (Ill. App. Ct. 1987), the 
court considered the meaning of the phrase "subject to court approval" included 
in two competing contracts for sale of trust real property, the first contract 
having been accepted the night before the second and offering a slightly higher 
purchase price.  
In D'Ottavio, as in the instant case, the 
trustee inserted the court approval provision even though it was not required by 
the trust, the will, or any statute.  The court held:

[T]he insertion of the provision "Subject to Court 
Approval" in the [first] contract amounted to conditional acceptance of the 
offer to purchase rather than merely making the contract a conditional 
offer.  The 
trustee-bank then owed [the first purchaser] the duty to use reasonable efforts 
to obtain court approval of the contract.  Having entered into a binding contract with 
[the first purchaser] subject only to court approval, the trustee should not 
have entered into a subsequent contract to sell the property to another party. 
The equitable interest [the second purchaser] acquired under his contract with 
the trustee was subject to the [first purchaser's] interests under the prior 
transaction.  
This follows the general rule that where equities are otherwise equal, 
the older in point of time prevails.  It is conceded that the trustee, [the realty 
companies], and [the second purchaser] all had knowledge of the execution of the 
[first] contract on the day prior to when the agreement embodying the higher 
offer was . . . executed.

 

D'Ottavio, 505 N.E.2d  at 27 (citation omitted).  

 

[¶20]   We find this reasoning compelling and 
conclude that ANB conditionally accepted the Rock Springs agreement and had a 
duty to use reasonable efforts to secure court approval.  The record reveals 
that, although ANB filed the declaratory judgment action promptly after 
executing the Rock Springs agreement, over a year passed before the parties 
obtained a hearing.  
Ultimately, the trustee joined with the beneficiaries to request approval 
of the later contract.  This placed Rock Springs in the unenviable 
position of having to intervene in the ongoing litigation, where significant 
hostility had developed between the beneficiaries and the trustee, in order to 
protect its rights under the agreement ANB had conditionally accepted.  The record 
indicates the beneficiaries made ANB's pursuit of court approval of the Rock 
Springs agreement difficult at best.  The court eventually found that ANB had made 
a "prudent and sound decision" when it signed the Rock Springs agreement. On the 
basis of that finding, we can reasonably infer the trial court would have 
confirmed the Rock Springs agreement had there not been the delay caused by the 
beneficiaries' litigious actions. 

 

[¶21]   Despite finding the Rock Springs 
agreement was prudent, the trial court apparently concluded it must look beyond 
that fact and determine whether the sale was, a year later, in the trust's best 
interest.  The 
beneficiaries argued this was the appropriate test because the Rock Springs 
agreement had provided for court confirmation and that fact alone warranted the 
court to undo what the trustee had done if it determined at a later date that a 
higher price could be obtained.  The trial court found the court approval 
clause conveyed to it broad advisory and even supervisory powers over those 
matters within the trustee's authority and "require[d] judicial consideration of 
the benefit to the trust and the best interest of the Beneficiaries as a matter 
of the Court's exercise of discretion in decision."  We disagree. The 
trustee's authority was not altered or diminished when the trustee simply asked 
the court to  
confirm the sale.  The authority granted by the settlor could 
not be altered by an agreement between the trustee and a third party, 
essentially a stranger to the trust, to seek the protection of court 
confirmation of a proposed sale of property.  Marvin F. Hall Trust 
v. Hall, 810 S.W.2d 710, 714 (Mo. Ct. App. 1991).  

 

[¶22]   The court's authority to review a 
trustee's actions is limited to assuring the terms of the trust are met.  The Restatement 
(Second) of Trusts provides:

  

Where discretion is conferred upon the trustee with respect 
to the exercise of a power, its exercise is not subject to control by the court, 
except to prevent an abuse by the trustee of his discretion.  

Comment:

c.  Kinds of discretionary powers.  The rule stated in 
this Section is applicable both to the powers of managing the trust estate 
conferred upon the trustee either in specific words or otherwise, and also to 
such powers as may be conferred upon him to determine the disposition of the 
beneficial interest.  
Thus, it is applicable not only to powers to lease, sell or mortgage the 
trust property or to invest trust funds, but also to powers to allocate the 
beneficial interest among various beneficiaries, to determine the amount 
necessary for a beneficiary's support, or to terminate the trust.  

 

Restatement (Second) of Trusts § 187 & cmt. c at 402 
(1959).  Many 
jurisdictions have applied this rule and have limited review of trustee actions 
to determining compliance with the trust's terms, not replacing the trustee's 
judgment with that of the court.  "To the extent to which the trustee has 
discretion, the court will not control his exercise of it as long as he does not 
exceed the limits of the discretion conferred upon him.'  2 Scott on Trusts (2d ed. 1956) § 187 at 1374."  Benadom v. Colby, 567 A.2d 463, 468 (Md. Ct. Spec. App. 1989); see also Templeton 
v. Peoples National Bank of Washington, 722 P.2d 63 (Wash. 1986); 
Miller v. First Hawaiian Bank, 604 P.2d 39, 42-43 (Haw. 1979).  The trial court's assumption of expansive 
authority over the trust because a trustee or beneficiary has asked for 
clarification of a narrow question penalizes the trustee.  Benadom, 567 A.2d  at 469.

 

This is illogical. Rather, the court should determine: (1) 
the extent of the Trustees' discretion under the Trust; (2) if the Trust 
instrument confers discretion on the Trustees regarding the matter in issue; and 
(3) if the court determines there is discretion on 
the matter at bar, the court defers, assuming the Trustees have acted honestly 
and reasonably.

Id.

Generally, a court of equity, as part of its general 
supervisory powers over trusts, has the authority to instruct and advise 
trustees about their powers and duties.

However, there are limits on a court's authority to advise 
and instruct trustees, the prime limitation being that such instructions should 
be given only when the trustees have reasonable doubt about their 
duties. . . . [C]ourts should not serve as 
legal advisers to trustees.  Thus, the purpose of a court's guidance to 
trustees is to protect the trustees "in those situations where the advice of 
competent lawyers is not sufficient protection because of doubtful meaning of 
the trust instrument or uncertainty as to the proper application of the law to 
the facts."  
[First National Bank v.] Christopher, 624 S.W.2d [474,] 481 [(Mo. App. 1981)]. 

 

Marvin F. Hall Trust, 810 S.W.2d  at 715 (some citations omitted & emphasis 
added). 

 

[¶23]   Sound public policy supports giving 
effect to contracts entered into with trustees in good faith and for adequate 
consideration.  
Goldberg v. Strass, 105 N.W.2d 553 (Wisc. 
1960).  
Prospective purchasers must be provided the certainty that their 
contracts will be honored in order for trusts to be able to function 
effectively.  
Id.; Evans, 65 N.E.2d 373.  
Rock Springs argues the policy is almost indistinguishable from that 
which promotes the integrity of sheriff's deeds such as was at issue in Lutz v. Schmillen, 915 P.2d 599 (Wyo. 1996), 
abrogated on other grounds by Vaughn v. State,  962 P.2d 149, 151 (Wyo. 
1998).  We 
recently made reference to a similar policy in the context of foreclosure sales, 
stating:

 

Manion v. Chase Manhattan Mortgage 
Corporation, 2002 WY 
49, ¶7, 43 P.3d 576, ¶7 (Wyo. 
2002), indicates this court's continued reticence to set aside 
or vacate a foreclosure sale absent clear prejudice and irregularity of the 
proceedings even when an inadequate price has been paid 
. . . .

            
. . . .

            
. . . . [T]he [purchaser is] entitled to rely upon 
the sanctity and finality of the foreclosure process and to protect [its] 
interest . . . .

 

McNeill Family Trust v. Centura Bank, 2003 WY 
2 ¶¶14-20, 60 P.3d 1277, ¶¶14-20 
(Wyo. 2003). 

 

[¶24]   The record in this case discloses good 
reason for such finality.  While an appraisal at the time of the 
original agreement supported the $1 million value, the beneficiaries presented a 
second appraisal dated a year later with a higher value.  The court 
recognized the second appraisal "had some problems" and relied heavily on 
anecdotal information the successor trustee provided regarding ranch 
operations.  
The evidence also suggested the property's condition was improved after 
the first agreement was signed which may have increased the property's value, 
and Rock Springs argued it assisted in making the improvements. These changes in 
circumstances are typical in matters of real estate and demonstrate why a 
standard which allows the trustee's actions to be judged by proverbial 
"twenty/twenty hindsight" is problematic.

 

[¶25]   The trial court "also considered the 
resistance of the Successor trustee and the Beneficiaries" in refusing to 
confirm the Rock Springs agreement.  We believe the court should have been 
governed by the settlor's intent, not the beneficiaries' preferences, when they 
were entitled to no more than the trustee's proper exercise of its fiduciary 
duty. The trust's terms make it clear the settlor intended the trustee to 
exercise its judgment regarding what was in the trust's best interest without 
interference by the courts.  This trust provided the trustee with 
authority to deal with trust property as any "natural person" would.  While it is 
understandable a trial court may lean toward allowing the beneficiaries to have 
input into how the trust assets are managed, as a matter of law, when the court 
is asked to confirm a trustee's actions, the trust terms must govern, and the 
actions must be judged, in light of those terms, at the time the action is 
taken.

 

[¶26]   The trial court improperly refused to 
confirm the Rock Springs agreement for the sole reason evidence existed that the 
property had a higher value over a year later.  Once the trial court determined ANB acted in 
a prudent manner when it accepted the Rock Springs agreement, it should have 
confirmed that agreement.  Therefore, we reverse and remand to the trial 
court for entry of an order of confirmation and authorization of the Rock 
Springs agreement consistent herewith.

 

B.        
Designation of Brendan as Trustee 

 

[¶27]   In yet another Byzantine twist in this 
case, after remand to the trial court for the second confirmation hearing, the 
beneficiaries removed ANB as trustee and purportedly replaced it with their 
fellow beneficiary, Brendan.  Rock Springs argues the replacement of ANB 
with a beneficiary violated the trust's terms.  In response, the beneficiaries contend Rock 
Springs has no standing to object to the replacement of the trustee and such 
replacement was proper. 

 

[¶28]   We must determine whether Rock Springs 
has standing to raise this issue on appeal.  "Standing to sue is jurisdictional in nature 
and can be considered at any time in the course of litigation."  Spratt v. Security Bank of Buffalo, 654 P.2d 130, 134 (Wyo. 
1982).  
"Standing is a legal concept designed to determine whether a party is 
sufficiently affected to insure that the court is presented with a justiciable 
controversy."  
Jolley v. State Loan and Investment Board, 2002 WY 7, ¶6, 38 P.3d 1073, ¶6 (Wyo. 
2002).

 

            
The doctrine of standing is a jurisprudential rule of jurisdictional 
magnitude.  At 
its most elementary level, the standing doctrine holds that a decision-making 
body should refrain from considering issues in which the litigants have little 
or no interest in vigorously advocating.  Accordingly, the doctrine of standing focuses 
upon whether a litigant is properly situated to assert an issue for judicial or 
quasi-judicial determination.  A litigant is said to have standing when he 
has a "personal stake in the outcome of the controversy."  This personal stake 
requirement has been described in Wyoming as a "tangible interest" at 
stake.  The 
tangible interest requirement guarantees that a litigant is sufficiently 
interested in a case to present a justiciable controversy. 

 

Schulthess v. Carollo, 832 P.2d 552, 556-57 (Wyo. 1992) (citations omitted); see 
also Sinclair Oil Corporation v. Wyoming Public Service Commission, 2003 WY 22, ¶11, 63 P.3d 887, ¶11 (Wyo. 
2003).

 

[¶29]   The beneficiaries argue that, because 
Rock Springs' participation at the trial court level was limited to determining 
whether the court is required as a matter of law to approve the agreement 
between the Trustee and Rock Springs," it did not have standing to challenge the 
trustee's replacement.  We do not believe the order granting 
intervention foreclosed Rock Springs from addressing new issues that arose in 
the course of the litigation such as the trustee replacement.  Neither the trial 
court nor the beneficiaries took exception to Rock Springs' pleadings which 
urged the court to disapprove Brendan's appointment, indicating neither 
considered the order on intervention as preventing the same.  However, since 
standing is jurisdictional, the failure of either the trial court or the 
beneficiaries to challenge Rock Springs' standing below does not foreclose the 
beneficiaries from raising that issue here.  

 

[¶30]   The contract right Rock Springs seeks 
to enforce would, under our standing jurisprudence, constitute a "legally 
protectable interest," thus satisfying the requirement of a personal stake in 
the outcome of the controversy.  However, under the common law, as reflected 
in the Restatement (Second) of Trusts, no one other than the beneficiary or one 
suing on his behalf can maintain a suit against the trustee to enforce the 
trust.  
Restatement (Second) of Trusts § 200 (1959).  Further, a person 
is not a beneficiary of the trust even though he might incidentally benefit from 
the performance of the trust.  Scott on Trusts § 200 at 209 (1987).  While a 
nonbeneficiary such as Rock Springs may not have standing to bring a direct 
challenge to the trust's administration where the court has properly obtained 
jurisdiction over a trust matter pursuant to the declaratory judgment statute 
and the trust's terms are being ignored, a court may take action to enforce the 
trust even though not called upon by a trustee to do so.

 

There is . . . a modern tendency in the United 
States for a court that has supervision over the administration of trust estates 
to enforce the duties of the trustees even though not called upon by the 
beneficiaries to do so.  The notion seems to be, although it is never 
very explicitly stated, that it is the function of the court to see that the 
directions of the settlor are carried out, even though no one complains to the 
court of the failure of the trustee to carry them out; that the court has 
administrative powers as distinguished from strictly judicial powers; that once 
the court acquires jurisdiction over the administration of the trust, it is the 
function of the court to see that the trust is administered in accordance with 
the direction of the settlor.  Thus in a case in Wyoming, the court said, 
"It was the duty of the court when it learned in any manner that the trustee was 
violating the terms of the trust to call it to account and to make such order in 
the premises as justice and equity required, and to see that the trust was 
faithfully executed." In a case in Wisconsin the court said that the lower court 
upon being apprised of the continued failure of the executor and trustee, for 12 
years, to render any account, should upon its own motion have immediately cited 
him to render an account.   In a case in Massachusetts it was held 
that the probate court could properly remove an executor in a proceeding brought 
by a person as a creditor, even though the person in fact was not a 
creditor.  The 
court said that a court can properly act sua sponte.  In a case in 
Pennsylvania  
it was held that the Orphans' Court might on its own volition, although 
no controversy or litigation is before it, order a trustee to rent a 
safe-deposit box.  
The court said that it had plenary powers over the administration of 
trusts until final distribution.

. . . The tendency of American courts has 
been to lay an increasing emphasis on the function of the court in carrying out 
the wishes of the settlor. 
 

Scott on Trusts, supra, § 200.4 
at 217-18 (footnotes omitted).  In International 
Trust Co. v. Preston (Hicks' Estate), 24 Wyo. 163, 156 P. 1128 (1916), cited 
by Scott on Trusts, a trustee's investment in foreign securities was found 
improper when the will required the trustee to invest in only domestic bonds and 
securities.  
The trustee argued the court should not act on the claims made because 
not all the beneficiaries were parties and the surviving annuitant did not 
object to the foreign investments.  This Court stated:

 

But this is not a civil action, but a proceeding in a trust 
estate over which the court had jurisdiction, and the trustee was before the 
court.  It was 
the duty of the court, when it learned in any manner that the trustee was 
violating the terms of the trust, to call it to account and to make such order 
in the premises as justice and equity required, and to see that the trust was faithfully 
executed.

 

International Trust Co., 156 P.  at 1132 (emphasis added).  This commitment to 
the protection of the settlor's intent has continued in Wyoming jurisprudence as 
reflected in the more recent case of First National Bank 
and Trust Company of Wyoming v. Brimmer, 504 P.2d 1367, 1371 (Wyo. 
1973), wherein we stated:

 

The clearly expressed intention of the settlor should be 
zealously guarded by the courts, particularly when the trust instrument reveals 
a careful and painstaking expression of the use and purposes to which the 
settlor's financial accumulations shall be devoted.  A settlor must have 
assurance that his solemn arrangements and instructions will not be subject to 
the whim or suggested expediency of others after his death.

 

Pursuant to this authority, we hold, once a court has been 
properly called upon to become involved in trust matters, it has jurisdiction to 
take such action necessary to assure the settlor's intent is 
fulfilled.

 

[¶31]   Article IX, Section 11 of  the trust in this 
case provided:

 

After the death of Settlor, . . . a majority 
of the beneficiaries . . . may at any time and from time to time 
remove the Trustee and designate one or more replacements by giving thirty days' 
written notice to such Trustee.  No notice of removal hereunder need give to 
the Trustee being removed any reason, cause or ground for such removal. If any 
Trustee shall die, resign, become incompetent, or cease to act for any other 
reason, the person or persons having the power of removal under this paragraph 
shall also have the power to fill any vacancy in the trusteeship by an 
instrument in writing executed within thirty days after the vacancy occurs.  If any vacancy is 
not filled within a thirty day period, then any beneficiary or his or her legal 
guardian or conservator may petition a court of competent jurisdiction, ex 
parte, to name a successor trustee to fill such vacancy.  By making any such 
designation, such court shall not thereby acquire any jurisdiction over the 
trust, except to the extent necessary for making such designation. Any successor trustee or trustees 
named hereunder shall be a bank or trust company situated in the United States 
and having trust powers under applicable federal or state law.  Any such bank or 
trust company shall have a combined capital and surplus of at least two million 
dollars and assets for which the bank or trust company has sole or shared 
investment responsibility of at least twenty-five million dollars. 

 

(Emphasis added.)  It is obvious the settlor intended to limit 
the pool of potential successor trustees to banks or trust companies with 
established minimum assets.  The beneficiaries argued, and the trial court 
apparently agreed, that the restriction with regard to successor trustees was to 
apply only when the court was called upon to designate such successor.  We do not believe 
the trust's language can be read in that manner.  It specifically states "any successor trustee 
named hereunder" must be a bank or trust company, not "any successor trustee 
named hereunder by the 
court."  
The reference to successors named "hereunder" is a clear reference to 
Section 11 of the trust in its entirety which is entitled "Removal and 
Replacement by Beneficiaries."  Where a question of proper trust 
administration is so patent in a matter otherwise properly before us, we must 
give effect to the settlor's intent. 

 

[¶32]   While it may be argued that our 
willingness to intervene in trust matters on this issue is inconsistent with our 
previous holding that the trial court should refrain from interfering with the 
trustee's prudent exercise of its powers, we believe the two rulings are 
entirely consistent and guided by the same rule; e.g., we must give effect to 
the settlor's intent.  
By granting the trustee broad powers to deal with trust property as any 
other person could, the settlor intended the trustee's judgment should control 
the decisions regarding trust property, and, when the court was called upon long 
after the settlor's death to confirm the trustee's actions, the court's only 
role was to determine whether those actions were reasonable and prudent at the 
time.  
Confirmation of those actions would, therefore, give full effect to the 
settlor's intent.  
Likewise, the settlor's clear intent with regard to a successor trustee's 
selection commands that such successor be a bank or trust company, and that 
intent must be honored. 

 

[¶33]   We conclude the trial court erred by 
confirming the beneficiaries' appointment of Brendan as the successor trustee 
because he did not meet the trustee requirements set out in the trust 
agreement.  In 
the absence of a qualified replacement, ANB remained as trustee.  That is not to say 
the beneficiaries cannot replace ANB.  However, such successor trustee must 
be

 

a bank or trust company situated in the United States and having trust powers under 
applicable federal or state law [with] a combined capital and surplus of at 
least two million dollars and assets for which the bank or trust company has 
sole or shared investment responsibility of at least twenty-five million 
dollars.

 

C.        Remaining 
Issues

 

[¶34]   As noted above, the beneficiaries filed 
two motions to dismiss with this Court alleging (1) a second appeal was required 
to be filed from the trial court order on remand and (2) the matter is moot 
because the earnest money was paid into an escrow pending this Court's decision 
on the merits of the appeal.  Both were denied, and yet the beneficiaries 
raise the issues again in their brief.  We decline to reconsider our denial of these 
motions by which we held this Court retained jurisdiction over the appeal while 
the matter was on remand making a second notice of appeal unnecessary and found 
the escrow arrangement was sufficient to preserve the earnest money.  

 

[¶35]   The beneficiaries also contend that 
Kathleen has an unresolved issue regarding her individual interest in the 
partitioned ranch property.  ANB and the beneficiaries stipulated to a 
division of the sale proceeds addressing this alleged claim as it pertained to 
the Reed agreement.  
That agreement failed, and the matter was not raised before the trial 
court in relation to the renewed motion to confirm the Rock Springs 
agreement.

 

Our general rule is that we will not consider issues not 
raised in the court below.  WW Enterprises, Inc. 
v. City of Cheyenne, 956 P.2d 353, 356 (Wyo. 1998).  There are only two exceptions to that 
rule:  when the 
issue raises jurisdictional questions or it is of such a fundamental nature that 
it must be considered.  Id.; Bredthauer v. TSP, 864 P.2d 442, 447 (Wyo. 
1993).

 

Cooper v. Town of Pinedale, 1 P.3d 1197, 1208 (Wyo. 2000).  The issue of Kathleen's interest does not 
fall within these exceptions, and we will not consider it further.

 

[¶36]   The beneficiaries also argue the trial 
court suggested in its first refusal to confirm the Rock Springs agreement that 
Rock Springs was estopped from arguing the agreement should be confirmed  because Rock 
Springs was aware ANB continued to offer the property for sale after the Rock 
Springs agreement was executed.  However, the Reed agreement failed, and any 
estoppel argument attendant to it failed as well.  

 

[¶37]   Finally, the beneficiaries request an 
award of attorney fees without a clear articulation of the basis for their 
claim.  The 
American rule, whereby each party is generally responsible for his own attorney 
fees and costs, applies in this jurisdiction.  McNeill Family 
Trust, 2003 WY 2, ¶32.  Consistent with our 
precedent, we apply the rule to hold all the parties in this matter responsible 
for their own fees and costs. Alexander v. Meduna, 
2002 WY 83, ¶49, 47 P.3d 206, ¶49 (Wyo. 
2002); Schlesinger v. Woodcock, 2001 WY 120, ¶21, 35 P.3d 1232, ¶21 (Wyo. 
2001); Cline v. Rocky Mountain, Inc., 998 P.2d 946, 949 (Wyo. 
2000).

 

[¶38]   Reversed and remanded.

 

FOOTNOTES

 

1The appellees' brief 
indicates, without record citation, that Ms. Clements died in December of 
1986.  The date 
of Ms. Clements' death does not impact the resolution of this appeal but does 
provide some historical perspective relative to ANB's appointment as 
trustee.   

2Article IX, Section 3 of the trust (emphasis added) 
provided in pertinent part:

The trust shall always be administered free from the active 
supervision of any court . . . . Proceedings to seek instructions or court determinations 
shall be initiated in the appropriate state court having original jurisdiction 
of matters relating to the construction and administration of trusts.

3Article X, Section 4 of 
the trust (emphasis added) provided:

The Trustee may sell, 
lease, transfer, exchange or otherwise dispose of, or grant options with respect 
to, any and all property at any time forming a part of the trust estate, in such 
a manner, at such time or times, for such other purposes, for such periods of 
time whether ending before or after the term of the trust, for such 
consideration and upon such terms, credits and conditions as it deems advisable, 
and may make and deliver such deeds, leases and other instruments as it 
considers proper under the circumstances, and may deal with the trust estate in all other ways in 
which a natural person could deal with his own property.