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2016 S.D. 45

IN THE SUPREME COURT

OF THE

STATE OF SOUTH DAKOTA

* * * *

In the Matter of the MARVIN M.

SCHWAN CHARITABLE FOUNDATION,

MARK SCHWAN and PAUL SCHWAN, 

as members of the Trustee Succession 

Committee of the Marvin M. Schwan 

Charitable Foundation, Petitioners and Appellants,

v.

LAWRENCE BURGDORF, KEITH BOHEIM, 

KENT RAABE, GARY STIMAC, and LYLE 

FAHNING, as Trustees of the Marvin M. 

Schwan Charitable Foundation, Respondents and Appellees.

* * * *

APPEAL FROM THE CIRCUIT COURT OF

THE SECOND JUDICIAL CIRCUIT

MINNEHAHA COUNTY, SOUTH DAKOTA

* * * *

THE HONORABLE MARK SALTER

Judge

* * * *

BLAKE SHEPARD, JR.

ALLEN I. SAEKS of

Stinson Leonard Street, LLP

Minneapolis, Minnesota

and

THOMAS J. WELK

JASON R. SUTTON of

Boyce Law Firm, LLP Attorneys for petitioners 

and appellants. 

* * * *

ARGUED ON APRIL 26, 2016

OPINION FILED 05/18/16
REECE ALMOND

VINCE M. ROCHE of

Davenport, Evans, Hurwitz 

 & Smith, LLP

Sioux Falls, South Dakota Attorneys for respondents 

and appellees.

RONALD A. PARSONS, JR.

PAMELA R. BOLLWEG of

Johnson, Janklow, Abdallah, 

 Bollweg & Parsons, LLP

Sioux Falls, South Dakota Attorneys for beneficiaries and 

appellees Bethany Lutheran 

College, Wisconsin Lutheran 

College, Evangelical Lutheran 

Synod, and WELS Kingdom 

Workers.

MARTY J. JACKLEY

Attorney General

PHILIP D. CARLSON

JEFFREY P. HALLEM

Assistant Attorneys General

Pierre, South Dakota Attorneys for appellee Attorney 

General of South Dakota.

KENNITH L. GOSCH of

Bantz, Gosch & Cremer, LLC

Aberdeen, South Dakota Attorneys for appellee 

Wisconsin Evangelical 

Lutheran Synod.
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WILBUR, Justice

[¶1.] Two members of a seven-member trust succession committee 

petitioned the circuit court for court supervision of the trust under SDCL 21-22-9. 

The trustees, beneficiaries, and attorney general requested that the court dismiss 

the petition. After a hearing, the circuit court dismissed the petition because it 

concluded that the two members did not meet the classifications of persons able to 

petition the circuit court for supervision. Reverse and remand.

Background

[¶2.] Marvin M. Schwan owned and operated Schwan’s Sales Enterprises 

(a.k.a. The Schwan Food Company) until his death in 1993. In 1992, Marvin had 

created the Marvin M. Schwan Charitable Foundation. The Foundation is a taxexempt, charitable supporting organization under Internal Revenue Code sections 

501(c)(3) and 509(a)(3). The Foundation’s governing documents (Trust Instrument) 

indicate that the Foundation is “organized and operated exclusively to support or 

benefit” the named beneficiaries. The Trust Instrument names the following seven 

beneficiaries: Wisconsin Evangelical Lutheran Synod, The Lutheran Church, 

Missouri Synod, Wisconsin Lutheran College Conference, Inc., Evangelical 

Lutheran Synod, Bethany Lutheran College, Inc., International Lutheran Laymen’s 

League, and Wisconsin Lutheran Synod Kingdom Workers, Inc. (Beneficiaries). 

[¶3.] The Trust Instrument provided for at least two trustees and not more 

than five trustees. Marvin had named himself, his brother Alfred Schwan, and his 

friend Lawrence Burgdorf as original trustees. Currently, the trustees include 

Burgdorf, Keith Boheim, Kent Raabe, Gary Stimac, and Lyle Fahning (Trustees). 
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The Trust Instrument grants the Trustees broad powers in their administration of 

the Foundation. The Trust Instrument further provides that all powers be 

exercised exclusively for the benefit of the Beneficiaries. In particular, the Trustees 

are charged with the responsibility to distribute income or principal to the 

Beneficiaries, to provide services or facilities for individual members of the 

Beneficiary organizations, and to support the activities of any religious or 

educational associations of the Beneficiary organizations. 

[¶4.] The Trust Instrument also provided for a Trust Succession Committee 

(Committee) comprising at least three members and not more than seven. The 

original members of the Committee included Marvin, Alfred, Burgdorf, and Owen 

Roberts. Currently, the Committee members include Marvin’s sons (Mark Schwan 

and Paul Schwan), David Ewert, Paul Tweidt, and three Foundation Trustees—

Burgdorf, Boheim, and Raabe. The Trust Instrument empowers the Committee to 

monitor the Trustees’ administration of the Foundation. The Committee may fire 

existing Trustees with or without cause, hire new Trustees, and request the 

Trustees to account “with regard to the Trustees’ doings” related to the Foundation. 

[¶5.] After Marvin’s death, the Trustees redeemed all Marvin’s stock in the 

company and funded the Foundation with assets valuing nearly $1 billion. The 

parties do not dispute that certain investments made by the Trustees over several 

years caused approximately $600 million in losses to the Foundation. These losses 

reduced the value of the Foundation’s assets and reduced the Foundation’s 

distributions to the Beneficiaries. 
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[¶6.] According to Committee members Paul and Mark, the Trustees did not 

inform the Committee until 2013 that the Foundation had experienced such 

significant losses from the Trustees’ offshore investments. Concerned about the 

Trustees’ actions, Paul attended a Trustees meeting to determine why the 

investments were made, how the losses occurred, and whether the Trustees were 

negligent and/or breached their fiduciary duties to the Foundation. According to 

Paul, the Trustees refused to address his concerns. 

[¶7.] Paul and Mark continued to seek information from the Trustees, 

relying on the Trustees’ duty under the Trust Instrument to “account” to the 

Committee related to the Trustees’ “doings.” In November 2013, the Trustees and 

Committee held a joint meeting. Prior to the meeting, Paul contacted Boheim. 

Boheim is both a Trustee and Committee member. Paul asked Boheim to create a 

meeting agenda that included, among other things, an accounting on the Trustees’ 

investment decisions and actions. According to Paul, the Trustees essentially 

ignored his requests, and at the meeting, the Trustees provided only short 

summaries related to the Foundation’s investments. 

[¶8.] In February 2014, Mark wrote to Committee Chair Ewert to express 

his continued concerns related to the Trustees’ offshore investments and his concern 

that the Trustees had not provided information related to those investments. Mark 

included in the letter a list of documents that he asked Committee member Ewert to 

obtain from the Trustees for an upcoming Committee meeting. On May 8 and 9, 

2014, the Committee held a meeting. But, according to Paul and Mark, Committee 

Chair Ewert and other Committee members whom are also Trustees refused to 
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address the Trustees’ past investment losses or provide the Committee information 

related to those investments. 

[¶9.] In June 2014, Mark and Paul petitioned the circuit court for 

instruction and supervision under SDCL 21-22-9. Paul and Mark asked the court to 

address whether the Committee had a duty under the Trust Instrument to request 

an accounting from the Trustees related to the Trustees’ investment losses, whether 

a majority vote of the Committee is required in order to request an accounting, 

whether the Committee members that are also Trustees have a conflict of interest, 

whether the Committee has a fiduciary duty to request an accounting, and whether 

Paul and Mark as individual Committee members may request an accounting. Paul 

and Mark also asked the circuit court to take judicial notice of a 2011 circuit court 

decision by Judge Stuart L. Tiede. Judge Tiede had issued the decision in a dispute 

about a Schwan family trust involving many of the same parties.

[¶10.] The Trustees moved to dismiss Paul and Mark’s petition. They 

asserted Paul and Mark lacked standing to request supervision and instruction 

under SDCL 21-22-9. Prior to the hearing on the Trustees’ motion to dismiss, the 

Trustees, Beneficiaries, and the South Dakota Attorney General requested an 

abeyance on any hearing for 90 days. The request came after the Trustees, 

Beneficiaries, and Attorney General entered into an agreement to allow the 

Beneficiaries and Attorney General to examine the Trustees’ actions. The Trustees 

agreed to provide the Beneficiaries and Attorney General detailed information and 

documentation related to the Foundation’s investment losses. The Beneficiaries 

and Attorney General agreed to keep the information confidential and to not share 
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the information with Paul and Mark. The circuit court postponed the hearing. In 

the meantime, the Trustees, Beneficiaries, and Attorney General prepared a 

“Settlement Agreement.” They conditioned the Settlement Agreement on the circuit 

court’s dismissal of Paul and Mark’s petition because they believed that “continued 

litigation over the June 2014 Petition would be contrary to the best interests of the 

Beneficiaries and would needlessly waste additional assets.” They further asserted 

that court supervision would “be unnecessary and impractical and would involve 

unnecessary expense to the Foundation.” Paul and Mark refused to sign the 

Settlement Agreement or dismiss their petition.

[¶11.] In February 2015, the Trustees filed a new motion to dismiss under 

SDCL 15-6-12(b)(1). The Trustees reasserted that Paul and Mark lack standing 

under SDCL 21-22-9 and added a claim that the Settlement Agreement rendered 

Paul and Mark’s petition moot. The Beneficiaries and Attorney General joined the 

Trustees’ motion. The circuit court held a hearing on February 23, 2015. At the 

hearing, the Trustees argued that Paul and Mark do not qualify as beneficiaries or 

fiduciaries under SDCL 21-22-9. Because only a trustor, fiduciary, or beneficiary as 

defined in SDCL chapter 21-22 can petition the circuit court for supervision, the 

Trustees averred that Paul and Mark’s petition must be dismissed. Paul and Mark 

responded that they are fiduciaries because a “fiduciary” is defined in SDCL 21-22-

1(3) to include a trust committee and they are part of the Committee. They also 

argued that they are beneficiaries because SDCL 21-22-1(1) broadly defines a 

beneficiary as “any person in any manner interested in the trust[.]” 
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[¶12.] After the hearing, the court gave the parties notice that it intended to 

treat the Trustees’ motion to dismiss as a motion for summary judgment under 

SDCL 15-6-56 so the court could consider matters beyond those contained in the 

pleadings. The court gave the parties a reasonable opportunity to present matters 

relevant to the motion for summary judgment and asked the parties to submit 

additional briefing. In July 2015, the court issued a memorandum decision and 

order. It granted Paul and Mark’s request that the court take judicial notice of 

Judge Tiede’s 2011 memorandum decision. The court denied the Trustees’ motion 

to dismiss based on the claim that the Settlement Agreement renders Paul and 

Mark’s petition moot. Lastly, the court granted the Trustees summary judgment 

and entered a judgment denying Paul and Mark’s petition because it held that Paul 

and Mark were not beneficiaries or fiduciaries authorized to bring a petition for 

supervision and instruction under SDCL 21-22-9.

[¶13.] Paul and Mark appeal, and we restate their issues as follows:

1. Whether the circuit court erred as a matter of law when it 

interpreted “fiduciary” under SDCL 21-22-1(3) to exclude 

Paul and Mark.

2. Whether the circuit court erred as a matter of law when it 

interpreted “beneficiary” under SDCL 21-22-1(1) to 

exclude Paul and Mark. 

3. Whether the circuit court erred in not remanding the case 

for additional evidence pursuant to SDCL 1-26-34.1

 

1. Paul and Mark do not restate or address this issue in their brief, nor cite to or 

rely on SDCL 1-26-34 in their arguments on the remaining issues. Moreover, 

SDCL 1-26-34 relates to administrative rules and procedures governing 

agency proceedings. “We will consider only those issues that the parties 

actually briefed.” Daily v. City of Sioux Falls, 2011 S.D. 48, ¶ 10 n.6, 802 

N.W.2d 905, 910 n.6. Issues not briefed are waived. Id.
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[¶14.] By notice of review, the Trustees, Beneficiaries, and Attorney General 

assert that the circuit court erred in rejecting their claim that Paul and Mark’s 

petition is moot because, under SDCL 55-4-31, the Beneficiaries ratified the 

Trustees’ conduct.2

Standard of Review

[¶15.] We review a circuit court’s decision to grant summary judgment de 

novo. In re Estate of Cullum, 2015 S.D. 85, ¶ 8, 871 N.W.2d 655, 657. Similarly, 

“[q]uestions of statutory interpretation and application are reviewed under the de 

novo standard of review with no deference to the circuit court’s decision.” Argus 

Leader v. Hagen, 2007 S.D. 96, ¶ 7, 739 N.W.2d 475, 478.

Analysis 

[¶16.] This appeal does not concern the scope of the Committee’s powers 

under the Trust Instrument related to the Trustees’ administration of the 

Foundation. Nor does this case concern the sufficiency of the Trustees’ “accounting” 

to the Committee on the Trustees’ “doings” related to the $600 million in losses on 

Foundation investments. This case concerns only whether Paul and Mark are 

authorized to petition the circuit court for supervision and instruction of the trust 

under SDCL 21-22-9. That statute provides in part that “[a]ny fiduciary, trustor, or 

beneficiary of any other trust may, if the trustee is a resident of this state or if any 

of the trust estate has its situs in this state, at any time petition the circuit 

 

2. The Trustees, Beneficiaries, and Attorney General do not brief this issue. 

Because we consider the issues actually briefed, this issue is waived. See id.
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court, the county where such petition is to be filed to be determined the same as in 

the case of a court trust, to exercise supervision.” Id. (emphasis added). Paul and 

Mark argue that they are fiduciaries and beneficiaries.

1. Fiduciary

[¶17.] Paul and Mark claim they are fiduciaries as used in SDCL 21-22-9 

because a “fiduciary” under SDCL 21-22-1(3) includes a “trust committee, as named 

in the governing instrument” and they are members of the “Trust Succession 

Committee” named in the Trust Instrument. Paul and Mark recognize that the 

majority of the Committee members oppose court supervision. Yet they assert that 

they are a “trust committee” under SDCL 21-22-1(3) because the Trust Instrument 

does not mandate that the Committee act only by a majority vote. Moreover, Paul 

and Mark claim that three of the Committee members have “a blatant conflict of 

interest” as the Trustees “responsible for the investment decisions that led to the 

Foundation’s $600 million loss.” 

[¶18.] The Trustees, on the other hand, argue that the plain language of the 

phrase “trust committee” does not include Paul and Mark because “[t]hey are 

merely two members of a seven-member trust committee[.]” The Trustees allege 

that, under the Trust Instrument, the Committee members take no individual 

action besides voting. The Trustees emphasize that the Committee (five of seven 

members) opposes Paul and Mark’s petition. According to the Trustees, “[i]t would 

be quite strange if a minority of the [Committee] could force the Foundation into 

court supervision when the Trust Instrument empowers the [Committee] to act only 

through majority vote and the majority opposes court supervision.” 
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[¶19.] Although Paul and Mark have fiduciary responsibilities as Committee 

members, “fiduciary” under SDCL 21-22-1(3) is specifically defined to mean “a 

trustee, custodian, trust advisor, trust protector, or trust committee, as named in 

the governing instrument or order of court.” Paul and Mark do not claim they are 

trustees, custodians, or trust protectors. And the plain language of the phrase 

“trust committee” does not support that Paul and Mark, individually, constitute a

“trust committee” under this Trust Instrument. The Trust Instrument names seven 

Committee members and empowers the “Committee” to exercise certain powers by a 

majority vote. Paul and Mark’s petition for court supervision is not supported by a 

majority vote. Moreover, although the Trust Instrument does not specifically 

require a majority vote before the Committee may request an accounting, the 

Instrument gives the “Committee” the power to request an accounting, not a 

Committee member. The drafters of the Trust Instrument were aware of the 

difference between a Committee and a Committee member. This is because the 

Trust Instrument refers to the Committee members individually in regard to the 

fact that the members shall be free from personal liability. Here, the circuit court 

did not err when it concluded that Paul and Mark, two members of a seven-member 

Committee, do not make up the “trust committee, as named in the governing 

instrument[.]” The result is the same if we remove the three allegedly-conflicted 

Committee members from our consideration. The remaining two members do not 

support Paul and Mark’s request for court supervision. 

[¶20.] Alternatively, Paul and Mark argue that the circuit court abused its

discretion when it did not exercise its equitable powers to recognize Paul and Mark 
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as fiduciaries. Paul and Mark direct this Court to the fact that SDCL 21-22-1(3) 

defines a fiduciary to include, in addition to a trust committee as named in a trust 

instrument, one named by “order of the court.” They claim the circuit court never 

decided whether Paul and Mark constitute a “trust committee” in light of equities 

(the biased Trustees/Committee members, the 2-2 vote of the remaining Committee 

members). The Trustees respond that the court “for good reason, declined to use its 

equitable powers to declare that the Schwans are a trust committee” because a 

majority of the Committee members oppose court supervision, the Attorney General 

opposes supervision, and the Beneficiaries oppose supervision. We decline to 

address this issue because we conclude that Paul and Mark are beneficiaries under 

SDCL 21-22-1(1). 

2. Beneficiary

[¶21.] The term “beneficiary” as used in SDCL 21-22-9 includes “any person 

in any manner interested in the trust[.]” SDCL 21-22-1(1). Paul and Mark claim 

that the Legislature chose to define “beneficiary” broadly so that “any person” 

interested extends beyond persons with a financial or beneficial interest in the 

trust. In Paul and Mark’s view, the phrase “in any manner interested” includes 

“persons with special powers, duties or interests under the governing trust 

document[.]” They then emphasize that they are persons interested in the trust 

because they have duties and powers under the Trust Instrument as Committee 

members. 

[¶22.] The Trustees, on the other hand, assert that a beneficiary under SDCL 

21-22-1(1) includes only those with “a financial interest in the trust, whether it is a 
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property right in the trust or a claim against the trust.” They contend that 

“[w]ithout limiting beneficiaries to those persons with a financial interest in the 

trust, the term beneficiary would conceivably cover any person who has any 

relationship or any self-proclaimed interest in the trust.” The Trustees direct this 

Court to SDCL 55-1-12, SDCL 55-13A-102(2), and SDCL 29A-1-201(4) as proof that 

the Legislature intended “beneficiary” under SDCL 21-22-29 to mean someone with 

a financial interest.3 

[¶23.] The plain language defining “beneficiary” is clear, certain, and 

unambiguous. A beneficiary under SDCL 21-22-1(1) is any person in any manner 

interested in a trust. Had the Legislature intended the manner interested be 

financial or beneficial, it could have so indicated just as it did in SDCL 55-1-12, 

SDCL 55-13A-102(2), and SDCL 29A-1-201(4). Moreover, under our well-settled 

rules of statutory interpretation, “we may not, under the guise of judicial 

construction, add modifying words to the statute or change its terms.” City of Sioux 

Falls v. Ewoldt, 1997 S.D. 106, ¶ 13, 568 N.W.2d 764, 767 (quoting State v. Franz, 

526 N.W.2d 718, 720 (S.D. 1995)). Nor will we declare the intent of the statute 

based on what we thought the Legislature meant to say. We are “bound by the 

actual language of applicable statutes” and “assume that statutes mean what they 

 

3. In SDCL 55-1-12, “beneficiary” is defined as “a person that has a present or 

future beneficial interest in a trust, vested or contingent.” Id. Under SDCL 

55-13A-102(2), a beneficiary includes “in the case of a trust, an income 

beneficiary and a remainder beneficiary[.]” And, under SDCL 29A-1-201(4), a 

beneficiary of a trust “includes a person who has any present or future 

interest, vested or contingent, and also includes the owner of an interest by 

assignment or other transfer[.]”
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say and that the legislators have said what they meant.” State v. Bordeaux, 2006 

S.D. 12, ¶ 8, 710 N.W.2d 169, 172 (quoting Crescent Elec. Supply Co. v. Nerison, 89 

S.D. 203, 210, 232 N.W.2d 76, 80 (1975)). 

[¶24.] This does not mean that any member of the public or any person with 

a self-proclaimed interest will be able to obtain court supervision. Here, Paul and 

Mark have a fiduciary responsibility to the Foundation as members of the 

Committee created by the Trust Instrument to oversee the Foundation. Because 

Paul and Mark are persons in any manner interested in the Trust as members of 

this Trust-created Committee, the circuit court erred when it granted summary 

judgment and dismissed Paul and Mark’s petition. 

3. Good Cause to the Contrary

[¶25.] The Beneficiaries and Attorney General alternatively ask this Court to 

affirm the circuit court’s decision because, in their view, the circuit court had good 

cause as a matter of law under SDCL 21-22-9 to deny court supervision. They 

assert, “Where the beneficiaries of a charitable trust—the only parties injured by 

alleged breaches of fiduciary duty or other conduct—have released the trustees 

pursuant to a settlement agreement drafted by the Attorney General following his 

independent review, there is little point to individual members of the [Committee] 

prolonging an expensive and quixotic quest to reopen and litigate what has already 

been resolved. No additional effectual relief could be gained by the trust’s 

beneficiaries from continued litigation.” Paul and Mark respond that the 

Beneficiaries did not raise this argument to the circuit court and that the circuit 

court did not hold a hearing on the merits under SDCL 21-22-9 because it dismissed 
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their petition. They further claim that “[a]n agreement specifically designed to 

conceal information from the [Committee] regarding the Trustees’ responsibility for 

the Foundation’s $600 million losses does not constitute good cause for dismissing 

the Schwans’ Petition.”

[¶26.] From our review of the court’s decision, the court did not conclude that 

the Trustees, Attorney General, or Beneficiaries established good cause to the 

contrary related to the merits of Paul and Mark’s petition. The court did not hold a 

hearing on the merits of Paul and Mark’s petition. In fact, the court identified that 

it would not address arguments raised by the Trustees or Paul and Mark because it 

concluded that Paul and Mark did not meet any classification entitled to seek court 

supervision under SDCL 21-22-9. On the record before us, we cannot say as a 

matter of law that the Trustees, Attorney General, or Beneficiaries have established 

good cause to the contrary. Because we hold that Paul and Mark are entitled to 

petition the circuit court to exercise supervision and instruction under SDCL 21-22-

9, the circuit “court shall fix a time and place for a hearing thereon, . . . and upon 

such hearing, enter an order assuming supervision unless good cause to the 

contrary is shown.” 

[¶27.] Reversed and remanded.

[¶28.] GILBERTSON, Chief Justice, and ZINTER, SEVERSON, and KERN, 

Justices, concur.