Opinion ID: 2598252
Heading Depth: 2
Heading Rank: 2

Heading: Designation of Brendan as Trustee

Text: [¶ 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.