Opinion ID: 1150387
Heading Depth: 2
Heading Rank: 1

Heading: The Opinion of the Chancellor is Contrary to the Evidence and the Law.

Text: Binx argues that he had not violated the trust in any way. To strengthen this position, Binx asserts that each year he paid all of the income from the trust to Alma V. Cox. Additionally, he claims to have operated the trust with a nominal charge for his acts. Binx also argues that there is no evidence before this Court of hostility other than the anxiety of the beneficiary. More specifically, Binx believes that Alma Cox's charges stem from his failure to place her judgment over the discretionary power granted to the trustee by the trust agreement. Considering Binx's argument, this Court turns to the reasoning in Yeates v. Box, 198 Miss. 602, 612, 22 So.2d 411, 415 (1945), where this Court states: A court of chancery or its equivalent has inherent power to remove the trustee for good cause, such power being incidental to the court's paramount duty to see that trusts are properly executed, and the trust estate preserved, and as broad and comprehensive as the exigencies of the case may require. In view of Yeates, this Court must decide whether the chancellor abused his discretion in removing the trustee. The first two grounds, absence from the jurisdiction and failure to give an accounting, certainly cast shadows as to the ability of the trustee to perform his duties. More significantly, the hostility of the trustee toward a beneficiary could affect the trustee's judgment in carrying out the terms of the trust. Thus, the only close question before this Court is whether or not the evidence supported the finding by the chancellor that there was hostility on the part of the trustee toward successor income beneficiary, Alma Cox. In resolving this issue, this Court thoroughly reviewed prior authority in connection with the removal of trustees. To this date, this Court has not addressed the issue of removal of a trustee due to hostility. A leading treatise on the subject, Bogart, Law of Trust (5th Ed. 1973) § 160, states: Disagreement and unpleasant personal relationships between the trustee and the beneficiaries are not usually enough to warrant removal. The beneficiary often conceives that he could manage the trust better than the trustee, resents failure to follow his advice, is dissatisfied with returns, thinks that the trustee is too conservative in his investment policies, and otherwise finds fault with the trustee. Thus, friction develops. But the settlor has entrusted the management to the trustee and not to the beneficiaries. The very fact that he created a trust showed that he did not want the beneficiaries to be the controlling factor in the management of the property. However, in some instances the hostile relationship between the trustee and the beneficiary have gone so far that the court feels a new trustee should be appointed. In addition to the reasoning in Bogart, this Court reviewed the analysis in Ashman v. Pickens, 12 Ark. App. 233, 674 S.W.2d 4 (1984). In Ashman the Court of Appeals in Arkansas, citing Blumenstiel v. Morris, 207 Ark. 244, 180 S.W.2d 107 (1944), sets out two rules concerning the removal of a trustee due to the mutual hostility between the beneficiaries and the trustee. The Court in Ashman explains: Also in Blumenstiel, supra, the Court adopted the rule that mutual hostility between the beneficiaries and the trustee is a sufficient ground for the court to remove the trustee if 1) the provisions of the instrument creating the trust require mutual interchange of ideas, and 2) if the hostility tends to defeat the purpose of the trust. Finding the reasoning of Ashman persuasive, we believe the better rule to be that hostility of the trustee toward the successor income beneficiary could defeat the purpose of the trust. In the case at hand, the chancellor found hostility as one of the grounds for removal of Binx Walker as trustee. We find that there was sufficient evidence in the record to support the finding of hostility. A review of the record reveals this special provision of the trust: It is not my intention that the trust estate and income therefrom be conserved for the benefit of the ultimate remaindermen. The chancellor found that Binx, acting contrary to this provision, did not fairly administer the trust according to its terms. In support of that finding, the lower court pointed out that Binx failed to meet Alma Cox's needs for extra money. His failure to meet her needs to the extent possible resulted in the trust growing from $36,788.09 to $157,078.40 over the trust's lifetime. The growth of the trust in itself is a highly commendable result and accomplishment, particularly while the trustee's compensation amounted to only $300 to $500 per year for this excellent performance. However, the trust seems to provide for expending the funds, rather than increasing its assets for future distribution. In addition to failing to provide further support for Mrs. Alma Cox, Mr. Walker also refused to provide an accounting of his actions. This Court finds little merit in Mr. Walker's argument that the residuary trustees were the ones entitled to an accounting. Consequently, this Court, as did the chancellor, finds that Mr. Walker's actions combined to support Alma Cox's allegation that there was hostility on the part of the trustee toward Mrs. Cox. Considering all the evidence presented, this Court has no alternative under our familiar Rule [1] except to uphold the chancellor's finding. We are aware that Alma Cox may bring great pressure upon the new trustee; however, the new trustee will, no doubt, carry out all of the purposes of the trust as required by law.