Opinion ID: 1842503
Heading Depth: 1
Heading Rank: 5

Heading: removal of mrs. dunham and billy alexander as trustees

Text: Ted F. Dunham, Sr., created eight testamentary trusts. He provided that Katherine, Billy Alexander and Fidelity National Bank of Baton Rouge would be the co-trustees of these trusts. Fidelity declined acceptance of the trusts and Louisiana National Bank of Baton Rouge was appointed as replacement co-trustee. All the beneficiaries of the trusts have joined in the petition to have Katherine and Billy Alexander removed as trustees. The trial court granted their request in part and ordered Katherine and Billy Alexander removed as trustees for the two trusts of which the sons, Ted, Jr., and Richard, were the beneficiaries. The Court of Appeal affirmed that ruling but amended it to provide that Katherine and Billy Alexander should also be removed as trustees to the six grandchildren's trusts also. We affirm that ruling. As stated by the trial court there are only two cases in Louisiana dealing with the removal of trustees. Succession of Supple, 274 So.2d 790 (La.App. 4th Cir. 1973) and Holladay v. Fidelity National Bank, 312 So.2d 883 (La.App. 1st Cir. 1975). Both of these cases generally provided that mere animosity between the trustees and beneficiaries was insufficient ground for removal of the trustee. However, while mere animosity is not sufficient ground for removal of the trustee, the statutory provisions relative to the responsibilities of a trustee are very rigid and hold the trustee to an even higher fiduciary responsibility to his beneficiary than that owed by a succession representative to heirs. The very word trustee implies the strongest obligation on the part of the trustee to be chaste in all dealings with the beneficiary. Several provisions in the Trust Code indicate the high standard to which a trustee is held. R.S. 9:2082 provides that a trustee shall administer the trust solely in the interest of the beneficiary. R.S. 9:2090 provides that a trustee in administering a trust shall exercise such skill and care as a man of ordinary prudence would exercise in dealing with his own property. R.S. 9:2085 prohibits the trustee from buying or selling trust property directly or indirectly from or to himself, his relative, his employer, employee, partner or other business associate. R.S. 9:2091 provides that a trustee is under a duty to a beneficiary to take reasonable steps to take, keep control of, and preserve the trust property. These provisions of the Trust Code evidence the intention by the Legislature to place the very highest possible fiduciary responsibility on the trustee towards the beneficiaries. Under R.S. 9:1789, [a] trustee may be removed in accordance with the provisions of the trust instrument or by the proper court for sufficient cause shown. As held by the Court of Appeal, sufficient cause was shown here to require the removal of Katherine and Billy Alexander as trustees of all eight of the trusts. As succinctly stated by the Court of Appeal: It is shown that Mrs. Dunham and Mr. Alexander conveniently delayed their acceptances of the trusts for the two sons until such time as the stock redemption had taken place. The sale took place February 27, 1978, and the pleadings and briefs show that Mrs. Dunham and Mr. Alexander did not accept the trusts until shortly after the sale had taken place. It was their duty either to have recused themselves as trustees as it is obvious that they intended to accept the trusts as soon as the redemption had taken place, or to have accepted the trusts and actively opposed the sale in their capacities as trustees. They did neither. Rather than opposing the sale or recusing themselves, as would appear to have been the more proper course, they did nothing, thereby permitting the succession and the trusts to sustain a substantial injury. This was a breach of their fiduciary duties as trustees, having been both a breach of the duty to act prudently in selling investments (LSA-R.S. 9:2127), and their duty to administer the trust solely in the interest of the beneficiaries (LSA-R.S. 9:2082), as the sale benefited Mrs. Dunham as shareholder and strengthened Mr. Alexander's position as corporate president. Also, as trustees it was their duty to have caused the principal trust property, stock in Anderson-Dunham, to be productive of the income. Income from the stock to the trusts would necessarily have had to have been in the form of dividends distributed by Anderson-Dunham. Trustees are under a duty to take reasonable steps to obtain possession of legacies. Comment (c) under LSA-R.S. 9:2091. It was the trustees' duty to have exerted pressure by threatening to demand delivery of the legacy, viz, corporate stock in trust, thereby influencing the corporation to distribute dividends, or to demand delivery of the stock from Mrs. Dunham in her capacity as executrix, so that the trustees could vote the stock in such a manner that the corporation would declare dividends. They did neither. Thus, they again breached their fiduciary duty. We, therefore, hold that the trial court was correct in removing Mrs. Dunham and Mr. Alexander as trustees of the trusts for the two children. Likewise, we find that they should have been removed as trustees of the trusts for the six grandchildren. The same injury that occurred to the children also occurred to the grandchildren. The grandchildren also suffered from Mrs. Dunham's and Mr. Alexander's failure as trustees to oppose the sale of the stock as the stock redemption, or to recuse themselves. The grandchildren also suffered from the failure of the corporation to declare dividends. It is, therefore, apparent that Mrs. Dunham and Mr. Alexander should be removed as trustees of the grandchildren's trusts as well.