Opinion ID: 1956316
Heading Depth: 1
Heading Rank: 5

Heading: speedway's request for an accounting

Text: Speedway requested, but the district court refused to order, an accounting regarding Hoppe's actions as a trustee. An action for accounting may, under one set of circumstances, find its remedy in an action at law and, under another, find it within the jurisdiction of equity. Where ... the intimate relationships of the parties are involved, an adequate remedy [is] available only within the equitable jurisdiction of the court. American Sec. Servs. v. Vodra, 222 Neb. 480, 492, 385 N.W.2d 73, 81 (1986) (quoting Philip G. Johnson & Co. v. Salmen, 211 Neb. 123, 317 N.W.2d 900 (1982)). Generally, in order to be entitled to the equitable remedy of accounting, it is necessary to show a fiduciary or trust relationship between the parties, or a complicated series of accounts, making the remedy at law inadequate. [Citations omitted.] In an accounting action the burden is upon the plaintiff to establish his right to the accounting. American Sec. Servs. v. Vodra, 222 Neb. at 492, 385 N.W.2d at 81. As stated by one author: The relations between the trustor and trustee under a deed of trust would seem to be the same as those between a mortgagor and mortgagee, that is, to be of a business character and not of a fiduciary nature. .... When one considers the relationship between the trustee under the trust deed and the creditors secured, the elements necessary for a true trust are present, namely, identified property held for others in a fiduciary relation. George G. Bogert, The Law of Trusts and Trustees § 29 at 374-75 (rev. 2d ed. 1984). We hold that the Nebraska Trust Deeds Act results in a fiduciary relationship between the trustee and the creditors secured by a deed of trust. Also, under the provisions of § 76-1011 of the act, a trustee has a duty to disburse proceeds to junior lienholders according to priority and, therefore, holds sale proceeds in trust for distribution to lienholders whose interests are junior to the interest of the beneficiary designated in the deed of trust. Therefore, Speedway, although not a party to the deed of trust, became a statutory beneficiary by virtue of Cornhusker Bank's invocation of the Nebraska Trust Deeds Act. The evidence in this case established that proceeds from the trustee's sale remain for distribution to junior lienholders after sales proceeds were applied to the trustor's debt to Cornhusker Bank. Therefore, in the case at hand, as a statutory beneficiary, Speedway became a beneficiary in fact when a surplus remained for distribution after application of the sales proceeds to the trustor's debt owed to Cornhusker Bank. The dealings of a trustee with the trust property are narrowly scrutinized by courts of equity. If impugned, they cannot stand unless characterized by the utmost good faith and candor. And the burden is upon the trustee to show their entire fairness. Where the duty of the trustee or agent requires it, he must keep true, regular and accurate accounts of all his transactions, both of receipts and disbursements, and should render a full and complete statement, supported by proper vouchers. Red Bud Realty Company v. South, 96 Ark. 281, 299, 131 S.W. 340, 348 (1910) (quoting McNeil v. Gates, 41 Ark. 264 (1883)). Accord A & P's Hole-in-One, Inc. v. Moskop, 38 Ark.App. 234, 832 S.W.2d 860 (1992). In the present case, Hoppe's disbursement statement did not specify whether the trustee's fee was based on the 5-percent provision in the deeds of trust or on services actually rendered. Thus, viewed in a most liberal and favorable light, the trustee's disbursement statement submitted by Hoppe reflects printing costs incurred for the sales, but fails to supply any information concerning the trustee's services performed, time expended, or the basis on which the trustee's fees were computed. Therefore, Hoppe's disbursement statement falls short of a full and complete accounting required from a fiduciary under the circumstances. Because the trustee's disbursement statement does not suffice as an accounting, Speedway is entitled to an equitable accounting of Hoppe's actions as trustee in connection with the exercise of the power of sale pursuant to the Nebraska Trust Deeds Act.