Opinion ID: 2160801
Heading Depth: 2
Heading Rank: 2

Heading: wettestad owed fiduciary duties to willers and his primary duty was to preserve the trust assets.

Text: A trustee is required to act in the highest good faith toward the trust beneficiary. SDCL 55-2-1 (1988); Restatement (Second) of Trusts § 2 (1959). A trustee is under a duty to administer the trust solely in the interest of the beneficiary. Restatement (Second) of Trusts § 170 (1959). Additionally, a trustee owes the beneficiary of a trust the duty of loyalty. The trustee in dealing with the beneficiary on the trustee's own account is under a duty to the beneficiary to deal fairly with him and to communicate to him all material facts in connection with the transaction which the trustee knows or should know. Restatement (Second) of Trusts § 170 (1959). A trustee's duty to preserve the trust assets is in accord with the fundamental duty of loyalty and fidelity owed by every trustee to his beneficiary. In re Johnson's Estate, 75 S.D. 595, 71 N.W.2d 77 (1955). This Court has determined previously that a trustee's first duty as a fiduciary is to act in all things wholly for the benefit of the trust. Schroeder v. Herbert C. Coe Trust, 437 N.W.2d 178 (S.D.1989); Restatement (Second) of Trusts §§ 175, 176 (1959). The evidence demonstrates that Wettestad violated his duties as trustee in this case. Wettestad knew Navistar's displeasure with him and his management of Siouxland jeopardized the stock for which he was trustee. Wettestad knew as early as March 13, 1986 that Navistar proposed an option which included preservation of some of the stock value if Wettestad resigned as president of Siouxland. Wettestad's position as trustee for Willers may have obliged him to act in favor of Willers, even when such action resulted in his own detriment. It certainly required full disclosure of all relevant facts. Then, when Wettestad undertook a lawsuit against Navistar, he failed to inform Willers of all settlement offers or the terms of a settlement eventually reached by Wettestad. Wettestad pursued and accepted a settlement that benefitted him personally, including a cash settlement of $35,000.