Opinion ID: 1830916
Heading Depth: 1
Heading Rank: 7

Heading: the trial court's grant of summary judgment for first national bank was error.

Text: ¶ 38. In their second assignment of error, the Slighs contend that the trial court erred in granting summary judgment to First National Bank because the bank's relationship with Lorance created legal duties for the bank; the negligence of the bank was the proximate cause of William Sligh's injuries; the bank is liable for entrusting a dangerous instrumentality to Lorance; and the bank is liable for breach of fiduciary duties. ¶ 39. The Slighs argue that FNB not only served as lender to Lorance, but served as banker, Trustee, advisor, counselor and consultant. In controlling the corpus of the trust, the invasion of the corpus of the trust, the income from the corpus and payments out of the trust, the Slighs contend that FNB exercised a degree of power and control over Lorance. ¶ 40. The Slighs rely on Uniform Trustee's Powers Act, Miss.Code Ann. § 91-9-101 et seq. (Rev.1994) which requires that the Trustee perform every act as a prudent man meaning in the manner in which men of ordinary prudence, diligence, discretion, and judgment would act in the management of their own affairs. Id. § 91-9-103(c). Therefore, the Slighs contend, the bank was charged with acting, in the management of the Trust, as it would if it was managing its own affairs in the same situation. ¶ 41. Under the terms of the trust, the bank had the power and duty to expend the trust proceeds for the best interest of... Gene Lorance, and shall pay to ... Gene Lorance such sums and at such times as my said Trustee thinks in ... his best interest. From these terms, the Sligh's argue that the bank was under a duty and had the power to determine the safety, well-being, and best interests of Lorance and to inquire affirmatively into and determine Lorance's best interest in paying Lorance any funds. ¶ 42. The Slighs contend that the bank had the ability to control whether Lorance received treatment for his alcoholism. Also, the Slighs contend that the bank had the ability to cut off the stream of money which Lorance used to support his alcoholic habits. Further, they contend that the bank had the ability to seek to have Lorance declared incompetent and unable to care for his own affairs. However, the bank did none of these things. ¶ 43. The Slighs contend that the duty of the bank to control Lorance arises by virtue of (1) the exercise of control by the bank over another (Lorance) or the ability to control another; plus (2) the foreseeability that harm might occur to a third party if that control is not exercised reasonably. The Slighs offer Implicit in the duty to control is the ability to control. Lundgren v. Fultz, 354 N.W.2d 25, 27 (Minn.1984). ¶ 44. Citing Karbel v. Francis, 103 N.M. 468, 709 P.2d 190, 193 (N.M.Ct.App.1985), the Slighs state: The element of control has been held to be dispositive of the existence of a duty owed to a third person. Whether a defendant has exercised control over another person or has the ability to control another are questions of fact for the jury. Id. ¶ 45. Relying on the Lorance's deposition, the Slighs argue that FNB had a great deal of control over Lorance by virtue of its control over his finances. Some examples given by Lorance are: the bank controlled whether the roof on Lorance's house was fixed; the bank had a hand in to whom Lorance sold his car; the bank controlled whether Lorance would receive treatment at St. Dominic's Hospital; and the bank controlled whether Lorance would continue to receive monthly income from the trust and whether the corpus would be invaded for Lorance's benefit. In the case sub judice, the Slighs contend that the bank's ability to control Lorance's access to both alcohol and a vehicle through the control of his money is solely a question for the jury. ¶ 46. Further, the Slighs contend that the bank had the actual knowledge that Lorance was a habitual drunkard and drug addict. The Slighs contend that Lorance testified under oath that Tommy Vaughn, President of the Pickens Branch of the bank, knew of his drinking tendencies. The Slighs also contend that Lorance testified that Barbara Edwards, an employee of the Pickens branch, had seen him intoxicated on several occasions. In addition, citing from the deposition of Tommy Vaughn, the Slighs contend that Tommy Vaughn authorized the payment out of the subject trust to St. Dominic's for alcoholic rehabilitation and treatment of Lorance. ¶ 47. The Slighs cite Levy v. McMullen, 169 Miss. 659, 152 So. 899 (Miss.1934), for the proposition that even if the bank only knew that Lorance was an occasional drinker, that knowledge amounts to actual knowledge sufficient to put the bank on inquiry which would have led to full knowledge of his general reputation as an habitual drunkard. ¶ 48. In his deposition, Lorance stated that he had several vehicular accidents and received numerous D.U.I. citations. He testified that he had been admitted to at least five different rehabilitation facilities for alcoholism. From this testimony, the Slighs argue that it was foreseeable to the bank that if Lorance was continually given money from the trust that he would continue to drink his life away and engage in activities while drunk, including driving, that would endanger himself and others. Further, it is argued that it was also foreseeable to the bank that if it financed Lorance's purchase of a vehicle, he would drive drunk and would be likely to harm an innocent person such as the plaintiff. ¶ 49. The Slighs cite M & M Pipe & Pressure Vessel Fabricators, Inc. v. Roberts, 531 So.2d 615, 618 (Miss.1988) for the proposition that The original actor will not be absolved of liability because of a supervening cause if his negligence put in motion the agency by or through which injuries were inflicted. The Slighs also rely on Ross v. Louisville & Nashville RR., 178 Miss. 69, 172 So. 752, 755 (Miss. 1937), for the proposition that If the occurrence of the intervening cause might reasonably have been anticipated, such intervening cause will not interrupt the connection between the original cause and injury. ¶ 50. Based upon these authorities, the Slighs argue that it is clear that the bank could and should have anticipated that someone such as William Sligh would be injured if Lorance was provided with the financing to obtain a vehicle while Lorance continued to receive disbursements from the trust with which to purchase alcohol, thereby enabling him to drink and drive. ¶ 51. The Slighs argue that the bank was negligent by financing the purchase of the S10 pickup by Lorance which was involved in the accident at issue. They further contend that section 390 of the Restatement (2d) of Torts is equally applicable to the bank since the bank supplied the truck to Lorance through a third person. The Slighs argue that the banks' financing the purchase of the truck with knowledge that Lorance would likely use it in such a manner as to create an unreasonable risk of harm to others creates liability on the part of the bank. ¶ 52. The Slighs contend that there was sufficient evidence to put the bank on notice that Gene Lorance was an alcoholic and a drug abuser. For this reason, the bank's loan of money to Lorance to buy a car violated the duty of the bank as a fiduciary. ¶ 53. Given the above reasons, the Slighs argue that the trial court erred in granting summary judgment to FNB. They argue that the existence of the disputed material facts means that summary judgment should not have been granted. ¶ 54. The Appellee, FNB, contends that the Slighs have utterly failed to demonstrate any legitimate basis for holding FNB liable as a trustee for the actions of Lorance, an adult income beneficiary of a trust administered by them. ¶ 55. FNB argues that the Slighs attempt to expand the trust into a conservatorship or guardianship. They assert that the only relationship was that of a trust imposed relationship. The duty of FNB was to administer the trust in accordance with the trust agreement by disbursing the funds and maintaining the trust corpus. ¶ 56. The powers the trust gave to FNB are as follows: (A) expend all or any part of the income of corpus of said trust property ... for the benefit of Gene Lorance ...; (B) make payments directly to Lorance or to anyone for him; (C) invest, reinvest, manage and care for said property ...; (D) all powers conferred by the Uniform Trustees Powers Act. These duties, FNB asserts, simply involved the handling of money and nothing more. FNB provided a stipend to Lorance for his living expenses. Additionally, FNB paid for repairs to the roof of his parent's house. Lorance paid his own bills and took care of himself. FNB relies on the testimony of Gene Lorance wherein he stated that FNB in no way controlled the affairs of his life. ¶ 57. FNB cites Deposit Guaranty Nat'l Bank v. First Nat'l Bank of Jackson, 352 So.2d 1324, 1327 (Miss.1977) for the proposition that It is undisputed that under controlling law an unambiguous contract, such as the trust documents at issue, are to be interpreted and enforced based solely on the four corners of the document. FNB asserts that as the Lorance trust documents clearly and unambiguously set forth the limited responsibilities, the Slighs efforts to expand upon these duties are barred as a matter of law. ¶ 58. FNB addresses each contention of the Slighs. First, the Slighs claim that FNB should not have provided the monthly living expenses which would have prevented Lorance from having alcohol money. FNB argues that this claim fails because Lorance was already receiving disability checks from the government. ¶ 59. Second, FNB argues that the Slighs allege on appeal for the first time that FNB should have Lorance declared incompetent by a court order to prevent him from driving. Citing Touart v. Johnston, 656 So.2d 318, 321 (Miss.1995), FNB states that this Court has long followed the rule, however, that an appellant is not entitled to raise new issues on appeal since to do so denies the trial court the opportunity to address the matter. However, in further addressing the matter, relying on the deposition of Gene Lorance, he testified that FNB had no knowledge of his alleged prior accidents. FNB submits that it had no such duty or ability under the trust provisions to have him declared incompetent. ¶ 60. Third, FNB addresses the financing of the truck. The Slighs assert FNB is responsible for the accident because FNB financed the truck. Citing Grisham v. John Q. Long VFW Post, 519 So.2d 413, 417 (Miss.1988), FNB states that Mississippi law is well settled that the proximate cause of an injury is that cause which in natural and continuing sequence unbroken by an efficient intervening cause produced the injury, and without which the result would not have occurred. FNB notes that Lorance already owned a vehicle at the time of the loan in question. ¶ 61. FNB argues that no duty to the Slighs existed. FNB relies on Stanley v. Morgan & Lindsey, Inc., 203 So.2d 473, 475 (Miss.1967) for the proposition that some duty must exist between a plaintiff and defendant before recovery will be allowed, stating actionable negligence cannot exist in the absence of a legal duty to the plaintiff. In the absence of any such duty, the existence of which is a question of law to be answered by the court, judgment for the defendant is necessary. Morgan & Lindsey, 203 So.2d at 475. FNB contends that the Slighs have not identified any duty allegedly owed to them by FNB. ¶ 62. In addressing negligent entrustment FNB cites § 390 of Restatement (Second) Torts which provides: One who supplies directly or through a third person a chattel for the use of another whom the supplier knows or has reason to know to be likely because of his youth, inexperience or otherwise, to use it in a manner involving unreasonable risk of physical harm to himself and others whom the supplier should expect to share in or be endangered by its use, subject to liability for physical harm resulting to them. Restatement (Second) of Torts, § 390. FNB quotes the case of Broadwater v. Dorsey, 107 Md.App. 58, 666 A.2d 1282, 1286; rev'd on other grounds, 344 Md. 548, 688 A.2d 436 (Md.App.1995). The Restatement articulation of the [negligent entrustment] tort contains a number of discrete elements. The defendant must supply the chattel; he must know or have reason to know that the person he supplies it to is likely to use the chattel in a manner involving an unreasonable risk of physical harm to other persons; and he must have reason to expect that those other persons may be endangered by the entrustees use of the chattel. Dorsey, 107 Md.App. 58, 666 A.2d 1282, 1286. ¶ 63. FNB contends that it is not a supplier of a chattel as required in negligent entrustment. FNB relies on the case of Peterson v. Halsted, 829 P.2d 373 (Co. 1992). In that case the Supreme Court of Colorado addressed the question of whether a person who supplied credit for the purchase of a vehicle could later be found liable to a third party under a negligent entrustment theory. In Peterson, the defendant co-signed on a loan with his adult daughter Tamera in order for Tamera to purchase a vehicle. Tamera later drove the vehicle while intoxicated and collided with the plaintiff, killing plaintiff's daughter. The court found that Tamera had an alcohol problem which was known to her parents prior to co-signing on the loan. The Supreme Court framed the pertinent issue as follows: [W]hether the indirect facilitation of the purchase of a vehicle by a third person, as by Donald Peterson's lending his credit to Tamera, is sufficient to make that person a supplier of a chattel under § 390 [of the Restatement]. In answering this question in the negative, the Court stated: [W]e think it unwise and destructive of flexibility of analysis to classify suppliers of money or credit categorically as suppliers of chattels under § 390 even though the loan or credit may be essential to the borrower in obtaining possession of the chattel. Peterson, 829 P.2d at 378. Following this holding FNB contends that as a mere furnisher of credit, it cannot be construed as a supplier of chattel under a negligent entrustment theory. ¶ 64. FNB argues that it did not know nor did it have reason to know that Lorance should not have been driving. FNB relies on the statements of its employees wherein it is unformly denied that anyone had any knowledge of the purported dangers of Lorance's driving or that Lorance purportedly had a dangerous reputation. FNB states that the only reputation evidence that the Slighs have presented comes from Lorance himself. ¶ 65. FNB argues that even if it were established that it met the elements of negligent entrustment, the accident was too remote in time. The loan for the vehicle in question was made on August 22, 1990. The accident occurred on January 30, 1993. The loan was paid in full on January 8, 1991, well before the date on which the accident occurred. ¶ 66. FNB argues that it owed a duty to Lorance in regard to the administration of the trust. The duty related to finances. FNB asserts that there has been no evidence to show that there was a breach in that duty. However, FNB contends that any such action would necessarily have to be commenced by Lorance, as beneficiary of the trust rather than the Slighs. ¶ 67. Further, FNB asserts that the Slighs have also failed to establish proximate cause. FNB contends that for the foregoing reasons the lower court was proper in its grant of summary judgment. ¶ 68. Upon acceptance of the trust by the trustee, he is under a duty to the beneficiary to administer the trust. Restatement (Second) of Trusts § 169. ¶ 69. The trustee is under a duty to the beneficiary in administering the trust to exercise such care and skill as a man of ordinary prudence would exercise in dealing with his own property; and if the trustee has or procures his appointment as trustee by representing that he has greater skill than that of a man of ordinary prudence, he is under a duty to exercise such skill. Restatement (Second) of Trusts § 174. ¶ 70. According to Restatement (Third) of Trusts § 5 Trusts and Other Relationships, the following are not trusts: (c) guardianships and conservatorships.... ¶ 71. In the case sub judice, the terms of the trust agreement are as follows: 1. My said Trustee shall have full and complete authority to expend all or any part of the income or corpus of said trust property for the benefit of myself and my said son, Gene Lorance, and shall have the right to make payments directly to me and to my said son or to anyone for myself or my said son. 2. The Trustee shall have the right to invest, re-invest manage and care for said property in the same manner as though said property was the individual property of said Trustee, and my said Trustee shall not be required to give bond, or account to Court, and shall have all the powers conferred by the Uniform Trustees' Powers Act as the same is now in force in the State of Mississippi and the power to sell, lease or encumber real property. My said Trustee shall exercise the powers herein granted for what may be, in the discretion of my said Trustee, in the best interest of myself and said Gene Lorance, and shall pay to me or the said Gene Lorance such sums and at such times as my said Trustee thinks in my or his best interest.... ¶ 72. The Slighs main argument is that FNB had control over Lorance and therefore should be liable for his actions. FNB is the trustee of a trust set up for the benefit of Gene Lorance. Its duty is to administer the trust. In evaluating the terms of the trust agreement, there is no language in which FNB was to take control of Lorance. Gene Lorance was given a monthly check to pay his bills and take care of his needs. The Slighs argument must fail because a review of the record indicates that the only relationship between FNB and Lorance is that of trustee and beneficiary. ¶ 73. The next question is whether FNB can be liable for negligent entrustment. Mississippi courts generally follow the rule established by the Restatement (Second) of Torts § 390 which provides that: One who supplies directly or through a third person a chattel for the use of another whom the supplier knows or has reason to know to be likely because of his youth, inexperience or otherwise, to use it in a manner involving unreasonable risk of physical harm to himself and others whom the supplier should expect to share in or be endangered by its use, is subject to liability for physical harm resulting to them. Restatement (Second) of Torts § 390 ¶ 74. Since the Mississippi courts have not been presented with the question of whether a bank is a supplier of chattel, the trial judge looked to the Supreme Court of Colorado for guidance. The trial judge followed the holding in Peterson v. Halsted, 829 P.2d 373 (Co.1992), that to create a duty on lenders to make in-depth inquiries into an applicant's persona, at the time of the loan, in order to avoid future liability at some indefinite future moment, stretches the application of § 390 beyond its intended scope. This Court agrees and follows Peterson v. Halsted . ¶ 75. The Slighs, failed to demonstrate that there is more there is no causal connection between the lending of credit for the purchase of an automobile and the accident two an one-half years later. The lower court was correct in granting summary judgment. There are no genuine issues as to material facts presented to defeat summary judgment.