Opinion ID: 2074647
Heading Depth: 1
Heading Rank: 6

Heading: Petition to surcharge the co-trustee.

Text: Patricia claims the court improperly dismissed her petition to surcharge Robert as co-trustee because she was denied the opportunity to present her case in support of the petition. She bases her claim on the court's order setting the final hearing in this matter, which stated: Any claim that Patricia Gridley may attempt to assert against Robert Hyde as co-trustee shall not be heard or decided at the hearing. Although Patricia was not allowed to specifically argue this issue before the court, the findings that the court made on the issues it did address necessarily required dismissal of Patricia's petition. SDCL 55-4-4 provides, in part: No trustee who has not joined in exercising a power shall be liable to the beneficiaries or to others for the consequences of such exercise.... In addition, the Restatement specifies that when one co-trustee is substantially more at fault than another co-trustee for a breach of trust, the former is not entitled to contribution from the latter, but the latter is entitled to indemnity from the former. Restatement (Second) Trusts § 258(1)(a) (1959); see also Reiner v. Kelley, 8 Ohio App.3d 390, 457 N.E.2d 946 (1983). Such a situation exists in the present case. The court determined that Robert did not know about the commodity trading until after the losses were sustained, and Patricia offers no basis for deeming that finding clearly erroneous. Since Robert did not know about the commodity trading he cannot be faulted for the loss that resulted; fault for the loss rests entirely upon Patricia. In fact, the Restatement illustration fits the present case. A and B are trustees for C. B permits A to assume the sole management of the trust. A purchases securities which are not proper trust investments. B does not know of or consent to the purchase. The securities are sold at a loss of $1000. If A makes good the loss he is not entitled to recover anything from B. If B makes good the loss he is entitled to recover $1000 from A. Here, Robert permitted Patricia to handle the day-to-day operation of the trust, Patricia invested in commodities which are not a proper trust investment, and Robert did not know about the investment. As a result, Patricia is not entitled to recover anything from Robert.