Opinion ID: 70923
Heading Depth: 2
Heading Rank: 2

Heading: The resignation by the trustee

Text: Plaintiff has not asked that the bank should be removed as trustee. Rather he says that he wants the bank to continue as trustee and to comply with its fiduciary obligations. For example, he says that other members of his family own FSC stock, and should a merger be proposed that is in the interests of trust beneficiaries, the bank, as his trustee, can join with other family-member shareholders to support the merger (and possibly to control a decision). Also, he asserts that the value of his FSC stock was enhanced when held in conjunction with FSC shares owned by other trusts. Four days after plaintiff filed this suit the trust officer, in a knee-jerk reaction, sent him a certificate for the FSC stock held in his trust and invited him to consider revoking the trust. Instead plaintiff promptly amended his complaint to charge that returning the stock was a breach of trust and was intended to prevent him from asserting the claims that had been made in his original complaint by depriving him of standing. The bank then resigned as trustee. The complaint was not amended to allege that the bank breached its obligations by resigning. However, we consider this issue because it was tried by consent—presented by the parties in the district court and decided by it, and presented to us on appeal. Coker testified that the return of the stock and the resignation violated the trust agreement, the bank's policy manual, and commonly accepted principles in the industry. The district court held that the resignation was not inappropriate, because the trust agreement authorized the bank to resign or revoke the trust on 30 days notice, and the trustee, accused of acting disloyally, had acted appropriately to relieve the situation. And, the court added, in view of the differences between the parties, if asked, it would have permitted the bank to resign. A trustee may not relieve itself of its role or its duties merely because it wishes to. It may resign with permission of a proper court, or with the consent of the beneficiaries, or in accordance with the terms of the trust agreement. II Scott, § 106, at p. 96. The power to resign, like other discretionary powers possessed by a trustee with conflicts of interest, must be exercised in good faith, for proper motives, and within the bounds of proper business judgment, and the burden of proof rests on the trustee. The bank could have sought permission of a court to resign pursuant to O.C.G.A. § 53-12-175, citing disagreement between the beneficiary and the trustee, but it did not do so. A petition to the court would have to be served on the beneficiary, and it would have to be shown, presumably after an opportunity by the beneficiary to be heard, that the resignation would not be disadvantageous to the trust. O.C.G.A. § 53-12-175(a)(3)(F). Plaintiff's claim that the trustee resigned for improper motives and without regard to his interests could not be disposed of by summary judgment.