Opinion ID: 1919258
Heading Depth: 1
Heading Rank: 3

Heading: whether a chancellor has jurisdiction to render a judgment against a removed executrix for failing to account for bonds sold for the decedent prior to the decedent's death without first filing a complaint against the executrix.

Text: ¶ 19. Frazier asserts that the ruling of the chancellor holding her accountable for over $320,000 of estate assets was a personal judgment and as such required the filing of a complaint. Frazier contends that when Chancellor Grist closed the estate in 1996, he released Frazier in her representative capacity, and that when the Mississippi Baptist Foundation filed a motion to re-open the estate in 1999, it should have commenced a civil action by filing a complaint. In addressing this argument, we thus consider the specific rights and duties assigned to a fiduciary charged with administering an estate. It is thus important to determine whether Frazier ever fully executed her duties and responsibilities so as to legally justify her release from the fiduciary responsibilities conferred upon her as a duly appointed officer of the court. ¶ 20. The nature of the relationships formed in this case are fiduciary in nature. In Hendricks v. James, 421 So.2d 1031 (Miss.1982), we stated: Whenever there is a relation between two people in which one person is in a position to exercise a dominant influence upon the other because of the latter's dependency upon the former, arising either from weakness of mind or body, or through trust, the law does not hesitate to characterize such relationship as fiduciary in character. Id. at 1041. ¶ 21. In Harper v. Harper, 491 So.2d 189 (Miss.1986), this Court determined that we hold trustees and other fiduciaries accountable to the same standard of care that we use to review the actions of an executor who has been charged with the maladministration of an estate. Id. at 194. In Harper, we specifically addressed the duties of executors and the standard of care by which we expected these duties to be executed: [T]he executor's duties are (1) to reduce to possession the personal assets of the testator; (2) to pay the testator's debts; (3) to pay legacies; and (4) to distribute the surplus to the parties entitled thereto. [quoting from Yeates v. Box, 198 Miss. 602, 22 So.2d 411 (1945)]. Powers granted an executor are coextensive with the will and therein grounded. Ricks v. Johnson, 134 Miss. 676, 99 So. 142 (1924); Grant v. Spann, 34 Miss. 294 (1857). The duly appointed executor shall carry out all of the provisions of the will that may be lawful. The will is the source and measure of the power of the executor. Ricks, 99 So. at 146. And in determining the powers of executors, the basis for all construction of language within the will is to determine first the intention of the testator as gathered from the whole will. Yeates v. Box, 198 Miss. at 602, 22 So.2d at 411. One serving in the capacity of executor or administrator is an officer of the Court and holds a fiduciary relationship to all parties having an interest in the estate. A trust arises from the appointment of the executor or administrator. Schreiner v. Cincinnati Altenheim, 61 Ohio App. 344, 22 N.E.2d 587 (1939); 33 C.J.S., Executors and Administrators, § 3, p. 878 (1942). Thus in answering questions of the powers, duties, and liabilities of executors, this Court applies the above Mississippi statutory and case law, as well as the expressed intent of the testamentary instrument itself. In answering these questions this Court must establish a standard of care chargeable to an executor in evaluating charges of maladministration. It appears proper that since a trust and fiduciary relationship is established by these connections, this Court holds that the same standard of care applicable to a general trustee applies to an executor or administrator. This standard is expressed as follows: Ordinary care, skill, and prudence are normally required of trustees in the performance of all their duties, unless the trust instrument provides otherwise. The rule is that trustees are bound in the management of all the matters of the trust to act in good faith and employ such vigilance, sagacity, diligence and prudence as in general prudent [persons] of discretion and intelligence in like matters employ in their own affairs ............ Bogert, Law of Trusts, § 93 (5th ed.1973). See also, Scott, Scott on Trusts, § 174 (3rd ed. 1967). 491 So.2d at 193-94 (emphasis added). ¶ 22. Today's case involves a direct fiduciary relationship which was memorialized in 1985 when Carter conferred a power of attorney over her estate to Frazier. At the moment Frazier became Carter's attorney-in-fact, she was charged with a fiduciary duty to act in good faith and employ such vigilance, sound judgment, diligence and prudence as exercised by general prudent persons of discretion and intelligence in handling their own affairs. Clearly, Mississippi law recognizes the important role that fiduciaries play in the administration of estates. Coordinately, our law fully considers the unique position of power given to executors, trustees and attorneys-in-fact when executing their duties and mandates, and we hold these fiduciaries strictly accountable to this high standard of care when we review their execution of such duties. Our chancery courts thus no doubt have an essential role in serving to protect a weaker, dependent party who has conferred power to a fiduciary under the auspices of confidence and influence. ¶ 23. Given this unique interplay between parties to a fiduciary relationship in a court of equity, it becomes obvious that Frazier's argument misapprehends the broad remedial powers provided to a chancellor. To this end, Frazier's argument ignores the continued relationship she had with Carter's estate, its beneficiaries, and the chancery court, and instead relies on a theory that a formal pleading was required to reestablish her fiduciary duty. In essence, Frazier is using a smoke and mirrors argument in order to avoid dealing with the very simple fact that she has not and can not provide any substantiation for the expenditure of a large portion of Carter's estate assets. In issuing his decision in this case, Chancellor Roberts noted this monumental dereliction: At least two Chancellors have requested an accounting from the Executrix since the Executrix [Frazier] failed to comply with Chancellor Grist's order to pay these entities and file copies of the negotiated instruments evidencing the distributions and payments with the Court. Further, this Judge has given the Executrix at least three occasions to present evidence to the Court of where money was spent to justify the cashing in of the savings bond prior to Ms. Carter's death. This Court has repeatedly stated that any money the Executrix can show was spent on Ms. Carter during her life, while Executrix was acting under power of attorney, will reduce the Executrix's monetary liability to the Estate. Not only would the potential award of over $320,00 be reduced by the amount spent but further reductions would be made for the tax liability and unearned interest. (emphasis added). ¶ 24. It is clear from reading the will that Carter intended all of her assets, except the real estate, to go to charities and not to individuals. She enumerated her bonds according to bond number and specifically designated these assets to individually named charities. While it follows that the assets, which were specifically spent for the benefit of Carter during her life, or for the settlement of her estate in the time following her death, should be accounted for and deducted from the estate, assets specifically designated to charitable organizations which have not been abated should indeed be expected to be paid over to these organizations in their entirety. This duty of administration, which was Frazier's singular responsibility as executrix of Carter's estate, was complicated by the fact that she also served as Carter's attorney-in-fact. It is clear that Frazier abused, or at the very least, wholly neglected her responsibilities in both capacities. ¶ 25. Prior to her death, Carter granted Frazier a power-of-attorney concerning Carter's affairs. In exercising this power, Frazier, who possessed full knowledge of Carter's intent as stated by her will, liquidated almost half of the assets as identified in the will. Moreover she redeemed twenty-three Class E savings bonds in the year prior to Carter's death and effectively disposed of assets intended for charitable distribution. Over the course of the litigation in this matter, Frazier has consistently failed to produce any records substantiating the need to sell these bonds. No expenses are documented, and Frazier testified that she cannot remember any specific monetary needs of Carter or how much they may have cost. Ultimately, Frazier failed, after multiple requests, to produce a single satisfactory accounting to the chancery court proving a proper distribution of assets. In no uncertain terms, Frazier has not only usurped her duty as prescribed by Carter's will, but breached her fiduciary duty as prescribed by law. ¶ 26. An accounting is an important mechanism for the chancery court to employ in order to monitor the administration of an estate. Moreover, an accounting is an opportunity for an individual charged with the distribution of the assets of an estate to document and justify his/her lawful execution of the duties conferred upon him/her. While an accounting may be waived by a testator, the chancellor, in the interest of equity, has the power to nullify this waiver: The executor is also required to file an accounting at least once a year, showing the disbursements and receipts of estate. Miss.Code Ann. § 91-7-277 (1972). This accounting may be waived by the testator through the will. Will of McCaffrey v. Fortenberry, 592 So.2d 52, 65 (Miss.1991). However, the chancery court may require an accounting even when the testator has waived it where there are charges of mismanagement or maladministration of the estate. Harper, 491 So.2d at 200. In re Estate of Hollaway, 631 So.2d 127, 134 (Miss.1993). ¶ 27. In Van Zandt v. Van Zandt, 227 Miss. 528, 86 So.2d 466 (1956), a case involving a suit by co-tenants against their fellow co-tenant for the accounting of proceeds received upon the sale of timber on the parties' commonly owned land, this Court examined the necessity of an accounting as it relates to a fiduciary's duty of disclosure. Under the facts of Van Zandt, this Court had to determine the duty to disclose as it relates to a co-tenant holding a power-of-attorney for his other co-tenants. We focused on the fiduciary relationship between the parties and the accompanying conditions of trust and confidence, and upheld the chancery court's finding that the facts and circumstances established a concealed fraud. Van Zandt, 86 So.2d at 469-70. Specifically, we held that [u]nder the facts as found to be true by the chancellor, the appellant made no disclosure of the sale whatsoever to the appellees, and made no accounting to the appellees for their pro-rata share of the proceeds, as was his duty to do under the fiduciary or trust relationship existing between him and the appellees. Id. at 470. In so holding, we noted the general rule in such cases: It is the prevailing rule that, as between persons sustaining a fiduciary or trust or other confidential relationship toward each other, the person occupying the relation of fiduciary or of confidence is under a duty to reveal the facts to the plaintiff (the other party), and that his silence when he ought to speak, or his failure to disclose what he ought to disclose, is as much a fraud at law as an actual affirmative false representation or act; and that mere silence on his part as to a cause of action, the facts giving rise to which it was his duty to disclose, amounts to a fraudulent concealment within the rule under consideration. [5] 86 So.2d at 470 (citing 173 A.L.R., page 588). ¶ 28. Here, Frazier is charged with maladministration inasmuch as she has never accounted for the proceeds of the estate assets. In accord with our holding in Van Zandt, Frazier has breached her fiduciary duty of disclosure by fraudulently concealing bond proceeds, having never produced an accounting which lends one iota of documentation as to the whereabouts of such proceeds. To this end, the beneficiaries to Carter's estate and the chancery court have been left in the dark for almost ten years concerning the distribution of these assets. Frazier unquestionably failed to complete her duties as an executrix and certainly never complied with her duties as a fiduciary. Given these clear facts, it stands to reason that the chancery court never lost jurisdiction over her. ¶ 29. The closing of an estate in a chancery proceeding is not a license for an executor or executrix to rob the coffers of the dead. Moreover, when indicia of fraudulent activity are present, there is no legal barrier preventing a chancellor, clothed with the powers of equity, from reopening a closed estate and demanding a fiduciary to produce evidence in an effort to disprove maladministration. In serving the interests of fairness, expediency and justice, a chancellor relies on executors/attorneys-in-fact to carry out the full gamut of their responsibilities while paying homage to their unique fiduciary duties. According to Mississippi law, one serving in the capacity of executor or administrator is an officer of the court and holds a fiduciary relationship to all parties having an interest in the estate. Hollaway, 631 So.2d at 133. Based on this relationship, Mississippi law provides a chancellor with broad equitable powers and encourages the imposition of regulatory measures which insure that an estate and the will of its owner are protected from fraud. It is therefore the distinct duty of a chancellor to hold those serving in positions of trust accountable for their administrative actions and, in this way, hold a fiduciary fully accountable for the property with which the fiduciary has been entrusted. ¶ 30. Regardless of her official title, Frazier owed a strict fiduciary duty to both Carter and to all parties bearing an interest in the estate. This became true the minute she agreed to become Carter's attorney-in-fact. Based on Frazier's continued responsibility over Carter's assets, both in life and upon her death, Chancellor Roberts had the power to hold Frazier fully accountable for the sum of the assets for which she was responsible. To this end, the chancellor diligently performed his duties; and therefore, there is no merit to this assignment of error.