Opinion ID: 1631481
Heading Depth: 1
Heading Rank: 2

Heading: acceptance of guardianship assets as security for personal loan to guardian

Text: Sections 456.240 to 456.350, RSMo 1978, were enacted in 1959, Laws of Mo.1959, S.B. 121, and contain provisions of the Uniform Fiduciaries Act, first promulgated by the Commissioners on Uniform Laws in 1922. The Uniform Fiduciaries Act should be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states which enact it. § 456.340, RSMo 1978. The Uniform Fiduciaries Act was designed to facilitate commercial transactions in negotiable instruments held in trust, by relaxing some of the harsher rules which require of a bank and of individuals the highest degree of vigilance in the detection of a fiduciary's wrongdoing. Colby v. Riggs National Bank, 92 F.2d 183, 198 (D.C. Cir. 1937); National Casualty Co. v. Caswell & Co., 317 Ill.App. 66, 72, 45 N.E.2d 698, 701 (1942). Accord, General Insurance Co. v. Commerce Bank of St. Charles, 505 S.W.2d 454, 457 (Mo.App.1974); St. Stephen's Evangelical Lutheran Church v. Seaway National Bank, 38 Ill.App.3d 1021, 1024, 350 N.E.2d 128, 131 (1976); Guild v. First National Bank of Nevada, 92 Nev. 478, 553 P.2d 955, 958 (1976); Edwards v. Northwestern Bank, 39 N.C.App. 261, 266, 250 S.E.2d 651, 656 (1979); Maryland Casualty Co. v. Bank of Charlotte, 340 F.2d 550, 553 (4th Cir. 1965); Davis v. Pennsylvania Co. for Insurances on Lives and Granting Annuities, 337 Pa. 456, 460, 12 A.2d 66, 69 (1940); Board of County Commissioners of County of Hot Springs v. First National Bank of Thermopolis, 368 P.2d 132, 136-37 (Wyo.1962). At common law, the transfer of a deposit from a trust account to a personal account did not affect its fiduciary character. National Bank v. Insurance Co., 104 U.S. 54, 68-69, 26 L.Ed. 693 (1881); Colby v. Riggs National Bank, 92 F.2d 183, 186 (D.C. Cir. 1937); Park Bank v. Yerington, 275 S.W. 970, 972 (Mo.App.1925). At common law, if a bank had notice that a fund was impressed with a trust and accepted money from that fund in payment of or as security for a personal debt of the fiduciary to it, the bank would be liable to the principal if the fiduciary in fact misappropriated the fund. Colby, 92 F.2d at 186-87. The Uniform Fiduciaries Act relieves the depository of the duty of seeing that fiduciary funds are properly applied. General Insurance Co. v. Commerce Bank of St. Charles, 505 S.W.2d 454, 457 (Mo.App. 1974); Johnson v. Citizens National Bank of Dacatur, 30 Ill.App.3d 1066, 1069, 334 N.E.2d 295, 298 (1975); Sugarhouse Finance Co. v. Zions First National Bank, 21 Utah 2d 68, 69, 440 P.2d 869, 870 (1968). The bank dealing with a fiduciary is entitled to rely on the presumption that the fiduciary will fulfill its obligations to its principal. Southern Agency Co. v. Hampton Bank of St. Louis, 452 S.W.2d 100, 105 (Mo.1970); General Insurance Co. v. Commerce Bank of St. Charles, 505 S.W.2d 454, 457 (Mo.App. 1974). As the depository has no duty to inquire whether the fiduciary properly applies funds held in trust, mere negligence on the part of the depository bank is not sufficient to hold it liable to the principal if the fiduciary in fact misappropriated the fund. Edwards v. Northwestern Bank, 39 N.C.App. 261, 266, 250 S.E.2d 651, 656 (1979); Maryland Casualty Co. v. Bank of Charlotte, 340 F.2d 550, 553 (4th Cir. 1965). Appellant seeks to analogize the pledge of the certificates of deposit as security for the personal obligation of respondent Hook to the transfer by a fiduciary of a negotiable instrument, within the terms of § 456.260, RSMo 1978, [3] or to the withdrawal of fiduciary funds deposited to the fiduciary's personal account, within the terms of § 456.310, RSMo 1978. [4] Under either provision, appellant contends that its security interest in the certificates of deposit is valid, because it accepted the certificates as security in good faith and without actual knowledge that respondent Hook was committing a breach of her fiduciary obligations. Several sections of the Uniform Fiduciaries Act provide that a person who deals with the fiduciary will be held liable to the principal if he has actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary. §§ 456.260, 456.270, 456.280, 456.290, 456.300, and 456.310, RSMo 1978. Actual knowledge of a breach of fiduciary obligation in this context has been defined to mean the present awareness that such a breach is taking place. Southern Agency Co. v. Hampton Bank of St. Louis, 452 S.W.2d 100, 105 (Mo.1970). Southern Agency indicates that a person dealing with a fiduciary would be subject to liability to the principal if he were presently aware that the fiduciary is defrauding his principal, that he is misappropriating trust funds, or that the funds are being used for private purposes. Id. Southern Agency does not attempt to exhaustively list examples of knowledge that a breach of fiduciary obligations is taking place. There are many ways that a fiduciary may breach his obligation as fiduciary other than by defrauding the principal or misappropriating the funds or using them for private purposes. For example, a fiduciary breaches his obligation when he purchases bonds in his personal name, Park Bank v. Yerington, 275 S.W. 970, 972 (Mo. App.1925); when he pledges guardianship property to secure a loan without prior court approval, Western Casualty & Surety Co. v. First State Bank of Bonne Terre, 390 S.W.2d 913, 919 (Mo.App.1965); when he acts in any way to the detriment of the principal, In re Farmers' Exchange Bank of Gallatin, 327 Mo. 640, 653, 37 S.W.2d 936, 942 (1931); when he invests trust funds imprudently or fails to account for them faithfully, § 475.130.1, RSMo 1978; when he wastes the trust corpus or mismanages it, §§ 475.110 and 473.140, RSMo 1978; or when the fiduciary fails to collect debts due the ward or pay claims due from the ward. § 475.130.3, RSMo 1978. If, in accepting a deposit of fiduciary funds or paying a check drawn on a fiduciary account, the bank acts with actual knowledge that the fiduciary is thereby breaching its duties in any of these ways, or acts in bad faith, the bank is liable to the principal under the Uniform Fiduciaries Act. The Uniform Fiduciaries Act does not define bad faith, but it does define good faith. The statute provides that [a] thing is done `in good faith' within the meaning of sections 456.240 to 456.350 when it is in fact done honestly, whether it be done negligently or not. § 456.240.2, RSMo 1978. Obviously, mere negligence is insufficient to amount to bad faith. However, it is not entirely accurate to equate bad faith with dishonesty, if the latter term is taken to denote a high degree of moral guilt, or evil motives. Guaranty Bank & Trust Co. of Alexandria v. C & R Development Co., 260 La. 1176, 1187, 258 So.2d 543, 547 (1972); Maryland Casualty Co. v. Bank of Charlotte, 340 F.2d 550, 554 (4th Cir. 1965); Board of County Commissioners of County of Hot Springs v. First National Bank of Thermopolis, 368 P.2d 132, 138-39 (Wyo.1962). The term bad faith is borrowed from the Uniform Negotiable Instruments Act. Maryland Casualty, 340 F.2d at 554; Paine v. Sheridan Trust & Savings Bank, 342 Ill. 342, 174 N.E. 368 (1931). In Ward v. City Trust Co., 192 N.Y. 61, 84 N.E. 585 (1908), the bank accepted a check drawn payable to a corporation in payment of a personal debt of a corporate executive. The court interpreted the term bad faith as it was used in the Uniform Negotiable Instruments Act as follows: Bad faith in taking commercial paper does not necessarily involve furtive motives, for it exists when the purchaser has notice of facts which, if unexplained, would show that he was taking the property of one who . . . owed him nothing, in payment of a claim that he held against some one else. 192 N.Y. at 73, 84 N.E. at 589, citing Rochester & Charlotte Turnpike Road Co. v. Paviour, 164 N.Y. 281, 286, 58 N.E. 114, 115 (1900). See Marine Bank v. Kalt-Zimmers Co., 293 U.S. 357, 365, 55 S.Ct. 226, 228, 79 L.Ed. 645 (1934); Scott, Participation in a Breach of Trust, 34 Harv.L.Rev. 454, 460-62 nn. 23-27 (1921). The test of bad faith under the Uniform Negotiable Instruments Act has been said to be whether it is commercially unjustifiable for the person accepting a negotiable instrument to disregard and refuse to learn facts readily available. Where circumstances suggestive of the fiduciary's breach become sufficiently obvious it is bad faith to remain passive. Peoples National Bank v. Guier, 284 Ky. 702, 710-713, 145 S.W.2d 1042, 1047-48 (1940); Guaranty Bank & Trust Co., 260 La. at 1187, 258 So.2d at 547. Maryland Casualty, 340 F.2d at 554. In Davis v. Pennsylvania Co. for Insurances on Lives and Granting Annuities, 337 Pa. 456, 12 A.2d 66 (1940), the court inquired into the proper construction of the term bad faith as it used in the Uniform Fiduciaries Act: At what point does negligence cease and bad faith begin? The distinction between them is that bad faith, or dishonesty is, unlike negligence, wilful. The mere failure to make inquiry, even though there be suspicious circumstances, does not constitute bad faith ( Union Bank & Trust Co. v. Girard Trust Co., 307 Pa. 488, 500, 501, 161 A. 865), unless such failure is due to the deliberate desire to evade knowledge because of a belief or fear that inquiry would disclose a vice or defect in the transaction,that is to say, where there is an intentional closing of the eyes or stopping of the ears. 337 Pa. at 460, 12 A.2d at 69. See General Insurance Co. v. Commerce Bank of St. Charles, 505 S.W.2d 454, 457-58 (Mo.App. 1974). Although a showing of knowledge that the fiduciary is committing a breach of his fiduciary obligations is not necessary to prove bad faith, such a showing is clearly sufficient to prove bad faith. The fact that one dealing with a fiduciary benefits financially from the transaction is a factor to be considered in determining whether he acted in bad faith under the Uniform Fiduciaries Act. Where a bank engages in transactions with a fiduciary and has both reason to suspect a misappropriation by a fiduciary and a monetary interest in the continuance of such activity, the bank acts in bad faith. Maryland Casualty, 340 F.2d at 554; Union Bank and Trust Co. v. Girard Trust Co., 307 Pa. 488, 498, 161 A. 865, 868 (1932). See also St. Stephen's Evangelical Lutheran Church v. Seaway National Bank, 38 Ill.App.3d 1021, 1026, 350 N.E.2d 128, 132 (1976); People ex rel. Barrett v. State Bank of Herrick, 290 Ill.App. 130, 134, 8 N.E.2d 71, 73 (1937); Farmers Banking and Trust Co. of Montgomery County v. Bender, 175 Md. 625, 3 A.2d 743, 745-46 (1939); Downey v. Duquesne City Bank, 146 Pa.Super. 289, 292, 22 A.2d 124, 127 (1941); Pennsylvania Co. for Insurances on Lives and Granting Annuities v. Ninth Bank & Trust Co., 306 Pa. 148, 149, 158 A. 251, 252 (1932); Schneider Fuel & Supply Co. v. West Allis State Bank, 70 Wis.2d 1041, 236 N.W.2d 266, 270 (1975). Both Southern Agency, 452 S.W.2d at 103, and Cassel v. Mercantile Trust Co., 393 S.W.2d 433, 438 (Mo.1965) suggest that if the banks had benefited from the proceeds of the fiduciary's misappropriation or received any of the fruits thereof, the banks could have been held liable to the principal even absent actual knowledge of a breach of fiduciary obligation. Accord, General Insurance Co., v. Commerce Bank of St. Charles, 505 S.W.2d 454, 457 (Mo.App. 1974). See Lucas v. Central Missouri Trust Co., 350 Mo. 593, 166 S.W.2d 1053, 1058 (1942), which states that a bank may incur liability and be compelled to make good deposits by a fiduciary . . . by appropriating the fund, either with or without the fiduciary's consent, to the payment of the latter's debt to the bank. Appellant contends that neither Charles Patterson nor any other of its employees was aware, when Patterson accepted the certificates of deposit as security for the personal loans to respondent Hook, that Hook was committing a breach of her fiduciary obligations by pledging the certificates. The fatal flaw in appellant's argument that it is not liable under the relevant provisions of the Uniform Fiduciaries Act is that the trial court expressly found that appellant's agent Charles Patterson had actual and continuing knowledge of the ownership of said funds up to and including the date when [respondent] Nancy Hook pledged said certificates of deposit for her personal debts. Respondent Hook was pledging guardianship property as security for her personal debts. Patterson thus had actual knowledge that Hook was committing a breach of her fiduciary obligations. Patterson's knowledge may be imputed to his employer, appellant Trenton Trust Company. Flemming v. Insurance Co. of North America, 50 S.W.2d 177, 178 (Mo.App.1932). Moreover, Patterson's acceptance of the pledge of guardianship property to secure Mrs. Hook's personal debts, though it may not show evil or dishonest motives, certainly shows knowledge that he was taking the property of persons who owed him nothing to secure a claim he held against someone else. Patterson's failure to inquire into respondent Hook's authority to pledge assets of her words to secure her personal debts shows a deliberate desire to evade knowledge and an intentional closing of the eyes or stopping of the ears. Appellant contends that there is not a scintilla of substantial evidence in the record to support a finding that Charles Patterson remembered, on October 25, 1975, and thereafter, that the funds invested in the certificates of deposit which respondent purported to pledge as collateral were held by her as guardian of her two minor children. We do not agree. Respondent Hook testified that, as to the loan transactions of October and November of 1975, although Patterson didn't come right out and say that he recalled that the certificates of deposit pledged as security were the ones he created in January, in the course of conversation it was, I imagine, discussed. This statement, taken in conjunction with other facts and circumstances in the record, supports the inference that Patterson knew during the loan transactions that the funds used to purchase the certificates of deposit were derived from insurance checks payable to respondent Hook as guardian. Other circumstances supporting the inference that Patterson remembered the fiduciary character of the fund used to purchase the certificates at the time he entered the loan agreements include the fact that Patterson had a history of handling loans to the Hooks, and was familiar enough with their finances to make such loans without requiring the Hooks to submit a financial statement or regular loan application; that respondent Hook discussed her children with Patterson on several occasions and in the fall of 1974 told Patterson that insurance money would be coming for the kids, but that it would not be paid until Hook could go to court to set up a guardianship; that Patterson admitted actually examining respondent Hook's endorsement of the insurance checks as guardian, and remembered comparing the endorsement with the manner in which the checks were made payable; that Patterson knew that the choice of certificates of deposit as the mode of investment of the insurance proceeds was dictated by the relative ease with which certificates of deposit could be renewed to coincide with the differing dates on which the children would be able to take the money; and that Patterson's signature was on each certificate of deposit. [5] Against the background of this evidence, we are not willing to say that we have a clear conviction that the finding of the trial court was wrong. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Although Patterson testified that he did not remember that the certificates of deposit represented guardianship funds it is apparent that the trial court simply did not believe Patterson's testimony in this regard. Special deference to the findings of the trial court should be accorded where those findings rest on a judgment as to the credibility of witnesses. Id. In view of the trial court's finding that Patterson accepted the certificates of deposit on behalf of appellant as security for a personal loan to respondent Hook, with the present awareness that the certificates were held by Hook as guardian of her children, this case becomes indistinguishable from Western Casualty & Surety Co. v. First State Bank of Bonne Terre, 390 S.W.2d 913 (Mo.App.1965). In Western Casualty , Edward Gibson, appointed guardian of his minor son, invested his ward's assets of $2500 in a time certificate of deposit issued in his name as guardian by the defendant bank. The certificate was due on April 10, 1963, one year from the date of investment. On November 24, 1962, November 28, 1962, and December 20, 1962, respectively, the defendant bank made three loans to Gibson each in the amount of $200. Gibson signed demand promissory notes on each occasion, and pledged his ward's certificate of deposit as security for the loans. On January 30, 1963, the bank loaned Gibson $500 in exchange for a promissory note signed by Gibson as guardian of the estate of his minor son. Again Gibson pledged the certificate of deposit to secure the loan. This fourth loan was advanced only after Gibson procured and displayed to the bank a certified copy of a written order from the probate court authorizing Gibson to withdraw a sum not to exceed $500.00 from the funds of this ward on deposit with the defendant. Id. at 917. When the certificate of deposit became due and payable the bank subtracted from the $2600 principal plus interest, the amount of principal and interest that was due on Gibson's four notes ($1,118.53). When it became apparent to the probate court that Gibson was unable to account for all of the assets of the ward's estate, it removed him as guardian and entered a judgment against Gibson and his corporate surety for $2500 plus interest and costs. The surety paid to the minor's successor guardian the amount of the fund which the bank had deducted from the ward's deposit, and sued the bank for that amount. The court held that the bank was liable to the surety for the $1,118.53, on the authority of § 475.135, RSMo 1978, which provides that [n]o contract shall bind the estate of any minor . . . unless . . . with the approval of the court. Id. at 920, citing Weir v. Kickbush, 353 S.W.2d 627, 634 (Mo. banc 1962). [6] The court held that the guardian's attempt to obligate the ward's estate for the payment of loans made to him was not within the guardian's authority, because Gibson had not first obtained an order from the probate court authorizing him to bind the ward's estate. 390 S.W.2d at 919. The court held the probate court's order authorizing the guardian to withdraw up to $500 of the ward's deposited funds could not be read to authorize the guardian to borrow from the defendant and pledge the ward's certificate of deposit as collateral security. Id. at 920. The court rejected the bank's argument that § 456.250, RSMo 1959, § 2 of the Uniform Fiduciaries Act, protected the bank from liability to the principal. [7] The court held that the loans advanced to Gibson did not constitute money which the guardian as such is authorized to receive within the meaning of § 456.250, RSMo 1959. Appellant seeks to distinguish Western Casualty from the instant case on the ground that in Western Casualty , the bank at all times knew from the face of the instrument and bank officers admitted they knew that the certificate was a guardianship asset. Appellant insists that in the case at bar at the time of the second transaction the certificates gave no clue as to their identity as a guardianship asset and there was no evidence that Appellant knew it was dealing with Nancy Hook in her capacity as guardian. We have already dealt with appellant's contention that its employee Charles Patterson did not remember when he accepted the pledge of the certificates to secure loans to respondent Hook and her husband that she held the certificates in her capacity as guardian. The trial court found that Patterson did remember, and we do not disturb that finding. The fact that the bank learned of the guardianship by means other than examination of the face of the certificates of deposit is of no consequence, where the bank's liability is predicated on its actual knowledge of a breach of fiduciary obligations or on its bad faith. Appellant maintains that it is a holder in due course of the certificates of deposit to the extent of its loan to the Hooks, under § 400.3-302(4), RSMo 1978. Although appellant's brief does not spell out the consequence of this assertion, apparently it wishes to claim the rights of a holder in due course to the certificates, under § 400.3-305, RSMo 1978, which provides that such a holder takes the instrument free from certain claims and defenses. Even if we were to find that appellant is a holder in due course of the certificates of deposit, such status would be of no assistance to appellant in this case. Section 400.3-305(2)(a), RSMo 1978, expressly provides an exception to the protection afforded to a holder in due course, from defenses of minors. Such a holder does not take free from the defense of infancy, to the extent that it is a defense to a simple contract. § 400.3-305(2)(a), RSMo 1978. As we have already pointed out, the contract purporting to pledge the minor wards' assets as security for a loan without the approval of the probate court is not binding on the estate of the minor, under § 475.135, RSMo 1978. Weir v. Kickbush, 353 S.W.2d at 635; Western Casualty, 390 S.W.2d at 920. Consequently, even if appellant qualified as a holder in due course of the certificates of deposit, it would not take the certificates free of the defenses of the Bruner children. Section 400.3-302, RSMo 1978, defines a holder in due course. It provides in relevant part that: (1) A holder in due course is a holder who takes the instrument (a) for value; and (b) in good faith; and (c) without notice that it is overdue or has been dishonored or of any defense against or claim to it on the part of any person. (2) A payee may be a holder in due course. (4) A purchaser of a limited interest can be a holder in due course only to the extent of the interest purchased. [8] We find that appellant is not a holder in due course of the certificates of deposit in question under this definition, because appellant fails to meet the requirement of § 400.3-302(1)(c), RSMo 1978, that it take the instrument without notice . . . of any defense against or claim to it on the part of any person. We recognize that § 400.3-304(4)(e), RSMo 1978, provides that the mere knowledge that any person negotiating the instrument is or was a fiduciary does not of itself give the purchaser notice of a defense or claim. The case at bar, however, is controlled by § 400.3-304(2), RSMo 1978, which provides: The purchaser has notice of a claim against the instrument when he has knowledge that a fiduciary has negotiated the instrument in payment of or as security for his own debt or in any transaction for his own benefit or otherwise in breach of duty. Since we adopt the trial court's finding that Charles Patterson knew that a fiduciary. . . negotiated the [certificates of deposit] as security for [her] own debt, we hold that appellant had notice of a claim against the certificates. Consequently, appellant at best enjoys the rights of one not a holder in due course of the certificates of deposit, and thus takes the [certificates of deposit] subject to . . . all valid claims to it on the part of any person. § 400.3-306(a), RSMo 1978. It is hardly necessary to add that the claim to the certificates of deposit asserted by respondent Lewis on behalf of the Bruner children in his capacity as successor guardian of those children constitutes a valid claim to the certificates, and that appellant took the certificates subject to that claim. Appellant places reliance on Southern Agency Co. v. Hampton Bank of St. Louis, 452 S.W.2d 100 (Mo.1970). In Southern Agency , the president (Phillips) of an automobile liability insurance corporation (Southern Agency) deposited checks belonging to that corporation in the separate account of an automobile physical damage insurance corporation (Colonial) of which Phillips was sole owner. Phillips thereafter purchased cashier's checks with checks drawn on the latter account. The Court held that the bank was not liable to the principal for the misappropriation by the fiduciary in that case. The Court noted that none of the bank's employees had actual knowledge that the fiduciary was preaching any duty owed to the plaintiff corporation. Id. at 105. There was no evidence that there was anything unusual or open to question or suspicion in the deposit of plaintiff's checks in the fiduciary's account, or in the later procurement of cashier's checks from the funds deposited in the fiduciary's account. Id. at 106. There was no evidence in the record in that case that funds belonging to the principal were used to pay any personal obligation of the fiduciary to the defendant bank. Id. at 106. The Court stated: There was no evidence that defendant bank benefited from the deposit in Colonial's account of the two checks payable to plaintiff, or benefited from the proceeds of any of the three cashier's checks drawn on Colonial's account. There was no evidence that any specific employee handled any of the transactions in evidence, and no evidence that any specific employee had even a suspicion of wrongdoing on the part of Phillips in indorsing or depositing either of the checks made payable to plaintiff, or in obtaining the three cashier's checks in question. Id. at 103. Southern Agency is not precedent for preferring the claim of appellant to that of the minor wards in the instant case, where the same bank employee handled a transaction transforming fiduciary funds into certificates of deposit titled in the personal name of the fiduciary and subsequently accepted the same certificates of deposit as security for a loan to the fiduciary in her own name, thereby knowingly accepting funds belonging to the wards to secure a personal obligation of the fiduciary to the appellant. A transaction similar to the one involved in the instant case was found to subject the bank to liability to the ward in Anacostia Bank v. United States Fidelity & Guaranty Co., 119 F.2d 455 (D.C. Cir. 1941). In Anacostia, a child's mother, acting as guardian, deposited guardianship funds in the bank and received a deposit receipt which bore four per cent interest. Sometime later she borrowed money from the bank at six per cent for her personal use, on a note which she signed personally and for which she pledged as security the deposit receipt which she held as guardian. When the bank demanded payment, she endorsed the deposit receipt, took from the bank a cashier's check to her order as guardian, and endorsed the cashier's check to the bank in payment of her personal note. The trial court directed a verdict against the bank under section 4 of the Uniform Fiduciaries Act (enacted in Missouri as § 456.260, RSMo 1978), finding that the bank acted with knowledge of the personal character of the loan, both when it accepted the deposit certificate as security and when it accepted the cashier's check payable to and endorsed by the guardian. The Court of Appeals for the District of Columbia affirmed, stating: The bank cannot have believed that she was so determined to enrich the bank and impoverish the ward that she continued to lend fiduciary funds to the bank at four per cent in order to borrow them back for fiduciary purposes at six per cent. 119 F.2d at 456. Appellant's knowledge that respondent Hook loaned fiduciary funds to the bank at seven per cent in order to borrow them back at nine per cent constituted knowledge that respondent Hook was committing a breach of her fiduciary obligations. [9] For the foregoing reasons, we affirm the judgment of the trial court. All concur.