Opinion ID: 2129921
Heading Depth: 1
Heading Rank: 5

Heading: whether there was sufficient evidence to support the trial court's removal of the executor.

Text: Eugene next asserts that there was insufficient evidence to warrant his removal as executor. Eugene correctly states that our standard of review requires that we uphold the trial court unless we determine that the findings upon which it relied are clearly erroneous. Vaughn v. Eggleston, 334 N.W.2d 870 (S.D.1983). Under Vaughn, a factual determination of the trial court will be disturbed only when, after reviewing all of the evidence presented, we are left with a definite and firm conviction that a mistake has been made. The trial court determined that Eugene mismanaged decedent's estate due to his failure to keep separate accounts for the estate and the nursing home, his operation of the nursing home at a deficit, his misconduct based upon the transfer of the automobiles, and the conflict of interest based upon the claims of Pyramid Inc. and Bank. Perhaps the most alarming fact raised at the circuit court level was the increase in the expenses for the administration of the nursing home and estate. The amount expended for food at the nursing home increased by more than fifty percent during the time that Eugene served as administrator. Further, the amount expended in wages increased from $6,481 during the last year that decedent operated the nursing home to more than $30,000 during the one-year period when it was operated by Eugene. We recognize, however, that decedent during her lifetime operated the nursing home with little outside help and that Eugene could not operate the nursing home in the same manner. Regardless, adding his management fee to the cost of hiring additional help to operate the nursing home on a day-to-day basis constitutes a massive increase in the cost of operating the facility. Mismanagement is further evidenced by its attempted sale in a scheme which essentially did not require that the buyer invest any of his own capital and would not have provided the estate with any initial cash input. We believe that such a transaction, due to its structure, would have been an immense liability to the estate. The trial court also found that Eugene had breached his fiduciary duty as executor of the estate by commingling the estate's funds in the nursing home account. SDCL 55-5-1 provides: In acquiring, investing, reinvesting, exchanging, retaining, selling and managing property for the benefit of another, a fiduciary shall exercise the judgment and care under the circumstances then prevailing, which men of prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital. As executor of the estate, it is obvious that Eugene acted in a fiduciary capacity. See In re Estate of Scheibe, 35 Wis.2d 89, 150 N.W.2d 427 (1967). As such, he was required to act in accordance with SDCL 55-5-1. We agree with the trial court that Eugene breached his fiduciary duty when he commingled the funds of the estate and the nursing home, especially in light of the extraordinary increase in expenses attendant to the home's operation. Such commingling, while not creating an insurmountable obstacle to auditing the estate's transactions, could make such an accounting tremendously more difficult. We also believe that Eugene breached his fiduciary duty as executor when he intended to approve and pay the full claim of his own corporation, Pyramid, Inc., before paying the estate's other largest creditor, Bank. While an executor may make a claim against the estate if he is a creditor under SDCL 30-21-35, we believe that Eugene's actions constitute an attempt to benefit himself at the expense of the other creditors. As such, he had a blatant conflict of interest which was inconsistent with his duties as executor. The trial court had an opportunity to weigh the credibility of the witnesses. It also was able to discern the animosity between Eugene, Sophia, and Sylvia. The court also had ample opportunity to review the abundance of evidence concerning the estate's financial condition and the transactions into which Eugene had entered on behalf of the estate. Our review of the record does not convince us that the trial court erred in removing Eugene as executor. Affirmed. WUEST, C.J., and MORGAN and SABERS, JJ., concur. HENDERSON, J., concurs in result.