Court Opinion

ID: 5082964
Source: CourtListenerOpinion
Date Created: 2021-10-01 13:08:24.582229+00
Date Added: 2024-06-11T08:20:18.212300
License: Public Domain

REYNOLDS, Justice,
dissenting.
I respectfully dissent from the majority opinion.
The majority punishes a party that deserves no punishment. The merits of the appellees’ claim against the trustee are not at issue, but their submission of facts neither found nor contained in the record, along with charges involving Bullitt family disputes, serves no purpose but to create a distraction.
The majority opinion, skillful in part of its analysis, transcends the basic language of Articles 4.01, 4.02 and 4.03 of the trust agreement which clearly enunciates First Kentucky Trust Company’s duties as trustee and reflectively discloses that the trustee’s power is quite limited. In brief, the trustee is prohibited from disposing of shares, voting the shares, or reorganizing unless directed by the beneficiaries or a majority of the beneficiaries.
The basic foundation of this case renders it a poor subject to effectuate a change in the law of trust. KRS 413.340 does not mean what the majority suggests, i.e., that there is no statute of limitations for a trustee’s breach of fiduciary duty during the life of the trust. This particular statute provides only that the provisions of KRS Chapter 413 shall not apply to a continuing and subsisting trust. While the majority refers to the trust at issue as a continuing and subsisting trust, this particular instrument and the facts of this case do not rise to such a height. This Court has previously correctly defined a subsisting trust to be one against which limitations do not run, and is one in which the trustee is acting within his powers and the cestui que trust has no cause of action against him. Potter v. Connecticut Mutual Life Ins. Co., Ky., 361 S.W.2d 515 (1962), Bogert, Trusts and Trustees, (2d ed.) § 951.
If the heirs have a cause of action against the trustee, then, by definition, the trust cannot be a subsisting trust. KRS 413.340 cannot prevent the statute of limitations found in KRS 413.120(5) from running. A limitation will not run until there is a cause of action. Potter, 361 S.W.2d at 516. Other courts have come to rely on this Court’s definition of a subsisting trust as enunciated in Potter. See, e.g., Salyers v. Allied Corp., 642 F.Supp. 442 (E.D.Ky. 1986). Quite candidly, our previous rule is just, workable and reasonable, and to continue with the Potter Court’s interpretation of KRS 413.340 requires only that an injured party to whom a cause of action has accrued shall act within a statutorily designated period to seek redress.
It appears that this particular statute is intended to do no more than to restate the common law rule that the statute of limitations does not apply to direct or express trusts (which were under the exclusive jurisdiction of equity courts, as opposed to those trusts imposed by law) with respect to an action by a beneficiary to recover trust property from the trustee. The rea-*539soiling behind this common law rule was that possession of the trust property by the trustee was considered possession beneficially by the cestui que trust so long as the trustee continued to hold the trust property as trustee. During that period, no cause of action could accrue to obtain possession of the trust estate from the trustee. If, however, the trustee acted in repudiation of his trust, then an action to recover the trust property would lie and limitations would begin to run from the time of the repudiation or the time the repudiation became known by the cestui que trust. See Robinson’s Committee v. Elam’s Ex’rx, 90 Ky. 300, 14 S.W. 84 (1890); Bates v. Bates, 182 Ky. 566, 206 S.W. 800 (1918).
This action is not one to recover possession of trust property from the trustee, but rather to obtain damages for the alleged negligent performance of a duty owed by a trustee to beneficiaries of the trust. I believe KRS 413.340 has no application to such an action and the trial court should be affirmed.
SPAIN, J., joins this dissent.