In Re Trusteeship Of Williams

591 N.W.2d 743 (1999)

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Nature of the Case

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Facts

James T. Williams created a trust. From 1979 until 1997, the trustees were Robert H. (D), Margaret Linstroth, and P. The trust is subject to the continuing supervision of the district court. The trustees' accounts of the trusteeship from the trust's inception through December 31, 1989, have been filed with the district court and were duly settled and allowed by prior orders of the court. James T. Williams, the trust's creator, founded the Creamette Company, and Creamette stock accounted for 98% of the trust's value. In 1979, Creamette was acquired by Borden, Inc. As part of the Borden acquisition, the trust's Creamette stock was exchanged for Borden's common stock. As of January 1, 1980, nearly 100% of the total market value of the trust was in Borden [stock. The trust owned 630,948 shares. In 1980, the trustees began selling shares of the stock to diversify trust assets. As of December 31, 1989, the trust owned 600,000 shares of Borden common stock at a value of $36.375 per share, and that stock accounted for 39.3% of the total market value of the trust. The trust's board of trustees makes decisions by majority. D moved to sell Borden stock. P and Linstroth were able to defeat the motions. Borden stock continued to lose value. The trustees disposed of most of the trust's Borden stock by exchanging it for RJR Nabisco stock. Borden common stock was valued at $14.25 per share. P sought approval of the trustees' annual accounts for the trusteeship from 1990 to 1995. Robert H. D objected claiming that P, as corporate trustee, was responsible for the trust's loss in value from 1990 to 1995 and should be surcharged for the trust's losses. P claimed that as per the trust: No Trustee shall be liable for the default or doing of any other Trustee, whether the act is one of misfeasance or nonfeasance, nor shall he be held liable for any loss by reason of any mistake or errors of judgment made by him in good faith in the execution of the trust. The court dismissed the action against P because P did not act with malfeasance and therefore was not liable. Ds appealed.