Roenne v. Miller

475 P.3d 708 (2020)

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Nature of the Case

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Facts

Sonya Miller died in 1995. She was survived by five children: Ps (Denise Roenne; Jeanette Miller; Mark Miller; Justin Miller); and D. Sonya bequeathed an undivided one-half interest in her farm real estate to D in fee simple. She bequeathed the other undivided one-half interest in her farm real estate to Mark for his lifetime and upon his death to his children. She directed that if Mark died without children, the remainder interest went to D. She bequeathed all of her livestock and farm machinery to D and Mark equally. She also left certain personal property to D and Mark. Mark later assigned his one-half interest in the farm operation to D. D erased the other children's interest in a quiet title action. In her will, Sonya specifically provided that her other children were not to own her farm property. The remainder of her estate went into a trust to be managed by D as trustee for the benefit of 'all of my children': Jeanette, Denise, Justin, Brad, and Mark. Upon the death of all the beneficiaries, the remaining amount held in trust was to be distributed per capita to each grandchild. She named Mark to replace d as trustee in the event of D's death, incapacity, or disqualification as trustee. The trust provided: 'At no time under any circumstances are any of the beneficiaries to become trustees.' The trust consisted solely of the oil royalty interests. The district court in Osborne County appointed D trustee of the trust, and D swore an oath to perform his duties as trustee. The testamentary trust stated that the trustee had 'uncontrolled' or 'exclusive' discretion over the trust. The trust authorized the trustee to use the income and principal of the trust to: pay the decedent's funeral and medical expenses; pay the administration expenses of the decedent's estate; pay the decedent's taxes; purchase and retain as investments any securities or other property, real or personal, belonging to the decedent's estate; make loans or advances to the decedent's executor or administrator; invest in stocks or in other personal or real property; make loans with adequate interest and security; sell, exchange, lease, and make contracts concerning real or personal property; hold bonds, shares, or other securities; to deposit cash in a bank account; improve or develop real estate; employ investment counsel, custodians of trust property, brokers, agents and attorneys; pay as income the whole of the interest, dividends, rent, or similar receipts from the property; carry on a crop and livestock program; operate a farm; execute oil and gas leases and other mineral leases; execute conveyances of the minerals; execute assignments of royalties; in his 'uncontrolled discretion to convey or dispose of any mineral interest purchased.' The trustee was to only act in a fiduciary capacity. The trust provided that the trustee 'shall each year render an account of his administration of the trust funds hereunder that the same shall be available for inspection by any of the beneficiaries at any reasonable time.' 'Each trustee and each successor trustee shall be liable only for failure to exercise reasonable care, prudence, and due diligence in the discharge of his duties hereunder, but not for errors of judgment made in good faith.' D used the trust income for his own purposes and then transferred all the assets to himself. D testified that he used the oil income to pay down the large debts on Sonya's farm real estate, which was not part of the trust. D admitted that his use of the oil money did not benefit the trust. D testified that he promised his mother that he 'would keep the farm intact whatever way I could.' He believed the trust gave him the authority to distribute all the wealth and worth of the trust to himself only and to pay the other beneficiaries nothing. He testified he was 'investing' the oil money in his land. In 2013 and 2014, as trustee, D conveyed the mineral rights from the trust to himself personally as a beneficiary, effectively emptying the trust of assets. Ps sued D and Amy, D’s wife, for breaching his fiduciary duties by converting for his own use the income from the trust, conveying the mineral interests to himself, and failing to provide periodic accountings of trust activity to the other beneficiaries. The court found no fiduciary violations by D. D was given absolute discretion by the trust to dispose and distribute the assets. It ruled that Sonya Miller knew exactly what she was doing. Ps appealed.