Broughton v. Merchants Nat. Bank of Mobile

• Decision Date: 06 September 1985
• Citation: 476 So.2d 97
• Parties: Elliott P. BROUGHTON v. The MERCHANTS NATIONAL BANK OF MOBILE, a corporation. 84-341.
• Court: Alabama Supreme Court

Page 97

476 So.2d 97

Elliott P. BROUGHTON v. The MERCHANTS NATIONAL BANK OF MOBILE, a corporation.

84-341.

Supreme Court of Alabama.

Sept. 6, 1985.

James F. Hampton of McLain & Hampton, Montgomery, for appellant.

William H. Hardie, Jr. of Johnstone, Adams, Howard, Bailey & Gordon, Mobile, for appellee.

BEATTY, Justice.

This is an appeal from summary judgment for the defendant in an action for negligent mismanagement of a living trust, conspiracy and fraud against the deceased beneficiary of the trust, and breach of the fiduciary duty owed by the trustee/executor to the decedent. The action was brought by the decedent's testamentary heir. We affirm.

Appellant Elliott P. Broughton is one of three heirs of the estate of Dorothy Carter Broughton, who died in 1979 in Mobile, Alabama. In 1971, Mrs. Broughton entered into a trust agreement with Merchants National Bank of Mobile (Merchants). The agreement provided that Merchants would manage the trust for Mrs. Broughton's benefit during her lifetime and that, upon her death, it would pay over any remaining trust property to her estate. Mrs. Broughton's will also named Merchants as executor of her estate.

After Mrs. Broughton's death, Merchants filed a petition for the probate of her will in the Probate Court of Mobile County. The petition for final settlement was heard by the probate court in March 1983. In that hearing, Elliott Broughton submitted a memorandum brief outlining his objections to the settlement of the estate. He contended that Merchants "did not execute fully or properly its duties as an Executor of this Estate"; that the executor "failed in its fiduciary capacity because of an inherent conflict of interest"; and that Merchants mismanaged and misadministered the living trust. Broughton requested that the probate court order "an independent audit so that the true facts of the management of this trust (and therefore estate) can be made known to the court." Merchants submitted a brief in reply.

The probate court issued its decree on final settlement, finding that Merchants had properly administered the estate and releasing Merchants from any further duty or liability to Mrs. Broughton's estate. Rather than appealing this order of the probate court, Broughton filed a new complaint in the Mobile Circuit Court. The five counts of that complaint are quoted in pertinent part below:

"COUNT I

"1. Defendant Merchants agreed by contract and trust arrangement to serve as Trustee for a trust created by Dorothy Carter Broughton in Mobile, Alabama, in 1971.

"2. As a part of that contract or trust the Defendant Merchants was given certain assets in the form of stocks, bonds, mutual funds and/or other securities.

"3. Defendant Merchants was also given the power as Trustee to manage those assets and invest the same in order to provide income to the creator.

"4. The approximate value of those assets which were deposited by the creator either at the time of the creation of this trust or thereafter created a total corpus in the amount of thirty-six thousand dollars ($36,000.00).

"5. Because of Defendant Merchants' negligence in management of this trust and/or its willful and wanton neglect or misconduct in management of this trust, the value of these assets was allowed to deplete to a value of approximately thirty thousand dollars ($30,000.00).

"6. As a direct result of this neglect, mismanagement or willful misconduct on the part of the Defendant Merchants the Plaintiff was caused to suffer financial losses which resulted from the unnecessary reduction of the corpus of this trust he inherited through the estate of Dorothy Carter Broughton subsequent to her death in 1979. Plaintiff was further caused mental distress and suffering because of the conduct and negligence and wanton conduct or neglect of Defendant Merchants and was caused to expend large fees for attorneys, travel expense and other costs involved in this matter.

"....

"COUNT II

"....

"8. Defendants A, B, C, D and E whose true names and/or identities are unknown to Plaintiff at this time acted either together with Defendant Merchants or as agents for Defendant Merchants in managing and/or investing the assets of the trust. In so doing, these Defendants also negligently mismanaged or failed to manage the corpus of this trust and/or wantonly and recklessly managed this trust so as to cause unnecessary losses which resulted in damage to plaintiff.

"....

"COUNT III

"....

"10. All of these Defendants acted together and with others and conspired to defraud the decedent Dorothy Carter Broughton of certain assets contained in this trust.

"....

"COUNT IV

"....

"12. Defendants defrauded the creator of this trust, Dorothy Carter Broughton, of the reasonable value of these lost assets.

"....

"COUNT V

"....

"15. Plaintiff shortly thereafter made complaints to the Executor about the mismanagement of the trust and asked the Executor for an explanation. Additionally, complaints were made as to the fact that the Executor did not make and could not make an independent investigation of the handling of the trust.

"16. Defendant Merchants thereby intentionally placed itself in a position of conflict between its duties as Executor and its duties as Trustee and as a result of holding both positions created a conflict of interest and thus prima facielly [sic] breeched [sic] its fiduciary duty to Dorothy Carter Broughton."

In an affidavit filed in response to Merchants' motion for summary judgment, Broughton stated:

"At no time during final settlement of this estate nor during any part of the handling of this estate did I ever assert the claims against Merchants National Bank which I am asserting through the present Complaint. That is, I never pursued the matter of the tortious conduct on the part of the Defendant Merchants Bank before any court.

"In addition, I can also state under oath that the matter which is raised by the present Complaint concerning the inherent conflict of interest on the part of Merchants National Bank in attempting to perform two tasks in relation to this estate was not raised for further consideration by the Probate Court of Mobile County, Alabama."

Notwithstanding the assertions contained in his affidavit, the trial court granted summary judgment against Broughton.

On appeal, Broughton argues that the statements made in his affidavit furnish at least a scintilla of evidence that genuine issues of material fact exist in this case and that the administration of Dorothy Carter Broughton's estate in the probate court did not bar this action for tortious misconduct against the trustee and executor. Merchants, on the other hand, contends that a testamentary heir has no standing to bring ex delicto claims against his decedent's trustee or executor. Merchants further contends that, under the doctrine of res judicata, this action is barred by the final settlement order entered in the probate court, where the same issues were litigated.

The dispositive issue in this case is whether the probate court's decree, which absolved the executor of wrongdoing, bars Broughton from brining this separate action in tort. We agree with Merchants' argument that these claims are barred by the doctrine of res judicata. ¹ The four essential elements of res judicata are "(1) [P]rior judgment rendered by court of competent jurisdiction; (2) prior judgment rendered on the merits; (3) parties to both suits substantially identical; and (4) same cause of action present in both suits. Stevenson v. International Paper Co., 516 F.2d 103 (5th Cir.1975). If these elements are present, then the former judgment is an absolute bar to any subsequent suit on the same cause of action, including any issue which was or could have been litigated in the prior action. McGruder v. B & L Construction Co., 331 So.2d 257 (Ala.1976)." Wheeler v. First Ala. Bank of Birmingham, 364 So.2d 1190, 1199 (Ala.1978).

As the following analysis demonstrates, each of these four elements is present in the case at bar.

The judgment of a probate court is entitled to the same finality as the judgment of any other court of general jurisdiction. A probate court is a court of record and is "vested with original and general jurisdiction in practically all matters having to do with probate and administration of decedents' estates or with orphans' business.... Its judgments and decrees are entitled to the 'same validity and presumption which are accorded to judgments and decrees of other courts of general jurisdiction.' " Opinion of the Justices, 280 Ala. 653, 657, 197 So.2d 456, 460 (1967). Furthermore, "[w]here jurisdiction has attached, a decree of the Probate Court, within its sphere of jurisdiction, is as conclusive as that of any other court of general jurisdiction, and is aided by the same intendments of law." White v. Hilbish, 282 Ala. 498, 502, 213 So.2d 230, 234 (1968).

Section 12-13-1 establishes the general jurisdiction of probate courts:

"(b) The probate court shall have original and general jurisdiction over the following matters:

"....

"(3) All controversies in relation to the right of executorship or of administration.

"(4) The settlement of accounts of executors and administrators.

"....

"(11) Such other cases as jurisdiction is or may be given to such courts by law in all cases to be exercised in the manner prescribed by law.

"(c) All orders, judgments and decrees of probate courts shall be accorded the same validity and presumptions which are accorded to judgments and orders of other courts of general jurisdiction." (Emphasis added.)

In addition to having original and general jurisdiction over executorship, the probate court of Mobile County was also granted general equity power concurrent with that of the circuit court by Act No. 974, 1961 Ala. Acts, p. 1551:

"Section 1. That the Probate Courts in all counties of this State which now have or may hereafter have a population of over 300,000 and less than 500,000,...