Collier v. Trustmark Nat. Bank

• Decision Date: 25 July 1996
• Docket Number: No. 93-CA-00123-SCT,93-CA-00123-SCT
• Parties: Ben COLLIER, as trustee of the Kay Hendrick Currie Trust, the Roger Hendrick Currie Trust, the James Gilbert Currie Trust, and the Benjamin Guilbert Currie Trust, Kay Hendrick Currie, Roger C. Hendrick, James G. Hendrick, and Benjamin G. Currie v. TRUSTMARK NATIONAL BANK.
• Court: Mississippi Supreme Court

Page 693

678 So.2d 693

Ben COLLIER, as trustee of the Kay Hendrick Currie Trust the Roger Hendrick Currie Trust, the James Gilbert Currie Trust, and the Benjamin Guilbert Currie Trust, Kay Hendrick Currie, Roger C. Hendrick, James G. Hendrick, and Benjamin G. Currie v. TRUSTMARK NATIONAL BANK.

No. 93-CA-00123-SCT.

Supreme Court of Mississippi.

July 25, 1996.

Mary Marvel Fyke, Maxey Wann & Begley, Jackson, for Appellant.

Robert C. Williamson, Jr., Williamson Law Firm, Jackson, for Appellee.

En Banc.

DAN LEE, Chief Justice, for the Court:

Mississippi allows the creator of a trust the right to place her absolute trust in an unworthy trustee. Unfortunately, such is this case.

The Appellants' appeal arises from a January 25, 1993, order of the Hinds County Circuit Court, First Judicial District, granting Trustmark National Bank's motion for summary judgment. The Appellants ("Hendricks") sought compensation from Trustmark after the family's accountant and trustee of its four trust accounts systematically embezzled funds from the trust accounts and placed the funds into his personal checking account. We find that the lower court properly granted summary judgment for Trustmark because there exists no genuine issue as to whether Trustmark had actual knowledge of the trustee's wrongdoing. Accordingly, we affirm the circuit court's finding that Trustmark was entitled to summary judgment as a matter of law.

FACTS

On December 27, 1983, Kathleen S. Hendrick established Irrevocable Trusts for her only child, Kay Hendrick Currie, and each of her three grandsons, James Gilbert Currie, Roger Hendrick Currie and Benjamin Guilbert Currie. ¹ Kathleen named her accountant, James Ethridge Moss, Sr., as trustee and vested him with broad powers under the terms of the trust instruments. In 1984, checking accounts were opened and checks were printed in the style of each account for each of the four trusts at the downtown Jackson offices of Trustmark, then First National Bank. These accounts were styled James E. Moss, Sr., Trustee of Kay Hendrick Currie Trust; James E. Moss, Sr., Trustee of Roger Hendrick Currie Trust; James E. Moss, Sr., Trustee of James Gilbert Currie Trust; and James E. Moss, Sr., Trustee of Benjamin Guilbert Currie Trust.

Between 1983 and 1985, Mrs. Hendrick deposited $30,000 in each account, for a total of $120,000. Beginning on May 22, 1984, Moss began writing checks on the Hendrick trust accounts and depositing them into his On December 11, 1990, the replacement trustee, Ben Collier, and the various trust beneficiaries filed a complaint against Trustmark in the Hinds County Circuit Court, alleging a breach of the checking account contract in allowing withdrawals not consistent with ownership of the accounts; gross negligence in failing to supervise and train its employees to deter misappropriation of customers' funds; and conversion in allowing Moss to remove funds from the trust accounts and deposit them into his own account.

personal checking account, styled Mr. or Mrs. James E. Moss. In October of 1989, Moss admitted to Kay Currie that he had depleted virtually all of the assets of the four trust accounts.

During the course of discovery, Moss stated that there was no particular pattern to his withdrawals; rather he would deposit money from the trust accounts into his personal account periodically when he needed it for his family's living expenses. These transactions took place at various Trustmark branches: downtown, South State Street and Highland Village. Although Moss most often used the Highland Village drive-up window, he stated that he was not personally acquainted with any of the tellers and did not know any of their names. Moss did not recall anyone ever questioning him about the withdrawals or deposits.

Trustmark filed a motion for summary judgment on March 25, 1991, asserting that it was not a party to the trusts; that Moss was authorized by the trust documents to open the checking accounts and write checks on the accounts; that there was no evidence that any Trustmark employee had actual knowledge that Moss was acting outside his powers as trustee; and that Trustmark was not responsible to trust beneficiaries for the honesty of their trustee. Trustmark's motion was supported by the pleadings and responses of the parties, copies of trust agreements, and an affidavit by T. Harris Collier, III, General Counsel for Trustmark, averring that the funds in the accounts were not subject to administration or supervision by the bank; that the bank had neither the right nor the obligation to restrict payment of checks drawn on the accounts; and that there were no longer any records which might identify tellers who handled any of Moss' transactions.

Later, Trustmark filed its second motion for summary judgment seeking to dismiss the Hendricks' punitive damages claim. Trustmark also filed a motion in limine to exclude any references to Moss' son's employment by Trustmark and to preclude the Hendricks from calling as an expert witness Millie Burtschell, retired Manager of Deposit Guaranty National Bank's downtown Jackson office, who had opined that a well-trained teller would have been suspicious of Moss' transactions.

In support of its brief in opposition to Trustmark's motions for summary judgment, the Hendricks submitted Moss' deposition outlining the establishment of the trusts and his subsequent depletion of the trust assets; copies of the checks and deposit slip for Moss' first withdrawals from the accounts; Trustmark's answers and objections to the Hendricks' first set of interrogatories; and the deposition of Patricia Paris, Vice President of Branch Operations at Trustmark.

A hearing on the motion for summary judgment was held on January 8, 1993. The circuit court found that the facts were insufficient for the Hendricks to meet their burden of showing that Trustmark had actual knowledge of any improper transactions by Moss. These findings were incorporated by reference into the circuit court's January 25, 1993, order granting Trustmark's motion for summary judgment and dismissing the Hendricks' claims with prejudice.

STANDARD OF REVIEW

The lower court may grant summary judgment "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Miss. R. Civ. P. 56(c). On appellate review, this Court reviews the record de novo to determine if the trial court erred in granting summary judgment. Downs v. Choo, 656

So.2d 84, 85 (Miss.1995) (citing Mantachie Nat. Gas v. Miss. Valley Gas Co., 594 So.2d 1170, 1172 (Miss.1992)). "The movant and non-movant bear the burdens of production corresponding to the burdens of proof they would bear at trial." Skelton v. Twin County Rural Elec., 611 So.2d 931, 935 (Miss.1992) (citing Palmer v. Biloxi Regional Medical Center, Inc., 564 So.2d 1346, 1355 (Miss.1990)). The party seeking summary judgment has the burden of persuading the court that there are no genuine issues of material fact and that they are, based upon the facts before the court, entitled to judgment as a matter of law. Daniels v. GNB, Inc., 629 So.2d 595, 600 (Miss.1993).

DISCUSSION

In the case sub judice, the trust clearly has a cause of action against Moss for his breach of his fiduciary duty. However, that is not the question now before this Court. Instead, we must decide whether the circuit court correctly found that the Hendricks failed to satisfy their burden of persuasion by putting forth evidence which would demonstrate that Trustmark had "actual knowledge" of Moss' misdeeds.

To decide the issue before us, we need only look to Miss.Code Ann. § 91-9-115 (1972) and Miss.Code Ann. § 81-5-53 (1972). Section 91-9-115 (1972), governs a third party's duty when dealing with a trustee and provides:

With respect to a third person dealing with a trustee or assisting a trustee in the conduct of a transaction, the existence of trust powers and their proper exercise by the trustee may be assumed without inquiry. The third person is not bound to inquire whether the trustee has power to act or is properly exercising the power; and a third person, without actual knowledge that the trustee is exceeding his powers or improperly exercising them, is fully protected in dealing with the trustee as if the trustee possessed and properly exercised the powers he purports to exercise. A third person is not bound to assure the proper application of trust assets paid or delivered to the trustee.

(Emphasis added). Miss.Code Ann. § 81-5-53 (1972), governs a bank's duty when a fiduciary executes a check in his fiduciary capacity and makes himself the payee of the check. This section provides:

A bank dealing, whether to its own benefit or otherwise, with, through or under any person, who is or may be an agent, trustee, guardian, executor, administrator, or other fiduciary, or a corporate officer, agent or employee, or a partnership member or representative, shall not be deemed to have notice of or be obligated to inquire as to any lack of or limitation upon the power of such person by reason in and of itself, either of the fact that such person has executed in his representative capacity and is himself the payee or indorsee of any check, bill, note or other promise or order, or of the use of descriptive words in connection with his deposit account or accounts, or in connection with any transfer, certificate or memorandum thereof, or in connection with any signature or indorsement of such person.

(Emphasis added).

The trial judge in the case at bar found that the Hendricks failed to shoulder their burden and put forth evidence which would allow a jury to find that Trustmark had "actual knowledge" of the trustee's wrongdoing. We agree.

Section 91-9-115 was enacted by the Mississippi Legislature in 1966 and is an integral...