Conservatorship of Estate of Martin, In re, 86-466

• Decision Date: 01 April 1988
• Docket Number: No. 86-466,86-466
• Citation: 228 Neb. 103,421 N.W.2d 463
• Parties: In re CONSERVATORSHIP OF THE ESTATE OF Elizabeth G. MARTIN, A Protected Person. Elizabeth G. MARTIN, A Protected Person, Appellant, v. Donald L. ELLISON, Conservator, et al., Appellees.
• Court: Nebraska Supreme Court

Page 463

421 N.W.2d 463

228 Neb. 103

In re CONSERVATORSHIP OF THE ESTATE OF Elizabeth G. MARTIN, A Protected Person Elizabeth G. MARTIN, A Protected Person, Appellant, v. Donald L. ELLISON, Conservator, et al., Appellees.

No. 86-466.

Supreme Court of Nebraska.

April 1, 1988.

Syllabus by the Court

1. Guardians and Conservators: Estates: Appeal and Error. Appeals of matters arising under the Nebraska Probate Code, Neb.Rev.Stat. §§ 30-2201 to 30-2902 (Reissue 1985), are reviewed for error on the record.

2. Guardians and Conservators. A conservator generally is required to observe the standards in dealing with the assets of an estate as would be observed by a prudent man dealing with the property of another.

3. Guardians and Conservators: Appeal and Error. Application of the wrong standard of care by the trial court constitutes error on the record.

David L. Kimble of Souchek & Kimble, Seward, for appellant.

James M. Egr of Egr & Birkel, David City, for appellee Ellison.

BOSLAUGH, CAPORALE, and GRANT, JJ., and RIST and CLARK, District Judges.

CLARK, District Judge.

Donald L. Ellison, conservator for the estate of Elizabeth G. Martin, a protected person, filed a motion for approval of account and resignation as conservator with the county court for Butler County. Elizabeth Martin, the protected person, through her attorney, filed an answer and cross-petition against Ellison and the bond surety company, alleging that Ellison had negligently breached his duties as conservator and that the estate of Martin had been damaged.

An evidentiary hearing was held in the county court, following which the county court found that Ellison had "exercised such care as a prudent man would exercise in dealing with his own property...." The county court then approved Ellison's accounting and approved his resignation as conservator.

The district court for Butler County found on appeal that there was no error on the record and affirmed the county court.

Elizabeth Martin appeals the ruling of the district court on the grounds, among others, that the county court applied the wrong standard of care to the performance of Ellison as conservator and that this constituted error on the record, which should have resulted in reversal by the district court.

We review the case, as did the district court, for error on the record. See Neb.Rev.Stat. §§ 30-1601 and 24-541.06 (Reissue 1985).

Prior to 1975, Nebraska statutes defined the standard of care to be that "which men of prudence, discretion, and intelligence acquire or retain for their own account in the management of their own affairs, not in regard to speculation, but in making investment of their own funds with a view to probable income as well as probable safety of the capital involved." Neb.Rev.Stat. § 24-601 (Cum.Supp.1974). Cf. § 24-601 (Reissue 1975).

With the adoption of the Uniform Probate Code, effective January 1, 1977, the new standard was set out in Neb.Rev.Stat. ch. 30 (Reissue 1985). Section 30-2646 provides: "In the exercise of his powers, a conservator is to act as a fiduciary and shall observe the standards of care applicable to trustees as described by section 30-2813."

Section 30-2813 provides that "the trustee shall observe the standards in dealing with the trust assets that would be observed by a prudent man dealing with the property of another...."

Further, the comments under § 30-2813, which were taken directly from the comments to the Uniform Probate Code, state:

This is a new general provision designed to make clear the standard of skill expected from trustees.... It differs somewhat from the standard stated in § 174 of the Restatement of Trusts, Second, which is as follows:

"The trustee is under a duty to the beneficiary in administering the trust to exercise such care and skill as a man of ordinary prudence would exercise in dealing with his own property...."

By making the basic standard align to that observed by a prudent man in dealing with the property of another, the section accepts a standard as it has been articulated in some decisions regarding the duty of a trustee concerning investments. See Estate of Cook, (Del.Chanc.1934) 20 Del.Ch. 123, 171 A. 730. Also, the duty as described by the above section more clearly conveys the idea that a trustee must comply with an external, rather than with a personal, standard of care.

The case of In re Estate of Wm. H. Cook, Dec'd., 20 Del.Ch. 123, 125-26, 171 A. 730, 731 (1934), referred to in the comments under § 30-2813, states The rule of a trustee's duty is generally stated to be, that he is under a duty to the beneficiary in administering the trust to exercise such care and skill as a man of ordinary prudence would exercise in dealing with his own property.

When this rule which is applicable to a trustee's duty generally is given specific application to the matter of investments, it needs, for the purposes of the instant case, to be supplemented by at least two observations.

The first is, that the external standard of "such care and skill as a man of ordinary prudence would exercise in dealing with his own property" is not the standard he would use in...