Peterson v. Peterson
| Decision Date | 29 October 2019 |
| Docket Number | A19A1428, A19A1468 |
| Citation | 835 S.E.2d 651,352 Ga.App. 675 |
| Parties | PETERSON et al. v. PETERSON et al. (two cases). |
| Court | Georgia Court of Appeals |
Rosemary Smith Armstrong, Joseph John Burton, Atlanta, for Appellant.
R. Bruce Russell SR, George Holland Rountree, Statesboro, for Appellee.
One case comes to us for a second time on appeal and the other was previously appealed to the Supreme Court of Georgia. See Peterson v. Peterson , 344 Ga. App. XXVIII (Case No. A17A2025) (February 27, 2018) (unpublished) ("Peterson I "); Peterson v. Peterson , 303 Ga. 211, 811 S.E.2d 309 (2018) (" Peterson II "). Brothers and co-trustees Charles Alexander Peterson ("Alex") and Hugh David Peterson ("David") (collectively, "Appellants") appeal from the trial court’s order granting summary judgment in favor of their mother and co-trustee Mary Jeannette Willcoxon Peterson ("Mary") and brother and co-trustee Cleveland Calhoun Peterson ("Calhoun") (collectively, "Appellees"). Appellants challenge the trial court’s finding that Mary did not owe Appellants a fiduciary duty when she exercised her power of appointment under two trusts and ordered Appellants to execute all conveyance documents submitted to them. Appellants further contend the trial court erred in concluding that Mary could act exclusively in her capacity as a beneficiary of both trusts in exercising her appointment power to convey trust assets. Lastly, Appellants contend the trial court erred in granting summary judgment in favor of Appellees on Appellants’ claims for breach of fiduciary duty with respect to both trusts. For the reasons that follow, we reverse.
BBL-McCarthy, LLC v. Baldwin Paving Co. , 285 Ga. App. 494, 494-495, 646 S.E.2d 682 (2007) (citations omitted).
In Peterson I and Peterson II , the relevant background was described as follows:
Charles Hugh Peterson died testate in 1994 and was survived by his wife, Mary, and their three sons Alex, David, and Calhoun. Mr. Peterson’s will, which was probated in 1995, created two testamentary trusts: a marital trust for the primary benefit of Mary, and a residual "by-pass" trust for the benefit of Mary and the couple’s three sons. Mary and her three sons were each designated co-executors of the will and co-trustees of both the marital and by-pass trusts. Item 5 of Mr. Peterson’s will created a marital trust for Mary, while Item 6 created a bypass trust for Mary and their three sons. The relevant portion of the will creating the terms of the by-pass trust reads as follows:
Under the terms of the will, all decisions made by the majority of the executors or trustees would control, provided that said majority included Mary. Other than some specific personal property, all the real and personal property of the estate was to be placed in either the marital trust or the bypass trust, and the bypass trust was designed to have a value of $600,000. Item 5 of the will provides that all of the income from the marital trust goes to Mary for her life and that Mary has "the power at any time and from time to time ... to direct the Trustees to turn over any part of the property in this trust to my said wife or to or among such of my descendants or spouses of such descendants." At Mary’s death, in the event that she has not disposed of the marital trust property in her will or by her power of appointment, it will become part of the bypass trust if it is still in existence. If it is not, the property is to be divided between Alex, David, and Calhoun or their descendants.
Sometime after the will was probated, a dispute arose between the co-executors and co-trustees over the administration of the estate and the by-pass trust, pitting Mary and Calhoun against Alex and David. Alex and David filed petitions for accounting and damages for breach of duties as executors and trustees against Mary and Calhoun, and sought the removal of Mary and Calhoun as executors and trustees in probate court. Mary and Calhoun each moved for summary judgment on all claims and the superior court granted their motions. Alex and David appealed those rulings.1
In the first appearance of this case before this Court, we reversed the trial court’s grant of summary judgment to Calhoun in an unpublished opinion. See Peterson I . One month later, the Georgia Supreme Court in Peterson II reversed the trial court’s grant of summary judgment to Mary for similar reasons. Both cases held that material issues of fact remained with respect to Appellees’ failure to fully fund the trusts at issue in the case and whether Appellees wasted assets. See Peterson I , at page 7-8, 10; Peterson II , 303 Ga. at 215-217, 811 S.E.2d 309.
In January 2016, Mary demanded that all assets in the marital trust be turned over to her. In September 2016, Mary further demanded that all assets of the by-pass trust be turned over to Calhoun. Appellants refused to execute the documents that would effectuate Mary’s demand. In response to Appellants’ refusal, Calhoun filed a petition to remove Appellants as trustees or in the alternative to compel the trustees to transfer property. Calhoun and Mary also filed separate motions for summary judgment. The trial court granted Calhoun’s petition to remove Appellants as trustees if they failed to execute the documents within 15 days and granted Appellees’ motions for summary judgment on all of Appellants’ claims except those related to past support and proper funding of the by-pass trust. This appeal followed.
1. Appellants first argue the trial court erred by finding, as a matter of law, that Mary did not owe Appellants a fiduciary duty when she exercised her power of appointment under both the marital and by-pass trusts. We agree.
Citing Connecticut Bank & Trust Co. v. Lyman , 148 Conn. 273, 280-281, 170 A.2d 130 (Conn. 1961), a Connecticut Supreme Court of Errors decision, the trial court held that under the terms of the will, Mary, in her capacity as a beneficiary of both trusts, could exercise her power of appointment to request the conveyance of property in both trusts without regard to any fiduciary duty she may have as a trustee. The trial court concluded that Appellants, as trustees, owe a fiduciary duty to Mary to execute the conveyance documents submitted to them, but that Mary owed no such fiduciary duty to them as co-beneficiaries. The trial court’s reliance on Lyman in support of its conclusion is incongruent to the facts of this case and laws of this state.
In Lyman , the trustee filed an action for construction of a trust instrument after a settlor’s wife made a demand for the entire principal of the trust after her husband’s death. 148 Conn. at 277, 170 A.2d 130. The court held that the wife, as a beneficiary of the trust, was entitled as a matter of right to receive the entire principal of the trust upon her written requests without condition. Id . at 282-283, 170 A.2d 130. However, Lyman is distinguishable from the facts of this case in that unlike the defendant in Lyman who was "neither an actual nor quasi trustee," Mary is a trustee of both trusts. See id . at 281, 170 A.2d 130. We find no case law or statutory authority which would allow a trustee to divorce themselves of their fiduciary duties if they are also a beneficiary under the same trust instrument. Moreover, in Lyman , the Connecticut Supreme Court of Errors also held that "where the life tenant is [herself] constituted a trustee, [she] occupies a quasi-fiduciary or fiduciary relationship with respect to [other beneficiaries]. Id . at 281, 170 A.2d 130.
Georgia law is clear that "[p]owers, especially of appointment, being always founded on trust or confidence, are peculiarly subjects of equitable supervision."
OCGA § 23-2-110. "Georgia trust law requires trustees to administer the trusts solely in the interests of the beneficiaries, and imposes upon them a duty of impartiality[.]" Rollins v. Rollins , 338 Ga. App. 308, 313 (1) (a), 790 S.E.2d 157 (2016) (citation and punctuation omitted). See also, OCGA § 53-12-246. As such, Rollins , 338 Ga. App. at 326 (6), 790 S.E.2d 157 (citations and punctuation omitted).
It is generally, if not always, humanly impossible for the same person to act fairly in two capacities and on behalf of two interests in the same transaction. Consciously or unconsciously he will favor one side as against the other, where...
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Wills, Trusts, Guardianships, and Fiduciary Administration
...of powers of appointment, see Mary F. Radford, Redfearn: Wills And Administration In Georgia §§ 15:1-15:3 (2019-2020 ed. 2019).73. 352 Ga. App. 675, 835 S.E.2d 651 (2019).74. See id.75. 303 Ga. 211, 811 S.E.2d 309 (2018).76. Ga. App. Case #A17A2025 (February 27, 2018).77. Peterson III, 352 ......