Trustmark National Bank v. Johnson, No. 2001-IA-01952-SCT.

• Decision Date: 12 February 2004
• Docket Number: No. 2001-IA-01952-SCT.
• Citation: 865 So.2d 1148
• Parties: TRUSTMARK NATIONAL BANK v. Mona B. JOHNSON and Deborah Biedenharn, as Individual Beneficiaries and in their Capacity as the Guardians and Conservators of their Brother Michael Shaw Biedenharn.
• Court: Mississippi Supreme Court

865 So.2d 1148

TRUSTMARK NATIONAL BANK v. Mona B. JOHNSON and Deborah Biedenharn, as Individual Beneficiaries and in their Capacity as the Guardians and Conservators of their Brother Michael Shaw Biedenharn.

No. 2001-IA-01952-SCT.

Supreme Court of Mississippi.

February 12, 2004.

Jeffrey Ryan Baker, Susan Latham Steffey, Jackson, attorneys for appellant.

Jan F. Gadow, Ridgeland, Thomas Y. Page, Dennis C. Sweet, III, Jackson, attorneys for appellees.

CARLSON, Justice, for the Court.

¶ 1. In this case on interlocutory appeal from the Circuit Court of the First Judicial District of Hinds County, Mississippi, plaintiffs, Mona B. Johnson and Deborah Biedenharn, as individual beneficiaries under the Ruth S. Biedenharn Trust, and as Guardian and Conservator for their brother, Michael Shawn Biedenharn, who is also an individual trust beneficiary, have sued Trustmark National Bank (Trustmark) for its allegedly negligent actions as Trustee arising solely in the administration of the Trust. Trustmark filed a counterclaim for declaratory judgment and moved to dismiss or transfer the matter to the Chancery Court of Warren County or, alternatively, to the Chancery Court of Pearl River County. The trial court denied Trustmark's motion. This Court granted Trustmark's petition for interlocutory appeal, see M.R.A.P. 5, since it involves jurisdiction. See Miss. Const. art. 6, § 147.

FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶ 2. The Ruth S. Biedenharn Trust was established on or about September 1, 1983, in Vicksburg, Warren County, Mississippi. The Trustee was First National Bank of Vicksburg, which has since been merged into Trustmark. Under the terms of the Trust Agreement, the Trustee was required, upon the death of Ruth S. Biedenharn (Ruth), to divide the assets into three equal shares. One share was to be held, managed, and distributed for the use and benefit of Milton A. Biedenharn, Jr. (Milton), the father of the Plaintiffs. The issue of the appropriate distribution of the other two shares under the Trust is not at issue in today's appeal. Pursuant to the terms of the Trust, upon Milton's death, the assets of his trust were to be divided into three equal shares, with one share going to each of the three Plaintiffs in this case. Ruth died on March 9, 1990, and her will was subsequently admitted to probate in Cause No. 20,979 on the docket of the Chancery Court of Warren County, which has exercised judicial oversight of the trust agreement in accordance with its terms and the terms of Ruth's will, all as part of the overall administration of Ruth's estate.

¶ 3. The record reveals that during the life of this estate matter in chancery court, the chancellor by way of decree authorized a disbursement in the amount of $6,000 for Milton and a disbursement in the amount of $5,500 for Milton's daughter, Deborah. Also, on September 13, 1994, Milton Biedenharn executed a promissory note to Trustmark in the amount of $100,000.

¶ 4. Milton subsequently died and his estate was opened in Cause No. 97-0514-GN-D on the docket of the Chancery Court of Pearl River County. Pursuant to the terms of Milton's will, the named Executor is John U. Biedenharn. Trustmark filed a claim against Milton's estate due to the promissory note. Milton's widow, Earline Biedenharn, contested Trustmark's claim on the basis of failure of consideration and/or no consideration for the promissory note. The parties entered into an Agreed Order of Continuance in the Pearl River County Chancery Court action because of Trustmark's concern of the possibility of a conflicting ruling with the underlying case.

¶ 5. It is this same loan that forms the basis of the Plaintiffs' claim against Trustmark in this underlying action. The Plaintiffs' complaint alleges inter alia that during the life of their father, Milton, Trustmark abused its discretion in the management of trust assets and by advancing trust money to Milton. Of particular import is the Plaintiffs' allegation that the $100,000 promissory note executed by Milton represented the amount of trust funds Trustmark loaned to Milton, unsecured and interest free, knowing Milton to be "a poor businessman." Plaintiffs, as Milton's heirs, now seek money damages by claiming that Trustmark mismanaged the Trust assets to their detriment.

¶ 6. Trustmark raises two issues in this interlocutory appeal: (1) Whether the Circuit Court of the First Judicial District of Hinds County lacks subject matter jurisdiction; and (2) whether that court is the proper venue for this action.

¶ 7. For the following reasons, we reverse the trial court's order denying a transfer to chancery court, and we remand this case to the Circuit Court of the First Judicial District of Hinds County for the entry of an order transferring this case to the Warren County Chancery Court. Because our decision on the first issue is dispositive of this appeal, we do not consider the second issue.

STANDARD OF REVIEW

¶ 8. Jurisdiction is a question of law which this Court reviews de novo. Briggs & Stratton Corp. v. Smith, 854 So.2d 1045, 1048(¶ 9) (Miss.2003); Rogers v. Eaves, 812 So.2d 208, 211 (¶ 11) (Miss.2002).

ANALYSIS

I. Subject Matter Jurisdiction

¶ 9. Trustmark asserts that the Circuit Court of the First Judicial District of Hinds County lacks subject matter jurisdiction since Plaintiffs' complaint derives wholly from the administration of the Ruth S. Biedenharn Trust. In support of its argument, Trustmark relies on Miss. Const. art. 6, § 159, which states:

The chancery court shall have full jurisdiction in the following matters and cases, viz.:

(a) All matters in equity;

(b) Divorce and alimony;

(c) Matters testamentary and of administration;

(d) Minor's business;

(e) Cases of idiocy, lunacy, and persons of unsound mind;

(f) All cases of which the said court had jurisdiction under the laws in force when this Constitution is put in operation.

(Emphasis added.) Additionally, Miss. Const. art. 6, § 157 states:

All causes that may be brought in the circuit court whereof the chancery court has exclusive jurisdiction shall be transferred to the chancery court.

(Emphasis added). The Mississippi Legislature has provided:

The court in which a will may have been admitted to probate, letters of administration granted, or a guardian may have been appointed, shall have jurisdiction to hear and determine all questions in relation to the execution of the trust of the executor, administrator, guardian, or other officer appointed for the administration and management of the estate, and all demands against it by heirs at law, distributees, devisees, legatees, wards, creditors, or others ...

Miss.Code Ann. § 9-5-83 (Rev.2002) (emphasis added). We have held:

A court of chancery or its equivalent has inherent power to remove the trustee for good cause, such power being incidental to the court's paramount duty to see that trusts are properly executed, and the trust estate preserved, and as broad and comprehensive as the exigencies of the case may require.

Walker v. Cox, 531 So.2d 801, 803 (Miss. 1988) (citing Yeates v. Box, 198 Miss. 602, 612, 22 So.2d 411, 415 (1945)).

¶ 10. The Plaintiffs' complaint focuses on the administration of the Ruth S. Biedenharn Trust. Plaintiffs have labeled their claims against Trustmark as negligence, breach of contract, breach of fiduciary duty, and gross negligence. However, Trustmark's actions or inactions which are at issue arise solely from its capacity as the Trustee of the Ruth S. Biedenharn Trust and any duty Trustmark may have arises from its appointment as Trustee. This action seeks to interpret the Trustee's obligations under the terms of the Trust. The Trust is under the exclusive jurisdiction of the Warren County Chancery Court and has been since its inception.

¶ 11. The Plaintiffs counter that they seek legal action rather than equitable remedies and that subject matter jurisdiction is proper in the circuit court; however, the Plaintiffs concede that when determining the true nature of the claim, one must look at the substance, and not the form, of the claim in order to determine whether the claim is legal or equitable. Briggs & Stratton Corp. v. Smith, 854 So.2d at 1049; Tillotson v. Anders, 551 So.2d 212, 214 (Miss.1989); Thompson v. First Miss. Nat'l Bank, 427 So.2d 973, 976 (Miss.1983); Dixie Nat'l Life Ins. Co. v. Allison, 372 So.2d 1081, 1085 (Miss. 1979). As Trustmark correctly asserts, "[a]lthough, the Plaintiffs employ the language of negligence and legal remedy, the fundamental substance of their claim is testamentary and equitable."

¶ 12. The Plaintiffs rely on Farris v. State, 764 So.2d 411, 423 (¶ 36) (Miss.2000), for the proposition that even though chancery courts are vested with jurisdiction of estate administrations, the circuit court is not precluded from hearing civil matters that coincide with the administration of the estate. However, Farris is distinguishable because it involved the felony prosecution of a trustee. In that case, Farris argued that the circuit court lacked jurisdiction for the criminal prosecution because his allegedly criminal actions took place in the administration of an estate. However, "[w]e reject[ed] Farris's argument on lack of jurisdiction. While it is true that the Mississippi Constitution vests exclusive jurisdiction of conservatorships in the chancery court, Article 6, § 156 also vests original jurisdiction for criminal matters in the circuit court." Farris, 764 So.2d at 423 (¶ 36).

¶ 13. Rather, the case sub judice is more analogous to Rogers v. Eaves, 812 So.2d 208 (Miss.2002). In Rogers, the plaintiff brought a legal malpractice lawsuit in the Circuit Court of Madison County against her attorneys in her divorce case in Scott County. We affirmed the circuit court's transfer of the matter to the Chancery Court of Scott County where the divorce proceedings took place. In doing so, we held:

[I]n order to maintain a legal malpractice claim, it must be determined

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