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Factual Background:

Trust beneficiaries brought action against co-trustee, alleging breach of fiduciary duty, negligence, and civil conspiracy.  Individual Co-Trustee spent $1,200,000.00 on repairs to home.  Corporate Co-Trustee A.G. Edwards Trust Company, Defendant herein, did not independently inquire as to the propriety of the expenditures because it had in its file a letter of direction from the Grantor of the Trust, authorizing the expenditures.

Held:

The Circuit Court, St. Louis County, B.C. Drumm, Jr., J., granted co-trustee A.G. Edwards summary judgment. Beneficiaries appealed.

On Appeal:

The Court of Appeals held that: (1) genuine issues of material fact as to whether co-trustee acted in the beneficiary’s best interest and exercised reasonable care in approving $1,200,000 in renovations to the estate property, precluded summary judgment, and (2) co-trustee was not liable for civil conspiracy.  Affirmed in part, and reversed and remanded in part. Although the trustee has many duties emanating from the fiduciary relationship, the most fundamental is the duty of loyalty; as part of its duty of loyalty, the trustee is to administer the trust solely in the interest of the beneficiary. The general rule regarding liability for a co-trustee’s actions is that a trustee is not liable to the beneficiary for a breach of trust committed by a co-trustee. The limited circumstances under which a co-trustee is liable for breach of trust by another co-trustee are when a trustee: (1) participates in a breach of trust committed by his co-trustee; or (2) improperly delegates the administration of the trust to his co-trustee; or (3) approves or acquiesces in or conceals a breach of trust committed by his co-trustee; or (4) by his failure to exercise reasonable care in the administration of the trust has enabled his co-trustee to commit a breach of trust; or (5) neglects to take proper steps to compel his co-trustee to redress a breach of trust.  The trial court erred in granting summary judgment in favor of A.G. Edwards because there are genuine issues of material fact as to whether it acted in the beneficiary’s best interest and exercised reasonable care in approving the $1,200,000 renovation to the estate property.

Co-trustee was not liable for civil conspiracy in the absence of evidence that co-trustee agreed with other trustee to carry out an unlawful objective or that co-trustee knowingly acted to carry out the unlawful purposes of the conspiracy. In order to prove a civil conspiracy, plaintiffs must establish: (1) two or more persons; (2) with an unlawful objective; (3) after a meeting of the minds; (4) committed at least one act in furtherance of the conspiracy; and, (5) the plaintiff was thereby damaged. Proof of the civil conspiracy must be supported by clear and convincing evidence. In a civil conspiracy action, there must be clear and convincing evidence that the alleged conspirator knowingly performed any act or took any action to further carry out the unlawful purposes of the conspiracy.