Co-Trustee removed and denied compensation for actions as chairman of bank owned in part by trust.
Richard Wilbourn II, the largest shareholder of Citizens National Bank of Meridian, left his bank stock in a testamentary trust for the lifetime benefit of his wife, Deanna, with the remainder passing to his children Elizabeth, Garnett, and Richard III (“Richard”). He named his wife, Deanna, and his son Richard as co-trustees.
Although the co-trustees initially agreed on the trust administration and the voting of the bank stock held in the trust, discord arose between them. Richard became chairman of the bank and, distrustful of the bank’s CEO, began interfering with the bank’s daily management, upset the balance between the bank’s board and its management, and lowered employee morale. The CEO complained to Deanna, who confronted Richard about his actions. Richard secretly taped their conversations. As a result of Richard’s behavior, the holding company that owned the bank, controlled by Deanna, Garnett, the bank’s CEO, and the CEO’s father, removed Richard as chairman of the holding company and chairman of the bank.
Three months later, Deanna, Elizabeth, and Garnett attempted to remove Richard as co-trustee pursuant to the trust terms. Richard sued to oppose his removal and counterclaimed to remove Deanna. The trial court held that good cause existed to remove Richard as co-trustee, and Richard appealed.
On appeal, the Mississippi Court of Appeals affirmed the trial court on the grounds that: (1) Richard breached his fiduciary duties by acting as Deanna’s attorney, advisor, and as co-trustee while at the same time he was gathering evidence to have Deanna declared incompetent and removed as co-trustee; (2) Richard refused to cooperate with Deanna in voting the bank shares, which resulted in a dilution of their family’s control over the bank; (3) Richard pursued his personal interests over the interests of his family when he interfered with the bank’s daily management; (4) Richard had engaged in self-dealing, violated his ethical duties as an attorney, and violated the terms of the trust when he attempted to convince Deanna to use the trust to guarantee a $12 million loan and to transfer the bank shares held in the trust to a new trust; (5) the hostility between Richard and his family, caused by Richard’s actions, warranted his removal; (6) Richard’s hostility towards the trust’s beneficiaries defeated the purpose of the trust; (7) Deanna should not be removed as trustee because Deanna, Elizabeth, and Garnett had credible explanations for their attempt to remove Richard and they had acted in good faith; and (8) because Richard presented no evidence that he provided services to the trust, he was not entitled to any trustee’s fees.