573 S.W.3d 584
Ark. Ct. App.2019Background
- William (Will) Ash owned 3,881 shares of Bancshares of Eastern Arkansas, Inc., evidenced by certificated stock no. 1221 in his name.
- Ash claims he intended to place the shares into a new revocable trust (with attorney Phil Hicky's assistance) to protect assets from creditors; no written revocable-trust document was produced.
- Ash signed a stock certificate indorsement and a separate stock power that explicitly transferred the shares to First National Bank of Eastern Arkansas as trustee of an irrevocable testamentary trust created under his mother’s will.
- Bank trust personnel relied on the stock power and possession of the certificate, treated the bank as holding legal title as trustee, and the trust received dividend K-1s for multiple years; Ash received no cash or other consideration.
- Procedural history: this matter was previously appealed (Ash I), remanded for further consideration of UCC securities-transfer issues; on remand the circuit court granted summary judgment to the bank dismissing conversion, replevin, and breach-of-fiduciary-duty claims; the court of appeals affirms in part and reverses in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of indorsement/transfer of certificated shares | Ash: indorsement to a trust did not effectively transfer; he intended revocable trust, not the irrevocable testamentary trust | Bank: stock power (separate signed document) plus delivery completed transfer to bank as trustee | Transfer via signed stock power and possession was effective; summary judgment for bank on ownership; conversion and replevin dismissed |
| Corporate transfer restrictions (certificate/bylaws) | Ash: transfer violated transfer-on-books/bylaw restrictions and is void | Bank: UCC stock-power indorsement valid; issuer not enforcing restriction here | Court: corporate-law restrictions do not void transfer between parties; transfer valid as between Ash and bank |
| Conversion / Replevin (right to possess) | Ash: bank wrongfully converted or refused to return shares | Bank: holds legal title as trustee following valid transfer | Held for bank; Ash lacks legal title so conversion and replevin claims fail |
| Breach of fiduciary duty (trustee duties) | Ash: transfer was a gift or otherwise unfair; bank must prove transfer benefited him; lacked disclosure/independent advice/consideration | Bank: transfer was valid, Ash consented/benefitted (dividends); law-of-the-case bars new claims | Court: genuine issues of material fact exist (disputed intent, disclosure, attorney role); summary judgment improper on fiduciary-duty claim |
Key Cases Cited
- Ash v. First Nat'l Bank of E. Ark., 513 S.W.3d 268 (Ark. Ct. App. 2017) (prior appellate decision remanding for analysis of UCC securities-transfer issues)
- Trott v. Jones, 157 S.W.3d 592 (Ark. Ct. App. 2004) (indorsement to a trust and ownership/transfer principles)
- Banks v. Evans, 64 S.W.3d 746 (Ark. 2002) (presumption that signatory knows contents of document signed)
- Lael v. Crook, 97 S.W.2d 436 (Ark. 1936) (trustee holds legal title; beneficiaries hold equitable interest)
- Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928) (articulation of high fiduciary standard for trustees and fiduciaries)