In re Maint. Fund Trust of Sunset Mem. Park Chapel
925 N.W.2d 695
Neb.2019Background
- A perpetual-care trust (Maintenance Fund) for the Sunset Memorial Park Mausoleum was created in 1980; Bank of the West (successor to The Guardian State Bank and Trust Co.) is the trustee.
- The Trust principal is small (about $7,500) and statutorily protected as an inviolate perpetual-care fund; income is to be paid semiannually to whoever operates the mausoleum.
- The original Mausoleum Company became inactive by 1998; the mausoleum deteriorated and distributions stopped.
- Trustee petitioned the county court (Scotts Bluff County) to resign, to be paid fees/expenses from the Trust, and to terminate or transfer the Trust (alleging abandonment).
- Cemetery Association (owner/operator of the surrounding cemetery) and crypt-owner Myrtle Hughbanks objected; county court found the Cemetery Association lacked standing, allowed trustee discharge, authorized trustee to pay fees that would exhaust the Trust, and denied fee awards to the parties.
- On appeal, Nebraska Supreme Court held Cemetery Association had standing and reversed the trustee’s discharge because the trustee failed to secure or identify a successor as required by the Trust agreement and the mausoleum statutes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of Cemetery Association to contest trustee petition | Cemetery Assn. is successor to entity named in Trust, selects trustee under Trust/statute, has direct interest in reversion/management | Trustee: Cemetery Assn. is merely an adjacent landowner/public actor without a legal interest | Court: Cemetery Assn. has standing; county court erred in holding otherwise |
| Whether trustee could resign/discharge without naming successor | Trustee: Trust small and uneconomical; resignation/discharge and payment of fees from Trust is justified; termination/transfer appropriate given abandonment | Cemetery Assn./Hughbanks: Trustee must follow paragraph 12 and mausoleum statutes; successor trustee or provision for future management required; principal inviolate | Court: Trustee cannot be discharged without identifying/requesting appointment of successor trustee; resignation without provision for ongoing management was erroneous |
| Payment of trustee’s litigation costs and fees from Trust principal | Trustee: Fees/expenses incurred prosecuting petition are reasonable and should be paid from Trust | Cemetery Assn./Hughbanks: Inviolate principal cannot be used to pay such costs, especially where trustee failed to comply with successor requirement | Court: Denied award of litigation payments from the inviolate Trust; vacated county court’s order authorizing such disbursements |
| Denial of mutual fee awards between parties | Trustee sought fees from Cemetery Assn.; parties sought reciprocal awards | Parties argued prevailing/losing positions support fee awards | Court: Affirmed county court’s denial of attorney fee awards to parties (no error) |
Key Cases Cited
- Wisner v. Vandelay Investments, 300 Neb. 825, 916 N.W.2d 698 (Neb. 2018) (standing is jurisdictional; appellate review of jurisdiction is de novo)
- In re Henry B. Wilson, Jr., Revocable Trust, 300 Neb. 455, 915 N.W.2d 50 (Neb. 2018) (equity trust issues reviewed de novo; trustee removal is equitable)
- Eagle Partners v. Rook, 301 Neb. 947, 921 N.W.2d 98 (Neb. 2018) (standing requires a personal stake; litigant must assert own legal interest)
- Ponderosa Ridge LLC v. Banner County, 250 Neb. 944, 554 N.W.2d 151 (Neb. 1996) (distinguishing public-interest actors from parties with proprietary interests)
- Matter of Memory Gardens, 91 A.D.2d 1163, 458 N.Y.S.2d 737 (N.Y. App. Div. 1983) (limitations on using inviolable trust principal to pay trustee litigation costs)
- In re Loree, 24 N.J. Super. 604, 95 A.2d 435 (N.J. Ch. Div. 1953) (trustee generally cannot resign simply because trustee services become uneconomical)
- Town of Cody v. Buffalo Bill Mem., 64 Wyo. 468, 196 P.2d 369 (Wyo. 1948) (trustee resignation not permitted where trust terms require continuity for special purpose)
- Empire Trust Co. v. Sample, 50 N.Y.S.2d 5 (N.Y. Sup. Ct. 1944) (similar principle restricting trustee resignation when it frustrates trust purpose)