Reliance Trust Co. v. Candler
294 Ga. 15
| Ga. | 2013Background
- Settlor (wife of Charles H. Candler III) created a revocable marital trust naming Reliance Trust Company as co‑trustee; Mr. Candler was the life beneficiary and remainder beneficiaries sued.
- Remainder beneficiaries alleged Reliance made improper principal (corpus) distributions to the life beneficiary after settlor’s death, diminishing trust corpus and causing damages.
- At trial the jury found Reliance did not act in bad faith but otherwise found for the remainder beneficiaries, awarding $1,140,924.41; trial court added $535,558.15 prejudgment interest.
- Court of Appeals affirmed; Supreme Court granted certiorari limited to whether the appellate court erred in upholding the verdict and the interest award.
- Reliance argued (1) the trust granted absolute discretion so liability requires bad faith under OCGA § 53-12-260, and (2) prejudgment interest should run only from the life beneficiary’s death, not from each distribution date.
- Supreme Court affirmed liability portion (finding Reliance waived some arguments and the evidence supported findings of arbitrariness/oppression) but reversed and remanded limited to prejudgment interest timing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper standard for review of trustee exercising discretionary power | Reliance’s discretionary acts were subject to the broader standard allowing liability for arbitrariness/oppression (as jury instructed) | Trustee with an "absolute" discretion can be liable only for bad faith (OCGA § 53-12-260) | Reliance waived the argument by consenting to jury instruction; court applied broader standard and found evidence supported arbitrariness/oppression |
| Sufficiency of evidence regarding multiple specific distributions | Distributions were improper and collectively diminished corpus; general verdict presumed proof of allegations | Each challenged distribution lacked specific proof of abuse; jury verdict insufficient on item-by-item basis | Reliance consented to a general verdict and waived right to require special findings; appellate review declined on unraised issue |
| Prejudgment interest accrual period | Interest should be awarded to make beneficiaries whole for lost accruals on improperly distributed funds | Interest should run only from the life beneficiary’s death, because had there been no breach interest would have been paid to the life beneficiary, not added to corpus | Interest must be awarded from date funds would have accrued to remainder beneficiaries — i.e., from the life beneficiary’s death; trial court’s award measuring from each distribution was reversed and must be recalculated |
| Effect of post‑trial change in Georgia Trust Code (OCGA § 53-12-260) | New Code confirms trustee must exercise discretion in good faith; supports Reliance’s position | Remainders rely on traditional broader standards previously applied by Georgia courts | Court notes new Code is materially identical to prior section but declines to alter procedural waiver analysis; substantive change not dispositive here |
Key Cases Cited
- Citizens & Southern Nat. Bank v. Orkin, 223 Ga. 385 (discusses when courts will interfere with trustee discretion)
- Springer v. Cox, 221 Ga. 673 (discretionary trust language and trustee liability discussion)
- Ludwig v. Ludwig, 281 Ga. 724 (trustee discretion and failure-to-act claim)
- Citizens & Southern Nat. Bank v. Haskins, 254 Ga. 131 (damages/removal for trustee failures)
- Hammond v. Hammond, 290 Ga. 518 (procedural waiver of jury instruction objections)
- Owen v. S. P. Richards Paper Co., 188 Ga. 258 (general verdict presumed to find all material allegations)
- Livingston v. Taylor, 132 Ga. 1 (acquiescence to general verdict waives right to special verdict)