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Docket Number

No. CA 83-392

Attorney(S)

Julius D. Kearney, for appellant. Williamson, Ball Bird, by: William K. Ball, for appellee.

Judges

LAWSON CLONINGER, Judge.

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Smart Summary

Ashman v. Pickens, No. CA 83-392 (Ark. Ct. App. Aug. 19, 1984)

Factual and Procedural Background

This appeal challenges a Desha Chancery Court decree (Donald Clark, Chancellor) removing Madelyn Ashman as co-trustee of a trust created by the will of R. A. Pickens's father. The trust has existed since 1932. Appellee R. A. Pickens has been a trustee since 1936; appellant Ashman, his daughter, since 1961. The trust holds significant farming-related interests (including a 43% interest in R. A. Pickens and Son Company and a one-fourth partnership interest in large acreage) and is engaged in large-scale farming operations in Desha County where appellee resides. Appellee petitioned to remove appellant as trustee; the chancellor granted the petition. Appellant appealed, arguing principally that the trial court erred in removing her and in considering facts not pled (hostility/impasse). The Court of Appeals affirmed.

Legal Issues Presented

Whether issues not raised in the pleadings (specifically evidence of hostility and an impasse) were properly considered under Rule 15(b) where they were tried by express or implied consent.
Whether the chancellor abused his discretion in removing appellant as trustee of the trust.

Arguments of the Parties

Appellant's Arguments

The chancellor erred in considering an issue (existence of hostility/impasse) not covered by the pleadings.
The removal was erroneous—appellant impliedly contends removal was not justified by the evidence.

Appellee's Position / Evidence Supporting Removal

Appellee petitioned to remove appellant as co-trustee and presented evidence that appellant was a long-time New York City resident who did not participate in major trust decisions, only occasionally signing documents.
Evidence indicated "clear and unmistakable enmity" and an impasse between appellant and appellee, including appellant's refusal to cooperate in selecting a third trustee after a resignation, impeding the trust's purpose requiring mutual interchange of ideas.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Sorrells v. Bailey Cattle Co., 268 Ark. 800, 595 S.W.2d 950 (Ark.App. 1980)	Chancellor's power to treat pleadings as amended to conform with the proof when issues not raised by the pleadings are tried by consent.	The court relied on Sorrells to support treating the unpled issue of hostility/impasse as tried by consent and thus properly considered by the chancellor under Rule 15(b).
Festinger v. Kantor, 272 Ark. 411, 616 S.W.2d 455 (1981)	Removal of a trustee lies in the sound discretion of the trial court; appellate review is for abuse of discretion.	The court applied Festinger's standard to evaluate whether the chancellor abused his discretion in removing appellant and concluded there was no abuse.
Blumenstiel v. Morris, Executor, 207 Ark. 244, 180 S.W.2d 107 (1944)	Removal for non-residence/absence is proper only when absence precludes attention to the trust or is accompanied by neglect; mutual hostility between beneficiary and trustee justifies removal if the trust requires mutual interchange of ideas and the hostility defeats the trust's purpose.	The court applied Blumenstiel to find that appellant's residence/absence and her refusal to cooperate (mutual hostility causing an impasse in appointing a trustee) met the criteria for removal.

Court's Reasoning and Analysis

The court first addressed the pleading objection, citing Rule 15(b) and Sorrells to conclude that an issue not explicitly pled may be treated as before the court where tried by express or implied consent. Turning to the substantive removal question, the court applied the abuse-of-discretion standard from Festinger. The chancellor's factual findings—appellant's long-term New York residence and likely continuance there, her lack of participation in trust farming operations (only occasional signatures), appellee's need for a co-trustee experienced in farming due to declining health, and a "clear and unmistakable enmity" resulting in appellant's refusal to cooperate in selecting a third trustee—were supported by the record. Under Blumenstiel, absence that precludes proper attention and mutual hostility that defeats a trust purpose (here, the mutual selection of a trustee) warrant removal. Because the findings met those criteria and were supported by evidence, the appellate court concluded there was no abuse of discretion in removal.

Holding and Implications

The chancellor's decree removing Madelyn Ashman as co-trustee is affirmed.

Implications: The direct effect is the removal of appellant as trustee and affirmation of appellee's successful petition. The opinion applies established Arkansas precedent on pleading by consent, trustee-removal discretion, non-residence/absence, and mutual hostility; it does not purport to announce a new legal rule beyond applying those precedents.

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Madelyn ASHMAN v. R. A. PICKENS

1. PLEADING — ISSUES NOT PLED — TRIED BY EXPRESS OR IMPLIED CONSENT. — Where issues not raised by the pleadings are tried by express or implied consent of the parties, the chancellor has the power to treat the pleadings as amended to conform with the proof. 2. TRUSTS TRUSTEES — TRUSTEE REMOVAL IN SOUND DISCRETION OF TRIAL JUDGE. — The removal of a trustee lies in the sound discretion of the trial court and its decision will not be overturned unless there has been an abuse of discretion. 3. TRUSTS TRUSTEES — REMOVAL OF TRUSTEE FOR ABSENCE. — Removal of the trustee on the ground of non-residence or absence from the jurisdiction is proper only when the absence is of a prolonged character precluding proper attention to the trust or where, in addition to his absence, there is also a neglect of duty. 4. TRUSTS TRUSTEES — MUTUAL HOSTILITY BETWEEN BENEFICIARY AND TRUSTEE — EFFECT. — Mutual hostility between the beneficiaries and the trustee is a sufficient ground for the court to remove the trustee if (1) the provisions of the instrument creating the trust require mutual interchange of ideas, and (2) if the hostility tends to defeat the purpose of the trust.

LAWSON CLONINGER, Judge.

This is an appeal from a decree of the chancellor which granted the petition of appellee, R. A. Pickens, acting individually and as trustee of the B. C. Pickens trust, who sought to remove the appellant, Madelyn Ashman, as a co-trustee of the above-named trust. The trust was created by the last will and testament of the appellee's father and has been in existence since 1932. Appellee has been a trustee since 1936, and appellant, who is appellee's daughter, has been a trustee since 1961. The trust is involved in farming operations in Desha County where the appellee resides. The trust owns a 43% interest in R. A. Pickens and Son Company which runs a farm shop, a cotton gin and a commissary. It also handles seed, fertilizer and chemicals and the harvesting and marketing of crops. Gross sales of the company have averaged over $3.3 million for each of the last four years. The trust also owns a one-fourth interest in the partnership of R. A. Pickens Son which owns approximately 9,713 acres of farm land.

The provision in the will providing for the appointment of trustees states in pertinent part:

When my son R. A. Pickens shall attain the age of 21 years, it is my wish and I hereby provide that he shall then become the fourth member of said Trustees of the Trust created by this Will, having equal voice and authority with each of the remaining three Trustees; and said Trustees shall continue to be four in number until a vacancy shall occur by death, resignation, or incapacity of one of the Trustees, after which there shall be three Trustees, INCLUDING my son R. A. Pickens so long as he may live; and after his death the third Trustee selected and appointed by the surviving Trustees shall be a son of said R. A. Pickens if he shall have a son surviving him who has attained his majority; and so on in the same manner during the existence of this Trust, the sound, adult male heirs of my body who have reached their majority, so long as they are available, shall be selected to fill vacancies Occurring among said Trustees, so that at least one of said Trustees shall be of my own blood.

Appellant argues three points for reversal which can be reduced to one major point; namely whether the trial court erred in granting appellee's petition to remove appellant as trustee. Appellant initially argues that the chancellor erred in considering a point not covered in the pleadings. Specifically, appellant argues that it was error for the trial judge to find that the evidence tended to establish the existence of hostility and an impasse between appellant and appellee. Rule 15(b) of the Rules of Civil Procedure states in pertinent part:

When issues not raised by the pleadings are tried by expressed or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.

Arkansas appellate courts have recognized the power of the chancellor to treat the pleadings as amended to conform with the proof. Sorrells v. Bailey Cattle Co., 268 Ark. 800, 595 S.W.2d 950 (Ark.App. 1980).

The only issue to be determined is whether the chancellor abused his discretion in removing appellant as trustee of the trust. The removal of a trustee lies in the sound discretion of the trial court and its decision will not be overturned unless there has been an abuse of discretion. Festinger v. Kantor, 272 Ark. 411, 616 S.W.2d 455 (1981).

In the instant case, the chancellor specifically found that appellant was a long-time resident of New York City and the probability was that she would remain there. The court further found that the business of the trust was large scale farming and that appellant was not qualified to make farming decisions. In fact, appellant had not participated in any of the trust activities other than occasionally signing papers. Lastly, the chancellor found that there was "a clear and unmistakable enmity" existing between the parties resulting in an impasse as to the selection of a third trustee required by the trust terms. The evidence at trial indicated that when appellee's son, Andrew, resigned as trustee, appellant refused to cooperate with appellee in the selection of the third trustee. Additional evidence was consistent with the chancellor's findings. Appellant testified that she did not have any experience in the farming industry other than occasional gardening. Further, she stated that she had not participated in the decisions of the farming Operations.

In Blumenstiel v. Morris, Executor, 207 Ark. 244, 180 S.W.2d 107 (1944), the Arkansas Supreme Court stated that removal of the trustee on the ground of non-residence or absence from the jurisdiction is proper only when the absence is of a prolonged character precluding proper attention to the trust or where, in addition to his absence, there is also a neglect of duty. Also in Blumenstiel, supra, the court adopted the rule that mutual hostility between the beneficiaries and the trustee is a sufficient ground for the court to remove the trustee if (1) the provisions of the instrument creating the trust require mutual interchange of ideas, and (2) if the hostility tends to defeat the purpose of the trust.

Applying the above rules to the facts in this case, there was evidence in the record to support a finding by the chancellor that appellant's absence from the jurisdiction of the trust precluded proper attention to the trust. Appellant herself testified that she did not participate in the major decisions of the trust but only signed papers and documents when sent to her. Appellee indicated an interest in appointing a trustee who was knowledgeable and experienced in farming operations because he was in poor health and would not be able to make all the decisions much longer.

Further, there was evidence to support a finding that hostility between appellant and appellee tended to defeat one of the purposes of the trust; namely, the appointment of an additional trustee. Evidence indicated that appellant refused to cooperate with appellee in the appointment of another trustee. The trust required a mutual interchange of ideas in the appointment of the other trustee and thus met the requirements for removal stated in Blumenstiel v. Morris.

We hold that the chancellor's decision in removing appellant as trustee was not an abuse of discretion.

Affirmed.

MAYFIELD and COOPER, JJ., agree.

ASHMAN v. PICKENS