PROBATE CORNER
Third Party Liability For Breach Of Trust
DAVID M. GARTEN
Sec. 736.1002(2), F.S. reads in relevant part: “[I]
f more than one person, including a trustee
or trustees, is liable to the beneficiaries
for a breach of trust, each liable person is
entitled to pro rata contribution from the
other person or persons.”
the purpose of selling the securities and
investing the proceeds, the broker is not
bound to inquire as to the authority of the
trustee to sell or as to his authority to make
investments, and the broker is not liable for
participation in a breach of trust, although
the trustee did not in fact have a power of
The following legal theories support a third sale, and although the customer invested
party’s liability for breach of trust:
the proceeds in securities which are not
ordinarily proper trust investments and
A. Restatement 2d of Trusts, §326
which were not proper investments under
the terms of the trust.
Restatement 2d of Trusts, §326 reads:
Ҥ326 Other Dealings with Trustee. A third In International Community Corp. v. Young,
person who, although not a transferee 486 So. 2d 629 (Fla. 5th DCA 1986), the
of trust property, has notice that the attorney for a corporation, at the request
trustee is committing a breach of trust of a corporate officer, prepared promissory
and participates therein is liable to the notes, mortgages, deeds, and bills of sale
beneficiary for any loss caused by the for execution by the corporate officer
breach of trust.”
encumbering and conveying corporate
property to a trust of which the corporate
The Comments & Illustrations to §326 officer was the sole beneficiary. The
read: a. Knowledge of breach of trust. If a corporation sued the corporate officer and
third person participates with the trustee the corporate attorney for damages for
in committing a breach of trust, knowing breach of fiduciary duty, negligence, and
that he is committing a breach of trust, he slander of title. The trial court entered a
is liable to the beneficiary for participation summary judgment in favor of the attorney
in the breach of trust. Thus, if the trustee and the appellate court reversed. The court
directs an agent to sell trust property, held that the allegations in the complaint
which the agent knows the trustee is not were sufficient to state a cause of action
authorized to sell, and he does sell it, he against the corporate attorney for damages
is liable for participation in the breach of resulting from participation in a breach
trust. Similarly, if the trustee purchases of trust by the corporate officer citing
through a stockbroker securities which Restatement (Second) of Trusts § 326 (1959),
it is a breach of trust for him to purchase G. Bogert, The Law of Trusts and Trustees, §
and the broker knows that the purchase is 901, et. seq., (rev. 2d ed. 1982), and the cases
in breach of trust, the broker is liable for collected; IV A.W. Scott, The Law of Trusts,
participation in the breach of trust. b. Notice § 326.4 (1967), and Centrust Savings Bank v.
of breach of trust. If a customer deposits Barnett Banks Trust Company, 483 So.2d 867
with a broker securities standing in the (Fla. 5th DCA 1986). The court stated that
name of the customer as trustee as security whether or not the corporate attorney knew,
for speculative transactions on margin, the or should have known, that he was assisting
broker is chargeable with notice that the in a breach of trust by the corporate officer
customer is a trustee and is committing is a question of fact to be resolved by a fact
a breach of trust. The mere fact, however, finder and not by summary judgment.
that an account is opened with the broker
in the name of the customer as "trustee" In Wolf v. Knupp , 76 Cal. App. 4th 1030, 90
does not put the broker upon inquiry as to Cal. Rptr. 2d 792 (Cal. App. 1999), a trust
the existence and terms of the trust; and if beneficiary sued the trustee’s attorneys for
the broker does not know facts from which actively participating with the trustee in
he could conclude that the customer is a breaches of fiduciary duty that essentially
trustee and that he is committing a breach looted the trust. The beneficiaries alleged
of trust, he is not liable. If the customer that the attorneys were aware that the
deposits with the broker securities standing assets of the trust were being commingled
in the name of the customer as trustee, for with non-trust assets and were being
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dissipated in breach of the provisions of the
trust; that they performed legal services
intended to prevent the beneficiary from
discovering these facts; that they advised
the beneficiary to waive his rights to on-
going accountings that would have revealed
the trustee's wrongful conduct; that they
made misrepresentations of material fact
concerning the trust; that they facilitated
the dissipation of the trust by preparing
legal documents that provided the trustee
with access to the principle of the trust; and
that they drafted a codicil to the decedent’s
will (providing that any questioning of
the decedent’s acts as trustee would be
a contest of his will) to discourage the
beneficiary from taking legal action as a
beneficiary of the trust upon learning what
had happened to trust assets. The Trustee’s
attorneys filed a motion for summary
judgment arguing that the damages sought
were damages for injury to the trust and
that the beneficiary lacked standing to sue
to recover those damages. The court denied
the motion for summary judgment, in part,
based on the Restatement Second of Trusts,
§326.
B. Civil Conspiracy
The essentials of a complaint for civil
conspiracy are: (a) a conspiracy between
two or more parties, (b) to do an unlawful act
or to do a lawful act by unlawful means, (c)
the doing of some overt act in pursuance of
the conspiracy, and (d) damage to plaintiff
as a result of the acts performed pursuant to
the conspiracy. See Walters v. Blankenship,
931 So. 2d 137 (Fla. 5th DCA 2006); Fla. Fern
Growers Ass'n v. Concerned Citizens, 616
So. 2d 562 (Fla. 5th DCA 1993); Nicholson v.
Kellin, 481 So. 2d 931 (Fla. 5th DCA 1985) (A
conspiracy is a combination of two or more
persons by concerted action to accomplish
an unlawful purpose or to accomplish
some purpose by unlawful means. Each
act done in pursuance of a conspiracy by
one of several conspirators is an act for
which each is jointly and severally liable);
Donofrio v. Matassini, 503 So. 2d 1278 (Fla.
2d DCA 1987) (the existence of a conspiracy
and an individual's participation in it may
be inferred from circumstantial evidence).