TRUSTS - WHEN IS THE BENEFICIARY OF A TRUST A NECESSARY PARTY IN A PROCEEDING INVOLVING THE TRUST ESTATE

Authors

Charles William Allen, University of Michigan Law SchoolFollow

Abstract

Two recent cases present the problem of the power of the trustee to represent the beneficiary in proceedings involving the trust estate. In Hood v. Cannon, arising in South Carolina, the trustee of an estate, upon merger of A bank into B bank, had applied to the probate court for permission to exchange A bank stock, held by the estate, for B bank stock. The court authorized the exchange in an ex parte proceeding to which the beneficiaries were not parties. B bank later failed, and the commissioner of banks brought suit against the defendant, the successor trustee, to recover the stockholders' statutory liability. It was held that the ex parte proceeding was void because the· beneficiaries were necessary parties. In Cottman Co. v. Continental Trust Co., a Maryland case, the dispute was in equity between the mortgagor and the mortagee-trustee, each claiming the right to insurance proceeds flowing from an injury to mortgaged property. The mortgagor had repaired the property and the bonds were not in default. The court held that the bond holders, as beneficiaries, were not necessary parties.

Recommended Citation

Charles W. Allen, TRUSTS - WHEN IS THE BENEFICIARY OF A TRUST A NECESSARY PARTY IN A PROCEEDING INVOLVING THE TRUST ESTATE, 35 Mich. L. Rev. 648 (1937).
Available at: https://repository.law.umich.edu/mlr/vol35/iss4/10