Wood v. Victoria Bank & Trust Co., 170 S.W.3d 885 (Tex. App.—Corpus Christi-Edinburg 2005, pet. denied).
The settlors named a particular corporation as trustee of their
trusts. After a series of corporate buyouts, mergers, and the formation
of subsidiary trust companies, a new corporation became the trustee of
these trusts. Despite compliance with the Substitute Fiduciary Act
(current version found at Tex. Fin. Code §§ 274.001-.203), the
beneficiaries of these trusts objected when the trust company was sold
to a third party. The trial court ruled against the beneficiaries who
subsequently appealed.
The appellate court affirmed. The court explained that the beneficiaries
received proper notice of the fiduciary substitution under the Act and
failed to object. The court explained that the Act does not require the
fiduciary substitution to result in a consolidation and the court was
unwilling to read into the Act a requirement not evident from the plain
language of the statute. The court also examined legislative history and
found nothing to support the beneficiaries’ claims that the Act was
designed for use only as a consolidating tool. Accordingly, it is
acceptable for the Act to be used to de-consolidate, as well as
consolidate, fiduciary appointments.
The court also rejected the application of the common law principles
that a trustee may not resign or transfer the office as trustee for a
monetary consideration. The court explained that the transfers in this
case were statutorily authorized and that the corporate entities
involved complied with the applicable statutes.
Moral: Corporations may rely on transactions made in compliance with the
Substitute Fiduciary Act and related Texas statutes.