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Ash v. First National Bank of Eastern Arkansas

Court of Appeals of Arkansas, Division II

February 1, 2017

WILLIAM CAMPBELL ASH APPELLANT
v.
FIRST NATIONAL BANK OF EASTERN ARKANSAS APPELLEE

         APPEAL FROM THE ST. FRANCIS COUNTY CIRCUIT COURT [NO. 62CV-14-179] HONORABLE CHALK S. MITCHELL, JUDGE

         REVERSED AND REMANDED FOR PROCEEDINGS CONSISTENT WITH THIS OPINION

          Branch, Thompson, Warmath & Dale, P.A., by: Robert F. Thompson III, for appellant.

          Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: M. Samuel Jones III, for appellee.

          BRANDON J. HARRISON, Judge

         This appeal concerns cross-motions for summary judgment in the St. Francis County Circuit Court. The circuit court dismissed William Ash's complaint with prejudice and entered judgment for First National Bank of Eastern Arkansas. Because the circuit court committed an error of law, we reverse and remand for further proceedings consistent with this opinion.

         I. Case History

         The majority of this case's facts are undisputed. In 2012, William Ash, individually, owned 3, 881 shares of Bancshares of Eastern Arkansas, Inc. He also held an equitable interest in 4, 164 shares of Bancshares of Eastern Arkansas, Inc., as the sole beneficiary of the William Campbell Ash Trust. The William Campbell Ash Trust is an irrevocable spendthrift trust that was funded by Ash's mother upon her death in 2011. First National Bank of Eastern Arkansas is the trustee of the William Campbell Ash Trust. We refer to First National Bank of Eastern Arkansas as "the bank" or "the trustee" throughout this opinion. Bancshares of Eastern Arkansas, Inc., is not a party to this case. The important point is that Ash owned some shares outright, but other shares were in an irrevocable spendthrift trust. No one disputes that, on 13 July 2012, Ash signed two documents at the bank: a stock certificate and a stock power. The parties do dispute what Ash intended to do by signing the documents and what legal effect his signatures have.

         According to Ash, he was transferring the Bancshares stock he owned individually to a new trust-meaning a trust that was not the spendthrift trust his mother had funded. He explained that he met with attorney Phil Hickey at the bank "to set up a trust, " that he was handed a document, thought it was the new trust, and signed it.[1] Two years passed, and Ash learned that, when he tried to liquidate some stock to secure money for a business investment, the bank believed the stocks to be in the spendthrift trust.

         Brice Fletcher, chairman of Bancshares of Eastern Arkansas, Inc., and CEO of First National Bank of Eastern Arkansas, testified in his deposition that senior officers, including himself, "execute all stock certificates on behalf of the bank." He said that he had not talked with Ash about transferring stock individually to the bank as trustee of the irrevocable trust. He did not discuss the stock power with Ash and said that the transfer "was done because Will's financial responsibility has not shown where he could manage assets, and it was in his best interest to have perpetual income to help him have a pretty good life." Fletcher also said that Ash's family had "a long history" with the bank and agreed that the bank as trustee "can manage the money better than Will could himself." In the bank's view, the Bancshares stock is part of the corpus of the William Campbell Ash Trust, and the bank refuses to allow Ash to liquidate or otherwise access the Bancshares stock because it would "constitute a violation of [the bank's] duties as trustee."

         In September 2014, Ash filed a complaint against the bank for breach of fiduciary duty, conversion, and replevin. He also asked the court to declare that the bank has no ownership interest in the 3, 881 shares he owned individually nor did it have the right to "possess or control these shares, as trustee or otherwise, " citing Arkansas's declaratory-judgment statute. Ash moved for summary judgment in January 2015; the bank moved for cross-summary judgment in October 2015.

         A "Memorandum and Order" entered in February 2016 explained the circuit court's reasoning in granting summary judgment to the bank. The circuit court framed the issue as whether Ash had legally transferred his individually owned Bancshares stock to the bank as the trustee of the irrevocable trust. The court found that the stock power that Ash had signed on 13 July 2012 effectively transferred the stock. It wrote, in part,

[T]he Court finds that pursuant to the plain language of the Stock Power Mr. Ash did in fact transfer his stock to First National Bank of Eastern Arkansas as Trustee for the William Campbell Ash Trust on July 13, 2012.
The Court thus agrees with the Bank's position that the unambiguous terms of the Stock Power admittedly signed by Mr. Ash controls the disposition of this ...

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