pjc-family-2024-lib

PJC 235.19

E XPRESS T RUSTS

PJC 235.19 Third-Party Liability If you answered [“Yes”] [“No”] [ see comment ] to Question ______, then answer the following question. Otherwise, do not answer the following ques tion. QUESTION ______ Did THIRD PARTY participate in or benefit from TRUSTEE ’s [ describe con duct or transaction ], knowing that TRUSTEE was a trustee and that his conduct was a failure to comply with his duties as a trustee? Answer “Yes” or “No.” Answer: _______________ COMMENT Wording conditioning instruction. This PJC is predicated on a finding of breach of fiduciary duty: a “Yes” answer to PJC 235.9 (breach of duty by trustee—other than self-dealing) or PJC 235.12 (breach of duty by trustee—self-dealing—duty of loyalty eliminated), or a “No” answer to PJC 235.10 (breach of duty by trustee—self dealing—duties not modified or eliminated by trust) or PJC 235.11 (breach of duty by trustee—self-dealing—duties modified but not eliminated by trust). If damages are sought based on PJC 235.9 and that question is submitted as shown in PJC 235.9 (that is, with separate answers for each duty) rather than in broad form, the conditioning instruction should be reworded accordingly. Source. “It is settled as the law of this State that where a third party knowingly participates in the breach of duty of a fiduciary, such third party becomes a joint tort feasor with the fiduciary and is liable as such.” Kinzbach Tool Co. v. Corbett-Wallace Corp. , 160 S.W.2d 509, 514 (Tex. 1942). See Horton v. Robinson , 776 S.W.2d 260, 266 (Tex. App.—El Paso 1989, no writ); Kirby v. Cruce , 688 S.W.2d 161, 165–66 (Tex. App.—Dallas 1985, writ ref’d n.r.e.); see also Tinney v. Team Bank , 819 S.W.2d 560, 563 (Tex. App.—Fort Worth 1991, writ denied) (noting that Kinzbach holds that “one who knowingly benefits from the action of a fiduciary in derogation of the fidu ciary’s responsibility shares liability with the fiduciary to those to whom the fiduciary owed his duty”). With respect to financial institutions, “if a bank has notice or knowledge that a breach of trust is being committed by an improper withdrawal of funds, . . . it will be undoubtedly liable.” United States Fidelity & Guaranty Co. v. Adoue & Lobit , 137 S.W. 648, 653 (Tex. 1911). Liability occurs if the financial institution has notice or

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