Trust 16 - Liability of Strangers Flashcards
1
Q
What is recipient liability?
A
- A personal claim against a recipient of misapplied trust property brought by beneficiaries
- Only liable if recipient had requisite degree of knowledge
2
Q
What are the requirements for recipient liability?
A
- Misapplication of trust property
- Beneficial receipt by D of misapplied TP (must be for his own benefit or in how own right)
- D knew property was misapplied TP: if they dispose of/dissipate property before knowing, don’t incur liability but as soon as they find out, should restore property to the trust
3
Q
When would someone trace property, rather than follow?
A
If original property has been substituted and if there’s an equity’s darling
4
Q
What is accessory liability?
A
Personal claim against those who dishonestly assisted or procured the breach of trust
Must be dishonest
5
Q
What are the requirements for accessory liability?
A
- Trust in existence at material time
- Trustee committed breach of that trust
- D assisted trustee in committing breach: must have made planning, commission or obfuscation of breach easier for trustee - more than minimal
- D’s assistance was dishonest: actual state of mind and apply objective standard of ordinary decent people
6
Q
What are the remedies for accessory liability?
A
Liable for loss incurred: C must show that but for breach, loss wouldn’t have occurred
Potentially liable for profits but only if proportionate - not automatic right to profits