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
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2
Q

What are the requirements for recipient liability?

A
  1. Misapplication of trust property
  2. Beneficial receipt by D of misapplied TP (must be for his own benefit or in how own right)
  3. 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
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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

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4
Q

What is accessory liability?

A

Personal claim against those who dishonestly assisted or procured the breach of trust
Must be dishonest

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5
Q

What are the requirements for accessory liability?

A
  1. Trust in existence at material time
  2. Trustee committed breach of that trust
  3. D assisted trustee in committing breach: must have made planning, commission or obfuscation of breach easier for trustee - more than minimal
  4. D’s assistance was dishonest: actual state of mind and apply objective standard of ordinary decent people
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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

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