Kaplan v. First Union National Bank of North Carolina

EAGLES, Judge. We note that only plaintiffs Stanley N. Kaplan and Harriet A. Kaplan have filed an appellate brief in this matter; no brief has been filed on behalf of plaintiff Sarah M. Torrence. Accordingly, Torrence’s appeal is dismissed. App. R. 14(d)(2). Therefore, any referente to “plaintiffs” in this opinion refers only to Stanley N. Kaplan and Harriet A. Kaplan. The sole issue on appeal is whether the trial court erred in granting summary judgment in favor of defendant, dismissing plaintiffs’ claims. Plaintiffs argue that whether FUNB exercised due care in making certain investments is a disputed question of fact. Plaintiffs assert that there is an issue of fact regarding the date on which FUNB obtained a copy of the liquidating trust agreement. Additionally, plaintiffs assert that FUNB had a duty to ascertain which investments were authorized by the liquidating trust agreement and that FUNB’s failure to determine which investments were authorized by the liquidating trust agreement, prior to purchasing the bonds, was a breach of its fiduciary duty. We disagree with plaintiffs’ argument that FUNB had a duty to ascertain whether the bond investments were authorized by the liquidating trust agreement. We also note that the evidence is uncontradicted that plaintiffs did not inform FUNB of any limitations on investments until some time after the investments in question had been made. Accordingly, we affirm the entry of summary judgment in favor of FUNB. Summary judgment is proper when there is “no genuine issue as to any material fact. . . .” G.S. 1A-1, Rule 56(c). Additionally, the court must find that on the undisputed facts the party given summary judgment is entitled to judgment as a matter of law. Our courts have repeatedly stated that summary judgment is rarely proper in negligence cases because “it ordinarily remains the province of the jury to apply the reasonable person standard.” Moore v. Crumpton, 306 N.C. 618, 624, 295 S.E.2d 436, 441 (1982). With these tenets in mind we hold that summary judgment was appropriate here. Plaintiffs assert that there is an issue of fact whether FUNB’s choice of investments, which were allegedly made contrary to the terms of the liquidating trust agreement, constituted negligence. Plaintiffs argue that FUNB possessed a copy of the liquidating trust agreement, that FUNB should have determined if the liq [573] uidating trust agreement contained restrictions on investments and that FUNB was negligent in investing in two to five year bonds for an account that was to be liquidated within one year. Plaintiffs have failed to raise a genuine issue regarding FUNB’s actual knowledge of the terms of the liquidating trust agreement. Plaintiffs admitted in their depositions that they did not provide FUNB with a copy of the agreement until some time in May of 1987, five months after the original investments had been made and four months after plaintiffs learned of the investments in treasury bonds. Plaintiffs also argue that an inference of FUNB’s actual knowledge of the contents of the liquidating trust agreement at the time of the investment arises from the fact that an unsigned copy of the agreement was found in FUNB’s file at some time in May. Plaintiffs’ argument is without merit. Plaintiffs also argue that FUNB had constructive notice of the contents and restrictions found in the agreement. “[IJmplicit in the principles that underlie the doctrine of constructive notice is the concept that before one is affected with notice of whatever reasonable inquiry would disclose, the circumstances must be such as to impose on the person sought to be charged a duty to make inquiry.” Perkins v. Langdon, 237 N.C. 159, 168, 74 S.E.2d 634, 642 (1953). Plaintiffs argue that FUNB had a duty to inquire about the trustees’ authority. We disagree. At common law a person who deals with another whom he knows to be a trustee is put upon inquiry as to the extent of the trustee’s powers and charged with knowledge of the facts which a reasonable investigation would disclose. . . . The third party must examine the trust instrument and look to other sources of information in order to satisfy himself that the trustee has authority to enter into the transaction which he is seeking to consummate. Bogert, Trusts and Trustees, § 565, pp. 273-74 (revised 2d ed. 1980). On the facts of this case the common law rule of inquiry has been superseded by statute. G.S. 32-20(a) provides, in pertinent part, that: No person who participates in the acquisition ... of a security by ... a fiduciary ... is liable for participation in any breach of fiduciary duty by reason of failure to inquire whether the transaction involves such a breach unless it is shown that he acted with actual knowledge that the proceeds of the trans [574] action were being or were to be used wrongfully for the individual benefit of the fiduciary or that the transaction was otherwise in breach of duty. As stated previously, plaintiffs have made no forecast of evidence that FUNB had actual knowledge that the investments made were in breach of the trustees’ (plaintiffs’) duties. For the reasons stated, the judgment is affirmed. Affirmed. Judges WELLS and GREENE concur.