IN RE THOMAS J HOGAN TRUST
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STATE OF MICHIGAN
COURT OF APPEALS
In re THOMAS J. HOGAN TRUST.
JAMES E. HOGAN, MARY ANN HOGANWILSON, and THERESA CHARBONNEAU, CoTrustees for THOMAS J. HOGAN, TRUST,
UNPUBLISHED
May 27, 2004
Petitioners-Appellants,
v
No. 247989
Macomb County Probate Court
LC No. 00-166589-TV
JULIANA HOGAN,
Respondent-Appellee.
Before: Fitzgerald, P.J., and Jansen and Talbot, JJ.
PER CURIAM.
Petitioners appeal as of right the probate court’s decision granting in part and denying in
part petitioners’ motion for accounting. We affirm in part, reverse in part, and remand.
This case arises from a trust agreement executed by Thomas J. Hogan (Hogan).
Petitioners, the children of Hogan’s first marriage, learned that their father had suffered a severe
and debilitating stroke in January 2000. They subsequently became concerned that respondent,
Hogan’s current wife, would seek to divest them of their residual interest in the trust. On August
28, 2000, petitioners filed a petition to remove Hogan as trustee.
The parties settled that litigation, and a stipulated order modifying the trust and installing
petitioners as co-successor trustees was entered by the probate court on June 27, 2001. As part
of that order, respondent was to have access to a new, separate trust account created for the care
and maintenance of Hogan. Additionally, respondent was made guardian of Hogan, whom the
parties stipulated was incapacitated. The agreement further specified that respondent was not a
trustee.
Petitioners became concerned that the $25,000 per month being deposited into the
account was not in fact being used for Hogan’s care and maintenance, and they filed the instant
action for accounting. The probate court granted an accounting with respect to another trust
asset under respondent’s control but denied the accounting with respect to the monthly care and
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maintenance account, reasoning that petitioners could have negotiated for an accounting in the
settlement leading to the June 27, 2001, order.
Petitioners first contend that respondent, as a fiduciary of Hogan, is also a fiduciary of the
$25,000 a month care and maintenance account, and, therefore, has a duty to account. The
probate court did not specifically address the issue whether respondent is a fiduciary of Hogan.
However, no one disputes the fiduciary nature of the relationship between respondent and
Hogan. A fiduciary relationship is one “where a relation of confidence exists between the
parties.” In Re Wood Estate, 374 Mich 278, 282-283; 132 NW2d 35 (1965). Respondent has
complete control of the $25,000 checking account used for Hogan’s care and maintenance.
Moreover, a guardian owes its ward a fiduciary duty. See Shenk v Alex, 245 Mich 167,
170; 222 NW 197 (1928). And MCL 700.1104(e) defines a fiduciary in part as “a personal
representative, guardian, conservator, trustee, plenary or partial guardian appointed as provided
in chapter 6 of the mental health code, 1974 PA 258, MCL 330.1600 to 330.1644, and successor
fiduciary.” MCL 700.1104(e) (emphasis added). Respondent was appointed as Hogan’s
guardian and, therefore, respondent is a fiduciary of Hogan.
Petitioners argue that the probate court abused its discretion by failing to recognize
respondent’s duty to account. We agree. A probate court’s substantive decisions are reviewed
for an abuse of discretion. In re Rice Estate, 138 Mich App 261, 270; 360 NW2d 587 (1984); In
re Hatjioannou Estate, 101 Mich App 370, 374; 300 NW2d 569 (1980). An abuse of discretion
has occurred when a result is so palpably and grossly violative of fact and logic that it evidences
perversity of will or the exercise of passion or bias rather than the exercise of discretion. In re
Estate of Weber, 257 Mich App 558, 560; 669 NW2d 288 (2003). A trial court abuses its
discretion when it misapplies or misunderstands the law. Bynum v ESAB Group, Inc, 467 Mich
280, 283; 651 NW2d 383 (2002).
“A guardian is a trustee of the estate of his ward, bound by law to manage and conserve it
in a manner most advantageous to the inheritance, and held, as a rule, to a rigid accountability in
the execution of the trust, and liable for loss occasioned by improper or unlawful expenditure of
the funds of his ward.” Reynolds v Garber-Buick Co, 183 Mich 157, 166-167; 149 NW 985
(1914). To the extent that respondent controls Hogan’s assets, she is a trustee of that estate.
Additionally, MCL 700.1308(1) and (2) provide as follows:
(1) A fiduciary is liable for a loss to an estate that arises from
embezzlement by the fiduciary; for a loss through commingling estate money
with the fiduciary’s money; for negligence in the handling of an estate; for
wanton and willful mishandling of an estate; for loss through self-dealing; for
failure to account for an estate; for failure to terminate the estate when it is ready
for termination; and for misfeasance, malfeasance, nonfeasance, or other breach
of duty.
(2) In response to an interested person’s petition or on its own motion, the
court may at any time order a fiduciary of an estate under its jurisdiction to file an
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accounting. After due hearing on the accounting, the court shall enter an order
that agrees with the law and the facts of the case. [MCL 700.1308(1) and (2).]
MCL 1105(c) provides that an “interested person”
includes, but is not limited to, an heir, devisee, child, spouse, creditor, and
beneficiary and any other person that has a property right in or claim against a
trust estate or the estate of a decedent, ward, or protected individual . . .
Petitioners, as Hogan’s children and beneficiaries, are interested persons in the trust.
Because the $25,000 monthly deposit for Hogan’s care comes from the trust corpus, petitioners
are “interested persons” who may petition the probate court for an accounting under MCL
700.1308(2). The probate court’s failure to consider petitioners’ right under MCL 700.1308(2)
was a mistake of law and an abuse of discretion.
Last, petitioners argue that equity mandates a constructive trust. This argument is
presented for the first time on appeal and is unpreserved. Adams Outdoor Advertising v City of
East Lansing, 463 Mich 17, 32; 614 NW2d 634 (2000). Though this Court may review equitable
issues not addressed by the lower court, Kratzke v Independent Order of Oddfellows, 442 Mich
136, 142; 500 NW2d 115 (1993), we find no compelling reason to do so here. There was no
showing of impropriety on respondent’s part that would necessitate the imposition of a
constructive trust. Moreover, the right to assert a constructive trust lies with Hogan, not
petitioners.
Affirmed in part, reversed in part, and remanded for proceedings consistent with this
opinion. Jurisdiction is not retained.
/s/ E. Thomas Fitzgerald
/s/ Kathleen Jansen
/s/ Michael J. Talbot
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