The Oklahoma Bar Journal January 2023

document has been delivered, is not a forgery, the grantor was not a minor, the grantor had the capacity to execute the instrument and the grantor was acting vol untarily in exchange for consid eration. Note that this standard does not include the presumption that a trustee had the authority to convey. In fact, ATES §4.7(1)(c) states, “Proof of the authority of the trustee of an express trust to convey land owned by the trust should be furnished.” Such proof can be included in a recorded cer tification of trust. 16 North Carolina has similarly held that when reviewing self- interested transactions by a trustee, certain precautions must be taken “not because there is fraud, but because the trustee, because of his fiduciary relationship, is skating on the thin and slippery ice of presumed fraud, which he must rebut by proof that no fraud was committed and no undue influence exerted.” 17 Further, “Transfers of trust property resulting in a breach of the duty of loyalty are voidable by the trust beneficiaries affected, regardless of whether the transac tion was supported by fair consid eration.” 18 Delaware also prohibits self-dealing. 19 Indiana requires court approval where a trustee self-deals. 20 21 The questions remain. Is a violation of 60 O.S. §175.11 void or simply voidable? Would an Oklahoma court begin with the presumption that the conveyance is void, placing the burden on the trustee to defend the conveyance? Would an examiner then be bound by 60 O.S. §175.11 to require evi dence of the trustee’s authority to self-deal? Or would an Oklahoma court presume such conveyance is valid unless the challenger proved CONCLUSION

is not allowed to unite the two opposite positions of buyer and seller. In such situation the law will avoid the transaction at the instance of the cestui que trust even though the sale was without fraud, the property was sold for its full value and no actual injury to his interests is proven. Such sale, however, is not void but voidable only and where the cestui que trust con sents to or acquiesces in such transaction the sale is valid and binding upon him. OTHER STATES HAVE MORE DIRECTLY ADDRESSED THE ISSUE Ark. Code Ann. §28-73-802(b)(2) contains language similar to 60 O.S. §175.11 and further requires that a transfer “… involving the invest ment or management of trust prop erty entered into by the trustee for the trustee’s own personal account or which is otherwise affected by a conflict between the trustee’s fiduciary and personal interests is voidable by a beneficiary affected by the transaction unless: … (2) the transaction was approved by a court.” This prohibition was rein forced in Matter of GNB III Trust , 15 wherein the court held that a co-trustee’s transactions involving the purchase of trust property – a house – required court approval, not just majority agreement by co-trustees, under statute provid ing that a transaction by a trustee for a trustee’s own account or that is affected by conflict is voidable unless approved by a court. Standards for Examination of Real Estate Titles in Arkansas (2021 edition) (ATES) Standard §4.1 states that in the absence of actual or constructive notice to the contrary, it may be presumed by the examiner that a recorded

stockholder of a corporation or cestui que trust protesting and asserting his right in the matter, the rule which prohibits the trustee from dealing with his trust in such a manner as to appropriate it with and mingle it with his own estate, will be set aside and no inquiry on the subject [of the adequacy of con sideration] will be permitted. 12 So jealous is the law of dealings of this character by persons holding confidential relations to each other, that the cestui que trust may avoid the transaction, even though the sale was without fraud, the property sold for its full value, and no actual injury to his interests be proven. It does not follow however, that the sale is absolutely void in the sense that the purchaser takes no title, which he can convey to a third person – a bona fide purchaser without notice; nor that the cestui que trust may not, upon notice of all the facts, ratify and affirm the sale by his acquies cence or silent approval. 13 The character of vendor and that of purchaser cannot be held by the same person. They impose different obligations. Their union in the same person would at once raise a conflict between interest and duty, and, constituted as humanity is, in the majority of cases duty would be overborne in the struggle. … 14

The court summarized such holdings in headnote No. 3, stating:

A person cannot legally pur chase on his own account that which his duty or trust requires him to sell on account of another, nor purchase on account of another that which he sells on his own account. He

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THE OKLAHOMA BAR JOURNAL