Independent executor may have conflict of interest - removal not warranted
Kappus v. Kappus, No. 08-0136 (Tex. May 1, 2009)(Willett)(removal of independent executor
for conflict of interest reversed)(probate law, disqualification and removal)(construction of the term
A good-faith disagreement over the executor’s ownership share in the estate is
not enough, standing alone, to require removal under section 149C. The statute
speaks of affirmative malfeasance, and an executor’s mere assertion of a claim
to estate property, or difference of opinion over the value of such property, does
not warrant removal. A potential conflict does not equal actual misconduct. The
court of appeals here did not list any instances of John’s misconduct or
mismanagement, let alone any that could be labeled “gross,” a modifier that
implies serious and willful wrongdoing.
JOHN KAPPUS v. SANDRA L. KAPPUS; from Anderson County; 12th district
(12-06-00233-CV, 242 SW3d 182, 11-30-07) (Tyler Court of Appeals opinion) ("John’s shared
ownership of the Anderson County property and improvements creates a conflict of interest. The
estate seeks at least an additional 4.86% interest in the property and John is adverse to the estate’s
position. John and the estate are both asserting ownership over the same property. Under these
circumstances, the trial court had no alternative but to remove John as independent executor. See
Street v. Skipper, 887 S.W.2d 78, 83 (Tex. App.–Fort Worth 1994, writ denied) (independent
executor removed when she had claim adverse to estate); Formby v. Bradley, 695 S.W.2d 782, 785
(Tex. App.–Tyler 1985, writ ref’d n.r.e.) (same). Because a conflict exists between the estate and
John as to ownership of some of the property, John cannot serve as independent executor. We
sustain Sandra’s second issue.")
The Supreme Court reverses the court of appeals' judgment and renders judgment.
Justice Willett delivered the opinion of the Court. (pdf version of opinion)
Kappus v. Kappus (Tex. 2009)
Argued December 10, 2008
Justice Willett delivered the opinion of the Court.
This appeal concerns whether an independent executor’s alleged conflict of interest—
here, a good-faith dispute over the executor’s percentage ownership of estate
assets—requires his removal as a matter of law.
Probate Code section 149C lists several grounds for removing an executor, but “conflict of
interest” (either actual or potential) is not among them, and we refuse to engraft such a test
onto the statute. Accordingly, as none of the conditions for removal under section 149C were
met in this case, we reverse the court of appeals’ judgment and reinstate the trial court’s
order denying the motion to remove.
In the 1980s, James Kappus, his brother John, and their father Walter formed a partnership
called Kappus Farms, which purchased 49.482 acres of land in Anderson County. In 1991,
James married Sandra, and they had two children. Walter Kappus died in 2001, which led to
the unofficial dissolving of the Kappus Farms partnership. After Walter’s will was probated,
James and John owned the Anderson County land 50/50 as co-tenants. Throughout the time
they owned the land, several improvements were added to the property: some by James
alone, some by James and Sandra, and some by John alone.
In 2004, James and Sandra divorced. As part of the divorce proceedings, Sandra was given
an equitable lien on the real estate for her half of the community improvements made to the
land. After the divorce was final, James executed a new will that named John as independent
executor (an appointment that nobody challenged) and Sandra’s brother as alternative
independent executor. The will also set up a testamentary trust with James’s children as
beneficiaries and John as trustee.
James died in 2005 after a long illness. John initiated probate proceedings, qualified as
independent executor, and was issued letters testamentary. As part of the administration of
the estate, John intended to pay off James’s debts by selling the Anderson County property
with the improvements and splitting the proceeds 50/50 between the estate and himself. A
buyer offered $110,000 in cash and also agreed to assume a $7,000 debt on a double-wide
mobile home, which was one of the improvements on the property.
Sandra, on behalf of her children, opposed the proposed distribution from the property sale,
contending the estate was owed more than 50% of the proceeds due to several
improvements James had made to the property, and she obtained an injunction preventing
the sale from closing. Sandra also sought to remove John as independent executor and
trustee of the testamentary trust, alleging that he had a conflict of interest, wasted estate
assets, refused to allow the children access to the Anderson County land, and incurred
significant expenses in probating the will. After a hearing, the trial court issued an order and
accompanying findings of fact and conclusions of law that refused to remove John and found
that the Anderson County property should be divided 58.59% for the estate and 41.41% for
On appeal, Sandra claimed that the evidence was both legally and factually insufficient to
support the trial court’s property division and that the estate was owed at least 63.45% of the
proceeds. Sandra also claimed the trial court erred as a matter of law in not removing John
as both independent executor and trustee. The court of appeals affirmed the trial court’s
division of the property, but reversed the trial court’s decision on removal. Citing Probate
Code section 149C(5), the court held that John’s shared ownership of the property created a
conflict of interest. “Under these circumstances,” the court of appeals concluded, “the trial
court had no alternative but to remove John as” executor. John appealed his removal to
this Court, and we now reverse.
II. Removal As Independent Executor
Since as early as 1848, a Texas testator has been able to opt for the independent
administration of his estate, including the right to pick his own independent executor.
While this power is “well fixed in the Texas law,” the testator’s chosen executor can be
removed under Probate Code section 149C(a), which states, “The county court . . . may
remove an independent executor when . . .” and then lists six specific grounds for removal.
The party seeking removal has the burden of establishing a violation of Section 149C in the
trial court. Once a violation of one of the six grounds has been proven, the trial court has
discretion to decide whether the violation warrants removal.
To begin, the grounds to remove an independent executor post-appointment are
different from those to disqualify an executor pre-appointment. Probate Code section 78
sets out five different bases for disqualification of a would-be executor, including “[a] person
whom the court finds unsuitable.” In contrast to this catch-all standard that confers broad
trial-court discretion, section 149C lists six specific grounds for removal, none quite as
expansive as unsuitability. Sandra claims that by being a co-owner of an estate asset,
John had a conflict of interest. And when John attempted to sell the land and split the
proceeds evenly, despite the estate being owed more than half the proceeds, that potential
conflict became an actual conflict and harmed the estate. While no subsection specifically
covers “conflict of interest” in those express terms, Sandra argues that such a conflict can
justify removal under subsections (2), (5), and (6) of section 149C. We consider each of
these subsections in turn.
A. Subsection (2) — “Misapplied or Embezzled”
Sandra’s first allegation is that John misapplied or embezzled part of the property
committed to his care. She claims that when John attempted to split the proceeds from the
potential sale of the Anderson County land 50/50, he improperly tried to divert part of the
proceeds to himself since it was ultimately decided that the estate was owed 58.59% of the
We presume the Legislature chose its words carefully and intentionally. Probate Code
section 149C(a)(2) associates misapplication with embezzlement; accordingly,
we give these terms a related meaning and interpret them to authorize removal if the trial
court believes the executor was engaged in subterfuge or wrongful misuse. The
evidence here shows that this dispute was, at bottom, a good-faith disagreement between
John and Sandra as to how to split the value of the improvements between John and the
estate. The record contains no evidence of dishonesty or misappropriation on John’s part,
much less enough evidence to conclude that Sandra proved misapplication or
embezzlement as a matter of law. Accordingly, the trial court did not abuse its discretion in
failing to remove John as independent executor on this basis.
B. Subsection (5) — “Gross Misconduct or Gross Mismanagement”
Sandra’s second allegation is that John committed gross misconduct or gross
mismanagement vis-a-vis his actual conflict of interest. In looking at the subsection, it is
instructive that the Legislature did not use “misconduct or mismanagement” but rather
“gross misconduct or gross mismanagement.” The use of the adjective “gross” indicates
that something beyond ordinary misconduct and ordinary mismanagement is required to
remove an independent executor. Gross is defined as “[g]laringly obvious; flagrant.” The
question then we face today is whether a potential conflict of interest constitutes gross
misconduct or gross mismanagement.
A half-century ago we addressed an independent executor’s conflict of interest in a different
setting. In Boyles v. Gresham, Boyles was named independent executor in Gresham’s will.
 But when Boyles applied for letters testamentary, Gresham’s son contested the
appointment because Boyles thought part of the money in the will should go to him and his
sons. In considering whether Boyles was unsuitable under Probate Code section 78, we
acknowledged that “it was firmly established in Texas that a testator had wide latitude in the
appointment of his independent executor.” Further, nothing in the Probate Code changed
that principle. In fact, in examining the Probate Code, we found the opposite was true. In
particular, we looked at section 77, which listed the order of preference for those entitled to
letters of administration. Among those listed were creditors. As we noted, “[t]he creditor’s
interest is necessarily antagonistic to the distributees, to the estate.” It would be
anomalous to say the Legislature specifically included someone entitled to letters of
administration in one section only to deem them unsuitable in another.
Boyles does not control our decision today. First, that case dealt with pre-appointment
unsuitability and not post-appointment removal. Second, Boyles expressly left open the
question of disqualification where “a named executor claims adversely, as his own, property
which is owned . . . by the estate.” However, while Boyles is not controlling, the same
policy reasons that undergird Boyles inform our decision today. The Legislature has
provided that creditors of the deceased can be granted letters of administration. Such
creditors, by their very nature, have a conflict of interest by virtue of a claim against estate
assets. Similarly, it is common for testators in Texas to name spouses (or business partners)
as independent executors. If we judicially amended section 149C by declaring a per se
removal rule for “conflict of interest” whenever spouse-executors have a shared interest in
community property, and issues arise over the separate or community character of estate
assets, the surviving spouse could be ousted. While Sandra contends removal would only be
justified when the executor has actually asserted a claim adverse to the estate, it seems
under her theory that once a beneficiary objects to an executor’s proposed valuation and
distribution of property, the executor’s defense would constitute a conflict of interest that
mandates removal. Such a rule, besides having no statutory anchor in the text of section
149C, would undermine the ability of Texas testators to name their own independent
executor and also weaken the ability of an executor “free of judicial supervision, to effect the
distribution of an estate with a minimum of cost and delay.” And it would impose this
extra-statutory restriction even if the testator was fully aware of the potential conflict when the
executor was chosen.
A good-faith disagreement over the executor’s ownership share in the estate is not
enough, standing alone, to require removal under section 149C. The statute speaks of
affirmative malfeasance, and an executor’s mere assertion of a claim to estate property, or
difference of opinion over the value of such property, does not warrant removal. A
potential conflict does not equal actual misconduct. The court of appeals here did not list any
instances of John’s misconduct or mismanagement, let alone any that could be labeled
“gross,” a modifier that implies serious and willful wrongdoing.
We recognize there may be scenarios where an executor’s conflict of interest is so absolute
as to constitute what the statute terms “gross misconduct or gross mismanagement.” In
deciding whether an executor’s conflict amounts to “gross misconduct or gross
mismanagement,” trial courts should take into consideration several factors, including the
size of the estate, the degree of actual harm to the estate, the executor’s good faith in
asserting a claim for estate property, the testator’s knowledge of the conflict, and the
executor’s disclosure of the conflict.
In this case, these factors cut squarely in John’s favor: the estate was small; there was no
actual harm to the estate since the trial court resolved the percentage-of-ownership issue;
John asserted his claim in good faith; and James knew that his brother’s co-ownership of
estate property might later pose allocation/valuation issues when he named John
independent executor. As such, we cannot say that the trial court abused its discretion in
failing to remove John as independent executor for gross misconduct or gross
C. Subsection (6) — “Legally Incapacitated”
Sandra’s third allegation is that John is legally incapacitated from performing as independent
executor. This subsection, as we construe it, is inapplicable to an alleged conflict of interest.
An incapacitated person is “[a] person who is impaired by an intoxicant, by mental illness
or deficiency, or by physical illness or disability to the extent that personal decision-making is
impossible.” A conflict of interest does not make it impossible for someone to make
decisions. Nor was John under any other legal incapacity that prevented him from carrying
out his duties. Accordingly, the trial court did not abuse its discretion in failing to remove
John as independent executor on this basis.
III. Removal as Trustee
The second issue is whether the trial court erred in failing to remove John as trustee of the
testamentary trust. The removal of a trustee is governed by Trust Code section 113.082.
This section gives the trial court more leeway on removal than does the Probate Code, as
its four grounds are not as narrow. In fact, in one subsection, the statute allows that “a court
may, in its discretion, remove a trustee . . . if . . . the court finds other cause for removal.”
While the statute for removal of an independent executor is different from the statute
for removal of a trustee, the fiduciary duties owed by both are similar. Given the
similarities in the type of duties owed and the level of discretion given a trial court by the
statute, we cannot say the trial court abused its discretion in not removing John as trustee
when, viewing the same conduct, it was not error to keep him as independent executor.
A good-faith disagreement between an executor and the estate over the percentage division
and valuation of estate assets is not grounds for removal as a matter of law. Such a
development would (1) depart from the specific grounds for removal listed in the statute, (2)
frustrate the testator’s choice of executor (particularly the common practice of appointing
spouse-executors), and (3) impede the broader goal of supporting the independent
administration of estates with minimal costs and court supervision. Accordingly, we reverse
the court of appeals’ judgment and reinstate the trial court’s order denying the motion to
remove John Kappus as independent executor and trustee.
Don R. Willett
OPINION DELIVERED: May 15, 2009
 242 S.W.3d 182, 191-92.
 Id. at 190.
 Roy v. Whitaker, 48 S.W. 892, 894 (Tex. 1898).
 Boyles v. Gresham, 309 S.W.2d 50, 53 (Tex. 1958).
 The grounds for removal are:
(1) the independent executor fails to return within ninety days after qualification, unless such time is
extended by order of the court, an inventory of the property of the estate and list of claims that have
come to the independent executor's knowledge;
(2) sufficient grounds appear to support belief that the independent executor has misapplied or
embezzled, or that the independent executor is about to misapply or embezzle, all or any part of the
property committed to the independent executor's care;
(3) the independent executor fails to make an accounting which is required by law to be made;
(4) the independent executor fails to timely file the affidavit or certificate required by Section 128A of
(5) the independent executor is proved to have been guilty of gross misconduct or gross
mismanagement in the performance of the independent executor's duties; or
(6) the independent executor becomes an incapacitated person, or is sentenced to the penitentiary,
or from any other cause becomes legally incapacitated from properly performing the independent
executor's fiduciary duties.
Tex. Prob. Code § 149C(a)(1)-(6).
 Id. § 78(e).
 Id. § 149C(a)(1)-(6).
 See Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540 (Tex. 1981).
 Misapplication is defined as: “[t]he improper or illegal use of funds or property lawfully held.”
Black’s Law Dictionary 1019 (8th ed. 2004) (emphasis added).
 Embezzlement is defined as: “[t]he fraudulent taking of personal property with which one has
been entrusted, esp. as a fiduciary.” Id. 561 (emphasis added).
 Riverside Nat’l Bank v. Lewis, 603 S.W.2d 169, 174 n.2 (Tex. 1980).
 In re Estate of Casida, 13 S.W.3d 519, 524-25 (Tex. App.–Beaumont 2000, no pet.).
 Tex. Prob. Code § 149C(a)(5).
 Am. Heritage College Dictionary 600 (3rd ed. 2000).
 309 S.W.2d 50, 51 (Tex. 1958).
 Id. at 51.
 Id. at 53.
 Id. at 54.
 See Tex. Prob. Code § 77(f).
 Corpus Christi Bank & Trust v. Alice Nat’l Bank, 444 S.W.2d 632, 634 (Tex. 1969).
 Stanley M. Johanson, Johanson’s Tex. Prob. Code Ann. § 149C cmt. at 225 (West 2008).
 See Street v. Skipper, 887 S.W.2d 78, 83 (Tex. App.–Fort Worth 1994, writ denied) (upholding
the removal of an independent executor for a conflict of interest when, under the executor’s division,
the estate would receive nearly $1 million less than what it should).
 See Geeslin v. McElhenney, 788 S.W.2d 683, 685 (Tex. App.–Austin 1990, no writ) (“the
statutory criteria of ‘gross mismanagement’ and ‘gross misconduct’ . . . include at minimum . . . any
breach of fiduciary duty that results in actual harm to a beneficiary’s interest”) (emphasis omitted).
 See In re Estate of Casida, 13 S.W.3d 519, 524 (Tex. App.–Beaumont 2000, no pet.) (The
grounds of removal alleged showed no bad faith, but rather a disagreement over the value of the
 See In re Roy, 249 S.W.3d 592, 596-97 (Tex. App.–Waco 2008, pet. denied) (holding that while
a conflict of interest might not be enough to remove an independent executor, the failure to disclose
that conflict was grounds for removal).
 The trial court’s findings of fact made this clear:
When he executed the 2004 Will, Decedent James Kappus knew the issues involving allocation and
valuation of the improvements to the 49.482 acre tract because he had himself litigated those issues
with Applicant Sandra L. Kappus in the divorce just three months before he made the Will, and with
that knowledge named his brother John Kappus independent executor.
 Black’s Law Dictionary 775 (8th ed. 2004).
 Tex. Prop. Code § 113.082(a)(4).
 Humane Soc’y of Austin & Travis County. v. Austin Nat’l Bank, 531 S.W.2d 574, 577 (Tex. 1975).