9-2107.   Allowing for the contracting for trust services; definitions;notice filing; authority of commissioner; fees; examination; branches.(a) As used in this section:

      (1)   "Contracting trustee" means any trust company, as defined in K.S.A.9-701, and amendments thereto, any bank that has been granted trustauthority by the state bank commissioner under K.S.A. 9-1602, and amendmentsthereto,or any national bank chartered to do business in Kansas that has beengranted trust authority by the comptrollerof the currency under 12 USC 92a, or any bank that has been granted trustauthority or any trust company, regardless of where such bank or trustcompany is located,and which is controlled, asdefined inK.S.A. 9-1612, and amendments thereto, by the same bank holdingcompany as anytrust company, state bank or national bank chartered to do business inKansas,which accepts or succeeds to any fiduciaryresponsibility as provided in thissection;

      (2)   "originating trustee" means any trust company, bank, nationalbanking association, savings and loan association or savings bank which hastrust powers and its principal place of business is in this state and whichplaces or transfers any fiduciary responsibility to a contracting trustee asprovided in this section;

      (3)   "financial institution" means any bank, national banking association,savings and loan association or savings bank which has its principal place ofbusiness in this state but which does not have trust powers.

      (b)   Any contracting trustee and any originating trustee may enter intoan agreement by which the contracting trustee, without anyfurther authorization of any kind, succeeds to and issubstituted for the originating trustee as to all fiduciary powers, rights,duties, privilegesand liabilities with respect to all accounts for which the originatingtrustee serves in any fiduciary capacity, except as may be providedotherwise in the agreement.Notwithstanding the provisions of this section, no contracting trustee asdefined in K.S.A. 9-2107(a)(1), and amendments thereto, having its homeofficeoutside the state of Kansas shall enter into an agreement except with anoriginating trustee which is commonly controlled as defined in K.S.A.9-1612,and amendments thereto, by the same bank holding company.

      (c)   Unless the agreement expressly provides otherwise, upon theeffective date of the substitution:

      (1)   The contracting trustee shall be deemed to be named as the fiduciaryin all writings, including, without limitation, trust agreements, wills andcourt orders, which pertain to the affected fiduciary accounts;

      (2)   the originating trustee is absolved from all fiduciarydutiesand obligations arising under such writings and shall discontinue theexercise of any fiduciary duties with respect to such writings, except thatthe originating trustee is not absolved or discharged fromany duty to account required by K.S.A. 59-1709, andamendments thereto, or any otherapplicable statute, rule of law, rules andregulations or court order, nor shall theoriginating trustee be absolved from any breach of fiduciary duty orobligation occurring prior to the effective date of the agreement.

      (d)   The agreement may authorize the contracting trustee:

      (1)   To establish a trust service desk at any office ofthe originating trustee at which the contracting trustee may conduct anytrust business and any business incidental thereto and which thecontracting trustee may otherwise conduct at its principal place of business;and

      (2)   to engage the originating trustee as the agent of the contractingtrustee, on a disclosed basis to customers, for the purposes of providingadministrative, advertising and safekeeping services incident to thefiduciary services provided by the contracting trustee.

      (e)   Any contracting trustee may enter into an agreement with afinancial institution providing that the contracting trustee mayestablish a trust service desk as authorized by subsection (d) in theoffices of suchfinancial institution and which provides such financial institution, on adisclosed basis to customers, may act as the agent of contracting trusteefor purposes of providing administrative services and advertising incidentto the fiduciary services to be performed by the contracting trustee.

      (f)   No activity authorized by subsections (b)through (e) shall be conducted by any contracting trustee, originating trusteeor financial institution until an application for such authority has beensubmitted to and approved by the commissioner. The application shall be in theform and contain the information required by the commissioner, which shall at aminimum include certified copies of the following documents:

      (1)   The agreement;

      (2)   the written action taken by the board of directors of theoriginating trustee or financial institution approving the agreement;

      (3)   all other required regulatory approvals;

      (4)   an affidavit of publication of notice of intent tofile the application with the commissioner.Publication of the notice shall beon the same day for two consecutiveweeks in the official newspaper of the city or county where the principaloffice of the originating trustee or financial institution is located.The notice shall be in the form prescribed by the commissioner and shallcontain the name of the applicant contracting trustee, the originating trusteeor financial institution, the proposed date of filing of the application withthe commissioner, a solicitation for written comments concerning theapplication, and a notice of the public's right to file a written request for apublic hearing for the purpose of presenting oral or written evidence regardingthe proposed agreement. All comments and requests for public hearing shall befiled with the commissioner on or before the 30th day after the date theapplication is filed; and

      (5)   a certification by the parties to the agreement that written notice ofthe proposed substitution was sent by first-class mail to each cofiduciary,each surviving settlor of a trust, each ward of a guardianship, each person whohas sole or shared power to remove the originating trustee as fiduciary andeach adult beneficiary currently receiving or entitled to receive adistribution of principle or income from a fiduciary accountaffected by the agreement, and that such notice was sent to each such person'saddress as shown in the originating trustee's records. An unintentional failureto give such notice shall not impair the validity or effect of any suchagreement, except an intentional failure to give such notice shall render theagreement null and void as to the party not receiving the notice ofsubstitution.

      (g)   A contracting trustee making application to the commissioner for approvalofany agreement pursuant to this section shall pay to the commissioner a fee, inan amount established by rules and regulations of the commissioner adoptedpursuant to K.S.A. 9-1713, and amendments thereto, to defray theexpenses of thecommissioner or designee in the examination and investigationof the application. The commissioner shall remit all amounts received underthis section to the state treasurer inaccordancewith the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt ofeach such remittance, the state treasurer shall deposit the entire amount inthe state treasury to the credit of a separateaccount in the state treasury for each application. The money in each suchaccount shall be used to pay the expenses of the commissioner, or designeein the examination and investigation of the application to which it relates andany unused balance shall be transferred to the bank commissioner fee fund.

      (h)   Upon the filing of any such application with the commissioner, thecommissioner shall make or cause to be made, a careful examination andinvestigation concerning:

      (1)   The reasonable probability of usefulness and success of the contractingtrustee;

      (2)   the financial history and condition of the contracting trustee includingthe character, qualifications and experience of the officers employed by thecontracting trustee; and

      (3)   whether the contracting agreement will result in any undue injury toproperly conducted existing banks, national banks and trust companies.

      If the commissioner shall determine any of such matters unfavorably to theapplicants, the application shall be disapproved, but if not, then theapplication shall be approved.

      (i)   If no written request for public hearing is filed, the commissionershall render approval or disapproval of the application within 60 days of thedate upon which the application was filed.

      (j)   If a written request for public hearing is filed, the commissioner shallhold within 30 days of the close of the comment period, a public hearing in alocation determined by the commissioner. Notice of the time, date and place ofsuch hearing shall be published by the applicant in a newspaper of generalcirculation in the county where the originating trustee or financialinstitution is located, not less than 10 nor more than 30 days prior to thedate of the hearing, and an affidavit of publication shall be filed with thecommissioner. At any such hearing, all interested persons may present writtenand oral evidence to the commissioner in support of or in opposition to theapplication. Upon completion of a transcript of the testimony given at anysuch hearing, the transcript shall be filed in the office of the commissioner. Within 14 days after the public hearing, the commissioner shall approve ordisapprove the application after consideration of the application and evidencegathered during the commissioner's investigation.

      (k)   The commissioner may extend the period for approval or disapproval ifthe commissioner determines that any information required by this section hasnot been furnished, any material information submitted is inaccurate oradditional investigation is required. The commissioner, prior to expiration ofthe application period provided for by this section, shall give written noticeto each party to the agreement of the commissioner's intent to extend theperiod which shall include a specific date for expiration of the extensionperiod. If any information remains incomplete or inaccurate upon theexpiration of the extension period the application shall be disapproved.

      (l)   Within 15 days of the date of the commissioner's approval or denial, theapplicant or any individual or corporation who filed a request for andpresented evidence at the public hearing shall have the right to appeal inwriting to the state banking board thecommissioner's determination by filing a notice of appeal with thecommissioner. The state banking board shall fix a date for hearing, whichhearing shall beheld within 45 days after such notice of appeal is filed. The boardshall conduct the hearing in accordance with the provisions of the Kansasadministrative procedure act and render its decision affirming or rescindingthe determination of the commissioner. Any action of the board pursuant tothis section is subject to review in accordance with the act for judicialreview and civil enforcement of agency actions.Any party which files an appeal to the state banking board of thecommissioner's determination shall pay to the commissioner a fee in an amountestablished by rules and regulations of the commissioner, adopted pursuant toK.S.A. 9-1713, and amendments thereto, to defray the board's expensesassociatedwith the conduct of the appeal.

      (m)   When the commissioner determines that any contracting trustee domiciledin this state has entered into a contracting agreement in violation of the lawsgoverning the operation of such contracting trustee, the commissioner shallgive written notice to the contracting trustee and the originating trustee orfinancial institution of such determination. Within 15 days after receipt ofsuch notification, the contracting trustee and originating trustee or financialinstitution shall have the right to appeal in writing to the state bankingboard the commissioner's determination. The board shall fix a date forhearing, which shall be held within 45 days after the date of theappeal and shall be conducted in accordance with the Kansas administrativeprocedure act. At such hearing the board shall hear all matters relevant tothe commissioner's determination and shall approve or disapprove thecommissioner's determination. The decision of the board shall be final andconclusive. If the contracting trustee does not appeal to theboard from the commissioner's determination or if an appeal is made and thecommissioner's determination is upheld by the board, the commissioner mayproceed as provided in K.S.A. 9-1714, and amendments thereto, until suchtime asthe commissioner determines the contracting trustee, originating trustee andfinancial institution are in full compliance with the laws governing theoperation of a contracting trustee and originating trustee or financialinstitution.

      (n)   Any party entitled to receive a notice under subsection (f)(5) may filea petition in the court having jurisdiction over the fiduciary relationship, orif none, in the district court in the county where the originating trustee hasits principal office, seeking to remove any contracting trustee substituted orabout to be substituted as fiduciary pursuant to this section. Unless thecontracting trustee files a written consent to its removal or a writtendeclination to act subsequent to the filing of the petition, the court, uponnotice and hearing, shall determine the best interest of the petitioner and allother parties concerned and shall fashion such relief as it deems appropriatein the circumstances, including the awarding of reasonable attorney fees. Theright to file a petition under this subsection shall be in addition to anyother rights to remove fiduciary provided by any other statute or regulation orby the writing creating the fiduciary relationship. If the removal of thefiduciary is prompted solely as a result of the contracting agreement, anyreasonable cost associated with such removal and transfer, not to exceed $200per account, shall be paid by the originating trustee or financial institutionentering into the agreement.

      History:   L. 1989, ch. 48, § 7;L. 1990, ch. 60, § 3;L. 1993, ch. 30, § 2;L. 1994, ch. 51, § 1;L. 1994, ch. 294, § 1;L. 1999, ch. 18, § 1;L. 2001, ch. 5, § 48; July 1.