The 49ers were a late entry in the Manning sweepstakes, prompting Smith to visit the Miami Dolphins over the weekend. Miami agreed to terms with quarterback David Garrard on Monday, however, likely taking that option off the table for Smith.
NFL Network's Rebecca Haarlow cited a source close to Smith in reporting that the quarterback was upset with the 49ers over what he perceives as a lack of loyalty.
"I wish him the best in Denver," York said. "He chose where he wanted to be, and I wish him the best."
As for the team's plan at quarterback should Smith sign elsewhere?
"I trust Jim (Harbaugh) and (general manager) Trent (Baalke) to figure it out," York said.