Hamilton National Bank of Chattanooga v. Hutcheson, Civ. A. No. 6272.

Decision Date05 April 1973
Docket NumberCiv. A. No. 6272.
Citation357 F. Supp. 114
PartiesHAMILTON NATIONAL BANK OF CHATTANOOGA, as Trustee of Trust Under Will of Mrs. Hazel M. Hutcheson and as Co-Trustee Under Trust Agreement of John L. Hutcheson, Jr., for Benefit of Hazel Montague Hutcheson, Dated Dec. 8, 1937, v. John L. HUTCHESON III et al.
CourtU.S. District Court — Eastern District of Tennessee

Charles J. Gearhiser of Stophel, Caldwell & Heggie, Chattanooga, Tenn., for plaintiff.

Morgan, Garner & Wood, Chattanooga, Tenn., for defendants.

MEMORANDUM

FRANK W. WILSON, Chief Judge.

This case is presently before the Court upon the plaintiffs' motion for summary judgment. This lawsuit was originally filed as an interpleader action by the trustee of two trusts to determine the validity of one trust (Trust No. 1347) and to determine the number of beneficiaries under a second trust (Trust No. 1128). A consent judgment has been entered with respect to Trust No. 1347 (Court File No. 17). The Court thereupon directed the plaintiff to file a motion for summary judgment with respect to the issue involved regarding Trust No. 1128, namely whether Marion Housch Hutcheson, Jr. is a beneficiary under Trust No. 1128 (Court File No. 18). Accordingly, the case is before the Court upon the complaint, the answers of the parties, the plaintiff's motion for summary judgment (Court File No. 20) and the responses thereto. Included in the record is a stipulation of the parties, together with the affidavit of Marion Housch Hutcheson, Jr. and a portion of the testimony of John L. Hutcheson, Jr. (Court File No. 16). Upon the basis of the foregoing record the following facts with reference to Trust No. 1128 appear to be undisputed.

Upon December 8, 1937, John L. Hutcheson, Jr. (herein sometimes referred to as "grantor") created an inter vivos trust by transferring certain property to himself and S. Lewis Hutcheson as trustees (See Exhibit D to the complaint). The portions of the trust relevant to the issue now before the Court were as follows:

"First: * * * "(b) This trust shall in no event terminate until the expiration of eighteen (18) months after the death of the grantor . . .
"(c) The beneficiaries of this trust shall be grantor's wife, Hazel Montague Hutcheson, grantor's children, the issue of any child of grantor who may die while this estate remains in trust . . .
* * *
"Third: (a) The entire trust estate shall be held in trust for the life of grantor's wife, HAZEL MONTAGUE HUTCHESON, and the annual net income therefrom shall be paid to the said Hazel Montague Hutcheson in convenient periodical payments for and during her natural life.
"(b) Upon the death of the said Hazel Montague Hutcheson, the trust estate shall be apportioned in equal shares to grantor's children. . .
* * *
Fifth: As to all or any portion of this trust estate accruing hereunder to or for the use of any daughter of grantor upon or after the death of the said Hazel Montague Hutcheson, the same shall continue in trust and so much of the net income therefrom as in the discretion of the trustees shall be deemed advisable, shall be used for the maintenance, support and education of such daughter until she shall attain the age of twenty-one (21) years. After such daughter has attained the age of twenty-one (21) years, her portion of the trust estate shall continue in trust for and during her natural lifetime. . ."

The trust agreement provides for the distribution of income in accordance with its terms to the grantor's children. Provision is also made in a rather complex manner for distribution of the corpus of the trust either to children, grandchildren or heirs, but in each instance "subject to the provisions of paragraph First (b)," that is, in no event is the corpus to be distributed sooner than 18 months after the death of the grantor.

There were four children born of the marriage of John L. Hutcheson, Jr. to Hazel Montague Hutcheson, being John L. Hutcheson III, W. Frank Hutcheson, Theodore M. Hutcheson and Hazel H. Meadow. Hazel Montague Hutcheson died on March 28, 1952, at which time the trust was construed to have the then surviving four children as beneficiaries and the income was apportioned accordingly. A subsequent marriage of John L. Hutcheson, Jr. resulted in the birth of a daughter, Marion Housch Hutcheson, Jr. on November 30, 1954. The grantor and all five children are presently surviving. The fifth child, Marion Housch Hutcheson, Jr., has never shared in the trust. By affidavit she states that she was unaware of the existence of the trust until the filing of this lawsuit. By deposition the grantor, John L. Hutcheson, Jr., states that her omission from sharing in the trust since her birth following the death of his first wife is an oversight on the part of the trustees. Upon this state of the record the single issue for determination by the Court is whether Marion Housch Hutcheson, Jr. is a beneficiary of Trust No. 1128.

An initial problem to be confronted is one of conflicts of law, that is, whether the Court should look to the law of the State of Tennessee or to the law of the State of Georgia as the substantive law to follow in construing the trust agreement now before the Court. It is conceded that all factors significant to the legal issue here presented are concentrated in these two states. While a majority of beneficiaries are residents of Rossville, Georgia, and none are residents of Tennessee, it further appears that the grantor of the trust was a resident of Tennessee at the execution of the trust, that the trust was executed in Tennessee and that the trust is being administered by a Tennessee banking corporation. Furthermore, the trust agreement makes reference in certain parts to Tennessee law and that of no other state, giving some indication of an intention on the part of the grantor that the agreement be construed in accordance with the law of Tennessee. The Court is accordingly of the opinion that the more significant contacts are with the State of Tennessee and further that the trust agreement reflects an intention on the part of the grantor that it be construed in accordance with the law of Tennessee. The rule to be followed in this regard is stated in the case of Moody v. Kirkpatrick, 234 F.Supp. 537:

"Problems in conflicts of laws must be resolved by the application of the conflicts rules of that state. Tennessee follows the general rule that the validity of a contract and the substantive rights of the parties to it are to be governed by the law which the parties intended. In the absence of a manifestation of contrary intention, the parties are presumed to have contracted pursuant to the laws of the state in which the contract was entered into. Deaton v. Vise, 186 Tenn. 364, 210 S. W.2d 665 (1948)."

See also Restatement of Conflicts of Law, 2d Ed., § 268 (1971). Further, it appears conceded that the law of Tennessee and the law of Georgia are substantially identical as relates to the issue here involved, rendering the conflicts issue of little relevance.

Turning to the principal issue in the lawsuit, that is, whether Marion Housch Hutcheson, Jr. is a beneficiary under the trust along with the other four children of John L. Hutcheson, Jr., the Court is confronted with the problem of construing the trust agreement. The problem is basically one of ascertaining the intention of the grantor from the face of the agreement, if that intention properly appears thereon, or otherwise applying relevant rules for ascertaining the grantor's intention where the intention does not appear with sufficient clarity upon the face of the trust instrument. In this connection it may be noted that the law of wills may be looked to in the construction of trust agreements and with reference to determining the grantor or settler's intention therein. See Marks v. Southern Trust Co., 203 Tenn. 200, 310 S.W.2d 435 (1958).

It should be noted at the outset that the trust agreement designates the beneficiaries simply as "the children" of the grantor or more correctly as the "grantor's children". No attempt to limit, restrict, or otherwise define this designation of the beneficiaries is contained in the agreement. No attempt is made to designate the children by name, number, date of birth, age, sex, whether born or unborn, or other limiting factors. Nor is the marriage of which they are born stated to be a limiting factor. Rather, the trust agreement in its various parts refers simply to the "grantor's children" see paragraphs First (c) and Third (b) or "any son of the grantor" see paragraph Fourth or "any daughter of the grantor" see paragraph Fifth or "any child" see paragraph Seventh. The designation "children" without restriction or limitation is...

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