Alexander v. UMB Bank, NA

• Decision Date: 23 August 2016
• Docket Number: WD 79378
• Citation: 497 S.W.3d 323
• Parties: Kelsey Alexander, Appellant, v. UMB Bank, NA, Trustee of the Darthea Stodder Harrison Trust, et al.; Jodi Lea Stodder, Respondents.
• Court: Missouri Court of Appeals

497 S.W.3d 323

Kelsey Alexander, Appellant,

v.UMB Bank, NA, Trustee of the Darthea Stodder Harrison Trust, et al.; Jodi Lea Stodder, Respondents.

WD 79378

Missouri Court of Appeals, Western District.

OPINION FILED: August 23, 2016

Miriam E. C. Bailey, Kansas City, MO, for appellant.

Angela G. Nichols, Kansas City, MO, for respondent UMB Bank, NA.

Before Division Two: Karen King Mitchell, Presiding Judge, Cynthia L. Martin, Judge and Gary D. Witt, Judge

Cynthia L. Martin

, Judge

Kelsey Alexander (“Alexander”) appeals from a judgment denying her petition to construe a trust to require distribution to the descendants of the settlor's deceased brothers' children. Because we agree with Alexander that the trust created a remainder interest in settlor's deceased brothers' children that was descendible and that was not subject to the condition of survival, we reverse and remand.

Factual and Procedural Background

Darthea Stodder Harrison (“Settlor”) formed a trust by executing a trust agreement on March 18, 1947 (“Trust”). The Trust was executed in Kansas. UMB Bank, N.A., (“UMB”) is the trustee of the Trust, and has administered and continues to administer the Trust in Jackson County, Missouri.

Settlor received monthly income from the Trust during her lifetime according to Article One, section (a) of the Trust. Article One, section (c) of the Trust provided that if Settlor predeceased her son, William Stodder Harrison, Jr. (“Settlor's Son”), then monthly income from the Trust would be paid to Settlor's Son during his lifetime.

Settlor died on May 31, 1962. Settlor's Son was living on that date. Settlor's Son thus received monthly income from the Trust until his death. Settlor's Son died on March 8, 2013.

Article One, section (e) of the Trust provided:

Upon the death of Settlor, or upon the death of Settlor's son, Williams S. Harrison, Jr., whichever shall last occur, ... this trust shall terminate, and upon such termination, the trust estate, including all increment and additions thereto, shall be paid over, distributed and delivered per stirpes to the lawful bodily issue of Settlor's son, William S. Harrison, Jr., if any there be; and, if none, the said remainder of the trust estate shall be paid over, distributed and delivered to Settlor's brothers, R.H. Stodder and F.G. Stodder. In the event either the said R.H. Stodder or F.G. Stodder shall be deceased, upon the termination of this trust as aforesaid, the share of said brother shall be paid over, distributed and delivered to said deceased brothers' children .

(Emphasis added). The Trust terminated by its plain terms on March 8, 2013, when Settlor's Son died. Termination of the Trust triggered the obligation to pay over, distribute and deliver the remaining Trust assets as directed by Article One, section (e). When the Trust terminated, Settlor's Son had no bodily issue, and R.H. Stodder and F.G. Stodder (“Settlor's Brothers”) were both deceased.¹ As a result, the highlighted language in Article One, section (e) remained the only potentially operative provision for distribution of the Trust assets.

When the Trust terminated, all of Settlor's Brothers' children were also deceased.² However, those children had children.³ Alexander is one of those children, as she is the granddaughter of F.G. Stodder. Because the Trust did not expressly specify the Settlor's intent should all of Settlor's Brothers' children predecease the Trust's termination, UMB petitioned the Jackson County Circuit Court Probate Division (hereinafter “Probate Court”) for instructions on how to distribute the Trust's assets.⁴ UMB did not take a position with respect to the proper recipients of the Trust assets, but did name known grandchildren of F.G. and R.H. Stodder in the petition. The Probate Court advised UMB by letter that its petition did not present a justiciable controversy because, according to the court, the Trust “fail[ed] because there are no designated beneficiaries.” The Probate Court's letter reasoned that the Trust “provided for [Settlor's Brothers'] children, but made no provision for [Settlor's Brothers'] more remote descendants.” Because the Probate Court refused to entertain UMB's petition, summons and service packets were never released, and the grandchildren of Settlor's Brothers were never notified of the petition.

After the Probate Court refused to consider its petition, UMB filed a petition to reopen Settlor's probate estate in the District Court of Johnson County, Kansas (the “Kansas Probate Court”) in order to distribute the assets from the Trust through Settlor's estate.⁵ The Kansas Probate Court scheduled a hearing on UMB's petition and authorized delivery of notice to interested persons, including Alexander. Alexander objected to the petition, and moved to stay the Kansas proceeding to permit the Missouri Probate Court to entertain a suit she filed concerning distribution of assets from the Trust. The Kansas Probate Court stayed its proceedings.

Alexander's petition in the Probate Court sought to terminate the Trust and to distribute assets per its terms, or alternatively to modify the Trust.⁶ Alexander took the position that pursuant to the Trust:

[T]he children of R.H. and F.G. Stodder held contingent remainder interests that became vested upon the death of [Settlor] ... and [Settlor's Son] .... The remainder interest held by the children of R.H. and F.G. Stodder passed through their respective estates upon their death. Accordingly, the heirs and devisees of R.H. and F.G. Stodder have a direct, vested property interest in the Trust Estate. The Trust did not fail. It passed property interests at the time of its creation to specifically identified beneficiaries, which have since vested.

At Alexander's request, summons were issued and service was had on each of the individuals identified as descendants of R.H. Stodder and F.G. Stodder. The identified descendants have not opposed Alexander's petition. UMB requested only that judgment be entered consistent with the terms of the Trust and Settlor's intent, expressing no position about Alexander's proposed construction of the Trust.

On January 14, 2016, without a hearing, advance notice, or the benefit of evidence, the Probate Court entered a judgment denying Alexander's petition (“Judgment”). The Judgment found that the Trust terminated by its terms upon the death of Settlor's Son on March 8, 2013. The Judgment found that the “remaining relief requested, an order construing the trust to provide for distribution of the remaining trust assets to the descendants of the [Settlor's Brothers'] children, is inconsistent with the Court's understanding of the [Settlor's] intention.”

Alexander filed this timely appeal.

Standard of Review/Choice of Law

“A court-tried probate case is reviewed under the standard of Murphy v. Carron , 536 S.W.2d 30 (Mo.banc 1976)

.” In re Estate of Schooler , 204 S.W.3d 338, 342 (Mo.App.W.D.2006). “Under that standard, the probate court judgment will be sustained ‘unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law.’ ” Id . (quoting Murphy , 536 S.W.2d at 32 ). “ ‘An appellate court will conduct de novo review of questions of law, which includes determination of the meaning of a trust instrument, and give no deference to the trial court's judgment in such matters.’ ” Brams Trust v. Hayden , 266 S.W.3d 300, 304 (Mo.App.W.D.2008) (quoting Betty J. Weldon Revocable Trust v. Weldon , 231 S.W.3d 158, 173 (Mo.App.W.D.2007) ).

In the absence of trust language to the contrary, “the law of [a] trust's principal place of administration will govern administrative matters and the law of the place having the most significant relationship to the trust's creation will govern the dispositive provisions.” Comment, Uniform Trust Code, section 107

; K.S.A. section 58a–107 (2003) (adopted nearly verbatim from Uniform Trust Code, section 107 ); Hudson v. UMB, N.A. , 447 S.W.3d 714, 719 (Mo.App.W.D.2014)(citing and applying section 107

Comment). The parties agree that although the Trust is administered in Missouri, Kansas has the most significant relationship to the Trust's creation, as the Settlor was a Kansas resident and executed the Trust in Kansas. Because Alexander's first point on appeal requires us to determine the meaning of the dispositive provisions of the Trust, the parties agree that Kansas law governs our resolution of point one on appeal.⁷

Analysis

Alexander raises three points on appeal. In her first point, Alexander argues that the trial court erred in concluding that the Trust assets should not be distributed to the descendants of Settlor's Brothers' children because, as a matter of law, the Trust afforded Settlor's Brothers' children with descendible property interests that were not conditioned on survival. In her second point, Alexander argues in the alternative that it was error not to modify the Trust to require distribution to the descendants of Settlor's Brothers' children. In her third point, Alexander argues in the alternative that it was error to enter the Judgment without affording Alexander notice and an opportunity to be heard. Alexander's first point on appeal is dispositive, rendering it unnecessary to address her second and third points on appeal.

The resolution of Alexander's first point on appeal requires us to determine the intended meaning of “Settlor's Brothers' children.” Did the Settlor intend, as the Probate Court concluded, to require each of Settlor's Brothers' children to survive the Trust's termination such that no distribution would be made to a child's descendants? Or did the Settlor intend, as Alexander argues, to permit the interest in favor of Settlor's Brothers' children to be descendible through a child's estate or by intestacy should a child predecease the Trust's termination? Stated simply, we must determine whether the Settlor intended survival to be a condition of...