Austin v. City of Alexandria, Record No. 020162.

• Decision Date: 10 January 2003
• Docket Number: Record No. 020162.
• Citation: 574 S.E.2d 289,265 Va. 89
• Court: Virginia Supreme Court
• Parties: William Y. AUSTIN, trustee of the James M. Duncan, III, Living Trust v. CITY OF ALEXANDRIA, et al.

574 S.E.2d 289

265 Va. 89

William Y. AUSTIN, trustee of the James M. Duncan, III, Living Trust v. CITY OF ALEXANDRIA, et al.

Record No. 020162.

Supreme Court of Virginia.

January 10, 2003.

Elizabeth G. Engle (Peter A. Dingman; Dingman Labowtiz, on briefs), Alexandria, for appellant.

Gerald F. Chapman; D. Brian Costello (Rand L. Gelber, on briefs), Springfield, for appellees.

Present: All the Justices.

Opinion by Justice LAWRENCE L. KOONTZ, JR.

In this appeal, we consider whether the trial court properly determined that an individual who was grantor, trustee, and beneficiary of a revocable land trust effectively conveyed title to real property held in the trust by a subsequent deed which did not specify the capacity in which he was acting.

BACKGROUND

This case involves parcels of commercial real property, commonly known as 200 North Henry Street and 1115 North Cameron Street, located in the City of Alexandria (the property). The material facts were stipulated in the trial court.

On September 7, 1993, James M. Duncan, III, executed an unrecorded declaration of trust establishing The James M. Duncan, III, Living Trust (the Living Trust).¹ The pertinent provisions of the declaration may be summarized in the following manner. Duncan was named as the initial trustee. Under Article 2, Duncan was named as the income beneficiary during his lifetime. In addition, Article 2 provided for discretionary distributions of corpus by the trustee to Duncan. Article 3 provided that "[b]y signed instruments delivered to the Trustee during [Duncan's] lifetime, [Duncan] may: (1) withdraw property from this trust in any amount and at any time upon giving reasonable notice in writing to the Trustee."

Articles 5 and 6 provided for the distribution of the trust corpus upon Duncan's death, with the tangible personal property being distributed immediately to two alternate remaindermen, and the balance of the corpus being placed into three charitable remainder trusts for the benefit of three remaindermen during their lifetimes and then to The James M. Duncan, Jr., Library Foundation for the benefit of the James M. Duncan, Jr., Library located in Alexandria, Virginia. Article 8 provided for the appointment of successor trustees and co-trustees. Burke & Herbert Bank & Trust Company of Alexandria was designated as the first successor trustee upon Duncan's death or resignation as original trustee. Article 12 provided for the broad powers of the trustee, which included the power to transfer title to the real property in the trust.

Concurrent with the execution of the Living Trust declaration on September 7, 1993, Duncan, as grantor, executed a "DEED IN TRUST" conveying the property to himself as trustee of the Living Trust. The legal description of the property included a reference to its prior recorded transfer to Duncan under the will of Ruth Birch Deahl Duncan. The deed referenced Code § 55-17.1 and declared that "the trust created by this conveyance shall not fail, ... because no beneficiaries are specified by name herein or because no duties are imposed upon the Trustee." The deed further provided that "[a]ny revocation of the [Living] Trust Agreement by the Grantor shall not be effective as to the property herein conveyed unless he execute[s] a deed, duly recorded, evidencing such revocation and reversion of title." This deed was duly recorded in the land records of the City of Alexandria on June 15, 1994.

On June 30, 1994, Duncan executed an amendment to the Living Trust providing that, upon his death or resignation as trustee, Burke & Herbert Bank & Trust Company and William Y. Austin should succeed him as co-trustees. Austin was the lifetime beneficiary of one of the charitable remainder trusts established under the Living Trust.

On August 3, 1999, Duncan executed a second deed purporting to convey the property previously conveyed to the Living Trust. This deed, which was styled as a "DEED OF CONTRIBUTION," was headed with the notation that it had been "PREPARED WITHOUT BENEFIT OF A TITLE REPORT." The deed named Duncan as grantor and named as the grantee the "James M. Duncan, III, Trustee for the J.M. Duncan, III Charitable Remainder Unitrust." The legal description of the property in the deed contained no reference to Duncan's prior transfer of this same property to the Living Trust or to any reversion of the title of this property to Duncan in his individual capacity. The deed was signed by Duncan, but did not specify the capacity in which he executed it.

On August 4, 1999, Duncan executed a trust agreement establishing The J.M. Duncan III Charitable Remainder Unitrust (the Unitrust). As with the Living Trust, Duncan was named as the initial trustee and lifetime beneficiary of the Unitrust. The charitable entities that would receive any remaining corpus and accumulated income upon Duncan's death were the St. Paul of the Desert Episcopal Church of Palm Springs, California, which would receive fifty percent of the remainder, the James M. Duncan, Jr., Library, in Alexandria, Virginia, which would receive forty-nine percent, and the Gamma Mu Foundation, which would receive the remaining one percent.

Attached to the Unitrust agreement as exhibit A was a legal description of the property to be held in the trust. The property described was substantially the same property previously deeded to the Living Trust. However, as with the deed purporting to convey the property to the Unitrust, no mention was made of Duncan's prior conveyance of this same property to the Living Trust or of any reversion of the title of the property to Duncan individually.² The exhibit concluded with an acknowledgement of the receipt of the property by Duncan in his capacity as trustee of the Unitrust.

The deed purporting to convey the property to the Unitrust was recorded in the land records of the City of Alexandria on August 5, 1999. The Unitrust agreement was not recorded.

On October 20, 1999, Duncan, expressly acting in his capacity as trustee of the Unitrust and pursuant to his authority as the trustee of that trust, executed a contract to sell the property to Nationwide CH, LLC (Nationwide) for $2,200,000.³ Settlement was to occur on or before eighteen months from the contract date.

Duncan died on March 2, 2000. Burke & Herbert Bank & Trust Company declined its appointment as successor co-trustee for the Living Trust on July 19, 2000. On September 26, 2000, the Superior Court of the State of California in and for the County of Riverside confirmed Austin as "the sole successor trustee" of the Living Trust and confirmed his title, as trustee, to certain real property located in the State of California which had previously been donated to that trust by Duncan.

On February 15, 2001, Austin, acting in his capacity as trustee of the Living Trust, filed a bill of complaint in the Circuit Court of the City of Alexandria (the trial court) against the City of Alexandria, the Alexandria Library Company, the Alexandria Library Board (collectively, the City), St. Paul of the Desert Episcopal Church, Gamma Mu Foundation, and Nationwide seeking a declaratory judgment that he is vested with legal and equitable title to the property as trustee of the Living Trust.⁴ The Alexandria Library Company owns the J.M. Duncan, Jr., Library which is operated by the Alexandria Library Board which oversees library services in the City of Alexandria.

In support of his bill of complaint, Austin essentially alleged that the 1999 deed was ineffective to donate the property to the Unitrust because by the 1993 deed Duncan in his individual capacity had conveyed title to the property to himself in his capacity as trustee of the Living Trust and that neither that conveyance nor the Living Trust had been revoked. The City and Nationwide filed separate answers in which they essentially contended that the creation of the Unitrust and the execution of the 1999 deed effectively revoked the prior conveyance of the property to the Living Trust and, thus, that the subsequent execution of the sale contract for the property by Duncan as trustee of the Unitrust was valid.

Ultimately Austin, the City, and Nationwide filed cross-motions for summary judgment. By final decree on October 31, 2001, the trial court entered judgment for the City and Nationwide. In an opinion letter incorporated by reference into the final decree, the trial court expressly found that "Duncan as grantor of the living trust had the authority to withdraw real estate from that trust. He did so by virtue of the documents creating the unitrust and the deed to himself as trustee of the unitrust." By an order dated April 30, 2002, we awarded Austin this appeal.

DISCUSSION

When, as here, the facts are stipulated in the trial court by all parties, the trial court's "findings, although highly persuasive and entitled to great weight, are not binding on appeal. However, we will not reverse the trial court's judgment on appeal unless it is plainly wrong or without evidence to support...