Baldwin v. Branch

• Decision Date: 05 March 2004
• Parties: Claude H. BALDWIN III v. Miles BRANCH and Suzanne B. Ligon.
• Court: Alabama Supreme Court

888 So.2d 482

Claude H. BALDWIN III v. Miles BRANCH and Suzanne B. Ligon.

1011214.

Supreme Court of Alabama.

March 5, 2004.

Harry Markstein and Daniel H. Markstein III of Maynard, Cooper & Gale, P.C., Birmingham, for appellant.

J. Frank Head of Wallace, Ellis, Fowler & Head, Columbiana, for appellees.

Bruce F. Rogers and James W. Davis of Bainbridge, Mims, Rogers & Smith, LLP, Birmingham, for amicus curiae Gloria Cobb, in support of the appellees.

SEE, Justice.

This case involves a dispute as to whether a disposition in a trust created by Claude H. Baldwin, Jr. ("Claude"), lapsed when the grantee died. The trial court entered a summary judgment holding that the disposition made in the Claude H. Baldwin, Jr., Revocable Trust ("the Baldwin Trust") to Claude's sister, Bernice B. Branch, did not lapse on Bernice's death. Claude H. Baldwin III ("Claude's son"), appeals. We affirm.

On September 2, 1992, Claude executed a declaration of trust creating a revocable trust. He appointed himself trustee. The declaration of trust stated that upon Claude's death or incapacity, O.W. Irwin would succeed him as trustee, that all net trust income was to be paid to Claude during Claude's lifetime, that Claude retained the right to remove assets from the trust, and that following Claude's death the successor trustee was to make certain dispositions from the trust, including one to his sister Bernice.

Bernice predeceased Claude, leaving two children, Miles Branch and Suzanne B. Ligon. Claude died testate on January 4, 2001; the trust had never been amended. On March 13, 2001, the conservator of Claude's estate filed in the probate court a final settlement of his conservatorship.¹

On February 12, 2001, Claude's widow, Julia Watson Baldwin, filed an action in the Shelby Circuit Court seeking a judgment declaring what assets were in Claude's estate and what assets, if any, were in the Baldwin Trust. On March 16, 2001, Claude's son filed an answer and a cross-complaint in Julia's declaratory-judgment action.² The cross-complaint filed by Claude's son is the subject of this appeal. Claude's son argued in his cross-complaint that the distribution to be made to Bernice from the Baldwin Trust had lapsed upon Bernice's death. Bernice's children, Miles Branch ("Branch") and Suzanne B. Ligon ("Ligon"), filed an answer to the cross-complaint in which they argued that as Bernice's children they are entitled to her share of the Baldwin Trust. Claude's son and Branch and Ligon moved for a summary judgment. Branch and Ligon attached to their motion an affidavit by the attorney who drafted the Baldwin Trust and Claude's will; the affidavit stated that Claude had intended Bernice's children to take under the trust in the event Bernice predeceased him. Claude's son moved the trial court to strike the affidavit on the ground that the Baldwin Trust was not ambiguous and therefore parol evidence was not necessary to its interpretation; the trial court granted the motion, and on February 1, 2002, entered a summary judgment in favor of Branch and Ligon upholding their claim to Bernice's share of the Baldwin Trust.

Claude's son appeals. He states the issue on appeal as whether "a provision for a beneficiary in a revocable trust lapses if the beneficiary predeceases the settlor, for whose lifetime benefit the trust income and principal are reserved, and the trust makes no provision for the contingency." (Appellant's brief, p. 4.) Specifically, Claude's son argues that Alabama's antilapse statute, which is applicable to wills, does not apply to trusts and that a gift in a revocable trust in which the settlor is also the trustee does not vest in the beneficiary upon the creation of the trust.

We review a trial court's summary judgment de novo, giving the judgment no presumption of correctness. Nationwide Ins. Co. v. Rhodes, 870 So.2d 695 (Ala.2003). When a document is unambiguous, its construction and legal effect are questions of law for the court to decide. Wheeler v. First Alabama Bank of Birmingham, 364 So.2d 1190 (Ala.1978).³

Claude's son argues that the provision in the Alabama Probate Code that prevents a lapse in a will, § 43-8-224, Ala.Code 1975, does not apply to revocable trusts. The issue whether a gift in a trust may lapse has not previously been addressed by an Alabama court. While § 43-8-224, Ala.Code 1975, operates, in the case of a will, to prevent a lapse when a devisee dies before the testator, there is no similar statutory provision to prevent a lapse of a gift made in a revocable trust.

Section 43-8-224 reads:

"If a devisee who is a grandparent or a lineal descendant of a grandparent of the testator is dead at the time of execution of the will, fails to survive the testator, or is treated as if he predeceased the testator, the issue of the deceased devisee who survive the testator by five days take in place of the deceased devisee and if they are all of the same degree of kinship to the devisee they take equally, but if of unequal degree then those of more remote degree take by representation. One who would have been a devisee under a class gift if he had survived the testator is treated as a devisee for purposes of this section whether his death occurred before or after the execution of the will."

Section 43-8-224 mentions only wills, not trusts. Therefore the plain language of § 43-8-224 indicates that it does not apply to trusts.

Claude's son argues that before the enactment of the antilapse statute, Alabama followed the common-law rule that bequests in wills lapse when the legatee or devisee predeceases the testator. See, e.g., Morgan County Bank v. Nelson, 244 Ala. 374, 13 So.2d 765 (1943); First Nat'l Bank v. Hartwell, 232 Ala. 413, 168 So. 446 (1936); and Little v. Ennis, 207 Ala. 111, 92 So. 167 (1922). Claude's son also notes that" `[i]t was the rule at common law that a gift in trust lapsed upon the death of the beneficiary prior to the death of the trustor'" (quoting In re Estate of Button, 79 Wash.2d 849, 853, 490 P.2d 731, 734 (1971)). In Alabama, "[s]tatutes in derogation or modification of the common law are strictly construed. Cook v. Meyer, 73 Ala. 580 (1883). Such statutes are presumed not to alter the common law in any way not expressly declared. Pappas v. City of Eufaula, 282 Ala. 242, 210 So.2d 802 (1968)." Arnold v. State 353 So.2d 524, 526 (Ala.1977). Therefore, absent an express statutory provision creating an antilapse rule for revocable trusts, no such rule exists, and Alabama continues to follow the common-law rule that gifts in trust lapse if the beneficiary predeceases the settlor.

Branch and Ligon argue that the antilapse statute should be applied to determining who takes under the Baldwin Trust. They point out that Ohio, Washington, and Virginia have held that similar statutes in those states also apply to trusts, and they cite cases from those jurisdictions in which courts have found that an antilapse statute, on its face applicable only to wills, reaches trusts as well. See Dollar Sav. & Trust Co. of Youngstown v. Turner, 39 Ohio St.3d 182, 529 N.E.2d 1261 (1988)

(holding that Ohio's antilapse statute, which specifically refers only to wills, applies to trusts); In re Estate of Button, supra (applying Washington's antilapse statute to a revocable inter vivos trust); and Hester v. Sammons, 171 Va. 142, 198 S.E. 466 (1938)(applying Virginia's antilapse statute to a testamentary trust).

Claude's son states that those cases do not provide reliable authority for this Court to hold that Alabama's anti-lapse statute reaches trusts. He notes that after the Ohio court handed down its decision in Dollar Savings & Trust, holding that Ohio's antilapse statute applied to trusts, the Ohio Legislature amended its antilapse statute to provide that the statute refers only to "wills" and that "will does not include inter vivos trusts or other instruments that have not been admitted to probate." Ohio Rev.Code Ann. § 2107.01. See also Ohio Rev.Code Ann. § 2107.52. The annotation to §§ 2107.01 and 2107.52 reads:

"In amending sections 2107.01 and 2107.52 of the Revised Code, the General Assembly hereby declares its intent to supersede the effect of the holding of the Ohio Supreme Court on October 26, 1988, in Dollar Savings & Trust Co. of Youngstown v. Turner (1988), 39 Ohio St.3d 182, 529 N.E.2d 1261."

When the Supreme Court of Washington held in Estate of Button that Washington's antilapse statute applied also to trusts, that Legislature responded by amending its antilapse statute expressly to add the word "trusts." In both cases, both state legislatures indicated by legislative amendment that the language of the statute did not comport with their courts' reading of the statute.

Claude's son also argues that Hester v. Sammons does not provide persuasive authority because Virginia's antilapse statute "covers every property of every kind which the decedent might have." 171 Va. at 146, 198 S.E. at 467. Therefore, Claude's son concludes, Virginia's statute by its plain wording covers trusts as well as wills.

This Court has previously expressed a reluctance to rewrite the Alabama Probate Code to accommodate the use of a revocable trust as a substitute for a will. In Russell v. Russell, 758 So.2d 533, 538 (Ala.1999), this Court refused to read into the Alabama Probate Code the "augmented estate concept" rejected by the Legislature in 1982 when it reenacted the Probate Code. To hold that Alabama's antilapse statute applies to trusts, this Court would have to invade the Legislature's power to amend statutes. We are not willing to do so; therefore, Branch and Ligon's argument that Alabama's antilapse statute applies to trusts fails.

Claude's son also argues that the Baldwin Trust is a special subspecies of trust — a revocable trust of which the settlor is also the trustee. Claude's son urges this Court to reject Branch and Ligon's contention that Bernice's share in the trust vested when Claude created the...