Bank v. Am. Children's Home

• Decision Date: 04 May 2010
• Docket Number: No. COA09-1232.,COA09-1232.
• Citation: 692 S.E.2d 457
• Court: North Carolina Court of Appeals
• Parties: FIRST CHARTER BANK, Trustee of The Last Will and Testament of Joseph F. Cannon, Dated April 26, 1932, Petitioner,v.AMERICAN CHILDREN'S HOME, Stonewall Jackson Youth Development Center, The Masonic Home For Children at Oxford, Inc., Boy's And Girls' Club of Cabarrus County, Inc., Nazareth Children's Home, Inc., Concord Fire Department, Barium Springs Home for Children, The Children's Home, Inc., Forest Hill United Methodist Church, Grandfather Home for Children, Inc., Stacy C. Eggers, IV, as Administrator CTA of the Estate of Annie L. Cannon, Joseph Ervin Morris, as Executor of the Estate of Mary Cannon Morris, R. Michael Allen, as Administrator CTA of the Estate of Joseph F. Cannon, Jr., and John Doe, as personal representative of the Estate of Anne Cannon Stouffer, Respondents.

692 S.E.2d 457

FIRST CHARTER BANK, Trustee of The Last Will and Testament of Joseph F. Cannon, Dated April 26, 1932, Petitioner,v.AMERICAN CHILDREN'S HOME, Stonewall Jackson Youth Development Center, The Masonic Home For Children at Oxford, Inc., Boy's And Girls' Club of Cabarrus County, Inc., Nazareth Children's Home, Inc., Concord Fire Department, Barium Springs Home for Children, The Children's Home, Inc., Forest Hill United Methodist Church, Grandfather Home for Children, Inc., Stacy C. Eggers, IV, as Administrator CTA of the Estate of Annie L. Cannon, Joseph Ervin Morris, as Executor of the Estate of Mary Cannon Morris, R. Michael Allen, as Administrator CTA of the Estate of Joseph F. Cannon, Jr., and John Doe, as personal representative of the Estate of Anne Cannon Stouffer, Respondents.

No. COA09-1232.

Court of Appeals of North Carolina.

May 4, 2010.

COPYRIGHT MATERIAL OMITTED

Appeal by respondent Joseph Ervin Morris, as Executor of the Estate of Mary Cannon Morris, from order and judgment entered 23 February 2009 by Judge W. Erwin Spainhour in Cabarrus County Superior Court. Heard in the Court of Appeals 9 February 2010.

Moore & Van Allen, PLLC, by Robert C. Bowers, Tonya L. Mitchell, and Andrea C. Chomakos, Charlotte, for petitioner-appellee.

Roy Cooper, Attorney General, by Gail E. Dawson, Special Deputy Attorney General, for respondent-appellee Stonewall Jackson Youth Development Center.

Edmundson & Burnette, L.L.P., by James T. Duckworth, III, Oxford, for respondent-appellee The Masonic Home for Children at Oxford, Inc.

Hamilton Moon Stephens Steele & Martin, PLLC, by Keith J. Merritt, Charlotte, and City Attorney's Office, by Albert M. Benshoff, Concord, for respondent-appellee Concord Fire Department.

Womble Carlyle Sandridge & Rice, PLLC, by Elizabeth K. Arias and Sarah L. Buthe, Raleigh, for respondents-appellees The Children's Home, Inc., Nazareth Children's Home, Inc., and Barium Springs Home for Children.

Hartsell & Williams, PA, by Samuel F. Davis, Jr., Concord, for respondent-appellee Forest Hill United Methodist Church.

Respess & Jud, by W. Russ Johnson, III and W. Wallace Respess, Jr., Lenoir, for respondent-appellee Grandfather Home for Children, Inc.

Eggers, Eggers, Eggers, & Eggers, by Stacy C. Eggers, IV, Boone, for respondent-appellee Stacy C. Eggers, IV, as Administrator CTA of the Estate of Annie L. Cannon.

Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Adam P.M. Tarleton and H. Arthur Bolick, II, Raleigh, for respondent-appellant Joseph Ervin Morris, as Executor of the Estate of Mary Cannon Morris.

MARTIN, Chief Judge.

Our recitation of the facts and procedural history of the case is limited to those events deemed relevant to the issues before us on appeal. When Joseph F. Cannon (“Settlor”) died in 1939, he was survived by his wife, Annie L. Cannon, and their three children, Anne Cannon Reynolds (later Anne Cannon Stouffer), Mary E. Cannon (later Mary Cannon Morris), and Joseph F. Cannon, Jr. Prior to his death, Settlor executed a last will and testament dated 26 April 1932 (the “Will”), a codicil to the Will dated 9 June 1938 (the “First Codicil”), and a second codicil dated 8 December 1938 (the “Second Codicil”).

The Will devised real and personal property to several named persons, including Settlor's wife and three children, and devised $1,000 each to several named charitable and service organizations and to Settlor's “trusted and efficient secretary,” Clara Gillon. The Will further designated that “the rest, residue and remainder” of Settlor's estate should be divided in “four equal parts” among Settlor's wife and three children, with his wife's share “turned over to [her] as soon as practicable, to be hers absolutely,” and his children's shares to be held in trust and “turn[ed] over and deliver[ed]” to each child “absolutely and fully discharged of any conditions whatsoever” “as each child reaches the age of twenty-eight years.”

The First Codicil directed the executors of Settlor's estate to “turn over to the Citizens Bank and Trust Company, Concord, North Carolina, all stock held by [Settlor] in said Citizens Bank and Trust Company,” and “to hold said stock for a period of ninety-nine (99) years” in a trust designated as “The Joseph F. Cannon Christmas Trust” (the “Christmas Trust”). Citizens Bank and Trust Company (“petitioner-trustee”) ¹ was appointed as trustee of the Christmas Trust and directed to “disperse annually the income from such stock held in said trust for the purpose of giving the inmates of [ten named charitable and service] institutions happiness and cheer at Christmas Time.” Each of the ten named institutions was to receive “[t]en per cent (10%) of the income [from the Christmas Trust] annually.” Settlor directed “the trustees of the various [charitable and service] institutions named to spend the amount in such a manner that it will give the inmates the most cheer and pleasure during the Yuletide Season.” In the event that any of the named institutions “cease [d] to exist, or should the trustees, or superintendents, or managers of any of the [named] institutions fail to carry out [Settlor's] directions as to the dispensation of the above fund,” petitioner-trustee was directed to “divert the part of such institution to some other worthy institution and pay out same to them as long as they comply with the provisions [Settlor] ha[d] made.” The First Codicil also provided that petitioner-trustee “shall be the sole and final judge in matters pertaining to the administration of this Fund.” All parties agree that the First Codicil does not expressly state what is to become of the remaining corpus of the Christmas Trust upon the expiration of the 99-year Trust term.

The Second Codicil made additional devises of real and personal property and revoked several provisions of the Will. Among the revoked provisions were Settlor's devises of $1,000 each to the charitable and service organizations named in the Will, some of which had since been named as beneficiaries of the Christmas Trust in the First Codicil. However, Settlor did not revoke his devise of $1,000 to his “trusted and efficient secretary,” Clara Gillon, and further provided that it was his “desire that [his] efficient secretary Miss Clara Gillon be retained as secretary to [his] estate at her present salary until said estate [wa]s finally settled.” Settlor then directed that three hundred shares of stock held by him in Wiscassett Mills be “set aside” and “placed in trust” (the “Gillon Trust”) with the Citizens Bank and Trust Company, Concord, North Carolina, which also served as trustee of the Christmas Trust. With respect to the Gillon Trust, petitioner-trustee was directed to “receive dividends from same and pay over immediately to Miss Clara Gillon same as long as she may live, deducting lawful charges from same for handling.” Settlor further provided, “[a]t the death of Miss Clara Gillon[,] I direct that the above shares of the Wiscassett Mills revert back to the heirs of my estate, share and share alike.” (Emphasis added.)

On 18 July 2007, petitioner-trustee filed a petition for declaratory judgment in which it requested, among other things, that the trial court determine whether petitioner-trustee “may ... at the termination of the [Christmas] Trust, distribute the Trust's assets to charitable entities as [it] in its discretion deems appropriate, consistent with [N.C.G.S.] § 36C-4-405(a).” In addition, “in an effort to ensure that any and all potentially interested parties [we]re represented,” on 2 November 2007 and 25 September 2008, petitioner-trustee amended its petition and named as respondents to the action the estates of Settlor's wife and three children-designated as Stacy C. Eggers, IV, as Administrator CTA of the Estate of Settlor's wife Annie L. Cannon; John Doe, as personal representative of the Estate of Anne Cannon Stouffer; Joseph Ervin Morris, as Executor of the Estate of Mary Cannon Morris; and R. Michael Allen, as Administrator CTA of the Estate of Joseph F. Cannon, Jr.-and the current beneficiaries of the Christmas Trust, which include American Children's Home, Stonewall Jackson Youth Development Center, The Masonic Home for Children at Oxford, Inc., Boys and Girls Club of Cabarrus County, Inc., Nazareth Children's Home, Inc., Concord Fire Department, Barium Springs Home for Children, The Children's Home, Inc., Forest Hill United Methodist Church, and Grandfather Home for Children, Inc. (collectively the “charitable beneficiaries”).

On or about 29 October 2008, petitioner-trustee filed its Motion to Ascertain Remainder Beneficiaries of the Christmas Trust. Petitioner-trustee requested that the trial court “declar[e] that the [Christmas] Trust's remainder beneficiaries will be the then-entitled charitable beneficiaries receiving income from the Trust at the expiration of the Trust term,” stating that “[r]esolution of this issue is beneficial and necessary to guide the [petitioner-t]rustee's ongoing administration of the Trust for the remaining 30 years of its 99-year term when the remainder interests will be distributed.” On 23 February 2009, the trial court entered its Order and Judgment on petitioner-trustee's Motion to Ascertain Remainder Beneficiaries of the Christmas Trust. The trial court first determined that the estate of Settlor's daughter Anne Cannon Stouffer (the “Stouffer Estate”)-for which petitioner-trustee “was not able to locate a person willing to re-open the [estate] or to serve as [its] personal representative”-could be “virtually” represented pursuant to N.C.G.S. § 36C-3-304 “by each of and any one of” the estates of Settlor's wife and Settlor's two other children (collectively the three “North Carolina Estates”). The trial court then concluded:

5. Under North Carolina law, a determination that the Christmas Trust is a wholly charitable trust is supported on multiple grounds:

a. The Settlor did not retain a reversionary interest in the Christmas Trust...