Bellingrath-Morse Found. Trust v. Huntingdon Coll. (Ex parte Huntingdon Coll.)

• Citation: 309 So.3d 606
• Decision Date: 27 March 2020
• Docket Number: 1180148
• Parties: EX PARTE HUNTINGDON COLLEGE (In re: Bellingrath-Morse Foundation Trust et al. v. Huntingdon College et al.)
• Court: Supreme Court of Alabama

309 So.3d 606

EX PARTE HUNTINGDON COLLEGE(In re: Bellingrath-Morse Foundation Trust et al.

v.Huntingdon College et al.)

1180148

Supreme Court of Alabama.

March 27, 2020

Rehearing Denied May 22, 2020

Richard H. Gill of Copeland, Franco, Screws & Gill, P.A., Montgomery, for petitioner.

Cynthia G. Lamar-Hart and John Neiman of Maynard, Cooper & Gale, P.C., Birmingham, for respondent Bellingrath-Morse Foundation Trust.

Jerome E. Speegle and Jennifer S. Holifield of Speegle, Hoffman, Holman & Holifield, LLC, Mobile, for Judge Don Davis as respondent.

PER CURIAM.

Huntingdon College, a beneficiary of the Bellingrath-Morse Foundation Trust ("the Foundation"), petitions this Court for a writ of mandamus directing the Mobile Probate Court to vacate its order denying Huntingdon's motion to dismiss an action filed by the Foundation's trustees, on behalf of the Foundation, and to enter an order dismissing the action for lack of jurisdiction. We grant the petition and issue the writ.

I. Facts

Walter D. Bellingrath, now deceased, established the Foundation, a charitable trust, by deed of trust dated February 1, 1950 ("the Trust Indenture"). Mr. Bellingrath contributed to the Foundation, both at its inception, and through his will and codicil, substantial property, including the Bellingrath Gardens ("the Gardens") and his stock in the Coca-Cola Bottling Company ("the Bottling Company stock"). Beneficiaries of the Foundation include three privately supported Christian colleges: Huntingdon College, Rhodes College, and Stillman College (hereinafter referred to collectively as "the beneficiaries").¹

The Foundation's trustees and the beneficiaries have historically disagreed as to whether the Trust Indenture contemplated the subsidy of the Gardens by the Foundation and, if so, to what extent and with what limitations, if any.² On May 11, 1981, the trustees and the beneficiaries executed a settlement agreement ("the 1981 Agreement"), outlining an acceptable and workable framework for managing the Foundation and operating the Gardens; the 1981 Agreement was conditioned upon the sale of the Bottling Company stock, which occurred in 1982. The 1981 Agreement limited the payments or distributions by the Foundation for the support of the Gardens, including any reserves for the Gardens, to an amount not to exceed 20 percent of the Foundation's net income. The 1981 Agreement provided that, beginning with the fourth fiscal year after the sale of the Bottling Company stock, if in any succeeding year the percentage of net income of the Foundation needed for the support of the Gardens exceeded 15 percent, then, upon request of any beneficiary, the Foundation would seek instructions from the Mobile Circuit Court as to whether the Gardens should be kept open and, if so, what limitations should be placed upon the future use of the Foundation's net income for the support of the Gardens, if any.

Going forward, the trustees had difficulty operating the Gardens based on the agreed-upon cap in the 1981 Agreement, and they voted to increase the distribution amount to the Gardens. After extensive negotiations, the beneficiaries agreed not to invoke their right under the 1981 Agreement to request that the Foundation seek court instructions concerning whether the Gardens should be kept open. Rather, on May 6, 2003, the trustees and the beneficiaries executed a first amendment to the 1981 Agreement ("the 2003 Amendment").

The 2003 Amendment provided, in relevant part:

"1. [Explaining that, commencing October 1, 2002, the payout method by the Foundation to the Gardens and to the beneficiaries would no longer be based on the net income of the Foundation. Rather, the payout method would be based on a percentage of a 12-quarter trailing average of the value of designated trust assets (sometimes referred to a unitrust or ‘total-return’ payout). The initial year's applicable rate was set at six percent].

"2. The Foundation shall not change the applicable rate to an amount lower than five percent (5%) at any time in the future without the unanimous consent of the Beneficiaries.

"3. The parties agree that if the Foundation chooses to increase payments made by the Foundation for the support of the Gardens, including any reserves for the Gardens, to as much as twenty percent (20%) of the distribution amount provided under paragraph 1 hereof, the Beneficiaries will not invoke their right [under the 1981 Agreement] to require the Foundation to seek court instructions, as provided in paragraph 2 of the [1981] Agreement. The Foundation shall not increase such payments for the support of the Gardens, including any reserves for the Gardens, above such twenty percent (20%) limitation at any time in the future without the unanimous consent of the Beneficiaries.

"....

"9. The Foundation agrees that except as provided in the [1981] Agreement and this [2003] Amendment, it will not expend funds for the benefit of the Gardens from the corpus of Foundation assets without the unanimous consent of the Beneficiaries.

"....

"11. The references in the [1981] Agreement and this [2003] Amendment to circumstances under which the parties may seek court instructions are not intended to exclude, limit or restrict any other remedies or rights of enforcement that may be available to the parties under applicable law. Nothing in [the 1981] Agreement or [the 2003] Amendment is intended to prevent any party from seeking court instructions with respect to the rights and duties of the parties.

"12. Other than as specifically changed by this [2003] Amendment, all of the terms and conditions of the [1981] Agreement remain in effect and are not changed, and the rights of the parties hereto thereunder are not waived or relinquished."

(Emphasis added.)

On August 1, 2003, the Mobile Circuit Court entered a final judgment approving the execution and delivery of the 2003 Amendment and authorizing the performance by the trustees and the beneficiaries of their duties thereunder. The circuit court also approved, as an equitable deviation from the 1981 Agreement, the Foundation's payout method to a "total return" method.³

On August 9, 2017, the trustees, pursuant to § 19-3B-201, Ala. Code 1975,⁴ filed in the Mobile Probate Court a petition for "emergency" instructions and declaratory relief with respect to the construction and administration of the Foundation.⁵ The trustees specifically asserted that their ability to maintain the Gardens had been substantially impaired by the funding restraints of the 1981 Agreement and the 2003 Amendment, and they requested, among other things, emergency instructions as to how the "existing funding agreement should be revised."⁶ The trustees sought, among other things, court approval (1) to fund immediately from the corpus of the Foundation and to continuously replenish, in the trustee's discretion, a $1,000,000 reserve for the repair, capital improvement, and/or emergency needs of the Gardens; and (2) to distribute to the Gardens, in the trustees' sole discretion, such amount of the Foundation's income they deemed necessary for the maintenance, repair, and operation of the Gardens. The beneficiaries moved the probate court to dismiss the trustees' action for want of jurisdiction. The beneficiaries argued that the trustees' action was a collateral attack on the judgment approving the 2003 Amendment and that a collateral attack on a prior judgment can be brought only in the court in which the prior judgment was rendered. The probate court thereafter entered an order identifying 11 specific questions of law it intended to rule upon after consideration of the beneficiaries' motion to dismiss. The trustees moved for a partial summary judgment on those questions of law.⁷

On October 5, 2018, the probate court entered an order concluding that it had jurisdiction over the trustees' action and purporting to render a decision in favor of the trustees on their motion for a partial summary judgment. The probate court declared, among other things, that the trustees had discretion under the Trust Indenture to establish a reserve and to maintain it on an ongoing basis, subject to the standards of the Trust Indenture. The probate court also declared that the trustees had the discretion under the Trust Indenture to distribute such portion of the Foundation funds they deemed necessary for the operation of the Gardens. In other words, the probate court, by declaring that the trustees were no longer bound by the 2003 Amendment capping the funding of the Gardens, effectively rendered void the 2003 final judgment of the Mobile Circuit Court. Huntingdon petitioned this Court for a writ of mandamus requesting, among other things, that this Court direct the Mobile Probate Court to dismiss the trustees' action for lack of jurisdiction.

II. Standard of Review

"Mandamus is a drastic and extraordinary writ, to be issued only where there is (1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court."

Ex parte Integon Corp., 672 So. 2d 497, 499 (Ala. 1995). The question of subject-matter jurisdiction is reviewable by a petition for a writ of mandamus. Ex parte Flint Constr. Co., 775 So. 2d 805 (Ala. 2000).

III. Analysis

It is undisputed that the Mobile Probate Court has concurrent jurisdiction with the Mobile Circuit Court in any proceeding involving a testamentary or inter vivos trust. See § 19-3B-203(b), Ala. Code 1975 (noting that "[a] probate court granted statutory equitable jurisdiction has concurrent jurisdiction with the circuit court in any proceeding involving a testamentary or inter vivos trust"). It is also undisputed that § 19-3B-201(b), Ala. Code 1975, provides that "[a] trust is not subject to continuing judicial supervision unless ordered by the court." This case, however, does not involve an issue concerning the...