Brown v. American Fletcher Nat. Bank

• Decision Date: 15 February 1988
• Docket Number: No. 49A02-8707-CV-264,49A02-8707-CV-264
• Citation: 519 N.E.2d 166
• Parties: Zilpha BROWN, Appellant (Plaintiff Below), v. AMERICAN FLETCHER NATIONAL BANK, as Trustee of August J. Schneider Testamentary Trust; Guy Allen Brown; Danny J. Brown, Barry Jo Brown; and After-born children of Norman S. Brown and Nancy Brown, Appellees (Defendants Below).
• Court: Indiana Appellate Court

Page 166

519 N.E.2d 166

Zilpha BROWN, Appellant (Plaintiff Below), v. AMERICAN FLETCHER NATIONAL BANK, as Trustee of August J Schneider Testamentary Trust; Guy Allen Brown; Danny J Brown, Barry Jo Brown; and After-born children of Norman S Brown and Nancy Brown, Appellees (Defendants Below).

No. 49A02-8707-CV-264.

Court of Appeals of Indiana Third District.

Feb. 15, 1988.

Rehearing Denied March 28, 1988.

Donald L. Adams, Adams & Commons, Indianapolis, for appellant.

Francis J. Feeney, Jr., Joseph J. Straub, Feeney & Ward, Indianapolis, for appellee American Fletcher Nat. Bank.

HOFFMAN, Judge.

Zilpha Brown appeals the summary judgment granted in favor of American Fletcher National Bank in its capacity as trustee of a testamentary trust established by Zilpha's father. This case involves no factual disputes and the sole legal issue raised is whether the terms of the trust violate the rule against perpetuities.

The pertinent parts of Zilpha's father's will are as follows:

"ITEM IV

I direct that, after satisfying all the devises of this Will hereinabove made and after the payment of all administration expenses and death taxes as hereinabove provided, my Executrix shall deliver and convey all of my residuary estate wheresoever situated, including all property which I may acquire or become entitled to after the execution of this Will to The American Fletcher National Bank and Trust Company of Indianapolis, Indiana, as Trustee. Said American Fletcher National Bank and Trust Company of Indianapolis shall hold, manage and control all of the aforesaid property as a trust estate, with all of the rights and powers and subject to the limitations hereinafter enumberated [sic], for the following uses and purposes.

A. The trustee shall collect the income from the property comprising the trust estate, and remit the net income derived therefrom, in monthly or other convenient installments, to my daughter, Zilpha M. Brown, of Indianapolis, Marion County, Indiana, or apply the same for her benefit, so long as she shall live.

* * *

* * *

C. Upon the death of my daughter, Zilpha M. Brown, or upon my death in the event that the said Zilpha M. Brown does not survive me, the Trustee shall divide the principal of the trust estate, share and share alike, between my great-grandchildren, Guy Allen Brown, Danny Jay Brown and Barry Jon Brown, and any afterborn children born to the marriage of Norman S. Brown and Nancy Brown, all of Indianapolis, Indiana, or in the event that any of said great-grandchildren be not surviving, then to their respective issue or in the event said predeceased great-grandchildren die without issue, then said share shall be divided between the survivors equally.

(C-1) If at the time the principal of the trust estate is divided under Section C of this Item, there shall be any of my great-grandchildren, who shall have attained the age of twenty-five (25) years, the Trustee shall distribute to said great-grandchild his respective share. Until the time when each great-granchild attains the age of twenty-five (25) years, the Trustee shall pay the net income from the respective funds to said grandchild as the Trustee may deem advisable to provide properly for his welfare."

Zilpha's father died on May 3, 1969 and the probate court's decree of final distribution was made on September 1, 1970. Since that time Zilpha has been the life beneficiary of the trust established by the above language. She filed her complaint on October 23, 1986. Ultimately both parties filed motions for summary judgment, and, on April 21, 1987 the trial court entered judgment in favor of the trustee.

The rule against perpetuities is an ancient, but still vital, rule of property law intended to enhance marketability of property interests by limiting remoteness of vesting. L. Simes, Law of Future Interests Sec. 121 (2d Ed. 1966). In Indiana this rule has been codified at IND. CODE Sec. 32-1-4-1 (1982) and in pertinent part, the statute provides:

"An interest in property shall not be valid unless it must vest, if at all, not later than twenty-one (21) years after a life or lives in being at the creation of the interest."

Over the years the exact application of this rule has generated much scholarship and litigation; however, in the present case it is only necessary to focus on a single aspect of the rule's operation.

Zilpha contends that her father's testamentary scheme violates the rule against perpetuities, because the great-grandchildren's interest will not necessarily vest within the mandatory 21 years. Specifically Zilpha argues that the trust provides for an impermissible 25-year gap between her own death and ultimate vesting in the great-grandchildren. In reaching her conclusion, Zilpha...