Chiles v. Chiles

• Citation: 242 S.E.2d 426,270 S.C. 379
• Decision Date: 15 March 1978
• Docket Number: No. 20642,20642
• Parties: Walter H. CHILES, Respondent, v. Georgia Sykes CHILES, Grace Lewellyn Lovell Miller, Samuel George Lovell, Jr., Lawrence Edward Gray, John Marion Gray, Jr., Mary Margaret Chiles Burtis, Sarah Hale Chiles Shelburne, John Parham Chiles, Walter Hale Chiles, Jr., Paul Foster Chiles, John Russell Chiles, Jr., Julia Chiles Lovell, Mary Chiles Gray, Julia Carolyn Lovell, a minor over the age of fourteen years, and Walter Hale Chiles, III, a minor under the age of fourteen years, Baptist Foundation of South Carolina, Inc., and the Attorney General of the State of South Carolina, of whom Walter Hale Chiles, III, a minor under the age of fourteen, is Appellant.
• Court: United States State Supreme Court of South Carolina

Page 426

242 S.E.2d 426

270 S.C. 379

Walter H. CHILES, Respondent, v. Georgia Sykes CHILES, Grace Lewellyn Lovell Miller, Samuel

George Lovell, Jr., Lawrence Edward Gray, John Marion Gray,

Jr., Mary Margaret Chiles Burtis, Sarah Hale Chiles

Shelburne, John Parham Chiles, Walter Hale Chiles, Jr., Paul

Foster Chiles, John Russell Chiles, Jr., Julia Chiles

Lovell, Mary Chiles Gray, Julia Carolyn Lovell, a minor over

the age of fourteen years, and Walter Hale Chiles, III, a

minor under the age of fourteen years, Baptist Foundation of

South Carolina, Inc., and the Attorney General of the State

of South Carolina, of whom Walter Hale Chiles, III, a minor

under the age of fourteen, is Appellant.

No. 20642.

Supreme Court of South Carolina.

March 15, 1978.

H. T. Abbott, Jr., Conway, for appellant.

Barnes, Austin & Ellison, Columbia, for respondent.

RHODES, Justice:

This is an action instituted by the settlor of an irrevocable inter vivos trust to modify the trust instrument by extinguishing the interests of certain beneficiaries. The lower court granted the modification and only Walter Hale Chiles, III, a minor under the age of fourteen and a beneficiary under the trust, appeals contending the lower court erred in extinguishing his interest in the trust. We agree and reverse only that portion of the lower court's order which extinguishes his interest.

The trust instrument in question was executed by the respondent, grandfather of the appellant, as settlor with the Baptist Foundation of South Carolina, Incorporated, designated trustee. ¹ The trust was funded with securities which, at the time of the transfer in trust, had a value in excess of two million dollars. By the terms of the trust, the settlor is to receive distributions during his lifetime and, upon his death, distributions are to be made to specified beneficiaries during their lifetime. The appellant is one of these latter beneficiaries.

Upon termination of the intermediate beneficial interests, the trust provides that "all corpus shall be used as a permanent endowment and the income derived from this entire trust (after special benefits have been paid according to the terms of this trust) shall be, at least annually, distributed to and paid over to the Lottie Moon Christmas Offering of the Southern Baptist Convention."

The document specifically provides that the trust is irrevocable.

According to the respondent's petition filed in the lower court, his purpose in establishing the trust was to provide a charitable gift to the Lottie Moon Christmas Offering. To effectuate this purpose, the respondent seeks to extinguish the interests of the intermediate beneficiaries because, according to his allegations, he "has been advised by the Internal Revenue Service that the Trust Agreement as presently constituted does not effect the purpose of Petitioner as far as being a charitable contribution in that there will be no recognizable gift to the Lottie Moon Christmas Offering of the Southern Baptist Convention upon the death of the last of the non-charitable contingent beneficiaries."

Service was had upon all of the numerous intermediate beneficiaries and the Attorney General of South Carolina. ² Only the Attorney General and the appellant, through his duly appointed Guardian Ad Litem, responded to the respondent's petition.

Based primarily on the testimony of the respondent as to his intentions, the lower court found his clear intent at the time of the creation of the trust was to create a charitable gift to the Lottie Moon Christmas Offering. The respondent's accountant testified that no corpus would remain for the benefit of the charity if the prior distributions to the settlor and intermediate beneficiaries should be made in accord with the trust provisions. Based on this showing, the lower court held that the settlor's intent could be achieved only by extinguishing the interests of the intermediate beneficiaries.

As the case stands before us on appeal, the only question presented and the only one we consider is whether it was error to extinguish the interest of Walter H. Chiles, III. ³

The respondent points out that a court of equity may modify a trust upon the occurrence of emergencies or unusual circumstances in order to carry out the settlor's intent. He contends that, in the present case, his intent can be effectuated only by excluding the intermediate beneficial interests and, thus, the lower court acted properly in extinguishing the interest of the appellant.

It is true that a court of equity has the power to alter or modify a trust to effectuate the intent of the settlor. 89 C.J.S. Trusts § 87(b) (1955). However, it is the duty of the courts to preserve, not destroy, trusts and to see to it that the rights of infants are not injuriously affected. Bettis v. Harrison, 186 S.C. 352, 195 S.E. 835 (1938); Dumas v. Carroll, 112 S.C. 284, 99 S.E. 801 (1919). Accordingly, the exercise of this power "can be justified only by some exigency or emergency which makes the action of the court in a sense indispensable to the preservation of the trust . . . ." 89 C.J.S., supra.

In order to determine whether the requested modification is justified in the present case, it is, first, necessary that we ascertain the intent of the settlor; otherwise, we could not give it effect.

The respondent has testified extensively in the court below as to his intent in creating this trust. However, the respondent has overlooked the cardinal rule of ascertaining intent. "(R)esort is first to be had to its (the instrument's) language, and if such is perfectly plain and capable of legal construction, such language determines the force and effect of the instrument. Extrinsic facts cannot, in such cases, give the instrument a different construction from that imported by its terms." Superior Auto Ins. Co. v. Maners, 261 S.C. 257, 263, 199 S.E.2d 719, 722 (1973); ⁴ Restatement (Second) of Trusts § 38 (1959) (see especially com. a); 89 C.J.S., supra. "(T)he possibility that the trustor may be alive should have no effect upon the interpretation to be given the trust instrument. Its construction depends upon the trustor's intent at the time of execution as shown by the face of the document and not on any secret wishes, desires or thoughts after the event." Brock v. Hall, 33 Cal.2d 885, 206 P.2d 360, 11 A.L.R.2d 672, 675 (1...