Daugherty v. Daugherty

• Decision Date: 05 February 1990
• Citation: 784 S.W.2d 650
• Court: Tennessee Supreme Court
• Parties: Helen DAUGHERTY, Plaintiff/Appellant, v. R.L. DAUGHERTY, Executor, et al., Defendants/Appellees. R.L. DAUGHERTY, Plaintiff/Appellee, v. Sharon Grizzle WALLACE, et al., Defendants/Appellees.

Page 650

784 S.W.2d 650

Helen DAUGHERTY, Plaintiff/Appellant, v. R.L. DAUGHERTY, Executor, et al., Defendants/Appellees.

R.L. DAUGHERTY, Plaintiff/Appellee, v. Sharon Grizzle WALLACE, et al., Defendants/Appellees.

Supreme Court of Tennessee,

at Knoxville.

Feb. 5, 1990.

George H. Buxton, III, Robert W. Wilkinson, Oak Ridge, for Helen Daugherty.

Robert S. Marquis, Knoxville, for Heirs Chester Daugherty.

Elbert M. Cooper, Jr., Clinton, for unknown, unborn Heirs.

J. Polk Cooley, Pat Fritts, Rockwood, for R.L. Daugherty Individually.

Joe E. Magill, Clinton, for R.L. Daugherty, et al.

Donald B. Roe, Oak Ridge, for estate.

OPINION

O'BRIEN, Justice.

This case originated in the Chancery Court for Anderson County as a declaratory judgment action filed by the plaintiff Helen Daugherty to determine her rights under the last will and testamentary trust of John Ramsey Daugherty. The defendant, R.L. Daugherty, executor and trustee under the will responded. Plaintiff and defendant each filed motions for summary judgment on the sole issue of whether Helen Daugherty was an heir under the will. The chancellor entered a judgment granting the motion for summary judgment filed by the plaintiff and denying the motion filed by the defendant. He decreed that Helen Daugherty was entitled to all of the interest her deceased husband, Leo Daugherty, would have inherited from the estate of John Ramsey Daugherty. The decision of the trial court was taken to the Court of Appeals which vacated the summary judgment and remanded for the purpose of making all claimants to the estate of J.R. Daugherty parties to the proceeding.

R.L. Daugherty as beneficiary, executor and trustee of the will of John Ramsey Daugherty then filed a complaint for declaratory judgment naming as defendants the grandchildren of John Ramsey Daugherty and other unknown heirs at law. The complaint requested the court to construe the will of John Ramsey Daugherty to the effect that the estate ultimately vested in Chester Daugherty and R.L. Daugherty and their heirs at law or in the alternative that the will violated the rule against perpetuities.

On 27 March 1987 the chancellor heard each of the declaratory judgment actions separately on stipulated exhibits and argument of counsel. He entered identical judgments in each case. He found that the effect of the will of J.R. Daugherty was to leave the estate to his three sons. Upon the prior death of one of the sons the estate left to that son became vested in his then surviving heirs. He found that Helen Daugherty was the sole surviving heir of her deceased husband, Leo Daugherty, one of the beneficiaries under the will. He held that because there was no provision made in the will beyond the surviving heirs that the gift to them was a gift in fee simple and Helen Daugherty was entitled to one-third ( 1/3) of the estate in fee.

The cases were consolidated for appeal purposes. Appeals were taken on behalf of R.L. Daugherty, the heirs of Chester Daugherty, and by the guardian ad litem for the unknown heirs of R.L. Daugherty and Chester Daugherty. The Court of Appeals disagreed with the trial court, holding that the testator created or attempted to create successive trusts, initially for the benefit of his sons, and upon their respective deaths, for their heirs, with no termination or further disposition. They held that the will of J.R. Daugherty violated the rule against perpetuities and was therefore void.

An application for permission to appeal to this Court was filed by Helen Daugherty. The only issue presented was whether the Court of Appeals erred in holding that the last will and testamentary trust of J.R. Daugherty violated the rule against perpetuities. That application was granted. The case is now before this Court for disposition.

The appellant, Helen Daugherty, takes the position that the rule against perpetuities is a rule invalidating interests which vest too remotely and is not a rule invalidating interests which vest but may not become possessory until beyond the period of perpetuities. Thus, she says, each of J.R. Daugherty's three sons had an interest for life in one-third of his estate followed by a remainder interest in their "surviving heirs," although the gift was in trust with unspecified terms. When Leo Daugherty predeceased his father, the remaining interest in Leo's "surviving heirs" accelerated and became an immediate beneficial interest in his heirs determined as if Leo died at the time of or subsequent to the death of J.R. Daugherty. It is insisted that in accordance with T.C.A. § 31-1-101(5) the word "heirs" includes Helen Daugherty, as Leo Daugherty's spouse, just as if he had died intestate. The one-third interest in the estate vested in the heirs of each of J.R. Daugherty's sons upon the occurrence of his death (in Leo's case) or the son's death (in the case of Chester and R.L.).

The appellees, on the other hand, insist that the result of the chancellor's ruling was to rewrite the will of Mr. Daugherty to avoid the rule against perpetuities. That it is the duty of the court to construe the will without regard to the rule, then to apply it vigorously without regard to the testator's intent, citing Marks v. Southern Trust Co., 203 Tenn. 200, 310 S.W.2d 435, 437 (1958). They say if the testator did not see fit to dispose of the corpus of the trust he created, it is not the role of the court to do so for him and applying the rule against perpetuities will effectuate the intent of the testator in this case.

The classic definition of Gray's Rule against Perpetuity is set out in Marks v. Southern Trust Co., supra, 310 S.W.2d at p. 441:

"No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest."

The immediate issue we have before us is created by the second and sixth numbered paragraphs of J.R. Daugherty's will. These sections of the will provide as follows:

"SECOND: I desire and direct that all of my estate which I may own at my death, real, personal and mixed, tangible and intangible, of whatever kind and character and wherever situated, including all property I may acquire or become entitled to after the execution of this will, including all lapsed legacies and devises be placed in and held in trust for my three sons, Leo Daugherty, Chester Daugherty and R.L. Daugherty of Anderson County, Tennessee.

SIXTH: At the time of the death of any one of my sons, Leo Daugherty, Chester Daugherty and R.L. Daugherty, I direct that each of their one-third of my estate be held in trust by a Trustee properly appointed and bonded, one-third of my estate for Leo Daugherty's surviving heirs, one-third of my estate for Chester Daugherty's surviving heirs, one-third of my estate for R.L. Daugherty's surviving heirs."

John Ramsey Daugherty executed his will and testamentary trust on 23 August 1969. He died on 9 December 1985. He had three children, Leo, Chester and R.L. Daugherty. Leo Daugherty predeceased his father on 26 August 1981, leaving a wife, Helen, but no surviving children. Chester and R.L. Daugherty survived their father. Chester died on 16 February 1986 leaving a wife and five children. R.L. Daugherty has a wife and five children.

The first question to be investigated is whether the disposition of the remainder interest by Item 6 of the will violates the rule against perpetuities. We disagree with the conclusion reached by the Court of Appeals that this provision resulted in a violation of the rule. That court held that the testator created or attempted to create successive trusts, initially for the benefit of his sons, and upon their respective deaths, for their heirs, with no termination or further disposition. They went on to hold that title did not vest within the limiting period of the rule against perpetuities. They say there was no vesting of interest because the testator devised his estate in trust to his sons and upon their deaths again in trust to their heirs, with no provision for termination and disposition of the corpus of each trust.

It is plain from the direction of the will that the testator first created a trust for the use and benefit of his three sons with the income therefrom to be divided equally among them. There was a further provision that if they were in need of additional funds for themselves or for explicit business purposes they could encroach on the principal estate by agreement of the three of them. The testator provided with equal explicitness that at the time of the death of any one of his sons, that son's one-third of his estate was to be delivered in trust to a new trustee, properly appointed and bonded, for the use and benefit of the surviving heirs of the deceased son.

In Marks, supra, p. 438, this Court said: "[T]he important thing in the construction of the trust instrument is to determine the intention of the settlor as evidenced by all the provisions of the instrument, giving no portion any greater emphasis than any other. (Citations omitted). In determining this intention we cannot follow any hard and fast rule but each case must be considered on its own bottom. The peculiar facts and circumstances ... are considered to determine what is this intention.

will is to be interpreted in the light of the circumstances existing at the tim e of its execution.... And is to be interpreted in the light of its general pu rpose ... (Citations omitted), Third National Bank in Nashville v. Stevens, 755 S.W.2d 459, 462 (Tenn.App.1988). It is the absolute right of the testator to direct the disposition of his property and the Court's are limited to the ascer tainment and enforcement of his directions. See National Bank of Commerce v. G reenberg, 195 Tenn. 217, 258 S.W.2d 765 (1953); Third National Bank v. Stevens, supra, at p. 463.

It is not necessarily so much the language that is used by the settlor as it is his or her evident intention which governs." The basic rule in...