Denver Nat. Bank v. Von Brecht

• Decision Date: 03 February 1958
• Docket Number: No. 18022,18022
• Citation: 137 Colo. 88,322 P.2d 667
• Parties: The DENVER NATIONAL BANK, etc., et al., Plaintiffs in Error, v. Cora Lee VON BRECHT, etc., Defendant in Error.
• Court: Colorado Supreme Court

Page 667

322 P.2d 667

137 Colo. 88

The DENVER NATIONAL BANK, etc., et al., Plaintiffs in Error, v. Cora Lee VON BRECHT, etc., Defendant in Error.

No. 18022.

Supreme Court of Colorado, En Banc.

Feb. 3, 1958.

Rehearing Denied March 24, 1958.

Dayton Denious, Denver, for plaintiff in error, The Denver Nat. Bank.

Dawson, Nagel, Sherman & Howard, Fritz A. Nagel, Arthur K. Underwood, Jr., Denver, for other plaintiffs in error.

Rothgerber, Appel & Powers, Ira C. Rothgerber, Jr., Denver, for defendant in error.

KNAUSS, Justice.

Cora Lee Von Brecht, administratrix of the estate of Gustavus Adolphus Von Brecht, deceased, brought an action against. the Denver National Bank, Virginia Von Brecht Lewis, J. Bourdon Von Brecht, Virginia Christina Von Brecht, a minor, Dee Dee Von Brecht, a minor, and Ida Vet Funk to set aside and hold void a certain trust agreement executed by plaintiff's intestate, to whom we will refer as the 'settlor'. Four grounds were set forth in plaintiff's complaint as the basis of her claim for relief, to wit: (1) That the trust instrument was a will and void because it was unwitnessed; (2) that the instrument was void because executed as a result of undue influence upon the settlor; (3) that the settlor lacked the mental capacity to enter into the trust agreement, and (4) that the settlor had made a binding promise to revoke the trust and had failed to do so. Issue was joined on the matters thus presented and trial to the court ensued.

The trust agreement involved, dated July 15, 1946, was executed by the settlor in California and accepted by the Bank in Colorado. By this agreement the settlor transferred to the Bank as Trustee two thousand seven hundred ninety-two and two-thirds shares of the capital stock of Don-Vir Investment Company, and by the terms thereof it was the duty of the Bank to pay the settlor the net income from the trust estate in monthly or quarterly installments, 'as convenient to the Trustee'; and 'From time to time, upon the written request of the Settlor, to pay over to him any part or all of the corpus of the trust estate.' Provision was made for disbursement of funds from the trust for the care and medical attention of the Settlor in the event of his illness. After the death of the Settlor all of the trust estate not required to meet debts incident to his last illness 'shall be distributed per stirpes (and not per capita,) to such of Settlor's brother and sister (viz.: J. Bourdon Von Brecht and Virginia Von Brecht Lewis) and their lawful lineal descendants as are living at the time of each respective distribution, but if none of such persons is living, then to Ida Vet Funk.'

The Trustee was authorized to 'transfer all or any part of the trust estate into its name or its nominee with the right to exercise full powers or ownership thereof, including the right to execute proxies, whether discretionary or otherwise, with respect to any stocks constituting a part thereof,' and 'To retain the property received from the Settlor to invest and reinvest the money and property at any time comprising the trust estate in such securities and other property, real or personal, as the Trustee may select, whether or not legal investments for trustees under any statute or rule of law, and * * * from time to time to change such investments in such manner as the Trustee shall deem best; provided, however, that the Trustee shall not sell or otherwise dispose of any of the trust properties in value in excess of One Thousand Dollars ($1,000.00), or invest trust funds in an amount in excess of One Thousand Dollars ($1,000.00), unless it shall first have notified the Settlor in writing, delivered to him or mailed to his address last on file with the Trustee, and shall have requested his approval of the action proposed by the Trustee. If the Settlor shall file with the Trustee his written disapproval the Trustee shall not take such action. If the Trustee shall not receive such written disapproval within five (5) days after such delivery or mailing, the Trustee shall be free to act regarding the proposed matter in such manner as it shall deem advisable.' The Settlor reserved the right to designate some other person than himself to receive such notice from the Trustee, such person to have the same right to disapprove any such proposed action of the Trustee.

The Trustee was empowered 'To sell, assign, transfer, collect, alter and change, and to compromise and adjust any part or all of the trust estate, and to execute, acknowledge and deliver all proper assignments, bills of sale, receipts, transfers, deeds, conveyances and other instruments in its judgment needful or desirable.'

The settlor was empowered to add to the trust by depositing additional property with the Trustee 'to be held and administered thereafter as part of the trust estate.'

The settlor reserved the right to revoke, modify or amend the Trust agreement. A spendthrift clause was contained in the Trust agreement, but does not apply to the settlor.

Two memorandum opinions were filed in the court below, in each the trial judge concluding that the trust instrument was void because not executed in accordance with the statute governing the execution of wills. C.R.S. '53, 152-2-1 et seq.

In the second memorandum opinion the trial judge stated that plaintiff Cora Lee Von Brecht, administratrix, pursuant to rule 56, Rules of Civil Procedure Colo. as amended, moved for summary judgment in her favor on the ground '(a) There is no genuine issue as to the material fact that the purported trust agreement was not executed in conformity with the Statute of Wills * * *; hence the purported trust is void.' The court then held that 'the trust agreement intrinsically created an agency, since the Settlor retained virtual control and dominion over the trust property * * * the Trustee under the circumstances, being the Settlor's agent to hold title, invest, sell and dispose of the property. He further stated: 'The Court believes the Bank is the agent, either made such by the instrument, or such construction given it by the parties; hence, the principal never divested himself of possession, and the case of Dunham v. Armitage, 97 Colo. 216, 48 P.2d 797 is then controling.'

The trial court having predicated its opinion on Dunham v. Armitage, we refer to the holding in that case, where it was said: 'It is our conclusion that the instrument is testamentary in character and non-effective. In addition to the fact that the maker reserved possession and control in all particulars, the rents, issues, and profits, and the right to revoke at her pleasure, she expressly stated that 'upon her death,' revocation not having been exercised, the real estate was to become the property to plaintiff in error. That retention of the power of revocation and 'reservation * * * postponing the vesting of title until the death of the grantor' are important, see Phillips v. Phillips, 30 Colo. 516, 71 P. 363.'

We are satisfied that the Dunham case, supra, is not applicable to the facts before us, because there a vital fact, not present in the instant case, appeared, towit: the reservation of possession. To hold that when title vested in the Bank followed by possession of the property that it was still that of the settlor, is fallactious reasoning. If such was the law in this jurisdiction then no revocable trust would be valid unless the settlor executed the same in conformity with the statute governing the execution of wills.

It is to be remembered that the property was that of the settlor until the trust agreement was executed and title to the property transferred to the Trustee. Thereafter it was controlled by the terms of the trust agreement which must be construed within the confines of its four corners.

In the absence of ambiguity, fraud, duress, or mistake, intent of trustor and the nature of the relationship created by the agreement creating the inter vivos trust, is to be determined from the face of the instrument itself. Hanson v. Wilmington Trust Co., Del.Ch., 119 A.2d 901.

Much is said in the briefs concerning a stipulation of counsel concerning the hearing on the motion for summary judgment. It is contended by counsel for the administratrix that 'having stipulated that determination for Summary Judgment would not be assigned as error, Plaintiffs in Error are now precluded from so doing.' The stipulation mentioned provided inter alia: 'If review is sought by any party, the procedure of considering and determining the legal issue upon Plaintiff's Motion for Summary Judgment will not be assigned as a ground of error.' What is meant by 'procedure of considering and determining the legal issue' is not clear. We do not think that plaintiffs in error are precluded by this stipulation from urging the point that the contents of the Trust Officer's deposition (taken as a discovery matter) could not be used as a bssis for determining the legality of the trust agreement. However, even if the stipulation was held to preclude plaintiffs in error from urging this matter, we are inclined to the view that a threat to revoke the trust unless the settlor's request for a certain investment was complied with, did not amount to a revocation of the trust agreement. It has been definitely held in this state that revocation of a trust agreement must be in accordance with the terms of the instrument and not otherwise.

On this point the trial court said: 'the Settlor directed that a certain loan be made to Agency Associates. Notwithstanding the recommendation of the Bank that the loan should not be made, it was made when the Settlor threatened to utilize his power of revocation.' From this conclusion, based on the deposition of the Trust Officer of the Bank, the trial court determined that 'the power to revoke, whether wielded to a partial or entire extent, in order to bend the will of the Trustee, is indicative of the retention of dominion and control over the trust estate....