Dickerson v. Union Nat. Bank of Little Rock, 80-32

• Decision Date: 24 March 1980
• Docket Number: No. 80-32,80-32
• Citation: 268 Ark. 292,595 S.W.2d 677
• Parties: Cecil H. DICKERSON, Jr., Appellant, v. UNION NATIONAL BANK OF LITTLE ROCK, Appellee.
• Court: Arkansas Supreme Court

Page 677

595 S.W.2d 677

268 Ark. 292

Cecil H. DICKERSON, Jr., Appellant, v. UNION NATIONAL BANK OF LITTLE ROCK, Appellee.

No. 80-32.

Supreme Court of Arkansas.

March 24, 1980.

Sanford L. Beshear, Jr., Rison, Robert R. Wright, Little Rock, for appellant.

Phil Stratton, Clark & McNeil, Conway, for appellee.

GEORGE ROSE SMITH, Justice.

The principal question on this appeal is whether a trust created by the holographic will of Nina Martin Dickerson, who died on June 21, 1967, is void under the rule against perpetuities, because it is possible that the interest of the various beneficiaries may not vest within the period allowed by that rule. Cecil H. Dickerson, Jr., one of the testatrix's two sons, attacks the validity of the trust. The chancellor rejected Cecil's attack on two grounds: First, Cecil should have raised the question of the validity of the trust in the probate court in connection with the probate of the will and the administration of the estate. His failure to do so makes the issue res judicata. Second, on the merits, the trust does not violate the rule against perpetuities. We disagree with the chancellor on both grounds.

The facts are not in dispute. The testatrix was survived by her two children. Cecil, 50, was single, and Martin, 45, was married. At that time the two sons had a total of seven children, who of course were the testatrix's grandchildren.

The testatrix named the appellee bank as executor and directed that at the close of the administration proceedings the bank transfer to itself as trustee all the assets of the estate. The terms of the trust are quite long, but we may summarize them as follows:

The trust is to continue until the death of both sons and of Martin's widow, who is not otherwise identified. The income is to be divided equally between the two sons during their lives, except that Cecil's share is to be used in part to provide for a four-year college education for his two minor children, who are named, and for the support and education of any bodily heirs by a later marriage. When the two named minor children finish college, their share of the income is to revert to Cecil. Upon Martin's death his share of the income is to be paid monthly to his widow and children living in the home, but the share of each child terminates and passes to the widow when that child marries or becomes self-supporting. The trustee is given discretionary power to make advance payments of principal in certain cases of emergency or illness. If either son and his wife and all his bodily heirs die before the final distribution of the trust assets, that son's share in the estate and in the income passes to the other son and then to his bodily heirs.

As far as the rule against perpetuities is concerned, the important part of the will is paragraph VIII, from which we quote:

VIII. This Trust shall continue until the death of both my sons and my son Martin's widow and until the youngest child of either son has reached the age of twenty-five years, then at that time, the Trust shall terminate and the Union National Bank Trustee shall distribute and pay over the entire balance of the Trust Fund in their hands to the bodily heirs of my son, Cecil H. Dickerson, and the bodily heirs of my son, William Martin Dickerson, in the same manner and in the same proportions as provided for by the general inheritance laws of Arkansas.

Upon the death of the testatrix in 1967, her will was presented to the Faulkner Probate Court by her son Cecil, who lived in Conway, Arkansas. (The other son, Martin, was living in Indiana.) The probate court entered a routine order reciting that the will had been properly executed, admitting the instrument to probate, and appointing the bank as executor, without bond. On May 31, 1968, the probate court entered another routine order approving the executor's first and final accounting, allowing fees to the executor and its attorneys, discharging the executor, and closing the administration of the estate. That order made no reference to the validity of the trust or to the manner in which the assets of the estate were to be distributed.

In fact, the assets of the estate, except for $18,000 set aside for administration expenses and estate taxes, had already been transferred by the bank to itself as trustee. On August 11, 1967, about a month after the probate of the will, the bank filed in the Faulkner Chancery Court an ex parte "Declaration of Trust," in which the bank expressed its desire to perform the trust and asked the court to find and decree that it held the property in trust for the beneficiaries of the testamentary trust. No notice of that filing appears to have been given to anyone. On September 1, 1967, the bank filed a petition in the same ex parte case, asking for an interpretation of the will with respect to the distribution of income derived from capital gains. The court directed the bank to give notice of that petition to all persons interested in the trust estate. Counsel for the trustee certified that such notice of the hearing on the petition for interpretation had been given. On October 4 the chancery court entered an order reciting the appearance of the bank only, finding that the bank had been appointed as administrator of the estate and as trustee of the trust, authorizing the bank to transfer all the real and personal property (except $18,000) to the trust estate, and instructing the trustee as to the proper treatment of capital gains as trust income.

Nothing further appears to have taken place in the case until 1977, when Cecil Dickerson filed in the same proceeding the present complaint against the bank and its trust officer. The complaint, after reciting the background facts, asserts that the trust is void under the rule against perpetuities. The complaint charges the trust officer with violations of his fiduciary duties in failing to deliver all the assets of the estate to the heirs of the testatrix and in failing to ask the probate court to construe the will with respect to violations of the rule against perpetuities. The complaint charges that the trust officer concealed the trust's defects from the court and from the testatrix's two sons. The prayer is for an order restraining the trustee from making further transfers or distributions of the trust funds, for recovery of Cecil's half interest in the estate, for compensatory and punitive damages, and for other proper relief. The charges of negligence and wrongdoing on the part of the bank were later dismissed without prejudice. The other matters were heard upon stipulated facts, culminating in the decree dismissing Cecil's complaint on the two grounds we have mentioned.

First, there is no merit in the argument that Cecil's failure to challenge the validity of the trust in the probate proceedings precludes him from raising that issue now. Under the Probate Code the probate court does have the power to construe a will, but the construction must be necessary to the determination of some issue properly before the court. Ark.Stat.Ann. § 60-416 (Repl.1971). Here the probate court made no pertinent decisions except that Mrs. Dickerson's will had been properly executed and that at the end of the administration proceeding the estate should be closed. There was not even an order of distribution, because...