Epworth Children's Home v. Beasley

• Decision Date: 18 July 2005
• Docket Number: No. 26012.,26012.
• Court: South Carolina Supreme Court
• Parties: EPWORTH CHILDREN'S HOME, v. W.F. BEASLEY, Personal Representative of the Estate of Mary Etta Johnson; Prospect United Methodist Church; and Attorney General Henry D. McMaster, Of whom Attorney General Henry D. McMaster is Appellant, and Epworth Children's Home; W.F. Beasley, Personal Representative of the Estate of Mary Etta Johnson; and Prospect United Methodist Church are Respondents.

616 S.E.2d 710

EPWORTH CHILDREN'S HOME, v. W.F. BEASLEY, Personal Representative of the Estate of Mary Etta Johnson; Prospect United Methodist Church; and Attorney General Henry D. McMaster,

Of whom Attorney General Henry D. McMaster is Appellant, and

Epworth Children's Home; W.F. Beasley, Personal Representative of the Estate of Mary Etta Johnson; and Prospect United Methodist Church are Respondents.

No. 26012.

Supreme Court of South Carolina.

Heard May 5, 2005.

Decided July 18, 2005.

COPYRIGHT MATERIAL OMITTED

Attorney General Henry D. McMaster, Deputy Attorney General T. Stephen Lynch, and Senior Assistant Attorney General C. Havird Jones, Jr., all of Columbia, for Appellant.

Gregory G. Williams, of Columbia, for Respondent Epworth Children's Home; Bryan W. Braddock, of Saleeby & Cox, PA., of Hartsville, for Respondent Prospect United Methodist Church; and J. Anthony Floyd, of Floyd & Gardner, P.C., of Hartsville, for Respondent W.F. Beasley.

Justice BURNETT:

This case raises issues regarding the authority of a personal representative and a trustee, in administering a will and testamentary trust, to modify the plan established by a testatrix-settlor under an interpretation of the document's language and the doctrines of equitable deviation and merger. We certified this case from the Court of Appeals pursuant to Rule 204(b), SCACR. We reverse.

FACTUAL AND PROCEDURAL BACKGROUND

Mary Etta Johnson (Testatrix) died testate on December 3, 1999, and her will was duly submitted to probate court. The will provides, in pertinent part:

ITEM II: I give and devise unto the EPWORTH CHILDREN'S HOME¹ in Columbia, South Carolina, all of my personal effects including my jewelry, clothing, and furnishings.

ITEM III: I give and devise any remaining funds in accounts which have always been in my name alone at [two financial institutions] unto EPWORTH CHILDREN'S HOME, IN TRUST NEVERTHELESS, for management and distribution of the interest as follows:

1. One thousand and No/100ths ($1,000.00) Dollars per year unto my beloved sister, EDNA POSTON, for as long as she may live, which sum shall be paid directly to her or for her benefit in the discretion of my said Trustee.²

2. Five hundred and No/100ths ($500.00) Dollars per year unto PROSPECT METHODIST CHURCH, for so long as it shall exist.

3. The balance of the interest paid on my said accounts shall be paid annually to the EPWORTH CHILDREN'S HOME.

...

ITEM IX: By way of illustration and not of limitation, in addition to the inherent, implied or statutory powers granted to my Co-Personal Representatives and Trustee under law, I authorize said Co-Personal Representatives with respect to any and all property at any time constituting part of my estate or trust to hold and retain such property, to sell and dispose of same at public or private sale, at such prices and upon such terms as my Co-Personal Representatives' and Trustee shall deem proper, to invest and reinvest in any kind of property, real and personal, without limitation to the class of investments in which Co-Personal Representatives or Trustee may be authorized by statute or rule of Court; to manage, repair and improve real property belonging to my estate or trust, but said Co-Personal Representatives shall not be required to set up reserves for depreciation out of income; to lease any such real property regardless of the fact that the terms of any such lease may extend beyond the period of administration of my estate or the term of any trusts; to borrow money for the benefit of my estate or trust; to distribute any property in kind or in cash or partly in kind or partly in cash; to allocate any receipt or expense between income and principal, and to do all other acts which in Co-Personal Representatives' discretion may be necessary or appropriate for the proper and advantageous management, investment and distribution of my estate or trust, all of which may be done without order of or report to any Court.

Testatrix named Epworth Children's Home as Trustee of the testamentary trust. Testatrix named three relatives as co-personal representatives: her brothers, W.F. Beasley and John Beasley, and her nephew, John G. Johnson. W.F. Beasley has acted as the sole Personal Representative in this litigation.

In Items IV through VI, the will separately devised Testatrix's interest in three parcels of real property to the co-personal representatives for life, with the remainder interest devised to Trustee. The will devised two parcels of real property directly to Trustee. Trustee was directed to sell all the properties at fair market value when it received them, giving relatives of the life tenants or other family members the first option to purchase them. Upon selling the properties, Trustee was in each case directed to pay the sale proceeds "into my said testamentary trust established in Item III hereinabove." The present total value of the charitable trust assets is about $300,000.

In 2002, Trustee filed a petition in probate court seeking a court order declaring the charitable trust terminated ab initio. Prospect Methodist Church (Church) would receive a lump sum payment of $10,000, with the remainder of trust assets distributed in a lump sum to Trustee. Church filed an answer agreeing with Trustee's petition to terminate the trust. Personal Representative filed an answer asking the probate court to protect the interest of family members, but otherwise agreed with Trustee's petition to terminate the trust. The South Carolina Attorney General's Office (the State), as authorized by statute,³ responded by opposing Trustee's petition and asking the probate court to protect the interests of the charitable trust.

The probate court, after a hearing, terminated the testamentary trust from its inception and ordered the immediate distribution of trust assets to the beneficiaries. The probate court relied on its interpretation of Item IX of the will and the doctrines of equitable deviation and merger. The circuit court affirmed and adopted the probate court order by reference.

ISSUES

I. Did the probate and circuit courts err in interpreting Item IX of the will to give Trustee and Personal Representative the authority to seek termination of the testamentary trust from its inception and distribute the trust assets immediately to the beneficiaries?

II. Did the probate and circuit courts err in ruling that the equitable deviation doctrine provides a basis for terminating the testamentary trust from its inception and immediately distributing the trust assets to the beneficiaries?

III. Did the probate and circuit courts err in ruling that the merger doctrine provides a basis for terminating the testamentary trust from its inception and immediately distributing the trust assets to the beneficiaries?

STANDARD OF REVIEW

An action to construe a will is an action at law. See Kemp v. Rawlings, 358 S.C. 28, 34, 594 S.E.2d 845, 848 (2004); Epting v. Mayer, 283 S.C. 517, 323 S.E.2d 797 (Ct.App.1984). When reviewing an action at law, on appeal of a case tried without a jury, the appellate court's jurisdiction is limited to correction of errors at law. The appellate court will not disturb the judge's findings of fact as long as they are reasonably supported by the evidence. Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976).

DISCUSSION

I. LANGUAGE OF WILL AND TESTAMENTARY TRUST

The State argues the probate and circuit courts erred in interpreting Item IX of the will to give Trustee the authority to seek termination of the testamentary trust from its inception and distribute the trust assets immediately to the beneficiaries. We agree.

Item IX of the will, as set forth above, grants certain general powers to Trustee and Personal Representative. Trustee, in an argument accepted by the lower courts, focuses on a single phrase of the paragraph: "and to do all other acts which in Co-Personal Representatives' discretion may be necessary or appropriate for the proper and advantageous management, investment and distribution of my estate or trust" (emphasis added). Trustee argues this phrase demonstrates Testatrix placed great confidence in Trustee and authorized it to distribute all assets of the trust if it determines that is the best course of action. Further, Trustee contends the language of the will contemplates the trust may terminate at some point because it allows Trustee to enter into leases extending beyond termination.

The cardinal rule of will construction is to determine and give effect to the testator's intent from a reading of the will as a whole. Matter of Clark, 308 S.C. 328, 330, 417 S.E.2d 856, 857 (1992); May v. Riley, 279 S.C. 248, 250, 305 S.E.2d 77, 78 (1983); Albergotti v. Summers, 205 S.C. 179, 182, 31 S.E.2d 129, 130 (1944). In construing the language of a will, the appellate court must give words their ordinary, plain meaning unless it is clear the testator intended a different sense, or unless such a meaning would lead to an inconsistency with the testator's declared intention. Buist v. Walton, 104 S.C. 95, 88 S.E. 357 (1916); In re Estate of Fabian, 326 S.C. 349, 353, 483 S.E.2d 474, 476 (Ct.App.1997). A will must be read in the ordinary and grammatical sense of the words employed, unless some obvious absurdity, repugnancy, or inconsistency with the declared intention of the testator, as abstracted from the whole will, would follow from such construction. Clark, 308 S.C. at 330, 417 S.E.2d at 857; Love v. Love, 208 S.C. 363, 369, 38 S.E.2d 231, 233 (1946).

A court may not consider the will piecemeal, but must give due weight to all its language and provisions, giving effect to every part when, under a reasonable interpretation, all the provisions may be harmonized with each other and with the will as a whole. King v. S.C. Tax Commn., 253 S.C. 646, 649, 173 S.E.2d 92, 93 (1970); Wise v. Poston, 281 S.C. 574, 578, 316 S.E.2d 412, 414 (Ct.App.1984). The rules of construction are of...