Fidelity & Columbia Trust Co. v. Gwynn

• Decision Date: 27 January 1925
• Citation: 206 Ky. 823,268 S.W. 537
• Parties: FIDELITY & COLUMBIA TRUST CO. v. GWYNN.
• Court: Kentucky Court of Appeals

268 S.W. 537

206 Ky. 823

FIDELITY & COLUMBIA TRUST CO. v. GWYNN.

Court of Appeals of Kentucky.

January 27, 1925

Appeal from Circuit Court, Jefferson County, Chancery Branch, Second Division.

Proceedings by Joseph K. Gwynn against the Fidelity & Columbia Trust Company, trustee of Joseph K. Gwynn, to cancel a trust. From the judgment defendant appeals, and plaintiff cross-appeals. Affirmed.

Trabue Doolan, Helm & Helm, of Louisville, for appellant.

Thomas J. Wood, of Louisville, for appellee.

SANDIDGE C.

On November 14, 1921, appellee, Joseph K. Gwynn, delivered to appellant, Fidelity & Columbia Trust Company, as trustee $24,000 in cash to be held by it under the terms of a trust agreement, which empowered the trustee to manage and invest the money, and required it to pay him the net income therefrom in monthly installments during his life. The trust agreement contained this further provision:

"Upon the death of the party of the first part, this trust shall cease and the principal of the trust estate shall pass in accordance with the last will of the party of the first part. Should the party of the first part fail to exercise said right of testamentary disposition, the principal of the trust estate shall pass unto the heirs of the party of the first part as determined by the laws of the state of Kentucky then in force."

It did not reserve to the settlor the right or power of revocation or by its terms assign any reason for the creation of the trust. By this proceeding, had by virtue of and pursuant to the provisions of the declaratory judgment law, a cancellation of the trust is sought by appellee upon the ground that the execution of the trust agreement was procured by undue influence; that the purpose for which the trust was created has been accomplished; and that he, the settlor of the trust, having voluntarily created it for his own benefit no one else being interested, has the right to have the same canceled at any time.

The chancellor adjudged a cancellation of the trust, upon the ground that the purpose for which it was created no longer exists and that therefore the trust should be canceled; but adjudged that the trust agreement was not procured by undue influence, and that the settlor of a trust who is also its sole beneficiary cannot have it canceled at any time upon his application. An appeal by the trustee and a cross-appeal by the settlor and cestui que trust have been prosecuted from that judgment, presenting to us three questions: (1) Was the execution of the trust agreement procured by undue influence? (2) Did the chancellor properly adjudge that the purpose for which the trust was created had been accomplished and that, therefore, the trust should be canceled? (3) Has one who voluntarily creates a trust for his own benefit, in a case where no one else has or takes any beneficial interest under the trust agreement, the right at any time to cancel and annul the trust?

That the execution of the trust agreement was procured by undue influence is not urged for appellee on his cross-appeal, and we will consider that question as being waived. The chancellor's judgment as to it is undoubtedly correct.

Appellant insists that the chancellor erroneously adjudged that the purpose for which the trust was created has been accomplished and that therefore it should be canceled. The principle of law that the parties interested may have a trust canceled when the purposes for which it was created have been accomplished seems everywhere to be rcognized. Perhaps the principle has been given a wider application than was contemplated when it was first established. The principle seems originally to have been enunciated in cases where property was deeded to a trustee as security for the debts of the settlor of the trust, and upon the payment of the debts the purpose for which it had been created having been accomplished reason no longer existed for its continuance. Consequently, it was held that the settlor of the trust was entitled to its cancellation and a reconveyance of the property embraced in the trust. Other kindred situations calling the principle into use might be cited. The field covered by the principle has been gradually broadened until now it seems to be recognized under certain circumstances as broad enough to cover spendthrift trusts and such trusts as unfortunate habits and ill health upon the part of the cestui que trust have caused to be created. A number of cases in Kentucky have recognized the principle as applying to trusts created for the protection of spendthrifts and those possessed of ill health or unfortunate habits. The principle seems to be well established in this court that where the moving cause for the creation of the trust was to protect the cestuis que trustent from the consequence of ill health,...