First Nat. Bank of Birmingham v. Brown

• Decision Date: 29 July 1971
• Docket Number: 6 Div. 828
• Parties: The FIRST NATIONAL BANK OF BIRMINGHAM, Alabama, a National Banking Association v. Martha H. BROWN, as Executrix of the Estate of James Mitchell Brown, Deceased, et al.
• Court: Alabama Supreme Court

Page 204

251 So.2d 204

287 Ala. 240

The FIRST NATIONAL BANK OF BIRMINGHAM, Alabama, a National Banking Association v. Martha H. BROWN, as Executrix of the Estate of James Mitchell Brown, Deceased, et al.

6 Div. 828.

Supreme Court of Alabama.

July 29, 1971.

John Self, Hamilton, for appellant.

Fite, Davis & Fite, Hamilton, for appellee Martha H. Brown, as Executrix of Estate of James Mitchell Brown, deceased.

Tweedy, Jackson & Beech, Jasper, for appellee Hamilton United Methodist Church, an Unincorporated Association.

McCALL, Justice.

The First National Bank of Birmingham, as executor and testamentary trustee, under the last will and testament of Ella Brown, deceased, appeals from a decree entered by the circuit court, in equity, in a suit to contest the decedent's will.

Ella Brown's only heirs at law were two nephews, Rex Johnson Brown and James Mitchell Brown. By the terms of a trust created in her will, the testatrix directs the trustee Bank to distribute from the trust equal amounts of money in annual installments to each of her two nephews for life. Upon the death, respectively, of each nephew and that of his immediate heir or heirs, as the case may be, the trustee is directed to distribute that income to the Hamilton United Methodist Church of Hamilton, Marion County, Alabama.

James Mitchell Brown filed this suit in equity to contest Ella Brown's will on the grounds of mental incapacity and undue influence exercised over her, when she executed the instrument. In its answer, the Bank denied that the will was invalid, and denied each and every allegation of the grounds of contest.

After the contestant, James Mitchell Brown's death, his wife, Martha H. Brown, revived the pending suit in her name, as executrix under her deceased husband's will. General Acts Alabama, 1947, p. 543; Tit. 7, § 153(1), Code of Alabama, Recompiled 1958. Before a trial of the will contest, the court entertained Mrs. Brown's written petition, entitled 'Petition of Consent to Settle Will Contest,' to which she attached a proposed compromise, entered into by all parties interested in the decedent's estate, except the executor-trustee Bank. After hearing evidence ore tenus in open court, the court approved and adopted the proposed compromise and decreed, (a) the will of Ella Brown is null and void, (b) ordered the assets of the decedent's estate equally divided among the following: Martha H. Brown, as executrix of the estate of James Mitchell Brown, deceased, Rex Johnson Brown and Hamilton United Methodist Church of Hamilton, Marion County, Alabama, and (c) directed the expenses of the estate, including taxes, to be borne equally by the parties to the agreement, and to be paid prior to the distribution of the assets of the estate. The decree further ordered and directed the executor-trustee Bank to be discharged and to pay over to an administrator of Ella Brown's estate, yet to be appointed, all assets and all things of value. It further ordered an accounting by the Bank of its actions to be had within fifteen days from being furnished a certified copy of letters of administration, by a person, qualified as the administrator of the decedent's estate.

The court sanctioned compromise agreement also states that the parties considered the expenses of the pending litigation, the time involved in its disposition, the uncertainty of its outcome, and the question of the mental competence of Ella Brown to make a will, and that in consideration of those variables and their mutual covenants, they agreed and consented to adjust by compromise the pending suit, and further, that the parties felt that the court's approval of the compromise would be in the best interest of the estate and those interested in it.

There are a total of forty-one assignments of error. The appellant's argument, as we understand it, is that the contest of a will in chancery is in the nature of a proceeding in rem. It is to determine the status of the res; that is, whether there is a will or not, and not the rights of the parties. Kaplan v. Coleman, 180 Ala. 267, 60 So. 885; Ex parte Walter, 202 Ala. 281, 283, 80 So. 119; Nesmith v. Vines, 248 Ala. 72, 26 So.2d 265. With such a statement of law, we find no fault, but such neither disposes of nor conflicts with the issue here of the right of the parties to a will contest to settle and compromise the contest suit and thereby avoid protracted and expensive litigation.

Assignments of Error No. 16, 37, 38, 39, and 40. The case of Harris v. Harris, 211 Ala. 144, 99 So. 913, involved the settlement and compromise of a proceeding to contest a will in the probate court wherein the complainant in equity sought to have annulled and vacated for fraud the order of the probate court which denied the probate of the decedent's will. The order was entered upon summary proof following a compromise during a second trial of the will contest. This court stated that there was no cause for complaint that the case was compromised. Extended and costly litigation was in progress. The Supreme Court observed:

'* * * In such condition the law favors compromise, and the courts may by all legal means encourage the same. The form of judgment or decree to be entered may itself be matter of agreement and compromise between parties sui generis properly represented. * * *'

This court also stated in Burleson v. Mays, 189 Ala. 107, 111, 66 So. 36, 38, a will contest case:

'It has been ruled by this court that the compromise of matters in dispute between parties or litigants, in the absence of fraud, is of itself a sufficient consideration to uphold a contract of settlement which, when made, was binding on both parties. Wyatt v. Evins, 52 Ala. 285; Allen v. Prater, 30 Ala. 458. * * * Here there was a pending suit, and reasonable ground for the controversy.'

Again in Hodge v. Joy, 207 Ala. 198, 203, 92 So. 171, 176, we find this pertinent language in the court's opinion:

'That families may adjust their differences as to interests in common property, and that it is the policy of the law to encourage and facilitate amicable adjustment of disputes or to effectuate division of such joint property according to the agreement of all the parties in interest, has been declared and enforced by this and the English courts. Betts v. Ward, supra (196 Ala. 248, 72 So. 110); Oliver v. Williams, 163 Ala. 376, 50 So. 937; Yarborough's Adm'r v. Avant, 66 Ala. 526; Ireland v. Rittle, 1 Atkyns, Eng.Ch. p. 541.'

Although the above cases involve 'family settlement' situations, the policy of fostering compromises is likewise applicable to nonfamily parties, if they would share in the estate under the will. Harris v. Harris, supra. Assignment of Error 18.

The termination of a trust by court approval of a compromise agreement proposed by the parties to the litigation is commented on in Bogert, Trusts and Trustees, 2d Ed., § 1009, p. 567 in the following language:

'* * * Where such litigation is pending the parties not infrequently get together in an effort to save expense and delay and do some measure of justice to all and form a plan for the alteration or termination of the trust and other donative provisions, and they apply to the court for the approval of the compromise and the distribution of the property accordingly.

'In many cases, as a result of statute or the inherent powers of the court, it has been held that the court may in its discretion approve the plan and the consequent alteration or termination of the trust. But the court should be convinced that the litigation was undertaken in good faith and that there was reasonable ground for it, since otherwise there is an opportunity for imposition on the court and an evasion of the usually prevailing rules regarding the termination of trusts which are active and useful. While the courts regard it as good public policy to encourage family settlements and prevent hostility and enmity between kinsmen, they will not permit fraudulent and underhanded dealings. In addition the court requires proof that the results of the plan will be fair to all the parties involved.'

Attention is also given this subject in American Law Institute, Restatement (Second) of Trusts, § 337, p. 158 in the following comment:

'* * * The beneficiaries of a trust, if all consent and none is under an incapacity can compel its termination if the continuance of the trust is not necessary to carry out a material purpose of the trust, although the period fixed by the terms of the trust for its duration has not expired. On the other hand, even though they all consent, they cannot compel the termination of the trust if its continuance is necessary to carry out a material purpose of the trust.'

In the Reporter's Notes found in the Appendix to this same work, § 337, p. 547, it is said:

'Thus where a trust is created under which the income is payable to one beneficiary for life and the principal is payable on his death to another beneficiary, the beneficiaries can terminate the trust unless such termination would defeat a purpose of the settlor in creating the trust.' Citing authorities which cite Restatement of Trusts, § 337.

As to a material purpose, Restatement of Trusts, § 377f. comments:

'* * * The mere fact that the settlor has created a trust for successive beneficiaries does not of itself indicate that it was a material purpose of the trust to deprive the beneficiaries of the management of the trust property for the period of the trust. If a trust is created for successive beneficiaries, in the absence of circumstances indicating a further purpose, the inference is that the only purpose of the trust is to give the beneficial interest in the trust property to one beneficiary for a designated period and to preserve the principal for the other beneficiary, * * *'

While the present case involves the validity of a compromise of a contest of a will wherein a testamentary trust is provided for, and while the courts of some jurisdictions hold...