First Union Nat. Bank of SC v. Soden

• Decision Date: 16 November 1998
• Docket Number: No. 2900.,2900.
• Citation: 511 S.E.2d 372,333 S.C. 554
• Parties: FIRST UNION NATIONAL BANK OF SOUTH CAROLINA, as Successor Trustee under Trust Agreement dated November 30, 1973, under Agreement with Josephine B. Clary, as Settlor, Respondent/Respondent/Appellant, v. Margaret Ann SODEN, Nancy Pierce Cashwell, Deborah Karen Walters Smith, Barbara Nightingale Walters Migaleddi, Patricia Lanning Walters and Joseph Herschel Pierce, Defendants, of whom Margaret Ann Soden, Deborah Karen Walters Smith, Barbara Nightingale Walters Migaleddi, Patricia Lanning Walters and Joseph Herschel Pierce are Respondents/Appellants/Respondents, and Nancy Pierce Cashwell is Appellant/Respondent/Respondent. First Union National Bank of South Carolina, as Successor Trustee under Trust Agreement dated November 30, 1973, under Agreement with Joseph Clary, as Settlor, Respondent/Respondent/Appellant, v. Joseph Herschel Pierce and Nancy Pierce (formerly Cashwell), Third-Party Defendants, of whom Nancy Pierce (formerly Cashwell) is Appellant/Respondent/Respondent.
• Court: South Carolina Court of Appeals

333 S.C. 554

511 S.E.2d 372

FIRST UNION NATIONAL BANK OF SOUTH CAROLINA, as Successor Trustee under Trust Agreement dated November 30, 1973, under Agreement with Josephine B. Clary, as Settlor, Respondent/Respondent/Appellant, v. Margaret Ann SODEN, Nancy Pierce Cashwell, Deborah Karen Walters Smith, Barbara Nightingale Walters Migaleddi, Patricia Lanning Walters and Joseph Herschel Pierce, Defendants, of whom Margaret Ann Soden, Deborah Karen Walters Smith, Barbara Nightingale Walters Migaleddi, Patricia Lanning Walters and Joseph Herschel Pierce are Respondents/Appellants/Respondents, and Nancy Pierce Cashwell is Appellant/Respondent/Respondent.

First Union National Bank of South Carolina, as Successor Trustee under Trust Agreement dated November 30, 1973, under Agreement with Joseph Clary, as Settlor, Respondent/Respondent/Appellant, v. Joseph Herschel Pierce and Nancy Pierce (formerly Cashwell), Third-Party Defendants, of whom Nancy Pierce (formerly Cashwell) is Appellant/Respondent/Respondent.

No. 2900.

Court of Appeals of South Carolina.

Heard October 7, 1998.

Decided November 16, 1998.

Nancy H. Pierce, pro se of Wisconsin, appellant/respondent/respondent.

David M. Yokel and Charles D. Hoskins, both of Mitchell, Bouton, Duggan, Yokel & Childs, of Greenville, for respondent/appellant/respondent.

R. David Massey and Chris B. Roberts, both of Brown, Massey, Evans & McLeod, of Greenville, for respondent/respondent/appellant.

HUFF, Judge:

This case involves the rights and claims of parties to the Josephine Clary trust which, by its terms, was to terminate upon the income beneficiary's death or remarriage. Upon learning in September 1992 that Joseph Pierce (hereinafter Joseph), the income beneficiary, had allegedly remarried in 1984, First Union National Bank, as successor trustee, brought this action in probate court seeking guidance as to the proper course of action relative to the distribution of the trust assets. Josephine Clary's niece and three great-nieces (hereinafter, collectively, the Soden Group) were remainder beneficiaries under the trust. Joseph's daughter, Nancy Pierce (hereinafter Nancy), was also a remainder beneficiary. The Soden group asserted cross-claims and counterclaims against the Trustee and Joseph. Nancy asserted cross-claims and counterclaims against the Trustee. Joseph also filed counterclaims and cross-claims against the Trustee. The Trustee then amended its complaint to assert various claims against Joseph and Nancy.

The action was removed to circuit court. Over Nancy's objection, it was referred to the master in equity, with direct appeal to the supreme court. The master entered judgment against the Trustee and Joseph. In addition, he limited Nancy's recovery from the trust. In a subsequent order, the master granted the Trustee a portion of its attorney's fees to be paid from Nancy's share of the trust. He denied the other parties' requests for attorney's fees.¹ All parties, except for Joseph, appeal. We affirm in part and remand in part.

FACTUAL/PROCEDURAL BACKGROUND

In 1973, Josephine Clary established a trust with Citizens National Bank in Connecticut providing for herself as income beneficiary, with the trust terminating upon her death. Her niece Margaret Ann Soden and her nephew, Ralph Henry Walters, Jr., were to divide the remainder equally after her death. In 1975, Josephine married Joseph. In 1978, Josephine amended the trust to give Joseph the income interest after her death. The trust was to terminate upon Joseph's death or remarriage. The remaining principal then was to be divided among Ms. Soden who would receive 40%, Nancy, who would receive 30%, and the children of Ralph Henry Walters, Jr., who would divide 30% among themselves.

Josephine died on November 27, 1980. Joseph was 66 at the time. After traveling for a while, Joseph moved to Greenville, South Carolina to live with Nancy. When the Connecticut bank discontinued its trust department in 1982, the Trust was transferred to Southern Bank and Trust in Greenville, South Carolina. In 1982, Joseph moved to Port Royal. In 1986, Southern merged into First Union.

A mutual friend introduced Joseph to Elizabeth McMillan (hereinafter Elizabeth), a nurse, in the fall of 1983. Joseph was living in Port Royal and traveling to Greenville, where Elizabeth lived, to receive cancer treatments. They would talk on the phone and go out on dates when he was in town. In May of 1984, Joseph and Elizabeth were married in a civil ceremony in Savannah, Georgia. Joseph explained they married to protect Elizabeth from the social stigma of living together without the benefit of marriage. Because of her employment commitments, Elizabeth did not move to Port Royal until several months later.

Joseph was, at best, inconsistent with revealing his marital status. Until 1992, Joseph listed his filing status as single on his income tax returns. In a will executed March 25, 1985 he referred to Elizabeth as "my wife, Elizabeth G. Pierce." However, in a will executed May 6, 1991 he referred to her as "my friend, Elizabeth G. McMillan." Although he did not normally introduce Elizabeth as his wife, Joseph told one friend about the marriage when Elizabeth came to the house to live. He denied he ever discussed his marriage with Nancy.

Joseph did not inform the Trustee of his remarriage and continued receiving monthly disbursements from the Trust. In fact, in 1987, when the Trustee informed him his monthly payments would decrease, Joseph had a lawyer contact the Trustee. After the lawyer explained that because of Joseph's health problems he needed continuation of the $800 monthly payments, the Trustee realigned the Trust's investments to maintain the amount of the payments.

In June of 1992, Nancy's ex-husband contacted remainder beneficiary Margaret Ann Soden, one of the Soden remainder beneficiaries, to disclose his knowledge about Joseph's remarriage. In September of 1992, an attorney for the Soden Group sent the Trustee a copy of Joseph's and Elizabeth's marriage certificate. The Soden Group brought suit against the Trustee and Joseph Pierce in federal court in New Jersey, attaching a copy of the marriage license to the summons and complaint. After receiving these documents, the Trustee wrote Joseph Pierce, asking him to confirm his marriage.² Joseph never responded to this letter. In September 1992, the trustee ceased paying Joseph the trust income and stopped collecting administration fees from the trust.

After the federal action was dismissed for lack of personal jurisdiction, the Trustee commenced the present action in probate court. In a request for admission from the Soden Group, Joseph admitted he and Elizabeth went through a marriage ceremony, but stated he had not been able to physically consummate the marriage. He explained Elizabeth provided him health care and the marriage was to protect her reputation. He described their relationship as friends and companions. In a later document, Joseph asserted the question of whether his relationship constituted a valid marriage under Georgia law was at issue. However, in his deposition taken August 11, 1993, Joseph stipulated that he and Elizabeth Pierce were married in May of 1984. He stated he has considered Elizabeth to be his wife since their marriage. He also admitted he was no longer entitled to receive income from the trust because of his remarriage.

The balance of the trust account at the time of Joseph's remarriage was $129,687.00. During the period of time the Trustee became aware of Joseph's remarriage, the trust had a market value of $179,045.91. At the time of the hearing, $185,196.52 was in the trust account.

The master found Joseph was aware, at the time of his remarriage, that his income from the trust should terminate. He found Joseph had a duty to inform the Trustee of his marital status, and held Joseph was responsible to the Trustee for damages suffered by reason of his conduct. He awarded the Trustee judgment of $88,669 against Joseph, the amount erroneously paid him from June 28, 1984 to August 28, 1992.

As to the Trustee, the master held it breached its duty to take reasonable steps to ascertain Joseph's marital status. In addition, he found Joseph's breach of his duty to disclose his marital status did not relieve the Trustee of its separate duty to safeguard the interests of the innocent remainder beneficiaries. The master further held the evidence was not sufficient to support the Trustee's claims against Joseph and Nancy for civil conspiracy. He noted Nancy acknowledged she was aware of the remarriage provision in the trust, but asserted she did not know about her father's remarriage. The master found this position incredible, and found Nancy was aware of Joseph's remarriage shortly after it occurred. He held Nancy was equitably estopped from recovering any funds from the trust other than a 30% interest in the trust as of her father's 1984 marriage, the amount she would have received had she informed the bank of her father's remarriage. The court explained Nancy should not "in equity and good conscience be allowed to watch her father receive money not due him, allow the bank to be exposed to damage claims by reason of such payments, and then to claim that she should benefit from her silence." He found to make further awards to her on this claim would be to reward her silence and would be unjust. The court, however, found Nancy was entitled to an additional $3,378.26, representing a 30% interest in fiduciary management fees which the court found were improperly received by the Trustee.

The master distributed the remaining funds in the Trust and the rest of the fiduciary fees to the Soden Group. He also entered judgment against the Trustee in favor of the Soden Group in the amount of $88,669, the amount of income that the Trustee wrongfully paid to Joseph, plus interest on that amount from May 30, 1985 through August 30, 1992. The master explained...