Garrett v. First Nat. Bank

• Decision Date: 18 February 1937
• Docket Number: 3 Div. 190
• Citation: 172 So. 611,233 Ala. 467
• Parties: GARRETT v. FIRST NAT. BANK OF MONTGOMERY et al.
• Court: Alabama Supreme Court

172 So. 611

233 Ala. 467

GARRETT v. FIRST NAT. BANK OF MONTGOMERY et al.

3 Div. 190

Supreme Court of Alabama

February 18, 1937

Appeal from Circuit Court, Montgomery County; Walter B. Jones Judge.

Suit in equity by Frank Barnes Garrett against the First National Bank of Montgomery, as trustee, and others. From a decree sustaining demurrers to the bill as amended, complainant appeals.

Reversed and remanded.

Geo. T Garrett, of Montgomery, for appellant.

Steiner Crum & Weil, Sam Rice Baker, and Benj. Hardeman, guardian ad litem, all of Montgomery, for appellees.

BOULDIN Justice.

The ultimate aim or purpose of the suit is to reclaim the estate of Frank B. Garrett, complainant, bequeathed to him by the will of his mother, Mary Barnes Garrett, deceased, and now held by the First National Bank of Montgomery under a trust agreement.

The appeal is from an interlocutory decree sustaining demurrers to the bill as amended.

By her will, the mother bequeathed the estate in question, stocks and bonds of the approximate value of $50,000, to James M. Garrett, her husband, father of complainant, in trust for the use of her only son, and heir, said Frank B. Garrett, to be managed and reinvested so as to produce the best income consistent with safety; such income or corpus, if necessary, to be used for the maintenance and education of the son, then seventeen years of age, and, if necessary, for the maintenance of the husband during his life. The will provided that the property, or so much as should remain, be turned over to the son as his own on his arrival at twenty-one years of age, or as soon thereafter as his father should deem it proper for him to assume control of same.

The husband was named executor of the will and testamentary guardian of their son; was relieved from making bond, and from making any report of his trust to any court.

On the probate of the will, and grant of letters testamentary, James M. Garrett, individually, and as executor and trustee of the wife's estate, and as guardian of the son, turned over this estate to the First National Bank of Montgomery, trustee, under a trust agreement of date April 9, 1930.

By this agreement the said trustee was given the management and control of the securities with full power of disposition and reinvestment as the trustee should deem to the best interest of the trust. The agreement stipulated this trust shall be irrevocable.

Commencing September 1, 1930, it was stipulated there should be paid to the trustor the sum of $250 per month throughout his natural life. On his death before the son arrived at twenty-one years of age, the son was to be paid $150 per month, or so much more as necessary for his education and support, until his arrival at twenty-one years of age. Thereafter the entire net income could be paid to the son at the discretion of the trustee.

Paragraph V reads: "This Trust shall terminate and the principal, as well as all undistributed accumulations thereon, shall be turned over by the Trustee to Frank Barnes Garrett upon his reaching thirty-five years of age, provided (a) that at that time, in the opinion of the Trustee, he is capable of managing this estate, and further provided (b) that, in the opinion of the Trustee, there shall be no further or legal objections to the termination of said trust estate. In the event, in the opinion of the Trustee, either (a) or (b) exists as a reason for the continuation of this trust estate, then it shall continue until, in the opinion of the Trustee, both provisos (a) and (b) shall have ceased to exist."

Paragraph VIII reads:

"Should said Frank Barnes Garrett die during the life of this Trust with issue, same shall be continued for such issue, share and share alike, the net income therefrom to be used by the Trustee in its discretion for the support, maintenance and education of such issue, final settlement of the principal to be made upon arrival at the age of twenty-one years respectively.

"Should said Frank Barnes Garrett die during the life of this Trust leaving a wife surviving him and at the time of his death, living with him, but without issue, one-half of the principal shall be paid to his said wife and the balance shall go to his surviving half brothers and half sisters, the child or children of a deceased child to take the parent's share. Should said Frank Barnes Garrett die without issue leaving no wife, the entire trust shall go to his surviving half brothers and half sisters, share and share alike, the child or children of a deceased child to take the parent's share."

Certain other discretionary powers, not necessary to enumerate, were given the trustee. A yearly compensation was stipulated for the trustee's services.

Frank B. Garrett, the beneficiary under the will, arrived at the age of eighteen years August 2, 1930. Promptly thereafter James M. Garrett, the father, proceeding under Code, § 8280, obtained a decree removing the son's disabilities of nonage.

Thereupon, August 15, 1930, a written agreement was entered into between Frank B. Garrett and First National Bank of Montgomery reciting the prior execution of the trust agreement, the removal of disabilities of nonage, and that thereupon Frank B. Garrett ratified and confirmed the trust agreement in all things as if made by him with full capacity in the first instance.

The half-brothers and sisters referred to in the trust agreement are three brothers and one sister, issue of a former marriage of the father. The brothers are living and of full age. The sister, Myrtle Garrett Watson, now deceased, left four children, two of whom are adults and two minors.

The original bill, filed June 16, 1936, sought a revocation of the trust. It averred the foregoing facts, that Frank B. Garrett is fully capable of managing his estate; that the trustee refuses to turn over the fund because of contingent interests of beneficiaries, who are minors, and whose interests the trustee should protect. The father of Frank B. Garrett, his wife, his half-brothers, and adult children of the deceased sister all joined with Frank B. Garrett as cocomplainants. The minor children of the deceased sister, and First National Bank of Montgomery were made respondents.

Demurrers to this bill, filed by the bank and guardian ad litem for the infant respondents, were sustained.

As last amended, Frank B. Garrett was made sole complainant. All the next of kin, father, half-brothers, children of the deceased sister, and children of the living half-brothers, also the wife of complainant, were made respondents. All the adult next of kin and the wife of complainant filed a joint answer admitting the averments of the amended bill, and consenting to the relief prayed.

The respondent bank and the guardian ad litem for the infant respondents filed separate demurrers to the amended bill as a whole and to its several aspects. These demurrers were all severally sustained, and from that decree this appeal is taken.

Proceeding to a consideration of the equities of the amended bill, and the demurrers thereto, we note this amended bill seeks to set aside the trust agreement and have the estate now in the trustee's possession turned over to Frank B. Garrett, as the owner under his mother's will.

The grounds alleged are in effect that the trustor and trustee were without lawful authority to enter into such agreement for two reasons: (a) The trustor, thereby, sought to delegate the discretionary powers, personal in their nature, which had been conferred upon him by the will of the testator. (b) The trust agreement undertook to divest the complainant of the character of estate bequeathed to him by the will, debase an absolute estate into a conditional or defeasible estate, dependent on complainant's continuance in life until thirty-five years of age, and until a trustee, not named by the testator, should consider him capable of managing his estate; and in creating and limiting on the estate of complainant contingent estates not named in the will; and in postponing his possession and enjoyment of complainant's estate far beyond the date specified in the will. Therefore, it is alleged, the rightful continuance of this trust turns on the agreement of complainant, ratifying and confirming the trust agreement in toto.

That the will conferred upon the husband, father of complainant, active duties and discretionary powers touching the testamentary trust, which could not be delegated to a stranger, is not subject to serious debate. Gaines v. Dahlin et al., 228 Ala. 484, 154 So. 101.

That the trust agreement undertook to greatly qualify, deplete, and reduce the absolute estate bequeathed to complainant under his mother's will, and to postpone the possession and enjoyment thereof, is equally manifest on a reading of the provisions of the two instruments.

It follows the validity of the trust agreement must turn on the binding force of the agreement directly between complainant and the bank ratifying and confirming the declaration of trust theretofore made by his father.

Passing over the feature of the bill attacking the validity of the decree removing complainant's disabilities of nonage, we consider the averments challenging the ratifying agreement on the ground of undue influence. Eliminating the intermingled averments touching the invalidity of the nonage proceedings and viewing the averments of undue influence from the viewpoint of a young man with the full legal capacity of twenty-one years of age, we find averments to this effect: That complainant lived in the home of his father, was dependent upon him for support, had no experience in business affairs, looked to his father for advice, had no outside counsel, indeed had never read his mother's will and did not...