In re Estate of Washburn
Decision Date | 17 June 2003 |
Docket Number | No. COA02-1029.,COA02-1029. |
Citation | 581 S.E.2d 148,158 NC App. 457 |
Court | North Carolina Court of Appeals |
Parties | In re the ESTATE OF Vera Yarborough WASHBURN, Deceased. |
Deaton & Biggers, by A. Susan Biggers, Shelby, for trustee appellants.
Essex Richards, P.A., by G. Miller Jordan, Lisa T. Kelly, and James C. Fuller; and Leslie C. Rawls, Charlotte, for co-executor appellants.
Jerry Scruggs (Scruggs) and John Cabiness (collectively the trustees) appeal an order and judgment entered 7 January 2002 distributing the assets of Vera Yarborough Washburn (Washburn) between her estate and a trust established by her prior to her death. Sylvia E. Hutchins and J.D. Champion, the co-executors of Washburn's estate, also appeal from the January 7 order.
In this order, the trial court made the following undisputed findings:
Based on these findings, the trial court concluded:
The record also contains a power of attorney issued by Washburn to allow Scruggs to act, inter alia, as her agent with respect to her banking transactions, tax matters, personal affairs, estate transactions, and gifts to charities.
The issues are whether: (I) the stock certificates, household furnishings, and appliances were properly conveyed to the Trust and thus became trust assets and (II) the deposit of funds into the Trust account by Scruggs as Washburn's power of attorney was proper.
By definition, the creation of a trust must involve a conveyance of property, and before property can be said to be held in trust by the trustee, the trustee must have legal title.... Aside from the situation in which a settlor of a trust declares himself or herself trustee, separation of the legal and equitable interests must come about through a transfer of the trust property to the trustee.
90 C.J.S Trusts § 68, at 193-94 (2002) (footnotes omitted). Accordingly, "the owner must surrender control of the property which he or she has subjected to the alleged trust." 90 C.J.S. Trusts § 70, at 196; see also Wescott v. Bank, 227 N.C. 39, 42, 40 S.E.2d 461, 463 (1946) (); Baxter v. Jones, 14 N.C.App. 296, 307, 188 S.E.2d 622, 628 (1972) (citation omitted) ("`[i]n order to create an enforceable trust it is necessary that the donor or creator should part with his interest in the property to the trustee by an actual conveyance or transfer, and, where the creator has legal title, that such title should pass to the trustee'"). "[I]f the owner of property makes a conveyance inter vivos of the property to another person to be held by him in trust for a third person and the conveyance is not effective to transfer the property, no trust of the property is created." Restatement (Second) of Trusts § 32 (1959) (emphasis added).
The trustees and the estate claim the trial court erred by failing to assign both stock certificate No. BBT080224 (Certificate 1) and stock certificate No. BBT093753 (Certificate 2) to them. The trustees, in support of their position, contend that the "Assignment of Assets" executed contemporaneously with the Trust was sufficient to transfer both stock certificates to the Trust. We disagree.
In order to determine the proper transfer of legal title to a security, we must look to Article 8 of the Uniform Commercial Code governing investment securities. Under Article 8, "a valid transfer of a certificated security requires both the indorsement and delivery of the certificate by its holder to the transferee." Tuckett v. Guerrier, 149 N.C.App. 405, 410, 561 S.E.2d 310, 313 (2002) (citing N.C.G.S. §§ 25-8-301, -304 (1999)); see Russell M. Robinson, II, Robinson on North Carolina Corporation Law § 10.10, at 10-26 (7th ed.2002) [hereinafter Robinson] ("[t]he title to a share certificate, and to the shares represented thereby, is normally transferred by the delivery of the certificate to the transferee, either duly endorsed or with a separate document containing a written assignment or a power of attorney to transfer the shares"). An "`[i]ndorsement' means a signature that alone or accompanied by other words is made on a security certificate in registered form or on a separate document for the purpose of assigning, transferring, or redeeming the security." N.C.G.S. § 25-8-102(a)(11) (2001). Delivery, in turn, "occurs when: (1) [t]he [transferee] acquires possession of the security certificate; [or] (2) [a]nother person ... acquires possession of the security certificate on behalf of the [transferee]." N.C.G.S. § 25-8-301(a)(1)-(2) (2001). In this case, the parties do not contest that Washburn indorsed Certificate 1 by signing it and designating the "Vera Y. Washburn Trust Fund c/o Jerry R. Scruggs and John W. Cabiness, Trustees" as transferee in the allotted space on the certificate. The evidence is also clear that Certificate 1 was delivered to the trustees before...
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...places his property in an active trust, the grantor's legal title to that property passes to the trustee. See In Re Estate of Washburn, 158 N.C.App. 457, 581 S.E.2d 148 (2003); Lentz v. Lentz, 5 N.C.App. 309, 168 S.E.2d 437 (1969); Mast v. Blackburn, 248 N.C. 231, 102 S.E.2d 812 (1958). The......
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...and before property can be said to be held in trust by the trustee, the trustee must have legal title[.]” In re Estate of Washburn, 158 N.C.App. 457, 461, 581 S.E.2d 148, 151 (2003) (internal citations omitted). In other words, creation of an express trust “presupposes that [the settlor] ha......
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