In re Mellott
| Citation | 2020 Ohio 3738,155 N.E.3d 995 |
| Decision Date | 29 June 2020 |
| Docket Number | No. 19 BE 0004,19 BE 0004 |
| Parties | In the MATTER OF the TRUST CREATED BY ITEM IX OF THE WILL OF James F. MELLOTT, Deceased. |
| Court | United States Court of Appeals (Ohio) |
Atty. Todd M. Kildow, Emens & Wolper Law Firm Co., LPA, 250 West Main Street, Suite A, St. Clairsville, Ohio 43950, for Plaintiff-Appellant.
Atty. John R. Estadt, Atty. Kyle W. Bickford, and Atty. Erik A. Schramm, Jr., Hanlon, Estadt, McCormick & Schramm Co., LPA, 46457 National Road West, St. Clairsville, Ohio 43950, for Respondents-Appellees.
BEFORE: Cheryl L. Waite, Gene Donofrio, Carol Ann Robb, Judges.
OPINION AND JUDGMENT ENTRY
{¶1} Appellant Board of Trustees of Bellaire Public Library ("Library Board") appeals the January 14, 2019 determination by the Belmont County Court of Common Pleas, Probate Division, regarding trusts established by James F. Mellott. Appellees are Edwin Douglass and Larry Gautschi, ("Mellott Trustees"). The issue in dispute is a determination of the assets appropriately placed into each trust. For the reasons that follow, the judgment of the trial court is reversed and the matter is remanded for further proceedings.
{¶2} James F. Mellott died on August 10, 1952. His last will and testament was filed and accepted for probate in Belmont County. The will made various gifts and specific bequests. Item IX of the will is at issue in this matter. It provided that the remainder and residue of Mellot's estate was to be placed in trust for the specific purposes described in that section of the will. The Belmont County Probate Court at the time determined that Item IX of the will created three trusts, each having their own particular funding and purpose. The separate trusts were established and initially funded pursuant to the trustee's inventory filed February 13, 1957. Those trusts have continued to be administered since that time by successive trustees. Each of the three trusts has its own case number within the probate system. They are referred to as "Trust A", "Trust B" and "Trust C."
{¶3} Trust A provided that shares of First National Bank in Bellaire, Ohio (or proceeds from the sale thereof) were to be used for the upkeep of the Mellott burial lot in Greenwood Cemetery in Bellaire, Ohio. Any unused income from Trust A is to be transferred every five years into the general purposes trust, Trust B. Trust A is known as the "cemetery upkeep trust" by the parties, and is not directly at issue in this appeal.
{¶4} Trust B, the general trust, was set up pursuant to the language in Item IX of the will which required the remainder value and worth of the trust estate, "other than from one hundred (100) shares of stock of said First National Bank in Bellaire, Ohio and all of my said stock of The Union Savings Bank in Bellaire, Ohio" to be used for "the construction of a library building that will be a credit to the City of Bellaire." (Will, page 7, lines 1-21.) In addition, any remaining trust funds "excepting therefrom one hundred (100) shares of the stock of First National Bank in Bellaire, and all of the stock which I may own at the time of my decease in the Union Savings Bank of Bellaire, Ohio" were to be used to erect a community center building. (Will, page 7, lines 22-33, page 8, lines 1-7.)
{¶5} As Trust C, Item IX provided that "the income from the one hundred (100) shares of stock of First National Bank in Bellaire, Ohio, and the income from the shares of stock belonging to my estate of The Union Savings Bank of Bellaire, Ohio, [excepted from Trust B, discussed above] shall be paid by my said Trustees annually to the Board of Trustees of said library building, to be used by said board for the upkeep of said building." (Will, page 9, lines 24-30.) Trust C is referred to as the library upkeep trust.
{¶6} The Mellott Memorial Library Building and Community Center Room were constructed and completed by 1960 with funds from both the William D. Mellott Trust and Trust B of the James F. Mellott Trust. William D. Mellott, who predeceased James, was James' brother. William D. Mellott had also included a provision in his will for the construction of a library in Bellaire, Ohio. As the City of Bellaire chose not to take title to the building, the real estate was conveyed to the James F. Mellott Trustees in a judgment entry dated July 26, 1960.
{¶7} After construction of the library and community center, the language in Item IX later defined by the probate court as Trust C, provided:
(Will, page 9, lines 9-30.)
{¶8} Trust C, then was determined to be comprised of the principal and income from 100 shares of First National Bank stock and all of the Mellott's shares in The Union Savings Bank. This was originally to be paid to the library board annually for maintenance and upkeep of the building. Pursuant to an application filed by the James F. Mellott Trustees, in a judgment entry dated October 26, 1960 the probate court changed the way the money was to be expended. Instead of paying it out to the Library Board on an annual basis, the income from these stocks was to be retained by the estate's trust, used for maintenance and upkeep of the buildings, and paid at the discretion of the Mellott Trustees.
{¶9} The remainder of the assets of the estate, except for the bank shares and their derivative income that were placed in Trust C, were to be used for remodeling the library and community center building as needed. The record reveals that all other remaining assets have been consistently included in the annual accountings for Trust B filed with the probate court.
{¶10} The trusts have operated continually with only minor modifications of their respective assets. Trust C has continued to hold the converted and derivative bank shares (now JP Morgan Chase) from the initial funding, along with other investments at JP Morgan Chase Bank that arose from stock dividends and accumulated interest on the investments of stock income. Trust B has continued to hold the remainder miscellaneous assets not fully consumed in the library construction, including a parcel of Texas real estate, proceeds from a real estate sale, and proceeds from an oil lease. Regular accountings for all three trusts have been consistently filed with the probate court annually since the trusts were established.
{¶11} In 2017 the Mellott Trustees located and secured newly discovered additional assets of James F. Mellott which had not previously been accounted for in the trust estates. These assets included real estate and mineral rights for a number of parcels of land. The Mellott Trustees entered into six oil and gas leases, naming the lessors as "Edwin Douglass and Larry Gautschi, as Trustees of the James F. Mellott General Trust for the Benefit of the Bellaire Library." The Lessees included various oil and gas companies. All of the leases were executed between the months of April and October of 2017.
{¶12} The Mellott Trustees filed an accounting for each separate trust estate for the 2017 accounting period on January 19, 2018. The account for Trust B again included the parcel of land in Pecos County, Texas purchased in 1962. This real estate had continuously been listed as an asset on the Trust B accounting ledger since its acquisition. Pecos County, Texas real estate taxes, Texas school district taxes, and oil lease income and proceeds from real estate sales have also consistently been listed as expenses or profit in Trust B since the acquisition of the Texas property in 1962. Interestingly, the 2017 account for Trust C included a line item consisting of income from oil and gas leases totaling $907,637.10. The Trust C accounting did not include copies of any lease agreements from which the oil and gas income was generated or a listing of the real estate on which any mineral rights may be based.
{¶13} On February 15, 2018, the Library Board filed exceptions to the 2017 Trust B and Trust C accountings. In the exceptions for Trust C they alleged: (1) the revenues from the oil and gas leases should have been listed as an asset under Trust B; (2) the real estate and mineral interests which generated the oil and gas income should be listed as assets of Trust B; (3) Trust C did not list the value of the 135,197 shares of J.P. Morgan Chase Stock; (4) certain checks written from the Trust C account lack a description of the purpose and nature of the payment; and (5) there is no accounting or tax expense for any required IRS filings for income received or expenses paid on behalf of Trust C.
{¶14} On March 22, 2018, the Mellott Trustees filed both an amended accounting and a response to the Library Board's exceptions. The response asserted: ...
To continue reading
Request your trial