In The Matter Of The Cable Family Trust Dated June 10, 1987 v. Wells Fargo Bank N.M.

Decision Date23 March 2010
Docket Number787.,No. 30,30
Citation148 N.M. 127,2010 NMSC 017,231 P.3d 108
PartiesIn the Matter of the CABLE FAMILY TRUST DATED JUNE 10, 1987, as Amended.Gary D. Cable, Beneficiary-Petitioner,v.Wells Fargo Bank New Mexico, N.A., Petitioner-Respondent.
CourtNew Mexico Supreme Court

Law Offices of Jane B. Yohalem, Jane B. Yohalem, Santa Fe, NM, for Petitioner.

Hurley, Toevs, Styles, Hamblin & Panter, P.A., Gregory W. MacKenzie, Albuquerque, NM, for Respondent.

OPINION

DANIELS, Justice.

{1} This case requires us to determine whether the community property trust created by a married couple granted the surviving spouse the power to amend the trust's remainder distribution schedule after the death of the first spouse. The Court of Appeals upheld the affirmative answer to that question by the district court solely on the theory that the surviving spouse's undisputed right to withdraw all assets of the trust estate implicitly included a lesser power to amend the trust. While we conclude that the Court of Appeals was correct in upholding the surviving spouse's right to amend, we do so through a broader analysis of the totality of the trust provisions. Because we hold that the power of amendment was specifically intended by the grantors in this case, we do not need to hypothesize whether an unrestricted power to withdraw necessarily includes a power to amend in all cases as a matter of law.

I. BACKGROUND

{2} In July 1987, Lowell and Martha Cable created the Cable Family Trust to care for the needs of each other and to distribute any assets that remained after the deaths of both of them to their three children, Petitioner Gary Cable, Larrie Cable, and Shirley Trevino (for purposes of clarity, all family members will be referred to by their first names in this Opinion). Although the property initially placed into the trust was separate property, in December of the same year, Lowell and Martha entered into a community property agreement that designated “all property, ... regardless of when acquired, and all property hereinafter acquired” as community property. Three months later, Martha died, leaving Lowell as the sole surviving grantor.

{3} Over the next fifteen years, Lowell made a series of amendments to the trust, among which were his 1988 appointment of Gary as trustee and his 1994 amendment, after he remarried, replacing Gary as trustee with a predecessor of Wells Fargo Bank. Of particular significance to the issues in this case is Lowell's 1999 amendment to the post-trust distribution schedule, redirecting 39 percent of the trust remainder to (1) his eleven grandchildren (2.5% each); (2) five nonprofit organizations-The Salvation Army, Habitat for Humanity, Albuquerque Rescue Mission, Albuquerque Little Theatre, and Musical Theatre of the Southwest (1.5% each); (3) St. Paul Lutheran Church (2.5%); and (4) two close friends (1.5% jointly). The greater part of the trust remainder, 61 percent of the total, was still to be distributed among Martha and Lowell's three children, but the original equal three-way distribution among them was amended to provide for a 30-30-40 split, with 18.3 percent of the total trust proceeds going to each of their two sons, Gary and Larrie, and 24.4 percent going to their daughter, Shirley. In dollar terms, the amended distribution schedule meant that Shirley would receive roughly $36,600 more than either of her brothers. The 1999 amendments were the last made before Lowell died in 2002.

{4} After Lowell's death, trustee Wells Fargo filed a petition in the district court for approval to distribute the remainder of the trust estate, amounting to about $600,000, in accordance with the 1999 amended distribution schedule. Gary filed a written opposition to Wells Fargo's request and moved for declaratory judgment and summary judgment. His position was that all of the trust amendments Lowell had made in the years after the death of Martha, including the 1999 distribution schedule, were beyond Lowell's authority as surviving grantor. Gary argued that he therefore was entitled to receive a full one-third share of the trust remainder, as originally designated in the 1987 schedule, instead of the 18.3 percent he would receive by the terms of the 1999 schedule, a dollar difference of about $90,000.

{5} Much of the focus of the litigation in this case has been the proper interpretation of Section 9.1 of the instrument creating the trust, which provides in its entirety:

9.1 Power in Grantors During Lifetimes of Grantors. Grantors reserve the right at any time or times to amend or revoke this instrument and the trusts hereunder, in whole or in part, by an instrument or instruments in writing, signed by Grantors and delivered in Grantors' lifetimes to Trustee; provided, however, that no such alteration, amendment or revocation shall affect the character of any property held by the Trust, and the interest of the Husband and Wife in the various Trust assets, whether community, separate or otherwise, shall retain its character as such. Nothing herein shall be construed as a transfer of separate properties from Husband to Wife, or from Wife to Husband, and in the event of any revocation, all property shall be reconveyed to the respective owners. If this instrument is revoked in its entirety, the revocation shall take effect upon the delivery of the required writing to Trustee. On the revocation of this instrument in its entirety, Trustee shall deliver to Grantors, or as Grantors may direct in the instrument of revocation, all the Trust property. Notwithstanding the foregoing, the Grantors may specifically declare in writing certain assets to be community property.

{6} Wells Fargo filed a motion for summary judgment that relied primarily on provisions contained in the trust instrument itself, but that also relied on a supporting affidavit executed by Wayne Marsh, the attorney who had drafted the original 1987 Cable Family Trust agreement at Lowell and Martha's request. Mr. Marsh's affidavit recited in relevant part (1) that he drafted Section 9.1 of the agreement to provide that Grantors “reserve the right at any time or times to amend or revoke” the trust and its provisions; (2) that it was his practice to explain to his clients that this standard language routinely used by him in trust agreements “confers upon the surviving spouse the power to amend the trust agreement after the death of the first spouse”; and (3) that, as the attorney who prepared the agreement for Lowell and Martha, he believed that Section 9.1 accurately stated the intent of his clients to allow the surviving spouse the power to amend. Gary argued in opposition that the use of the plural term “Grantors” in Section 9.1 meant that both grantors had to agree jointly to any amendment, and that it was therefore impossible for Lowell to have any such amendment power after Martha's death.

{7} The district court granted summary judgment in favor of Wells Fargo, agreeing that Lowell, as surviving grantor, had the power of amendment, and the Court of Appeals affirmed that result. Cable v. Wells Fargo Bank N.M., N.A. (In Re Cable Family Trust), 2008-NMCA-005, 143 N.M. 269, 175 P.3d 937 (filed 2007). The Court of Appeals rejected attorney Marsh's interpretation of the effect of Section 9.1 of the trust and instead relied exclusively on Section 2.4, which provided in relevant part: Trustee shall ... pay over to the surviving Grantor such amount or amounts of principal as the surviving Grantor may demand in writing delivered to Trustee.” Id. ¶ 2. In essence, the Court viewed the power to take all as necessarily including the power to take less than all and to redistribute it. Id. ¶¶ 1, 17.

{8} We granted certiorari to consider those issues.

II. STANDARD OF REVIEW

{9} The parties agree that the material facts in this case are undisputed and that the case should have been resolved by summary judgment, although they disagree about the principles of law that should be applied to the undisputed facts. “An appeal from the grant of a motion for summary judgment presents a question of law and is reviewed de novo. Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.” Montgomery v. Lomos Altos, Inc., 2007-NMSC-002, ¶ 16, 141 N.M. 21, 150 P.3d 971 (internal quotation marks and citations omitted).

{10} The legal inquiry in this case involves the interpretation of trust language and the application of statutes to the trust and its terms. Both tasks also require de novo review. Arch, Ltd. v. Yu, 108 N.M. 67, 71, 766 P.2d 911, 915 (1988) (“When the issue to be determined rests upon the interpretation of documentary evidence, this Court is in as good a position as the trial court to determine the facts and draw its own conclusions.”); State v. Nick R., 2009-NMSC-050, ¶ 11, 147 N.M. 182, 218 P.3d 868 (“Statutory construction is a matter of law we review de novo.”).

III. DISCUSSION
Role of Grantor's Intent

{11} We start with the basic principle that [i]n construing the provisions of wills and trust instruments, the court must attempt to ascertain and give effect to the [grantor's] intent.” Fenley v. Estate of Deupree (In re Estate of Deupree), 2002-NMCA-097, ¶¶ 10, 12, 132 N.M. 701, 54 P.3d 542 (noting that a court may consider the language and conduct of the parties, the surrounding circumstances, and, where needed to interpret ambiguous language, extrinsic evidence of the parties' intent, including testimony of the attorney who drafted the trust) (internal quotation marks and citation omitted); Loco Credit Union v. Reed, 85 N.M. 729, 733, 516 P.2d 1112, 1116 (1973) (emphasizing the need to honor the intent of the grantors, despite deficiencies in technical document drafting).

{12} In the Uniform Trust Code (UTC), adopted by the New Mexico Legislature in 2003 as NMSA 1978, Sections 46A-1-101 to 46A-11-1105 (2003, as amended through 2009), the phrase “terms of the trust” is defined as “the...

To continue reading

Request your trial
20 cases
  • Skyline Potato Co. v. Hi-Land Potato Co.
    • United States
    • U.S. District Court — District of New Mexico
    • May 24, 2016
    ...248 P.3d 878, 906 (citing Restatement (Third) of Trusts § 86, cmt. b (2007)); In re Cable Family Trust, 2010-NMSC-017, ¶ 12, 148 N.M. 127, 231 P.3d 108, 111 (citing the Uniform Trust Code, N.M. Stat. Ann. 1978, §§ 46A1–101 to 46A–11–1105 (2003, as amended through 2009) and Restatement (Thir......
  • Hill v. Vanderbilt Capital Advisors, LLC
    • United States
    • U.S. District Court — District of New Mexico
    • September 30, 2011
  • Hill v. Vanderbilt Capital Advisors, LLC
    • United States
    • U.S. District Court — District of New Mexico
    • September 30, 2011
  • Hinkle v. Abeita
    • United States
    • Court of Appeals of New Mexico
    • June 19, 2012
    ...for summary judgment presents a question of law and is reviewed de novo.” Cable v. Wells Fargo Bank N.M., N.A., 2010–NMSC–017, ¶ 9, 148 N.M. 127, 231 P.3d 108 (internal quotation marks and citation omitted).III. DISCUSSION {4} Over thirty years ago in Hartley, this Court resolved the exact ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT