Marvin F. Hall Trust v. Hall

• Decision Date: 13 June 1991
• Docket Number: No. 17211,17211
• Citation: 810 S.W.2d 710
• Parties: MARVIN F. HALL TRUST, First National Mercantile Bank and Trust Company, Joplin, Mo., Janice A. Hall, and Grace E. Hall, as Trustees under Intervivos Trust Agreement executed by Marvin F. Hall, Plaintiffs-Respondents, v. Janice A. HALL, June Hall, Jean Hall, James Hall, and Grace E. Hall, as Guardian of the Person of Joyce Hall, Defendants-Respondents, and Paul Francois Disdier, James Fullerton Disdier, and the Unborn Heirs of Janice A. Hall, of June Hall, of Jean Hall, of James Hall, and of Joyce Hall, Defendants-Appellants.
• Court: Missouri Court of Appeals

Page 710

810 S.W.2d 710

MARVIN F. HALL TRUST, First National Mercantile Bank and

Trust Company, Joplin, Mo., Janice A. Hall, and Grace E.

Hall, as Trustees under Intervivos Trust Agreement executed

by Marvin F. Hall, Plaintiffs-Respondents, v. Janice A. HALL, June Hall, Jean Hall, James Hall, and Grace

E. Hall, as Guardian of the Person of Joyce Hall,

Defendants-Respondents,

and

Paul Francois Disdier, James Fullerton Disdier, and the

Unborn Heirs of Janice A. Hall, of June Hall, of

Jean Hall, of James Hall, and of Joyce

Hall, Defendants-Appellants.

No. 17211.

Missouri Court of Appeals,

Southern District,

Division Two.

June 13, 1991.

Robert L. Bradley, Blanchard, Van Fleet, Martin, Robertson and Dermott, Joplin, for defendants-appellants Disdier.

John J. Podleski, Crandall & Dally, Carthage, for defendant-appellant unborn heirs.

Robert W. Richart, Joplin, for defendants-respondents Halls.

Daniel E. Scott, Timothy R. Whelan, Copeland, Scott & Whelan, Joplin, for plaintiffs-repondents trustees.

SHRUM, Judge.

This lawsuit was brought by the trustees of the Marvin F. Hall intervivos trust after a member of one class of beneficiaries, the children, requested a discretionary distribution of trust income after she had reached the age of 35 years.

In Count I of their two-count petition, the trustees sought construction of the trust instrument claiming an inconsistency between paragraphs 2(a)(1) and 13 created an ambiguity concerning the trustees' authority to distribute trust income to children age 35 and older. The trial court determined there was an ambiguity and held that the trustees have discretion to distribute trust income to the grantor's living children even though they are older than 35.

In Count II the trustees asked the trial court to construe paragraph 8 of the trust instrument, and the court found that a majority of the grantor's living children have authority to "approve an accounting by the trustees and to discharge the trustees from all liability for acts and omissions concerning all matters disclosed in such account; and such settlement and discharge shall be conclusive and binding upon all persons and entities, including the minor and unborn heirs and beneficiaries."

The trial court judgment is appealed by the minor grandchildren of the grantor, through their guardian ad litem, and by the guardian ad litem of the unborn heirs of the grantor's children. Respondents on appeal We affirm that part of the judgment in which the trial court authorized discretionary distribution of income to the children even though they are older than 35. We reverse the portion of the judgment which construes paragraph 8 and remand to the trial court with instructions to dismiss Count II of the trustees' petition.

are the trustees and the grantor's children.

FACTS

On January 1, 1965, Dr. Marvin F. Hall executed an intervivos trust agreement which created three classes of beneficiaries: his children as of the date of the trust (children), the issue of the children (issue), and Dr. Hall's grandchildren living on the date of death of the last of the children (grandchildren). The class of children consists of James, Janice, June, Jean, and Joyce, all of whom are living and the youngest of whom turned 35 in 1984. The class of issue consists of Paul Francois Disdier and James Fullerton Disdier, the minor children of June Hall.

Initially the trustees were Dr. Hall, his daughter, Janice, and one Max Myers. Myers died around 1977 and the vacancy created by his death was not filled until the corporate trustee (bank) was appointed in October 1982. Income distributions were made from the trust to certain of the children for the fiscal years ending June 30, 1980, June 30, 1981, and June 30, 1982, dates prior to the bank's becoming a co-trustee, but after the recipient children had reached age 35.

In 1989, Jean Hall wrote the bank requesting a discretionary distribution from the trust income. Trust officers of the bank reviewed the trust and concluded there was "some confusion within the trust document" about the trustees' authority. Review by outside counsel resulted in the same opinion, that there was "confusion within the terms of the document...." This lawsuit for construction of the trust followed.

The request that the trustees distribute trust income is grounded on paragraph 2(a)(1) of the trust instrument, which reads:

(a) At the end of each fiscal year during the lives of the present children of the Grantor, commencing with the fiscal year ending June 30, 1965, the Trustees shall accumulate the net income by adding and incorporating it into the capital of the trust estate and thereafter administering set net income as an integral part of the capital, provided however:

(1) That the Trustee shall have the power to pay or apply to or for the benefit of present living children of the Grantor who are then living and under 35 years of age, or to any one or more of their issue, prior to incorporation of that year's net income into capital, so much of the net income at such time or times and in such amount or amounts as the Trustee may deem advisable, for the support and maintenance of the present living children of the Grantor or for the support and maintenance of any one or more of their issue, and in either case, at such times, in such manner, and in such proportions among such of these beneficiaries as the Trustees may deem advisable; and provided further; that the Trustees, in the case of each payment or application of income, shall determine that such payment or application is reasonably necessary to enable the beneficiary to be maintained in accordance with the station in life which such beneficiary has established. In making such determination, the Trustees shall take into consideration the amount of income which such beneficiary may enjoy from sources other than this Trust Estate. At the end of each fiscal year, the Trustees shall add to the capital of the trust estate, as above provided, all of the net income for that year which was not paid to, or applied for the benefit of, such beneficiaries.

In their petition, the trustees claimed that certain provisions in paragraph 2(a)(1) are inconsistent with the following portion of paragraph 13:

To more fully express his intention, the Grantor hereby declares that his primary purpose in establishing this trust is to assure his present living children and The alleged inconsistency, the trustees claimed, created "an ambiguity as to the power of the Trustees to make discretionary payments under paragraph 2(a)(1) to Children older than 35 years of age."

their issue additional income if necessary, to further provide the present living children of the Grantor and their issue with material comforts during their lives, and to provide an inheritance for such issue....

In Count II the trustees sought construction of paragraph 8 which reads:

The Trustees may at any time render an account of their acts to the present living children of the Grantor who shall have the full power to settle any such account and, upon the basis thereof, to discharge the Trustees from all liability for acts and omissions concerning the matters embraced in such account. Such settlement and discharge shall be binding upon all persons, even if then under legal disability or unborn, and shall have the same force and effect as a final decree of a court of competent jurisdiction in which all necessary and proper parties are present and represented. Nothing herein, however, shall preclude the Trustees from having their accounts judicially settled, whenever they deem such settlement advisable.

In paragraphs 13 and 14 of Count II, the trustees assert that paragraph 8 of the trust is "ambiguous as to the method for the Trustees to account for their acts" in that it is unclear whether settlement of an account requires unanimous or majority approval by the children. In paragraph 15 and 16 of Count II, the trustees extol the clarity of the terms of paragraph 8 concerning discharge of the trustees from liability, but they question "the operative effect of such language...."

By their separate answers and in their respective prayers for relief, the children, the grandchildren, and the unborn heirs requested that the court "enter its order determining that it is necessary that all of the Children approve an accounting by the Trustees in order to discharge the Trustees from liability for past actions so accounted ... (emphasis added)."

Over the appellants' objection, the trial court heard testimony from the bank's trust officer Doug Hauser, grantor's accountant Dan Stengel, four of grantor's five children, and grantor's widow Grace Hall. Summarized, their testimony was that Dr. Hall had great affection for his children. He often stated that he wanted the income from the trust to be used for his children, if necessary, for their maintenance and care throughout their lifetimes. Dr. Hall's desires grew out of his devotion to his children, his desire that they never be confronted with the financial struggles which he had faced as a young person, his concern that a family illness (diabetes) might adversely affect his children in their ability to provide for themselves, and the particular needs of his youngest child Joyce. He aided his children financially after they became adults. While serving as trustee, Dr. Hall made income distributions from the trust to children who were older than 35. Dr. Hall expressed his belief that the age restriction in paragraph 2(a)(1) was inconsistent with what he wanted for his family and that he wished he could amend the trust but could not.

The trial court determined that the pertinent language of the trust instrument was "ambiguous and subject to construction," and it held that the trustees have discretion to distribute trust income to the grantor's living children even though they are older than 35. Despite the unanimous request by all beneficiaries and potential...