Nowlin v. Frost Nat. Bank

• Decision Date: 14 September 1995
• Docket Number: No. 01-94-01093-CV,01-94-01093-CV
• Parties: Jack L. NOWLIN, Appellant, v. The FROST NATIONAL BANK, Texas Heart Institute, and AIDS Foundation Houston, Inc., Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 283

908 S.W.2d 283

Jack L. NOWLIN, Appellant, v. The FROST NATIONAL BANK, Texas Heart Institute, and AIDS

Foundation Houston, Inc., Appellees.

No. 01-94-01093-CV.

Court of Appeals of Texas,

Houston (1st Dist.).

Sept. 14, 1995.

Joseph S. Horrigan, Steven E. Hollis, Houston, for appellant.

Martha Failing, Houston, for appellees.

Before PRICE ¹, FARRIS ² and TAFT, JJ.

OPINION

TAFT, Justice.

In this appeal, we are asked to decide whether Karl D. Nowlin validly exercised his special testamentary power of appointment in favor of the Texas Heart Institute and the AIDS Foundation Houston, Inc. (the charities). We will affirm the summary judgments granted to the charities.

Summary of Facts

On July 21, 1981, Carroll and Mary Nowlin created express trusts for the benefit of their sons, Jack and Karl. The trusts were initially funded from the proceeds of several life insurance policies totaling approximately $800,000. The terms of the trust agreement specify that each trust terminates two years following the death of the last of the grantors to die, or when the beneficiary reaches age 35, whichever is later. The trust terms also permit each beneficiary to execute a special testamentary power of appointment. The exact language of the relevant portion of section 1.6 of the trust agreement provides:

Each Beneficiary shall have the special testamentary power to appoint (outright, in trust or otherwise) all or any part of the property remaining in such Beneficiary's trust to any person or persons related to such Beneficiary by blood, marriage or adoption or to any charity or charities.... Such special power shall be exercisable by such Beneficiary only by specific reference in such Beneficiary's will; provided, however, the exercise of such special power shall not be valid if it requires the Trustee to make a distribution of the property subject to such power to the appointee of such Beneficiary prior to the expiration of two years following the death of the last to die of the Grantors.

Carroll Nowlin died in 1985, and is presently survived by his wife and his son, Jack. The Nowlins' other son, Karl, died in 1992. Karl's will included a provision exercising this special power of appointment. Section 2.8 of his will provides:

It is my intention to exercise the special testamentary power of appointment as granted to me in Section 1.6 Article I of that certain Trust Agreement dated July 21, 1981 between Carroll B. Nowlin and Mary D. Nowlin as Grantors and Jack L. Nowlin as Trustee ("Trust Agreement"). I hereby appoint all of the remaining property in the Trust created by the Trust Agreement over which I have special power of appointment to the following charitable organization [sic]:

Texas Heart Institute--50%

Aids Foundation Houston--50%

It is this appointment of the trust property to the charities that is contested by appellant, Jack Nowlin, who contends that his brother's exercise of the special testamentary power of appointment was not valid.

Procedural History

Cullen Center Bank and Trust (now Frost National Bank) was appointed the successor trustee following appellant's resignation as trustee. The bank filed a petition for declaratory judgment in probate court on January 21, 1993. The bank asked the court to construe the trust instrument to determine whether Karl Nowlin validly exercised his special testamentary power of appointment and to determine when the ultimate beneficiaries would receive the estate.

The charities filed separate motions for summary judgment, as did appellant. The court heard the motions for summary judgment at one time. Appellant's motion was denied August 1, 1994. The Texas Heart Institute's motion was granted August 1, 1994. The AIDS Foundation's motion was granted September 8, 1994.

The court determined only that the exercise of the power of appointment was valid, and deferred judgment on when the beneficiaries would receive the estate. On October 7, 1994, the court signed an order for severance of action, rendering the summary judgments final and appealable.

Points of Error

In three points of error, appellant makes two arguments: (1) that the motions for summary judgment were improperly granted to the charities and improperly denied to him because Karl Nowlin's attempted exercise of his power of appointment was invalid; and (2) the court erred in not finding ambiguity in the clause creating the trust agreement and in declining to consider the intent of a grantor to resolve the ambiguity.

Standards of Review

An order denying summary judgment is not appealable unless both parties have moved for summary judgment, and one motion is granted while the other is overruled. Jones v. Strauss, 745 S.W.2d 898, 900 (Tex.1988); Tobin v. Garcia, 159 Tex. 58, 316 S.W.2d 396, 400-01 (1958). Courts of appeals may consider the denial of a summary judgment only if appellant complains of both the granting of appellee's motion and the denial of his own. Jones, 745 S.W.2d at 900. The court may then appropriately resolve the entire case, including rendering the appropriate judgment. Utica Nat'l Ins. Co. v. Fidelity & Cas. Co., 812 S.W.2d 656, 658 (Tex.App.--Dallas 1991, writ denied). Appellant has properly complained of the disposition of his own and of the charities' motions for summary judgment, thus permitting review by this Court.

Summary judgment shall be rendered if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law on the issues expressly set out in the motion or in an answer. TEX.R.CIV.P. 166a(c); Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex.1985). Construction of a trust instrument is a question of law for the trial court when no ambiguity exists. Hancock v. Krause, 757 S.W.2d 117, 119 (Tex.App.--Houston [1st Dist.] 1988, no writ). If the court can give a certain or definite legal meaning or interpretation to the words of an instrument, it is unambiguous and the court may construe it as a matter of law. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). If, however, the meaning of the instrument is uncertain or reasonably susceptible to more than one meaning, it is ambiguous. Id. If it is ambiguous, then its interpretation presents a fact issue precluding summary judgment. Id. at 394.

Ambiguity in the Trust Agreement

In his third point of error, appellant complains that the trial court erred in failing to find that there was an ambiguity in the trust agreement creating the power of appointment, and in failing to consider the intent of one of the grantors to resolve the ambiguity. As part of his summary judgment proof, appellant submitted an affidavit from his mother in which she stated:

As a Grantor, it was my intent in executing the Trust Agreement that no power of appointment, as granted under Section 1.6 of the Trust Agreement, was to be exercised prior to the expiration of two years after the death of the last to die of my husband, Carroll B. Nowlin, and myself.

Appellant correctly states that the parol evidence provided by this uncontroverted affidavit supplies the only meaning that can be used if the court finds that the trust language is ambiguous. If the court finds no ambiguity, however, then Mary Nowlin's affidavit is irrelevant because appellant does not claim that when the trust agreement was signed there was any fraud, accident or mistake. Accordingly, the parol evidence rule would bar extrinsic evidence to contradict, vary or add to the terms of an unambiguous written agreement. Kuper v. Schmidt, 161 Tex. 189, 338 S.W.2d 948, 952 (1960).

"Only if the intention of the parties as expressed on the face of the document is doubtful may the court resort to parol evidence to resolve the doubt." Massey v. Massey, 807 S.W.2d 391, 405 (Tex.App.--Houston [1st Dist.] 1991), writ denied, 867 S.W.2d 766 (Tex.1993). Examining the language of section 1.6 of the trust agreement, we find that it is not ambiguous on its face. It is not susceptible to more than one meaning. The trust is quite clear that if the exercise of the special power of appointment requires the trustee to make a distribution of the property subject to the power prior to the expiration of two years following the death of the last of the grantors, it shall not be valid.

Any ambiguity lies not in the language of the trust agreement, but in the language of the will, because it was silent as to the timing of distribution. In the absence of ambiguity in the trust agreement, the trial court did not err by declining to allow parol evidence from Mary Nowlin regarding her intent.

We overrule appellant's third point of error.

The Special Testamentary Power of Appointment

In points of error one and two, appellant claims that the attempted exercise of a power of appointment by Karl Nowlin was invalid. The crux of appellant's argument is that because his brother's will did not expressly defer distribution until two years following Mary Nowlin's death, the trust provision was violated. The charities argue that because the will did not expressly require distribution, the terms of the trust agreement were honored. The pertinent inquiry, then, is whether Karl Nowlin's will required distribution of the property subject to the power of appointment.

Appellant applies probate and property law to argue that the testator's death required immediate distribution. The charities urge this Court to read the will and the trust agreement together as one instrument, and to conclude that immediate distribution is not required but is instead controlled by the terms of the trust.

It is thus necessary to examine the will itself, to see if it expressly required distribution, as well as appellant's arguments that probate law applies to require distribution or that property law applied to render the appointment invalid. In order to avoid confusion, we address the meaning of a power of appointment first.

I. Power of Appointment

Texas law describes a power of appointment...