Phipps v. Palm Beach Trust Co.

• Decision Date: 21 May 1940
• Citation: 196 So. 299,142 Fla. 782
• Parties: PHIPPS et al. v. PALM BEACH TRUST CO. et al.
• Court: Florida Supreme Court

196 So. 299

142 Fla. 782

PHIPPS et al. v. PALM BEACH TRUST CO. et al.

Florida Supreme Court, Division A.

May 21, 1940

Suit in equity by the Palm Beach Trust Company and others against Hubert B. Phipps and others, for a construction of a trust indenture. From the judgment, Hubert B. Phipps and others appeal.

Affirmed. Appeal from Circuit Court, Palm Beach County C. E. Chillingworth, judge.

COUNSEL

Alley &amp Burns, of West Palm Beach, for appellants.

Loftin Calkins, Anderson & Scott, of Miami, for appellees.

OPINION

TERRELL Chief Justice.

June 3, 1932, Margarita C. Phipps of Palm Beach County, Florida, created a trust out of certain securities from her separate property for the benefit of her children, John H., Hubert B., Margaret Douglas, and Michael G. Phipps; John H. Phipps, however, being the primary beneficiary of the trust. John S. Phipps, the husband of the donor of the trust, and Palm Beach Trust Company were named as trustees to administer the trust estate. Section Six of the trust indenture being pertinent to this decision is as follows:

'At any time within the duration of this trust, as hereinafter provided, upon the written direction of the then Individual Trustee, the Trustees shall pay over and transfer all or any part of the rest, residue, and remainder of the trust estate, both principal and income, which may at such time remain and be in the hands of the Trustees to the said John H. Phipps, Hubert B. Phipps, Margaret Douglas and Michael G. Phipps and to the descendents of any of them, in such shares and proportions as 'the said Individual Trustee, in his or her sole and absolute discretion, shall determine and fix even to the extent of directing the payment of the entire trust estate to one of said parties. The written direction of the said John S. Phipps may be contained in his last will and testament, anything herein to the contrary notwithstanding.'

John S. Phipps will hereafter be referred to as the individual trustee and Palm Beach Trust Company as the corporate trustee. July 25, 1939, the individual trustee pursuant to Section Six of the trust indenture executed and delivered to the corporate trustee written directions to transfer the trust estate to the individual and the corporate trustee in trust for the benefit of the descendents of the original donor with the exception that provision be made for the payment of an income to wife of the beneficiary John H. Phipps, if he (John H. Phipps) should so provide in his will. In the latter trust indenture, hereinafter referred to as the second trust indenture, John S. Phipps granted himself and his successors substantially the same power of appointment as was contained in the original trust indenture but otherwise the second trust indenture was slightly different from the original one.

The corporate trustee being in doubt as to whether or not the action of the individual trustee was within the scope of his powers granted in the original trust indenture brought this suit in equity praying for a construction of the original trust indenture with respect to its duties. All the children and grandchildren of the settlor of the trust were named as parties defendant and filed answers admitting the facts alleged in the bill of complaint. On final hearing, the Chancellor ruled that the individual trustee was authorized to create the second trust and ordered the corporate trustee to proceed as directed. This appeal is from the final decree.

The question to be answered may be stated as follows: May an individual and a corporate trustee clothed with absolute power to administer a trust estate in the interest of designated beneficiaries create a second trust estate, for the benefit of said beneficiaries at such time and in the manner determined by the individual trustee?

The powers vested in a trustee under a deed of trust may be general as when exercised in favor of any one the trustee may in his discretion select, or special as when exercised in favor of the person or class of persons named in the trust deed. We are confronted here with powers of the latter class and the rule is that if a trustee has a general power of appointment, that is a power to appoint anyone he may select including himself, he can effectively appoint one as trustee for himself or for another person. If a trustee has a special power of appointment, that is a power to appoint among the members of a specified class, whether he can effectively appoint a trustee for members of the class depends upon the terms of the power vested in him. Restatement of the Law of Trusts, American Law Institute, page 66, Section 17, (E),...