Richards v. Richards
| Decision Date | 18 May 1981 |
| Docket Number | No. 80-C-2559,80-C-2559 |
| Citation | 408 So.2d 1209 |
| Parties | William G. RICHARDS, et al. v. Horace V. RICHARDS. Mrs. Loretto Richards O'REILLY v. Horace V. RICHARDS. |
| Court | Louisiana Supreme Court |
Andrew L. Gates, III, of Gordon, Arata & McCollam, New Orleans, for defendant-relator.
Thomas B. Lemann of Monroe & Lemann, Howard J. Smith of Doyle, Smith & Doyle, New Orleans, for plaintiff-respondent.
On December 26, 1941, Ernest V. Richards, Jr., established nine separate trusts, one for each of his children, by nine separate acts of donation which were identical in form. Plaintiffs, William G. Richards, Julian S. Richards and Mrs. Loretto Richards O'Reilly, each a beneficiary of one of these trusts, and John J. Richards, a co-trustee of these three trusts, filed actions to have their brother, Horace V. Richards, removed as a trustee of these three trusts pursuant to La.R.S. 9:1789. 1
The district court rendered judgment in favor of defendant and against plaintiffs dismissing their suits with prejudice. Plaintiffs appealed. Subsequent to oral argument on appeal, the clerk of court for the court of appeal informed counsel for defendant by letter that the court's preliminary view was that the three trusts involved in the litigation had terminated. Defense counsel replied by letter advising the court that he was willing to acquiesce in the court's view that the trusts had terminated by operation of law. The court of appeal rendered the following judgment:
Because defendant trustee concedes that the trust and his trusteeship have expired, the questions presented by this suit are moot. This appeal is therefore dismissed.
After reviewing the decision of the court of appeal, defendant became concerned as to whether the trusts had actually legally terminated and, if so, whether the six other trusts created by his father had also terminated. The latter question was of particular interest to defendant as he was the beneficiary of one of the trusts not involved in this litigation. Accordingly, he filed an application for rehearing requesting that the court (1) not decide at this time whether the trusts had terminated; or in the alternative (2) expand its reasons for its decision; or in the further alternative (3) remand the case to the trial court with the specific instructions that defendant be allowed to file a reconventional demand to allege specifically that the three trusts subject to this litigation as well as the trust created for the benefit of defendant had expired. The court of appeal refused rehearing but did expand on its reasons for dismissing the action as moot. 2 On defendant's application, we granted certiorari to review the correctness of that judgment. 3
Plaintiffs first contend that defendant should not be allowed to attack the judgment rendered by the court of appeal terminating the trusts as the judgment was rendered in reliance on his acquiescence. In particular, plaintiffs urge that (1) defendant is estopped from revoking his "judicial confession" that the trusts had terminated because plaintiffs and the court of appeal relied upon it; (2) defendant was granted the relief requested by him when the court ruled that the trusts had terminated after his acquiescence of the termination, and thus is not entitled to an appeal; (3) defense counsel's letter signified his consent to the court's preliminary view that the trusts had terminated, and thus the decision rendered by the court was a consent judgment binding on all of the consenting parties and thus is not appealable; and (4) defendant should not be permitted to repudiate his consent to the dismissal which was relied upon by plaintiffs in giving their consent to the dismissal.
We need not address any of these contentions as defendant did not have the power or authority to terminate any of the trusts. The concept of trust indestructibility is inherent in our Louisiana trust law. McLendon v. First National Bank of Shreveport, 299 So.2d 407 (La.App. 2d Cir. 1974). This is evidenced by La.R.S. 9:2028 which states:
The consent of all settlors, trustees, and beneficiaries shall not be effective to terminate the trust or any disposition in trust, unless the trust instrument provides otherwise.
In the instant case, the trust instrument does not provide for termination by consent of any or all of the parties. Therefore, defense counsel's letter acquiescing in the termination of the trusts had no effect. Furthermore, he had no authority to terminate the trusts as La.R.S. 9:2111 provides that
a trustee shall exercise only those powers conferred upon him by the provisions of the trust instrument or necessary or appropriate to carry out the purposes of the trust and are not forbidden by the provisions of the trust instrument.
The sole issue for our determination is whether the court of appeal erred in finding that the trusts had terminated. 4 Each of the acts of donation creating the trusts contain the following provision:
The legal title to all the trust estate shall be vested in the Trustees, and their successors, as Trustees, to be held by them in trust pursuant to the laws of the State of Louisiana, and particularly the Trust Estates Act, as same may from time-to-time be amended, for the maximum allowable period.
It is clear from this provision that the settlor-donor desired the trusts to exist for the maximum allowable period of time as provided for under Louisiana trust law as would from time-to-time be amended.
In ruling that the trusts had terminated, the court of appeal relied on La.R.S. 9:2252 (savings clause) which provides in pertinent part:
Trusts heretofore created and any provisions or dispositions therein made shall be governed by the laws in effect at the time of their creation.
Following this statute, the court applied the trust law regarding term of trusts that was in effect in 1941, the year the trusts were created. Section 4 of Louisiana Acts 1938, No. 81, provided in pertinent part:
Unless an earlier termination is required by the trust instrument or by the proper court, every inter vivos or testamentary trust created under this Act shall terminate at the expiration of ten years from the settlor's death as to a beneficiary which is not a natural person, at the expiration of ten years from the settlor's death as to a beneficiary who is a natural person and of full age at the settlor's death, and at the expiration of ten years from the beneficiary's majority as to a beneficiary who is a natural person and a minor at the settlor's death.
The court ruled that since Ernest V. Richards, Jr., the settlor, died in 1960, the trusts "expired either in 1970, ten years from the settlor's death, or no later than 1973, which is at least ten years from the (majority) of any beneficiary alive or conceived in 1941."
In reaching this result, the court of appeal ignored the settlor's intent and misapplied the savings clause of La.R.S. 9:2252. In construing a trust, the settlor's intention controls and is to be ascertained and given effect, unless opposed to law or public policy. Lelong v. Succession of Lelong, 164 So.2d 671 (La.App. 3d Cir. 1964). It was the settlor's intent that the trusts in question exist for the maximum allowable period of time as provided for under Louisiana trust law as would from time-to-time be amended. We know of no public policy or law that would prohibit a trust from containing such a condition.
The 1952 Comments to La.R.S. 9:2252 state that the purpose of the savings clause is to assure the validity of trusts heretofore created. The court of appeal misapplied this clause and reached a result that held invalid a provision desired by the settlor. While correct in its conclusion that the trust law in effect in 1941 should be used in interpreting the trust, the court erred when it applied the 1938 trust law in determining the actual term of the trusts. Each trust specified that the term would be for the maximum allowable period as may from time-to-time be amended, not the maximum allowable period in effect at the time the trusts were created. We are of the opinion that the laws in effect at the time of creation should be used to determine the validity of the provision that states that the term shall be for the maximum allowable period as may from time-to-time be amended, but not to determine the actual term of the trusts. We can find nothing in the laws in effect at the time the trusts were created that would prohibit the term provision contained in the instant trusts. Therefore, we conclude that the term provision should be given full effect in accordance with the settlor's clear intent. Because the provision states that the term is to be for the maximum allowable period as may from time-to-time be amended, the actual term of the trusts should be the maximum allowable period under current law.
La.R.S. 9:1831 states in pertinent part:
If the trust instrument stipulates a term and, unless an earlier termination is required by the trust instrument, or by the proper court, a trust shall terminate at:
(1) the death of the last surviving income beneficiary or the expiration of twenty years from the death of the settlor last to die, whichever last occurs, if at least one settlor and one income beneficiary are natural persons; ...
The 1968 Comments to the statute provide that a "statement in the trust instrument that the term of the trust is the maximum allowable term, is a stipulation of a term." La.R.S. 9:1831(1) is applicable to the trusts in question because the settlor was and the income beneficiaries are natural persons and because the instruments state that the term is for the "maximum allowable period." Therefore, the trusts have not terminated and will not terminate until the death of their respective income beneficiaries. The court of appeal erred in holding otherwise. Hence, we must reverse.
Since the court of appeal found that the trusts had terminated, it did not...
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