Ridge v. Bright, 738

• Docket Nº: No. 738
• Citation: 244 N.C. 345, 93 S.E.2d 607
• Case Date: June 26, 1956
• Court: United States State Supreme Court of North Carolina

Page 607

93 S.E.2d 607 244 N.C. 345 Paul H. RIDGE, as Executor of the Estate of Lottle Rascoe
McMillan lvey,
v.
Virginia Fitch BRIGHT and investors Mutual, Inc. No. 738 Supreme Court of North Carolina. June 26, 1956

Long, Ridge, Harris & Walker, Graham, for appellant.

Sanders & Holt, Burlington, for appellee Virginia F. Bright.

Brooks, McLendon, Brim & Holderness, Hubert B. Humphrey, Jr., Greensboro, for appellee Investors Mutual, Inc.

DENNY, Justice.

It is not contended that the instrument under consideration was executed in the manner required by law so as to be valid as a testamentary disposition of the shares of stock involved. Consequently, the question to be determined is whether the instrument created a valid inter vivos trust which entitled Virginia Fitch Bright to the stock upon the death of the settlor-trustee, Lottie Rascoe McMillan Ivey. However, in making this determination we must consider (1) whether upon the execution of the so-called trust instrument, the defendant, Virginia Fitch Bright, acquired an interest in the subject matter of the trust; or (2) whether the settlor retained such control over the subject matter of the trust as to render it invalid as a trust but only an attempted testamentary disposition.

The appellant contends that the instrument under consideration is invalid because under our decisions, Speight v. Speight, 208 N.C. 132, 179 S.E. 461, Nixon v. Nixon, 215 N.C. 377, 1 S.E.2d 828, and Woodard v. Clark, 236 N.C. 190, 72 S.E.2d 433, a limitation over, after a life estate, in personal property is void. While we do not concede that these cases are controlling on the facts in this case, it is well to note that the restriction upon the right to create a remainder in personal property after a life estate by deed, or other written instrument, has been eliminated by Section 1, Chapter 198 of the Session Laws of 1953, codified as G.S. § 39-6.2, which reads as follows: 'Any interest or estate in personal property which may be created by a last will and testament may also be created by a written instrument of transfer.'

In creating an inter vivos trust, the creator and the trustee may be one and the same person. Bogert on Trusts and Trustees, Volume 1, section 41, page 270; Scott on Trusts, Volume 1, section 18, page 143; Restatement of the Law on Trusts, Volume 1, section 18, page 68; 90 C.J.S., Trusts, § 210b, p. 137; 54 Am.Jur., section 116, page [244 N.C. 349] 101. Likewise, in creating a trust inter vivos, 'where there is a completely executed voluntary contract to establish a trust and nothing further remains to be done by the grantor to transfer the title, the relation of trustee and cestui que trust is established and the equitable rights growing out of such conveyance in trust, although made without consideration, will be recognized and enforced, since it is considered as an executed gift, needing no consideration.' 89 C.J.S., Trusts, § 28, p. 746 et seq. 'Consideration is not necessary to the creation of a trust, or, in other words, consideration is not necessary to a trust that is executed in the sense of being perfectly created, whether by declaration or transfer.' 54 Am.Jur., Trusts, section 41, page 51, et seq.

In Bogert on Trusts and Trustees, Volume 1-A, section 202, page 254, et seq., it is said: 'The modern law is clearly to the effect that the existence of consideration is not necessary to the establishment of a trust, either by the transfer to a trustee of real or personal property, or by way of declaration of a trust of real or personal property. In order that the trust be enforceable, it is not necessary that there be any transaction which would amount to the giving of consideration if the trustee were treated as a promisor under a contract.

Page 611

It is not an essential feature of the trust creation that the settlor has received a benefit from the trustee, cestui, or another, or that benefits have moved from the settlor, cestui, or another, to the trustee. * * * If the settlor has otherwise effectively completed the trust, the fact that he has received nothing in return for the transfer of the equitable or legal and equitable property interest is immaterial. * * *'

Moreover, when the owner of personal property, in creating a trust therein, constitutes himself as trustee, it is not necessary as between himself and the beneficiary that he should part with the possession of the property. Warner v. Burlington Federal Savings & Loan Ass'n, 114 Vt. 463, 49 A.2d 93, 168 A.L.R. 1265; Cohen v. Newton Savings Bank, 320 Mass. 90, 67 N.E.2d 748, 168 A.L.R. 1321.

As to the reservation of the power to revoke or modify a trust, the general rule in this respect is stated in section 57.1, Scott on Trusts, Volume 1, page 336, et seq., as follows: 'It is well settled that the reservation by the settlor of a power to revoke the trust does not of itself make the trust testamentary. It is also settled * * that the reservation by the settlor of a life interest does not make the trust testamentary. Does the reservation of a life interest together with a power of revocation have any greater effect? It seems clear that it does not. If the owner of property transfers it in trust to pay the income to the settlor for life and on his death to pay the principal to others, the settlor reserving also power to revoke the trust at any time as long as he lives, [244 N.C. 350] it is held that the trust is not testamentary.' The foregoing view is supported by almost countless decisions, among them we cite: Becker v. St. Louis Union Trust Co., 296 U.S. 48, 56 S. Ct. 78, 80 L.Ed. 35; United Bldg. & Loan Ass'n v. Garrett, D.C., 64 F.Supp. 460;...