Roberts v. Squyres

• Decision Date: 18 November 1999
• Docket Number: CO-EXECUTOR
• Citation: 4 S.W.3d 485
• Parties: (Tex.App.-Beaumont 1999) JAMIE REESE ROBERTS, INDIVIDUALLY and as INDEPENDENTof the ESTATE OF VIRGINIA R. REESE and WHITNEY ELIZABETH REESE, TINDAL HARDING REESE, JOHN B. REESE, and COURTNEY KING REESE, Appellants, v. CHARLOTTE JANE SQUYRES, SHANE HASTINGS SQUYRES, and FIRST BANK AND TRUST EAST TEXAS, Appellees. NO. 09-98-034 CV.
• Court: Texas Court of Appeals

Page 485

4 S.W.3d 485 (Tex.App.-Beaumont 1999)

JAMIE REESE ROBERTS, INDIVIDUALLY and as INDEPENDENT CO-EXECUTOR of the ESTATE OF VIRGINIA R. REESE and WHITNEY ELIZABETH REESE, TINDAL HARDING REESE, JOHN B. REESE, and COURTNEY KING REESE, Appellants, v. CHARLOTTE JANE SQUYRES, SHANE HASTINGS SQUYRES and FIRST BANK AND TRUST EAST TEXAS, Appellees.

NO. 09-98-034 CV.

In The Court of Appeals Ninth District of Texas at Beaumont.

Submitted on September 2, 1999.

Decided November 18, 1999.

On Appeal from the 217th District Court Angelina County, Texas Trial Cause No. 29,601-96-08.

Before Walker, C.J., Burgess and Stover, JJ.

OPINION

RONALD L. WALKER, Chief Justice.

This appeal arises from a declaratory judgment action filed by First Bank &amp Trust East Texas ("Bank") to determine rights to assets of a trust created in 1971 by Eddy Taylor Clark III ("Clark III"), now deceased, for the benefit of his son, Eddy Taylor Clark IV ("Clark IV"), also now deceased. The trial court ruled that the estate of Clark IV was entitled to the trust assets. Relatives of Clark III bring this appeal, contending the trust failed and its assets belong to Clark III's estate. We agree.

Factual Background

The facts are undisputed, though lengthy and complicated by the deaths of Clark III, Clark IV, and two potential heirs of Clark III's estate. The parties filed an agreed statement of facts and other stipulations that was recited in the trial court's judgment and later adopted by the trial court as its findings of fact.

Prior to their 1971 divorce, Clark III and his wife Charlotte Jane Clark ("Charlotte") had one child, Clark IV, born June 8, 1966. In connection with their divorce, Clark III and Charlotte entered into a Child Support and Property Settlement Agreement ("Agreement") that was made a part of their divorce decree. The Agreement provided for Clark III to establish a trust sufficient in size to pay child support in the amount of $200 per month until Clark IV reached the age of majority or married.

The trust established by Clark III exceeded the requirements of the Agreement by allowing the trustee discretion to distribute amounts from net income in addition to the required $200 in order to provide for Clark IV's education, welfare, and comfort. Further, the trust was to continue past Clark IV's twenty-first birthday, with distributions of corpus as provided below:

ARTICLE II

After the Grantor's son, Taylor Clark IV, shall attain the age of 21 years, the Trustee shall pay over to him or apply on his behalf the entire net income of his fund until he shall attain the age of 25 years at which time the Trustee shall distribute 1/3 of the corpus to the beneficiary in fee. The remainder of the Trust shall continue and the net income therefrom shall be paid to the said beneficiary or applied on his behalf until he shall attain the age of 30 years at which time the trust hereunder shall terminate and the corpus thereof shall be distributed to Taylor Clark IV.

Clark III died in 1971, shortly after creating the trust. Clark IV, the trust's sole beneficiary, died on March 30, 1996, less than three months before reaching age thirty. While the trust provided that when Clark IV reached age thirty the trust would terminate and he would receive all corpus, it made no provision for distribution if he died before then.

The trial court found that Clark IV's trust interest did not terminate on his death, but instead passed to his estate. The sole beneficiaries of his will and his sole heirs at law are his mother Charlotte Jane Squyres (formerly Charlotte Jane Clark) and his half-brother, Shane Hastings Squyres.

When Clark III died in 1971, he left all of his property to his mother, Lillian Clark Cooper ("Lillian"). His will provided:

I have one son, Eddy Taylor Clark IV, who was 4 years old on the 8th day of June 1970, and who is now in the custody of his mother. My wife has instituted legal proceedings in the State of Wyoming, which is her temporary residence, against me for a divorce. Until this matter is finally settled, including the custody of my son, I make no provision herein for his support, welfare and education. I leave this matter entirely within the sole and exclusive jurisdiction and right of my beloved mother, who, if good reason exists will make adequate provisions for my son. This provision shall not impair her absolute right to all the property I die seized and possessed of.

Lillian died in 1988, leaving her personalty and residence to her grandson Clark IV. The rest and residue of her estate was left in trust for various uses, and one of its beneficiaries was Clark IV. Lillian's will provided for the trust to continue if Clark IV survived both her and her husband and was not yet thirty-five years old. Clark IV was to receive one-third of the principal at age twenty-five, one-half of the balance at age thirty, and the remainder at age thirty-five. If Clark IV died without lineal descendants prior to reaching age thirty-five, then the trust assets passed to Lillian's sister, Virginia Reese.

On July 31, 1996, Virginia Reese disclaimed her interest in the trust created by Taylor Clark III, in 1971, and specified that her disclaimer "[was] and shall be binding upon my heirs, executors, administrators, estate, successors, agents, legal representatives, and assigns." On August 15, 1996, Virginia Reese died. The beneficiaries of her will and heirs at law were named in the stipulations as her daughter, Jamie Reese Roberts, and her grandchildren, Whitney Elizabeth Reese, Tindal Harding Reese, Erin Elizabeth Reese, Courtney King Reese, and John B. Reese, who with the exception of Erin, are the appellants in this cause. Erin assigned her interest to John B. Reese.

Issues

Appellants bring two issues. In the first, they contend the trial court failed to apply the proper legal standards and tests in making its determination that the parties to the trust agreement did not intend for Clark IV's interest to terminate upon his death and that the trust did not terminate but passed to his estate. In their second issue, appellants argue the evidence was legally and factually insufficient to support the trial court's finding that Clark III intended for the trust to pass to Clark IV's heirs if he died before age thirty.

Standard of Review

We review declaratory judgments under the same standards as other judgments and decrees. FDIC v. Projects Am. Corp., 828 S.W.2d 771, 772 (Tex. App.--Texarkana 1992, writ denied). We look to the procedure used to resolve the issue at trial to determine the standard of review on appeal. Here, because the case was resolved by an agreed statement of facts, we review the propriety of the declaratory judgment under the standards applied to judgments rendered upon an agreed statement of facts. See, City of Galveston v. Giles, 902 S.W.2d 167 (Tex. App.--Houston [1st Dist.] 1995, no writ); Unauthorized Practice of Law Committee v. Jansen, 816 S.W.2d 813, 814 (Tex. App.--Houston [14th Dist.] 1991, writ denied).

A case submitted to the trial court upon an agreed stipulation of facts is in the nature of a special verdict and is a request by the litigants for judgment in accordance with the applicable law. Giles, 902 S.W.2d at 170. The trial court and the reviewing court may not, unless provided otherwise in the agreed statement, find any facts not conforming to the agreed statement. State Bar of Texas v. Faubion, 821 S.W.2d 203, 205 (Tex. App.--Houston [14th Dist.] 1991, writ denied). Therefore, the sole question on appeal is, "Did the trial court correctly apply the law to the admitted facts?" See Commission for Lawyer Discipline v. Sherman, 945 S.W.2d 227, 228, (Tex. App.--Houston [1st Dist.] 1997, no writ); Faubion, 821 S.W.2d at 205. We find that the trial court incorrectly applied the law to the agreed facts, and sustain issue one.

Analysis

A trust fails when it becomes impossible to accomplish its intended purposes. See, Cushing v. Fort Worth Nat'l Bank, 284 S.W.2d 791, 793 (Tex. Civ. App.--Fort Worth 1955, writ ref'd n.r.e.). Here, the trust established by Clark III failed. Under the terms of the trust, the remaining corpus was to be distributed to Clark IV upon his reaching age thirty. He did not attain the age of thirty; therefore, the terms of the trust became impossible to fulfill.

"When an express trust fails, the law applies a resulting trust with the beneficial title vested in the grantor, or in case of his death, his estate and devisees." Richardson v. Laney, 911 S.W.2d 489, 493 (Tex. App.--Texarkana 1995, no writ); see Brelsford v. Scheltz, 564 S.W.2d 404, 406 (Tex. Civ. App.--Houston [1st Dist.] 1978, writ ref'd n.r.e.). This general rule is expressed in the Restatement of Trusts: "Where the owner of property gratuitously transfers it and properly manifests an intention that the transferee should hold the property in trust but the trust fails, the transferee holds the trust estate upon a resulting trust for the transferor or his estate, unless the transferor properly manifested an intention that no resulting trust should arise or the intended trust fails for illegality." RESTATEMENT (SECOND) OF TRUSTS 411 (1959).

The Restatement also provides that the resulting trust can be rebutted, "if the transferor properly manifested an intention that no resulting trust should arise upon the failure of the trust." RESTATEMENT (SECOND) OF TRUSTS 412 (1959). In the trust itself, Clark III manifested no intention that no resulting trust should arise upon the failure of the trust. Further, the parties stipulated that, "The trust agreement does not explicitly state how the property subject to the trust should be distributed under these circumstances." Also, the original petition states, "There are no provisions in the Trust Agreement which contain any directions for the termination of the Trust and disposition of Trust Assets in the event of Taylor Clark, IV's death prior to attaining thirty (30) years of...