St. Louis Union Trust Co. v. Dudley

• Decision Date: 02 June 1942
• Docket Number: No. 26043.,26043.
• Citation: 162 S.W.2d 290
• Parties: ST. LOUIS UNION TRUST CO. v. DUDLEY et al.
• Court: Missouri Court of Appeals

162 S.W.2d 290

ST. LOUIS UNION TRUST CO. v. DUDLEY et al.

No. 26043.

St. Louis Court of Appeals. Missouri.

June 2, 1942.

Appeal from Circuit Court, Audrain County; Frank Hollingsworth, Judge.

"Not to be reported in State Reports."

Suit by St. Louis Union Trust Company as successor cotrustee under indenture of trust of G. H. Dudley against Samuel R. Dudley and others and Samuel R. Dudley as cotrustee under indenture of trust of G. H. Dudley to require an accounting and to recover for benefit of trust estate the proceeds of two policies on the life of the creator of the trust. From a judgment for defendant, plaintiff appeals.

Affirmed.

Bryan, Williams, Cave & McPheeters, of St. Louis, for appellant.

Fry & Edwards, of Mexico, for respondents.

BENNICK, Commissioner.

This is a proceeding by plaintiff, St. Louis Union Trust Company, as successor cotrustee under a certain trust indenture or declaration of trust, to require an accounting and recover from defendants, for the benefit of the trust estate, the proceeds of two policies of insurance upon the life of the creator of the trust, which proceeds are alleged to be rightfully a part of the assets of such estate. Judgment was entered in favor of defendants; and plaintiff's appeal to this court has followed in the usual course.

The trust indenture in question was executed on April 15, 1930, by one G. H. Dudley, now deceased.

The Dudley family home was in Mexico, Missouri, from whence the deceased had come to St. Louis in 1892, where he engaged in the real estate business for many years. Remaining in Mexico were his brother, Samuel R. Dudley, and his two sisters, Mary Ella Dudley and Ethel Dudley, the three of whom, being the recipients of the proceeds of the two policies of insurance, were named by plaintiff as defendants in this proceeding. Samuel R. Dudley was also joined as a defendant in his capacity as cotrustee with plaintiff under the terms and provisions of the declaration of trust.

In his declaration of trust, which, as we have already indicated, was executed on April 15, 1930, the deceased designated himself and his brother, Samuel R. Dudley, as trustees, and then recited that he had assigned, transferred, and delivered, and by virtue of such instrument did assign, transfer, and deliver, to the said trustees certain deeds of trust, notes, securities, and property more particularly described in an exhibit attached thereto and made a part thereof, all of which assets were to be held in trust for the uses and purposes and subject to the conditions mentioned in seven succeeding sections of the instrument.

By Section 1 it was provided that the trustees should have full power and authority to manage and control the trust estate, to sell, assign, transfer, or dispose of all or any part of it, and to invest and reinvest the proceeds.

It was then provided that the deceased, as the donor or creator of the trust, should receive the entire net income of the trust estate during his life, and that after his death the net income should be paid in equal shares to his brother and two sisters, or the survivor or survivors of them, during their lives, with a further provision that if Minnie Dudley, the wife of Samuel R. Dudley, should be living upon the death of the last survivor of the brother and two sisters and should have been the wife of Samuel R. Dudley at his death, then and in that event the then trustees should pay to the said Minnie Dudley, for and during her lifetime, a sum out of income not exceeding $50 a month, with any excess to be added to the corpus of the estate and to be invested as a part thereof until the termination of the trust.

Provision was made that the trust should terminate upon the death of the last survivor of the donor, his two sisters, his brother, and the latter's wife, at which time the sum of $2,000 out of the corpus of the estate should be paid to the Elmwood Cemetery Association of Mexico, Missouri, as an endowment fund for the perpetual care of the Dudley family burial lot, with the remainder of the corpus of the estate to be retained in trust in perpetuity as a charitable trust, the income of which should be used to provide scholarships for worthy students of Audrain County, Missouri.

By Section 2 it was provided that in the event of the death, resignation, or disability of G. H. Dudley as cotrustee, the St. Louis Union Trust Company should be and become successor cotrustee with the donor's brother, Samuel R. Dudley, and that all successor trustees should have and enjoy all the powers and privileges thereinbefore conferred upon the original trustees.

Section 3 permitted encroachment upon the corpus of the estate for certain purposes and in certain contingencies; Section 4 prohibited the anticipation of income on the part of the beneficiaries; while Section 5 reserved to the donor the right to deposit other and additional funds, securities, or property with the trustees for the purpose of having the same become a part of the trust estate subject to all the terms and provisions of the indenture.

Then followed Sections 6 and 7, the provisions of which form the basis for the contentions of the respective parties in regard to the question of whether the two policies of life insurance were a part of the assets of the trust estate at the time of the donor's death:

"Section 6: The Donor hereby reserves the right as Co-trustee hereunder, to deposit all or any part of the trust estate in a safe deposit box to which he shall have sole access during his lifetime as such Co-trustee, without the consent, knowledge or presence of his Co-trustee, and neither the Co-trustee with the said Donor, nor any successor trustees shall be in anywise liable or responsible for any property or securities placed in the said safe deposit box or withdrawn therefrom or otherwise disposed of by the Donor as such Co-trustee during his lifetime, it being the intention of this Indenture to reserve unto the Donor the right to have the possession, custody and control of the trust estate and sole access thereto and the sole right of disposition thereof during his lifetime without the consent or concurrence of his Co-trustee, and to absolve his Co-trustee, and all successor trustees from any and all liability on account of any act of the Donor or any disposition of the trust estate made by him during his lifetime.

"Section 7: The Donor hereby reserves the right to revoke and vacate this trust in whole or in part, or to withdraw any of the said funds, securities or property from its operation at any time during his life, upon his written notice to the Trustees, and upon the receipt of any such notice by the Trustees revoking or vacating this trust or requesting the withdrawal of any of the said funds, securities or property, this trust as to such funds, securities or property, shall stand revoked and vacated and the same shall be delivered unto the Donor free from this trust."

The policies in question, the one for the face amount of $2,000, and the other for the face amount of $5,000, had both been issued by the John Hancock Mutual Life Insurance Company, and in both the deceased's brother, Samuel R. Dudley, and his two sisters, Mary Ella Dudley and Ethel Dudley, had been designated as beneficiaries, with the right reserved in the deceased, however, to make a change of beneficiary subject to the right of any assignee.

Both of such policies were listed as assets of the trust estate in the exhibit filed with and made a part of the trust indenture; and we do not understand that there is any controversy about the fact that such policies did originally become assets of the trust estate, notwithstanding the fact that there had been no change of beneficiary endorsed upon the policies, nor had the insurance company been notified of the assignment of the policies to the trust estate. The provision for notice to the insurance company was intended solely for the company's benefit; and while, in the absence of notice, the assignment of the policies to the trust estate was not binding on the insurance company, the assignment was nevertheless effective in so far as the deceased himself was concerned and as between him and his brother and two sisters, the beneficiaries designated in the policies. An assignment of a policy is one thing, and a change of beneficiary another, even though the net result may be the same in a particular case; and where, as here, the insured has reserved to himself the right to change beneficiary so that the named beneficiary has acquired no vested interest in the policy, his further right of assignment is superior to any conditional right of the named beneficiary, and the exercise of such right should logically defeat the right of the beneficiary to retain the proceeds of the insurance as against the claim of the assignee. Missouri State Life Ins. Co. v. California State Bank, 202 Mo.App. 347, 216 S.W. 785; Cornell v. Mutual Life Ins. Co., 179 Mo. App. 420, 165 S.W. 858.

The question, then, is whether the policies, having been...