Starling v. Taylor, 68SC43

• Decision Date: 22 May 1968
• Docket Number: No. 68SC43,68SC43
• Citation: 161 S.E.2d 204,1 N.C.App. 287
• Court: North Carolina Court of Appeals
• Parties: Homer C. STARLING, Trustee, and Ruth I. Page and Wachovia Bank & Trust Company, Successor Trustees under an agreement with B. F. Page, v. Elizabeth Page TAYLOR and husband, Melvin B. Taylor, Frank Page Taylor and wife, Linda Tart Taylor, Helen Page Gaither and husband, John G. Gaither, Betty Page Gaither Halter and husband Gerald William Halter, Margaret Page Gaither and Wright T. Dixon, Jr., Guardian Ad Litem for Sue Page Taylor, a minor, John B. Gaither, Jr., a minor, Mary Helen Gaither, a minor, William Wiley Gaither, II, a minor, Frank Page Taylor, Jr., a minor, and such other unknown or unborn person who may be interested in the said Trust Estate.

Page 204

161 S.E.2d 204

1 N.C.App. 287

Homer C. STARLING, Trustee, and Ruth I. Page and Wachovia Bank & Trust Company, Successor Trustees under an agreement with B. F. Page, v. Elizabeth Page TAYLOR and husband, Melvin B. Taylor, Frank Page Taylor and wife, Linda Tart Taylor, Helen Page Gaither and husband, John G. Gaither, Betty Page Gaither Halter and husband Gerald William Halter, Margaret Page Gaither and Wright T. Dixon, Jr., Guardian Ad Litem for Sue Page Taylor a minor, John B. Gaither, Jr., a minor, Mary Helen Gaither a minor, William Wiley Gaither, II, a minor, Frank Page Taylor, Jr., a minor, and such other unknown or unborn person who may be interested in the said Trust Estate.

No. 68SC43.

Court of Appeals of North Carolina.

May 22, 1968.

Joyner & Howison, Raleigh, for plaintiff appellees.

Lassiter, Leager & Walker, Raleigh, for Elizabeth Page Taylor and Helen Page Gaither, appellees.

Bailey, Dixon & Wooten, Raleigh, for Wright T. Dixon, Jr., Guardian Ad Litem, appellant.

MORRIS, Judge.

Although portions of the original trust indenture are set out in the facts, the indenture itself is not before the Court for construction. We, therefore, consider it only as the instruments before us for construction relate to it.

We must first determine what legal effect, if any, is to be given to the memorandum of agreement executed on 23 December 1946, purporting to extend the original trust indenture for 10 years beyond its stated date of termination. It is clear that the extension of a trust beyond its stated duration amounts to a modification. The rules generally applicable to modifications are, therefore, applicable here.

Since the trust indenture contained no provision for revocation, it is an irrevocable trust. 3 Scott, Trusts 2d, § 330.1, p. 2394.

Obviously, the settlor here recognized the general rule that, having created an irrevocable Inter vivos trust devoid of any provisions with respect to modification, he was without power to modify the trust. 3 Scott, Trusts 2d, § 331, pp. 2413--2414.

In City of Washington v. Ellsworth, 253 N.C. 25, 116 S.E.2d 167, our Supreme Court refused to allow validity to an instrument seeking to modify a trust agreement. One of the contentions of the appellees was that since the settlor reserved the right 'to sell or dispose' of the property held in trust with the written consent of persons named in the instrument, she had the right to convey it to those persons who would have taken under the purported modification, and the purported modification shoud be construed as a deed to them. The Court in speaking to this proposition said:

'The original instrument contained no provision reserving the right to revoke or modify the trust provisions created therein, it only reserved the right of the trustor with the consent of those parties above-named 'to sell or dispose' of the property described in the instrument.

'The last cited authority (3 Scott, Trusts 2d) section 331, at page 2413, states: 'The same principles are applicable to the modification of a trust as are applicable to the revocation of a trust. If the settlor does not by the terms of the trust reserve a power to alter or amend or modify it, he has no power to do so."

In 4 Scott, Trusts 3d, § 338, p. 2687, it is said:

'It is true that where some of the beneficiaries do not consent, the others, even with the consent of the settlor, cannot terminate the trust. But where the settlor and all of the beneficiaries are of full capacity and consent, there seems to be no good reason why they should not have power to make such disposition of the trust property as they choose.'

And further at § 338, p. 2693:

'Similarly the terms of the trust may be modified if the settlor and all of the beneficiaries so desire.'

Our Supreme Court has said that where the beneficiaries of a trust are Sui juris and their rights are vested, they may dispose of their equitable interests in the trust property. Smyth v. McKissick, 222 N.C. 644, 24 S.E.2d 621.

In the case before us, however, all the beneficiaries did not consent, nor were all the beneficiaries Sui juris....