State ex rel. Nixon v. Turpin
| Citation | 994 S.W.2d 53 |
| Decision Date | 08 June 1999 |
| Docket Number | No. WD,WD |
| Parties | STATE of Missouri, ex rel., Jeremiah W. NIXON, Attorney General, State of Missouri, Respondent, v. Wade A. TURPIN, Appellant. 56419. |
| Court | Court of Appeal of Missouri (US) |
Elizabeth U. Carlyle, Lee's Summit, for Appellant.
Virginia H. Murray, Asst. Atty. Gen., Jefferson City, for Respondent.
Before SMART, P.J., HANNA and LAURA DENVIR STITH, JJ.
Wade A. Turpin appeals the trial court's order that ninety percent of the income distributions Turpin receives from a trust be paid to the state as reimbursement for the cost of his incarceration. The judgment of the trial court is vacated to the extent that it purports to order the trustee to distribute all the net income in the trust. The judgment of the trial court is affirmed in all other respects.
Turpin was sentenced to the custody of the Missouri Department of Corrections on February 25, 1985, following his convictions of two counts of sodomy and two counts of child abuse. On January 30, 1998, the Attorney General of the State of Missouri filed an action against Turpin under the Missouri Incarceration Reimbursement Act ("MIRA"), § 217.825 through 217.841, RSMo 1994, 1 seeking to have Turpin's assets applied to the cost of his incarceration. Specifically, the state sought to recover the cumulative cost of Turpin's care while incarcerated, from income payable to Turpin from a trust account of which Turpin is a beneficiary. Since the time of his incarceration, beginning in 1993, the trustee, United Missouri Bank, N.A. ("UMB"), has made twenty-nine separate quarterly deposits of the trust's income into Turpin's prison account, totaling $21,611.07. Between March 1997 and March 1998, the net annual income earned by the trust was $3,177.39. The state's petition sought the payment of ninety percent of this amount as reimbursement, and sought an order directing the inmate treasurer to pay over to the state ninety percent of each distribution from the trust to Turpin's prison account until reimbursement is made in full.
Turpin filed a response to the state's petition on April 14, 1998. In his response, Turpin argued that the trust was a discretionary trust as well as a spendthrift trust, and because he had "no absolute right to such payments," the trust was not an asset under MIRA.
A hearing on the matter was held on May 28, 1998. On June 15, 1998, the court issued detailed findings of fact and conclusions of law. 2 The court concluded that the trust was not discretionary as to the payment of "necessaries," and that "necessaries" were what the state was seeking reimbursement for. Further, the court concluded that to the extent that the trust was a "spendthrift trust," the exception for the suppliers of "necessaries" applied.
The court ruled that the trust's net income was an asset under MIRA and consequently, ninety percent of the annual income ($2,700.00) was available to the state as reimbursement. Mr. Rodney Kueffer, inmate treasurer of the Missouri Department of Corrections, was ordered to pay ninety percent of each disbursement of the trust's income over to the state. The remaining ten percent was to be left in Turpin's prison account.
In 1988, the State of Missouri enacted MIRA, §§ 217.825 through 217.841, RSMo, 1994, as a means of reimbursing the state for the cost of caring for and maintaining prisoners in the Missouri Department of Corrections ("MDOC"). Under MIRA, every prisoner must complete a department form in which the prisoner lists, under oath, his or her assets. 3 § 217.829, RSMo 1994. The form is then forwarded to the attorney general, along with an estimate of the total cost of caring for that prisoner. § 217.831.1, RSMo 1994. After investigating the prisoner's form, the attorney general may, subject to some restrictions, seek reimbursement for the state's expense in caring for the prisoner. § 217.831.3, RSMo 1994. No more than ninety percent of the value of the prisoner's assets may be paid to the state as reimbursement, § 217.833.1, RSMo 1994, and the total amount of reimbursement sought may not exceed the cost of caring for the prisoner while the prisoner is confined in the MDOC. § 217.833.2, RSMo 1994.
In March 1965, Leroy S. Turpin ("Father") executed his last will and testament, which established the trust now at issue. Article IV.C.2. (a) of Father's will provides:
The share created for my son, WADE ARTHUR, shall constitute a separate trust estate, and the Trustee shall manage, invest and reinvest the same, collect the income therefrom and pay over to my son, WADE ARTHUR, all of the net income of his separate trust, not less often than quarter-annually, during his life....
Paragraph B of Article V 4 provides in pertinent part:
Whenever the beneficiary of any trust hereunder shall be under a legal disability or, in the sole discretion of the Trustee, shall, for any reason be unable to apply any payments which he is entitled to receive hereunder to his or her own best advantage, the Trustee---
2. may withhold part or all of such payment ... as, in the sole judgment of the Trustee, shall exceed the amount needed to provide for the suitable care, support, maintenance, education and welfare of such beneficiary, taking into consideration the needs of anyone dependent upon such beneficiary and all other funds available to him of which the Trustee shall have knowledge; and any income so withheld shall be added to the principal of the trust estate from which it was derived.
Father's trust also contains the following spendthrift provision: 5
To the extent permitted by law, none of the beneficiaries hereunder shall have any power to dispose of or to charge by way of anticipation or otherwise, any interest given to such beneficiary; and all sums payable to any beneficiary hereunder shall be free and clear of debts, contracts, alienations and anticipations of such beneficiary, and of all liabilities for levies and attachments and proceedings of any kind, at law or in equity, and, in the case of a married woman, free from the control of her husband.
We review all of Mr. Turpin's points on appeal under the standard enumerated in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). The judgment of the trial court will be upheld unless it is not supported by substantial evidence, it erroneously declares or applies the law, or it is against the weight of the evidence. Id.
In Turpin's first two points on appeal, he claims that the trial court erred in entering judgment for the state because the income from the trust is not an "asset" under MIRA. MIRA defines "assets" as "property, tangible or intangible, real or personal, belonging to or due an offender ... from any other source whatsoever." § 217.827(1)(a), RSMo 1994 (emphasis added). Turpin contends that because he is under a legal disability, under Article V.B.2 of Father's trust, the distribution of income is now discretionary and he has no absolute right to receive the income. Turpin further contends that because he does not have an "undisputed right" to receive the income, the trust income "is not 'due' him, and does not provide a 'current stream of income.' " In other words, Turpin wants to continue receiving the distributions of income, and wants the trustee to continue to exercise its discretion to determine that the distributions are necessary for his suitable care, support, maintenance, education and welfare, but he wants to use the contention that there is discretion involved as a shield to prevent the state from receiving any of the proceeds distributed. Because of the overlapping nature of Turpin's contentions, we shall consider them together.
Whether trust income is available to or due a beneficiary depends on the grantor's intent. Missouri Div. of Family Servs. v. Wilson, 849 S.W.2d 104, 107 (Mo.App.1993).
In construing wills, the familiar rule prevails that they are to be construed as a whole; liberally construed; construed with reference to the intention of the testator; and unless that intention, if carried out, will violate some positive rule of law, or subvert some rule of public policy, such intention must be allowed to control, and be effectuated by the courts. And, in construing wills which create trusts, the same liberality of construction as to such trusts prevails.
Partridge v. Cavender, 96 Mo. 452, 9 S.W. 785, 786 (1888).
Turpin interprets Article V.B.2 as allowing "the trustee [to] withhold payments whenever it decides that Mr. Turpin is unable to apply the distribution to his best advantage." Further, Turpin argues that because he is imprisoned, he is under a "legal disability." 6 Consequently, Turpin concludes that
The language of Article V.B.2 is clear. Upon determining that Turpin suffers from a legal disability or that Turpin would be unable to apply the distribution to his own best advantage, the Trustee may withhold any part of the income distribution which the Trustee believes would exceed the amount necessary to provide for "the suitable care, support, maintenance, education and welfare" 7 of Turpin. Therefore, according to Article V.B.2, the determination of the amount necessary for Turpin's "suitable care, support, maintenance, education, and welfare" is within the trustee's sole discretion. Once the trustee determines the amount necessary for Turpin's "suitable care, support, maintenance, education, and welfare," the distribution of that amount is mandatory. The trustee's only discretion is in determining the amount which exceeds the amount necessary for Turpin's care, support, maintenance, education and welfare.
Thus far, the trustee has exercised its discretion to distribute all of the net income to Turpin through his inmate...
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