Taylor v. Nationsbank Corp.
| Decision Date | 04 March 1997 |
| Docket Number | No. COA96-919,COA96-919 |
| Citation | 481 S.E.2d 358,125 N.C.App. 515 |
| Parties | Joseph McKinley Bryan TAYLOR, Individually, and as Guardian Ad Litem of Joseph McKinley Bryan Taylor, Jr., and Martha Caroline McKellar Taylor, Minors; and Mary Price Taylor, Individually, Plaintiffs, v. NATIONSBANK CORPORATION, formerly N.C.N.B. National Bank of North Carolina; E.S. Melvin; and Carole W. Fee Bruce, Trustees, Defendants. |
| Court | North Carolina Court of Appeals |
Smith, Follin & James by Norman B. Smith and Seth R. Cohen, Greensboro, and Prickett, Jones, Elliott, Kristol & Schnee by William Prickett and Heather D. Jefferson, Wilmington, for plaintiffs-appellants.
Smith, Helms, Mulliss & Moore, L.L.P. by James G. Exum, Jr., Larry B. Sitton and Larissa J. Erkman, Greensboro, for defendants-appellants.
Plaintiffs argue that defendants' failure to verify their answer and motion for judgment on the pleadings is fatal to their appeal. However, plaintiffs failed to raise any objection at trial to the absence of verification and failed to assign error in the record on appeal. Accordingly, this issue is not properly preserved for appellate review. N.C.R.App. P. 10(a), (b)(1).
Plaintiffs assign error to the trial court's conversion, ex mero motu, of the parties' motions for judgment on the pleadings pursuant to Rule 12(c) of the North Carolina Rules of Civil Procedure to motions for summary judgment. However, plaintiffs bring forward no argument or authority in their briefs in support of this assignment of error. Accordingly, this assignment of error is deemed abandoned pursuant to Rule 28(a) of the North Carolina Rules of Appellate Procedure. N.C.R.App. P. 28(a).
The first issue before us is whether the plaintiffs were beneficiaries under the trust agreement at the time they filed their complaint. Defendants contend that by accepting the specific cash bequests prior to filing their complaint, adult plaintiffs no longer had any continuing present or future interest in the corpus of the trust, and therefore, were no longer owed any duties as trust beneficiaries. Also, defendants contend that legal title in the minor plaintiffs' specific cash bequests passed from the trust prior to the filing of the complaint and vested in separate trusts, and therefore, the minor plaintiffs now have only a continuing interest in the separate trusts and not an interest in the trust in dispute. Accordingly, defendants urge that plaintiffs do not have the status of trust beneficiaries.
No decisions or statutes in North Carolina have defined "beneficiary." Although North Carolina has not adopted the Uniform Probate Code as such, it has relied on it as persuasive authority in In re Estate of Francis, 327 N.C. 101, 108, 394 S.E.2d 150, 155 (1990). Uniform Probate Code, U.L.A. § 1-201(3) (1996), defines a trust beneficiary as including "a person who has present or future interest, vested or contingent" in the trust property. See Restatement (Second) of Trusts, § 3 (1959) (). This definition of beneficiary does not deal with the status of beneficiaries who have already received their bequests. Understandably, only a beneficiary may profit from a trust. Moreover, once beneficiaries receive their undisputed interest in the trust, their interest in the trust terminates. However, here it is undisputed that plaintiffs were each named beneficiaries in the trust documents. Furthermore, plaintiffs seek to view trust documents because they question the terms of the trust from which their specific bequests came. Therefore, they are by no means like mere strangers to the trust as defendants suggest. We hold that plaintiffs' mere receipt of cash bequests from a trustee does not terminate their status as beneficiaries where, as here, the plaintiffs were named as beneficiaries in the trust documents and they ask to view the trust documents because they question the terms of the trust from which their bequest came.
We now consider whether plaintiffs as beneficiaries were entitled to view the "Second Restated and Amended Revocable Trust Agreement," dated 29 June 1990, and the "First Amendment to Second Restated and Amended Revocable Trust Agreement," dated 8 December 1992.
Defendants contend that plaintiffs are estopped from asserting that they are entitled to view the trust documents on the grounds that " 'a party will not be allowed to accept benefits which arise from certain terms of the contract and at the same time deny the effect of other terms of the same agreement.' " See Brooks v. Hackney, 329 N.C. 166, 173, 404 S.E.2d 854, 859 (1991) (quoting Capital Outdoor Advertising, Inc. v. Harper, 7 N.C.App. 501, 505, 172 S.E.2d 793, 795 (1970)). Defendants' argument overlooks that defendants have the duties and obligations of a trustee. This Court has found that transactions between trustees and beneficiaries of a trust are "presumed fraudulent" and therefore "are voidable by the beneficiary unless the trustee can show by the greater weight of the evidence that the transaction was 'open, fair and honest,' " and "that the beneficiary had a full and complete understanding of the transaction...." Johnson v. Brown, 71 N.C.App. 660, 668, 323 S.E.2d 389, 394-95 (1984). Furthermore, defendants do not point to any terms of the trust that restrict the beneficiaries' rights to view the trust instrument. Here it would be a manifest unfairness to allow the trustees to invoke the doctrine of estoppel against the beneficiaries.
Defendants contend that the settlor created a private living trust, the terms of which he instructed his trustees were to be held confidential. Therefore, defendants urge they are legally bound to not disclose the terms of the trust agreement. Plaintiffs counter that as beneficiaries they have an absolute right to receive complete and accurate information with regard to the trust, including the right to examine all trust documents.
No decisions in North Carolina have conferred an absolute right to view trust documents on a trust beneficiary. Other jurisdictions have determined that a trustee has a duty of full disclosure of all material facts for the protection of a beneficiary's present and future interests in the trust. See Lee, North Carolina Law of Trusts § 30 (6th ed.1977); In re Murray's Will, 195 Misc. 629, 88 N.Y.S.2d 579, 581 (Sur. Ct., Orange County 1949); Branch v. White, 99 N.J.Super. 295, 239 A.2d 665, 671 , cert. denied, 51 N.J. 464, 242 A.2d 13 (1968); Karpf v. Karpf, 240 Neb. 302, 481 N.W.2d 891, 896-97 (1992); Eddy v. Colonial Life Ins. Co. of America, 919 F.2d 747, 750 (D.C.Cir.1990); Fidelity Bank v. Com. Marine & General Assur. Co., 592 F.Supp. 513, 528-29 (E.D.Pa.1984); In re Estate of Rosenblum, 459 Pa. 201, 328 A.2d 158 (1974); Budgen v. Tylee, 21 Beav. 545 (1856). While none of these authorities deal specifically with a right of the beneficiary to view the trust instrument itself, several of them rely on the Restatement (Second) of Trusts and other persuasive authorities. Although the North Carolina Supreme Court recently frowned on our use of the Restatement (Second) of Torts as authority in Hedrick v. Rains, 344 N.C. 729, 477 S.E.2d 171 (1996), we note that the Supreme Court has recognized the Restatement (Second) of Trusts as persuasive authority. See Fortune v. First Union National Bank, 323 N.C. 146, 148, 371 S.E.2d 483, 484 (1988); Citizens National Bank v. Grandfather Home for Children, Inc., 280 N.C. 354, 185 S.E.2d 836, 842 (1972); Campbell v. Jordan, 274 N.C. 233, 242, 162 S.E.2d 545, 551 (1968); Little v Wachovia Bank & Trust Co., 252 N.C. 229, 254, 113 S.E.2d 689, 708 (1960).
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