Third Nat. Bank v. Scribner

• Citation: 16 McCanless 400,212 Tenn. 400,370 S.W.2d 482
• Parties: , 212 Tenn. 400 THIRD NATIONAL BANK, Appellee, v. Elizabeth Wilson Cates SCRIBNER et al., Appellants.
• Decision Date: 11 September 1963
• Court: Tennessee Supreme Court

Page 482

370 S.W.2d 482

16 McCanless 400, 212 Tenn. 400

THIRD NATIONAL BANK, Appellee, v. Elizabeth Wilson Cates SCRIBNER et al., Appellants.

Supreme Court of Tennessee.

Sept. 11, 1963.

Watkins, McGugin & Stewart, Nashville, for Elizabeth Wilson Cates Scribner.

W. Ovid Collins, Jr., Cornelius & Collins, Nashville, for Third National Bank.

Robert W. Sturdivant, Trabue, Minick, Sturdivant & Harbison, Nashville, for James Wilson Cates.

Robert W. Sturdivant, Nashville, guardian ad litem for Mary Elizabeth Talley.

ROBERT S. CLEMENT, Special Justice.

The Appellant herein, Elizabeth Wilson Cates Scribner, is the daughter of the late R. Morris Wilson and is a beneficiary under his will. James Wilson Cates and Mary Elizabeth Cates Talley are the children of the Appellant and are also beneficiaries under the will. The Third National Bank is the Trustee under the will of R. Morris Wilson. Litigation dealing with the estate of the decedent goes back to October 26, 1938, when a bill was filed to construe certain portions of the decedent's will and to obtain instructions as to the proper administration of the trust. There were subsequent decrees of the Court which the Appellant is now seeking to invalidate which will be discussed in detail in this opinion.

Appellant was a beneficiary under a will executed by her father in 1936. Later he disinherited her, but under a fourth codicil to his will, he made her a beneficiary. The effect of the fourth codicil, which was drawn by the testator's layman brother, was considered in Third National Bank v. Scribner, 175 Tenn. 14, 130 S.W.2d 126, 123 A.L.R. 1385, where it was held that the fourth codicil did not revive Appellant's interest under the 1936 will, but that any interest she had in her father's estate came solely from the codicil. The language pertinent to this cause is:

'My daughter shall have the use and occupancy of my Home on the Franklin Road with what furnishings therein belonging to me for her live (sic), free of rental, and I direct that the Trustee or Trustees pay, from the funds of my estate, the taxes and insurance thereon.

'I further wish to emphasize that the corpus and income, my home and furnishings which my daughter Elizabeth is to enjoy under this instrument is in every way protected by the spend thrift trust as set out in my will of October 1936.'

In a 1942 proceeding which was primarily concerned with the size of the allowance for the rearing of Appellant's children, the decree provided that the trustee was 'permitted' to make such repairs on the home place as would be necessary for its preservation. In a 1946 proceeding, again primarily concerned with the allowance for the children, the court approved and ratified the expenditures of certain funds on repairs of the home place, and provided that in the future the trustee would be empowered to make such expenditures without prior court approval.

In 1950 the opportunity arose for a portion of the large tract on which the ancestral house was located to be rented. At this time appellant and her two children, one of whom was no longer a minor and the other of whom had her disabilities of minority removed, entered into an agreement which was approved in a decree entered December 22, 1950. As a result of the agreement and the decree, a lease of five years, renewable for two more five-year periods, was executed, and a portion of the trust corpus was used in the financing of construction on the rental property. The agreement further provided for the distribution of the rental income, a portion to go to appellant and a portion to the trust estate.

Finally, in 1954, appellant's children again raised the issue of whether the trustee should pay for repairs on the home place. In exchange of pleadings, the issue of the right to rental income from the tract of land on which the ancestral home was situated was raised. However, in a 'Final Decree' entered on November 15, 1954, after a hearing before Chancellor Thomas A. Shriver, the matter was terminated. The decree recited that

'the parties hereto having adverse interests in the questions presented by said pleadings, to wit: Elizabeth Wilson Cates Scribner and James Wilson Cates and Mary Elizabeth Cates Talley, are before the Court and are sui juris, and that they have compromised and settled all the matters in controversy and evidenced same by a written agreement * * *.'

The decree further stated that so much of the agreement as undertakes to interpret the provisions of the will constitutes proper interpretations; that such of the agreement as is a compromise settlement between the beneficiaries is fair and equitable; and that the agreement in its entirety is fair, reasonable and proper, and not inconsistent with the provisions and directions of the will. It then adjudged that the agreement was ratified and approved and made the order of the court, and decreed that previous orders of the court as to payments to be made by the trustee for maintenance and repair of the home place should be superseded and modified in accord with the agreement.

The agreement provided that (a) the children would guarantee their mother $400.00 per month for eight months, the trustee would pay appellant $1,200.00 cash, appellant could lease all commercially-zoned property adjoining to the home place for up to twenty-five years (with certain provisions as to lease terms), and appellant would get 80% of the rents from such rental property, and that (b) the sole duty of the trustee as to maintenance and repair of the home place should be to pay taxes and insurance, the $1,200.00 should be received in full discharge of any expenditures made or to be made for repair and maintenance of the home place, and 20% of the rental income should go equally to the two children.

The instant proceeding arose out of a controversy over who should bear the expense of pressing an insurance claim. The trustee petitioned for instructions on this matter, and also asked for clarification of prior instructions regarding the trustee's duty to pay for repairs and maintenance of the home place. In a cross-petition, appellant sought a decree that the trustee was under a duty to pay for repairs and maintenance, and further to set aside the 1950 and 1954 agreements and decrees on the ground that they were void, being in violation of the terms of the spendthrift trust. The trustee and appellant's two children demurred to the cross-petition. The Chancellor sustained the trustee's demurrer on the grounds that (1) the decree of 1954 was a consent decree and could not be vacated or modified except for fraud or mutual mistake, and (2) since appellant could only have had the use of the property in question for her life, and could not have negotiated lease contracts for a period longer than her life, then the agreement to apportion rental income from said property was not an assignment of appellant's interest under the spendthrift trust.

The Chancellor also sustained the demurrers of the children, which were identical, on the grounds that the 1954 decree was a consent decree and could not be vacated or modified except for fraud or mutual mistake; that appellant was estopped to deny the validity of the 1950 and 1954 decrees having accepted the benefits or leases thereunder; the construction of the will approved by the Court in the 1954 proceeding was res judicata; appellant had been guilty of laches and that no proper grounds to vacate the 1950 and 1954 decrees were stated. In his memorandum the Chancellor states that he found the 1950 and 1954 decrees to be consent decrees and further that the parties were capable of binding themselves by consent, and did consent, and that the decrees showed on their face that they were consent decrees. From the sustaining of these demurrers, the appellant has appealed to this Court, assigning the following as error:

1. The Chancellor erred in sustaining the three demurrers and in dismissing appellant's cross-petition.

2. The Chancellor erred in sustaining each and every of grounds Nos. 1, 3, 4, 5 and 6 of the Demurrers filed by James Wilson Cates and Mary Elizabeth Cates Talley and each and every of grounds Nos. 1 and 2 of the demurrer filed by the Trustee and Conservator and in not overruling the demurrers.

3. The Chancellor erred in holding that the Trustee is under no duty to expend trust funds in the maintenance and repair of the homeplace mansion and in not...