Trust v. Filler

CourtCourt of Appeal of Missouri (US)
Citation7 S.W.3d 482
Parties(Mo.App. S.D. 1999) Theodore Short Trust and Elinor K. Short Trust, Under Trust Agreements dated
Decision Date18 August 1969

Appeal From: Circuit Court of Greene County, Hon. Calvin R. Holden

Counsel for Appellant: Richard L. Schnake, Emory Melton and Robert S. Wiley

Counsel for Respondent: Charles A. Redd and Timothy J. Prosser

Opinion Summary: None

Garrison, C.J., and Prewitt, J., concur.

Robert S. Barney, Judge

This consolidated appeal involves a three-way dispute among claimants to the residue of the Theodore Short Trust and to the residue of the Elinor K. Short Trust.1

On August 18, 1969, Theodore Short ("Theodore") and his wife, Elinor K. Short ("Elinor") executed respective, revocable living trusts containing residuary dispositions which were essentially identical.

Elinor died intestate on January 11, 1973, and Theodore died testate on April 7, 1973. One child was born to the marriage of Theodore and Elinor, namely Theodore G. Short ("Teddy"). Teddy died testate on June 5, 1996, without issue.

Article II of each trust, in pertinent part, provided for the benefit of each grantor's spouse and their son, Teddy. Each grantor directed that upon the grantor's decease the net income of the trust, in the sole and absolute discretion of the trustee, could be distributed: (1) in whole or in part to the grantor's spouse or son; (2) to the descendants of the grantor's son, Teddy; or (3) accumulate in whole or in part and be added to the principal of the trust.

Additionally, the following provisions are found in Article II of each trust:

Said trust hereinabove created after the decease of the Grantor shall continue for the life of my [spouse], and my son, [Teddy]. Upon the decease of the last to survive, said trust shall thereupon cease.

If my son is survived by issue, then all of the rest, residue and remainder of the Trust Estate of whatsoever kind and wheresoever situated, I direct shall be distributed equally and per stirpes to and among the issue of my son, [Teddy].

* * *

However, if my son is not survived by issue, then I will the following legacies to the following named persons:

[Distributions of cash to legatee(s)]

All of the rest, residue and remainder of the Trust Estate I direct shall be divided into two (2) equal portions. One equal portion shall be divided equally among my surviving brothers and sisters, per capita and not per stirpes. The remaining one-half (1/2) of my residue estate I direct shall be distributed equally and outright to MICHAEL F. KELLY, MOLLY MARTIN, and TIMOTHY L. KELLY, or to those that survive, on a per capita basis. If MICHAEL F. KELLY survives, I direct that my Galena residence be made a part of his share.

(emphasis added; this clause is the subject of the disagreement among the parties).2

Michael Kelly, Molly Martin and Timothy Kelly survived Theodore and Elinor, and were living as of Teddy's death on June 5, 1996. None of Theodore's siblings survived Teddy.3

After Teddy's death without issue, Mercantile Bank of Springfield ("Mercantile") brought two separate petitions for declaratory judgment in its capacity as trustee of both Theodore's trust and Elinor's trust. In each action, Mercantile requested the court to interpret the residuary clause as set out in Article II of each trust and determine the respective trust's residuary beneficiaries.4

One set of claimants ("Chinnis claimants") representing certain heirs at law of siblings who survived Theodore (see names of siblings at footnote two, supra) answered. These claimants posited that as heirs at law of the brother and sisters "surviving" at the time of Theodore's death, they were entitled to one-half of the residuary estate of each trust. They asserted that Theodore's trust and Elinor's trust, together with Theodore's will indicated an intention by each grantor to provide for equal distribution between the collateral heirs of Elinor and the collateral heirs of Theodore in the event that their son, Teddy, died without issue.

A second set of claimants, consisting of Intervenors Michael Kelly, Molly Kelly Martin and Timothy Kelly ("Kelly claimants") answered and asserted that they were lawfully entitled to their one-half of the residue as provided by each trust.5 Additionally, they maintained that since none of Theodore's siblings survived Theodore's son, Teddy, any disposition of the property of either trust in favor of Theodore's siblings failed. They asked the court to direct Mercantile to hold the remaining one-half of the portion of the residue of each trust in a resulting trust for the benefit of Theodore's probate estate and "Elinor's [intestate] estate," respectively.

A third claimant, Charles A. Fuller ("Fuller"), the personal representative of Teddy's probate estate, answered Mercantile's petition and generally prayed for the court to give interpretation and construction to each of the two trusts.6 Fuller adopted Mercantile's respective memoranda filed in each action in support of Mercantile's respective motions for summary judgment.

Mercantile argued that although the class of beneficiaries who were to inherit the disputed one-half of the residue of each trust were Theodore's surviving brothers and sisters, because no member of the defined class was living at the time of Teddy's death, "the disposition of the portion[s] of the trust[s] to be distributed to [Theodore's] surviving brothers and sisters fail[ed]" and Theodore "died intestate as to the failed portion[s] of the trust[s]."

Mercantile then postulated that "the proper disposition [of the failed interest in Theodore's trust] is by descent" as determined at the time of Theodore's death and that, therefore, the "failed interest" should be distributed to the probate estate of Theodore's son, Teddy.

Regarding the failed interest in Elinor's trust, Mercantile argued that since Elinor died intestate and both Elinor's husband, Theodore, and her son, Teddy, were deceased, one-half of the failed interest should be distributed "by descent" to Theodore's probate estate and one half of the failed interest should be distributed "by descent" to Teddy's probate estate.

Thereafter the parties filed and answered each other's respective motions for summary judgment in each case. The court entered an amended judgment, discussed more fully infra, in each declaratory judgment action.7

In Theodore's trust case, the court granted the Kelly claimants' Motion for Summary Judgment while denying all other motions for summary judgment. The court's pertinent conclusions are noted in the following lettered paragraphs.

[a] Because no brother or sister of [Theodore] survived the death of [Teddy] in 1996, any gift to [Theodore's] siblings under Article II of [Theodore's trust] failed.

[b] [T]he portion of the trust remainder which is the subject of [Theodore's] failed gift [is to] be held by . . . Mercantile in 'resulting trust' for the benefit of [Theodore's] estate.

[c] Mercantile is obliged now to transfer all property held in resulting trust for [Theodore's probate estate] to itself as Trustee of the Trust. To administer the property in question according to the terms of [Theodore's trust], Mercantile must divide the subject property into "two (2) equal portions," one portion to be "distributed equally and outright to [Kelly claimants]," and one portion to be administered and distributed under the provisions of Article II of [Theodore's trust] creating the failed gift to [Theodore's] siblings.

[d] Each and every portion of the Trust which is or becomes the subject of the failed gift to [Theodore's] siblings must be held in resulting trust for [Theodore's] estate and should . . . pass under Article III of [Theodore's] Will to the Trustee of [Theodore's trust] which must, under Article II of [Theodore's trust], again divide the property into "two (2) equal portions," one portion to be distributed outright to [Kelly claimants] and one portion to circulate, yet again and again, through [Theodore's probate estate] and [Theodore's trust] until all of the property in question has passed, in successive one-half installments, to [Kelly claimants].

The court then Ordered that Mercantile "distribute such portion of the property held in resulting trust equally to the [Kelly claimants]."

Likewise, in the amended judgment in Elinor's trust case, the court made similar findings and conclusions of law. It also determined that Elinor had died intestate and that at her death only her husband, Theodore, and her son Teddy were her surviving heirs and each was entitled to receive an equal, one-half share of her intestate estate under the provisions of section "474.010(1)(a) RSMo, as written in 1973."

The court concluded that since both Theodore and Teddy were now deceased, "their respective, one-half shares must pass to their respective estates." The court then made similar dispositions as outlined in its amended judgment in Theodore's trust case. See sub-paragraphs (c) and (d), supra. The court determined and Ordered that:

[a] [Mercantile], holds the one-half portion of the property of [Elinor's trust] to be 'divided equally among Grantor's, [i.e., Theodore's] surviving brothers and sisters, per capita and not per stirpes,' in resulting trust for the benefit of the Estate of Elinor K. Short;

[b] That [Mercantile] shall distribute the property held in resulting trust, one-half to [Teddy's probate estate] and one-half to the [Kelly claimants] in accordance with the terms of [Theodore's] Will and Trust Agreement.

I.

The Chinnis claimants, representing certain heirs at law of Theodore's siblings that survived Theodore, bring separate appeals from the...

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