Union Trust Co. v. Hawkins

• Court: Ohio Supreme Court
• Writing for the Court: MARSHALL, C.J.
• Citation: Union Trust Co. v. Hawkins, 121 Ohio St. 159, 167 N.E. 389 (Ohio 1928)
• Decision Date: 31 May 1928
• Docket Number: No 20680,20680
• Parties: The Union Trust Co. v. Hawkins, Admr.

167 N.E. 389

121 Ohio St. 159

The Union Trust Co. v. Hawkins, Admr.

No 20680

Supreme Court of Ohio

May 31, 1928

Trusts - Instrument testamentary in character, when - Owner's title not divested and transfer operative only at his death - Relinquishment of dominion over property, essential to common law trust - Trust agreement, reserving alteration or revocation, valid although not executed as will - Section 8617, General Code.

1.

Where the owner of property executes to another an instrument under or in connection with which he does not divest himself of the title to any of his estate but provides for the disposition of such property at or after his death and it becomes operative to transfer the property only at the time and, by reason of his death, such instrument is testamentary in character.

2.

At common law a trust instrument intended to operate as a

conveyance of property at and after the death of the sett]or must be consummated by such a distinct and absolute delivery of property by the settlor to the trustee for the benefit of the named beneficiaries as to be a relinquishment of dominion over it by the settlor.

3.

The amendment of Section 8617, General Code, effective August 14 1921, authorizes a trust agreement, including the power to alter, amend or revoke the trust, and by virtue of that amendment a trust agreement making a transfer or conveyance of property including such power and to take effect at the death of the creator of the trust, will effect ouch transfer and conveyance, although the instrument be not executed in conformity with the law of wills.

Henry D. Hawkins, administrator of Catherine Hawkins, brought suit in the court of common pleas of Cuyahoga county against the Union Trust Company to recover certain assets claimed to belong to the estate of Catherine Hawkins. A jury was waived and the cause tried to the court, resulting in judgment for the plaintiff, and thereupon the defendant company prosecuted error to the Court of Appeals, which court affirmed the judgment. The cause comes to this court on allowance of the motion to certify the record. This cause is before this court at this time upon a rehearing, the original disposition having been made May 31,1928. The controversy turns upon the legal effect of two written instruments, as follows: Original Agreement.

"This agreement made and entered into at Cleveland, Ohio, this 30th day of January, 1920, by and between Catherine Hawkins, as first party, and the Citizens' Savings & Trust Company of Cleveland, Ohio, as second party, witnesseth:

"That said first party has this day delivered to said second party the sum of $4,400 in cash, and the cognovit promissory note of Simon S. Robinson to the order Of the said Catherine Hawkins for $9,500, dated January 29,1920, payable on or before five years after date at the office of the Citizens' Savings & Trust Company, Cleveland, Ohio, with interest at the rate of 6 per cent. per annum payable semi-annually, together with mortgage deed on real estate located in Dover township, Ohio, securing said note. Said note is indorsed in blank, and said mortgage deed is duly assigned to said the Citizens' Savings & Trust Company. Said cash, note, and mortgage, and the investments and reinvestments of same, are hereinafter called the 'trust estate' and are to be held, treated, and disposed of as hereinafter set forth.

"Said second party shall have absolute control of the trust estate, and shall handle, manage, sell invest, and reinvest, lease for any term irrespective of the period of the trust, and deal with the trust estate in such manner and form as to it shall seem wise, all statutory requirements or other limitations as to the investment of trust funds now or hereafter enacted or prescribed being hereby expressly waived. Provided, however, that no sale investment, or reinvestment of the trust estate or any part thereof, and no lease for a period longer than the term of the trust, shall be made, without the written consent and approval of first party; but first party may resign such supervision, in which event or in the event of her death or disability while the trust is in force all sales, investments, reinvestments, and leases shall be made as aforesaid, as to second party shall seem wise.

"Said second party shall also have the power to determine what is income and what is principal of the trust estate, and to apportion gains, expenses, and losses to principal or income as to it shall seem equitable.

"From the income derived from the trust estate said second party shall pay all charges and expenses necessary for the proper care, management, and preservation of the trust estate, including compensation to said second party for its services rendered hereunder, which compensation it is hereby agreed shall be 5 per cent of the gross income collected by second party.

"The net income derived from the trust estate shall quarterly, on or about the 1st days of February, May, August, and November in each year, be paid over to the first party as long as she shall live, if the trust shall not be sooner terminated by her as hereinafter provided.

"If the trust hereby created shall not be terminated during the lifetime of first party as hereinafter provided, it shall terminate on her death and the trust estate in the hands of second party shall be by it transferred, paid over, and distributed to the personal representative of first party.

"First party reserves to herself the right, if she elect so to do, to make additions from time to time to the trust estate hereby created, and if, as and when such additions are made, same shall be held, treated, and disposed of as though they had constituted a part of the original trust estate.

"Said first party also reserves to herself the right to withdraw from time to time any part or or all of the trust estate held under the terms of this agreement, and upon making such withdrawals the part of the trust estate transferred, paid over, and distributed to first party shall thereafter be held as her sole and absolute property, released from any trust created by this agreement.

"This agreement may be terminated at any time by mutual consent of the parties, or either party may terminate this agreement on giving the other 60 days' written notice of intention to terminate, and on the termination of the trust as aforesaid the trust estate shall be transferred, paid over, and distributed to first party and shall thereafter be held as her sole and absolute property, released from any trust created by this agreement.

"Second party does not guarantee any investment made by it hereunder, and shall be held responsible only for the exercise of good faith and reasonable diligence in the execution of the trust.

"Second party shall keep true and correct books of account, which books of account shall at all reasonable times be open to the inspection of first party or her duly appointed representative. Second party shall also annually, on or about the 1st day of February in each year, render first party a detailed statement showing all receipts and disbursements on account of the trust estate and the manner and form in which the trust estate is invested at the time of the rendition of such statement.

"It shall not be the duty of second party to return or list the trust estate or any part thereof for taxation, nor to attend to the payment of any taxes or assessments on any part of the trust estate. First party agrees for herself and her personal representative that she or her personal representative will make all necessary return of the property for taxation and that she or her personal representative will pay all taxes and assessments on account thereof and will indemnify second party against any and all such taxes and assessments and any and all penalties and interest accruing thereon, and that second party shall be further entitled to such indemnity out of the trust estate.

"If at the time of the distribution of said trust estate any part of the same consist of notes secured by real estate mortgages payable to second party or its successor, without any indication of trustee krship, or certificates of participation in beneficial ownership of real estate, the title to which shall be held by said second party or its successor, said second Party may, at its option, distribute in lieu of such real estate mortgage loans the principal amount thereof, with interest accrued to date of distribution, and in lieu of such certificates of beneficial interest may distribute the principal amount at which such certificates were acquired by the trust estate, together with accrued rental to the date of distribution.

"In witness whereof, the parties have hereunto set their names to duplicates hereof the day and year first above written. Katharine Hawkins. The Citizens' Savings & Trust Company, by E.D. Hale, Vice President. G.P. Koelliker, Secretary."

Supplemental Agreement.

"This supplemental agreement, made and entered into this 22d day of January, 1923, by and between Catherine Hawkins, (also known as Katharine Hawkins), as first party, and the Union Trust Company as second party, witnesseth:

"Whereas said parties entered into an agreement dated January 30, 1920, in which it was provided on page 2 thereof that if the trust thereby created should not be terminated during the lifetime of first party it should terminate on her death and the trust estate in the hands of second party should be transferred, paid over and distributed to the personal representative of first party, and first party now desires to change said provision to read as follows, now it is mutually understood that in lieu of said provision the following shall be substituted as a part of said agreement:

"The note and...