Valaer v. Campbell, 33668

• Decision Date: 14 February 1957
• Docket Number: No. 33668,33668
• Court: Washington Supreme Court
• Parties: Virgil N. VALAER, Appellant, v. Dorothy Valaer CAMPBELL, Eugene Webb Valaer, Dorothy Joan Valaer Schell, Mary Ellen Valaer Stevens, and The Baker-Boyer National Bank of Walla Walla, a National Banking Corporation, as Trustee, Respondents.

Page 835

49 Wn.2d 835

307 P.2d 256

Virgil N. VALAER, Appellant, v. Dorothy Valaer CAMPBELL, Eugene Webb Valaer, Dorothy Joan

Valaer Schell, Mary Ellen Valaer Stevens, and The

Baker-Boyer National Bank of Walla Walla, a National Banking

Corporation, as Trustee, Respondents.

No. 33668.

Supreme Court of Washington, Department 1.

Feb. 14, 1957.

Rehearing Denied April 1, 1957.

Cameron Sherwood and Robert A. Comfort, Walla Walla, for appellant.

Tuttle & Luce, Walla Walla, for Respondents Campbell, Valaer, Schell and Stevens.

Ringhoffer & Ringhoffer, Walla Walla, for The Baker-Boyer National Bank.

SCHWELLENBACH, Justice.

This is the second appeal involving these parties. See Valaer v. Valaer, 45 Wash.2d 565, 277 P.2d 326. The first appeal was concerned with an action by Mr. Valaer to modify a divorce decree previously obtained by Mrs. Valaer, which ratified and confirmed a property settlement agreement entered into between the parties on April 29, 1942, in contemplation of divorce. We held that the payments provided for in the agreements were not to be alimony and support money, but that they constituted a part of the settlement of property rights between the parties and that the decree could not be modified. We then stated: 'Nothing we have said herein, however, is intended to foreclose appellant of his right, if any he may have, to attack the trust agreement of July 15, 1942.'

We quote portions of the property settlement agreement:

'That he will deed, in trust, to the Baker-Boyer National Bank of Walla Walla, Washington, all of the farm lands now owned by him in Walla Walla County, State of Washington, to be held in trust by the said Baker-Boyer National Bank for purpose of providing an income for the said party of the second part and for the said children of the parties hereto; said lands to be held in trust during the lifetime of the said party of the second part or until the youngest child of said parties shall arrive at the age of 30 years.

'The said Trustee to manage the said farm lands and to apply the proceeds therefrom toward the payment of the interest on the mortgages now in effect against said lands and the taxes and other necessary maintenance charges, and the net income after the deductions of said charges to be paid to party of the second part; provided, however, that the said party of the second part shall not be paid in excess of the sum of Four Hundred ($400.00) Dollars monthly, and the balance of the net income shall be held in a reserve fund to be used by the said Trustee for the purpose of retiring the mortgage indebtedness against said lands and for the purpose of meeting the Four Hundred ($400.00) Dollar monthly payment to the party of the second part in the event that the income from the said lands in any subsequent years may not allow of the payment of the full amount of Four Hundred ($400.00) Dollars monthly.

'The said Trustee to have the power and authority to sell any of the said lands for the purpose of retiring the mortgage indebtedness against the remaining lands and thus clearing a reasonable portion of said lands of all mortgage liens.

'And providing further that if the said reserve fund exceeds the sum of Ten Thousand ($10,000.00) Dollars and the said mortgage indebtedness has been paid, then any sum in excess of the said sum of Ten Thousand ($10,000.00) Dollars shall be distributed and paid to the said party of the second part in addition to the Four Hundred ($400.00) Dollar monthly payment hereinbefore prescribed.

'That the details of the trust and management of the said lands shall be determined by and between the parties in a subsequent agreement and subject to the approval of the said Trustee.'

The trust agreement was dated July 15, 1942. In it Virgil N. Valaer, as grantor, conveyed all of his farm lands, in trust, to the Baker-Boyer National Bank, as trustee. We quote, in part:

'That Whereas, the Grantor and Dorothy Valaer, the beneficiary hereinafter designated, are husband and wife, and are the parents of Dorothy Joan Valaer aged 17 years, Eugene Webb Valaer aged 15 years and Mary Ellen Valaer aged 14 years, hereinafter mentioned;

'And Whereas, the said Virgil N. Valaer and Dorothy Valaer have heretofore made and entered into an agreement of separation, property settlement, alimony and support and maintenance, wherein and whereby the said Grantor has agreed to convey, in trust, certain real property hereinafter described unto said Trustee in pursuance of the terms of said agreement;

'And Whereas, the said Grantor desires to convey the real property hereinafter described to the said Trustee for the purpose of creating said trust;

'And Whereas, the said Trustee has agreed to accept said property and to hold the same and the proceeds and income thereof upon the trusts hereby created;

'* * *

'3. To sell and of said lands to the end and purpose that the remainder of said lands may be cleared of any mortgage indebtedness and to make, execute and deliver to the purchasers thereof all necessary and proper conveyances therefor, with special warranty only as to Trustee.

'* * *

'8. The grantor expressly surrenders all right and power to amend, modify or revoke this trust, in whole or in part.

'9. The said Trustee is to pay to the said Dorothy Valaer during the period of her natural life, and in the event of her death to the said following named children of the said Grantor and the said Corothy Valaer, towit: Dorothy Joan Valaer, Eugene Webb Valaer and Mary Ellen Valaer, or the survivors thereof, until the youngest of said surviving children becomes of the age of thirty (30) years, all of the net income from the said lands in monthly installments; and provided that until the mortgage indebtedness on said lands is fully liquidated and paid and until a reserve of Ten Thousand ($10,000.00) Dollars, as hereinafter provided for, is established the said monthly installments shall not exceed the sum of Four Hundred ($400.00) Dollars and to hold in a reserve fund all of the excess of said net income over and above the sum of Forty-eight hundred ($4800.00) Dollars per annum until said reserve equals the sum of Ten Thousand ($10,000.00) Dollars; said reserve fund to be used for the purpose of paying the mortgage indebtedness in force against said lands and to provide for the payment of the subsequent installments of Four Hundred ($400.00) Dollars per month in the event that prices of crops or rental returns shall diminish to such an extent that the current annual income from said lands does not provide sufficient money for said monthly payment of Four Hundred ($400.00) Dollars; and provided further that in the event that the lands remaining in this trust are fully cleared of mortgage indebtedness and the said reserve fund equals the sum of Ten Thousand ($10,000.00) Dollars, then all of the net proceeds and income of said lands may be paid to the beneficiary or beneficiaries of this trust.

'10. That in the event and as long as the income from the trust hereby created is held to be taxable to the grantor, he shall be reimbursed out of trust income for the income taxes he is so required to pay by the Trustee paying to him annually, on or before July 1st or as soon thereafter as the amount is determinable, an amount equal to the amount of taxes which this trust or the beneficiaries would be required to pay if it were treated as a taxable entity and the income taxable to it or them and such...