Goulding v. Bank of America, N.A.
2010 Mo. App. LEXIS 1601
Mo. Ct. App.2010Background
- Goulding v. Bank of America, N.A. concerns the Trustee’s distribution of trust income under a 1946 trust, as amended, with a 17% income provision and a 17% provision for the lawful issue of John Sr.
- The Settlor’s 17% and per stirpes distribution schemes directed postmortem accrual of former shares to the lawful issue of John Sr. and living recipients at monthly distribution times.
- Patrick Goulding, Emma Flanagan, Minnie Scully, John Sr., Mary, Isabel, and others are named beneficiaries; Emma’s former share uniquely accrued to John Sr., Minnie, and Mary, altering their shares.
- After Patrick’s death in 1982, the trust income previously paid to him was redistributed; John Jr. asserted Patrick’s other 31.17% share should also accrue per stirpes, enlarging his and his father’s issue’s combined entitlement.
- The circuit court held Patrick’s 3.25% share accrued per stirpes, but Patrick’s 31.17% share accrued to Patrick’s lawful issue via the 17% provision; the Missouri Court of Appeals affirmed, concluding the Settlor intended accrual into the 17% provision and rejected John Jr.’s broader vesting theory.
- The court’s governing holding ultimately affirms the circuit court’s judgment and clarifies that “accrue” and “former share” refer to accrual into the 17% provision, not vesting in individuals.
- The decision rests on interpretation of the trust as a whole to reflect the Settlor’s intent to distribute income to John Sr.’s lawful issue, ultimately per stirpes, during the life of the trust.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Patrick’s 31.17% share accrued to Patrick’s issue or to John Jr. | Goulding argues Patrick’s 31.17% formed part of his former share and should be per stirpes to John Jr. | Bank contends 31.17% was not part of Patrick’s former share and accrues to Patrick’s lawful issue via the 17% provision | Patrick’s 31.17% accrues to Patrick’s lawful issue via the 17% provision; former share limited to 3.25%. |
| Whether the Settlor intended per stirpes accrual to John Sr.’s lawful issue for former shares of other named beneficiaries | John Jr. asserts per stirpes accrual should be granted to him and Patrick’s Children | Bank argues accrual to the 17% provision for John Sr.’s lawful issue, not direct vesting in John Jr. and Patrick | Settlor intended accrual to John Sr.’s lawful issue via the 17% provision; no vesting in John Jr. or Patrick. |
| Whether the term ‘accrue’ signals vesting or accumulation within the 17% provision | Accrue means vesting and would enlarge former shares for John Jr. | Accrue means accumulate into the 17% provision, not vest | ‘Accrue’ is interpreted as accumulation into the 17% provision, not vesting. |
| Whether the trust class of lawful issue remains open for monthly distributions | The class remains open; monthly distributions to the lawful issue living at distribution time. |
Key Cases Cited
- Traders Bank of Kansas City v. Goulding, 711 S.W.2d 872 (Mo. banc 1986) (established that only Patrick’s legitimate children qualified as John Sr.'s issue at the time)
- Mercantile Trust Co. v. Sowell, 359 S.W.2d 719 (Mo. banc 1962) (trust interpretation favors Settlor’s primary intent)
- Gardner, 69 S.W.2d 950 (Mo.App.2002) (trust interpretation based on Settlor’s intent; open class rule)
- Commerce Bank, N.A. v. Blasdel, 141 S.W.3d 434 (Mo.App.2004) (no right to rewrite terms; reflect actual intent)
- McFall v. Blue Ridge Bank and Trust Co., 207 S.W.3d 149 (Mo.App.2006) (de novo review of trust interpretation; Settlor’s intent governs)
- State ex rel. Clark v. Gallagher, 801 S.W.2d 341 (Mo.1990) (statutory definition aids term interpretation)