89 Ohio St. 3d 152 | Ohio | 2000
Lead Opinion
There are three issues for our consideration. The first issue is whether Katherine Beyer’s one-third share of Donald Van Horn’s trust fund should be distributed to her estate, as administered by the state of New Jersey, or to her sisters Sophie and Elizabeth Beyer. To answer this question we must ascertain how Donald Van Horn intended the trust corpus from his testamentary trust to be distributed. The second issue is whether the state of New Jersey had standing to challenge distribution of Katherine Beyer’s share of
Construing the terms of the trust pursuant to Van Horn’s intent, we find that Katherine Beyer’s share of the trust should pass to Sophie and Elizabeth Beyer equally. This makes the issue of whether New Jersey has standing moot. We also find that the appellate court did not err in affirming the probate court’s judgment that awarded NCB trustee fees and expenses for administration of the trust subsequent to December 31, 1990. Thus, we affirm the judgment of the court of appeals.
Katherine Beyer’s Share of the Trust
The fundamental rule in the construction of a trust is to ascertain the intent of the settlor. Domo v. McCarthy (1993), 66 Ohio St.3d 312, 314, 612 N.E.2d 706, 708. In determining the intent of a testamentary trust, we must look to the testator’s intent as evidenced in his or her will. This court has used the following guidelines to interpret a testamentary trust:
“ T. In the construction of a will, the sole purpose of the court should be to ascertain and carry out the intention of the testator.
“ ‘2. Such intention must be ascertained from the words contained in the will.
“ ‘3. The words contained in the will, if technical, must be taken in their technical sense, and if not technical, in their ordinary sense, unless it appear[s] from the context that they were used by the testator in some secondary sense.
“ ‘4. All parts of the will must be construed together, and effect, if possible, given to every word contained in it.’ ” Ohio Natl. Bank of Columbus v. Adair (1978), 54 Ohio St.2d 26, 30, 8 O.O.3d 15, 17, 374 N.E.2d 415, 417-418, quoting Townsend's Executors v. Townsend (1874), 25 Ohio St. 477, syllabus.
We find that Item 5.2 C of Van Horn’s will contains language that is instructive in determining how Katherine Beyer’s share of the trust should be distributed. Item 5.2 C states:
“At the death of my daughter, Virginia, if she leaves lineal descendants surviving, then the assets of this trust estate shall be divided into as many equal trust shares as my said daughter has children then living, plus an equal share for the lineal descendants per stirpes of any child of my daughter, who may have died leaving lineal descendants surviving.
U i{{ $ *
“The assets of such trust share shall be distributed free from trust to the beneficiary thereof when he or she reaches the age of twenty-five (25) years. If such beneficiary dies before the assets of his or her trust share has [sic] been
We find that the contingency requiring lineal descendants to reach the age of twenty-five evidences intent by Van Horn that such contingency is a condition precedent to the vesting of an interest in the trust fund in those descendants. The interest would then become possessory once all prior interests have terminated.
However, a vested interest may be subject to divestment upon the occurrence of a named event. See Papiernik v. Papiernik (1989), 45 Ohio St.3d 337, 343, 544 N.E.2d 664, 670. We believe that was precisely Van Horn’s intent in using the following language found in Item 5.2 C of his will: “[/]/ such beneficiary dies before the assets of his or her trust share has [sic] been fully distributed to him or her, then the undistributed portion shall be distributed forthwith and free from trust to his or her issue, if any, but in default of any such issue, shall be distributed pro rata to the shares of those, if any, who claim through the same parent as the deceased beneficiary, but in default of any such, then such share shall be added pro rata to the other trust shares * * *.” (Emphasis added.)
We find that this language indicates that a lineal descendant’s right to the proceeds from the trust fund is contingent upon the descendant’s surviving distribution of the trust share to him or her. In other words, under this trust, Virginia Beyer’s lineal descendants have a vested interest in the trust corpus if they reach the age of twenty-five, but are subject to divestment if they die before the proceeds from the trust are distributed to them.
We also find that the trust language subsequent to the divesting language evidences an intent by Van Horn that, should a descendant who is vested die before his or her interest is fully distributed to him or her, that share would gift over to other family members. A gift-over provision to relatives indicates an intent by the testator that property from a trust remain in the family. See Casey v. Gallagher (1967), 11 Ohio St.2d 42, 40 O.O.2d 55, 227 N.E.2d 801.
We also find that Item 6 of Van Horn’s will provides insight into his intent in distributing trust assets. Item 6 is a spendthrift clause, which provides:
“No principal or income payable or to become payable under any trust created by this will shall be subject to * * * attachment by any creditor * * * . If * * *
This language provides that beneficiaries cannot alienate the corpus of the trust prior to the actual receipt of the trust share to the beneficiary. Any attempt to do so would terminate that beneficiary’s interest in his or her trust share. Thus, a spendthrift clause also indicates an intent to have trust proceeds stay within those named as beneficiaries.
In interpreting a testamentary trust, we must look to all the parts of the will. Adair, 54 Ohio St.2d at 30, 8 O.O.3d at 17, 374 N.E.2d at 418. Together, Items 5 and 6 of the Van Horn will evidence an intent by Van Horn to keep the trust corpus from being alienated outside the bloodlines of his family or their descendants. Further, the specific language in Item 5.2 C of Van Horn’s will divests a beneficiary of his or her share of the trust should he or she die before the share is fully distributed to him or her, and directs how that share is gifted over to his or her other family members. Thus, we affirm the court of appeals’ judgment that, in creating the testamentary trust, Van Horn’s intent was to keep the corpus from being alienated outside the bloodlines of the family members or their descendants.
Prior to Mildred Van Horn’s death, Sophie, Elizabeth, and Katherine Beyer all had reached the age of twenty-five. Thus, each had acquired a vested interest in the trust corpus because each had a present fixed right to future enjoyment of the trust assets. See Tax Comm. v. Oswald (1923), 109 Ohio St. 36, 52, 141 N.E. 678, 682. When Mildred Van Horn died on June 2, 1990, Sophie, Elizabeth, and Katherine Beyer’s respective vested interests became possessory. However, Katherine Beyer’s share of the trust had not been distributed to her before she died on December 31,1990. Therefore, pursuant to the language in Item 5.2 C of the will, she was divested of her share when she died before her share was distributed to her. If Katherine Beyer had left an heir, then the language in Item 5.2 C would have directed her share to be distributed to her children. However, because Katherine Beyer died childless, Item 5.2 C directed that Katherine Beyer’s share of the testamentary trust be distributed pro rata to Sophie and Elizabeth Beyer.
Therefore, we affirm the court of appeals’ judgment pertaining to the distribution of Katherine Beyer’s share of the trust. Katherine Beyer’s share of the trust should be distributed to Sophie and Elizabeth Beyer equally.
Trustee Fees and Expenses
In answering NCB’s complaint, Sophie and Elizabeth Beyer asserted a counterclaim seeking “a refund of all Trustee fees * * * and other trust expenses taken by Plaintiff [NCB].” NCB moved for partial summary judgment against this counterclaim. Following a hearing, the probate court by entry on March 10, 1998, granted NCB’s motion for partial summary judgment against Sophie and Elizabeth Beyer’s counterclaim for “Trustee Fees and Expenses.” The appellate court affirmed the award of trustee fees and expenses.
On cross-appeal to this court, Sophie and Elizabeth Beyer assert that they should not have to pay NCB trustee fees and expenses after December 31, 1990, because of NCB’s unreasonable delay in distributing the proceeds of the Van Horn trust.
Sup.R. 74 addresses trustee compensation. Subsection (E) states:
“The court may deny or reduce compensation if * * * after hearing, the court finds that the trustee has not faithfully discharged the duties of the office.'” (Emphasis added.)
“[UJsage of the term ‘may’ is generally construed to render optional, permissive, or discretionary the provision in which it is embodied.” (Emphasis added.) State ex rel. Niles v. Bernard (1978), 53 Ohio St.2d 31, 34, 7 O.O.3d 119, 120-121, 372 N.E.2d 339, 341. Thus, pursuant to the language in Sup.R. 74(E), a court has discretion whether to reduce or deny a trustee compensation. “The term ‘abuse of discretion’ connotes more than an error of law or of judgment; it implies that the court’s attitude is unreasonable, arbitrary or unconscionable.” State v. Adams (1980), 62 Ohio St.2d 151, 157, 16 O.O.3d 169, 173, 404 N.E.2d 144, 149.
Sophie and Elizabeth Beyer allege that NCB should not be awarded trustee fees and expenses because it failed to distribute the trust assets within a reasonable time. The record indicates that a hearing to determine whether to award NCB trustee fees and expenses was scheduled for February 24,1998. On March 10, 1998, the probate court awarded NCB trustee fees and expenses by entry. The probate court did not issue a decision on the issue although the entry that granted NCB summary judgment did refer to “the facts presented.”
Notwithstanding our presumption of the regularity of the probate court’s proceedings and judgment awarding NCB trustee fees and expenses, we also find that, pursuant to the arguments made and the evidence that was certified in the record, the probate court did not abuse its discretion. Arguably, there is evidence to support a finding that NCB was reasonable in its actions, just as there is some evidence to support a finding that NCB was not reasonable in its actions. Sophie and Elizabeth Beyer have challenged the award of fees and expenses to NCB, but have failed to provide the court with a transcript of the proceedings of the hearing to enable this court to evaluate the evidence upon which the probate court based its judgment. The evidence that does exist outside the hearing and is before this court is of such a nature and quantity to be insufficient to find that the probate court’s judgment awarding trustee fees and expenses to NCB was unreasonable, arbitrary, or unconscionable. Accordingly, we affirm the judgment that awarded trustee fees and expenses to NCB.
Conclusion
We find that (1) it was Donald Van Horn’s intent that Katherine Beyer’s share of the trust fund should pass to Sophie and Elizabeth Beyer in equal shares, (2) the issue of New Jersey’s standing is moot, and (3) NCB was entitled to trustee fees and expenses.
Thus, we affirm the judgment of the court of appeals.
Judgment affirmed.
. We note that where a parent attempts to utilize a spendthrift clause to preclude a creditor from reaching his or her child’s inheritance, such a spendthrift clause might be against public policy if it interferes with a parent’s obligation for his or her child’s support. However, that is not the situation in this case. Katherine Beyer is Donald Van Horn’s granddaughter. Thus, Van Horn had no obligation to support her.
Concurrence in Part
concurring in part and dissenting in part. Because the majority’s disposition of the issue of trustee fees and expenses recharacterizes the nature of the proceedings below, contradicts this court’s holding in Carrabine Constr. Co. v.
The Beyers filed a counterclaim against NCB for breach of fiduciary duty, requesting a refund of all trustee fees and expenses paid since December 31, 1990. The majority correctly indicates that NCB filed a motion for partial summary judgment on this counterclaim. The probate court did not rule on this summary judgment motion in its January 30, 1998 judgment entry. Rather, on January 30, 1998, the probate court issued an order in which it set NCB’s motion for partial summary judgment for a February 24, 1998 hearing. (See Appendix I.) The probate court proceeded to hold this hearing, and in a March 10, 1998 entry, the court stated that the “Motion for Partial Summary Judgment * * * is hereby granted.” (See Appendix II.)
In this instance, then, we are left with a situation in which the probate court thought that it was holding a summary judgment hearing and thought that it was entering a grant of partial summary judgment. The majority, however, has altered the character of the February 24, 1998 hearing. Instead of attributing to the probate court an awareness of what it was doing, the majority states that the hearing in question was not in actuality a summary judgment proceeding but was, instead, a hearing pursuant to Sup.R. 74(E). Even assuming arguendo that the proceeding should have been conducted under Sup.R. 74(E), the record indicates that the probate court thought it was conducting summary judgment proceedings, resulting in what the probate court intended to be a grant of partial summary judgment on the Beyers’ counterclaim for breach of fiduciary duty.
The majority erroneously concludes that because the record does not include a transcript of the February 24,1998 hearing, the court must assume the regularity of the probate court’s ruling on NCB’s summary judgment motion and affirm the decision. Although this rationale may indeed control if the February 24, 1998 proceedings were conducted under Sup.R. 74(E), this rule cannot be applied to the summary judgment hearing that took place on that day.
In Carrabine, this court held that “[a] trial court is precluded from considering supplemental oral testimony introduced for the first time at a hearing on a motion for summary judgment under Civ.R. 56.” Id. at syllabus. Therefore, even if the transcript of the February 24, • 1998 hearing were included in the record, this court would ignore any evidence not properly present in the record, just as the probate court and the court of appeals below could only consider that evidence that was properly before the probate court pursuant to Civ.R. 56(C). In recharacterizing the February 24, 1998 proceedings, the majority has inadvertently altered not only the nature of what appears to have transpired below, but also the nature of this court’s review. Instead of addressing this issue on the
The majority also states that “[notwithstanding our presumption of the regularity of the probate court’s proceedings and judgment awarding NCB trustee fees and expenses, we also find that, pursuant to the arguments made and the evidence that was certified in the record, the probate court did not abuse its discretion.” There is no discretion in the review of a motion for summary judgment; by its very definition, summary judgment may only be awarded in instances in which a party is entitled to judgment as a matter of law. This court has previously explained that, pursuant to Civ.R. 56(C), summary judgment is proper only if “(1) [n]o genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to [the nonmoving] party.” Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O.3d 466, 472, 364 N.E.2d 267, 274; Dresher v. Burt (1996), 75 Ohio St.3d 280, 293, 662 N.E.2d 264, 274. The holding of this court today departs from this clear standard.
Given the foregoing considerations, I find especially notable the majority’s statement that “[a]rguably, there is evidence to support a finding that NCB was reasonable in its actions, just as there is some evidence to support a finding that NCB was not reasonable in its actions.” This is precisely the reason why I would hold that there is a genuine issue of material fact with respect to the Beyers’ counterclaim and would reverse on this issue.
[[Image here]]
JUDGMENT ENTRY
The Court upon consideration of the Motions and documents filed and the facts presented the Court hereby orders the following:
1. The Motion for Joinder and in the alternative to Appoint a Co-Trustee is denied and current Trustee National City Bank, NE shall serve as the sole remaining Trustee as permitted by Ohio Revised Code Section 2109.07.
2. The National City Bank, NE Motion To Strike the Affidavit of Daniel G. LaPorte is not well founded and therefore denied.
3. The Sophie M. Beyer and Elizabeth O. Beyer Motion for Separate Trial of Defendant’s second Counterclaim against National City Bank, NE is denied.
4. The National City Bank, NE Request to pay fees for administering the Donald G. Van Horn Trust is scheduled for hearing on February 24,1998 at 9:00a.m.
5. The Cross-Motion for Summary Judgment for the Defendant State of New Jersey is granted. The Court finds no material issue of fact and that the State of New Jersey is entitled to Summary Judgment as a matter of law. The Court further determines that the Donald G. Van Horn Trust constructively terminated at the death of Mildred R. Van Horn on June 2,1990 when all remaining beneficiaries were twenty-five (25) years of age pursuant to the testator’s instructions in paragraph 5.2 C of his Last Will and Testament The Court further determines that the Katherine Beyer trust share shall be distributed to the State of New Jersey as the administrator of the Katherine Beyer Estate as appointed March 27,1997.
6. The National City Bank, NE Motion for Partial Summary Judgment against the Sophie M. Beyer and Elizabeth O. Beyer Second Counterclaim for Indemnity is granted due to the failure to state a judiciable Cause of Action.
7. The National City Bank, NE Motion for Partial Summary Judgment Against the Sophie M. Beyer and Elizabeth O. Beyer Third Counterclaim For
8. It is further ordered that this judgment is a final judgment and an appealable order pursuant to Civil Rule 54(B) because there is no justifiable reason for delay of a possible appeal of this judgment until other claims and issues are determined.
[[Image here]]
cc: John Hirnhy, Attorney for NCB David P; Kamp, Attorney for State of New Jersey Daniel G. LaPorte, Attorney for Sophie and Elizabeth Beyer John Beyer
[[Image here]]
JUDGMENT ENTRY
The Court upon consideration of the Motions and documents filed and the facts presented the Court hereby orders the following:
1. The Motion to Authorize Attorney Fees for James Contini II, attorney for Trustee, National City Bank, Northeast is granted.
2. The Sophie M. Beyer and Elizabeth O. Beyer Motion For Stay of Execution is granted.
3. The National City Bank, Ne Motion for Partial Summary Judgment Against the Sophie M. Beyer and Elizabeth Beyer Third Counterclaim For Trustee Fees and Expenses after December 31,1990 is hereby granted.
4. The Motion of Defendants Beyer under Civil Rule 60(A) to amend the January 30,1998 Judgment Entry to include a ruling on the Beyer Motion for Summary Judgment is granted. The Sophie M. Meyer and Elizabeth O. Beyer Summary Judgment is denied.
[[Image here]]
oc; John A. Murphy Dayid P- Karnp Daniél G.1 LaPojrte
