*1 SCHMIDT et al. v. SCHMIDT et al.
No. 12573. Appeals
Court of Civil of Texas.
Galveston.
Oct. 1953.
Rehearing Denied Nov. Rehearing Dec. Denied
Further *2 Hardin, Walley Rosenberg,
L. & Walley, Jr., Beau- Robichau W. G. mont, appellants. for Lindsey,
Joerger, Lindsey Rosenberg,. & Houston, Grundy, S. Kolius and G. Thad appellees. HAMBLEN, Chief Justice.
This suit filed was .trial Schmidt, individually in several out, representative capacities set hereafter Schmidt, appel- and William F. who are lants before Court. The suit was this brought judicial to secure construction of an, purporting to be and for con- venience a hereinafter referred to as trust deed, Ap- provisions a and certain of will. pellees, below, together defendants appellants, grantors constitute deed, under the trust beneficiaries legatees will and the and devisees Schmidt, Sr., heirs at law of Frank and his wife, Mary. Sr., Schmidt, undisputed Frank
It is
married twice. His first wife died
By
marriage he had one
his first
Schmidt,
child,
Frank
William F. Schmidt.
Mary
Sr.’s,
marriage was to
second
By
mar-
who died in
Schmidt
whom,
children, all
he had nine
riage
daughter,
exception
named
of a
with the
Evelyne
Evelyne,
their mother.
survived
daughter, Mary
surviving her a
Eve-
left
son,
R.
lyne Spacek
and a
Chovanec
Julius
Spacelc.
appellants sought
deed which
August
executed
construed was
to have
Schmidt, Sr.,
and all
Frank
marriage (and their
children
second
except
wives)
F. C.
husbands and
trustee,
Evelyne,
as
was named
who
who was dead. The two children of Eve-
By
lyne
join.
did
its terms for valua-
granted,
ble consideration
sold and con-
veyed
to F. C. Schmidt
trustee three
land therein described
tracts of
for a term
twenty-five years
purpose
but for the
powers
(a)
with the
and duties
to:
farming
land
graz-
lease or rent the
therefrom,
(b)
and collect the rents
royalty and
“The above 'tracts of land
purposes, sell
constitute
mineral'
lease for
myself
community
Estate
considerations
receive
minerals and
wife,
I
one-
deceased
and own an
funds col-
undivided
therefor,
keep and maintain
(c)
*3
therein,
the intention
half interest
and it is
account,
which
lected in a bank
bequest
Trustee
taxes,
of this
to vest title in the
insurance
paid by him .all
should be
my
(d) of
interest in said land.'
improvements,
repairs and
and costs
fund
a reserve
setting' aside
after
pay to
year
ensuing
contingencies for
2.
pro rata
her
annually
his
grantor
each
my
whether
“All the remainder of
estate
fund.
the accumulated
share of
mixed,
my
real,
bequeath unto
personal
I
children,
share alike.
surviving
and
share
for the
also
The
account,
pay
keep
books
trustee to
validation
compensation, for
himself
leases, the
mineral
or other
gas
and
of oil
F. C.
hereby
appoint
“Í
constitute
beyond the
extend
terms of
should
will and di-
of this
sole executor
Schmidt
‘
provided:
trust,
further
term
security
required
be
that no bond or
rect
In the event
executor.
him as
upon our
binding
trust shall be
“2. This
Schmidt,
re-
failure or
or his
of said F. C.
as-
heirs, executors, administrators
act,
Trustee or Executor
fusal to
either as
ei-
the death of
event of
signs, and in
hereunder,
I direct
Schmidt
then
A.
Joe
herein
in the
us,
interests
lands
our
ther of
F.
succeed said
C.
and Ernest
Schmidt
J.
un-
trustee
vested
said
shall be
described
re-
executor in the
as Trustee or
Schmidt
hereof
expiration
the term
til the
serve with-
spective order
and shall
named
and conditions
the terms
subject to all of
security
out bond or
as such.”
acting
trustee
and the said
herein contained
heirs, exe-
our
account to
shall
hereunder
attacked,
By
appellees
their answer
assigns,
same-
cutors,
administrators
validity
portion
the trust deed and that
n
living.”.
still
though
as
we were
of the. will wherein the testator
dis-
.made
position
property by
of his
reference to the
Sr.,
Schmidt,
March
died
Frank
By
appellees
trust deed.
cross-action
children, except Eve-
by all of his
survived
sought
of the lands
involved
chil-
lyne,
by
grandchildren,
two
quoted portion
trust deed and the
written will
left a
Evelyne. He
dren of
will,
accounting
an
from the trustee and
the material
duly probated,
which has been
ancillary
certain
relief.
appeal
is
which,
far as
so
portions of
concerned,,are as follows:
Schmidt,
qualified
having
as trustee
C.
the trust
deed and executor in the
,
“2.
will,
died March
Schmidt
A.
Joe
qualified as
trustee under the
successor
my
I
desire and so direct that the
“It
trust deed and as successor executor and
pass
following described
shall
acting
trustee under the will and
sowas
Schmidt, Trustee,
in F. C.
and be vested
was
when this suit
instituted.
himby
as such Trus-
shall-held
my surviving heirs
the benefit of
tee for
pend-
While the above
suit
described
by
managed and controlled
him
and shall be
ing,
representative
agreement
trust
heretofore made
under the
capacity,
appellee,
filed suit
my children and for the term of
me and
Bank,
Rosenberg State
to recover
The
agreement.
lands so devised
said trust
deposit
checking
a fund on
in a
amount of
as Trustee to be
to the said F. C. Schmidt
sought exemplary
account. He also
dam-
described as follows:
him are
held
ages against
alleged wrongful
bank for
a check
refusal to honor
drawn on such ac-
description being of the same
“(The
bank,
answer,
The
filed a motion
the aforementioned count.
property described in
with the declaratory
suit
deed.)
to consolidate
interpleader and
judgment suit
a bill of
tutes the
“trustee,”
transferee a nominal
an
'
general
were agent
denial.
two causes
transferor,
for the
and that such
pro-
by the
the trial
agency
consolidated
court and
“coupled
void unless
in
an
conclusion,
terest,”-
jury.
ceeded
At the
before a
pending
decease of
revocable
th.e
appellants’
appellees
principal
case
moved the
ipso
and revoked
facto
verdict,
grant-
for an
which was
instructed
support
decease.
proposition
appel-
Judgment
ed.
denying
was entered
by appellate
cite four decisions
for,
prayed
lants all
declaring
relief
courts
this State.
are:
These decisions
portion
will in-
Weiner,
trust deed and that
Peterson
v.
71 S.W.
corporating
the trust deed
reference to
refused;
2d
Chaison,
writ
Chaison v.
invalid,
by appel-
accounting
ordered an
*4
Tex.Civ.App.,
961,
154
writ
S.W.2d
refus
lant,
executor,
ed;
and trus-
as
Bank,
Benavides v. Laredo National
tee,
property
and ordered a
of the
372;
91 S.W.2d
Fleck v.
involved, including
deposit
Baldwin,
in
fund on
975,
Tex.
141
172 S.W.2d
af
appellee
bank.
firming the
Ap
Galveston Court of Civil
peals’ opinion reported in
the other asserted purported court was dealing with gifts of Appellees personal property. contend that the of the action used upon trial court questions was correct either of two the courts in discussing the there First, they say might, upon theories of law. so-call- reading, involved casual seem ed support appellees’ trust deed did not create a trust at all to lend proposition. to power instance, but a merely agency revocable or. For Benavides v. Laredo Na- and, second, attorney, they say Bank, says that tional S.W.2d [91 “ * * * portions trust deed and those a the 'will ‘Until donor has divested 374]: provisions absolutely based thereon violate the -irrevocably Art. himself of the dominion, title, of the subject 26 Constitution of State of and 'control of the § Texas, Ann.St.j power Vernon’s known gift, otherwise of the he has to revoke it.’ Perpetuities. Against 650, 651, Rule as the 46.” § C.J. Appellees’ theory expressions first is may based Similar be found in they proposition upon by assert be appellees. the law each of the cases relied property that a purpose in this State transfer reviewing No would be served purportedly in They factually trust which fails to each of divest them. are not inopera bar; they-in- the transferor of beneficial title is to the case at do analogous nor simply principle tive to create “trust” but consti volve the same of substantive law. Institute, Re- authority for From the Law None of those is American cases may Trusts, proposition not Vol. of land statement of Law of that the owner another Sec. convey following: thereto to legal title ’ equitable person and himself the retain in may “The settlor of be one right has do this beneficial title. The beneficiary.” beneficiaries or the sole the earliest decisions recognized been from section, In the comment which our England, the courts of authority last cited that in some states *5 by inter the “B. A written transfer vivos ble) in estate land should henceforth property person as owner of to another e., (i. legal vested with seized of land such trustee the transferor or a third for for to the the reve- title) restoring thus crown person persons”. by deprived the which it had been nues of But if it be creation of uses. even con- of the An examination instrument by adoption the common the of tended involved in the case under consideration the Statute England law have made of we that the undertook there discloses owners law, part examination of a our an Uses of convey property to legal to the title the early authorities will English the dis- of to F. C. Schmidt trustee. involved by the that statute was construed close that clause, instrument a an granting contains convey- application only have to courts to clause, warranty habendum all clause and legal title, owner the re- of the bare ances in form sufficient our law to transfer ownership incidents of to taining all other legal They provided expressly title. application no to so- and to have himself such in legal title trustee or should vest the which the active uses in holder called his successor for of for a term performance with the legal charged is title twenty-five years, denying thus them to obligations with re- specified of duties power disposition legal selves of such fact, is from spect the In it the land. They impose upon title for that term. then Chancery Eng- Courts decisions of his the trustee and successor certain duties involving such active uses land cases obligations pay and instruct him to largely trusts of modern de- that our law them the net land benefits derived from the rived. obliga after performing such duties and Thus, they typical tions. have created a statute, right Except where limited active perfectly legal trust and valid under convey property le- owner our law. himself has gal title to another in consistently recognized been authorities appellees’ We turn now to ground second jurisdiction. burden- every Without instruments, of attack the aforesaid ing opinion with extensive this citation is, provisions that their violated the quote following: we 54 authorities Am. therefore, against perpetuities are, rule 117, par. may 138: Jur., page “The trustor support propo- void and invalid. In Menefee, or one be the sole beneficiaries of a sition cite Anderson v. one cannot create a trust in trust but 174 S.W. and Hender- liability Moore, favor that is free from own v. 144 son Tex. 190 S.W.2d jurisdictions. debts or torts.” cases from other several
897 conveyors authorities tent of the Before these determined considering employed conveyance. application the case under consid- in the eration, be well to set forth might in carefully considering the principles. general following After light here dealt with in the struments cited, as a perpetuity authorities A been defined we take the view that the has equitable subject matter of limitation which takes beneficial or title perpetuity period conveyed of commerce for a immediately upon out vested the ef being per greater time than life or lives fective date of instrument years twenty-one plus the thereafter sons for creat whose benefit trust was ed, namely period Neely ordinary gestation. grantors. v. In the instrument Tex.Com.App., only Brogden, S.W. “vest” is 239 word used connection legal grant with the trus title to the period being form no lives in When respect tees. does the instrument suspension postponement of the or the here considered differ from the instruments title, vesting limit of time discussed Anderson v. Menefee and twenty-one years perpetuity from the Moore, Henderson because v. of that Moore, the testator. Henderson v. distinguishable difference are those cases Tex. S.W.2d from the case bar. at court, In both of the cited cases the requires The rule that the situation vest, holding that the beneficial title did not be viewed as of the date be points to words the instrument evidenc viewed, comes effective and “when if so grantor an intent on any possible contingency (here a devise *6 The fol that such beneficial not vest. title rule, grant) stand, violates the cannot opinion quotation the Chief lowing be must held Bryson void.” Con v. Alexander in case Henderson the of Justice necticut Life Company, General Insurance clearly v. Moore will illustrate the reasons 532, 196 S.W.2d for his 190 S.W. conclusions Tex. [144 2d 801]: And, it is also well established that legal
the fact that the
title is
in
vested
trus
“We
opinion
are of the
that under the
applica
tees with full
discretion
to the
terms of the
itwill was not intended that
corpus
tion of the income or the
to the uses the title to
property
testator’s
vest
should
of
beneficiary during
the
period
the trust
twenty-five years
in the devisees until
after
does not militate
the immediate
death. The testator used
rather clear
vesting
the
of
beneficial
(equitable) title
convey
to
such an
intent.
‘
* *
*
beneficiary.
Rust,
the
Rust v.
Tex.
147
provides
my
will
it is
will
de-
*
Civ.App. 181,
* *
eventually vest in my the descendants of We sisters, have held that expressly the trust deed provide brothers and Ibut here involved the effect placing my had the property kept intact, of that said shall be * * legal title in twenty- *, trustees for term my of property Executor and said years equitable five and the' beneficial preserved or my shall be maintained and grantors. title period years.’ the It now nec (Em- becomes Executor of 25 essary to consider phasis whether such beneficial provided It was ours.) further that equitable title in the grantors proceeds was vested the net of the rentals be should vested, or contingent. year If the paid person beneficiaries the each to entitled there- power would full have of the proportion recipients alienation and to ownership ‘in the to property commerce, my not taken out property, of were of said the same vested at (Emphasis ours.) therefore the rule is The in in them such times’ not violated. paragraph strument must be viewed as of its effective And in the fifth of the will it is date, August 20, I persons the ‘The that Whether desire to re- beneficial title depends upon my vested in- at the end ceive above of * By re- theory on an incorrect of law. their following: period, mentioned are the error, exception maining points var- of of naming as devisees the descendants discussed, of will be hereafter brothers No. which and half brothers and sisters ious trial appellants complain action of ours.) Under (Emphasis and sisters. which, our hold- we are correct in to ‘even- court if property was terms the will the appellants’ points of error Nos. on broth- tually descendants vest’ consequence be held as a logical that it and must By meant this was ers sisters. However, by plead- their the to be erroneous. upon happening of only was to vest mismanage- ings raised issues event, is, end of that at named com- have been alleged ment and waste years.” twenty-five Schmidt, for by appellant, mitted A. Joe in the instrument appear No such words accounting, removal they sought an which rule A well established here considered. alternatively, trustee, or, that he be of such here applicable might which construction bond, relief. required to make and other doubt that where which that rule states upon theory which this case Because of exists, law favors or ambiguity tried, we held be errone- which have in the earliest results which construction were not tried. ous, thus raised the issues However, greatest estate. vesting reason, necessary re- For it will be construc- resorting rule of to this without retrial such issues. mand case for analysis tion, a careful we feel that retrial, proper it is deemed In view of such no intention on indicates ap- upon the error asserted pass that we themselves grantors' ever divest pellants point error No. which property. On to their beneficial title previously disposed of. has not been equitable hand, beneficial or the other freely de- by them be retained title was complain By point appellants No. 7 heirs, by their vised, or inherited alienated failing the trial court erred to find they had subject only to the under the terms and determine .that created. upon the and the will trust deed trustee, original C. 2 of paragraph numbered the in- From quoted full, sole We strument, the Schmidt became successor trustee. hereinabove *7 “ * * * agree appellants in contention. significant: following are this words part provid us, The material of the trust deed death''of either of the event of the ' * * * acting ed: hereunder shall said trustee heirs, executors, account to our adminis- the “1. event of the of * said F. * assigns, trators and Schmidt, C. or failure or refusal to act use, by grantors of the words hereunder, The or his removal from the State executors, “heirs,. administrators as- Texas, any during of at time the term of clearly- indicates their intent that the signs” agreement, then A. Schmidt and Joe they retained equitable title which should Schmidt Ernest shall succeed him as J. distribution, by pass by. or de- descent trustee hereunder in the order named and vise, by grant vivos or other aliena- or inter powers shall be vested with all the and sub- tion. ject to all limitations herein contained.” Paragraph 3 of will has been herein- Patently it be said that an cannot set forth. above descendible, devisable, or which is estate of is taken out commerce within alienable We feel that indi- quoted recognized meaning definition clearly the intent on the cates heretofore stated. perpetuity and the grantors respectively, testator that Schmidt, appel- upon the death of F. foregoing discussion C. From the act, ap- points failure or refusal that of error Nos. it is lants’ A. Joe that should succeed him sole trustee parent this Court feels trial Schmidt that that in the up- tried or executor and event of the erred and that case was
ggg n deathof A. Schmidt or his failure or not susceptible in kind was Joe act, upon refusal Ernest Schmidt should made assumption the erroneous J. succeed him as sole or executor. the entire property parti- trustee involved must be tioned among" litigants all of the before the foregoing For the reasons outlined trial court. From such a 'finding does not opinion, judgment trial court necessarily follow that the undivided inter- reversed and the cause remanded. est appellees these may two not carv- ed out of property, leaving the remain- Rehearing On Motion for der subject thereof intact and to the trust. right of the administrator of the estate Appellees, conceding without the correct- Schmidt, deceased, C. to insist on conclusions, except for ness of this Court’s partition depends upon necessity there- purpose rehearing, their for motion the purpose of properly administer- n nowinsist that hold- view Court’s ing estate, as to which the record is proceed (1) now render ing it should to: silent. The heirs of Schmidt, F. C. Mary appellees, Eve- judgment favor of whom the right partition subject to ad- Spacek lyne Spacek Chovanec, R. Julius ministration exist, would otherwise are not capacity as Ernest Schmidt in his ad- by determined the trial right court. The estaje of F. C. ministrator appellees require Schmidt to ren- Joe deceased, partitioning undivided in- der an accounting than other ordering the sale terest under the of the trust instrument, terms receiver, (2) judg- affirm the thereof right and the Schmidt to recover Joe of the trial appellant, ment court denying damages depend the bank upon the Schmidt, any recovery damages Joe against appellee, determination the trial court of facts Bank, Rosenberg State waste, of mismanagement, bad faith and (3) judgment affirm the of the trial court in other elements by- raised the pleadings but directing A. Schmidt as trustee to ren- not determined the trial court because accounting appellees der an of the ad- theory erroneous that no trust in 'fact ministration of his trust. All of these is-- existed. appellees sues now were contend com- tried; dependent are pletely for their appears It thus that the right to the relief validity on determination invalidity now depends seek will; of the trust deed and so ren- fact issues which cannot be determined in dering judgment this will Court be “render- present state-of the -record and which judgment which the trial court any should passed upon event be first should have rendered” meaning within the a court of original jurisdiction before the T.R.C.R Rule 434 jurisdiction appellate of an court to review *8 such determination can be invoked. With contention we do not Accordingly, the cause must be remand- Mary Evelyne agree. Spacek Since Cho- generally ed for retrial of those issues in Spacek R. par vanec were not Julius accordance with our original opinion. deed, their right ties to interest is conceded. Appellees’ However the motion for rehearing is re- finding by trial court that fused. notes large part law derived. is provide there that a are statutes which prevalent become fact so did custom set- transfer in trust for the benefit-of the parliament, in country order that the interesting tlor void. It is note for- restore to the crown the revenues among Texas included such States. merly levied from fines and taxes obtained contrary Re- To the Art. 74Z5b-7 of legal or “seiz- exchange on the title Texas, vised Civil Statutes Vernon’s land, passed in” Statute of famous Ann.Civ.St., portion Tex- being That to execute Uses. statute undertook Act which deals with the methods Trust by providing use that whoever estates created, provides: may which trusts e., equita- (i. with the use should be vested