Appeal by plaintiff from judgment entered 27 February 2002 by
Judge A. Leon Stanback, Jr. in Durham County Superior Court. Heard
in the Court of Appeals 10 September 2003.
Epting & Hackney, by Steve Lackey and Joe Hackney, for
plaintiff-appellant.
Newsom, Graham, Hedrick & Kennon, P.A., by Josiah S. Murray,
III and J. Alan Campbell, for defendant-appellee.
ELMORE, Judge.
Plaintiff, Janice Taylor Davenport, appeals from judgment
entered 27 February 2002 denying her motion for summary judgment
and granting summary judgment in favor of defendant, Central
Carolina Bank and Trust Company. For the reasons discussed herein,
we affirm. In February and March 1989, Louise C. Rightsell and her
husband, Earl F. Rightsell, established an estate plan by executing
various testamentary documents. The Rightsells were plaintiff's
great-aunt and great-uncle. On 23 February 1989, Louise Rightsell
and Earl Rightsell executed separate revocable management trust
documents, thereby creating the Earl F. Rightsell Trust (Husband's
Trust) and the Louise C. Rightsell Trust (Wife's Trust), with each
naming defendant as trustee. Both the Husband's Trust and the
Wife's Trust were subsequently amended on 14 March 1989, with
defendant again named trustee in each instance.
Earl Rightsell died in 1989, survived by Louise Rightsell.
Pursuant to the terms of the Husband's Trust, defendant thereafter
held the balance of the Husband's Trust estate as trustee for
Louise Rightsell, with the net income paid to her quarterly.
Defendant continued to so administer the Husband's Trust until
Louise Rightsell's death in 1998. Upon Louise Rightsell's death,
defendant, pursuant to Article Sixth of the Wife's Trust, set aside
and delivered to itself, as trustee, the balance of the Wife's
Trust estate. Article Sixth of the Wife's Trust provides in
pertinent part as follows:
As soon after the death of [Louise Rightsell] as is
reasonably possible, the Trustee shall:
A. Set aside and deliver to itself, as Trustee
for [Louise Rightsell's] husband, E.F.
Rightsell and others, the balance of the Trust
estate to be held and administered under the
applicable provisions of [the Husband's
Trust]. . . . (Emphasis added)
. . . .
As plaintiff acknowledges in her brief, “construction of the
'applicable provisions' of Earl Rightsell's [T]rust referred to in
article '[s]ixth' of Louise Rightsell's Trust is the ultimate
issue” before this Court for determination. Plaintiff argues that
these “applicable provisions” are found only in Article Eighth of
the Husband's Trust, while defendant contends they are also found
in Articles Sixth and Seventh therein.
The Husband's Trust provides as follows in Articles Sixth,
Seventh, and Eighth:
As soon after the death of [Earl Rightsell] as is
reasonably possible, the Trustee shall:
A. Set aside and hold under the provisions of
Article Seventh next below, as Trustee for
[Earl Rightsell's] wife, Louise Crowder
Rightsell, if she shall survive him, the
balance of the Trust estate. (Emphasis added)
The said wife of [Earl Rightsell] shall have
the right, power and authority, by written
instrument filed with the Executor of [Earl
Rightsell's] estate and the Trustee, within
one-hundred fifty (150) days from the date of
death of [Earl Rightsell], to disclaim a
portion or all of the amount directed to be
set aside for her under this paragraph A;
whereupon the amount so disclaimed shall be
added to and become a part of that trust which
may be established pursuant to the provisions
of Article Eighth below.
B. If [Earl Rightsell's] wife does not survive
him, or shall disclaim any portion of said
Trust estate, in either of such events the
balance of the Trust estate and/or the
disclaimed portion shall be held under the
provisions of Article Eighth below.
. . . .
The trust under this Article shall be for these
purposes:
A. During the lifetime of Alyse Walker Taylor the
net income shall be paid in equal shares,
monthly, to the said Alyse Walker Taylor and
[plaintiff]; provided, however, that if
[plaintiff] should predecease her mother, then
[plaintiff's] daughter, Lisa Davenport, shall
replace her mother as a beneficiary of this
trust; and provided further, however, that
upon the death of Alyse Walker Taylor this
trust shall terminate and its assets shall be
paid over to [plaintiff], if living, or to her
daughter, Lisa Davenport, if [plaintiff]
should be deceased . . . .
. . . .
Alyse Taylor Walker, who was Louise Rightsell's niece and
plaintiff's mother, died prior to Louise Rightsell's 1998 death.
On 26 September 1990, Louise Rightsell executed a last will
and testament in which she appointed the Husband's Trust assets to
her estate, to pass under her will. Louise Rightsell's will, which
was drafted by the same attorney who had earlier drafted the
Husband's Trust and Wife's Trust instruments, provided in pertinent
part as follows:
In Paragraph C of Article Seventh of [the Husband's
Trust] . . ., the following language appears:
“Upon the death of Louise Crowder Rightsell,
the principal shall be paid to such person or
persons, or to her estate, as she may by
specific reference to this power in her Will
appoint.”
Pursuant to said authority
I hereby appoint the principal
remaining in said Trust to my estate for use and
distribution in accordance with the terms of this, my
Will.
. . . . (Emphasis added)
Louise Rightsell's will then proceeded to make a number of
specific bequests, including a bequest of $10,000.00 to plaintiff
and bequests in varying amounts to the Salvation Army, the Durham
County Chapter of the American Red Cross, Trinity Avenue
Presbyterian Church, Methodist Retirement Homes, Inc., Young Men's
Christian Association, Roland C. Fields, Jr., and Lisa Davenport.
The will also bequeathed $200,000.00 in trust for the benefit of
plaintiff and her family, with the trust ultimately to terminate
and its assets to be paid over in equal shares to plaintiff and
plaintiff's daughter. Plaintiff, a retired educator, bequeathed
“all the rest, residue and remainder of [her] estate . . . in equal
shares to DUKE UNIVERSITY and the UNIVERSITY OF VIRGINIA” for
addition to each university's general endowment fund.
After Louise Rightsell's death on 30 January 1998, defendant
promptly qualified as executor of her estate and proceeded to
administer Louise Rightsell's estate according to the terms and
provisions of her will. Defendant set aside and delivered to
itself as trustee the Wife's Trust assets, totaling approximately
$394,301.00. Defendant then combined the Wife's Trust assets withthe Husband's Trust and, pursuant to the general power of
appointment exercised by Louise Rightsell in her will, defendant
added the combined Trust assets to Louise Rightsell's estate for
distribution as directed in the will. Including the assets of both
Trusts, Louise Rightsell's estate was valued at approximately
$1,800,000.00 upon her death. Pursuant to the will's terms,
plaintiff, Louise Rightsell's sole heir at law, received a total of
$110,000.00 from her great-aunt's estate. Plaintiff acknowledged
receipt of this sum by executing two separate receipts before the
Durham County Clerk of Superior Court on 16 March 1998.
Defendant completed its administration of Louise Rightsell's
estate and distributed all the estate's assets on or about 26 May
1999. On 3 August 2000, plaintiff filed the subject civil action,
alleging that defendant breached its fiduciary duty as Trustee by
distributing the assets of the Wife's Trust to the Husband's Trust,
and then adding the combined assets to Louise Rightsell's estate
before distributing the estate's assets as directed by her will.
(See footnote 1)
Plaintiff advocates a construction of the Wife's Trust whereby
plaintiff would instead receive the Wife's Trust assets as the
remainder beneficiary.
On 3 December 2001, plaintiff and defendant argued their cross-
motions for summary judgment. By judgment entered 27 February 2002,
the trial court denied plaintiff's motion and granted summaryjudgment in defendant's favor. Plaintiff gave notice of appeal on
28 March 2002.
Summary judgment is appropriate “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to
any material fact and that [a] party is entitled to a judgment as
a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c) (2001). When
reviewing a trial court's allowance of a summary judgment motion,
we consider whether, on the basis of materials supplied to the trial
court, there was a genuine issue of material fact and whether the
moving party is entitled to judgment as a matter of law. Evidence
presented by the parties is viewed in the light most favorable to
the non-movant.
Summey v. Barker, __ N.C. __, __, 586 S.E.2d 247,
249 (2003).
By her first assignment of error, plaintiff argues that the
four corners of the instruments establishing the Husband's Trust and
the Wife's Trust compel a construction of these instruments that
would result in distribution to plaintiff of all the Wife's Trust
assets, pursuant to what she contends are the “applicable
provisions” of Article Eighth of the Husband's Trust. To the
contrary, however, we conclude that the plain language of the
Husband's Trust and the Wife's Trust does not support such a
construction, but rather compels administration of the Trust assets
in the manner undertaken by defendant.
In construing the terms of a trust, “[o]ur responsibility is
to ascertain the intent of the settlor and to carry out that intent
. . . deriv[ing] the settlor's intent from the language and purposeof the trust, construing the document as a whole.”
Wheeler v.
Queen, 132 N.C. App. 91, 95, 510 S.E.2d 195, 198,
disc. rev. denied,
350 N.C. 385, 536 S.E.2d 320 (1999). Where there are two or more
instruments relating to a trust, the instruments should be construed
together to effectuate the settlor's intent.
Estate of Taylor, 361
Pa. Super. 395, 400, 522 A.2d 641, 643 (1987).
Our review of the Wife's Trust and Husband's Trust instruments
in their entirety reveals an intent on each settlor's part that (1)
the assets of both Trusts be available for the care and support of
the surviving spouse, and (2) the surviving spouse be allowed to
control the ultimate disposition of the assets of both Trusts. In
the event that Louise Rightsell survived her husband, as happened
here, Article Sixth of the Husband's Trust clearly and unambiguously
states that the Husband's Trust assets be held in a support trust
for Louise Rightsell “under the provisions of Article Seventh” of
the Husband's Trust. We must therefore proceed directly to Article
Seventh of the Husband's Trust, which clearly and unambiguously
grants to Louise Rightsell the right to distribute the Husband's
Trust assets upon her death “to such person or persons, or to her
estate, as she may by specific reference to this power in her Will
appoint.” Louise Rightsell clearly and unambiguously exercised her
general power of appointment in her will, wherein she cited the
foregoing language from the Husband's Trust Article Seventh and
stated “[p]ursuant to said authority, I hereby appoint the principal
remaining in said Trust to my estate for use and distribution in
accordance with the terms of this, my will.” While Article Eighth of the Husband's Trust does make provision
for the Husband's Trust assets to be held in trust for the benefit
of plaintiff and her mother, with remainder to plaintiff upon her
mother's death, the plain language of both the Husband's Trust and
Wife's Trust instruments compels us to conclude that Earl and Louise
Rightsell intended to fund such a trust only if Louise Rightsell (1)
died before Earl Rightsell; (2) disclaimed any portion of the
Husband's Trust assets; or (3) failed to exercise her general power
of appointment. Otherwise, the Husband's Trust assets were to be
held in a support trust for Louise Rightsell, subject to
distribution upon her death according to her general power of
appointment, if exercised.
In order to adopt the construction sought by plaintiff, we
would have to, in effect, skip over Article Seventh of the Husband's
Trust entirely and proceed directly to Article Eighth for the
“applicable provisions” under which the Husband's Trust assets were
to be administered. However, where, as here, Louise Rightsell
survived her husband, did not disclaim any portion of the Husband's
Trust assets, and exercised her general power of appointment in a
validly drawn and executed will, we conclude defendant properly
construed both Trusts by following the plain language of both Trust
instruments and distributing the Husband's Trust assets to Louise
Rightsell's estate, combining them with the Wife's Trust assets, and
distributing the combined Trust assets along with the rest of Louise
Rightsell's estate as provided for in her will. In light of our
holding that the plain language of the Trust instruments compelsthis outcome, we need not consider plaintiff's remaining assignments
of error.
Affirmed.
Judges TIMMONS-GOODSON and HUDSON concur.
Footnote: 1