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Hudson v. UMB Bank, N.A.

Court of Appeals of Missouri, Western District, Fourth Division

August 26, 2014

ANGELA K. HUDSON, ET AL., Appellants,
v.
UMB BANK, N.A., TRUSTEE OF A.B. HUDSON TESTAMENTARY TRUST, Respondent

Page 715

Appeal from the Circuit Court of Jackson County, Missouri. The Honorable Kathleen A. Forsyth, Judge.

Michael J. Gallagher, Kansas City, MO, for appellants.

Clayton T. Norkey, Kansas City, MO, for respondent.

Before Division Four: Alok Ahuja, Chief Judge, Presiding, Cynthia L. Martin, Judge and Randall R. Jackson, Special Judge. All concur.

OPINION

Page 716

Cynthia L. Martin, Judge

The lifetime income beneficiaries of four testamentary trusts appeal the trial court's judgment in favor of the trustee in an action that sought to remove the trustee or to modify the trusts to permit easier removal of the trustee. The lifetime income beneficiaries argue that the trial court erred: (1) in concluding that the trusts' principal place of administration is Kansas requiring Kansas law to apply to the determination of their claim seeking removal of the trustee; and (2) in concluding that the trusts are charitable trusts supporting the entry of summary judgment in favor of the trustee on their claim seeking to modify the trusts. We affirm.

Factual and Procedural Background

On February 6, 2008, A. B. Hudson (" Hudson" ) executed a Will in Kansas where Hudson lived. Among other things, the Will created four testamentary trusts, each to be funded in the amount of $1,500,000 on his death. Each trust designated one of Hudson's four grandchildren (" grandchildren" )[1] as the lifetime income beneficiary. Each trust provided that upon the death of the lifetime income beneficiary the trust would terminate and the trust's remainder would be paid to Shriners Hospital for Crippled Children[2] (" Shriners" ) free of trust " exclusively for the charitable purposes" of the hospital. Each trust named UMB Bank, N.A.[3] (" UMB" ) " with an office and place of business in Topeka, Kansas" as trustee. Each trust provided that the trustee would have " all powers conferred

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upon trustees by the provisions of the Kansas Uniform Trustees' Powers Act."

Hudson died in mid-February, 2008, shortly after executing the Will. The Will was submitted to probate administration in Wabaunsee County, Kansas. Following probate administration, the testamentary trusts were funded in Kansas, and were initially managed in Kansas by Pat Lockerby (" Lockerby" ), a UMB trust advisor. Lockerby worked under the direct supervision of Tami West Stratton (" Stratton" ) whose office is in Kansas. UMB later replaced Lockerby with Meg Armstrong (" Armstrong" ), and named J.T. Trujillo (" Trujillo" ) as the portfolio manager for the trusts. Armstrong and Trujillo work in Colorado and were named to their positions for the ease of the grandchildren who live in Colorado. Stratton continued to supervise Armstrong. The investment policies Trujillo employed as portfolio manager were primarily developed by higher level employees in UMB's Kansas City, Missouri office. Account statements for the trusts sent periodically to the grandchildren show UMB's address in Missouri.

At some point, the grandchildren grew dissatisfied with UMB as trustee, primarily because UMB would not adopt their investment requests and strategies. The grandchildren wanted to replace UMB with The Private Trust Co., N.A., and specifically wanted Dan Foley, who was in some manner associated with that firm, to manage the trust assets. The grandchildren asked UMB to resign as trustee. UMB refused.

The grandchildren filed a three-count petition in the probate division of the Circuit Court of Jackson County, Missouri. The petition named Shriners as an additional plaintiff, alleging that Shriners had been " joined in this action as a party necessary to the adjudication of the issues," and that Shriners " has no opposition to being joined in this action as a necessary party." [4] Count I sought to modify the trusts pursuant to section 456.4B-411[5] by adding a provision that would permit a majority of the income and remainder beneficiaries of any trust to remove the trustee with or without cause. Count II sought to remove UMB as trustee pursuant to section 456.7-706, and to replace UMB with another suitable trustee. Count III of the petition sought a declaration that UMB could not recover its attorney's fees in defending the lawsuit from the trusts.

The trial court entered summary judgment in favor of UMB on Count I of the petition, finding the trusts to be charitable trusts not eligible for modification under Kansas law.[6] Following a bench trial, the trial court entered judgment in favor of UMB on Count II of the petition, finding that Kansas law controlled the administration of the trusts and that the beneficiaries had not established a right under Kansas law to remove UMB as the trustee. The trial court also entered judgment in favor of UMB on Count III of the petition.

The grandchildren appeal the trial court's judgment on Counts I and II of the petition.

Summary of Issues on Appeal

The grandchildren assert two points on appeal. First, they argue that the trial

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court erroneously entered judgment in favor of UMB on Count II of their petition because Missouri, not Kansas, is the principal place of administration of the trusts, and Missouri law permits removal of a trustee with the unanimous consent of all qualified beneficiaries. Second, they argue that the trial court erroneously entered summary judgment in favor of UMB on Count I of the petition because the trial court erroneously found the trusts to be charitable, when they are noncharitable and subject to modification under either Missouri or Kansas law with the unanimous consent of all qualified beneficiaries.

Point One--Judgment Denying Claim for Removal of UMB as Trustee

Standard of Review

In a court tried case, we will not reverse the trial court's judgment unless " there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). To reverse the trial court's judgment, because it was against the weight of the evidence, we must have a firm belief that the judgment is wrong. Id. We view the evidence and any inferences in the light most favorable to the trial court's judgment. Hightower v. Myers, 304 S.W.3d 727, 732 (Mo. banc 2010). We are to affirm the trial court's judgment on any basis supported by the law and the facts of the case. Ballard v. Ballard, 77 S.W.3d 112, 118 (Mo. App. W.D. 2002).

Analysis

The trial court found that Kansas law controls the administration of the trusts, and that the grandchildren did not establish a right to remove UMB as trustee under Kansas law. The grandchildren argue that the trusts' principal place of administration is in Missouri, and that Missouri law permits removal of UMB as the trustee with the unanimous consent of all qualified beneficiaries. ...


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