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Alexander v. UMB Bank, N.A.

Court of Appeals of Missouri, Western District, Second Division

August 23, 2016

KELSEY ALEXANDER, Appellant,
v.
UMB BANK, NA, TRUSTEE OF THE DARTHEA STODDER HARRISON TRUST, ET AL.; JODI LEA STODDER, Respondents.

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

          Before: Karen King Mitchell, Presiding Judge, Cynthia L. Martin, Judge and Gary D. Witt, Judge.

          OPINION

          CYNTHIA L. MARTIN, JUDGE.

         Kelsey Alexander ("Alexander") appeals from a judgment denying her petition to construe a trust to require distribution to the descendants of the settlor's deceased brothers' children. Because we agree with Alexander that the trust created a remainder interest in settlor's deceased brothers' children that was descendible and that was not subject to the condition of survival, we reverse and remand.

         Factual and Procedural Background

         Darthea Stodder Harrison ("Settlor") formed a trust by executing a trust agreement on March 18, 1947 ("Trust"). The Trust was executed in Kansas. UMB Bank, N.A., ("UMB") is the trustee of the Trust, and has administered and continues to administer the Trust in Jackson County, Missouri.

         Settlor received monthly income from the Trust during her lifetime according to Article One, section (a) of the Trust. Article One, section (c) of the Trust provided that if Settlor predeceased her son, William Stodder Harrison, Jr. ("Settlor's Son"), then monthly income from the Trust would be paid to Settlor's Son during his lifetime.

         Settlor died on May 31, 1962. Settlor's Son was living on that date. Settlor's Son thus received monthly income from the Trust until his death. Settlor's Son died on March 8, 2013.

         Article One, section (e) of the Trust provided:

Upon the death of Settlor, or upon the death of Settlor's son, Williams S. Harrison, Jr., whichever shall last occur, . . . this trust shall terminate, and upon such termination, the trust estate, including all increment and additions thereto, shall be paid over, distributed and delivered per stirpes to the lawful bodily issue of Settlor's son, William S. Harrison, Jr., if any there be; and, if none, the said remainder of the trust estate shall be paid over, distributed and delivered to Settlor's brothers, R.H. Stodder and F.G. Stodder. In the event either the said R.H. Stodder or F.G. Stodder shall be deceased, upon the termination of this trust as aforesaid, the share of said brother shall be paid over, distributed and delivered to said deceased brothers' children.

(Emphasis added). The Trust terminated by its plain terms on March 8, 2013, when Settlor's Son died. Termination of the Trust triggered the obligation to pay over, distribute and deliver the remaining Trust assets as directed by Article One, section (e). When the Trust terminated, Settlor's Son had no bodily issue, and R.H. Stodder and F.G. Stodder ("Settlor's Brothers") were both deceased.[1] As a result, the highlighted language in Article One, section (e) remained the only potentially operative provision for distribution of the Trust assets.

         When the Trust terminated, all of Settlor's Brothers' children were also deceased.[2]However, those children had children.[3] Alexander is one of those children, as she is the granddaughter of F.G. Stodder. Because the Trust did not expressly specify the Settlor's intent should all of Settlor's Brothers' children predecease the Trust's termination, UMB petitioned the Jackson County Circuit Court Probate Division (hereinafter "Probate Court") for instructions on how to distribute the Trust's assets.[4] UMB did not take a position with respect to the proper recipients of the Trust assets, but did name known grandchildren of F.G. and R.H. Stodder in the petition. The Probate Court advised UMB by letter that its petition did not present a justiciable controversy because, according to the court, the Trust "fail[ed] because there are no designated beneficiaries." The Probate Court's letter reasoned that the Trust "provided for [Settlor's Brothers'] children, but made no provision for [Settlor's Brothers'] more remote descendants." Because the Probate Court refused to entertain UMB's petition, summons and service packets were never released, and the grandchildren of Settlor's Brothers were never notified of the petition.

         After the Probate Court refused to consider its petition, UMB filed a petition to reopen Settlor's probate estate in the District Court of Johnson County, Kansas (the "Kansas Probate Court") in order to distribute the assets from the Trust through Settlor's estate.[5] The Kansas Probate Court scheduled a hearing on UMB's petition and authorized delivery of notice to interested persons, including Alexander. Alexander objected to the petition, and moved to stay the Kansas proceeding to permit the Missouri Probate Court to entertain a suit she filed concerning distribution of assets from the Trust. The Kansas Probate Court stayed its proceedings.

         Alexander's petition in the Probate Court sought to terminate the Trust and to distribute assets per its terms, or alternatively to modify the Trust.[6] Alexander took the position that pursuant to the Trust:

[T]he children of R.H. and F.G. Stodder held contingent remainder interests that became vested upon the death of [Settlor] . . . and [Settlor's Son] . . . . The remainder interest held by the children of R.H. and F.G. Stodder passed through their respective estates upon their death. Accordingly, the heirs and devisees of R.H. and F.G. Stodder have a direct, vested property interest in the Trust Estate. The Trust did not fail. It passed property interests at the time of its creation to specifically identified beneficiaries, which have since vested.

         At Alexander's request, summons were issued and service was had on each of the individuals identified as descendants of R.H. Stodder and F.G. Stodder. The identified descendants have not opposed Alexander's petition. UMB requested only that judgment be entered consistent with the terms of the Trust and Settlor's intent, expressing no position about Alexander's proposed construction of the Trust.

         On January 14, 2016, without a hearing, advance notice, or the benefit of evidence, the Probate Court entered a judgment denying Alexander's petition ("Judgment"). The Judgment found that the Trust terminated by its terms upon the death of Settlor's Son on March 8, 2013. The Judgment found that the "remaining relief requested, an order construing the trust to provide for distribution of the remaining trust assets to the descendants of the [Settlor's Brothers'] children, is inconsistent with the Court's understanding of the [Settlor's] intention."

         Alexander filed this timely appeal.

         Standard of Review/Choice of Law

         "A court-tried probate case is reviewed under the standard of Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976)." In re Estate of Schooler, 204 S.W.3d 338, 342 (Mo. App. W.D. 2006). "Under that standard, the probate court judgment will be sustained '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.'" Id. (quoting Murphy, 536 S.W.2d at 32). "'An appellate court will conduct de novo review of questions of law, which includes determination of the meaning of a trust instrument, and give no deference to the trial court's judgment in such matters.'" B ...


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