Title: Austin v. City of Alexandria

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
WILLIAM Y. AUSTIN, TRUSTEE OF THE 
 JAMES M. DUNCAN, III, LIVING TRUST 
 
OPINION BY 
v.  Record No. 020162 
JUSTICE LAWRENCE L. KOONTZ, JR. 
 
JANUARY 10, 2003 
CITY OF ALEXANDRIA, ET AL. 
 
 
FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA 
Alfred D. Swersky, Judge 
 
In this appeal, we consider whether the trial court 
properly determined that an individual who was grantor, trustee, 
and beneficiary of a revocable land trust effectively conveyed 
title to real property held in the trust by a subsequent deed 
which did not specify the capacity in which he was acting. 
BACKGROUND 
This case involves parcels of commercial real property, 
commonly known as 200 North Henry Street and 1115 North Cameron 
Street, located in the City of Alexandria (the property).  The 
material facts were stipulated in the trial court. 
On September 7, 1993, James M. Duncan, III, executed an 
unrecorded declaration of trust establishing The James M. 
Duncan, III, Living Trust (the Living Trust).1  The pertinent 
provisions of the declaration may be summarized in the following 
manner.  Duncan was named as the initial trustee.  Under Article 
2, Duncan was named as the income beneficiary during his 
lifetime.  In addition, Article 2 provided for discretionary 
distributions of corpus by the trustee to Duncan.  Article 3 
provided that “[b]y signed instruments delivered to the Trustee 
during [Duncan’s] lifetime, [Duncan] may: (1) withdraw property 
from this trust in any amount and at any time upon giving 
reasonable notice in writing to the Trustee.” 
Articles 5 and 6 provided for the distribution of the trust 
corpus upon Duncan’s death, with the tangible personal property 
being distributed immediately to two alternate remaindermen, and 
the balance of the corpus being placed into three charitable 
remainder trusts for the benefit of three remaindermen during 
their lifetimes and then to The James M. Duncan, Jr., Library 
Foundation for the benefit of the James M. Duncan, Jr., Library 
located in Alexandria, Virginia.  Article 8 provided for the 
appointment of successor trustees and co-trustees.  Burke & 
Herbert Bank & Trust Company of Alexandria was designated as the 
first successor trustee upon Duncan’s death or resignation as 
original trustee.  Article 12 provided for the broad powers of 
the trustee, which included the power to transfer title to the 
real property in the trust. 
                                                                  
1 Although Duncan resided in the State of California at the 
time the Living Trust was created, the trust document specified 
that it was to be governed by the law of Virginia. 
 
2
Concurrent with the execution of the Living Trust 
declaration on September 7, 1993, Duncan, as grantor, executed a 
“DEED IN TRUST” conveying the property to himself as trustee of 
the Living Trust.  The legal description of the property 
included a reference to its prior recorded transfer to Duncan 
under the will of Ruth Birch Deahl Duncan.  The deed referenced 
Code § 55-17.1 and declared that “the trust created by this 
conveyance shall not fail, . . . because no beneficiaries are 
specified by name herein or because no duties are imposed upon 
the Trustee.”  The deed further provided that “[a]ny revocation 
of the [Living] Trust Agreement by the Grantor shall not be 
effective as to the property herein conveyed unless he 
execute[s] a deed, duly recorded, evidencing such revocation and 
reversion of title.”  This deed was duly recorded in the land 
records of the City of Alexandria on June 15, 1994. 
On June 30, 1994, Duncan executed an amendment to the 
Living Trust providing that, upon his death or resignation as 
trustee, Burke & Herbert Bank & Trust Company and William Y. 
Austin should succeed him as co-trustees.  Austin was the 
lifetime beneficiary of one of the charitable remainder trusts 
established under the Living Trust. 
On August 3, 1999, Duncan executed a second deed purporting 
to convey the property previously conveyed to the Living Trust.  
This deed, which was styled as a “DEED OF CONTRIBUTION,” was 
 
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headed with the notation that it had been “PREPARED WITHOUT 
BENEFIT OF A TITLE REPORT.”  The deed named Duncan as grantor 
and named as the grantee the “James M. Duncan, III, Trustee for 
the J. M. Duncan, III Charitable Remainder Unitrust.”  The legal 
description of the property in the deed contained no reference 
to Duncan’s prior transfer of this same property to the Living 
Trust or to any reversion of the title of this property to 
Duncan in his individual capacity.  The deed was signed by 
Duncan, but did not specify the capacity in which he executed 
it. 
On August 4, 1999, Duncan executed a trust agreement 
establishing The J. M. Duncan III Charitable Remainder Unitrust 
(the Unitrust).  As with the Living Trust, Duncan was named as 
the initial trustee and lifetime beneficiary of the Unitrust.  
The charitable entities that would receive any remaining corpus 
and accumulated income upon Duncan’s death were the St. Paul of 
the Desert Episcopal Church of Palm Springs, California, which 
would receive fifty percent of the remainder, the James M. 
Duncan, Jr., Library, in Alexandria, Virginia, which would 
receive forty-nine percent, and the Gamma Mu Foundation, which 
would receive the remaining one percent. 
Attached to the Unitrust agreement as exhibit A was a legal 
description of the property to be held in the trust.  The 
property described was substantially the same property 
 
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previously deeded to the Living Trust.  However, as with the 
deed purporting to convey the property to the Unitrust, no 
mention was made of Duncan’s prior conveyance of this same 
property to the Living Trust or of any reversion of the title of 
the property to Duncan individually.2  The exhibit concluded with 
an acknowledgement of the receipt of the property by Duncan in 
his capacity as trustee of the Unitrust. 
The deed purporting to convey the property to the Unitrust 
was recorded in the land records of the City of Alexandria on 
August 5, 1999.  The Unitrust agreement was not recorded. 
On October 20, 1999, Duncan, expressly acting in his 
capacity as trustee of the Unitrust and pursuant to his 
authority as the trustee of that trust, executed a contract to 
sell the property to Nationwide CH, LLC (Nationwide) for 
$2,200,000.3  Settlement was to occur on or before eighteen 
months from the contract date. 
Duncan died on March 2, 2000.  Burke & Herbert Bank & Trust 
Company declined its appointment as successor co-trustee for the 
Living Trust on July 19, 2000.  On September 26, 2000, the 
                     
2 The legal descriptions in the two deeds and the exhibit 
attached to the Unitrust vary in certain details.  However, the 
parties do not make an issue of this.  Accordingly, this anomaly 
in the record does not enter into our analysis. 
3 This purchase contract listed the seller as “J. M. DUNCAN, 
III IRREVOCABLE CHARITABLE TRUST.”  This discrepancy in the 
 
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Superior Court of the State of California in and for the County 
of Riverside confirmed Austin as “the sole successor trustee” of 
the Living Trust and confirmed his title, as trustee, to certain 
real property located in the State of California which had 
previously been donated to that trust by Duncan. 
On February 15, 2001, Austin, acting in his capacity as 
trustee of the Living Trust, filed a bill of complaint in the 
Circuit Court of the City of Alexandria (the trial court) 
against the City of Alexandria, the Alexandria Library Company, 
the Alexandria Library Board (collectively, the City), St. Paul 
of the Desert Episcopal Church, Gamma Mu Foundation, and 
Nationwide seeking a declaratory judgment that he is vested with 
legal and equitable title to the property as trustee of the 
Living Trust.4  The Alexandria Library Company owns the J. M. 
Duncan, Jr., Library which is operated by the Alexandria Library 
Board which oversees library services in the City of Alexandria. 
In support of his bill of complaint, Austin essentially 
alleged that the 1999 deed was ineffective to donate the 
property to the Unitrust because by the 1993 deed Duncan in his 
individual capacity had conveyed title to the property to 
himself in his capacity as trustee of the Living Trust and that 
                                                                  
proper name of the Unitrust is not pertinent to the issue 
presented in the present appeal. 
 
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neither that conveyance nor the Living Trust had been revoked.  
The City and Nationwide filed separate answers in which they 
essentially contended that the creation of the Unitrust and the 
execution of the 1999 deed effectively revoked the prior 
conveyance of the property to the Living Trust and, thus, that 
the subsequent execution of the sale contract for the property 
by Duncan as trustee of the Unitrust was valid. 
Ultimately Austin, the City, and Nationwide filed cross-
motions for summary judgment.  By final decree on October 31, 
2001, the trial court entered judgment for the City and 
Nationwide.  In an opinion letter incorporated by reference into 
the final decree, the trial court expressly found that “Duncan 
as grantor of the living trust had the authority to withdraw 
real estate from that trust.  He did so by virtue of the 
documents creating the unitrust and the deed to himself as 
trustee of the unitrust.”  By an order dated April 30, 2002, we 
awarded Austin this appeal. 
DISCUSSION 
When, as here, the facts are stipulated in the trial court 
by all parties, the trial court’s “findings, although highly 
persuasive and entitled to great weight, are not binding on 
appeal.  However, we will not reverse the trial court’s judgment 
                                                                  
4 St. Paul Church and Gamma Mu Foundation are not parties in 
 
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on appeal unless it is plainly wrong or without evidence to 
support it.”  Ohio Casualty Ins. v. State Farm Fire & Casualty, 
262 Va. 238, 240-241, 546 S.E.2d 421, 422 (2001)(citations 
omitted).  Applying this standard, the focus of our analysis in 
this appeal is whether the stipulated facts support the trial 
court’s judgment that the creation of the Unitrust and the 
execution of the 1999 deed purporting to convey the property to 
the Unitrust were sufficient to satisfy the provisions of the 
Living Trust and the 1993 deed conveying the property to the 
Living Trust to withdraw the property from the Living Trust so 
that it reverted to Duncan in his individual capacity.  Stated 
another way, the focus of our analysis is whether under the 
stipulated facts title to the property passed to Duncan as 
trustee of the Unitrust by the 1999 deed or, as a matter of law, 
title to the property remained with Duncan as trustee of the 
Living Trust until his death. 
We begin our analysis with well-settled principles 
regarding land trusts in this Commonwealth.  Obviously, no trust 
can arise while the grantor retains both the full equitable 
interest and legal title in the trust property.  See Ballard v. 
McCoy, 247 Va. 513, 517, 443 S.E.2d 146, 148 (1994).  Therefore, 
when real property is placed into a trust, a change in the title 
                                                                  
this appeal. 
 
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of that property must be effected.  Id.; see also 1 Austin W. 
Scott & William F. Fratcher, The Law of Trusts § 17 (4th ed. 
1987).  A change in the title occurs and a trust is created when 
the grantor conveys both equitable and legal title in the 
property to the trustee.  See Air Power v. Thompson, 244 Va. 
534, 537, 422 S.E.2d 768, 770 (1992).  However, when the trust 
is revocable, the grantor retains a right to withdraw the 
property from the trust in accordance with the terms specified 
by the trust agreement and the recorded deed conveying the 
property to the trust.  See Cohn v. Central National Bank of 
Richmond, 191 Va. 12, 19, 60 S.E.2d 30, 33 (1950). 
In conveying the property in 1993 by recorded deed to the 
Living Trust, in accord with the provisions of Code § 55-17.1, 
Duncan transferred the complete title in the property to himself 
as trustee.  See Air Power, 244 Va. at 537, 422 S.E.2d at 770.  
In his capacity as the beneficiary of the Living Trust, his 
interest in the property became personal property.  See Curtis 
v. Lee Land Trust, 235 Va. 491, 494, 369 S.E.2d 853, 854 (1988).  
Thus, Duncan subsequently could not convey title to the property 
to himself as trustee of the Unitrust without first revoking the 
prior conveyance to, and withdrawing the property from, the 
Living Trust so that title of the property would revert to him 
in his individual capacity.  See Ballard, 247 Va. at 517, 443 
S.E.2d at 148.  To do so, it was necessary for Duncan to comply 
 
9
with both the revocation and withdrawal provisions of Article 3 
of the Living Trust and the corresponding provisions in the 1993 
recorded deed conveying the property to the Living Trust.  See 
Cohn, 191 Va. at 19, 60 S.E.2d at 33. 
The City and Nationwide contend that, because Duncan was 
both grantor and trustee of the Living Trust, the subsequent 
Unitrust agreement and the 1999 recorded deed were “signed 
instruments” sufficient to give “reasonable notice in writing to 
the Trustee” of Duncan’s withdrawal of the property from the 
Living Trust pursuant to the requirements of Article 3 of the 
declaration of that trust and the revocation and reversion of 
title requirements of the 1993 deed.  Notice to the trustee of 
the Living Trust of the withdrawal of the property from that 
trust, on the facts of this case, is a non-issue.  As noted, 
Duncan was both grantor and trustee.  Accordingly, we will 
accept the contention that the notice requirements for 
withdrawal of the property under Article 3 of the Living Trust 
declaration have been satisfied. 
However, in order to accomplish the withdrawal of the 
property from the Living Trust, Duncan was required by the 
provisions of the 1993 deed to “execute a deed, duly recorded, 
evidencing such revocation and reversion of title.”  (Emphasis 
added).  We are of opinion that this provision contemplates the 
execution of a recorded deed which effectively accomplishes the 
 
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reversion of the legal title, as reflected in the appropriate 
land records as a result of the 1993 deed, from Duncan as 
trustee of the Living Trust to Duncan individually.  There is no 
deed that specifically transfers the legal title of the property 
in accordance with this requirement of the 1993 deed.  The 1999 
deed purporting to convey the property to the Unitrust was not 
executed by Duncan in his capacity as trustee of the Living 
Trust, and the absence of any reference in that deed to the 
Living Trust precludes the conclusion that it effectively 
satisfied the revocation and reversion of title requirements of 
the 1993 recorded deed.  It then follows, as a matter of law, 
that because Duncan never effectively caused the reversion of 
the title of the property to himself individually after 1993, he 
did not convey the title of the property to the trustee of the 
Unitrust in 1999. 
The City and Nationwide, relying on Bottimore v. First and 
Merchants National Bank of Richmond, 170 Va. 221, 226, 196 S.E. 
593, 594 (1938), further contend that Duncan could effectively 
revoke the conveyance to the Living Trust because he was the 
sole beneficiary of that trust.  Their reliance on this case is 
misplaced.  In Bottimore, we held that an irrevocable trust 
could be revoked by the consent of all parties in interest 
provided they are sui juris.  170 Va. at 226, 196 S.E. at 594.  
We further held that because the grantor was the sole 
 
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beneficiary, she could revoke the trust agreement.  Id. at 227, 
196 S.E. at 594.  The issue here, however, is not whether the 
Living Trust was revocable.  Clearly it was.  The issue is 
whether Duncan complied with the requirements of the Living 
Trust declaration and the 1993 deed for withdrawing the property 
from that trust.  The Bottimore case simply does not address 
that issue. 
In sum, we hold that the legal and equitable title of the 
property remained with Duncan as trustee of the Living Trust 
until his death.  Accordingly, we further hold that the 1999 
deed purporting to convey the property to the Unitrust was 
ineffective because Duncan did not make the conveyance as 
trustee of the Living Trust and he had no legal title in the 
property to convey in his individual capacity. 
CONCLUSION 
For these reasons, we will reverse the judgment of the 
trial court, enter judgment here for Austin, in his capacity as 
trustee of the Living Trust, and remand the case to the trial 
court for entry of an appropriate order consistent with this 
opinion to be recorded in the land records of the City of 
Alexandria. 
 
 
 
 
 
 
Reversed, 
final judgment, 
 
 
 
 
 
 
and remanded. 
 
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