Title: In re Estate of Stratton

State: vermont

Issuer: Vermont Supreme Court

Document:

In re Estate of Stratton  (94-513); 165 Vt 7; 674 A.2d 1281


[Opinion Filed 08-Mar-1996]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 No. 94-513


In re Estate of Allen L. Stratton                 Supreme Court


                                                  On Appeal from
                                                  Grand Isle Superior Court


Merchants Trust Company                           On Appeal from
                                                  Chittenden Superior Court
     v.

Francis Peisch, Esq.                              November Term, 1995


Stephen B. Martin, J.

Richard H. Wadhams, Jr., of Pierson, Wadhams, Quinn & Yates, Burlington, for
  defendant-appellant


PRESENT:  Gibson, Dooley, Morse and Johnson, JJ.


       GIBSON, J.   Attorney Francis Peisch appealed to Grand Isle Superior
  Court a probate court decision with respect to the estate of Allen L.
  Stratton.  In a related action, Merchants Trust Company sued Peisch in the
  Chittenden Superior Court for malpractice as executor and attorney for the
  same estate.  Peisch moved in both courts for permission to pursue an
  interlocutory appeal, and the motion was granted as to each proceeding. 
  The certified questions are answered and the matter remanded.

       Appellant was executor and attorney for the estate of Allen L.
  Stratton, whose one natural child was a daughter, Alene Stratton.  Sometime
  prior to August 20, 1969, Allen L. Stratton opened an account at the
  Burlington Savings Bank entitled "Allen L. Stratton, Trustee for Alene
  Harris Stratton."  Alene Stratton, then known as Alene Stratton Srba, died
  on August 8, 1982.  On September 5, 1984, Allen L. Stratton opened a
  deposit account at the Bank of

 

  Vermont, accompanied by a letter to an officer of the bank stating in
  relevant part:

     Per my phone call today, I am enclosing my check #1117, for
     $100,000.00.

     Will you please issue a C/D in this amount for 29 months, with
     interest guaranteed for 29 months at 12% (effective yield 12.55%.)

     This C/D should be issued in the name of ALLEN L.
     STRATTON, TRUSTEE For ALENE HARRIS STRATTON.

     As you confirmed, this C/D Account, viz - ALLEN L.
     STRATTON, TRUSTEE For ALENE HARRIS STRATTON, will
     be treated as a separate account and so insured by FDIC, and not
     combined in any way with my other C/D's already issued by the
     Bank of Vermont and/or Burlington Savings Bank, in my name
     only - viz - ALLEN L. STRATTON.

       On September 21, 1986, Allen L. Stratton died.  Shortly thereafter,
  appellant filed a petition to open the Allen L. Stratton Estate as executor
  and later a petition to re-open the intestate estate of Alene Stratton
  Srba, which he had previously administered.  Appellant took possession of
  the 1969 and 1984 accounts in February 1987 and thereafter filed an
  inventory in the Alene Stratton Srba Estate listing both accounts, the
  proceeds of which he distributed to Alene Stratton Srba's three children in
  April 1987.

       In September 1988, Merchants Trust Company, as administrator of a
  trust created in Allen L. Stratton's will, filed a petition in the Grand
  Isle Superior Court seeking, and obtaining, removal of appellant as
  executor of the Allen L. Stratton Estate for numerous reasons, including
  his unauthorized removal of the 1984 account as an asset of the estate.  In
  December 1992, Merchants brought an action against appellant in the
  Chittenden Superior Court for malpractice in rendering legal advice to the
  Allen L. Stratton Estate and for converting the proceeds of the 1984
  account.

       The matters were consolidated, and following a prehearing conference
  the court ruled that the 1984 account was an asset of the Allen L. Stratton
  account as a matter of law, since a person who has died prior to the
  creation of a trust cannot be a beneficiary of the trust, and consequently,
  no trust is created in such circumstances, citing Restatement (Second) of
  Trusts,

 

  § 112, cmt. f (1959).(FN1)  The court granted appellant's motion for
  interlocutory review and certified the following questions pursuant to
  V.R.A.P. 5(a):

          (a) whether Bank of Vermont Account No. 01-878370
     entitled "Allen L. Stratton, Trustee for Alene Harris Stratton"
     created by Allen Stratton after the death of Alene Harris (Stratton)
     Srba, when Allen L. Stratton knew that she was already dead, is
     an asset of the Estate of Allen L. Stratton, or, alternatively, is an
     asset of the Estate of Alene Harris (Stratton) Srba.

          (b) whether Burlington Savings Bank Account No. 159284
     entitled "Allen L. Stratton, Trustee for Alene Harris Stratton"
     created by Allen L. Stratton before the death of Alene Harris
     (Stratton) Srba, with further deposits being made to the account by
     Allen L. Stratton after the death of Alene Harris (Stratton) Srba,
     is an asset of the Estate of Allen L. Stratton, or, alternatively, is
     an asset of the Estate of Alene Harris (Stratton) Srba.

          (c) whether the two above certified questions are, on the
     one hand, questions of law to be decided by the court, or, on the
     other hand, questions of fact or mixed questions of law and fact to
     be decided by the jury.


       Appellant argues that the court erred in ruling that a person who has
  died prior to the creation of a trust cannot be a beneficiary of the trust,
  since in the present case Allen L. Stratton knew that his daughter was no
  longer living at the time he opened the 1984 account.  The principle
  enunciated in § 112 of the Restatement and relied on by the court does
  apply most commonly to cases in which a beneficiary is alive when the trust
  instrument is created but dies

 

  prior to the vesting of the trust, or where the settlor is unaware that the
  intended beneficiary is deceased at the time the trust is created and does
  not apply where the beneficiary is living when an inter vivos trust is
  created.  See, e.g., First National Bank of Bar Harbor v. Anthony,