Court Opinion

ID: 9530150
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:57:46.425534+00
Date Added: 2024-06-11T13:28:00.869164
License: Public Domain

Abbott, J.,
concurring and dissenting: Carrie’s grandfather established the trusts because he was concerned whether Carrie could handle money and care for her own needs. At the time Carrie received assistance from SRS, she was married and the mother of two children. Over a 34-month period, SRS paid Carrie $35,565.11. Since SRS stopped assisting the family in February *6461986, Carrie and her husband have divorced. Carrie is working in a sheltered workshop for the mentally and physically handicapped, building wooden pallets on a commission basis. The workshop staff picks her up at her apartment and takes her home. The trust pays her transportation costs ($30 a month) and her apartment rent ($285 a month with utilities paid). The trust also pays about $200 for groceries and other incidentals each month. The trust is paying approximately $515 a month for shelter, transportation, and food.
This case was brought by the State. According to the State’s petition and briefs to the trial court, the State’s position is that Carrie’s grandfather established the trust in question for her benefit and that the State is entitled to take the income and invade the corpus as a matter of public policy, even though the trust is a spendthrift and discretionary trust.
We do not answer that issue. The trial court did not answer that issue nor did the Court of Appeals. The trial court and the Court of Appeals held the trust was a discretionary trust and that the State has no greater right than the trust beneficiary and, thus, the State could not invade the corpus or take the- income. The majority opinion does not deal with that issue, which, in my opinion, leaves unanswered the only real issue raised by the State in the trial court.
I am also concerned because the State stipulated the trust was “a discretionary trust with spendthrift provisions.” I suspect the State so stipulated because the executor of Carrie’s grandfather’s estate previously petitioned the court to interpret the trust language that is also the subject of this appeal. Carrie and the trustees appeared in that proceeding. The court held
“that the language is clear and unambiguous and that the Trustees have discretionary power to pay out, if the Trustees so elect to do so, any net income in their uncontrolled discretion; provided, further, the Trustees are under no obligation to pay any net income from the Trust during the life of Carrie Conner Jackson, but in the event the Trustees deem it advisable to do so, any income paid out during the lifetime of Carrie Conner Jackson shall be paid to Carrie Conner Jackson.
“5. That such power of distribution of net income is solely within the Trustees!’] discretion and completely within their control as to whether or not distributions of income shall be made, if at all, to Carrie Conner Jackson during her lifetime.”
*647None of the parties appealed the court’s construction of the trust. Although it is part of the record on appeal, the parties in the present action did not mention that prior court determination at either the trial court or appellate court level. The State must claim through Carrie, and if Carrie is bound by the previous decision (res judicata), so is the State.
The trial court in this case also held that the trust was discretionary. On appeal to the Court of Appeals, the State contended that “public policy” allowed the State to take the income and to invade the corpus of a discretionary and spendthrift trust.
The Court of Appeals panel unanimously upheld the trial court’s decision, and the State’s petition for review with this court was granted. The State, in my opinion, changed its position before this court and took a position it had never taken before by arguing that the fundamental issue is whether Carrie was eligible for public assistance during the time she received it.
Two trial judges and three members of the Court of Appeals held that the provisions in question were unambiguous and established a discretionary trust. This court found the same provisions to be unambiguous and the trustees’ only discretion concerning income from the trust was the manner in which it should be paid to Carrie.
I look at the fact that five other competent judges (the original trial judge in the estate proceedings, the trial judge in this case, and the three-judge Court of Appeals panel) reached a different conclusion from the six-person majority of this court. I question both groups’ judgment that the phrase in question is unambiguous.
There is evidence in the record that the grandfather was dissatisfied with Carrie’s lifestyle. He changed the original trust instrument to add the discretionary language. The persons named as trustees were relatives who appear to have discussed the trust with the grandfather and who were of the opinion they had absolute discretion. A trustee already has considerable discretion regarding how and when to pay funds to the trust beneficiary. At a minimum, I would reverse on this issue and remand the case to the trial court to determine the grandfather’s intent.
*648I do not place as much reliance on “shall” and “may” as does the majority.
This state has consistently followed the Restatement of Trusts, and the majority sets out Restatement (Second) of Trusts § 155 (1957). In the case at bar — as to income — the trust instrument before us uses the exact language “the trustee shall pay ... in his uncontrolled discretion” (emphasis supplied) as an example of when a discretionary trust is created. Here, the trust instrument follows the Restatement of Trusts’ exact language to create a discretionary trust.
The majority relies on the fact that the trust instrument uses “may” when it speaks of invading the corpus. A careful reading of the majority opinion reveals authority that justice should not be the slave of grammar, that “shall” and “may” are frequently interpreted by courts to mean the same, and that the context in which the words appear must be the controlling factor.
I am not persuaded that “uncontrolled discretion” refers to the form of payment. The trustee already has as much discretion in that arena as “uncontrolled discretion” would give.
In summary, I believe the trust instrument to be ambiguous. However, in my opinion, that issue has been decided and is res judicata. The bottom line is that the issue presented in the trial court and Court of Appeals was whether the State has the right to take the net income of a discretionary trust to reimburse itself for welfare payments and, if the income is insufficient to do so, to invade the corpus of a discretionary trust. I would decide that case on that issue. I would reach the same result, i.e., that the State can reach the net income of a discretionary trust when the State has furnished necessities to the trust beneficiary. I would do so on the basis of public policy and on the authority of Restatement (Second) of Trusts § 157 (1957) cited in the majority opinion. I would not permit the State to invade the corpus of this discretionary trust.