Court Opinion

ID: 4229529
Source: CourtListenerOpinion
Date Created: 2017-12-16 04:29:47.952015+00
Date Added: 2024-06-11T14:43:11.109108
License: Public Domain

Reversed and Remanded and Opinion filed December 14, 2017.

                                       In The

                     Fourteenth Court of Appeals

                               NO. 14-15-00945-CV

    EDNA ARCHER, HADEN BEARDSLEY, AND SARAH KATHRYN
                    PACHECO, Appellants
                                         V.

       JANICE MOODY, LINDA MOODY, ELIZABETH MOODY,
    W.L. MOODY, V, AND MOODY NATIONAL BANK, AS TRUSTEE,
                          Appellees

                        On Appeal from Probate Court
                            Galveston County, Texas
                       Trial Court Cause No. PR-0076077

                                 OPINION
      Three remainder beneficiaries of a trust challenge the Galveston County
Probate Court’s final judgment interpreting the trust instrument.

      The probate court concluded that the trust instrument directed a per capita
distribution of the trust estate to the remainder beneficiaries upon the trust’s
termination and applied a per stirpes distribution to the descendants of a deceased
remainder beneficiary. We reverse and remand because the trust instrument’s
distribution of the trust estate upon termination “in equal shares per stirpes”
contemplates a distribution to the remainder beneficiaries based on their deceased
ancestors’ shares. Because the beneficiaries descend from three siblings, the trust
instrument directs that the trust estate initially must be divided into three shares; the
beneficiaries’ shares are computed based upon the 1/3 interest of each of the three
siblings from whom the beneficiaries are descended.

                                         BACKGROUND

       The litigants in this declaratory judgment action are remainder beneficiaries
of a trust that W.L. Moody, Jr. created in 1934. The trust corpus is a 15,000-acre
ranch located about 100 miles northwest of San Antonio near Junction, Texas. See
generally Myrick v. Moody Nat’l Bank, 336 S.W.3d 795, 796-97 (Tex. App.—
Houston [1st Dist.] 2011, no pet.).

       W.L. Moody, Jr.’s son was W.L. Moody, III, who in turn had three children.
The last surviving child was W.L. Moody, IV (“Bill Moody”). The parties agree
that the trust terminated when Bill Moody died in 2014.

       Bill Moody had four children. His two siblings were Edna Moody and
Virginia Moody, each of whom had two children.

       The appellants come from the Edna and Virginia wings of the Moody family.
Edna Archer is Edna Moody’s daughter.1 Sarah Kathryn Pacheco is Virginia
Moody’s daughter; Haden Beardsley is the son of Virginia Moody’s other daughter,
who is deceased. We refer to them collectively as the “Edna and Virginia Moody

       1
           This court dismissed the appeal of Edna Moody’s son, David Myrick, on his motion after he
settled his claim.

                                                 2
Appellants.”

        The appellees are Bill Moody’s four children: Janice Moody, Linda Moody,
Elizabeth Moody, and W.L. Moody, V. We refer to them collectively as the “Bill
Moody Appellees.”2

        The family tree relevant to this appeal appears as follows:

                                      W.L. Moody, Jr. (deceased)

                                      W.L. Moody, III (deceased)

              Edna Moody (deceased)       Virginia Moody (deceased)                W.L. Moody, IV ("Bill Moody")
                                                                                           (deceased)

                                  Virginia
            David     Edna                          Sarah
                                 Beardsley                         Janice                  Elizabeth   W.L. Moody, V
            Myrick   Archer                        Kathryn         Moody    Linda Moody
                                (deceased,                                                  Moody       (deceased)
                                                   Pacheco
                                survived by
                                  Haden
                                Beardsley)

The remainder beneficiaries are W.L. Moody, III’s grandchildren: David Myrick,
Edna Archer, Virginia Beardsley (deceased and survived by Haden Beardsley),
Sarah Kathryn Pacheco, Janice Moody, Linda Moody, Elizabeth Moody, and W.L.
Moody, V (deceased). The legal dispute focuses on how to calculate the fractional
shares of the trust estate allocable to the remainder beneficiaries when the trust
terminated in 2014.

        The Edna and Virginia Moody Appellants interpret the trust instrument to

        2
           Appellee Elizabeth Moody appears pro se in this appeal and did not file a brief. Appellee W.L.
Moody, V died in 2016. Craig Janek was appointed and has qualified to serve as Independent Executor of
the Estate of W.L. Moody, V, deceased. Moody National Bank is the trustee of the trust created by W.L.
Moody, Jr. and is an appellee. The bank’s brief does not take a position on the merits of this appeal and
states that the bank will “abide by the final judgment on trust distribution issued in this case.”

                                                      3
distribute the trust estate equally in 1/3 shares among Edna Moody, Virginia Moody,
and Bill Moody. Under this interpretation, the Edna and Virginia Moody Appellants
each receive a 1/6 undivided interest from Edna Moody’s and Virginia Moody’s
respective 1/3 shares, computed as 1/3 multiplied by 1/2; the Bill Moody Appellees
each receive a 1/12 undivided interest in the trust estate from Bill Moody’s 1/3 share,
computed as 1/3 multiplied by 1/4.

        In contrast, the Bill Moody Appellees interpret the trust instrument to
distribute the trust estate equally upon termination so that each of the remainder
beneficiaries receives a 1/8 undivided interest in the trust estate.

        The probate court interpreted the operative trust instrument language on cross-
motions for traditional summary judgment under Texas Rule of Civil Procedure
166a(c). It granted summary judgment in favor of the Bill Moody Appellees and
held that the remainder beneficiaries each receive an equal 1/8 undivided interest in
the trust estate. The Edna and Virginia Moody Appellants challenge the probate
court’s grant of summary judgment in favor of the Bill Moody Appellees and the
denial of the appellants’ cross-motion for summary judgment.3

        3
           The probate court’s orders on the parties’ cross-motions for summary judgment were severed into
a document labeled as a “final and appealable judgment” on October 8, 2015. The Edna and Virginia
Moody Appellants filed a joint notice of appeal on November 5, 2015. The October 8, 2015 judgment was
not actually final because an unresolved issue regarding attorney’s fees remained in the case. Therefore,
the parties filed in this court an agreed motion to abate the appeal until the probate court signed a final
judgment that resolved the amount and allocation of the parties’ attorney’s fees. This court granted the
parties’ agreed motion to abate, removed the case from the court’s active docket, and instructed that the
case would be reinstated “when the supplemental clerk’s record is filed in this court.” The probate court
signed a final judgment on June 6, 2016, incorporating its prior orders on the cross motions for summary
judgment and awarding attorney’s fees. The supplemental clerk’s record was filed with this court in June
2016 and this court reinstated the appeal on June 23, 2016. Appellant Haden Beardsley filed an amended
notice of appeal on July 1, 2016. Appellants Edna Archer and Sarah Kathryn Pacheco did not file an
amended notice of appeal. The premature joint notice of appeal filed by appellants Edna Archer, Sarah
Kathryn Pacheco, and Haden Beardsley on November 5, 2015, when the judgment was not final nonetheless
is effective to perfect an appeal from the subsequent final judgment signed on June 6, 2016. See Brighton
v. Koss, 415 S.W.3d 864, 866 (Tex. 2013) (per curiam) (“When a party prematurely files a notice of appeal,
our procedural rules treat the premature notice as filed subsequent to the order or judgment to which it
applies.”). The appellants do not challenge on appeal the trial court’s award of attorney’s fees to the Bill
                                                     4
                                            ANALYSIS

       The Edna and Virginia Moody Appellants raise two issues on appeal
contending that the probate court should have granted summary judgment in their
favor and adopted their interpretation of the operative trust instrument language. In
practical terms, adopting the appellants’ interpretation means that their individual
share size increases from 1/8 to 1/6 and the share size received by each of the Bill
Moody Appellees decreases from 1/8 to 1/12.

       This dispute arrives on appeal by way of cross-motions for traditional
summary judgment. We review summary judgments de novo. Valence Operating
Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). In a traditional motion for
summary judgment, the movant must show there is no genuine issue of material fact
and that the movant is entitled to judgment as a matter of law. Tex. R. Civ. P.
166a(c); Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015). When
both parties move for summary judgment and the trial court grants one motion and
denies the other, we review both sides’ summary judgment evidence. S. Crushed
Concrete, LLC v. City of Houston, 398 S.W.3d 676, 678 (Tex. 2013). We may affirm
the judgment, reverse and render a judgment for the other side if appropriate, or
reverse and remand for further proceedings. Drake Interiors, L.L.C. v. Thomas, 433
S.W.3d 841, 847 (Tex. App.—Houston [14th Dist.] 2014, pet. denied); see also In
re Estate of Rhoades, 502 S.W.3d 406, 416-18 (Tex. App.—Fort Worth 2016, pet.
filed) (concluding that the trial court’s interpretation of a will devise was in error;
court reversed the trial court’s judgment and remanded the case for further
proceedings consistent with its opinion).

Moody Appellees. Therefore, we do not address attorney’s fees.

                                                  5
I.    Standards Governing Interpretation of the Trust Instrument

      “We interpret trust instruments the same way as wills, contracts, and other
legal documents.” Myrick, 336 S.W.3d at 802 (citing Lesikar v. Moon, 237 S.W.3d
361, 366 (Tex. App.—Houston [14th Dist.] 2007, pet. denied)).

      We look to the four corners of the trust instrument to ascertain the settlor’s
intent. Id. (citing Hurley v. Moody Nat’l Bank of Galveston, 98 S.W.3d 307, 310-11
(Tex. App.—Houston [1st Dist.] 2003, no pet.)). We presume the settlor placed
nothing superfluous or meaningless in the trust instrument and that the settlor
“intended every part, sentence, clause, and word to have a meaning and to play a
part in the disposition of his property.” Marlin v. Kelly, 678 S.W.2d 582, 587 (Tex.
App.—Houston [14th Dist.] 1984), aff’d, 714 S.W.2d 303 (Tex. 1986); see also
PopCap Games, Inc. v. MumboJumbo, LLC, 350 S.W.3d 699, 708 (Tex. App.—
Dallas 2011, pet. denied) (“The use of different language in different parts of a
contract generally means that the parties intended different things.”).

      The court’s construction of a trust instrument should not “add to, subtract
from, amend, correct, reform, revise, or rewrite” the language used in the instrument.
Parker v. Parker, 131 S.W.3d 524, 531 (Tex. App.—Fort Worth 2004, pet. denied);
see also Kettler v. Atkinson, 383 S.W.2d 557, 561 (Tex. 1964) (“[t]his court is not
disposed to rewrite the will of the testatrix”).

      “The construction of a will or a trust instrument is a question of law for the
trial court.” Hurley, 98 S.W.3d at 310 (citing Nowlin v. Frost Nat’l Bank, 908
S.W.2d 283, 286 (Tex. App.—Houston [1st Dist.] 1995, no writ)). The goal in
construing both wills and trusts is to ascertain the maker’s intent. Id. (citing Jewett
v. Capital Nat’l Bank of Austin, 618 S.W.2d 109, 112 (Tex. Civ. App.—Waco 1981,
writ ref’d n.r.e.)). Unambiguous trust language that expresses the settlor’s intent
makes it unnecessary to construe the instrument because it speaks for itself. Id.
                                            6
(citing Jewett, 618 S.W.2d at 112).

      “A court should determine the intention of the testator from the language in
the instrument.” Id. (citing Rekdahl v. Long, 417 S.W.2d 387, 389 (Tex. 1967)). “A
court should give effect to every part of the instrument if the language is reasonably
susceptible to a harmonious construction.” Id. (citing O’Malley v. Stratton, 831
S.W.2d 35, 37 (Tex. App.—El Paso 1992, no writ)).

      We now apply these precepts to the disputed trust language.

II.   Applying the Standards

      Resolution of this appeal focuses primarily on Article II and Article III of the
trust instrument. Article II governed distribution of the trust’s net income to W.L.
Moody, III, his children, and his grandchildren before the trust terminated. Article
III governs distribution of the trust estate after it terminated in 2014 upon the death
of W.L. Moody, III’s last surviving child, Bill Moody.

      Under Article III, W.L. Moody, III’s grandchildren are remainder
beneficiaries entitled to share in the trust estate at the trust’s termination upon Bill
Moody’s death. Article III distributes the trust estate upon termination as follows:

      . . . [T]he Trustee shall, upon the termination of the Trust, distribute the
      Trust Estate in equal shares per stirpes to the then living grandchildren
      of William Lewis Moody, III, and the surviving issue of his deceased
      grandchildren.

(emphasis added). Our task is to determine the meaning of the phrase “in equal
shares per stirpes” in Article III.

      The Edna and Virginia Moody Appellants assert that this phrase in Article III
requires an initial division of the trust estate into thirds among W.L. Moody, III’s
three children: Edna Moody, Virginia Moody, and Bill Moody. In turn, W.L.
Moody, III’s grandchildren share equally in the 1/3 interest of their respective

                                           7
parents.

      The Bill Moody Appellees assert that Article III’s operative phrase mandates
a per capita distribution of the trust estate to W.L. Moody, III’s grandchildren, with
an equal 1/8 distribution allocated to each grandchild. They contend that Article
III’s inclusion of the phrase “per stirpes” applies only to the distribution of a
deceased grandchild’s allotted 1/8 interest to the grandchild’s descendants.

      The parties agree that, if one of W.L. Moody, III’s grandchildren died before
the trust terminated and is survived by descendants, then the deceased grandchild’s
allotted interest is distributed per stirpes to his or her descendants.

      We agree with the interpretation of Article III advanced by the Edna and
Virginia Moody Appellants. The trust instrument is not ambiguous and we ascertain
its meaning as a matter of law. See Hurley, 98 S.W.3d at 310. Article III’s operative
phrase “in equal shares per stirpes” requires an initial division of the trust estate in
thirds among W.L. Moody, III’s three children; W.L. Moody, III’s grandchildren
share equally in the 1/3 share of the sibling from whom they are descended. We
reach this conclusion for the following reasons.

      First, the Edna and Virginia Moody Appellants’ interpretation is supported by
the plain language of Article III’s operative phrase.

      “Per stirpes” is defined as “[p]roportionately divided between beneficiaries
according to their deceased ancestor’s share.” Per stirpes, Black’s Law Dictionary
(10th ed. 2014). The grandchildren are descendants of W.L. Moody, III’s three
children: Edna Moody, Virginia Moody, and Bill Moody. By instructing that the
trust estate be disbursed to W.L. Moody, III’s grandchildren “in equal shares per
stirpes,” Article III contemplates a distribution to the grandchildren dependent on
their deceased ancestor’s share. See id. The deceased ancestors here are Edna

                                            8
Moody, Virginia Moody, and Bill Moody. See also In re Estate of Williams, No.
08-98-00144-CV, 2000 WL 1053857, at *3 n.2 (Tex. App.—El Paso Aug. 1, 2000,
no pet.) (not designated for publication) (citing Black’s Law Dictionary definition
of “per stirpes,” court stated that “[t]he use of the term ‘per stirpes’ demonstrates the
intent that the descendants . . . would take by representation”); Parrish v. Mills, 102
S.W. 184, 188 (Tex. Civ. App.—Austin 1907), aff’d, 101 Tex. 276 (Tex. 1908)
(defined “per stirpes” as meaning “to take by stock or through a common source,
and, when applied to estates, signifies that the particular descendants shall take
among themselves the share of their deceased parent”).

      Second, the Edna and Virginia Moody Appellants’ interpretation of Article
III’s operative phrase comports with an examination of the trust instrument as a
whole.

      Article II of the trust instrument distributed the trust’s net income before
termination as follows:

      . . . [T]he trustee shall pay over the net income from the Trust Estate
      semi-annually to William Lewis Moody, III, so long as he shall live;
      and after the death of William Lewis Moody, III, the Trustee shall pay
      over the net income from same semi-annually in equal shares to the
      present and any future children of [William Lewis Moody, III] during
      the lives of said children . . . .

                                     *     *      *

      But if any such child [of William Lewis Moody, III] shall die leaving
      surviving issue, then such surviving issue shall succeed to and
      thereafter receive per stirpes their parent’s share and interest in the
      Trust Estate.

(emphasis added). This provision in Article II mandated an equal per capita
distribution of the trust’s net income to Edna Moody, Virginia Moody, and Bill
Moody while living. If Edna, Virginia, or Bill died, then this language required that

                                           9
their share of net income pass per stirpes to their children.4

        In essence, the Bill Moody Appellees assert that Article III distributes the trust
estate upon termination to W.L. Moody, III’s grandchildren in the same manner as
Article II distributed the trust’s net income to W.L. Moody, III’s children before the
trust terminated.

        We disagree with this assertion because, unlike Article III’s operative phrase
“in equal shares per stirpes,” Article II’s net income clause separates the phrase “in
equal shares” from the phrase “per stirpes” and in so doing prescribes an initial per
capita distribution to the beneficiary class. In contrast to Article II, Article III’s use
of the combined phrase “in equal shares per stirpes” directs that the termination
distribution to the beneficiary class is by ancestor, not per capita. The Bill Moody
Appellees’ interpretation of Article III’s operative clause impermissibly rewrites
Article III by divorcing the phrase “equal shares” from the phrase “per stirpes.” We
cannot rewrite Article III in this manner. See Parker, 131 S.W.3d at 531 (the court
may not “reform, revise, or rewrite” an instrument’s devise). This interpretation also
makes an untenable assumption that Article II and Article III operate in the same
manner even though the articles use different formulations to express the settlor’s
intent. Cf. PopCap Games, Inc., 350 S.W.3d at 708 (“The use of different language
in different parts of a contract generally means that the parties intended different
things.”).

        Third, cases and secondary sources analyzing similar dispositive language
provide additional support for the interpretation of Article III advanced by the Edna

        4
           The Galveston County district court examined this provision in a separate proceeding and
concluded that the trust’s net income should be distributed per capita to W.L. Moody, III’s children and per
stirpes to the descendants of a deceased child. The Moody Nat’l Bank of Galveston, Trustee v. Estate of
W.L. Moody, III, No. 92CV1142 (212th Dist. Ct., Galveston County, Tex. Sept. 14, 1998). This judgment
was attached as an exhibit to appellant Sarah Kathryn Pacheco’s motion for partial summary judgment.

                                                    10
and Virginia Moody Appellants.

      We first look to In re Estate of Williams, 2000 WL 1053857, in which the
wife’s will devised 2/3 of her estate “to all [of the wife’s] living or surviving brothers
and sisters, and all of [her] husband’s living or surviving brothers and sisters, in
equal shares per stirpes, share and share alike.” 2000 WL 1053857, at *1.

      The court concluded that the dispositive language prescribed an initial
division of the 2/3 devise between the husband’s siblings and the wife’s siblings,
with the siblings sharing equally in their ancestor’s 1/3 share. Id. at *3. Similarly,
Article III’s use of the phrase “in equal shares per stirpes” directs a distribution by
line of descent, not per capita, and prescribes an initial division of the trust estate
among W.L. Moody, III’s three children. See also In re Hickey’s Estate, 73
N.Y.S.2d 508, 511, 516 (N.Y. Sur. Ct. 1939) (will devised estate to “the children of
my said daughter, [name], and the children of my said son, [name], . . . to be divided
between them equally, per stirpes;” court held that devise distributed the estate so
that “one half share [of the estate] shall be maintained among the children of each
group” (emphasis in original)).

      The Restatement (Second) of Property also supports the Article III
interpretation advanced by the Edna and Virginia Moody Appellants. It concludes
that a “per stirpes” class distribution requires a distribution by ancestor:

      If a gift is made to the “grandchildren” of a designated person “per
      stirpes,” the described class members stem from different children of
      the designated person. In such case, the words “per stirpes” suggest
      an initial division of the subject matter of the gift into shares, one
      share for the children of each child of the designated person, thereby
      overcoming the per capita division otherwise called for by the rules of
      this section.

Restatement (Second) of Prop.: Donative Transfers § 28.1 cmt. i. (1988) (emphasis
added).
                                           11
      The Restatement example mirrors the distribution at issue here: Article III’s
termination clause distributes the trust estate to the grandchildren of W.L. Moody,
III “in equal shares per stirpes.” The grandchildren stem from W.L. Moody, III’s
three children: Edna Moody, Virginia Moody, and Bill Moody. Accordingly, the
trust estate initially is divided into three shares for each of W.L. Moody, III’s
children, and the grandchildren share equally in the 1/3 interest of the sibling from
whom they are descended. See id.

      The Texas Practice Guide provides another example that supports the Edna
and Virginia Moody Appellants’ interpretation of Article III:

      F leaves Blackacre to the children of A, B, and C, per stirpes. A has
      one child, B has two children, and C has three children. Thus,
      Blackacre will be divided into three equal parts, one share for each of
      the A, B, and C’s children. A’s children will receive one share, or one-
      third of Blackacre. B’s children will receive jointly one share, or one-
      sixth each, of Blackacre. C’s children will receive jointly one share, or
      one-ninth each, of Blackacre.

Ronald R. Cresswell, Patrick J. Pacheco & Sarah P. Pacheco, Tex. Practice Guide:
Wills, Trusts and Estate Planning § 4:241 (2016). Here too, the trust estate was left
to the grandchildren of W.L. Moody, III, and “per stirpes” designates a distribution
by line of descent.

      The Bill Moody Appellees rely heavily on Ladd v. Whitledge, 205 S.W. 463
(Tex. Civ. App.—Amarillo 1918, writ ref’d), to support their competing
interpretation of Article III’s termination clause. Ladd does not control here because
the dispositive language analyzed in Ladd did not include a per stirpes distribution;
instead, it directed a distribution to the beneficiaries “to share alike in equal
proportional parts.” Id. at 463, 465.

      We sustain the Edna and Virginia Moody Appellants’ issues because their
interpretation of Article III’s operative phrase is supported by the termination
                                         12
clause’s plain language, the trust instrument as a whole, and cases and secondary
sources analyzing similar dispositive language.

                                  CONCLUSION

      We hold that Article III’s operative phrase “in equal shares per stirpes”
requires an initial division of the trust estate among the three children of W.L.
Moody, III. The grandchildren of W.L. Moody, III share equally based upon the 1/3
share of the sibling from whom they are descended. We reverse the probate court’s
June 6, 2016 final judgment and remand the case to the trial court for further
proceedings consistent with our holding. See In re Estate of Rhoades, 502 S.W.3d
at 418.

                                      /s/    William J. Boyce
                                             Justice

Panel consists of Justices Boyce, Jamison, and Brown.

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