Court Opinion

ID: 8295067
Source: CourtListenerOpinion
Date Created: 2022-10-17 11:01:15.776681+00
Date Added: 2024-06-11T16:44:00.745029
License: Public Domain

Chief Justice TOAL.
I concur in nearly all of the majority’s excellently researched and learned opinion, with the exception of the finding regarding the removal of the court-appointed fiduciaries. I continue to hold the opinion that the court ordered fiduciaries Pope and Buchanan should have been retained. However, in light of the fact that the rest of the Court sees this issue differently, I agree with all of the directives and holdings contained in the majority opinion with respect to the further handling of these matters on remand. My agreement includes concurrence in our ruling that, on remand, the circuit court should decide who to appoint as fiduciary and should review all attorney and other fees and order all unearned or unapproved fees to be disgorged and returned to Mr. Brown’s estate. I also write separately to comment on what I view as the government’s unprecedented encroachment into estate administration, which had we accepted it, would be the end of estate administration as we know it in this State.
As an initial note, I concur wholeheartedly in the portions of the majority opinion finding that the contestants had no good faith basis upon which to bring their claims against the estate and that the terms of the settlement were not just and reasonable. The effect of the circuit court’s order is to allow a group of “beneficiaries” with highly questionable or completely invalid claims to agree with each other to receive benefits the testator chose to deny them without even having to take any *452steps toward substantiating the validity of their claims or verifying the testator’s incapacity. Had any steps been taken to verify their claims, I am of the opinion that the circuit court would have found all completely lacking in merit, which in turn would have lead to the disinheritance of every contestant of the will under the no-contest clauses contained in the estate documents. See Russell v. Wachovia Bank, N.A., 370 S.C. 5, 633 S.E.2d 722 (finding no-contest clause was valid and enforceable where claims of undue influence lacked probable cause in that they did not represent a bona fide inquiry into the testators carefully drafted estate plans).31
While I agree with the majority that the purpose of a settlement agreement is not to litigate the merits of the claims against the estate, accusations in a complaint and inferences made from other fragmented facts in the Record cannot form the basis of a good faith controversy to invalidate an otherwise carefully drafted estate plan. Instead, courts must require the settling parties to put forward some “forecast of evidence indicating that at trial [they] would be able to show that a bona fide dispute existed as to the validity of the [estate provisions] in question.” Holt v. Holt, 304 N.C. 137, 282 S.E.2d 784, 785 (1981); see also O’Neil v. O’Neil, 271 N.C. 106, 155 S.E.2d 495, 501 (1967) (“The record discloses no information as to the circumstances under which the ‘Will’ was drafted. Nor does the record indicate what inquiries, if any, have been made to determine what testimony the draftsman and the witnesses would give relevant to what occurred prior to and at the time of the execution of the ‘Will.’ ”). Otherwise, it is impossible to say to that the claims were brought in good faith. Further inquiry is especially important, where, as here, it appears the contestants’ chance of success on the merits was *453highly unlikely. Furthermore, any agreement sanctioning a windfall to these contestants which also simultaneously defeats Mr. Brown’s express desire that one hundred percent of that money go to fund the educational pursuits of needy children cannot be just or reasonable.
The fact that the AG has agreed to the settlement is of no consequence, as the court is the ultimate arbiter of the merits of any settlement agreement devolving from a testator’s express intent.
The AG has taken unprecedented action in this case. After effecting a total takeover of Mr. Brown’s estate by excluding its trustees and banding together with parties who stand only to gain from the invalidation of the testator’s devise, the AG disposed of the court-appointed trustees, created a new settlement entity, and inserted himself into the day-to-day operations of a newly created charitable trust, the Legacy Trust. Along the way, a seemingly carefully executed testamentary devise was completely disregarded without any sworn testimony that the document, itself, is somehow defective. In asking this Court to give our imprimatur to the settlement agreement, Respondents effectively asked us to dispense with the cardinal rule of trusts and estates law that the intent of the testator must prevail wherever possible. See Johnson v. Thornton, 264 S.C. 252, 257, 214 S.E.2d 124, 127 (1975) (“In determining this question we are guided by the rule that in construing the provisions of a will the intention of the testator is the primary inquiry of the court.”); Limehouse v. Limehouse, 256 S.C. 255, 257, 182 S.E.2d 58, 59 (1971) (“The court’s aim in construing a Will is to discover and effectuate the expressed intention of the testator.”). Were we to accept the new estate plan, we would undermine any confidence citizens may have in their ability to do with their personal assets as they wish, leading to a chilling effect on future testators in South Carolina wishing to make charitable testamentary devises, as the result sought by the AG would permit him to become the effective “super member” of the boards of directors or trustees of these future testators’ foundations whenever he chose to intervene in the administration of their estates. Evelyn Brody, Whose Public? Parochialism and Paternalism in State Charity Law Enforcement, 79 Ind. L.J. 937,1034 (2004).
*454As outlined by the majority, four months after intervening in the action,32 the AG convened a mediation in Augusta, Georgia, and intentionally excluded Appellants, the court-appointed fiduciaries of Mr. Brown’s estate. During the ensuing negotiations, the AG purported to “settle” the claims against the estate by creating a new estate plan, under which nearly fifty percent of the residuary estate, which Mr. Brown left entirely to the Charitable Trust for the education of needy children, was now divided between some of Mr. Brown’s adult children and his purported spouse. In settlement of these parties’ claims against the estate, the AG and these family members created a new charitable trust, the Legacy Trust. The AG gave himself sole authority to select, remove, and replace the managing trustee of the Legacy Trust.33 Furthermore, the disinherited children and putative wife of Mr. Brown were authorized to select a trustee from whom the managing trustee would seek input and advice when managing the Legacy Trust.
In approving the settlement agreement, the circuit court observed:
When the [AG] does appear in litigation involving a charitable trust either by motion for intervention or being brought in by an amendment to the pleadings, he has a right to take charge and control that portion of the litigation which relates to the charitable trust ... This authority that allows the [AG] to control the litigation also provides that the [AG] has exclusive authority, in order to protect the public interest, to settle or compromise litigation....
Therefore, it is for the [AG], as the officer charged with the duty of protecting charitable beneficiaries, to exercise his discretion as to the appropriateness of a settlement. It is *455the responsibility of this Court in reviewing the record to determine if the [AG] acted in good faith [in] entering in this compromise agreement.
(citations omitted).
This is a gross misstatement of AG’s authority. While the circuit court ultimately approved the settlement, in my view, this erroneous statement of law suggests that the circuit court did not engage in meaningful independent review of the settlement because the court wrongly assumed that the AG had discretion to settle the estate, with the court merely required to “rubber-stamp” any agreement presented to it by the AG.
It goes almost without saying that the AG, like the attorneys general of most states, has common law and statutory authority to enforce trusts domiciled in the State of South Carolina. See S.C.Code Ann. § 1-7-130 (Supp.2011).34 The precedents relied upon by the circuit court and cited by Respondents are in line with this position and stand for the proposition that the attorney general is the appropriate party to “protect the interests of the public at large in the matter of administering and enforcing charitable trusts.” Epworth Children’s Home v. Beasley, 365 S.C. 157, 163 n. 3, 616 S.E.2d 710, 713 n. 3 (2005) (citing Furman Univ. v. McLeod, 238 S.C. 475, 482, 120 S.E.2d 865, 868 (1961)).
Epworth and Furman are foundational in that they define the role of an attorney general in our state jurisprudence; however, these cases cannot be read as broadly as Respondents urge. In my view, these cases illustrate the traditional role of the AG’s enforcement and oversight role in charitable trust administration, but do not grant the AG a “blank check” authorizing the AG to do what he will when it comes to charitable enforcement. Under the traditional model, the role of an attorney general in overseeing charitable entities is “limited ... to ascertaining that trustee actions are permitted by, and not inconsistent with, the underlying trust instrument, and safeguarding against fraud.” Mark Sidel, The Struggle *456for Hershey: Community Accountability and the Law in Modem American Philanthropy, 65 U. Pitt. L.R. 1, 2 (2002); cf. 1 S.C. Jur. Attorney General § 14 (“The Attorney General is charged with responsibility for enforcement of the due application of funds given or appropriated to public charities within the State of South Carolina. He is responsible for the prevention of breaches of trust in the administration of public charities. His duty is to protect the interests of the public at large rather than those who may have an immediate or peculiar interest in a charitable trust.” (footnotes omitted)). This traditional oversight role, contrary to the AG’s view, “does not include ... a right to direct either the day-to-day affairs of the charity or the action of the court.” Id. at 32 (citation omitted).35
This viewpoint is very much in line with other state court and scholarly opinions. For example, in Midkiff v. Kobayashi, 54 Haw. 299, 507 P.2d 724, 745 (1973), the Hawaii Supreme Court aptly described an attorney general’s role in charitable trust administration as follows:
The function of the attorney general, as parens patriae of charitable trusts, is to oversee the activities of the trustees to the end that the trust is performed and maintained in accordance with the provisions of the trust document, and to bring any abuse or deviation on the part of the trustees to the attention of the court for correction. The authority of the attorney general over charitable trusts does not extend beyond the performance of that function.
(internal citations omitted).36
Of course, this view of the AG’s supervisory powers, embodied in reporting requirements and other oversight and investi*457gative tactics, does not mean that the AG has no role to play when a charitable trust is involved. In Estate of Horton, 11 Cal.App.3d 680, 90 Cal.Rptr. 66, 68 (1970), the California court was presented with the question of how much involvement the attorney general should have in settlement negotiations involving several charitable entities and other beneficiaries of a testamentary trust. In approving the settlement agreement, the court defined the role of the attorney general as follows:
The role of the Attorney General is as an overseer of charities representing the public, the ultimate beneficiary of the charitable trust.... His duty is to remedy abuses in trust management____He is a necessary party to proceedings affecting the disposition of the assets of a charitable trust----It is his right and duty to participate in proceedings to protect charitable gifts....
Id. (internal citations omitted). While the court found the attorney general “has undoubted standing to seek redress in the courts of contracts entered into by charities which are collusive, tainted by fraud or which demonstrate any abuse of trust management,” the court also found that the attorney general could not assume “the position of a super administrator of charities with control over, or right to participate in, the contractual undertakings of the charities.” Id.; cf. Mary Grace Blasko, Curt S. Crossley, David Lloyd, Standing to Sue in the Charitable Sector, 28 U.S.F. L.Rev. 37, 47 (1993) (“The *458attorney general does not ... have a right to regulate the actions of a charity or to direct its day-to-day affairs. Courts have denied the attorney general authority to intervene in suits contesting wills involving charities, to enforce obligations owing to charities, to intervene or appear for the establishment of an invalid charitable trust, or to authorize deviations from trust provisions.” (emphasis in original) (footnotes omitted)).
While no one disputes the propriety of the AG’s initial intervention amidst allegations of fraud by the original trustees, once the court appointed Pope and Buchanan as fiduciaries, the AG’s involvement was no longer necessary to stave off maladministration of the Charitable Trust. At that point, the AG should have assumed a more passive role. Carl Schramm, Law Outside the Market: The Social Utility of the Private Foundation, 30 Harv. J.L. & Pub. Pol’y 355, 372-73 (2006) (“In general ... government oversight is premised on a view of nonintervention in the substantive decision-making and operations of foundations.... With few exceptions, the law neither attempts to control the decisions of managers, made in good faith, as to how the purposes will be achieved, nor how their organizations will be administered.’ Generally, a state attorney general can pursue legal action against foundations in cases where charitable assets are in jeopardy (thus possibly violating donor intent), and in cases involving illegal actions.” (quoting Waldemar A. Nielsen, The Golden Donors: A New Anatomy of the Great Foundations 13,110 (1985))).
Instead, the AG took it upon himself to discontinue the court-appointed trustees’ administration of the trust in accordance with their fiduciary responsibilities by settling the claims against the estate, and then proceeded to create an entirely new estate plan in which he has a direct role in the management and day-to-day operation of the Charitable Trust through the appointment, at will, of the managing trustee. Thus, the AG impermissibly crossed “the line between oversight and management” in this case. Brody, supra, at 974. Absent any claims of fraud or mismanagement, the trustees should have been permitted to probate the will in accordance with its terms or engaged in any settlement negotiations they deemed necessary to protect the assets of the estate. Cf. Murphey v. Dalton, 314 S.W.2d 726, 730-31 (Mo.1958) (“And trustees of a public charitable trust, like trustees of a private *459trust, may bring actions against third persons to recover or preserve or protect the trust assets and may bring suits for instructions, and it should follow that they may take any reasonable action (including the defense of a will contest suit) necessary to uphold the validity of the trust established by a will and thereby protect and preserve the trust assets ... ”). When the AG hijacked the proceedings here, the case was nothing more than a run-of-the-mill will contest (aside from the size of the estate).37 The AG had no authority to act as the lawyer for the trust or the trustees by entering into this settlement agreement at the exclusion of the rightful fiduciaries. See Murphey, 314 S.W.2d at 730-31 (finding the trustee was empowered to hire outside counsel to defend a will contest and stating “the attorney general as the attorney for the public is not the attorney for the trustee of a public charitable trust who was appointed by the settlor, and that when and under what circumstances the attorney general is a necessary or proper party to a will contest or to any other suit involving a public charitable trust or when and under what circumstances he should or must bring such action, has nothing to do with the right of a trustee to be represented by counsel of his own choosing.” (internal citations omitted)).
Furthermore, as noted by the majority, the testamentary documents, which are the guiding indicator of a testator’s *460intent, absent a court finding otherwise, conferred upon the trust, acting through its trustees, and upon the estate, acting through the personal representatives, the power to compromise claims. Trust, Art. X(19); Will, ITEM VI; see also Bob Jones Univ. v. Strandell, 344 S.C. 224, 230, 543 S.E.2d 251, 254 (Ct.App.2001) (citation omitted) (“In construing a will, a court’s first reference is always to the will’s language itself.”); Limehouse v. Limehouse, 256 S.C. 255, 257, 182 S.E.2d 58, 59 (1971) (“The court’s aim in construing a Will is to discover and effectuate the expressed intention of the testator. In searching for intention, however, we may not conjecture how the testator might have chosen to express himself had his mind adverted to the particular contingency. Circumstances known to the testator at the execution of his Will are an admissible aid in construing doubtful provisions, but the main recourse must be to the language used. We may not redraft the Will, nor may we doctor a crucial part.” (internal citations omitted)). There has not been a finding by any court concerning the validity of the will or the trust instruments. Therefore, the plain language of the testamentary documents only reinforces Appellants’ claim that the AG overstepped his authority in this case.
In sum, the Court has rightly decided that the AG simply does not possess the sweeping and unprecedented authority he assumed in this case, perhaps best illustrated by the dearth of case law supporting the AG’s position in our own jurisprudence. The AG orchestrated the fabrication of an entirely new estate plan under the auspices of his power to intervene in the litigation when settlement negotiations in this case should have been undertaken (or not) by the trustees as the rightful fiduciaries of the charitable trust, and not the AG. The AG, absent claims of fraud or mismanagement, has no right to interfere in the operation of a validly created testamentary trust based solely on his statutory authority to enforce a charitable trust.
Where discretion is conferred on a charity’s board, proper state enforcement action over fiduciary decision making reduces to a single rule: The role of the attorney general and courts is to guard against charity fiduciaries’ wrongdoing, and not to interfere in decision making carried out in good faith.... To this end, an attorney general is vested *461with the authority to seek to correct breaches of fiduciary duty that have not otherwise been remedied by the board. However, the attorney general is not a “super” member of the board.
Brody, supra, at 1034.
Because the circuit court labored under the erroneous assumption that the AG had the right to control this litigation, failed to review the bona f ides of the claims against the estate, and approved a settlement that was entirely unjust and unreasonable based on the dubious claims of the contestants, I would further find that the circuit court erred in removing Appellants as fiduciaries of the estate based on the recommendation of the settling parties.38

. We upheld Judge Russell’s estate plan, including the no-contest clause because it could not be shown that Judge Russell lacked testamentary capacity or that his ability to make decisions of this nature had been overborn by others. Mr. Brown is entitled to the same treatment. Mr. Brown’s estate plan, including its no-contest provisions, must be enforced because there has been no showing that he lacked testamentary capacity or that his will was overborn by others. If we will uphold a no-contest clause in Judge Russell's case, where die issue of capacity was actually contested, it is only just to uphold Mr. Brown's estate plan, including the no-contest provisions, where there was no real evidence-based challenge to Mr. Brown’s capacity.

. Everyone agrees that the AG’s initial intervention was proper amidst allegations of fraud and misappropriations of the trust funds by the original trustees, Bradley, Dallas, and Cannon.

. In fact, the settling parties represented to the circuit court that under the settlement agreement, "there will be a replacement of the currently serving personal representatives and trustees with a managing trustee who will be controlled completely by the attorney general of South Carolina” and that "the [AG] under the documents has full power to remove and replace any trustee serving ... as trustee of the ... Legacy Trust.”

. I note that this power to enforce the trust is not exclusive. See S.C.Code Ann. § 62-7-405(c) ("The settlor of a charitable trust, the tmstee, and the Attorney General, among others may maintain a proceeding to enforce the trust.” (emphasis added)).

. The facts of both Epworth and McLeod exemplify the valid exercise of attorney general enforcement power. In Epworth, 365 S.C. 157, 616 S.E.2d 710, the trustees wished to terminate the trust in a manner that was violative of the settlor’s intent, and the attorney general intervened to protect the charitable trust from destruction. In McLeod, 238 S.C. 475, 120 S.E.2d 865, the attorney general was made a party to protect the public interest when trustees sought to deviate from the technical terms of the trust.

. Importantly, the Hawaii Supreme Court found that the ■ attorney general did not have the authority to sanction trustee deviation from the provisions of the trust. Id. Instead, that court stated, "If a deviation *457from any trust provision is necessary in the interest of the trust, the power to authorize the deviation rests solely with the court.” Id. Our facts are slightly different, but I think the import of this statement rings true in the present controversy, as the circuit court, in approving the AG’s settlement agreement, wrongly assumed that the AG had total control over the litigation, and thus the court’s approval was a foregone conclusion. The Respondents repeatedly proclaimed to the court that they sought court approval of the agreement not out of legal necessity, but as a matter of course, because court approval of a private settlement agreement was not essential to its validity. In my view, in any instance where any party desires to deviate from the express terms of a testamentary trust, meaningful court review is required. See, e.g., Brown v. Ryan, 338 Ill.App.3d 864, 273 Ill.Dec. 307, 788 N.E.2d 1183, 1191 (2003) (citations omitted) (holding while "the community has an interest in enforcing the trust and the Attorney General represents the community in seeing that the trust is properly construed and that the funds are applied to their intended charitable uses[,]” the state could not "compel the court to terminate the trust and end the relationship between the Trustees and the Trust corpus.").

. Indeed, I question whether the AG has any role to play in a will contest. See Com. ex rel. Ferguson v. Gardner, 327 S.W.2d 947, 949 (Ky.1959) ("The contention that the Attorney General should be permitted to intervene and participate as a party in the present type of will contest does not appeal to this court as being independently sound in principle. The object of the contest is to determine one issue, i.e. [sic], whether the papers probated are the last will and testament of Ed Gardner. If not, nothing was thereby devised, bequeathed, or created to go to charity, and there will be no administration to be supervised.”); Spang v. Cleveland Trust Co., 134 N.E.2d 586, 591 (Ohio Com.Pl.1956) ("The object of this will contest proceeding is to determine one simple issue: Whether the paper writing is the last will and testament of the testatrix. If it is found not to be, then it never was the last will and testament; and nothing was bequeathed or devised by it, and nothing was created by it. The object of the proceeding is not primarily, if at all, to terminate a charitable trust. The will contest proceeding may result in the nonexistence of a purported trust created by a paper writing, having no recognition in law as a conveyancing, assigning, transferring, bequeathing or devising instrument.” (emphasis in original)).

. Nevertheless, I agree with the majority that the circuit judge, on remand, has the authority to review the propriety of Bauknight's continued service to the estate in a fiduciary capacity. I further join in the majority’s directive that the circuit judge should proceed to review all fees awarded and requested up to this point in these proceedings, determine the appropriateness of such fees, and order the payment or the disgorgement of such fees based on his calculations.