Court Opinion

ID: 9604555
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:23:32.200961+00
Date Added: 2024-06-11T09:15:09.390502
License: Public Domain

Robert L. Brown, Justice, dissenting. The majority opinion draws a nice distinction between consent to action by the settlor and beneficiary of a trust under Restatement of the Law, Trusts § 216 and modification of a trust based on actions by the settlor and beneficiary under Ark. Code Ann. § 28-69-401 (a) (Supp. 1999). I do not agree that that distinction can be made in this case. Section 28-69-401 (a) reads: By written consent of the settlor and all named beneficiaries of a trust or any part thereof, regardless of any spendthrift or similar protective provisions, such trust or part thereof may be revoked, modified, or terminated upon a finding by the court having jurisdiction over such trust, or otherwise being of competent jurisdiction, that the trust’s purposes, as expressed in or implied by the circumstances surrounding the trust, as a result of circumstances not foreseen to the settlor are not effectively being fulfilled or are frustrated. As the majority points out, our caselaw on this matter is sparse. Furthermore, I agree that Cotham v. First National Bank of Hot Springs, 287 Ark. 167, 697 S.W.2d 101 (1985), which dealt with an attempted termination of a spendthrift trust by the beneficiaries of the trust is not on all fours with the facts of this case. The distributions to the beneficiary, Barbara Blaisdell, by the trustee/bank which exceeded the amounts to be distributed under the two trusts are these: Date Amount Source 9/7/82 $ 7,250 1941 Trust 9/7/82 7,250 1940 Trust 9/17/82 12.500 1940 Trust 9/17/82 12.500 1941 Trust 6/28/84 15.000 1941 Trust 12/21/92 27.000 1940 Trust 10/20/93 24,025 1940 Trust 2/17/94 25.000 1941 Trust 2/17/94 25.000 1940 Trust 8/4/94 56,537 1940 Trust 2/14/95 25.000 1940 Trust 2/14/95 25.000 1941 Trust 5/3/95 22,918.74 1941 Trust TOTAL $284,980.74 Section 28-69-401 was codified following the enactment of Act 841 of 1989. Thus, with the exception of the payments made by the bank in 1982 and 1984, the distributions all occurred after Act 841 became law. The distribution on December 21, 1992, in the amount of $27,000 amounted to a modification of the trust agreement, particularly in light of the previous unauthorized payments made in 1982 and 1984. Evidence of this modification continued over the course of four consecutive years (1992-1995) and involved significant sums of money. This evidences a regular course of conduct, and modification of an agreement may be proved by the course of conduct of the parties. 17A C.J.S. Contracts § 410 (1999). In my judgment, the repeated actions of the bank over consecutive years with the agreement of the settlor and life beneficiary amounted to a modification of the trust agreement without court approval as opposed to mere consent to unauthorized actions by the bank. Act 841 establishes the policy of the State with regard to modifications of a trust agreement, and it was not complied with. While I recognize that the bank would be required to pay damages to the Blaisdell Estate for breach of trust, having previously paid like amounts to Ms. Blaisdell, the heirs of Ms. Blaisdell are entitled to this. To do otherwise is to disregard the express intent of the General Assembly as manifested by Act 841. For these reasons, I respectfully dissent. IMBER, J., joins.