Court Opinion

ID: 1047474
Source: CourtListenerOpinion
Date Created: 2013-10-08 02:46:02.598694+00
Date Added: 2024-06-11T13:02:46.018242
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                           AT KNOXVILLE
                               September 20, 2011 Session

     FIRST TENNESSEE BANK, N.A. v. HAROLD WOODWARD ET AL.

                   Appeal from the Chancery Court for Knox County
                    No. 178062-2    Daryl R. Fansler, Chancellor

             No. E2011-00599-COA-R3-CV-FILED-OCTOBER 25, 2011

First Tennessee Bank, N.A. (“the Trustee”) is the trustee of a testamentary trust established
under the will of Steve Woodward (“the Deceased”) for the benefit of his son, Jeffrey Clinton
Woodward (“the Son”). Steve Woodward died in 2005. The Deceased’s will (“the Will”)
provides that at his death a trust was to be created for the benefit of the Son. The Son is to
receive a monthly payment from the trust and, at age 50, the Son is to receive the corpus of
the trust. The Deceased’s brother, Harold Woodward (“the Brother”), is the recipient under
the Will of “all of the property that would make up my residual estate and not named
herein. . . .” The trust was created and payments were being made to the Son until he died
in 2009 at the age of 33. The Trustee filed this action asking the court to determine its
obligations as trustee with respect to the corpus of the trust. The suit named all parties with
a possible interest in the outcome as defendants, including the Son’s estranged wife, Andrea
Woodward (“the Wife”). The trial court ordered the Trustee to distribute the corpus of the
trust to the Brother. The Wife appeals. We reverse.

      Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
                            Reversed; Case Remanded

C HARLES D. S USANO , J R., J., delivered the opinion of the Court, in which H ERSCHEL P.
F RANKS, P.J., and J OHN W. M CC LARTY, J.J., joined.

T. Turner Snodgrass, Nashville, Tennessee, for the appellant, Andrea Woodward.

Wayne R. Kramer, Knoxville, Tennessee, for the appellee, First Tennessee Bank, N.A.

Amanda M. Busby, Knoxville, Tennessee, for the appellee, Harold Woodward.
                                           OPINION

                                                I.

        The procedural history of this case is adequately set forth in the orientation paragraph
of this opinion. The parties stipulated at a hearing held by the trial court that the facts are as
set forth in a memorandum of law filed by the Trustee in anticipation of the final hearing.
We will quote the pertinent stipulated facts verbatim, omitting citations to the record,
headings and paragraph numbering:

               Steve Woodward [,the Deceased,] died testate on November 17,
               2005 at the age of fifty-six (56) as a resident of Trousdale
               County, Tennessee. At the time of his death, [the Deceased]
               was not married, having been divorced from Jamie Harper since
               December 16, 2002. He was survived by [the Son], [the Brother
               and another brother,] Lakin Corder Woodward and by a sister-
               in-law, Carlos Ann Woodward [, all of whom are beneficiaries
               under the Will]. Subsequent to his death, . . . [the Will] was
               offered and accepted for probate in the Chancery Court for
               Trousdale County . . . The administration of [the Deceased’s]
               Estate . . . was closed by Order entered October 31, 2006.

               Pursuant to the terms and conditions of [the Will], a Trust
               (“Trust”) was created for the benefit of [the Son]. [The Trustee]
               was named Trustee under the Trust, is currently serving in such
               capacity and has been so serving as Trustee since the funding of
               the Trust on or about December 7, 2006.

                                            *   *     *

               [The Son] died intestate on October 27, 2009 at the age of thirty-
               three (33). He was the sole beneficiary of the Trust.

               At the time of [the Son’s] death, defendant Andrea Woodward
               was separated from but still legally married to [the Son] and she
               is [the Son’s] sole heir at law pursuant to Tenn. Code Ann. § 31-
               2-104 (a)(1).

               [The Son] was not survived by his father, any children,
               grandchildren or other lineal descendants or ancestors other than

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his mother. Nor did [the Son] ever have any children,
grandchildren or other lineal descendants.

Harold Woodward, Lakin Corder Woodward, Andrea
Woodward and Carlos Ann Woodward are the only parties who
could have an interest in the Trust, said individuals being either
beneficiaries under [the] Will, heirs at law of [the Deceased]
and/or heirs at law of [the Son].

Pursuant to Article V of [the] Will, [the Son] was entitled to a
distribution from the Trust in the amount of One Thousand
Dollars ($1,000.00) per month until reaching the age of fifty
(50). In addition, every year in January, [the Son] was to receive
a four percent (4%) increase in his monthly draw. The Trustee
was granted various powers and authority in connection with the
Trust and its administration.

Among other things, the terms of the Trust under Article V of
the Will provided as follows:

       I direct that when Jeff reaches the age of fifty (50)
       years he shall receive the corpus of the trust fund
       and any income therefrom and the trust shall
       terminate. (emphasis added)

Neither the Will nor the specific terms of the Trust includes any
language as to the disposition of the Trust corpus and remaining
undistributed income . . . in the event that [the Son’s] death . . .
occurred prior to his reaching the age of fifty (50). . . .

Article VI of the Will, “Residual Estate,” provides as follows:

       I hereby give, devise and bequeath all of the
       property that would make up my residual estate
       and not named herein to my brother, Harold
       Woodward, to be his absolute property.

In addition to the above cited provisions in [the] Will, the
following provisions are also relevant to the issues . . . :

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              At the making of this last will and testament I have one son,
              Jeffrey Clinton Woodward. I hereby make the provisions
              contained in this last will and testament for Jeff.

              In the event I am pre-deceased by my son, Jeffrey Clinton
              Woodward, there will be no trust as described hereinafter, and
              all of the estate that was considered trust property will go to my
              brother, Harold Woodward. If Jeffery Clinton Woodward and
              Harold Woodward pre-decease me, my Estate goes to my
              brother, Lakin Corder Woodward.

(Bold and underlining in original.)

       The trial court noted that all parties had ample authority to support their respective
positions, provided they were correct about the intent of the Deceased. Therefore, the court
held that “the controlling and deciding factor here is the intent of [the Deceased].” The court
ultimately found “that it was the intent of [the Deceased] that if [the Son] predeceased him
or did not live until fifty (50) years old then the funds that would otherwise be placed into
the Trust would go to [the Brother] under the residuary clause of [the Will.]” The court
entered an order directing the Trustee to distribute the corpus of the trust and any
undistributed income to the Brother.

                                              II.

       The Wife appeals. Her issue on appeal is

              [w]hether the [t]rial [c]ourt [e]rred in finding that [the
              Deceased] expressed the intent in his will, that should [the Son]
              die prior to attaining the age of fifty years, that the funds placed
              in trust for [the Son’s] benefit be distributed to the [Brother],
              pursuant to the [W]ill’s residuary clause.

                                              III.

When an appellate court is

              called upon to construe a will, and there is no dispute in the
              evidence as to any material fact, then the question on appeal is
              one of law. Accordingly, our review is de novo with no

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                presumption of correctness accompanying the lower courts’
                conclusions of law.

In re Estate of McFarland, 167 S.W.3d 299, 302 (Tenn. 2005)(citations omitted).

                                                    IV.

        We will begin by noting a few undisputed principles that courts apply in construing
a will. The “cardinal rule” in construction of a will is to discover the intent of the testator
and give it effect unless the end result is illegal or against public policy. McFarland, 167
S.W.3d at 302; Third National Bank v. First American National Bank, 596 S.W.2d 824,
828 (Tenn. 1980). The court should not find an intent that is not justified by the language
of the will itself. In re Estate of Pegram v. Pegram, 189 S.W.3d 227, 230 (Tenn. Ct. App.
2005). The intention must be ascertained from the words used in the will giving due regard
to the context, scope and purpose of the instrument. McFarland, 167 S.W.3d at 302.

                                                    V.

        All parties acknowledge that the key issue is whether the Deceased intended, once the
trust was created, for the remainder of the trust to vest in the Son even if he did not live to
be 50 years old.1 The Wife argues that the language of the Will allows only one conclusion
– that the Deceased intended that once the Son survived his father and the trust was created,
then the Son, or the Son’s beneficiaries, would receive the full benefit of the trust, even if he
did not live to age 50. She argues also that several principles of law require this result.
Notwithstanding the arguments made by the Brother and the Trustee, which we will discuss
in due time, we agree with the Wife.

        The Wife correctly points out that paragraph V. of the Will, which creates the trust,
makes no provision for divesting the Son of the trust’s benefits once it is funded. The Will
directs, unconditionally, that certain liquid assets “be placed in an income-producing trust
for [the Son].” It further directs, again unconditionally, that the Son receive from the trust
“the sum of One Thousand Dollars ($1,000.00) per month . . . until he reaches the age of fifty
(50) years old” with annual increases to the monthly benefit. Finally, it unconditionally
directs that “when [the Son] reaches the age of fifty (50) years he shall receive the corpus of
the trust fund and any income therefrom and the trust shall terminate.” The Wife correctly
points out that the language terminating the trust “when” the Son reaches the age of 50 does

        1
         The issue in this case is the intention of the Deceased when he executed his will; the issue is not
whether the Deceased, if he had had the benefit of foresight, would have wanted the corpus of the trust to
go to the Son’s wife if, as happened, they were separated at the time of the Son’s death.

                                                    -5-
not use the word “if.” Had the word “if” been used, its use might well have implied that the
Son would not be entitled to the corpus unless he reached the age 50; the word “when”
suggests that the Deceased intended for the Son to enjoy the full benefit of the trust but that
the Deceased, for whatever unstated personal reasons, wanted the Son to be content with the
income until some later date when the trust would terminate.

       In our view, neither the language that requires the Son to survive the Deceased nor the
residuary clause suggest that the Deceased intended to divest the Son of the trust once it was
created. We have already set forth the subject language verbatim and will not repeat it here.
The first event, i.e., the Son dying before his father, obviously did not happen as evidenced
by the fact that the trust was created. The residuary clause only covers “property . . . not
named herein . . .” The assets in the trust fund are “named herein.” The Trustee
acknowledges in its brief that neither provision answers the question of what happens in the
event a trust is created and the Son dies before age 50. The trial court also found that to be
true. We agree.

        The stated and otherwise obvious purposes of the Will are to (1) provide for the
payment of the Deceased’s lawful debts; (2) provide gifts of specific property to the Brother
and to the Deceased’s other brother, Lakin Woodward; (3) “make . . . provisions . . . for” the
Deceased’s only child, the Son; and (4) distribute any unidentified “residual” property to the
Brother. “When one controlling or dominant purpose . . . is expressed, it is the duty of the
court to so construe [a] will as to effectuate this major intention, and to construe all
subsidiary clauses so as to bring them into subordination.” Davis v. Mitchell, 178 S.W.2d
889, 912 (Tenn. Ct. App. 1943). Of the purposes we have identified, the desire to “make . . .
provisions” for the Son dominate. Paragraph V. of the Will was devoted to making those
“provisions” through the trust. We believe that in light of how much language in the Will
is devoted to that dominant purpose, if the Deceased had meant for that provision to be
contingent upon some future event, he would have expressly so stated.

        Thus, upon examining the trust language in context, and in light of the dominant
purpose, we are convinced that the intent was for the right to the trust to vest in the Son at
the time of the death of the Deceased. This result is consistent with the holding of numerous
cases, including Harris v. France, 232 S.W.2d 64, 72 (Tenn. Ct. App. 1950), and National
Bank of Commerce v. Dortch, 1987 WL 19510 (Tenn. Ct. App.W.S., filed Nov. 9, 1987).
Harris was a will construction case. The will placed a farm with approximately 1,300 acres
of land in trust for the benefit of the testator’s nieces and nephews and their children. 232
S.W.2d at 67. The beneficiaries were to receive the profits from the farm until the youngest
grandniece or grandnephew reached the age of 30, at which time the trust would terminate
and the beneficiaries would receive their share of the corpus of the trust. The issue was

                                              -6-
whether the devise violated the rule against perpetuities2 by making a gift to a class that was
contingent on survival of a child that was not yet born at the testator’s death. Id. at 66. This
court held that the gift did not violate the rule against perpetuities because the rights of the
beneficiaries, even those not yet born, vested at the death of the testator. Id. at 73. Although
the Court discussed multiple reasons for its holding, one rule of law applied by it was that

                an intermediate gift of income accruing during the term of an
                active trust at the end of which the corpus is to be distributed
                among the beneficiaries, is conclusive, nothing else appearing,
                of the intention of the testator that an equitable, transmissible
                estate in fee should vest in the beneficiaries immediately upon
                his death.

Id. at 72 (emphasis added). Harris goes on for pages discussing nuances of the will and of
the rule against perpetuities, but the key issue in that case is the intention of the testator as
to how and when the beneficiaries’ rights in the trust vested. The same is true in the present
case. The Court in Harris described what the grandnieces and grandnephews obtained at the
death of the testator as “an equitable estate in fee,” and further stated that “it was not the
vesting of the estate in the beneficiaries which the testator desired to delay, but the
termination of the trust, which does not exclude the idea of a prior vesting of an equitable
estate in fee in the beneficiaries.” Id. at 72-73 (citation omitted).

       The Dortch case is very similar in many respects to the present case. It was filed by
a bank that was the trustee of a testamentary trust asking the court to determine to whom the
bank should pay the remainder in the trust. 1987 WL 19510 at *1. Pursuant to the language
in the will, the “net income” of the trust was to be paid into the hands of one Trilby
McGoodwin until her death and then “the net income . . . shall go to [her] children, share and
share alike, for twenty (20) years, being paid to them . . . and then the corpus shall be divided
equally among them.” Id. The trial court held that the testator intended that any interests of
Trilby’s children to the corpus of the trust were contingent upon them living 20 years after
Trilby’s death. Id. at *2. This Court reversed the judgment of the trial court. We applied
Harris and found “the fact that the children of [Trilby] were to receive both the income and
the corpus of the trust determinative of the testatrix’s intent.” Id. at *5. The result of our

        2
        There is no need for lengthy elaboration on the rule against perpetuities. As stated in Harris, 232
S.W.2d at 67, it’s substance is:

                No interest is good unless it must vest, if at all, not later than 21 years after
                some life in being at the creation of the interest.

                                                      -7-
holding in Dortch was that the spouse of Trilby’s son James took his share of the corpus of
the trust even though James did not outlive Trilby by 20 years. See id. at *2,6.

       The Trustee attempts to distinguish Dortch by the fact that the language of the will
in Dortch directed that the beneficiaries “were to receive the income for a period of [twenty]
years and then they were to receive the corpus” whereas in the present case the Son “was to
receive the principal only when he reached age 50.” (Emphasis in Trustee’s brief.) We do
not agree with this distinction. It not only misconstrues the Will, but also suffers the
weakness of constructing the conclusion from the very fabric of the question. In other words,
it concludes that since the Son was to receive the corpus at age 50, then his interest was
contingent and he was “only” entitled to the corpus if he lived to age 50. The weakness of
the Trustee’s distinction can easily be shown by casting the controlling facts of the present
case into the language the Trustee employs to describe the will in Dortch; i.e., “The Son was
to receive the income until he reached age 50 and then he was to receive the corpus.”

        The Brother attempts to weaken the force of Dortch by arguing that the will in that
case did not “appear” to have a residuary clause, therefore the Court there was striving to
prevent intestacy. It is by no means clear that the will in Dortch did not contain a residuary
clause. The opinion does not say whether or not there is a residuary clause. There is one
mention of the possibility of a “partial intestacy” in the Court’s discussion of the parties’
contentions. Id. at *2. The fact that such a possibility was not further discussed suggests
that, even if true, that possibility was not particularly important to the resolution of the case.
The Brother also attempts to weaken the force of Dortch by the fact that it is unpublished.
We have not blindly followed Dortch as the authoritative holding of a higher court that we
cannot question. We have simply examined the facts and reasoning of the case and found
it persuasive that our construction of the Will in the present case to place a vested interest in
the Son is correct. We also note that the Harris opinion, which Dortch followed, is
published. The Brother offers no direct criticism of Harris.

       We turn now to the other arguments offered by the Brother and the Trustee. The
Trustee purports to take no position but argues that the trial court was correct. Both the
Brother and the Trustee argue that, because the Son does not receive the corpus until he
reaches the age of 50, this means he cannot have attained any vested interest unless he
reaches age 50, which he did not. We have already rejected this argument as the product of
circular reasoning, and as inconsistent with the language of the trust provision considering
the dominant purpose and context of the Will. We need not repeat that analysis.

       The final argument offered by the Brother and the Trustee is that the very definition
of a contingent interest is one that requires the beneficiary to attain a certain age or some
similar milestone. They offer treatise definitions as well as some selective language from

                                               -8-
American National Bank v. Embry, 181 S.W.2d 356 (Tenn. 1944). It should go without
saying that we cannot blindly extrapolate from a generic definition in a treatise or dictionary
to create a result that is inconsistent with the language of the Will, considering its purpose
and the context of the language. The language of the will in Embry upon which they rely is
as follows:

              I give, devise and bequeth all the rest and residue of my estate,
              real, personal and mixed, and wherever situate, to the American
              National Bank of Nashville, as Trustee, to be held and invested
              by it in trust, as hereinafter provided, and to pay the net income
              thereof to John William Embry . . . until such time as he shall
              reach the age of Thirty (30) years.

Id. at 357. The issues in Embry were whether the beneficiary’s right to receive income
began at the testator's death or at some later time and whether the “net income” that the
beneficiary was to receive included all income that came into the estate from the time of the
testator’s death as opposed to only that income derived from the residuary estate. Id. The
Embry opinion did not see fit to provide the reader with more than the one paragraph of the
will from which we have quoted. The Court stated, nevertheless, that

              [t]he defendant here [,John William Embry,] takes a life estate
              in the income from the trust, which, if he survives the age of 30
              years, will be enlarged to an absolute ownership of the corpus.

Id. at 357-58 (emphasis in original). We have no reason to question the High Court's
statement. We can only believe that some other language in the will which we have not seen
provides support for the Court’s statement. We note that the Embry opinion speaks
repeatedly of contingent beneficiaries without giving an explanation of the language behind
that characterization, just as there is no explanation of why John William Embry had a right
to the corpus. We see nothing in Embry that is inconsistent with the result we reach today.
We have not attempted to establish an absolute rule that a testator cannot establish a
testamentary trust that is contingent. We have merely tried to decipher the intent of the
Deceased in this particular case. “It has often been said, and truly, that precedents are of
little value in the construction of wills because no two are identical . . . .” Davis, 178 S.W.2d
at 905.

       To summarize, we hold that the language of the Will creates a trust for the benefit of
the Son without providing a mechanism for divesting him of the trust, once it had been
created. Language in the will requiring the Son to survive his father means very little in the
context of this dispute because the Son did survive the Deceased. The residuary clause does

                                               -9-
not require a different result because it applies only to “property . . . not named herein.” The
trust property and the beneficiary are “named herein.” Established law supports our
conclusion and there is nothing persuasive to weigh against our ultimate holding that the
Deceased intended the Son’s right to the income and corpus of the trust to vest at the death
of the Deceased.

                                              VI.

        The judgment of the trial court is reversed. Costs on appeal are taxed equally to First
Tennessee Bank, N.A., and Harold Woodward. This case is remanded for such proceedings,
if any, as may be necessary in light of our opinion.

                                                     _______________________________
                                                     CHARLES D. SUSANO, JR., JUDGE

                                              -10-