Court Opinion

ID: 9479884
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:31:40.957668+00
Date Added: 2024-06-11T17:47:20.656079
License: Public Domain

DAVID A. NELSON, Circuit Judge,
dissenting.
It seems to me unlikely that the courts of Ohio would deny Norma Jean Collins a reversionary interest (or what would amount to a reversionary interest) in the nearly three million dollars’ worth of jointly owned real estate, acquired during cov-erture, that she and Patrick Collins placed in trust upon the dissolution of their marriage. From the standpoint of an Ohio common pleas court judge, elected by the voters to exercise all of the powers a court of equity, I am persuaded that the case hypothetically presented by Mrs. Collins would look very appealing indeed.
Here we have an obviously unsophisticated woman, married at the age of 18, who worked at her husband’s side year after year in the family plumbing and construction business. The business evidently prospered. Norma Jean Collins contributed to the success of the enterprise, and she shared in the fruits of that success: “I worked as hard as he did,” she testified, “and we owned everything 50/50." Nothing in the record suggests that this testimony was not entirely credible.
When, after nearly a quarter of a century of marriage, the couple decided to go their separate ways, they consulted Attorney J.R. Nieberding, who had represented Patrick Collins in business and other matters for more than a decade. It was Patrick who had been the client, not Norma Jean, and Attorney Nieberding quite properly advised Mrs. Collins to seek other counsel. She chose not to do so. Nieberd-ing then agreed to represent both parties in drafting a separation agreement.
The agreement was intended, as its purpose clause recites, “to make an equitable distribution of their property_” (emphasis supplied). Their property included the real estate (basically construction, office and warehouse property) that the couple had acquired in Hamilton County, Ohio, during the 1960s and 70s. It has been stipulated by the litigants in the present lawsuit that the property was “jointly owned." This stipulation was accepted as accurate by the district court, and its accuracy is borne out by the deposition of Norma Jean Collins. “It was half my property too,” she testified, going on to explain that:
"My name was on the deeds; my name was on the mortgages. It was half mine; it was never all his.”
Although the deeds to most of the properties (ten in number, by my count) named as grantees “Patrick R. Collins and Norma Jean Collins,” or “Patrick R. Collins and Norma Jean Collins, husband and wife,” or “Norma Jean Collins and Patrick R. Col*854lins, husband and wife,” there were two deeds in which Mrs. Collins’ name did not appear. But the district judge (the late David S. Porter, an experienced and capable Ohio jurist) dismissed this omission as insignificant. Under Ohio law, Judge Porter declared in denying a government motion to reopen the case, “Norma Jean Collins had an equitable interest in all property that came to the couple during their marriage, whether or not her name appears on the deed.” The conclusion that Mrs. Collins had at least an equitable interest in half of the real estate has not been seriously challenged by the government — and eight of the deeds gave her a legal interest as well.
Pursuant to the separation agreement drafted by Attorney Nieberding, Mr. and Mrs. Collins executed general warranty deeds conveying legal title in the real estate to Mr. Nieberding as trustee. Under a separate trust agreement, also drawn by Mr. Nieberding, Norma Jean Collins surrendered at least a portion of her equitable interest in the properties. She received, in exchange, certain household furnishings, a Florida savings and loan account, a Chevrolet automobile, three motorcycles, a house in Florida, a hold-harmless agreement on the couple’s outstanding indebtedness, a lump sum payment of $15,000, and the promise of lifetime alimony payments of at least $10,400 per annum (subject to an annual cost-of-living adjustment), plus an additional payment of $5,000 every third year for the rest of her life.
The fairness of this arrangement need not concern us; whether she acted wisely or not, Norma Jean Collins made the deal she made — and it is perfectly clear that for the joint lives of herself and Patrick Collins, at least, she gave up all of her equitable estate in the Hamilton County property except for a security interest designed to ensure that the alimony would be paid in accordance with the agreement. (The record shows, by the way, that the alimony was so paid.)
The critical question is not where equitable title lay during the period when both Patrick and Norma Jean Collins remained alive. During the balance of the couple’s joint lives, equitable title clearly lay with Patrick. Both the separation agreement and the trust agreement said so; under both instruments, the property was to be held by the trustee “for the use and benefit of Patrick.” But the trust agreement provided that upon the death of either Patrick or Norma Jean, the duties and obligations of the trustee would terminate— and the critical question facing District Judge Porter was what happened to the property upon the termination of the trust. That is a matter the trust agreement does not address; neither does the separation agreement.
The mere fact that the property had been held for the use and benefit of Patrick for the duration of the trust does not suggest to me that the parties intended the entire beneficial interest to pass to Patrick’s estate upon termination of the trust by reason of Patrick’s death. The phrase “for the use and benefit of Patrick” presumably means what it says — and it does not say that the trustee is to hold the property for the use and benefit of Patrick’s estate after Patrick himself can have no further use for the property. The phrase obviously does not say, moreover, that the trustee has a continuing duty to hold the property for the use and benefit of Patrick’s estate notwithstanding the express termination of the trustee’s duties and obligations. As Judge Porter declared, citing Homer v. Wullenweber, 89 Ohio App. 255, 101 N.E.2d 229 (Hamilton 1951), the phrase in question “does not provide indication of where the property is to go upon the termination of the trust.”
It is my view that an Ohio court of equity, mindful of the fact that Norma Jean Collins owned a one-half interest in the property before she signed the deeds conveying the land to Mr. Nieberding as trustee, would have little difficulty in deciding on the correct disposition of the property once the trust has terminated. Judge Porter, at least, was very clear on this. Citing, among other authorities, Lillard v. Lillard, 63 Ohio App. 403, 26 N.E.2d 933 (Hamilton 1939) — another decision from the court of appeals for the very county in *855which the real estate is located — Judge Porter noted that on termination “the trustee holds the principal of the trust for the settlor....” (Upon termination of the trust, “every title created by the trust instrument is destroyed and the title of the trustor freed of every such title.” Lillard, 63 Ohio App. at 412, 26 N.E.2d at 937.) And, Judge Porter continued, “Norma Jean, as joint owner of the properties transferred to the trustee^] is a settlor [or “trustor”] and therefore is entitled to her share.... ” This is exactly right, in my opinion.
Attorney Nieberding may have lost sight of Norma Jean’s potential interest when, several months after the execution of the separation agreement, he came to draw Patrick Collins' will. The will purports to give the Collins’ two daughters not only Patrick’s beneficial interest, but Norma Jean’s beneficial interest as well. As Judge Porter recognized in denying the government’s motion to reopen the case, however, the mistake in Patrick Collins’ will can hardly be deemed controlling:
“... we remain unconvinced that Norma was not half-owner of the property in the trust. We find wholly unpersuasive the language the government cites from the will indicating Patrick Collins believed he owned all the property in the trust (Doc. 20 at 7). Collins’ belief is uncontrolling on the legal question of Norma Jean’s interest in the property.” (Memorandum and order of April 28, 1987; emphasis in original.)
Mistakes strikingly similar to that made by Patrick Collins were made by the settlor in Lillard. The Hamilton County Court of Appeals said of them that “these subsequent acts and declarations are not effective to directly disturb the irrevocable trust ... or to indirectly do so by influencing an interpretation of its terms contrary to the words used in the circumstances then existing.” 63 Ohio App. at 405, 26 N.E.2d at 934.
Even if it were enforceable, the mistake in Patrick Collins’ will might make little difference, as a practical matter, aside from whatever bearing it has on the interpretation of the trust agreement. Norma Jean Collins, as her deposition makes clear, was not estranged from her children. Her marriage was dissolved, but her family was not, Norma Jean did not remarry, and within 18 months she went back to work at the family business on a full-time basis, doing the bookkeeping for the plumbing side while her younger daughter handled the books for the construction side. (This arrangement continued until Patrick Collins’ sudden death from a stroke several years later.) We know that at least one will was prepared for Norma Jean Collins after the dissolution of her marriage. We do not know the will’s terms, unfortunately, but we do know who drafted it — Attorney Nieberding. If the will that he drew for Norma Jean Collins followed the same pattern as the will that he drew for Patrick Collins, the two daughters would ultimately take the real estate in any event — and tax considerations aside, it probably would matter little to the daughters whether they ultimately took all of the real estate under their father’s will, or half under their father’s and half under their mother’s. In neither eventuality would the daughters have full enjoyment of the property until both parents were dead — for Patrick’s will provided that in the absence of a complete settlement with Norma Jean, all of the property would be held in a testamentary trust to secure payment of the alimony to which Norma Jean was entitled for life. Only such income from the property as might exceed Norma Jean’s adjusted alimony payments would go to the daughters during their mother’s life.
Turning to the proceeding in which the Hamilton County Court of Common Pleas purported to “modify” the decree by which the marriage was dissolved, I find it interesting that the daughters appeared in that proceeding, that they were represented by counsel, and that they interposed no objection to the modification. Perhaps they would not have been so accommodating had they not known that they stood to take their mother’s half interest upon the mother’s death.
*856Be that as it may, I agree with the panel majority that notwithstanding the incorporation of the Collins’ separation agreement in the original decree of dissolution, it was beyond the power of an Ohio court to modify the separation agreement. Where the separation agreement and trust agreement were silent, however — as they were on the question of what happened to the real estate upon termination of the trust — it would obviously not be beyond the power of an Ohio court to speak. And I read the modification decree as providing a rather clear indication of what an Ohio court would say on that score; it would say that when the trust terminated, the property would have to be returned to the settlors or their testamentary representatives.
In addition to conforming to well established precedent, such a holding would work to the advantage of a lady who typifies the sort of person whose interests chancellors have always been solicitous to protect. Norma Jean Collins, to repeat, is an unsophisticated woman who, despite her substantial means, undertook to negotiate the separation and trust agreements without any legal advice beyond that provided by her adversary’s lawyer. If an Ohio chancellor were called upon to resolve any ambiguity as to what the instruments so negotiated actually said — and what they did not say — it is inconceivable to me that the character of the woman, and the circumstances under which the woman was acting, would be ignored. I daresay such a notion would have been equally inconceivable to Judge Porter.
I agree with Judge Porter, finally, on his treatment of the mortgages that Mr. and Mrs. Collins placed on their real estate before putting the real estate in trust. The property was still mortgaged when the trust terminated, and the value of what Norma Jean Collins got back upon the termination of the trust could not have exceeded the value of the equity of redemption in her half of the trust property. (I might quibble with Judge Porter about the deduction he made in respect of alimony paid prior to Patrick’s death, but no one has made an issue of that.) Although I do not agree with Judge Porter’s reasoning in its entirety, I think the result he reached was essentially correct. I would affirm the judgment.