Albritton v. Albritton

600 So. 2d 1328, 1992 WL 112110
Supreme Court of Louisiana·Decided May 26, 1992·No. 91-C-2903·Published·Cited by 14 cases

Opinion

600 So.2d 1328 (1992)

Alvin H. ALBRITTON
v.
A. Stirling ALBRITTON, et al.

No. 91-C-2903.

Supreme Court of Louisiana.

May 26, 1992.
Rehearing Denied June 26, 1992.

*1329 John Dale Powers, Neil H. Mixon, Jr., Powers, Vaughn & Clegg, Baton Rouge, for plaintiff-applicant.

Claude Favrot Reynaud, Jr., Robert Troxel Bowsher, Jude Christopher Bursavich, Christine Lipsey, Breazeale, Sachse & Wilson, Baton Rouge, for defendants-respondents.

MARCUS, Justice.

Plaintiff, Alvin H. Albritton, is the son of Dr. A. Stirling Albritton and the grandson of Alvin R. Albritton, and was born on January 23, 1952. On December 3, 1957, plaintiff's grandfather died, leaving a will that bequeathed to plaintiff an undivided one-fourth interest in the naked ownership of his residuary estate. This interest was subject to a life usufruct in favor of his father and was further subject to an irrevocable testamentary spendthrift trust, with *1330 plaintiff's father and uncle (William Louis Albritton) acting as trustees.[1] The trust was set to terminate in two stages: one-half of the trust would terminate on plaintiff's twenty-first birthday (January 23, 1973); the other half would terminate on plaintiff's twenty-sixth birthday (January 23, 1978). On September 21, 1972, approximately four months prior to the termination of the first part of the trust, plaintiff, at the request of his father, signed as settlor and beneficiary a document entitled "Extension of Trust." That document provided in pertinent part:

3.

Settlor does hereby, and acting as Settlor, extend the term of the Trust described above [the Alvin R. Albritton Testamentary Trust] insofar as Settlor is beneficiary thereunder to provide that the term is for the lifetime of the Settlor.
4.
If it should be determined that the Trust described above cannot be extended in this manner, then Settlor declares that Settlor's interest in the Trust described above shall be held and is hereby placed irrevocably in trust and shall be managed and invested and reinvested and held with and distributed in exactly the same manner as set forth in the Trust described above, but for Settlor's lifetime, by the same Trustees and successors as provided therein, and, in that event, Settlor incorporates the trust agreement described above into this act by reference as a new trust.

In addition to plaintiff's signature, the document was signed by plaintiff's father and uncle as co-trustees and by a notary and two witnesses.[2] On January 29, 1973, the trial judge signed an ex parte order upon petition of the trustees, which purported to validate the extension.

On January 12, 1988, sixteen years after the 1972 document was executed, plaintiff filed suit against the trustees,[3] seeking a declaration that the agreement executed by him on September 21, 1972 was of no force and effect, or alternatively, that any trust created in connection therewith be terminated and annulled. The essence of plaintiff's petition was that he was misled by the trustees and that he signed the agreement in error, believing it applied only to a part of the trust property known as Stoney Point. Subsequently, the trustees filed a peremptory exception of prescription. After a hearing, the trial judge sustained the exception of prescription and dismissed plaintiff's claims. In his oral reasons, the trial judge stated that even if the extension of trust agreement violated the trust code, such a violation only gave rise to a relative nullity, which prescribed in five years. He reasoned that plaintiff had five years to bring suit after learning he signed the agreement in error. The trial judge found plaintiff learned at least by 1980, if not sooner, that more property than Stoney Point was involved in the agreement; therefore, his 1988 suit was outside of the five year prescriptive period. Plaintiff appealed. The court of appeal affirmed.[4] Upon plaintiff's application, we granted certiorari to consider the correctness of *1331 that decision.[5]

The sole issue before us is whether plaintiff's right to raise the nullity of the 1972 extension of trust agreement has prescribed.

The articles of the civil code pertaining to nullity are as follows:

Art. 2030. Absolute nullity of contracts
A contract is absolutely null when it violates a rule of public order, as when the object of a contract is illicit or immoral. A contract that is absolutely null may not be confirmed.
Absolute nullity may be invoked by any person or may be declared by the court on its own initiative.
Art. 2031. Relative nullity of contracts
A contract is relatively null when it violates a rule intended for the protection of private parties, as when a party lacked capacity or did not give free consent at the time the contract was made. A contract that is only relatively null may be confirmed.
Relative nullity may be invoked only by those persons for whose interest the ground for nullity was established, and may not be declared by the court on its own initiative.
Art. 2032. Prescription of action.
Action for annulment of an absolutely null contract does not prescribe.
Action for annulment of a relatively null contract must be brought within five years from the time the ground for nullity either ceased, as in the case of incapacity or duress, or was discovered, as in the case of error or fraud.
Nullity may be raised at any time as a defense against an action on the contract, even after the action for annulment has prescribed.

The trial judge assumed that any modification of the existing trust would be null, since it would violate the provisions of the trust code. Nonetheless, he went on to find that if plaintiff entered into such an agreement in error, the agreement would be a relative, rather than absolute, nullity, reasoning that the trust code set forth rules intended for the protection of private parties and did not set forth rules of public order. We disagree.

We believe there is a strong public policy in effectuating and protecting the settlor's intent as set forth in the trust document. In Richards v. Richards, 408 So.2d 1209 (La.1981), we stated:

In construing a trust, the settlor's intention controls and is to be ascertained and given effect, unless opposed to law or public policy.

The trial judge mistakenly focused on plaintiff's intent in entering into the agreement, rather than on the settlor's intent. In doing so, he implicitly held that in the absence of any vices of consent, plaintiff could enter into an agreement affecting the trust, even if the agreement was contrary to the settlor's intent. This cannot be so. The trust would hardly be a stable device for the transmission of property if the beneficiaries and trustees could make agreements that could modify the settlor's fundamental intent in setting up the trust. We believe such modifications are contrary to the rules expressed in the trust code in La.R.S. 9:2021 and 9:2025:

§ 2021. General rule; modification
The settlor may modify the terms of the trust after its creation only to the extent he expressly reserves the right to do so. (emphasis added).
§ 2025.

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Albritton v. Albritton, 600 So. 2d 1328, 1992 WL 112110 (La. 1992).

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