Coats v. Whitlow

581 S.W.2d 392, 1979 Mo. App. LEXIS 2312
CourtMissouri Court of Appeals
DecidedApril 2, 1979
DocketNo. KCD 29533
StatusPublished
Cited by8 cases

This text of 581 S.W.2d 392 (Coats v. Whitlow) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Coats v. Whitlow, 581 S.W.2d 392, 1979 Mo. App. LEXIS 2312 (Mo. Ct. App. 1979).

Opinion

SHANGLER, Presiding Judge.

The plaintiff Mildred DeArman Coats, life beneficiary under a testamentary trust [393]*393settled by her husband, George Dewey Coats, seeks a declaration to direct the trustee, W. C. Whitlow, to encroach upon the corpus of the trust estate to adequately provide her with a living according to the terms of the trust. The trustee asserted, and the trial court adjudged, that the trustee had discretion under the trust terms to refuse to invade the corpus while the beneficiary wife held other assets, liquid and readily available, to satisfy her living needs.

The testament and codicil of George Dewey Coats, as admitted to probate, at Article Second created a trust in favor of the wife, Mildred DeArman Coats:

SECOND: If my wife, Mildred DeArman Coats, shall survive me, I give, devise and bequeath all of the rest, residue and remainder of my estate to W.C. Whitlow, to hold the same with full discretionary powers of management, sale and resale, investment and reinvestment, and to keep the same invested, IN TRUST, however, for the following use and purpose, namely:
1. The Trustee shall first pay to my wife, Mildred DeArman Coats, on a monthly basis, the net income of the trust fund.
2. In addition to the said income, she shall be entitled to live in my home, if she so desires.
3. I give my Trustee full authority and power to encroach upon the principal of the Trust Estate in order to provide a living for my wife, and further, in the event of an emergency due to illness, accident or other misfortune, I give the said Trustee full authority to encroach upon the principal of the Trust Estate for any amount necessary to alleviate such emergency.
4. The Trustee may, in his discretion, use and apply such income and/or principal for the benefit of my wife in lieu of making such payment directly to her. [Emphasis added.]

The testator Coats died in 1965. The trustee Whitlow took up his duty some two years later and has since distributed the annual income of $1200 from the trust estate to wife Coats. She now resides with two sisters in Arkansas and her shared obligations for living expenses, exclusive of house maintenance and repair, amount to $500 each month. The trust income — it is evident — does not meet the cost of the expense of her daily life. The wife Coats, however, has available personal resources of $530 each month which derive from a retirement pension as a teacher, a retirement pension from the employment of her husband, and a social security stipend. In addition, she has on deposit $15,000 which accrues an annual income of some $1,000.

The wife Coats seeks a judicial instruction that the trustee invade the corpus of the trust to provide a living for her [in the terms of the trust] for which the income, merely, from the trust estate does not suffice. The trustee resists on the premise that the trust terms do not direct encroachment upon the corpus while the beneficiary has resources otherwise available for her living. Thus, the appeal presents an issue of law: whether a trustee may consider other resources available to a life beneficiary under a provision of trust which grants power to encroach upon the principal for the support of the beneficiary.

The salient question such a case presents [ Winkel v. Streicher, 365 Mo. 1170, 295 S.W.2d 56, 61 (banc 1956)] is:

“ ‘Does the will constitute an absolute gift of support and maintenance which makes a charge upon the income from the estate and upon principal? If so, then the private income of the beneficiary cannot be considered. If, however, the gift is of income coupled with a provision that the principal may be invaded in case of need, the private income of the beneficiary must be considered in determining whether such need exists.’ ”

That primary determination rests upon the intention the testator meant for the trust provisions — discerned from the intrinsic instrument when the sense of the language is clear, and as aided by surrounding circumstances when the sense is in doubt. Cockrell v. First National Bank of Kansas City, 357 Mo. 894, 211 S.W.2d 475, 477[1-4] [394]*394(1948); § 474.430, RSMo 1969. The parties do not doubt that Article Second, subpara-graph 1, makes an absolute gift to the wife beneficiary of the net income of the trust fund. Nor do they doubt that the wife beneficiary has the absolute benefit of residence in the home of the trustor. They contend over whether, in addition, the testament intends an unconditioned access to the trust estate assets, corpus as well as income, to provide a living for the beneficiary — without regard to her private resources, or whether the language of the will intends that the trustee shall have the discretion to encroach upon the corpus for need, and in that exercise, may consider the private income of the beneficiary.

The dispute relates to the terminology of Article Second, subparagraph 3: I give my Trustee full authority and power to encroach upon the principal of the Trust Estate in order to provide a living for my wife . The trustee contends that these terms are a grant of power and that a grant of power vests discretion in a trustee as to the manner of use. It is a matter of rule that a court will not interfere with an honest exercise of discretion by a trustee of a conferred power [First National Bank of Kansas City v. Hyde, 363 S.W.2d 647, 655[19, 20] (Mo.1963)]—so that if subpara-graph 3 intends to allow the trustee the reasonable and honest judgment of need of the beneficiary before incursion into the estate corpus, then his refusal to use the principal to support her living while substantial personal assets remain available to the beneficiary is not for challenge before us.

The plain words of integral subparagraph 3, however, merely confer a power — a right to act — a vestment of authority — to encroach upon the corpus to provide a living for the wife. They neither direct the trustee to any action nor confer a discretion. The authority or power, in terms, to a trustee to do something may be intended as a direction or discretion, according to the context of the testament or trust. Scott on Trusts, § 187 (3d ed. 1967); Schumacher v. Howard Sav. Inst., 128 N.J.Eq. 56, 15 A.2d 107, 110[4] (1940); In re Carr’s Estate, 176 Misc. 571, 28 N.Y.S.2d 12, 14[1] (1941). Hence, the ambiguity. The doubt whether the trustor meant the support to his wife as an absolute gift of the corpus, as well as the income, or only on condition of need is not resolved by resort to precedent or general rule. The variety of text, circumstance and disposition, from will to will, suggests that the intention of the trustor — as discerned from the language of the instrument aided by the environment of the transaction— alone can wrest the true sense to be given effect. The testament and trust provisions, within the context of execution by the husband Coats, stand on their own, Winkel v. Streicher, supra, l.c. 61.

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Bluebook (online)
581 S.W.2d 392, 1979 Mo. App. LEXIS 2312, Counsel Stack Legal Research, https://law.counselstack.com/opinion/coats-v-whitlow-moctapp-1979.