Diane Davis Eckels and John Byron Davis v. Marceil Brewster Davis and Paul Hesse Welch, Individually and as Independent Co-Executors Under Last Will and Testament of J.B. Davis, and Paul Hesse Welch , Individually and as Co-Trustee of the J.B. Davis Living Trust

CourtCourt of Appeals of Texas
DecidedJune 19, 2003
Docket02-02-00037-CV
StatusPublished

This text of Diane Davis Eckels and John Byron Davis v. Marceil Brewster Davis and Paul Hesse Welch, Individually and as Independent Co-Executors Under Last Will and Testament of J.B. Davis, and Paul Hesse Welch , Individually and as Co-Trustee of the J.B. Davis Living Trust (Diane Davis Eckels and John Byron Davis v. Marceil Brewster Davis and Paul Hesse Welch, Individually and as Independent Co-Executors Under Last Will and Testament of J.B. Davis, and Paul Hesse Welch , Individually and as Co-Trustee of the J.B. Davis Living Trust) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Diane Davis Eckels and John Byron Davis v. Marceil Brewster Davis and Paul Hesse Welch, Individually and as Independent Co-Executors Under Last Will and Testament of J.B. Davis, and Paul Hesse Welch , Individually and as Co-Trustee of the J.B. Davis Living Trust, (Tex. Ct. App. 2003).

Opinion

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH

NO. 2-02-037-CV

 

DIANE DAVIS ECKELS AND JOHN BYRON DAVIS                                APPELLANTS

V.

MARCEIL BREWSTER DAVIS AND PAUL HESSE                                    APPELLEES
WELCH, INDIVIDUALLY AND AS INDEPENDENT
CO-EXECUTORS UNDER LAST WILL AND
TESTAMENT OF J.B. DAVIS, AND PAUL HESSE
WELCH, INDIVIDUALLY AND AS CO-TRUSTEE
OF THE J.B. DAVIS LIVING TRUST

----------

FROM PROBATE COURT NO. 1 OF TARRANT COUNTY

OPINION

I. Introduction

        This is a summary judgment appeal from a declaratory judgment action construing the terms of a living trust. The trust identified two numbered accounts at a financial management company as the trust corpus. The primary issue we address in this appeal is whether the financial management company's unilateral act of renumbering one of the accounts for internal bookkeeping reasons transformed the assets in the renumbered account into non-trust assets. We hold that the renumbering of the account created a latent ambiguity, which was properly resolved by the admission of extrinsic evidence, and did not indicate any change in J.B. Davis's intent to distribute the account's assets through the terms of the trust. Therefore, we will affirm the trial court's judgment.

II. Factual and Procedural Background

        On February 25, 1993, J.B. Davis ("Settlor") executed the "J.B. Davis Living Trust" (hereinafter "Trust"). Exhibit A attached to the Trust document indicates that the following assets were to be delivered to the Trust to fund it:

Delivered to the [Living] Trust at execution of the Trust document are all the assets in two accounts held in custody by Charles Schwab of Dallas, Texas and Morgan Keegan & Co. of Pensacola, Florida, each subject to a Discretionary Investment Advisory Agreement with Fiduciary Financial Services of the Southwest, Inc. of Dallas, Texas and designated by that latter firm as Account Number 1716 and Account Number 1717.

On December 30, 1992, in preparing to create the Trust, Settlor changed the custodian of his Charles Schwab account to Morgan Keegan. Following the Trust's creation on February 25, 1993, the assets in the Charles Schwab account were transferred to the new Morgan Keegan account number 45203031, and the Charles Schwab account was closed.

        The Trust was funded on or about April 16, 1993. At that time, the two accounts referenced in Exhibit A to the Trust document consisted of (1) a rollover IRA with Morgan Keegan & Co. containing approximately $690,000, which Morgan Keegan identified as account number 75902072 and which Fiduciary Financial Services of the Southwest (hereinafter "FFSS") designated as account number 1716; and (2) an individual account at Morgan Keegan containing approximately $345,000, which Morgan Keegan identified as account number 45203031 and FFSS designated as account number 1717. FFSS provided discretionary investment advisory services for these two accounts, while Morgan Keegan held custody of the assets in each of the accounts.

        Originally, the terms of the Trust, specifically paragraph 2.04, provided that the Trust would terminate upon the death of both Settlor and his wife, Marceil Brewster Davis ("Marcy"), with the remaining assets to then be distributed equally between Settlor's children from a previous marriage, Diane Davis Eckels ("Eckels") and John Byron Davis ("Davis"). On April 1, 1993, before the trust was funded, however, Settlor amended paragraph 2.04 of the Trust (hereinafter "Trust Amendment") to provide as follows:

        If not earlier terminated by distribution of all of the assets of this Trust under other provisions hereunder, this Trust shall terminate ninety (90) days following the death of the Settlor at which time the corpus and undistributed income remaining shall be distributed as follows:

From my IRA Rollover account, #1716, I hereby direct that $300,000 shall be distributed to separate IRA accounts for each of my two children, JOHN BYRON DAVIS of Baker, Louisiana and DIANE DAVIS ECKELS of Houston, Texas. This totals $600,000. Should there be less than $600,000 in the IRA account at the date of my death, I direct the trustee to make up the difference out of my Individual Account, #1717. If there is an excess of $600,000 in my IRA Rollover account, I direct that the remainder be given to my wife, MARCEIL BREWSTER DAVIS. Further, she will receive all of the assets in my Individual Account #1717, that [are] not used to make up any deficiency in my IRA Rollover Account.

        Sometime after the Trust Amendment was executed, Morgan Keegan assigned Settlor's Individual Account a new account number, changing it from 45203031 to 19015304, to reflect its designation as a trust account. When Morgan Keegan renumbered its account, FFSS also opened a new account, number 2095, to correspond to the new account number assigned by Morgan Keegan. Once all of the assets were transferred and reflected in the new accounts, FFSS closed account 1717. Settlor did not amend the Trust to reflect the account number change by FFSS.

        Settlor died on August 2, 1998. When the Trust terminated ninety days later, Settlor's IRA Rollover Account, which was held in the custody of Morgan Keegan in account 75902072 and designated by FFSS as account 1716, had a balance in excess of $900,000, and his Individual Account, also in the custody of Morgan Keegan in account 19015304 and designated by FFSS as account 2095, had a balance of $363,662.53. Settlor's attorney, Paul Hesse Welch ("Welch"), and Settlor's brother, Stuart Switzer Davis,(1) acting as successor co-trustees for the Trust, distributed $600,000 from the IRA Rollover account, or FFSS account 1716, to Settlor's children, Eckels and Davis, and distributed the balance of the assets in this account and all of the assets in the Individual Account, or FFSS account 2095, to Settlor's wife, Marcy.

        Appellants Eckels and Davis filed a declaratory judgment action, asserting that FFSS account 2095, containing assets worth $363,662.53, was erroneously distributed entirely to Marcy under the terms of the Trust when one-third of the $363,662.53 should have passed to each of them under the terms of their father's will.(2) Eckels and Davis filed a motion for summary judgment claiming that the Trust only authorized distribution of the assets in FFSS account 1717 to Marcy and that because FFSS account 1717 ceased to exist when it was closed in 1994, the Trust language giving Marcy all the assets in FFSS account 1717 was not applicable to account 2095.

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Diane Davis Eckels and John Byron Davis v. Marceil Brewster Davis and Paul Hesse Welch, Individually and as Independent Co-Executors Under Last Will and Testament of J.B. Davis, and Paul Hesse Welch , Individually and as Co-Trustee of the J.B. Davis Living Trust, Counsel Stack Legal Research, https://law.counselstack.com/opinion/diane-davis-eckels-and-john-byron-davis-v-marceil-brewster-davis-and-paul-texapp-2003.