Pounds v. Pounds

703 So. 2d 487, 1997 WL 721553
CourtDistrict Court of Appeal of Florida
DecidedNovember 21, 1997
Docket96-3082
StatusPublished
Cited by14 cases

This text of 703 So. 2d 487 (Pounds v. Pounds) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pounds v. Pounds, 703 So. 2d 487, 1997 WL 721553 (Fla. Ct. App. 1997).

Opinion

703 So.2d 487 (1997)

J. Herbert POUNDS and Rice H. Pounds, Appellants,
v.
Betty B. POUNDS, Appellee.

No. 96-3082.

District Court of Appeal of Florida, Fifth District.

November 21, 1997.
Rehearing Denied December 23, 1997.

Charles Evans Davis, Orlando, for Appellants.

George E. Adams of Adams, Hill, Reis, Adams, Hall & Schieffelin, Orlando, for Appellee.

W. SHARP, Judge.

J. Herbert Pounds and Rice H. Pounds appeal from a final order, which denied their motion to interpret a trust, and to vacate an injunction. The effect of the final order is to enjoin one of the appellants, Rice, from voting stock issued by the Pounds Motor Company, which is presently held in the Russell Pounds Trusts. The issue in this case is whether a provision in Article 4 of the 1985 Amended Trust was intended to give Rice or his nominee the right to vote the shares of the Pounds Motor Company in the Trusts, only so long as he served as a Co-Trustee. The trial court ruled that after Rice and Herbert had been removed as Co-Trustees because of a "conflict of interest,"[1] Rice's powers to vote the stock were terminated, and the sole remaining co-trustee, Betty Pounds, has the power to vote the stock. We disagree, and reverse for further proceedings.

The Trusts involved in this lawsuit were created by a 1975 inter vivos trust executed by Russell Pounds. It was funded with 400 shares of Pounds Motor Company stock (one-third of the Company's outstanding shares) and other properties. Pounds is an agricultural equipment business located in Winter Garden, Florida, that manufactures and sells farm equipment. It was incorporated in 1955 by Hoyle Pounds and his two sons, Herbert and Russell. Each was issued 400 shares of stock. Pounds Motor Company has never paid a dividend on its stock since its incorporation in 1955. Rice (Russell's son), Herbert (Russell's brother), and Steve Pounds (Russell's other son) are the current corporate officers.

In 1975, each shareholder (Hoyle, Russell and Herbert) placed his stock in a separate inter vivos trust, naming himself trustee until his death. Russell's trust was extensively amended in 1982. After Russell's death, pursuant *488 to the provisions of the Amended Trust, two trusts were created. Trust A was created to hold the trust assets and apply the income from its assets for the benefit of Russell's widow, Betty. The other Co-Trustees of the Trusts have discretionary powers to distribute the principal to Betty. Trust B was designed to hold Trust assets and apply the income or principal (in the Co-Trustees' discretion) for the benefit of Betty, and/or Russell's issue — Rice and Russell's and Betty's two other children (Steve and a daughter). Betty, Rice and Herbert were named as Co-Trustees of both Trusts. At Betty's death, the Trusts were to be merged, and the balance held in other trusts for children and grandchildren.

The Amended Trust was amended a second time on October 1, 1985, by adding the paragraph at issue in this case. The Amendment solely concerned voting the Pounds Motor Company stock. It states:

Notwithstanding anything contained in this Trust Agreement to the contrary, upon the death, incompetency or incapacitation of the Grantor, all shares of the capital stock of Pounds Motor Company, Inc. held by the Trustees hereunder shall be voted only by Rice H. Pounds, or his nominee as designated in a written instrument delivered to the Trustees, in the manner in which he deems appropriate, in his sole and absolute discretion. The other Trustees shall have no voting rights whatsoever with respect to said shares of Pounds Motor Company, Inc unless Rice H. Pounds, or his nominee fails to vote such stock.

The lower court held an evidentiary hearing to construe this provision. The testimony was without contradiction that the Grantor of the Trusts, Russell Pounds, expressly provided and intended that only Rice or Rice's nominee was to vote the Pound Motor Company stock in the Trusts, so long as he or the nominee did so. However, the attorney who drafted the Trust documents testified neither he nor Russell anticipated the circumstance that Rice would be removed as a Trustee. The trial court ruled there was no ambiguity, and held that the office of trustee carries with it the right to vote the shares of stock owned by a trust. It permanently enjoined Rice from voting the stock in the Company held by the Trusts.

In the case sub judice, Betty asserts that she should have the sole power to vote the stock of the Pounds Motor Company held in the Trusts. The minutes of a stockholder meeting, in the record on appeal, indicate that Betty also seeks to have the Company dissolved and its assets distributed to its stockholders. Since the stockholders in this case are the two Trusts, Betty's income would increase by her proportionate share in the Trusts, and it would also follow that as sole Trustee, Betty could infringe on the corpus of the trusts of which she is a beneficiary, perhaps even dissolving them.

In construing the provisions of a trust, the cardinal rule is to try to give effect to the grantor's intent, if possible. Bacardi v. White, 463 So.2d 218 (Fla.1985); First National Bank of Florida v. Moffett, 479 So.2d 312 (Fla. 5th DCA 1985); § 737.621, Fla. Stat., Rules of Construction. The grantor's intent should not be determined by resort to isolated words and phrases, but rather by a construction of the instrument as a whole, and the general plan interpreted. Id. Accord, Whitmore v. Starks, 17 Ill.2d 202, 161 N.E.2d 254 (1959); Sound City, Inc. v. Kessler, 316 So.2d 315, 316 (Fla. 1st DCA 1975).

The inter vivos trust sets up a typical marital deduction trust for Russell's wife (Betty), Trust A, and a non-taxable Trust B, for her benefit if she survives him. The Co-Trustees are required to pay the income from Trust A to her, and they have authority to pay her part or all of the principal of Trust A, as they deem advisable, for her support and welfare. Upon her death, the remainder of Trust A is to be merged with Trust B.

Similarly, Trust B is to be held by the Trustees, to pay the income to or apply it for Betty's benefit and/or Russell's and Betty's issue, in the Co-Trustees' sole discretion, giving primary consideration to Betty's needs. The Co-Trustees are also given discretion to apply all or part of the principal to the same beneficiaries, giving primary regard to Betty's needs. At Betty's death, the *489 assets of Trust B are to be held for the benefit of Russell's children and issue, with discretionary income-distribution powers given to the Trustees, as well as discretionary powers to distribute principal to the same class of beneficiaries. The Trust is not to terminate until all of Russell's children are deceased, and the youngest grandchild attains the age of 30.

However, the Trustees are specifically forbidden from distributing to any beneficiaries shares of stock in Pounds Motor Company. When the Trust terminates, the Trustees are to transfer the Trust assets in equal shares to the surviving grandchildren or issue per stirpes. But if Brian Benson Pounds, Russell's grandson, is surviving and employed by Pounds Motor Company, then his share is to include all shares of stock in Pounds Motor Company, even if the inclusion overfunds his share.

Paragraph 6 deals with the tenure and succession powers of the Co-Trustees. After Russell's death, three people are named to serve as Trustees: Betty, Rice and Herbert.

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Bluebook (online)
703 So. 2d 487, 1997 WL 721553, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pounds-v-pounds-fladistctapp-1997.