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Rose v. St. Louis Union Trust Co.

AUGUST 14, 1968.




Appeal from the Circuit Court of St. Clair County, Twentieth Judicial Circuit; the Hon. JOHN M. KARNS, Judge, presiding. Affirmed in part, reversed in part, and remanded with directions.


Rehearing denied and opinion modified October 23, 1968.

Plaintiff brought this case individually and as coexecutor of the estate of Clarence Rose, her husband, against St. Louis Union Trust Company in its individual capacity as coexecutor of her husband's estate and as trustee, to set aside an inter vivos trust created by decedent. The case was tried without a jury before the Twentieth Judicial Circuit of St. Clair County, Illinois. Defendant appeals from a decree in plaintiff's favor.

Plaintiff and Clarence Rose were married in 1927 and Clarence died testate, a resident of the State of Illinois, on February 24, 1963, at the age of 81, leaving plaintiff and two children by a prior marriage. In 1955 Mr. Rose, while a resident of Missouri, executed a will that provided his two children were to share, equally, 60% of his estate and that plaintiff was to receive the income from the remaining 40% of the estate for life, with a non-cumulative right to $2,000 principal annually. Upon Mrs. Rose's death this 40% or its residue was to be divided equally between his children.

In July 1958, Mr. Rose executed an irrevocable, inter vivos trust with defendant as trustee and transferred substantial assets into the trust. Defendant-trustee was to pay Mr. Rose the income thereon for life and upon his death divide 60% of the assets equally between his children and hold the remaining 40% in trust for his wife on much the same terms as the prior testamentary trust. In September, 1958, Clarence Rose executed a codicil to his will which excised the earlier testamentary trust for his wife and substituted a pour-over of this 40% of his estate into the living trust. The assets transferred constituted the bulk of decedent's estate, although it is not clear from the record what property, if any, passed to his wife by joint tenancy. Defendant-trustee has made payments totaling 60% of the trust estate to decedent's children according to the terms of the trust agreement, and has paid state and inheritance taxes computed on the basis of validity of the trust and unrenounced will and codicil, thus depriving the estate of any marital deductions.

Harry R. Ball, who had officed with decedent and had purchased decedent's business from him, testified Mr. Rose came into their offices in the summer of 1958 and said, "I just fixed it so Lola (his wife) won't get anything." He went on to testify that decedent said he had checked with an attorney to see if the arrangement with St. Louis Union Trust would stand up.

Mr. William Stolle, plaintiff's brother who lived next door to the Roses, testified he heard Mr. Rose say on several occasions to Mrs. Rose, "I am going to change my will and see that you don't get any money. No more than just enough to get by on." Mr. Stolle also recounted several occasions on which Mr. Rose passed out and one such occasion in 1957 on which Mr. Rose remarked, "One of these days I will pass out and that will be the end of it."

Blanche Stolle (Mrs. William Stolle) testified much as her husband had, adding that she had heard decedent refuse to buy a new car because he did not want to leave his wife a good car. Mrs. Stolle was not present when decedent allegedly remarked about his fainting spells.

Mrs. Louise Rose testified at some length, over defendant's objection that she was incompetent under the Illinois Dead Man Statute (Ill Rev Stats, c 51-2). She testified that she and her husband argued frequently, that he said he was going to change his will so that there would be less and less for her, and that he had fainting spells, although he was otherwise very active. Mrs. Rose generally confirmed defendant's evidence that Mr. Rose remained active in business until very late in his life and took several long trips during his later years, traveling twice to Europe and once to Florida.

Plaintiff introduced a series of correspondence between decedent and defendant and defendant's intraoffice memos indicating Mr. Rose retained some control of the trust corpus contrary to the terms of the trust, and plaintiff argued that decedent used defendant as an agent and did not relinquish control. A vice-president of St. Louis Union Trust Company, Mr. Leroy Ozment, testified the transactions were instances of courtesy consultation which was a custom of the trust business and a necessary incident thereof if good customer relations are to be maintained.

The trust was negotiated and executed in St. Louis, Missouri, and was administered in Missouri by defendant, a Missouri corporation with its principal place of business in Missouri. The trust corpus was kept in Missouri and the trust agreement used Missouri law to determine rights to the corpus should the grantor die without his wife or children surviving him. Plaintiff alleged that Missouri law governed the trust's validity and the case was tried and determined on this basis.

The trial court has made 45 findings of law and fact upon which it rendered its decree finding the trust was voidable as a testamentary disposition effected without the formalities of a will and as a fraud on the marital rights of Mrs. Rose. As a result, the decree ordered the defendant, St. Louis Union Trust Company, to pay over to the coexecutors all of the entrusted property, or its equivalent in values as of the date of the death of Clarence S. Rose, plus interest at 5% per annum from that date. The court also ordered that since plaintiff's attorneys had recovered assets for the estate, and the testamentary scheme of decedent was ambiguous and required judicial construction, that the probate division should allow reasonable attorney fees out of the total sum recovered for the estate. We decline to pass upon the propriety of each of the specific findings since many of them become immaterial and premature in the light of this opinion, and will be obviated by compliance by the lower courts with the holdings and directions herein contained. We therefore affirm only those findings that are consistent with this opinion and disapprove the remainder.

Appellant contends the trust was not voidable for either reason under the law of Missouri. The basis of voidability is, of course, important for if the trust is voidable because it is subject to and fails to comply with the Statute of Wills, the entire trust is voidable; while if voidable only because it is in fraud of a surviving spouse's rights, the trust can only be voided to the extent necessary to protect those rights. Edgar v. Fitzpatrick (Mo App), 369 S.W.2d 592 (1963) modified on appeal, 377 S.W.2d 314 (1964). Wanstrath v. Kappel, 356 Mo 210, 201 S.W.2d 327 (1947).

Mr. Rose irrevocably transferred title and possession of trust assets to the trustee, retaining only a life interest in the trust's income. The trust was completely executed and irrevocable even though Mr. Rose exercised some control in managing trust investments. It is clear, therefore, that this trust was not testamentary in the sense that it was an illusory transfer to take actual effect only at death. As such, the trust is not wholly voidable for failure to comply with the statute prescribing certain formalities for wills. Restatement of the Law of Trusts, Second, § 57 (1959). To conclude the trust was ...

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