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Hines v. Louisville Trust Co.

November 13, 1952



MILLIKEN, Justice.

Appellant, W. T. Hines, administrator with the will annexed of the estate of A. M. Rowe, instituted this action against the Louisville Trust Company (hereinafter referred to as the Trust Company) and the Christian Church Widows and Orphans Home (hereinafter referred to as the Orphans Home) to have a certain voluntary trust agreement declared revoked, terminated and at an end. The chancellor adjudged that the decedent had no power to revoke the agreement, and that it was therefore in full force and effect.

On August 11, 1936, the decedent, as settlor, delivered to the Trust Company, as trustee, certain cash and securities, to be held under the terms of a voluntary trust agreement which empowered the trustee to manage and invest the corpus and to pay the decedent the income therefrom during his life. It further provided that after his death, the income was to be paid to his wife during her life and that after her death the income should be paid to the Orphans Home. It also provided that under certain circumstances the corpus might be paid to the Orphans Home.

On October 9, 1939, the decedent executed a supplemental trust agreement (as of August 11, 1936, the date of the original agreement), which assigned additional securities to the trust estate under the same terms and conditions as the original instrument except that it recited the death of his wife and provided that should the Orphans Home cease to exist, the trust should be for the benefit of his nephews and should none of them be living, then it could be for the benefit of the College of the Bible of Transylvania College.

The 1939 supplemental trust agreement contains only the following provision susceptible of being construed as a reservation of a power of revocation by the settlor:

'Rowe reserves to himself the right at any time in his judgment to change the Trustee from the Louisville Trust Company to such other corporation or individual as he may choose, and so continue to make changes from time to time as he deems advisable.'

On the same date the supplemental trust agreement was executed, i. e., October 9, 1939, the decedent executed a will and after making several specific bequests, he devised the residue of his state to the Trust Company to hold in accordance with the terms of the supplemental trust agreement. Subsequently he executed six codicils to this will. The last codicil was made on June 12, 1950, and reads:

'I, A. M. Rowe of Bowling Green, Warren County Kentucky do on this the 12th day of June 1950 revoke all the Codicils which have been made by me except the one to Dr. A. D. Donnelly, Sr., for $1000 and Dr. J. H. Blackburn, Sr. for $250 and the above revocations, if any, made by me apply to a voluntary Trust agreement made by me with the Louisville Trust Company, Louisville, Ky. on October 9th, 1939 (as of August 11th, 1936.) I am doing this for the reason that at times I have not been in a mental condition to protest myself, and there may have been codicils made at such times under duress and coercion therefore I want to void all codicils except the two herein above mentioned.' (Italics ours.)

The appellant contends: (1) That the decedent retained the power of revocation under the trust agreement and consequently revoked the trust agreement by virtue of the sixty codicil to his will; and (2) that the trust agreement was intended to operate as a testamentary disposition and must fail because it was not executed with the formalities required by our statutes relating to wills.

Whether the language employed in the sixth codicil is a sufficient indication of the decedent's intention to revoke the voluntary trust agreement is debatable inasmuch as it is possible that he intended to revoke only the testamentary dispositions which were to be added to the voluntary trust agreement after his death. However, we shall assume for the sake of argument that the language employed is sufficient to show an intent to revoke the voluntary trust agreement.

Clearly, there is no express power of revocation written in the trust instrument, for the reservation of the right of change trustees does not extend to other provisions. The general rule is to the effect that where a valid and effective voluntary trust has been created and no power of revocation has been reserved, it cannot be revoked by the creator without the consent of the beneficiaries thereunder. Restatement of the Law of Trusts, Volume 2, Section 338, page 1033; 65 C.J., Trusts, Section 113, page 341; Annotations 28 A.L.R. 941, 91 A.L.R. 102 and 131 A.L.R. 457; Underhill v. U. S. Trust Co., 227 Ky. 444, 13 S.W.2d 502; Burton v. Burton, 198 Ky. 429, 248 S.W. 1031.

In the instant case the Orphans Home, as beneficiary, did not consent to a revocation of the trust agreement. Furthermore, a careful examination of the trust instrument fails to reveal an implied power of revocation.

If the settlor intends to reserve the power of revocation but omits it by mistake from the trust agreement, he may have the instrument reformed, or if he was induced to create the trust by fraud, duress, undue influence or mistake, the trust may be set aside. Restatement of the Law of Trusts, Volume 2, Section 330(1)(b), page 985. In the case at bar, however, there is no proof of any such occurrences.

The appellant infers that since the first trust agreement was slightly modified, this indicates that the decedent retained the power of revocation. As stated ...

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