Starling v. Taylor

Morris, J. Although portions of the original trust indenture are set out in the facts, the indenture itself is not before the Court for construction. We, therefore, consider it only as the instruments before us for construction relate to it. We must first determine what legal effect, if any, is to be given to the memorandum of agreement executed on 23 December 1946, purporting to extend the original trust indenture for 10 years beyond its stated date of termination. It is clear that the extension of a trust beyond its stated duration amounts to a modification. The rules generally applicable to modifications are, therefore, applicable here. Since the trust indenture contained no provision for revocation, it is an irrevocable trust. 3 Scott, Trusts 2d, § 330.1, p. 2394. Obviously, the settlor here recognized the general rule that, having created an irrevocable inter vivos trust devoid of any provisions with respect to modification, he was without power to modify the trust. 3 Scott, Trusts 2d, § 331, pp. 2413-2414. In Washington v. Ellsworth, 253 N.C. 25, 116 S.E. 2d 167, our Supreme Court refused to allow validity to' an instrument seeking *290 to modify a trust agreement. One of the contentions of the appellees was that since the settlor reserved the right “to sell or dispose” of the property held in trust with the written consent of persons named in the instrument, she had the right to convey it to those persons who would have taken under the purported modification, and the purported modification should be construed as a deed to them. The Court in speaking to this proposition said: “The original instrument contained no provision reserving the right to revoke or modify the trust provisions created therein, it only reserved the right- of the trustor with the consent of those parties above-named ‘to sell or dispose’ of the property described in the instrument. “The last cited authority (3 Scott, Trusts 2d) section 331, at page 2413, states: ‘The same principles are applicable to the modification of a trust as are applicable to the revocation of a trust. If the settlor does not by the terms of the trust reserve a power to alter or amend or modify it, he has no power to do so.’ ” In 4 Scott, Trusts 3d, § 338, p. 2687, it is said: “It is true that where some of the beneficiaries do not consent, the others, even with the consent of the settlor, cannot terminate the trust. But where the settlor and all of the beneficiaries are of full capacity and consent, there seems to be no good reason why they should not have power to make such disposition of the trust property as they choose.” And further at § 338, p. 2693: “Similarly the terms of the trust may be modified if the settlor and all of the beneficiaries so desire.” Our Supreme Court has said that where the beneficiaries of a trust are sui juris and their rights are vested, they may dispose of their equitable interests in the trust property. Smyth v. McKissick, 222 N.C. 644, 24 S.E. 2d 621. In the case before us, however, all the beneficiaries did not consent, nor were all the beneficiaries sui juris. From the record and the stipulation of the parties, each of the primary beneficiaries had a child under 4 years of age at the time of the execution of the purported extension agreement. Other children were born after its execution. The memorandum agreement had no effect as a modification of the trust indenture. Nor did it have effect as creating a new trust. It is well settled in this State that three circumstances must con *291 cur in order to constitute a valid trust: (1) sufficient words to raise a trust, (2) a definite subject or trust res, and (3) an ascertained object. Finch v. Honeycutt, 246 N.C. 91, 97 S.E. 2d 478; Trust Co. v. Taylor, 255 N.C. 122, 120 S.E. 2d 588. Assuming that the rights of the two primary beneficiaries in the income and corpus of the trust established by their father is a sufficient trust res, there is no language in the instrument evidencing any intent to create a trust, nor is there any language from which a transfer of any title or interest to trustees for the benefit of another could be inferred. In the construction of any contract, we are required to ascertain the intent of the parties, and in so doing consider the purpose to be accomplished and the situation of the parties, among other things. Electric Co. v. Insurance Co., 229 N.C. 518, 50 S.E. 2d 295. So, also, the parties’ “intention to create a trust and manifestation thereof, with reasonable certainty, are essential to the creation and existence of a trust.” 54 Am. Jur., Trusts, § 33, p. 44; Bogert, Trusts & Trustees, 2d, §§ 45 and 46. There is no language in the instrument under consideration from which an intent to create a new trust at the time of its execution could be inferred. The only expression of intention is to extend the life of an existing trust. This is not an intent to create a trust, absent the addition of new property to the trust assets or substitution of different properties for trust assets. Bogert, Trusts & Trustees, 2d, § 46. Additionally, the situation of the parties at the time and allegations and admissions revealed by the pleadings herein negative any intent to create a new trust by the memorandum agreement. We deem it unnecessary to discuss the efficacy of the instrument entitled “Revocation of Purported Agreement” executed by Elizabeth Page Erickson and Helen Page Gaither, and the application of G.S. 39-6 thereto. A fortiori, the doctrine of worthier title discussed by the trustees, has no application, nor is the defense of laches raised by the guardian ad litem available. We have carefully considered the questions raised and the exhaustive and informative briefs of the parties, and in the judgment of the court we find No error. Campbell and Parker, JJ., concur.