Deal v. Wachovia Bank & Trust Co.

WiNBOBN®, J. The challenge of appellants to the judgment below is untenable. The trust in question is active, and not passive. In cases of passive trusts the legal and equitable titles are merged into the beneficiary and the beneficial use is converted into legal ownership. But this is not true as to active trusts. Fisher v. Fisher, ante, 42, 6 S. E. (2d), 812, and cases cited. If a special duty be imposed upon the trustee, such, for example, as the collection and application of the income or the rents and profits of the estate, the trust is active, because the trustee must have the legal title in order to perform his duties. Webb v. Borden, 145 N. C., 188, 58 S. E., 1083; Cole v. Bank, 186 N. C., 514, 120 S. E., 54; Heyer v. Bulluck, 210 N. C., 321, 186 S. E., 356; Fisher v. Fisher, supra, and numerous other cases. The factual situation in Cole v. Bank, supra, is not unlike that here. Adams, J., speaking for the Court there, said that “the general rule is that a gift of the income of property is to be regarded as a gift of the property itself only when no limitation of time is attached; but where *490 a testator directs that the interest on a sum o£ money be paid to a designated beneficiary annually during his natural life, and that after his death the principal should be distributed among other legatees, the legacy is construed, not as a gift to the first taker of the corpus of the fund, but only of the income for the intermediate period.” Then, with regard to an agreement signed by legatees to give their interest in the fund to the immediate beneficiary, the Court held that under the circumstances the agreement could not destroy the trust and deprive the bank of its right to hold and disburse the fund in controversy as provided in the will. Applying these principles to the present case, the income is to be paid to Clarence R. Deal “during the.term of his natural life, and at his death,” to others. Contingent remainders are created and the trustee is, by operation of law, required to hold the property and pay over the income as directed, and finally to account for the corpus. The releases signed by James F. Deal and wife, Arthur L. Deal and wife, Mabel Deal Aull and husband, and the children of Silas A. Deal, deceased, cannot destroy the trust nor deprive the trustee of its right to hold the property and execute the trust nor relieve the trustee of liability entirely. 'While it is stipulated in the release that it is intended as a family settlement agreement, we are of opinion and hold that the family settlement doctrine is inapplicable to the present factual situation. See Reynolds v. Reynolds, 208 N. C., 578, 182 S. E., 341; Bohannon v. Trotman, 214 N. C., 706, 200 S. E., 852. Furthermore, it is pertinent to note that neither Claude E. Deal, if living, nor his children, if any, though unknown, are parties to this action. In this connection, while the principle of law that “the absence of a person from his domicile, without being heard from by those who would be expected to hear from him, if living, raises a presumption of his death, that is, that he is dead at the end of seven years,” Beard v. Sovereign Lodge, 184 N. C., 154, 113 S. E., 661; University v. Harrison, 90 N. C., 387; Steele v. Ins. Co., 196 N. C., 408, 145 S. E., 787, “the presumption of his death, arising from seven years absence under the rule, is presumption of fact which may be rebutted.” Chamblee v. Bank, 211 N. C., 48, 188 S. E., 632, and cases there cited. It may also be noted that, though' Claude E. Deal be declared to be civilly dead, and if he be in fact dead, it does not necessarily follow that he died without leaving issue surviving him. In fact, the decree of the clerk of Superior Court of Rowan County merely declares him tq be civilly dead, and does not attempt to make any adjudication on the question as to whether he is actually dead, or as to whether he left surviving issue. Moreover, in order to sustain the judgment below it is not required *491 that we pass upon the question of the extent to which the judgment entered by Gwyn, J., at the November Term, 1939, is res judicata. Nevertheless, it has been said that the Court has no higher duty than the protection of infant defendants, and that there can be no trust more sacred than that of a guardian. The object of the appointment of a guardian ad litem, is to protect the interest of the infant defendants. It is the duty of a guardian ad litem to file an answer and to protect their interests. Latta v. Trustees, 213 N. C., 462, 196 S. E., 862; Graham v. Floyd, 214 N. C., 77, 197 S. E., 873. A guardian ad litem has no authority, without valid consideration, to relinquish rights of the infant defendants whom he represents. As applied to the present case, even though the parents of the named infants and unborn issue have assigned, transferred and conveyed to Clarence E. Deal, the immediate cestui que trust, all of their contingent right, title, interest and estate in and to property in the trust in question, and even though the interest of such infants and unborn issue he remote, their guardians ad litem, in the absence of valid consideration therefor, are without authority to relinquish those rights to the immediate beneficiary of the trust estate. In Latta v. Trustees, supra, Barnhill, J., said: “In all suits or legal proceedings of whatever nature, in which the personal or property rights of a minor are involved, the protective powers of a court of chancery may be invoked whenever it becomes necessary to fully protect such rights. When necessary, the Court will go so far as to take notice ex mero motu that the rights of infants are endangered and will take such action as will properly protect them.” And, further, quoting from 10 E. C. L., 340, it is there stated: “Equity has full and complete jurisdiction over the persons and property of infants and all other persons laboring under legal disabilities. . . . The jurisdiction in all these cases is plenary and potent to reach and afford relief in every case where it may he necessary to preserve their estates and protect their interests.” The judgment below is Affirmed.