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Brown v. Brown

Court of Appeals of Ohio, Third District, Hardin

December 11, 2017

RUSSELL A. BROWN, TRUSTEE, PLAINTIFF-APPELLEE,
v.
DANNY L. BROWN, ET AL., DEFENDANTS-APPELLEES, and SANDRA K. HASSAN FARABEE, ET AL., DEFENDANTS-APPELLANTS.

         Appeal from Hardin County Common Pleas Court Probate Division Trial Court No. CA 20169001

          Howard A. Traul, II for Appellants

          John M. Tudor for Appellee Russell A. Brown, Trustee and Personally J. Michael Hood for Appellees, Danny L. Brown and Cathy Harris

          OPINION

          SHAW, J.

         {¶1} Defendants-appellants, Sandra Farabee, Robert Lambert, and Jack Lambert ("Appellants"), appeal the April 14, 2017 judgment of the Hardin County Court of Common Pleas, Probate Division, terminating the "Brown Family Trust" and distributing the Trust assets equally to plaintiff-appellee, Russell A. Brown ("Anthony"), and his siblings, defendants-appellees, Daniel Brown and Cathy Harris (collectively referred to as "Appellees"). On appeal, Appellants challenge several of the trial court's findings supporting its conclusion to distribute the Trust assets to only the three Appellees upon termination of the Trust.

         Relevant Factual Background

         {¶2} The parties to this action are three siblings and three step-siblings. Sometime in the early 1970's Appellees' father, Russell J. Brown ("Russ, Sr."), moved in with Appellants' mother, Rose A. Brown ("Rose"). During this time, Appellants lived with Russ, Sr. and by all accounts viewed him as a father figure. Russ, Sr. and Rose eventually married in 1978, when Russ, Sr. divorced his wife after all three Appellees had "graduated."

         {¶3} In 1985, Russ, Sr. and Rose executed reciprocal Wills leaving their probate estates to the surviving spouse and naming the six children as beneficiaries of the surviving spouse's estate in equal shares.

         {¶4} In 2000, Rose and Russ, Sr. executed a quitclaim deed, which placed 129.54 acres of land into the "Brown Family Trust, " a revocable trust. Rose died on June 14, 2013, and Russ, Sr. made his election to take under her Will. Russ, Sr. executed a new Will on September 18, 2013, wherein he included the following provision modifying the distribution of his probate estate from his prior 1985 Will:

2.02. I give, devise and bequeath all the rest, residue and remainder of my estate, real or personal, wherever situated and whenever acquired, unto my lineal descendants in equal shares, per stirpes. At the time of the making this Will, my descendants consist of Russell A. Brown, * * * Dan Brown, * * * and Cathy Harris. By such provision I intend that should any of my children predecease me, their share in equal share shall descend per stirpes to their lineal descendants, if any, and if none to be divided equally between my surviving children or their lineal descendants in equal share per stirpes. In making the provisions of this article in my Will, I am not unaware of the existence of my step children, being the children of my late wife, Rose Brown, but herewith provide only for my own children.

(Doc. No. 73).

         {¶5} On January 10, 2014, Russ, Sr. executed an "Affidavit of Successor Trustee, " stating that he and Rose were Co-Trustees of the Brown Family Trust and that after Rose's death he became the sole Successor Trustee pursuant to the Trust Agreement.

         {¶6} Russ, Sr. died on August 26, 2014. His 2013 Will was subsequently admitted to probate and no contest was made challenging the Will. Anthony was appointed executor of Russ, Sr.'s estate. The land contained in the Brown Family Trust, and the proceeds therefrom, were not included in either Rose's or Russ, Sr.'s probate estates.

         {¶7} On September 30, 2014, Anthony executed an "Affidavit of Successor Trustee, " stating he was the "presumed Successor Trustee" of the Brown Family Trust.

         Procedural History

         {¶8} On February 16, 2016, Anthony, as Trustee, filed a complaint naming all six children of Rose and Russ, Sr., individually, as defendants and seeking a determination from the trial court regarding several aspects of the Brown Family Trust. The complaint stated that Anthony, as Russ, Sr.'s executor, was in possession of a check for proceeds from the land owned by the Brown Family Trust that needed to be deposited, but no account existed for the Trust. Anthony and his counsel were unable to find the Trust Agreement or any documents creating the Brown Family Trust.[1] Anthony assumed possession of the Trust assets as "presumed Successor Trustee."

         {¶9} Anthony and his counsel later discovered an "Abstract of Trust Agreement, " which identified Rose and Russ, Sr. as "Co-Trustors" and "Co-Trustees" and further provided that:

3. Successor Trustees. Upon removal of both husband and wife as Co-Trustees, the joint Co-Successor Trustees are designated as


RUSSELL A. BROWN [Anthony] and SANDRA K. STONE [nka Farabee]. In the event either of them should become incompetent or otherwise unable or unwilling to serve, then the other shall serve alone as Trustee hereof.


(Doc. No. 76). However, no person, other than Rose and Russ, Sr., was identified as a beneficiary in the "Abstract of Trust Agreement." Thus, there was no provision giving guidance as to how the Trust assets were to be distributed after the deaths of both Rose and Russ, Sr.

         {¶10} Accordingly, the complaint initiating this case sought a judgment from the trial court determining the identity of the successor beneficiaries under the Trust, if the trial court determined there was a trust, and to whom the income and proceeds of the liquidation of the Trust assets should be distributed, when such distribution should be made, and when the Trust should be terminated.

         {¶11} Appellants-i.e., Rose's children, filed a counter-claim and cross-claim asserting that they were entitled to fifty percent of the Trust assets. Appellants requested the trial court find Sandra Farabee was the Co-Trustee of the Brown Family Trust pursuant to the "Abstract of Trust Agreement;" that an accounting should be ordered; and that a judgment should be issued liquidating the Trust, distributing fifty percent to Appellants, and terminating the Trust.

         {¶12} Appellants filed a motion for summary judgment which was overruled by the trial court and the case proceeded to a bench trial on January 23, 2017, where several witnesses testified and numerous exhibits were admitted. Based upon the evidence presented, the trial court issued Findings of Fact on February 15, 2017. Specifically, the trial court found relative to this appeal that Russ, Sr. and Rose were settlors of "Brown Family Trust, " a revocable trust established on June 15, 2000, and that the "Abstract of Trust Agreement" identified two beneficiaries, Rose A. Brown and Russell J. Brown, who were also the initial Co-Trustees. (Doc. No. 80 at ¶¶ 7- 8).

         {¶13} The trial court further found that on June 15, 2000, Russ, Sr. and Rose executed a quitclaim deed for the 129.54 acres of land to the Trust granting it to themselves as Co-Trustees. The trial court found that the quitclaim deed evidenced that the property was acquired solely by Russ, Sr. with Rose having only a dower interest in the property prior to placing the land into the Trust. The trial court also found that "the act of titling the real estate to the Trust removed personal ownership from either/or both Russell J. Brown and Rose A. Brown and exhibited an intent that the property not be included as part of their estates." (Id. at ¶ 13).

         {¶14} The trial court examined the "Abstract of Trust Agreement" and determined from that document that the Co-Trustees-i.e., Rose and Russ, Sr.-had the power to transfer the Trust assets and the survivor of the two had a right to a power of appointment exercisable by Will. However, the trial court noted that there was no evidence presented that action was taken by either Rose or Russ, Sr. consistent with these powers.

         {¶15} At the time of trial, the 129.54 acres were still titled in the name of the Brown Family Trust and there was approximately $38, 000 of proceeds from the land in a bank account established by Anthony under the name "Brown Family."[2]Based upon the evidence before it, the trial court could not determine who the beneficiaries were intended to be after the deaths Rose and Russ, Sr. and further determined that "[b]ecause the purposes of the Trust cannot be ascertained they are impossible to achieve."[3] (Doc. No. 80 at ¶ 40); see R.C. 5804.10(A).

         {¶16} In a separate document, the trial court set forth its Conclusions of Law based upon these findings, after giving the parties an opportunity to file their "exceptions" to the trial court's Findings of Fact and to brief the legal issues. The trial court found that a valid revocable trust was established, and that no evidence of revocation by Rose or Russ, Sr. was presented at trial. Having found that there was no ascertainable beneficiary of the Trust after the deaths of Rose and Russ, Sr. and that the purposes of the Trust could no longer be achieved, the trial court concluded that the Trust should be terminated. Thus, the primary concern of the trial court was how to distribute and to whom to distribute the Trust assets upon the termination of the Trust in the absence of any instruction from a trust agreement.

          {¶17} The trial court examined the relevant statutes on the issue and observed that it could "not find any statute directly on point to help resolve this conundrum." (Doc. No. 88 at 10). Nevertheless, the trial court looked to the statutory provisions for guidance and concluded the following:

By agreement of the parties and without objection, the Court took judicial notice of the entire contents of the estates of both Russell J. Brown and Rose A. Brown. Both estates were fully administered and neither is currently opened. The Court would note that Mrs. Brown, the first to die, left her entire estate to her husband, Russell J. Brown. Were she entitled to any of the assets back from the trust or were she a beneficiary getting back assets from the trust, they would pass through her estate to her husband [pursuant to her 1985 Will]. As the evidence in this case clearly established, including the Court's file for the estate of Russell J. Brown, he left his entire estate to his three children, being plaintiff and defendants Brown. In either scenario, whether the assets passed from wife to husband and then to his children or merely would have passed directly to Mr. Brown (because Mrs. Brown only had a dower interest), the outcome would be the same. Ultimately, the assets would be divided equally between the three children of Russell J. Brown [pursuant either to Russ, Sr.'s 2013 Will or under the "law of jurisdiction" as the beneficiaries or the heirs are the same].


(Doc. No. 88 at 9). The trial court further determined that there was no adequate remedy at law and exercised "its equitable powers" to provide the parties relief. (Id. at 11). The trial court ordered the Trust be terminated and the assets be distributed directly to Appellees in equal shares, without re-opening Russ, Sr.'s estate. The trial court's orders were journalized in its April 14, 2017 Judgment Entry.

         {¶18} Appellants subsequently filed this appeal, asserting the following assignments of error.

ASSIGNMENT OF ERROR NO. 1


THE PROBATE COURT ERRED AS A MATTER OF LAW IN FINDING THAT IT HAD NO AUTHORITY TO DETERMINE THE BENEFICIARIES OF THE TRUST BECAUSE THE LAW PERMITS A TRIAL COURT TO DETERMINE THE TERMS OF A TRUST EVEN WHEN THE TRUST DOCUMENT IS MISSING; THEREFORE, THE PROBATE COURT'S APRIL 14, 2017 ENTRY SHOULD BE REVERSED.


ASSIGNMENT OF ERROR NO. 2


THE PROBATE COURT ERRED AS A MATTER OF LAW IN FAILING TO FIND THE SETTLORS INTENDED ALL SIX CHILDREN TO BE BENEFICIARIES UNDER THE BROWN FAMILY TRUST; THEREFORE, THE PROBATE ...

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