Present: All the Justices
WILLIAM Y. AUSTIN, TRUSTEE OF THE
JAMES M. DUNCAN, III, LIVING TRUST
OPINION BY
v. Record No. 020162 JUSTICE LAWRENCE L. KOONTZ, JR.
JANUARY 10, 2003
CITY OF ALEXANDRIA, ET AL.
FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA
Alfred D. Swersky, Judge
In this appeal, we consider whether the trial court
properly determined that an individual who was grantor, trustee,
and beneficiary of a revocable land trust effectively conveyed
title to real property held in the trust by a subsequent deed
which did not specify the capacity in which he was acting.
BACKGROUND
This case involves parcels of commercial real property,
commonly known as 200 North Henry Street and 1115 North Cameron
Street, located in the City of Alexandria (the property). The
material facts were stipulated in the trial court.
On September 7, 1993, James M. Duncan, III, executed an
unrecorded declaration of trust establishing The James M.
Duncan, III, Living Trust (the Living Trust). 1 The pertinent
provisions of the declaration may be summarized in the following
manner. Duncan was named as the initial trustee. Under Article
2, Duncan was named as the income beneficiary during his
lifetime. In addition, Article 2 provided for discretionary
distributions of corpus by the trustee to Duncan. Article 3
provided that “[b]y signed instruments delivered to the Trustee
during [Duncan’s] lifetime, [Duncan] may: (1) withdraw property
from this trust in any amount and at any time upon giving
reasonable notice in writing to the Trustee.”
Articles 5 and 6 provided for the distribution of the trust
corpus upon Duncan’s death, with the tangible personal property
being distributed immediately to two alternate remaindermen, and
the balance of the corpus being placed into three charitable
remainder trusts for the benefit of three remaindermen during
their lifetimes and then to The James M. Duncan, Jr., Library
Foundation for the benefit of the James M. Duncan, Jr., Library
located in Alexandria, Virginia. Article 8 provided for the
appointment of successor trustees and co-trustees. Burke &
Herbert Bank & Trust Company of Alexandria was designated as the
first successor trustee upon Duncan’s death or resignation as
original trustee. Article 12 provided for the broad powers of
the trustee, which included the power to transfer title to the
real property in the trust.
1
Although Duncan resided in the State of California at the
time the Living Trust was created, the trust document specified
that it was to be governed by the law of Virginia.
2
Concurrent with the execution of the Living Trust
declaration on September 7, 1993, Duncan, as grantor, executed a
“DEED IN TRUST” conveying the property to himself as trustee of
the Living Trust. The legal description of the property
included a reference to its prior recorded transfer to Duncan
under the will of Ruth Birch Deahl Duncan. The deed referenced
Code § 55-17.1 and declared that “the trust created by this
conveyance shall not fail, . . . because no beneficiaries are
specified by name herein or because no duties are imposed upon
the Trustee.” The deed further provided that “[a]ny revocation
of the [Living] Trust Agreement by the Grantor shall not be
effective as to the property herein conveyed unless he
execute[s] a deed, duly recorded, evidencing such revocation and
reversion of title.” This deed was duly recorded in the land
records of the City of Alexandria on June 15, 1994.
On June 30, 1994, Duncan executed an amendment to the
Living Trust providing that, upon his death or resignation as
trustee, Burke & Herbert Bank & Trust Company and William Y.
Austin should succeed him as co-trustees. Austin was the
lifetime beneficiary of one of the charitable remainder trusts
established under the Living Trust.
On August 3, 1999, Duncan executed a second deed purporting
to convey the property previously conveyed to the Living Trust.
This deed, which was styled as a “DEED OF CONTRIBUTION,” was
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headed with the notation that it had been “PREPARED WITHOUT
BENEFIT OF A TITLE REPORT.” The deed named Duncan as grantor
and named as the grantee the “James M. Duncan, III, Trustee for
the J. M. Duncan, III Charitable Remainder Unitrust.” The legal
description of the property in the deed contained no reference
to Duncan’s prior transfer of this same property to the Living
Trust or to any reversion of the title of this property to
Duncan in his individual capacity. The deed was signed by
Duncan, but did not specify the capacity in which he executed
it.
On August 4, 1999, Duncan executed a trust agreement
establishing The J. M. Duncan III Charitable Remainder Unitrust
(the Unitrust). As with the Living Trust, Duncan was named as
the initial trustee and lifetime beneficiary of the Unitrust.
The charitable entities that would receive any remaining corpus
and accumulated income upon Duncan’s death were the St. Paul of
the Desert Episcopal Church of Palm Springs, California, which
would receive fifty percent of the remainder, the James M.
Duncan, Jr., Library, in Alexandria, Virginia, which would
receive forty-nine percent, and the Gamma Mu Foundation, which
would receive the remaining one percent.
Attached to the Unitrust agreement as exhibit A was a legal
description of the property to be held in the trust. The
property described was substantially the same property
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previously deeded to the Living Trust. However, as with the
deed purporting to convey the property to the Unitrust, no
mention was made of Duncan’s prior conveyance of this same
property to the Living Trust or of any reversion of the title of
the property to Duncan individually. 2 The exhibit concluded with
an acknowledgement of the receipt of the property by Duncan in
his capacity as trustee of the Unitrust.
The deed purporting to convey the property to the Unitrust
was recorded in the land records of the City of Alexandria on
August 5, 1999. The Unitrust agreement was not recorded.
On October 20, 1999, Duncan, expressly acting in his
capacity as trustee of the Unitrust and pursuant to his
authority as the trustee of that trust, executed a contract to
sell the property to Nationwide CH, LLC (Nationwide) for
$2,200,000. 3 Settlement was to occur on or before eighteen
months from the contract date.
Duncan died on March 2, 2000. Burke & Herbert Bank & Trust
Company declined its appointment as successor co-trustee for the
Living Trust on July 19, 2000. On September 26, 2000, the
2
The legal descriptions in the two deeds and the exhibit
attached to the Unitrust vary in certain details. However, the
parties do not make an issue of this. Accordingly, this anomaly
in the record does not enter into our analysis.
3
This purchase contract listed the seller as “J. M. DUNCAN,
III IRREVOCABLE CHARITABLE TRUST.” This discrepancy in the
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Superior Court of the State of California in and for the County
of Riverside confirmed Austin as “the sole successor trustee” of
the Living Trust and confirmed his title, as trustee, to certain
real property located in the State of California which had
previously been donated to that trust by Duncan.
On February 15, 2001, Austin, acting in his capacity as
trustee of the Living Trust, filed a bill of complaint in the
Circuit Court of the City of Alexandria (the trial court)
against the City of Alexandria, the Alexandria Library Company,
the Alexandria Library Board (collectively, the City), St. Paul
of the Desert Episcopal Church, Gamma Mu Foundation, and
Nationwide seeking a declaratory judgment that he is vested with
legal and equitable title to the property as trustee of the
Living Trust. 4 The Alexandria Library Company owns the J. M.
Duncan, Jr., Library which is operated by the Alexandria Library
Board which oversees library services in the City of Alexandria.
In support of his bill of complaint, Austin essentially
alleged that the 1999 deed was ineffective to donate the
property to the Unitrust because by the 1993 deed Duncan in his
individual capacity had conveyed title to the property to
himself in his capacity as trustee of the Living Trust and that
proper name of the Unitrust is not pertinent to the issue
presented in the present appeal.
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neither that conveyance nor the Living Trust had been revoked.
The City and Nationwide filed separate answers in which they
essentially contended that the creation of the Unitrust and the
execution of the 1999 deed effectively revoked the prior
conveyance of the property to the Living Trust and, thus, that
the subsequent execution of the sale contract for the property
by Duncan as trustee of the Unitrust was valid.
Ultimately Austin, the City, and Nationwide filed cross-
motions for summary judgment. By final decree on October 31,
2001, the trial court entered judgment for the City and
Nationwide. In an opinion letter incorporated by reference into
the final decree, the trial court expressly found that “Duncan
as grantor of the living trust had the authority to withdraw
real estate from that trust. He did so by virtue of the
documents creating the unitrust and the deed to himself as
trustee of the unitrust.” By an order dated April 30, 2002, we
awarded Austin this appeal.
DISCUSSION
When, as here, the facts are stipulated in the trial court
by all parties, the trial court’s “findings, although highly
persuasive and entitled to great weight, are not binding on
appeal. However, we will not reverse the trial court’s judgment
4
St. Paul Church and Gamma Mu Foundation are not parties in
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on appeal unless it is plainly wrong or without evidence to
support it.” Ohio Casualty Ins. v. State Farm Fire & Casualty,
262 Va. 238, 240-241, 546 S.E.2d 421, 422 (2001)(citations
omitted). Applying this standard, the focus of our analysis in
this appeal is whether the stipulated facts support the trial
court’s judgment that the creation of the Unitrust and the
execution of the 1999 deed purporting to convey the property to
the Unitrust were sufficient to satisfy the provisions of the
Living Trust and the 1993 deed conveying the property to the
Living Trust to withdraw the property from the Living Trust so
that it reverted to Duncan in his individual capacity. Stated
another way, the focus of our analysis is whether under the
stipulated facts title to the property passed to Duncan as
trustee of the Unitrust by the 1999 deed or, as a matter of law,
title to the property remained with Duncan as trustee of the
Living Trust until his death.
We begin our analysis with well-settled principles
regarding land trusts in this Commonwealth. Obviously, no trust
can arise while the grantor retains both the full equitable
interest and legal title in the trust property. See Ballard v.
McCoy, 247 Va. 513, 517, 443 S.E.2d 146, 148 (1994). Therefore,
when real property is placed into a trust, a change in the title
this appeal.
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of that property must be effected. Id.; see also 1 Austin W.
Scott & William F. Fratcher, The Law of Trusts § 17 (4th ed.
1987). A change in the title occurs and a trust is created when
the grantor conveys both equitable and legal title in the
property to the trustee. See Air Power v. Thompson, 244 Va.
534, 537, 422 S.E.2d 768, 770 (1992). However, when the trust
is revocable, the grantor retains a right to withdraw the
property from the trust in accordance with the terms specified
by the trust agreement and the recorded deed conveying the
property to the trust. See Cohn v. Central National Bank of
Richmond, 191 Va. 12, 19, 60 S.E.2d 30, 33 (1950).
In conveying the property in 1993 by recorded deed to the
Living Trust, in accord with the provisions of Code § 55-17.1,
Duncan transferred the complete title in the property to himself
as trustee. See Air Power, 244 Va. at 537, 422 S.E.2d at 770.
In his capacity as the beneficiary of the Living Trust, his
interest in the property became personal property. See Curtis
v. Lee Land Trust, 235 Va. 491, 494, 369 S.E.2d 853, 854 (1988).
Thus, Duncan subsequently could not convey title to the property
to himself as trustee of the Unitrust without first revoking the
prior conveyance to, and withdrawing the property from, the
Living Trust so that title of the property would revert to him
in his individual capacity. See Ballard, 247 Va. at 517, 443
S.E.2d at 148. To do so, it was necessary for Duncan to comply
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with both the revocation and withdrawal provisions of Article 3
of the Living Trust and the corresponding provisions in the 1993
recorded deed conveying the property to the Living Trust. See
Cohn, 191 Va. at 19, 60 S.E.2d at 33.
The City and Nationwide contend that, because Duncan was
both grantor and trustee of the Living Trust, the subsequent
Unitrust agreement and the 1999 recorded deed were “signed
instruments” sufficient to give “reasonable notice in writing to
the Trustee” of Duncan’s withdrawal of the property from the
Living Trust pursuant to the requirements of Article 3 of the
declaration of that trust and the revocation and reversion of
title requirements of the 1993 deed. Notice to the trustee of
the Living Trust of the withdrawal of the property from that
trust, on the facts of this case, is a non-issue. As noted,
Duncan was both grantor and trustee. Accordingly, we will
accept the contention that the notice requirements for
withdrawal of the property under Article 3 of the Living Trust
declaration have been satisfied.
However, in order to accomplish the withdrawal of the
property from the Living Trust, Duncan was required by the
provisions of the 1993 deed to “execute a deed, duly recorded,
evidencing such revocation and reversion of title.” (Emphasis
added). We are of opinion that this provision contemplates the
execution of a recorded deed which effectively accomplishes the
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reversion of the legal title, as reflected in the appropriate
land records as a result of the 1993 deed, from Duncan as
trustee of the Living Trust to Duncan individually. There is no
deed that specifically transfers the legal title of the property
in accordance with this requirement of the 1993 deed. The 1999
deed purporting to convey the property to the Unitrust was not
executed by Duncan in his capacity as trustee of the Living
Trust, and the absence of any reference in that deed to the
Living Trust precludes the conclusion that it effectively
satisfied the revocation and reversion of title requirements of
the 1993 recorded deed. It then follows, as a matter of law,
that because Duncan never effectively caused the reversion of
the title of the property to himself individually after 1993, he
did not convey the title of the property to the trustee of the
Unitrust in 1999.
The City and Nationwide, relying on Bottimore v. First and
Merchants National Bank of Richmond, 170 Va. 221, 226, 196 S.E.
593, 594 (1938), further contend that Duncan could effectively
revoke the conveyance to the Living Trust because he was the
sole beneficiary of that trust. Their reliance on this case is
misplaced. In Bottimore, we held that an irrevocable trust
could be revoked by the consent of all parties in interest
provided they are sui juris. 170 Va. at 226, 196 S.E. at 594.
We further held that because the grantor was the sole
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beneficiary, she could revoke the trust agreement. Id. at 227,
196 S.E. at 594. The issue here, however, is not whether the
Living Trust was revocable. Clearly it was. The issue is
whether Duncan complied with the requirements of the Living
Trust declaration and the 1993 deed for withdrawing the property
from that trust. The Bottimore case simply does not address
that issue.
In sum, we hold that the legal and equitable title of the
property remained with Duncan as trustee of the Living Trust
until his death. Accordingly, we further hold that the 1999
deed purporting to convey the property to the Unitrust was
ineffective because Duncan did not make the conveyance as
trustee of the Living Trust and he had no legal title in the
property to convey in his individual capacity.
CONCLUSION
For these reasons, we will reverse the judgment of the
trial court, enter judgment here for Austin, in his capacity as
trustee of the Living Trust, and remand the case to the trial
court for entry of an appropriate order consistent with this
opinion to be recorded in the land records of the City of
Alexandria.
Reversed,
final judgment,
and remanded.
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