Schmidt v. Wachovia Bank

PRESENT: Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and
Lemons, JJ., and Stephenson, S.J.

WILLIAM C. SCHMIDT, III, ET AL.

v. Record No. 050353 OPINION BY JUSTICE ELIZABETH B. LACY
January 13, 2006
WACHOVIA BANK, NATIONAL ASSOCIATION,
TRUSTEE, ETC., ET AL.

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Theodore J. Markow, Judge

In this appeal, we decide whether any language in the

wills of William C. Schmidt (Mr. Schmidt) and Wilhemine B.

Schmidt (Mrs. Schmidt) (collectively "the Testators")

indicated a clear intent to delay vesting of remainder

interests in the trusts created by the wills.

I.

The parties stipulated to the facts. Mrs. Schmidt died

testate on July 24, 1951, survived by Mr. Schmidt, her

husband, and by her two children, Louise A. Schmidt (Louise)

and William C. Schmidt, Jr. (William, Jr.). Mr. Schmidt died

testate on July 1, 1957, survived by Louise and William, Jr.

The Testators' wills each provided that the residue of

their estates would be held in trust. The wills directed the

trustee to divide each of the Testators' residuary trust

estates into two equal shares, one share for the benefit of

Louise and the other share for the benefit of William, Jr.
 Mrs. Schmidt's will provided that Mr. Schmidt was

entitled to receive any portion of the income from the two

trusts she created until each of the children reached age 25

years. When each child reached age 25, any income not

requested by Mr. Schmidt became part of the corpus of the

trust established for the benefit of that child, and the child

became entitled to the income from the trust for life. Mrs.

Schmidt's will further provided that Louise, when she attained

age 25, was to receive $25,000 from the corpus of the trust

established for her benefit. Mrs. Schmidt's will also

provided that William, Jr., upon attaining age 25, was to

receive one-fourth of the corpus of the trust established for

his benefit and that he was to receive one-third of the

remainder of the corpus at age 35.

Mr. Schmidt's will is virtually identical to Mrs.

Schmidt's will, except that Mr. Schmidt's will provided for

the distribution of trust income to begin when each child

attained the age of 21 years. Mr. Schmidt's will also did not

provide for the payment to Louise of any of the corpus of the

trust created for her benefit.

Both wills provided that, upon the death of a child, the

income from the trust created for that child's benefit was to

be paid to the child's issue for a period of 21 years and 10

months. Both wills further provided that, if a child died

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without issue, the income from that child's trust would be

paid to the surviving child for life.

Both wills also contained the following provision: "I

expressly direct that neither the principal, nor any portion

thereof, nor the income, nor any portion thereof, accruing to

any beneficiary under these trust provisions, shall be

assignable by such beneficiaries, nor subject to any liability

of any such beneficiary." In addition, both wills contained

the following contingency clause:

If any bequests or directions in this will be
invalid under the laws of Virginia, or for any
reason ineffectual, I direct that all of my property
and estate whatever and wherever situated, which for
any reason may not be sufficiently disposed of by
this will, shall pass to and descend to my heirs at
law, according to the statutes relating to descent
and distribution in force at the date of my death.

Louise died on January 8, 1992, without issue and

survived by William, Jr. and her husband, James Findley

Newcomb. By her will, Louise devised her entire estate to her

husband.

Newcomb died testate on May 8, 1997. He devised all of

his estate, except his tangible personal property and $5,000,

in equal shares, to his friends Farouk Chaabi and James O.

Hobart, both of whom survived him.

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 James O. Hobart died testate on April 20, 2003, survived

by his wife, Lee J. Edmands. He devised his entire estate to

his wife.

William, Jr. died on October 3, 2002, survived by his

wife, Gladys S. Schmidt, and his two children, William C.

Schmidt, III and Christina M. Schmidt (the Grandchildren).

William, Jr. also was survived by two grandchildren and two

great grandchildren.

II.

The Testators' wills did not contain provisions

explicitly providing for the disposition of the trusts'

remainders after the provisions for the payment of the income

therefrom were satisfied. Consequently, the trustee of the

trusts, Wachovia Bank, National Association (Wachovia), filed

a bill of complaint seeking the aid and direction of the

court. Specifically, Wachovia asked the court to determine

the ownership interests in the remainders of the two trusts

that were created for Louise's benefit. The parties agreed

that the resolution of this issue will also apply to the

trusts created for William's benefit.

The trial court concluded that the contingency clauses of

the wills disposed of the ownership interests in the trust

remainders and that the early vesting rule applied to the

phrase "my heirs at law." Accordingly, the trial court held

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that the remainder interests vested in Louise at the time of

the Testators' deaths and therefore, Chaabi and Edmands each

had a one-fourth interest in the remainders of Louise's

trusts.

We awarded the Grandchildren this appeal. Chaabi and

Edmands are the appellees of record.1

III.

The parties agree that the Testators' wills, although

purporting to dispose of their entire estates, did not

specifically dispose of the remainder interests in the trusts

created by the wills. The contingency clauses contained in

each will describe how to identify the persons entitled to the

remainder interests, but do not indicate when those persons

are to be identified.2

1
On appeal, Wachovia argued in support of the trial
court's ruling. Wachovia, however, received the aid and
guidance that it had sought in the trial court and, therefore,
does not have standing to so act. Moreover, a trustee cannot
litigate the claims of one set of legatees against the others.
Thus, we will dismiss Wachovia as an appellee. See Shocket v.
Silberman, 209 Va. 490, 492-93, 165 S.E.2d 414, 417 (1969).
2
The Grandchildren originally assigned error to the trial
court's application of the contingency clauses and argued on
brief that the contingency clauses did not apply because the
intent of the Testators as shown in the wills required
disposition of the remainder interests to the Grandchildren,
the direct blood lineage of the Testators. At oral argument,
counsel agreed that the contingency clauses in the wills
applied, while still maintaining that the Testators' intent
was sufficiently shown in the wills to avoid the application
of the early vesting rule.
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 Under these circumstances the law is quite clear.

In this jurisdiction early vesting of estates
is favored, and devises and bequests are to be
construed as vesting at the time of [the]
testator's death, unless the intention to delay
the vesting is clearly indicated by the
language of the will. If it appears from the
instrument that [a] testator intended that
vesting be postponed to a time or upon the
happening of an event subsequent to his death,
effect must be given to that intent. Where the
testator's intent may be determined from the
language of the will, rules of construction are
not to be employed.

First National Exchange Bank of Roanoke v. Seaboard Citizens

National Bank of Norfolk, 200 Va. 681, 687, 107 S.E.2d 408,

413 (1959). Applying these principles to this case, the

remainder interests in the trusts' corpus vested in the

Testators' heirs at law under the intestacy statutes at the

time of the Testators' respective deaths, "unless the

intention to delay the vesting is clearly indicated by the

language of the will." Id.

The Grandchildren argue that the provisions in the wills

prohibiting Louise from assigning the principal of the trusts

created for her benefit and the spendthrift provisions

indicate a clear intent to delay vesting of the remainder

interests until the death of the Testators' last surviving

child, William, Jr., thereby vesting such interests in the

Grandchildren. However, these provisions do not apply solely

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to Louise. They apply to all trust beneficiaries.3 Therefore,

applying the grandchildren's rationale would require the

deferral to extend to a point at which the remainder interest

would not vest in any trust beneficiaries, including the

Grandchildren.

Likewise, the fact that Louise received a fixed dollar

amount of the trust's corpus in Mrs. Schmidt's will while

William, Jr. received a fractional portion of the corpus is

not an indication that the Testators intended to defer

vesting. Overall, there is no meaningful distinction between

the Testators' treatment of the two children regarding

disbursal of trust funds that supports a conclusion that the

Testators intended to delay vesting because they did not want

Louise to have any control of the trusts' corpus.

The Grandchildren also rely on Boyd v. Fanelli, 199 Va.

357, 99 S.E.2d 619 (1957), for the proposition that because a

spendthrift trust is inconsistent with early vesting, it is

sufficient evidence of an intent to delay vesting. This is an

overly broad reading of Boyd.

3
Article II, paragraph 8 of Mrs. Schmidt's will and
Article III, paragraph 5 of Mr. Schmidt's will state: "I
expressly direct that neither the principal, nor any portion
thereof, nor the income, nor any portion thereof, accruing to
any beneficiary under these trust provisions, shall be
assignable by such beneficiaries, nor subject to any liability
of any such beneficiary."
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 In Boyd, the testator divided the residue of her estate

into five shares, each going to a specific beneficiary. See

id. at 358-59, 99 S.E.2d at 620-21. For one of those

beneficiaries, the testator established a spendthrift trust

and provided that "at [the beneficiary's] death the principal

of said fund shall pass to my next of kin, per capita." Id.

at 358, 99 S.E.2d at 621. The question before the Court was

whether determination of the testator's next of kin was made

as of the testator's date of death or at the death of the

beneficiary. Id. at 359, 99 S.E.2d at 621. The Court stated

that applying the early vesting doctrine would be inconsistent

with the spendthrift trust because it would allow the

beneficiary, subject to the spendthrift provisions, to dispose

of at least a portion of the remaining trust principal. Id.

at 361, 99 S.E.2d at 622-23. But in concluding that the early

vesting rule did not apply, the Court stated that the phrase

directing that the principal of the fund pass to the

testators' next of kin, per capita, "when considered along

with other pertinent parts of the will, makes it quite clear

that [the] testatrix intended to defer the vesting of what was

left of the corpus of the trust fund until the life tenant's

death." Id. at 362, 99 S.E.2d at 623. The Court's decision

did not rest solely on the existence of a spendthrift trust.

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 In the instant case, no phrase such as that in Boyd

identifies an event or time at which the remainder interests

in question were to vest. The only similarity between the two

cases is the existence of a spendthrift trust. Neither Boyd

nor any other case has held that the existence of a

spendthrift trust alone is sufficient to show a clear intent

to delay vesting.

While the intent of the testator to defer vesting

reflected in the will must be given effect, we have said that

such intent must be clearly indicated by language contained in

the will. First Nat'l Exch. Bank, 200 Va. at 687, 107 S.E.2d

at 413. Accordingly, in the past we have imposed delayed

vesting only when the will contained some actual language

directing or supporting deferral. See, e.g., Maiorano v.

Virginia Trust Co., 216 Va. 505, 510-11, 219 S.E.2d 884, 887-

88 (1975) (trust principal to be divided, per stirpes, among

the testator's issue then living "[a]t the expiration of the

period of twenty-one years after the death of [William

Sitterding]."); First Nat'l Exch. Bank, 200 Va. at 687-88, 107

S.E.2d at 413-14 ("Should either of my said nieces die before

the final settlement of my estate, leaving issues, then

living, such issues shall be entitled to their mother's share"

means interest vested in living issue at time of mother's

death, not testator's death.); Cheatham v. Gower, 94 Va. 383,

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384, 26 S.E. 853, 853 (1897) ("I give to my nephew, T. M.

Cheatham, during his life, my mansion house, . . . and at his

death to his surviving children."). No such language appears

in the wills at issue in this case. In the absence of such

language, the doctrine of early vesting applies to these

wills.

For these reasons, we will affirm the judgment of the

trial court.

Affirmed.

SENIOR JUSTICE STEPHENSON, dissenting.

I respectfully dissent. When the wills are read as a

whole, I conclude that the Testators never intended to vest

Louise with the corpora of the trusts established for her

benefit.

When construing a will, a court's object is to determine

what the testator meant by the language used. If the meaning

of the words used is plain, a court must not resort to rules

of construction. In determining a testator's intent, the will

as a whole should be considered, and, if possible, effect

should be given to all provisions of the will in order to

ascertain the testator's general plan and purpose. Boyd v.

Fanelli, 199 Va. 357, 360, 99 S.E.2d 619, 622 (1957). Thus,

while the law favors early vesting of estates, "if it appears

from the language of the will that testator intended that the

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vesting of an estate be deferred to a time or event subsequent

to his death, that intent must be given effect." Id. at 360-

61, 99 S.E.2d at 622.

In the present case, the Testators were very careful to

avoid the result reached by the majority. Each will

prohibited Louise from assigning the principal of the trust

created for her benefit. Each will also contained a

spendthrift provision that provided that the principal would

not be subject to any liability Louise might incur. Moreover,

each will did not make periodic distributions of corpus to

Louise as were made to William, Jr.

Clearly, the Testators intended that Louise was to have

no control over the corpora of the trusts established for her

benefit. Indeed, it defies logic and reason that the

Testators would create spendthrift trusts and, at the same

time, intend to vest Louise with the corpora thereof. Such an

inconsistency was recognized in Boyd when we said the

following:

In construing the will to determine whether it
was the intent of the testatrix that the remainder
vest upon her death or upon the death of the life
tenant, it must be kept in mind that paragraph C
sets up a spendthrift trust.

. . . .

This provision is inconsistent with the idea
that the testator intended that the remainder vest
upon her death . . . . An anomalous situation would

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 exist if the beneficiary under the spendthrift trust
who now receives income for life . . . is . . . also
the owner of a vested interest in one-third of the
remainder of the corpus of the trust estate.

Id. at 361, 99 S.E.2d at 622-23.∗

It is equally clear, given the Testators' "general plan

and purpose," that their estates should stay in their family.

This is accomplished by finding that the corpora of the trusts

shall be divided between the Grandchildren determined as of

the date of the death of William, Jr., the Testators' last

surviving child.

For the foregoing reasons, I would hold that the

Testators did not intend that the remainder interests in the

trusts created for Louise's benefit should vest at the time of

their deaths, but that vesting should be deferred until the

death of William, Jr. I would further hold that the remainder

interests are vested in the Grandchildren. Accordingly, I

would reverse the trial court's judgment, enter final judgment

in favor of the Grandchildren in whom the remainder interests

would be vested, and remand for a distribution of the corpora

and interest consistent with the views expressed herein.

∗
The majority distinguishes Boyd and the other cases it
cites on their facts. The present case, however, is governed
by its own facts because no two wills are alike. As we have
said, " 'little aid can be derived in the construction of
wills from adjudged cases.' " Aldridge v. Rodgers, 183 Va.
866, 870, 33 S.E.2d 654, 656 (1945) (quoting Cole v. Cole, 79
Va. (4 Hans.) 251, 255 (1884)).
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