PRESENT: Keenan, Koontz, Kinser, Lemons, Goodwyn, and Millette,
JJ., and Lacy, S.J.
STEVEN HARBOUR, ET AL.
v. Record No. 082023 OPINION BY
JUSTICE BARBARA MILANO KEENAN
November 5, 2009
SUNTRUST BANK, ET AL.
FROM THE CIRCUIT COURT OF PATRICK COUNTY
David V. Williams, Judge
In this appeal, we consider whether the circuit court erred
in determining that certain remainder shares in a trust lapsed.
The facts in this case are not in dispute. Mollie Boaz
Johnson (the grantor) executed an inter vivos trust agreement,
in which she directed that the income and the corpus of the
trust be used for her benefit during her lifetime. She further
directed that if her husband, Harry B. Johnson, survived her,
the trust assets be used for his benefit for his lifetime. The
trust agreement further provided, in Section 7, entitled
“Disposition of Trust,” the following instruction:
C. Payment of Estate Tax at Spouse’s Death. Upon the
death of the Grantor’s spouse, the Trustee shall
divide the trust res, including any undistributed
income and the remaining principal, into four equal
shares, to be distributed as follows:
One such share shall be paid and delivered to my
brother, James Clayton Boaz; the second such share,
shall be paid and delivered to my brother, Herbert
Alan Boaz; and the third such share shall be paid and
delivered to my sister, Hazel Boaz Harbour.
The fourth such share shall be delivered to the
Stuart Baptist Church to be kept in a separate trust
account entitled “Mollie Boaz Johnson Educational
Fund”, to be used for scholarships for deserving
students from Patrick County in accordance with . . .
My Last Will and Testament.
If any of my brothers or sister shall fail to
survive me, his or her share shall lapse and such
share shall be added to the trust fund for Stuart
Baptist church, previously mentioned. (Emphasis
added.)
In the margin next to the paragraph underlined above, the
grantor placed her initials. She also placed her initials on
the bottom of each page of Section 7 of the trust agreement.
The grantor died in 1999 and was survived by her husband
and two of her siblings, Hazel Boaz Harbour (Harbour) and James
Clayton Boaz (Boaz). These siblings predeceased the grantor’s
husband (the husband), who died in 2007. Harbour was survived
by one child, Steven M. Harbour, and Boaz was survived by one
child, James Aubrey Boaz.
In November 2007, SunTrust Bank, as trustee, 1 filed a
complaint in the circuit court seeking aid and guidance in the
interpretation of the trust agreement and in the distribution of
the trust proceeds. Stuart Baptist Church (the church) and
Steven Harbour and James Aubrey Boaz (collectively, the nephews)
filed answers and memoranda.
1
In the trust agreement, the grantor named Crestar Bank as
the trustee. SunTrust Bank is the successor to Crestar Bank.
2
In its memorandum, the church contended that it was
entitled to all the remaining trust assets. The church argued
that under the terms of the trust agreement, the shares of all
the grantor’s siblings lapsed because none of the siblings was
alive at the time of the husband’s death.
In their memorandum, the nephews contended that because
Harbour and Boaz survived the grantor, their shares did not
lapse under the plain language of the trust agreement. Thus,
the nephews argued, as the sole heirs of Harbour and Boaz, the
nephews were entitled to shares of the remaining trust assets.
After considering the pleadings, stipulated facts,
memoranda, and argument of counsel, the circuit court entered
final judgment holding that “the shares of the three deceased
siblings lapsed and should be added to the share to be delivered
to the [church].” In a letter opinion incorporated into its
final judgment order, the circuit court stated that the church’s
position was “more compelling [from] review [of] the instrument
in its entirety.”
On appeal, the nephews contend that the circuit court erred
in failing to adopt the plain meaning of the language in the
trust agreement, which unambiguously vested the remainder
interests of Harbour and Boaz at the time of the grantor’s
death, rather than at the time of the husband’s death. The
nephews argue that the grantor’s intent is clearly expressed in
3
the following language: “If any of my brothers or sister shall
fail to survive me, his or her share shall lapse and such share
shall be added to the trust fund for [the] church.” (Emphasis
added.) Based on this language, the nephews maintain that the
shares of Harbour and Boaz did not lapse because they both
survived the grantor.
The nephews alternatively argue that under the rule of
construction favoring the early vesting of estates, the
remainder interests of Harbour and Boaz vested at the grantor’s
death because the trust agreement did not manifest a clear
intent to postpone vesting. According to the nephews, the trust
language instructing that the remaining assets be distributed
upon the husband’s death related to the time of possession of
the remainder interests, rather than to the event when vesting
would occur.
In response, the church initially asserts a procedural bar,
contending that the nephews failed to argue in the circuit court
that the remainder interests of Harbour and Boaz vested at the
grantor’s death. Thus, the church maintains that the nephews’
argument is not properly before us on appeal. We disagree.
The record shows that the nephews’ argument to the circuit
court regarding the time of vesting was not materially different
from their present argument. In their answer filed in the
circuit court, the nephews stated that the remainder interests
4
of the grantor’s surviving siblings vested upon the grantor’s
death. Although the nephews did not use the term “vest” in
their trial memorandum later filed with the circuit court, the
nephews alleged that the trust language unambiguously provided
that if a sibling survived the grantor, then that sibling’s
share would not lapse but would be paid to the sibling or to the
sibling’s heirs upon the death of the husband. Based on this
record, we hold that the requirements of Rule 5:25 were
satisfied, because the circuit court was able to rule
intelligently on the same substantive argument that the nephews
advance here. See Nusbaum v. Berlin, 273 Va. 385, 402-03, 641
S.E.2d 494, 503 (2007); Riverside Hospital, Inc. v. Johnson, 272
Va. 518, 526, 636 S.E.2d 416, 420 (2006); Eure v. Norfolk
Shipbuilding & Drydock Corp., 263 Va. 624, 631-32, 561 S.E.2d
663, 667 (2002).
Addressing the merits of the nephews’ arguments, the church
asserts that under the plain terms of the trust, the qualifying
remainder shares vested at the time of the husband’s death when
the remaining trust assets were to be distributed. Based on
this reading of the trust language, the church contends that
because Harbour and Boaz died before the husband, those two
siblings did not acquire vested remainder shares in the trust
assets. Thus, the church contends that the general rule
favoring early vesting of remainder interests is inapplicable,
5
because the grantor clearly expressed her intent to delay
vesting of the remainder interests until the husband’s death.
We disagree with the church’s arguments.
In considering the language of a trust agreement, the
intent of the grantor controls. Huaman v. Aquino, 272 Va. 170,
174, 630 S.E.2d 293, 296 (2006); Clark v. Strother, 238 Va. 533,
539-40, 385 S.E.2d 578, 581 (1989). We initially ascertain the
grantor’s intent by reviewing the language that the grantor used
in the trust instrument. Huaman, 272 Va. at 174, 630 S.E.2d at
296; McKinsey v. Cullingsworth, 175 Va. 411, 414-15, 9 S.E.2d
315, 316 (1940). If that language is clear and unambiguous, we
will not resort to rules of construction, and we will not
consider the grantor’s apparent reasoning or motivation in
choosing the particular language employed. See Schmidt v.
Wachovia Bank, 271 Va. 20, 24, 624 S.E.2d 34, 37 (2006); Frazer
v. Millington, 252 Va. 195, 199, 475 S.E.2d 811, 814 (1996);
Boyd v. Fanelli, 199 Va. 357, 361, 99 S.E.2d 619, 622 (1957);
McKinsey, 175 Va. at 414-15, 9 S.E.2d at 316. Instead, in such
instances, we will apply the plain meaning of the words that the
grantor used. Landmark Communications, Inc. v. Sovran Bank, 239
Va. 158, 163-64, 387 S.E.2d 484, 487 (1990); McKinsey, 175 Va.
at 414-15, 9 S.E.2d at 316.
A vested remainder interest is an estate limited to a
certain person and upon the occurrence of a certain event,
6
imparting a present capacity to take possession should the
existing possession become vacant. Coleman v. Coleman, 256 Va.
64, 66-67, 500 S.E.2d 507, 509 (1998); Clark, 238 Va. at 541,
385 S.E.2d at 582; Disney v. Wilson, 190 Va. 445, 455, 57 S.E.2d
144, 149 (1950); 1 Frederick D.G. Ribble, Minor on Real Property
§ 709, at 927 (2d ed. 1928). Our jurisprudence recognizes a
general rule of construction favoring the early vesting of
remainder estates. Schmidt, 271 Va. at 24, 624 S.E.2d at 37;
Coleman, 256 Va. at 66, 500 S.E.2d at 508; First Nat’l Exchange
Bank v. Seaboard Citizens Nat’l Bank, 200 Va. 681, 687, 107
S.E.2d 408, 413 (1959). Under this early vesting rule, any
remainder interests in trust assets are construed as vesting at
the time of a grantor’s death, unless the intent to delay
vesting is clearly indicated by the trust language. See
Schmidt, 271 Va. at 24, 624 S.E.2d at 37; Coleman, 256 Va. at
66, 500 S.E.2d at 508. However, as with other rules of
construction, this rule has no application when the language of
a trust or will unambiguously demonstrates the grantor’s intent.
See Schmidt, 271 Va. at 24, 624 S.E.2d at 37; Landmark
Communications, 239 Va. at 163-64, 387 S.E.2d at 487; Clark, 238
Va. at 539-41, 385 S.E.2d at 582; Boyd, 199 Va. at 361, 99
S.E.2d at 622.
In examining the language before us, we conclude that the
language employed by the grantor in Section 7(C) is unambiguous.
7
Thus, we do not apply the early vesting rule but rely solely on
the words the grantor employed. 2 See Schmidt, 271 Va. at 24, 624
S.E.2d at 37; Landmark Communications, 239 Va. at 163-64, 387
S.E.2d at 487; Clark, 238 Va. at 539-41, 385 S.E.2d at 582;
Boyd, 199 Va. at 361, 99 S.E.2d at 622.
The language chosen by the grantor referenced her own
death, not the death of the husband, as the event determining
whether the share of a sibling would lapse. Thus, under this
language, a sibling’s share would lapse only if that sibling
failed to survive the grantor.
At the time of the grantor’s death, both Hazel B. Harbour
and James C. Boaz survived the grantor, thereby having the
present capacity to take possession of their remainder interests
should the husband’s existing possession become vacant.
Accordingly, under the trust language, those surviving siblings
received a vested remainder interest in the trust assets when
the grantor died. See Coleman, 256 Va. at 66-67, 500 S.E.2d at
509; Clark, 238 Va. at 541, 385 S.E.2d at 582-83; Disney, 190
Va. at 455, 57 S.E.2d at 149. Conversely, the share of Herbert
A. Boaz, who predeceased the grantor, lapsed and became part of
the trust assets included in the church’s remainder interest.
2
Because we do not employ the early vesting rule of
construction, we do not consider the church’s procedural
argument that the nephews failed to preserve for appeal the
argument that the early vesting rule is applicable in this case.
8
The church’s contrary position would require us to add the
phrase “and my husband” to the grantor’s directive that “[i]f
any of my brothers and sisters fail to survive me . . . .” A
court has no authority, however, to insert words into a trust
document. See Jackson v. Fidelity & Deposit Co., 269 Va. 303,
310, 608 S.E.2d 901, 904 (2005); Gasque v. Sitterding, 208 Va.
206, 212-13, 156 S.E.2d 576, 581 (1967). Under a plain language
analysis, a grantor’s intention must be determined from what the
grantor actually stated, not from what may be supposed the
grantor intended to say. See MW Builders of Kansas, Inc. v. VT
Properties, Inc., 246 Va. 255, 259, 435 S.E.2d 145, 147 (1993);
Carter v. Carter, 202 Va. 892, 896, 121 S.E.2d 482, 485 (1961);
McKinsey, 175 Va. at 414-15, 9 S.E.2d at 316.
We also observe that the trust language identifying the
husband’s death as the time when the remainder shares were to be
distributed fixed the time when the eligible siblings and the
church were to come into possession and enjoyment of their
remainder interests, not the time that those remainder interests
vested. See Disney, 190 Va. at 456, 57 S.E.2d at 149. Thus,
the division of the trust res following the husband’s death
merely secured the possession of the remainder interests that
had vested at the time of the grantor’s death. Id.
Finally, we find no merit in the church’s alternative
argument that the trust document read in its entirety shows that
9
the grantor intended, after providing for herself and for the
husband, to benefit the church and only those siblings who
survived the husband’s death. 3 This alternative argument ignores
the plain language of Section 7(C). In addition, the church has
failed to identify any language in the balance of the trust
document that would suggest any intent contrary to the plain
terms set forth in Section 7(C). Accordingly, we conclude that
the circuit court erred in holding that the interests of Harbour
and Boaz lapsed in favor of the church.
For these reasons, we will reverse the circuit court’s
judgment and remand the case for entry of an order distributing
the remainder interests of the parties in accordance with the
holding expressed in this opinion.
Reversed and remanded.
3
Based on this holding, we need not consider the church’s
procedural argument that the nephews invited the circuit court
to read and consider the trust agreement in its entirety.
10