Matthew Larson Trust Agreement , 2013 N.D. LEXIS 87 ( 2013 )

MARING, Justice,

concurring and dissenting.

[¶ 31] I concur in those parts of the majority opinion that set forth the correct law to be applied for reformation of trusts, and I concur in the majority’s conclusion that the trial court misapplied the law using contract law to determine the Clair-monts did not meet the statutory requirements for reformation of the trusts under N.D.C.C. § 59-12-15. I, however, dissent from the majority’s conclusion that the trial court’s findings of fact support our Court ordering reformation. I am of the opinion that the trial court did not make sufficient findings for this Court to apply the correct law and order reformation; this matter should be remanded to the trial court for it to make the necessary findings of fact and to apply the correct law as set forth in the majority opinion.

[¶ 32] We have held that determining a party’s intent and whether there is a mistake of fact or law is a question of fact. See Agnes M. Gassmann Revocable Living Trust, 2011 ND 169, ¶¶ 8-9, 802 N.W.2d 889. The trial court in the present case never made a finding under the clear and convincing evidence standard, as to the intent of the Clairmonts.

[¶ 33] The trial court also never made a finding whether the evidence in this case rises to the level of clear and convincing evidence that the Clairmonts’ intent was that only their lineal descendants would benefit from the trusts. We have held that “even when reviewing findings made under a clear and convincing evidence standard, determination of the credibility of witnesses is a function of the trial court. We accord great deference to the trial court’s determination of the credibility of witnesses and the weight to be given their testimony.” Gassmann, at ¶ 9 (citations omitted). The trial court in the present case did not make any findings as to the credibility of any of the trial witnesses.

[¶ 34] To support reformation of a trust, the petitioner must establish by clear and convincing evidence “(1) that a mistake of fact or law affected the expression, inclusion, or omission of specific terms of the document and (2) what the donor’s actual intention was in a case of mistake in expression or what the donor’s actual intention would have been in a case of mistake in the inducement.” Restatement (Third) of Property: Donative Transfers § 12.1 cmt. g (Tentative Draft No. 1,1995).

[¶ 35] The trial court must determine if there is clear and convincing evidence the Clairmonts, misapprehended the meaning of “brothers and sisters,” believed it meant full-blooded siblings and intended only their lineal descendants would benefit from the trusts. These are all factual findings for the trial court to make.

[¶ 36] The trial court in its memorandum opinion made the following findings of fact after its discussion of the law of interpretation and reformation of trusts and the testimony at trial:

FINDINGS OF FACT

1. On May 1, 1996, the Clairmonts were the grantors in the Matthew Larson Trust Agreement in which Matthew Larson was the beneficiary. Under the terms of that trust, if Matthew Larson died without a will, and with no surviving issue, Matthew Larson’s “brothers and sisters” became beneficiaries of the trust.

2. At the time of the creation of the May 1, 1996, trust, Greg was married to Cindy, the Clairmonts’ daughter, and Greg and Cindy had four children, Matthew, Elizabeth, Samuel, and Jared.

3. On December 1, 2009, the Clair-monts were the grantors in the Matthew J. Larson Irrevocable Retirement Trust II Agreement, in which Matthew Larson was the beneficiary. Under the terms of that trust, if Matthew Larson died without a will, with no surviving issue, and without a wife who had reached 60 years of age at the time of his death, Matthew Larson’s “brothers and sisters” became beneficiaries of the trusts.

- 4. At the time of the creation of the December 1, 2009 trust, Greg and Cindy were divorced. Greg had remarried and Greg and his second wife had two children, N.J.L. and L.M.L.

5. On March 4, 2011, Matthew Larson died unexpectedly at the age of 25.

6. At the time of his death, Matthew Larson had never married, had no issue, and had not written a will.

7. The term “brothers and sisters,” as used in the May 1, 1996 trust and the December 1, 2009 trust, includes N.J.L. and L.M.L. as they are brothers and sisters of the half blood.

8. The Clairmonts were unfamiliar with N.D. CentCode § 30.1-04-07 and its applicability to the May 1, 1996 trust and the December 1, 2009 trust. The Clairmonts, however, are charged with that knowledge under the rale in North Dakota that all persons are presumed to know the law.

9. At the time of the creation of the May 1, 1996 trust and the December 1, 2009 trust, the Clairmonts were not acting under a misapprehension of the law, i.e., the applicability of N.D. CentCode § 30.1-04-07 to the trusts.

10. The Clairmonts have failed to prove by clear and convincing evidence a mistake of law at the time of the creation of the trusts.

11. The Clairmonts never expressed to the scriveners of the May 1, 1996 trust and the December 1, 2009 trust, that they intended only linear [sic] descendants of the Clairmonts to benefit under the trust agreements.

12. The Clairmonts were not mistaken as to any present or past fact when they created the trusts of May 1, 1996 and December 1, 2009.

13. The fact that Greg divorced Cindy and had two children by a second wife was not a past or present fact when the May 1, 1996 trust was written and was a past or present fact well known to the Clairmonts when the December 1, 2009 trust was created.

14. The fact that Matthew Larson died at a young age, without a spouse, without issue, and without a will, was not a past or present fact when either trust was created.

15. The Clairmonts have failed to prove by clear and convincing evidence of a mistake of fact at the time of the creation of the trusts.

None of these findings of fact address the Clairmonts’ intent or their credibility. None of the findings address the credibility of the other witnesses who testified at trial including three scriveners of the various trusts: William Guy III, Greg Larson, and Sean Smith.

[¶ 37] The respondent, Greg Larson as parent and guardian of N.J.L. and L.M.L., argued to the trial court (1) the Clairmonts knew the trusts were irrevocable and they consequently relinquished any power to revoke, alter, amend, or terminate any trust provision; (2) no evidence existed that a mistake was made by the scriveners of the trust documents; (3) the Clairmonts knew of Matthew Larson’s half-siblings, yet never discussed the status of the half-siblings under the trusts with their attorneys; (4) under Trust II, Matthew Larson’s wife would receive the trust assets on his death, and she was not a lineal descendant; and (5) the language of the trusts grants Matthew Larson a general power of appointment to distribute the trust assets in whatever manner he thought appropriate at the time of his death. The respondent Greg Larson, parent and guardian of N.J.L. and L.M.L., argued Matthew Larson had the power to change the order of inheritance of the trust assets, but he did not do so. Matthew Larson did not opt out of intestate succession, which allowed for his half-siblings to inherit equally from him as would his full siblings.

[¶38] The evidence in the record includes the 1996 Matthew Larson Trust Agreement (Trust I), which included the provision for the general power of appointment: “If the Beneficiary shall die before receiving complete distribution of the trust, the Trustee shall distribute the balance of the trust as the Beneficiary designates under his or her Last Will and Testament or under any other instrument exercising this general power of appointment.” The record also contains a copy of the Matthew J. Larson Irrevocable Retirement Trust II Agreement. This trust provided a general power of appointment:

Upon the death of Matthew, the principal and any undistributed income of the trust estate shall be handled as follows:

a. As Matthew may appoint in a will that specifically refers to this general power of appointment.

(1) Matthew may appoint to the creditors of his estate.

(2) This power of appointment shall be exercisable by Matthew alone and in all events.

The trust also provided that Matthew Larson’s spouse could benefit from the trust assets:

(2) To the extent that Matthew shall not have exercised the foregoing power of appointment, then as follows:

(a) if Matthew is survived by descendants, then to, or for the benefit of, those descendants as provided in Paragraph 2 of this Article: or,

(b) if Matthew is not survived by descendants, then:

i. if Matthew is survived by a wife and his wife has attained age sixty (60) as of the date of Matthew’s death, then for the benefit of his wife pursuant to Paragraph 3 of this Articled]

The 1991 Clairmont GC Trust Agreement, although no longer in place, preceded Trust I and only allowed the grandchildren of William and Patricia Clairmont to benefit from the trust if Matthew Larson died before receiving complete distribution:

(3)If such grandchild shall die before receiving complete distribution of his or her trust share, the Trustee shall distribute the balance of his or her share to his or her surviving issue by right of representation; or, if such grandchild should die without issue, then to the other living grandchildren named above and to the issue of any deceased grandchild of mine named above by right of representation.

[¶ 39] Differing inferences can be drawn from this evidence and should be made by a trial court when determining the intent of the Clairmonts to limit the benefits of the trusts to lineal descendants. Instead, the majority takes it upon itself to review the transcript of the trial and to make its own findings based on the testimony. The majority, at ¶ 27, concludes: “[T]he evidence is clear from the Clair-monts’ testimony that they intended only Matthew Larson’s brothers and sisters who are the Clairmonts’ descendants would benefit from the trusts if Matthew Larson died without issue and without a will. No evidence exists disputing their testimony.” First, as I have pointed out, there does exist evidence contrary to the claim of the Clairmonts about their intent and, second, the Clairmonts’ intention is a question of fact for the trial court to decide.

[If 40] I would remand the matter to the trial court for it to decide the facts and to apply the correct law as set forth in the majority opinion.

[¶ 41] MARY MUEHLEN MARING