Catley v. Boles

[Cite as Catley v. Boles, 2020-Ohio-240.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
GEAUGA COUNTY, OHIO
SHAWN C. CATLEY, ADMINISTRATOR, : OPINION
ESTATE OF PATRICIA BOLES WARNES,
et al.,
Plaintiffs-Appellants, :
CASE NO. 2019-G-0198
- vs - :
THOMAS BOLES, :
Defendant-Appellee. :
Civil Appeal from the Geauga County Court of Common Pleas, Case No. 2017 M
000955.
Judgment: Reversed and remanded.
Paul J. Mooney, Law office of Paul J. Mooney, 6579 Wilson Mills Road, Mayfield Village,
Ohio 44143. (For Plaintiffs-Appellants).
Michael A. Wagner, Stevenson & Wagner, LLC, 137 Main Street, Suite 6, Chardon, Ohio
44024. (For Defendant-Appellee).
MARY JANE TRAPP, J.
{¶1} Appellants, Shawn C. Catley (“Mr. Catley”), administrator of the estate of
Patricia Warnes (“Mrs. Warnes”), and John Warnes (“Mr. Warnes”), personally
(collectively “appellants”), appeal the Geauga County Court of Common Pleas’ judgment
granting summary judgment in favor of appellee, Thomas Boles, individually and as
trustee of the Stanley Boles and Veachel Boles Revocable Living Trust (the “trust”)
(collectively referred to as “Mr. Boles”). The trial court found that since Mrs. Warnes did
not exercise her power of appointment to transfer her interest in the undistributed trust
property to an heir or other beneficiary, by the terms of the trust, her interest was
transferred to her co-beneficiary and brother, Mr. Boles. Thus, the trial court found, as a
matter of law, there was no genuine issue of material fact remaining for determination by
the trier of fact, and Mr. Boles was entitled to transfer the entire property held in trust into
his own name.
{¶2} Appellants raise one assignment of error. Specifically, they argue the trial
court erred in determining Mr. Boles was entitled to prevail as a matter of law because
the trial court did not consider whether appellants had standing in this case to protect the
vested interest of Mrs. Warnes under the terms of the trust.
{¶3} This case presents the frequent unintended consequences of the so-called
“trust mill” living trusts, which are most times unnecessary to accomplish the goals of a
simple estate plan and unfortunately contain traps for those clients and attorneys alike,
who are not well-versed in the intricacies of trust law. This case exemplifies the pitfalls
of a “one size fits all” “cookie-cutter” trust document, exacerbated by sloppy blank-filling
that inserts a misspelled name of a beneficiary. The evidence before us indicates that
but for this mistake in properly identifying Mrs. Warnes, the deed meant to distribute the
real estate from the trust to the beneficiaries would have been signed by both trustees
and recorded, thus avoiding a costly lawsuit.
{¶4} This trust document is especially problematic because of the conflicting
provisions regarding the disposition of trust assets after the death of the surviving spouse.
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These conflicting provisions preclude a finding that as a matter of law Mrs. Warnes’ estate
has no interest in the subject real property.
{¶5} Moreover, it appears that there are genuine issues of material fact left to be
determined by a trier of fact as to whether the delivery of a deed signed by Mr. Boles, as
trustee, to Mrs. Warnes for her signature before her death in order to complete the
distribution of the real property from the trust to Mr. Boles and Mrs. Warnes, individually,
constitutes a final delivery of the trust res to Mrs. Warnes, thus negating the effect of the
divestment clause.
{¶6} Thus, we find Mr. Catley’s argument to have merit in part. The evidence
submitted by the parties on summary judgment reveals Mr. Boles sent Mrs. Warnes a
deed transferring their interests from the trust to them individually. Mr. Boles executed
and delivered the deed to Mrs. Warnes for her signature.
{¶7} Further, Mr. Boles’ motion for summary judgment did not raise and the court
did not address the remaining claims for relief presented in the case, i.e., a breach of
fiduciary duties and other equitable relief. We find that Mr. Catley’s pleadings were
sufficient to give him standing, both in his representative and individual capacity, to go
forward with the claims for relief for action for land, quiet title, and partition. Thus, we
reverse and remand the judgment of the Geauga County Court of Common Pleas for
further proceedings in accordance with this opinion.
Substantive and Procedural History
{¶8} Stanley and Veachel Boles, the father and mother, respectively, of Mrs.
Warnes and Mr. Boles, created the revocable living trust at issue on April 1, 2004. The
only asset in the trust was their residential property located in Chardon Township, Ohio.
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The trust provided that upon the death of the surviving spouse, the trust estate would be
divided into equal shares and held for the benefit of the named beneficiaries and co-
trustees, their children, Mrs. Warnes and Mr. Boles.
{¶9} Stanley Boles survived his spouse, and then he passed away on October
20, 2011. Both beneficiaries had residences on the property. Mrs. Warnes, with her
husband, Mr. Warnes, lived in one home, and Mr. Boles in the other.
{¶10} The evidence submitted by the parties on summary judgment reflects that
in March of 2017, both of the beneficiaries were represented by attorneys and were in the
process of transferring the real estate from the trust to themselves individually. Mr. Boles’
former attorney sent Mrs. Warnes a deed signed by Mr. Boles as co-trustee that was
intended to be a final distribution transferring their joint interests out of the trust. Mrs.
Warnes received the deed but did not sign it because her name was misspelled (which
notably, is also misspelled in the trust agreement itself as “Mrs. Warner”). She made
several attempts, both personally and with the assistance of her daughter-in-law, Christy
J. Catley (“Mrs. Catley”), to contact Mr. Boles’ former attorney to have the deed corrected
but was unsuccessful since he had apparently retired from the practice of law. A message
left at his office requesting a return call from the attorney was never returned.
{¶11} Mrs. Warnes passed away approximately two and half months later, on May
24, 2017, without appointing her interest in the trust through a will or any other written
instrument. Subsequently, on July 27, 2017, as the remaining sole beneficiary, Mr. Boles
transferred the property into his name.
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{¶12} Mr. Catley, as representative of Mrs. Warnes’ estate, and Mr. Warnes,
personally, filed the instant action against Mr. Boles in the lower court, alleging claims of
quiet title, partition, action for land, breach of fiduciary duty, and other equitable relief.
Motion for Summary Judgment
{¶13} Mr. Boles filed a motion for summary judgment. Specifically, he argued that
Mrs. Warnes’ interest was divested upon her death pursuant to the terms of the trust. Mr.
Boles further argued that because of this divestment, appellants could not prove a legal
interest in the subject real property to make a claim under R.C. 5303.03 (action for land),
and that any interest that appellants may have in the real property is not a legal
possessory claim under R.C. 5303.01 (quiet title); hence, they had no standing to assert
their claims for relief. Appellants’ prayer for equitable relief was not addressed in any
way.
{¶14} The evidentiary material attached to the motion for summary judgment
consisted of a copy of the trust and deposition transcripts for Mr. Warnes and Mr. Catley.
Brief in Opposition to Summary Judgment
{¶15} In turn, appellants filed Mr. Boles’ deposition transcript, in which he
acknowledged it was his parents’ intent that he and his sister share equally in the real
estate property that was held in the trust, and a brief in opposition to Mr. Boles’ motion
for summary judgment. Appellants argued that Mr. Catley, as the representative of Mrs.
Warnes’ estate, and Mr. Warnes, personally, are in actual possession of the property
and, thus, had standing to bring the claims. They contended that the real property was
not immediately distributed to the vested beneficiaries upon Stanley Boles’ death but
delayed for several years because Mrs. Warnes and Mr. Boles disagreed as to how the
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real property should be divided into two equal shares. They could not resolve, among
other issues, the costs of a survey for a lot split, the cost of a new driveway (the two
residences shared one driveway), and the cost of a new well. The parties had been in
the midst of a final distribution when Mrs. Warnes passed away. Thus, she maintained
her vested interest at the time of her death.
{¶16} The evidentiary material attached to appellants’ response in opposition to
summary judgment consisted of the following exhibits:
{¶17} Exhibit 1 was a June 22, 2017 letter (approximately one month after Mrs.
Warnes’ death) from Mr. Boles’ former attorney to Mr. Boles that requested he sign a
deed to transfer his “parents’ property into [his] name as the Successor Trustee” and
sign an enclosed “Affidavit of Successor Trustee.” The letter went on to advise Mr.
Boles that: “You will also need to know that upon rereading article V of your parents’
trust, it would appear that title of this property was meant to be transferred to you and
your sister immediately upon the death of your father, leaving your deceased sister
owning 1/2 of the property. It would appear that under paragraph D the property would
only go to you if your sister was deceased before your father’s death on October 20,
2011. That of course is not what I thought might happen earlier, but as sole Successor
Trustee, your [sic] will now have that ability to actually divide the property through a lot
split.”
{¶18} Exhibit 2 was a letter, dated March 6, 2017, from Mr. Boles’ former
attorney to Mrs. Warnes, informing her that under the terms of the trust, she and Mr.
Boles were named co-successor trustees and that the property should be transferred
into both of their names. The attorney enclosed a prepared warranty deed to transfer
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the property into their joint names, which had been signed by Mr. Boles. The letter and
prepared warranty deed as noted above, however, misspelled Mrs. Warnes’ name as
“Patricia Warner.”
{¶19} Exhibit 3 was an affidavit from Mrs. Catley attesting that Mrs. Warnes
received the signed warranty deed. Mrs. Warnes was upset because her name was
misspelled on the deed (and letter) as Patricia “Warner.” Mrs. Warnes indicated to Mrs.
Catley that she wanted to sign the deed although the name was misspelled, and Mrs.
Catley indicated to Mrs. Warnes that she would call the attorney’s office. Both she and
Mrs. Catley attempted to contact the attorney, but each was informed he had retired and
his office failed to respond further.
{¶20} Exhibit 4 was an affidavit from the attorney who represented Mrs. Warnes
upon the passing of Stanley Boles. This attorney attested that in March of 2017, Mr.
Boles and Mrs. Warnes were in negotiations to transfer the real estate from the trust to
themselves as beneficiaries. On March 6, 2017, Mr. Boles’ attorney sent a letter with a
deed directly to Mrs. Warnes without his knowledge. Due to her failing health, Mrs.
Warnes never signed the deed. Mrs. Warnes attorney attested that had he received the
communication and deed from opposing counsel, he would have advised Mrs. Warnes
to sign the deed to “complete the transaction that was negotiated and anticipated by my
client.”
Reply to Plaintiffs’ Opposition to Motion for Summary Judgment
{¶21} Mr. Boles filed a reply to appellants’ brief in opposition to motion for
summary judgment, arguing that appellants ignored the law regarding standing in trust
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disputes and that because Mrs. Warnes failed to exercise her power of appointment,
her vested interest divested upon her death.
The Trial Court’s Ruling
{¶22} The trial court found the following terms of the trust controlling:
{¶23} Art. V, “Dispositive Provisions After Death of Surviving Spouse”:
{¶24} “(C) ‘Distribution of Remainder of Trust Estate:’ Upon the death of the
Surviving Spouse, the Trustee shall, after paying or reserving for all amounts payable, as
provided in ARTICLE V PARAGRAPHS A and B, divide the remainder of the trust estate
into shares set forth as follows and shall hold, administer and distribute each share
according to the provisions of ARTICLE V PARAGRAPH E hereinbelow:
{¶25} “PATRICIA WARNER [sic] – A ONE-HALF (1/2) SHARE
{¶26} “THOMAS BOLES – A ONE-HALF (1/2) SHARE.
{¶27} “(D) Distribution of Deceased Beneficiary’s Share. In the event a
beneficiary named in Paragraph C of this ARTICLE V is not then living, the share of such
deceased beneficiary shall be distributed to the surviving named beneficiary per capita.”
{¶28} “(E) ‘Distributions of Income and Principal:’ (4) Upon the death of a
beneficiary for whom a trust is then held prior to final distribution to such beneficiary, if
said decedent is survived by issue, that portion of such trust (including both principal and
any accrued or undistributed income) which is not exempt from the generation-skipping
transfer tax imposed by Chapter 13 of the Internal Revenue Code of 1986 (or any
successor provisions) shall be distributed to such one or more persons or entities,
including the decedent’s estate, and on such terms and conditions, either outright or in
trust, as the decedent shall have appointed by the last dated instrument delivered to the
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Trustee, including a Will (whether or not admitted to probate), specifically referring to and
exercising this power of appointment. Any of such portion of the trust as is not appointed,
together with that portion of the trust that is exempt from the generation-skipping transfer
tax, shall be distributed according to the terms of ARTICLE V PARAGRAPH D.
hereinabove as though said beneficiary had predeceased the Surviving Spouse.
(Emphasis added.)
{¶29} The trial court concluded that Mr. Boles was entitled to summary judgment
since the “record is wholly deficient of any evidence that Patricia Warnes appointed
anyone through her will or other written instrument to transfer her interest in the Trust to
her own heirs or beneficiaries. The Trust itself is specific that absent such an
‘appointment’ by Warnes, her interest in the trust transfers to her co-beneficiary, the
Defendant. While it may well be true that the Defendant had, prior to Warnes death,
acknowledged and recognized Warnes equal interest in the property, and that the
Defendant even took steps to accomplish putting half of the Trust property into Warnes’
name, the harsh reality is that no such split or other resolution of their joint ownership
ever occurred prior to her death, resulting in the Trust language controlling the outcome.
Defendant was thereafter entitled to transfer the property into his sole name. Whether
Summary Judgment for the Defendant results in this matter because the Plaintiffs lack
‘standing’ or because the terms of the Trust simply dictate this conclusion regardless of
Plaintiffs’ standing, the conclusion is the same: the Defendant prevails as a matter of
law. This Court cannot rewrite the terms of the Trust.”
{¶30} Appellants raise one assignment of error on appeal:
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{¶31} “The trial court committed prejudicial error in granting Defendants-
Appellees’ Motion for Summary Judgment.”
Summary Judgment Standard of Review
{¶32} We review de novo a trial court's order granting summary judgment. Henry
v. Kohl’s Dept. Stores, Inc., 11th Dist. Lake No. 2018-L-113, 2019-Ohio-2094, ¶16, citing
Sabo v. Zimmerman, 11th Dist. Ashtabula No. 2012-A-0005, 2012-Ohio-4763, ¶9. “A
reviewing court will apply the same standard a trial court is required to apply, which is to
determine whether any genuine issues of material fact exist and whether the moving party
is entitled to judgment as a matter of law.” Id.
{¶33} “Since summary judgment denies the party his or her ‘day in court’ it is not
to be viewed lightly as docket control or as a ‘little trial’. The jurisprudence of summary
judgment standards has placed burdens on both the moving and the nonmoving party.
In Dresher v. Burt [75 Ohio St. 3d 280 (1996)], the Supreme Court of Ohio held that the
moving party seeking summary judgment bears the initial burden of informing the trial
court of the basis for the motion and identifying those portions of the record before the
trial court that demonstrate the absence of a genuine issue of fact on a material element
of the nonmoving party's claim. The evidence must be in the record or the motion cannot
succeed. The moving party cannot discharge its initial burden under Civ.R. 56 simply by
making a conclusory assertion that the nonmoving party has no evidence to prove its
case but must be able to specifically point to some evidence of the type listed in Civ.R.
56(C) that affirmatively demonstrates that the nonmoving party has no evidence to
support the nonmoving party's claims.” Id. at ¶17, quoting Welch v. Ziccarelli, 11th Dist.
Lake No. 2006-L-229, 2007-Ohio-4374, ¶40.
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{¶34} “If the moving party fails to satisfy its initial burden, the motion for summary
judgment must be denied. If the moving party has satisfied its initial burden, the
nonmoving party has a reciprocal burden outlined in the last sentence of Civ.R. 56(E) to
set forth specific facts showing there is a genuine issue for trial. If the nonmoving party
fails to do so, summary judgment, if appropriate shall be entered against the nonmoving
party based on the principles that have been firmly established in Ohio for quite some
time in Mitseff v. Wheeler (1988), 38 Ohio St. 3d 112.” Id. at ¶18, quoting Welch at ¶40.
{¶35} Further, the Supreme Court of Ohio in Dresher went on to hold that when
neither the movant or the respondent provides evidentiary materials demonstrating that
there are no material facts in dispute, the movant is not entitled a judgment as a matter
of law, as the moving party bears the initial responsibility of informing the trial court of the
basis for the motion "and identifying those portions of the record which demonstrate the
absence of a genuine issue of fact on a material element of the nonmoving party's claim."
(Emphasis sic.) Id. at 296.
{¶36} In Mitseff, supra, the court held that a party seeking summary judgment
must specifically delineate the basis upon which summary judgment is sought in order to
allow the opposing party a meaningful opportunity to respond. (Emphasis added.) Id. at
syllabus. Accordingly, the court made clear that the party moving for summary judgment
bears the burden of affirmatively demonstrating with respect to every essential issue in
each count of the complaint that there is no genuine issue of fact, even with regard to the
issues on which the plaintiffs would have the burden of proof should the case go to trial.
Id. at 115. Thus, when the movant fails to address a claim for relief in the motion, the
respondent is not obliged to argue that issue. Id. at 116.
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Law and Analysis
{¶37} Appellants argue that the trial court erred in granting Mr. Boles’ motion for
summary judgment because the only issue he raised in his motion was whether
appellants had standing to “protect the vested interest of Patricia Warnes in the trust
asset.”
{¶38} A review of Mr. Boles’ motion for summary judgment reveals he actually
argued there were no genuine issues of material fact remaining for determination by the
trier of fact for three reasons: (1) as a preliminary matter, appellants lacked standing to
bring an action to quiet title pursuant to R.C. 5303.01, and/or (2) a petition in action for
land pursuant to R.C. 5303.03; and (3) that under the terms of the trust, Mrs. Warnes’
vested interest in the real property was divested upon her death leaving Mr. Boles as
the sole beneficiary of the trust.
{¶39} The trial court did not base its ruling on appellants’ alleged lack of
standing to bring claims pursuant to R.C. 5303.01 or R.C. 5303.03. Rather, the trial
court found that as a matter of law, the terms of the trust stated that Mr. Boles was the
sole beneficiary and trustee of the trust upon Mrs. Warnes’ unfortunate passing before
the final distribution of the trust since she failed to exercise her power of appointment.
{¶40} We will analyze the standing question following a de novo standard of
review.
Standing
{¶41} The first issue posed by appellants is whether they properly set forth an
action to quiet title and/or an action in ejectment, and thus, had standing to pursue the
underlying case.
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{¶42} “Standing exists only when (1) the complaining party has suffered or has
been threatened with direct and concrete injury in a manner or degree different from
that suffered by the public in general, (2) the act in question caused the injury, and (3)
the relief requested will redress the injury.” (Citations omitted.) Cartwright v. Batner, 2d
Dist. Montgomery No. 25938, 2014-Ohio-2995, ¶46.
{¶43} Moreover, “a court of common pleas has authority both in law and equity
to ascertain legal title to land.” (Emphasis added.) Sturgell v. Bott, 12th Dist. Fayette
No. CA90-09-014, 1991 WL 84026, *2 (May 20, 1991), citing Avery v. Avery, 107 Ohio
App. 199 (6th Dist.1958). “This jurisdiction may be invoked by an action to quiet title,
pursuant to R.C. 5303.01, or an action for the recovery of real property (ejectment)
pursuant to R.C. 5303.03.” Id.
Action to Quiet Title Pursuant to R.C. 5303.01
{¶44} Pursuant to R.C. 5303.01, entitled “Action to quiet title,” “[a]n action may
be brought by a person in possession of real property, by himself or tenant, against any
person who claims an interest adverse to him, for the purpose of determining such
adverse interest. Such action may be brought also by a person out of possession,
having, or claiming to have, an interest in remainder or reversion in real property,
against any person who claims to have an interest therein, adverse to him, for the
purpose of determining the interests of the parties therein.” (Emphasis added.)
{¶45} “The statute expressly allows a person in possession, ‘by himself * * *,’
to bring an action to quiet title.” (Emphasis added.) Sturgell at *2.
{¶46} A review of appellants’ amended complaint reveals that they adequately
pleaded an action to quiet title. Under the alleged facts, appellants stated that Mr.
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Warnes has resided on and been in possession of the property prior to 2005, when he
and Mrs. Warnes moved into her parents’ residence on the real property. Mr. Boles
lived in the second house on the property. After Mr. and Mrs. Boles passed away, the
Warnes continued to live in the one house on the real property and to pay the real
estate taxes of the property. Thus, they alleged both Mrs. Warnes’ estate and Mr.
Warnes have an interest in the real property.
{¶47} Under Count Two, “Quiet Title,” appellants pleaded that they have actual
possession of the property and an interest in the remainder of Mrs. Warnes’ vested
interest. Thus, they have sufficient possession to maintain an action to quiet title. Id.
See also Paden v. Miller, 5th Dist. Guernsey No. 00CA29, 2001 WL 1782890, *3 (Feb.
8, 2001) (R.C. 5303.01 requires either possession or a claim of an interest in remainder
or reversion); NBRT Properties, Inc. v. ATFH Real Property, LLC, 7th Dist. Mahoning
No. 17 MA 0136, 2018-Ohio-4724, ¶30 (Appellants did not have standing to bring a
quiet title action because they did not have actual or constructive possession or an
interest in remainder or reversion in the property at issue).
Action for Land Pursuant to R.C. 5303.03
{¶48} Pursuant to R.C. 5303.03, in a “Petition in action for land,” “* * * it is
sufficient if the plaintiff states in his petition that he has a legal estate therein and is
entitled to the possession thereof, describing it with such certainty as to identify the
property, and that the defendant unlawfully keeps him out of the possession. It is not
necessary to state how the plaintiff’s estate or ownership is derived.”
{¶49} A review of Count One, “Action for Land,” reveals appellants also
adequately pleaded that Mr. Warnes is currently in possession of the real property and
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has been in possession prior to 2005, along with Mrs. Warnes, who now has an interest
through her estate. Appellants further alleged that they have a legal estate in the real
property, are entitled to possession of the property, and that Mr. Boles is unlawfully
attempting to keep them out of possession.
{¶50} We find that such averments are sufficient under the rules of notice
pleading to allege a claim for relief for land pursuant to R.C. 5303.03.
{¶51} Thus, at the very least, under the facts of this case, it appears appellants
have standing because they sufficiently pleaded interests – actual possession and a
legal interest – in their amended complaint.
Vested Interest Capable of Divestment
{¶52} The third question posed by Mr. Boles in his motion for summary judgment
is whether as a matter of law, by the terms of the trust, Mrs. Warnes’ vested interest
was subject to defeasance upon her passing because she failed to appoint, either
through her will or another written document, a beneficiary.
{¶53} “When construing provisions of a trust, our primary duty is to ‘ascertain,
within the bounds of the law, the intent of the * * * settlor.’” McCoy v. Witzleb, 2d Dist.
Greene No. 2005 CA 25, 2005-Ohio-6678, ¶24, quoting In re Brooke, 82 Ohio St. 3d
553, 557 (1998), quoting Domo v. McCarthy, 66 Ohio St. 3d 312, 314 (1993). “The
settlor's intention is determined by considering the language used in the trust, reading
all the provisions of the trust together.” (Citation omitted.) Id., citing Mumma v.
Huntington Natl. Bank of Columbus, 9 Ohio App. 2d 166, 169 (10th Dist.1967). When
the terms of the trust are not ambiguous, the intent of the settlor can be determined by
the express language of the trust. (Citation omitted.) Id. Words used in the trust
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instrument are presumed to be used according to their common, ordinary meaning.
(Citation omitted.) Id.
{¶54} A vested interest is subject to complete defeasance or divestment upon
the occurrence of a named event. Natl. City Bank v. Beyer, 89 Ohio St. 3d 152, 157
(2000), citing Papiernik v. Papiernik, 45 Ohio St. 3d 337, 343 (1989). Stated differently,
“[i]t is thus clear that the term ‘defeasance’ includes both the process by which an
interest expires by its own term before it ever becomes possessory, and the process by
which an interest is cut short by reason of some executory limitation or by the exercise
of some power.” In re Trust of Findeiss, 5th Dist. Muskingum No. CT2003-0050, 2005-
Ohio-2985, ¶20, quoting Papiernik at 343, quoting 1 Simes & Smith, The Law of Future
Interests (2 Ed.1956) 95, Section 113.
{¶55} The trust agreement, pursuant to Article V, “Dispositive Provisions After
Death of Surviving Spouse,” granted Mrs. Warnes and Mr. Boles as the beneficiaries,
an equal one-half share vested interest upon the death of the surviving spouse.
{¶56} Their interest, however, pursuant to Article V, Par. E(4), was subject to
complete defeasance if they failed to appoint a beneficiary and passed away before a
final distribution.
{¶57} In relevant part, Article V, Par. E(4) states: “[u]pon the death of a
beneficiary * * * prior to final distribution to such beneficiary * * * that portion of such
trust * * * shall be distributed to such one or more persons or entities, including the
decedent’s estate, and on such terms and conditions, either outright or in trust, as the
decedent shall have appointed by the last dated instrument delivered to the Trustee,
including a Will (whether or not admitted to probate), specifically referring to and
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exercising this power of appointment. Any of such portion of the trust as is not
appointed * * * shall be distributed to the terms of ARTICLE V PARAGRAPH D.
hereinabove as though said beneficiary had predeceased the Surviving Spouse.”
(Emphasis added.)
{¶58} By the terms of the trust, Mrs. Warnes was required to appoint, either by
will or another written instrument, a successor beneficiary before the final distribution of
her interest. There is no question that she died intestate and that there is no other
written instrument naming a beneficiary to her interest. Thus, Mrs. Warnes had a
vested interest subject to complete defeasance, which interest may have expired
because she did not exercise her power of appointment. See Natl. City Bank at 158
(where the specific language of the testamentary trust at issue directed that the interest
of a beneficiary in his or her share was divested should he or she die before the share
was fully distributed to him or her, and directed how that share was to be gifted over to
his or her other family members).
{¶59} But our analysis cannot begin and end with this provision of the trust.
Ambiguities in the Trust Provisions Regarding Vesting & Distribution
{¶60} The agreement is contradictory as to the vesting and distribution of trust
assets after the death of the last parent:
{¶61} Art. V, Par. C provides the trust assets were to remain in trust (1/2 for Mrs.
Warnes; 1/2 for Mr. Boles): “(C) ‘Distribution of Remainder of Trust Estate:’ Upon the
death of the Surviving Spouse, the Trustee shall, after paying or reserving for all
amounts payable, as provided in ARTICLE V PARAGRAPHS A and B, divide the
remainder of the trust estate into shares set forth as follows and shall hold, administer
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and distribute each share according to the provisions of ARTICLE V PARAGRAPH E
hereinbelow:
{¶62} “PATRICIA WARNER [sic] – A ONE-HALF (1/2) SHARE
{¶63} “THOMAS BOLES – A ONE-HALF (1/2) SHARE.”
{¶64} Art. V, Par. E(1) and E(2) address distributions of income and principal
and apply whether or not the beneficiaries have reached the age of 21.
{¶65} However, Art. V. Par. E(6) says the trustee shall distribute a beneficiary’s
share “free of trust” when he or she reaches age 21, subject to Art. VII, Par. S.
{¶66} It appears Mr. Boles and Mrs. Warnes were attempting to effectuate a
distribution of their respective shares from the trust. Art. VII, Par. S says the trustee can
withhold distribution if there are conflicting claims. From the evidentiary materials
before us, that appears to be the case here. Mr. Boles and Mrs. Warnes, through
counsel, were negotiating the terms of distributing the real property. This provision
further states that the beneficiaries’ interests remained “vested” during this withholding
period. However, Art. V, Par. (E)4 provides for a divestment when a beneficiary dies
before final distribution if the beneficiary did not exercise her power of appointment.
Was There a Final Distribution?
{¶67} We disagree, then, with the trial court that the terms of the trust are
unambiguous and controlling given these noted ambiguities and given the evidence of
the mutual intent of Mr. Boles and Mrs. Warnes to transfer their interests from the trust
by a deed signed and prepared by Mr. Boles’ attorney, signed by Mr. Boles, and
delivered to Mrs. Warnes shortly before Mrs. Warnes’ untimely death.
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{¶68} Whether this was a “delivery” of a deed sufficient to constitute a final
distribution and vesting of title in Mrs. Warnes’ name individually before her death is a
question of material fact that remains to be determined.
{¶69} “A deed must be delivered to be operative as a transfer of ownership of
land. Kniebbe v. Wade (1954), 161 Ohio St. 294, 297. ‘Delivery imports transfer of
possession or the right to possession of the instrument with the intent to pass title as a
present transfer. It is essential to delivery that there not only be a voluntary delivery, but
there must also be an acceptance thereof on the part of the grantee, with the mutual
intention of the parties to pass title to the property described in the deed.’ (Emphasis
deleted.) Id. at 297. If the grantee possesses the deed, then a presumption of delivery
exists. See id. However, manual delivery is not essential. See Dukes v. Spangler
(1878), 35 Ohio St. 119; Lessee of Shirley v. Ayres (1846), 14 Ohio 307, paragraph one
of the syllabus (‘It is not essential to the validity of a deed, that it be actually delivered
to, or ever pass into the hands of the grantee’). Instead, ‘“the fact of delivery may be
found from the acts of the parties preceding, attending, and subsequent to the signing,
sealing, and acknowledgment of the instrument.”’ In re Kusar's Estate (1965), 5 Ohio
Misc. 23, 33, quoting Dukes at paragraph one of the syllabus.” Goddard v. Goddard,
192 Ohio App. 3d 718, 2011-Ohio-680, ¶28 (4th Dist.).
{¶70} “Recording a deed perfects delivery. See Candlewood Lake Assn. v.
Scott, 10th Dist. Franklin No. 01AP–631, 2001 WL 1654288, (Dec. 27, 2001), citing
Romaniw–Dubas v. Polowyk, 8th Dist. Cuyahoga No. 75980, 2000 WL 1144784 (Aug.
10, 2000). However, ‘a deed does not have to be recorded to pass title. Whether or not
recorded, a deed in Ohio passes title upon its proper execution and delivery, so far as
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the grantor is able to convey it.’ Wayne Bldg. & Loan of Wooster v. Yarborough, 11
Ohio St. 2d 195, 212 (1967). Furthermore, ‘[a]ctual manual delivery of a deed is not
always required to effectuate the grantor's intention to deliver; the filing and recording
thereof being prima facie evidence of delivery, in the absence of any showing of fraud.’
Behymer v. Six, 5th Dist. Nos. Morgan CA02–006, 2002-Ohio-6403, ¶13, citing Frank v.
Barnes, 40 Ohio App. 328, 337 (1931), citing Lessee of Mitchell v. Ryan, 3 Ohio St.
377.” Id. at ¶29.
{¶71} Both parties agree it was the settlors’ intent that brother and sister share
equally in the property, and that at the time of Mrs. Warnes untimely passing, she and
Mr. Boles were represented by attorneys and in the process of a final distribution. In
fact, Mr. Boles sent Mrs. Warnes a signed deed transferring their interests from the trust
to each of them individually. It appears from the evidence submitted on summary
judgment, specifically the affidavit of Mrs. Catley, that Mrs. Warnes wanted to sign but
was troubled by the clerical error in the misspelling of her name and that she and Mrs.
Catley attempted to contact the attorney who drafted the deed to get the deed
corrected.
{¶72} Approximately one month after Mrs. Warnes passed away, Mr. Boles
received a letter from his former attorney accompanied by a deed to transfer the
property into Mr. Boles’ name as “Successor Trustee.” The attorney went on to advise
Mr. Boles that “upon rereading article V of your parents’ trust, it would appear that title
of this property was meant to be transferred to you and your sister immediately upon the
death of your father, leaving your deceased sister owning 1/2 of the property. It would
appear that under paragraph D the property would only go to you if your sister was
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deceased before your father’s death on October 20, 2011. That of course is not what I
thought might happen earlier, but as sole Successor Trustee, your [sic] will now have
that ability to actually divide the property through a lot split.”
{¶73} Further, the terms of the trust provide that if there are conflicting claims, as
there were in this case, the parties’ interests remain vested. Pursuant to Art. VII, Par. S,
the trustee may “withhold from distribution, in the Trustee’s discretion, at the time for
distribution of any property in this trust, without the payment of interest, all or any part of
the property, so long as the Trustee shall determine, in the Trustee’s discretion, that
such property may be subject to conflicting claims, to tax deficiencies, or to liabilities,
contingent or otherwise, properly incurred in the administration of the trust estate. The
Trustee is under no obligation to make such retention’s [sic] and shall be under no
liability whatever for the exercise of the failure to exercise such discretion. The interests
of the beneficiaries hereunder shall be vested regardless of whether or not such assets
are so retained * * *.” (Emphasis added.)
{¶74} Thus, there remains for determination a question of material fact whether
Mr. Boles’ delivery of a signed deed to Mrs. Warnes constituted a final distribution
given the parties’ seemingly mutual intent and agreement to transfer their interests from
the trust to themselves individually. If so, Mrs. Warnes’ vested interest did not divest
upon her passing without the exercise of her appointment power and is part of her
estate.
{¶75} As the English philosopher, Thomas Hobbes observed: “For where no
covenant hath preceded, there hath no right been transferred, and every man has right
to everything and consequently, no action can be unjust. But when a covenant is made,
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then to break it is unjust and the definition of injustice is no other than the not
performance of covenant.” Leviathan, Chapter 15 (1651). “‘Justice’ and ‘equity’ are
substantially equivalent terms, if not synonymous. Equity imputes an intention to fulfill
and obligation.” Brannon v. Adkins, 7 Ohio Misc. 18, 20 (C.P.1966).
{¶76} In addition, inasmuch as we have determined that appellants’ pleadings
were sufficient to survive a standing challenge and the fact that Mr. Boles did not place
at issue in his motion for summary judgment appellants’ claims breach of fiduciary
duties and other equitable relief, those claims, and the claims for action for land, quiet
title, and partition remain for further determination.
{¶77} Thus, we reverse and remand the judgment of the Geauga County Court
of Common Pleas for further proceedings in accordance with this opinion.
MATT LYNCH, J., concurs.
TIMOTHY P. CANNON, P. J., concurs in part and concurs in judgment only in part, with
a Concurring Opinion.
_____________________________
TIMOTHY P. CANNON P.J., concurring in part and concurring in judgment only in part.
{¶78} I concur in the judgment of the majority that appellants have standing. I
concur in the balance of the judgment as well but would reach the conclusion with a more
direct analysis. Article V, para. E(6) should be dispositive of appellants’ claims. That
provision states as follows:
6. Subject to a possible retention of some or all of the assets of the
trust estate by the Trustee pursuant to ARTICLE VII PARAGRAPH
S., whenever any beneficiary for whom a trust is then held shall have
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attained the age of twenty-one (21) years, the Trustee shall
distribute to such beneficiary, free of trust, the entire principal and
accumulated income, if any, of his or her separate trust.
{¶79} Stanley Boles died on October 20, 2011. It was the duty of the trustees of
his trust to transfer to both beneficiaries any interest they had in the trust because each
was over 21 years of age. The trustees failed in that duty. There was never a need for
Patricia Warnes to exercise a power of appointment because her interest should have
been transferred to her in 2011. Patricia did not die until May of 2017. I would hold that,
because the trustees failed in their duty to transfer Patricia’s interest immediately after
the death of Stanley, her interest was not subject to divestment.
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