Angela K. Hudson v. UMB Bank, N.A., Trustee of A.B. Hudson Testamentary Trust , 447 S.W.3d 714 ( 2014 )

In the
Missouri Court of Appeals
Western District
ANGELA K. HUDSON, ET AL., )
)
Appellants, ) WD77008
)
v. ) OPINION FILED: August 26, 2014
)
UMB BANK, N.A., TRUSTEE OF A.B. )
HUDSON TESTAMENTARY TRUST, )
)
Respondent. )
Appeal from the Circuit Court of Jackson County, Missouri
The Honorable Kathleen A. Forsyth, Judge
Before Division Four: Alok Ahuja, Chief Judge, Presiding, Cynthia L. Martin, Judge and
Randall R. Jackson, Special Judge
The lifetime income beneficiaries of four testamentary trusts appeal the trial
court’s judgment in favor of the trustee in an action that sought to remove the trustee or
to modify the trusts to permit easier removal of the trustee. The lifetime income
beneficiaries argue that the trial court erred: (1) in concluding that the trusts' principal
place of administration is Kansas requiring Kansas law to apply to the determination of
their claim seeking removal of the trustee; and (2) in concluding that the trusts are
charitable trusts supporting the entry of summary judgment in favor of the trustee on their
claim seeking to modify the trusts. We affirm.
Factual and Procedural Background
On February 6, 2008, A. B. Hudson ("Hudson") executed a Will in Kansas where
Hudson lived. Among other things, the Will created four testamentary trusts, each to be
funded in the amount of $1,500,000 on his death. Each trust designated one of Hudson's
four grandchildren ("grandchildren")1 as the lifetime income beneficiary. Each trust
provided that upon the death of the lifetime income beneficiary the trust would terminate
and the trust’s remainder would be paid to Shriners Hospital for Crippled Children2
("Shriners") free of trust "exclusively for the charitable purposes" of the hospital. Each
trust named UMB Bank, N.A.3 ("UMB") "with an office and place of business in Topeka,
Kansas" as trustee. Each trust provided that the trustee would have "all powers conferred
upon trustees by the provisions of the Kansas Uniform Trustees' Powers Act."
Hudson died in mid-February, 2008, shortly after executing the Will. The Will
was submitted to probate administration in Wabaunsee County, Kansas. Following
probate administration, the testamentary trusts were funded in Kansas, and were initially
managed in Kansas by Pat Lockerby ("Lockerby"), a UMB trust advisor. Lockerby
worked under the direct supervision of Tami West Stratton ("Stratton") whose office is in
Kansas. UMB later replaced Lockerby with Meg Armstrong ("Armstrong"), and named
J.T. Trujillo ("Trujillo") as the portfolio manager for the trusts. Armstrong and Trujillo
1
The grandchildren are Angela K. Hudson, Nichole Rothe, Nathan Rothe, and Rachele Rothe.
2
Shriners was also the residuary beneficiary under Hudson's will.
3
UMB was also named as a co-executor of Hudson's will along with Hudson's daughter, Michele Kahn.
2
work in Colorado and were named to their positions for the ease of the grandchildren
who live in Colorado. Stratton continued to supervise Armstrong. The investment
policies Trujillo employed as portfolio manager were primarily developed by higher level
employees in UMB's Kansas City, Missouri office. Account statements for the trusts sent
periodically to the grandchildren show UMB's address in Missouri.
At some point, the grandchildren grew dissatisfied with UMB as trustee, primarily
because UMB would not adopt their investment requests and strategies. The
grandchildren wanted to replace UMB with The Private Trust Co., N.A., and specifically
wanted Dan Foley, who was in some manner associated with that firm, to manage the
trust assets. The grandchildren asked UMB to resign as trustee. UMB refused.
The grandchildren filed a three-count petition in the probate division of the Circuit
Court of Jackson County, Missouri. The petition named Shriners as an additional
plaintiff, alleging that Shriners had been "joined in this action as a party necessary to the
adjudication of the issues," and that Shriners "has no opposition to being joined in this
action as a necessary party."4 Count I sought to modify the trusts pursuant to section
456.4B-4115 by adding a provision that would permit a majority of the income and
remainder beneficiaries of any trust to remove the trustee with or without cause. Count II
sought to remove UMB as trustee pursuant to section 456.7-706, and to replace UMB
with another suitable trustee. Count III of the petition sought a declaration that UMB
could not recover its attorney's fees in defending the lawsuit from the trusts.
4
The attorney representing the grandchildren also purported to be the attorney of record for Shriners.
5
All statutory references are to RSMo 2000 as supplemented unless otherwise indicated.
3
The trial court entered summary judgment in favor of UMB on Count I of the
petition, finding the trusts to be charitable trusts not eligible for modification under
Kansas law.6 Following a bench trial, the trial court entered judgment in favor of UMB
on Count II of the petition, finding that Kansas law controlled the administration of the
trusts and that the beneficiaries had not established a right under Kansas law to remove
UMB as the trustee. The trial court also entered judgment in favor of UMB on Count III
of the petition.
The grandchildren appeal the trial court's judgment on Counts I and II of the
petition.
Summary of Issues on Appeal
The grandchildren assert two points on appeal. First, they argue that the trial court
erroneously entered judgment in favor of UMB on Count II of their petition because
Missouri, not Kansas, is the principal place of administration of the trusts, and Missouri
law permits removal of a trustee with the unanimous consent of all qualified
beneficiaries. Second, they argue that the trial court erroneously entered summary
judgment in favor of UMB on Count I of the petition because the trial court erroneously
found the trusts to be charitable, when they are noncharitable and subject to modification
under either Missouri or Kansas law with the unanimous consent of all qualified
beneficiaries.
6
The trial court's application of Kansas law to Count I of the petition despite the fact the claim sought to
modify the trust pursuant to Missouri law is explained, infra.
4
Point One--Judgment Denying Claim for Removal of UMB as Trustee
Standard of Review
In a court tried case, we will not reverse the trial court's judgment unless "there is
no substantial evidence to support it, unless it is against the weight of the evidence,
unless it erroneously declares the law, or unless it erroneously applies the law." Murphy
v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). To reverse the trial court's judgment,
because it was against the weight of the evidence, we must have a firm belief that the
judgment is wrong. Id. We view the evidence and any inferences in the light most
favorable to the trial court's judgment. Hightower v. Myers, 304 S.W.3d 727, 732 (Mo.
banc 2010). We are to affirm the trial court's judgment on any basis supported by the law
and the facts of the case. Ballard v. Ballard, 77 S.W.3d 112, 118 (Mo. App. W.D. 2002).
Analysis
The trial court found that Kansas law controls the administration of the trusts, and
that the grandchildren did not establish a right to remove UMB as trustee under Kansas
law. The grandchildren argue that the trusts' principal place of administration is in
Missouri, and that Missouri law permits removal of UMB as the trustee with the
unanimous consent of all qualified beneficiaries. Resolution of this point on appeal
requires us to determine the principal place of administration of the trusts.
"Principal place of administration" is defined at section 456.1-103(17), in pertinent
part, as "the trustee's usual place of business where the records pertaining to the trust are
kept." Section 456.2-202.1 provides that "[b]y accepting the trusteeship of a trust having
its principal place of administration in this state . . . the trustee submits personally to the
5
jurisdiction of the courts of this State regarding the administration of the trust during any
period that the principal place of administration is located in this state." UMB admitted
the allegation in the grandchildren's petition that the principal place of administration of
the trusts was in Missouri "pursuant to section 456.2-202.1." UMB also admitted as
alleged in the petition that the principal place of administration of the trusts "as defined in
section 456.1-103(17)" is Kansas City, Missouri. The trial court's judgment thus found
that "[t]he fact that UMB's principal place of business is located in Jackson County,
Missouri, qualifies Missouri as a principal place of administration for the purpose of this
Court's exercise of jurisdiction to decide the issues raised" in the petition.
Despite this finding, the trial court also found that "the principal place of
administration of the Trusts for choice of law purposes is Kansas," and that "Kansas law
[thus] governs administrative matters, including removal of the trustee." The trial court
based its conclusion on application of section 456.1-107, the "governing law" provision
of the Uniform Trust Code ("U.T.C.") as adopted by Missouri. That statute provides:
The meaning and effect of the terms of a trust are determined by:
(1) the law of the jurisdiction designated in the terms [of the trust] . . . ; or
(2) in the absence of a controlling designation in the terms of the trust, the
law of the jurisdiction having the most significant relationship to the matter
at issue.
The phrase "terms of the trust" is defined at section 456.1-103(27) as "the manifestation
of the settlor's intent regarding a trust's provision as expressed in the trust instrument or
as may be established by other evidence that would be admissible in a judicial
6
proceeding." The comment to section 103 of the U.T.C. provides that the phrase "terms
of a trust" is not limited to the words used in a trust and also includes:
Oral statements, the situation of the beneficiaries, the purposes of the trust,
the circumstances under which the trust is to be administered, and, to the
extent the settlor was otherwise silent, rules of construction . . . .
Unif. Trust Code section 103(18) (amended 2005), 7C U.L.A. 419 cmt. (2006) (emphasis
added).
The trial court found that Hudson did not designate the "governing law" he wanted
to control the meaning and effect of the terms of his testamentary trusts as anticipated by
section 456.1-107(1). The trial court thus turned to section 456.1-107(2), which provides
that in the absence of a governing law designation, "the law of the jurisdiction having the
most significant relationship to the matter at issue" will control. (Emphasis added.) The
comment to the U.T.C. explains that "the matter at issue" is a variable in assessing which
jurisdiction's governing law should apply. "Usually, the law of the trust's principal place
of administration will govern administrative matters and the law of the place having the
most significant relationship to the trust's creation will govern the dispositive provisions."
Unif. Trust Code section 107 (amended 2005), 7C U.L.A. 437 cmt. (2006).
The trial court reasoned that the "matter at issue" in Count II of the petition was an
administrative matter since section 456.2-202.3 lists removal of a trustee among judicial
proceedings involving a trust's administration. We agree with this conclusion, and in any
event it is a conclusion that is not challenged on appeal. Given the comment to section
107 of the U.T.C., it follows, therefore, that the "law of the trust's principal place of
administration" should govern the resolution of Count II of the petition. Id. UMB
7
admitted, and the trial court found, that the principal place of administration of the trusts
for purposes of bestowing jurisdiction over UMB is Missouri, as the term is defined by
section 456.1-103(17).
The trial court did not, however, apply Missouri law to resolve Count II of the
petition. Instead, the trial court concluded that section 456.1-107(2) permitted it to
disregard the statutory definition of "principal place of administration," and to instead
determine the principal place of administration for purposes of resolving administrative
matters based on which jurisdiction has the most "significant relationship" to
administration of the trusts. The trial court then consulted the comment to the U.T.C.
addressing factors impacting this determination. The U.T.C. counsels that the
determination of the "principal place of administration," and thus of the jurisdiction
whose governing law will usually control the resolution of administrative matters,
requires analysis of which jurisdiction has the most "significant relationship" to the
administration of the trusts.
A trust's principal place of administration ordinarily will be the place where
the trustee is located. Determining the principal place of administration
becomes more difficult, however, . . . when a single institutional trustee has
trust operations in more than one state. In such cases, other factors may
become relevant, including the place where the trust records are kept or
trust assets held, or in the case of an institutional trustee, the place where
the trust officer responsible for supervising the account is located.
Unif. Trust Code section 108 (amended 2005), 7C U.L.A. 439 cmt. (2006).
The trial court's reliance on the comment to the U.T.C. to determine that Kansas
was the principal place of administration of the trusts, and not Missouri as per section
456.1-103(17), erroneously failed to take into consideration a material difference between
8
the U.T.C. and Missouri's version of the U.T.C. The U.T.C. does not define "principal
place of administration." See Unif. Trust Code section 103 (amended 2005), 7C U.L.A.
413-15 (2006). The comment to the U.T.C. explains that this was a purposeful choice.7
In stark contrast, the Missouri legislature defined the term "principal place of
administration" when it adopted the U.T.C. in 2004. When a term is defined in a statute,
"a court must give effect to the legislature's definition." Short v. S. Union Co., 372
S.W.3d 520, 532 (Mo. App. W.D. 2012). The inclusion of a statutory definition of
"principal place of administration" in Missouri's version of the U.T.C. renders it
unnecessary and inappropriate to resort to the "significant relationship" test set forth in
section 456.1-107(2) to determine a trust's principal place of administration. The trial
court erroneously concluded otherwise.8
Though the trial court erroneously applied section 456.1-107(2) to override the
definition of "principal place of administration" set forth in section 456.1-103(17), we are
nonetheless bound to affirm the trial court's legal conclusion that Kansas law controls the
resolution of administrative matters involving the trusts on any other grounds supported
by the law and the facts. McDermott v. Carnahan, 934 S.W.2d 285, 287 (Mo. banc
1996) (holding that an appellate court "is concerned primarily with reaching a correct
result, and thus . . . need not agree with the reasoning of the trial court in order to affirm
7
"Because of the difficult and variable situations sometimes involved, the Uniform Trust Code does not
attempt to further define principal place of administration." Unif. Trust Code section 108 (amended 2005), 7C
U.L.A. 439 cmt. (2006) (emphasis added).
8
It is important to point out, however, that the significant relationship test described in section 456.1-
107)(2) remains relevant to determine which jurisdiction's governing law should control the resolution of dispositive
(in contrast to administrative) matters involving the trust, as "[u]sually . . . the law of the place having the most
significant relationship to the trust's creation will govern the dispositive provisions." Unif. Trust Code section 107
(amended 2005), 7C U.L.A. 437 cmt. (2006).
9
the result"). We are able to do so in this case because the statutory definition for
"principal place of administration" set forth in section 456.1-103(17) expressly provides
that the definition controls "unless [a place of administration is] otherwise designated
by the terms of the trust as provided in section 456.1-108." (Emphasis added.)
Section 456.1-108 provides:
1. Without precluding other means for establishing a sufficient connection
with the designated jurisdiction, terms of a trust designating the principal
place of administration are valid and controlling if:
....
(2) all or part of the administration occurs in the designated jurisdiction.
(Emphasis added.) Here, although the trial court correctly found that Hudson did not
designate the "governing law" to be applied to determine the meaning and effect of the
terms of his trusts pursuant to section 456.1-107(1), the trial court failed to address the
fact that Hudson designated the "place of administration" of his trusts pursuant to section
456.1-108.1. "Designating the principal place of administration [as authorized by Section
108] should be distinguished from designating the law to determine the meaning and
effect of the trusts terms, as authorized by Section 107." Unif. Trust Code section 108
(amended 2005), 7C U.L.A. 440 cmt. (2006).
In the Will, Hudson expressly identified UMB "with an office and place of
business in Topeka, Kansas" as the trustee. Hudson thus unambiguously expressed his
intent that the trustee would be located in Kansas. Hudson's designation of the place of
business for the trustee expresses the intent that the place of administration of the trusts
would be Kansas. This conclusion is reinforced by Hudson's directive in his Will that the
10
trustee should have "all powers conferred upon trustees by the provisions of the Kansas
Uniform Trustees' Powers Act," an act that addressed the administration of trusts in
Kansas prior to its repeal in 2002.9 To conclude otherwise would render Hudson's
directives about where the trustee would be located and whose laws would control the
trustee's powers meaningless. "In determining the meaning of a trust provision, the
paramount rule of construction is that the settlor's intent is controlling and such intention
must be ascertained primarily from the trust instrument as a whole." First Nat'l Bank of
Kansas City v. Hyde, 363 S.W.2d 647, 652 (Mo. 1962). In fact, Hudson's directives
appear plainly consistent with the U.T.C., which observes that "[a] settlor expecting to
name a trustee . . . with significant contacts in more than one state may eliminate possible
uncertainty about the location of the trust's principal place of administration by
specifying the jurisdiction in the terms of the trust." Unif. Trust Code section 108
(amended 2005), 7C U.L.A. 440 cmt. (2006).
Pursuant to section 456.1-108(2), Hudson's designation of Kansas as the place of
administration for the trusts is "valid and controlling" and must be enforced if "all or part
of the administration [of the trusts] occurs in [Kansas]." Here, the evidence plainly
established that part of the administration of Hudson's testamentary trusts has at all times
9
The attorney who drafted Hudson's Will testified that the reference to the Kansas Uniform Trustees'
Powers Act was a mistaken carryover from earlier versions of Hudson's will, and should have been corrected to refer
to the Kansas Uniform Trust Code. We need not address or determine whether the trust provision can be or should
be reformed to correct this purported error. But see Commerce Trust Co. v. Weed, 318 S.W.2d 289 (Mo. 1958)
(addressing that a testator may expressly tie a will or trust to law other than that existing on the date of its
execution). For our purposes, regardless that a repealed act was referenced in the trust provisions in Hudson's Will,
it is plain that Hudson was expressing the intent that his trusts should be administratively managed in accordance
with Kansas law consistent with his intent to designate Kansas as the principal place of administration of the trusts.
11
occurred in Kansas. The trusts were formed in Kansas, were funded in Kansas, were
initially managed in Kansas, and continue to be managed in part in Kansas.10
In light of the foregoing discussion, we conclude that given UMB's admission,
Missouri was the "usual place of business [for UMB] where the records pertaining to the
trust are kept," and would thus have been the principal place of administration of the
trusts but for Hudson's contrary designation of the place of administration pursuant to
section 456.1-108.1.11 Section 456.1-103(17). We further conclude that because Hudson
properly designated the place of administration of the trusts as Kansas pursuant to section
456.1-108.1, Kansas is the "governing law" applicable to resolve administrative matters
relating to the trust, including issues involving removal of the trustee. The trial court thus
correctly concluded that the principal place of administration of the trusts is Kansas for
purposes of determining the governing law applicable to administrative matters at issue,
10
The trial court found that in naming Colorado employees to manage the day-to-day administration of the
trusts, UMB attempted to change the principal place of administration of the trusts from Kansas to Colorado, an
effort that was not legally effective because UMB failed to comply with K.S.A. 2013 Supp. 58a-108(d), which
permits a trustee to change the principal place of administration of a trust under certain circumstances, but only if
appropriate written notice is provided to the beneficiaries. This ruling has not been challenged on appeal. Though
not strictly at issue here, we do express some reservation as to whether a trustee has the power to transfer the
principal place of administration of a trust if the settlor has designated the principal place of administration. See
Unif. Trust Code section 108 (amended 2005), 7C U.L.A. 440 cmt. (2006) (observing that "[t]he procedure for
transfer [of trust administration] specified in this section applies only in the absence of a contrary provision in the
terms of the trust. See Section 105").
11
We recognize that UMB admitted in its answer to the grandchildren's petition that Kansas City, Jackson
County, Missouri was the principal place of administration as defined by section 456.1-103(17), and that the trial
court had personal jurisdiction over it pursuant to section 456.2-202.1. However, these admissions, which clearly
constituted UMB's voluntary submission to the personal jurisdiction of the trial court in Missouri, were never relied
on or cited by the grandchildren as controlling on the issue of the principal place of administration of the trusts for
choice of law purposes. The trial court expressed the view at the commencement of trial that the principal place of
administration of the trusts remained a factual issue in dispute, an assertion the grandchildren did not challenge. The
parties then presented competing evidence on this contested point, which had the practical effect of trying the issue
of the principal place of administration by implied, if not express, consent, notwithstanding UMB's admissions. See,
e.g., Smith v. City of St. Louis, 395 S.W.3d 20, 25 (Mo. banc 2013). In any case, we would be reluctant to conclude
that UMB's admissions could have the effect of negating Hudson's designation of the place of administration of the
trusts, given the plain language of section 456.1-103(17) and section 456.1-108.1 requiring a trial court to honor a
settlor's designation.
12
although it reached this conclusion for the wrong reasons. McDermott, 934 S.W.2d at
286.
We thus turn our attention to whether Kansas law permits the grandchildren to
remove UMB as trustee based on the purported unanimous consent of all beneficiaries.12
As an initial observation, the grandchildren's petition did not seek to remove UMB as
trustee under Kansas law, and sought only to remove UMB pursuant to section 456.7-
706.1(4). Section 456.7-706.1(4) does provide that a court may remove a trustee where
"removal is requested by all of the qualified beneficiaries" if (a) "removal . . . best serves
the interests of all of the beneficiaries; (b) removal . . . is not inconsistent with a material
purpose of the trust; and (c) a suitable cotrustee or successor trustee is available and
willing to serve."13 However, as we have explained, section 456.7-706.1(4) is not the
governing law. We must look to the counterpart of that statute under Kansas law. K.S.A.
58a-706(b)(4)14 is that counterpart and makes no provision for the removal of a trustee
based on the unanimous consent of all beneficiaries. Where section 456.7-706.1(4)(a-c)
permits the unanimous consent of all qualified beneficiaries to trigger possible removal of
12
UMB contests that Shriners consented to removing UMB as trustee. The trial court's judgment
acknowledged, but did not resolve this dispute. Because we conclude that Kansas law does not permit beneficiaries
to remove a trustee predicated on unanimous consent, we similarly find it unnecessary to determine whether
Shriners' acquiescence to being named as a party plaintiff in the petition constitutes consent to removal of UMB as
trustee.
13
On this point, the trial court found that even if Missouri law applied to the grandchildren's claim to
remove UMB as trustee, the grandchildren failed to introduce any evidence that The Private Trust Co., N.A. was
"qualified to conduct trust business in this state," an express condition of finding that a cotrustee or successor trustee
is a "suitable replacement" where a corporate trustee is being removed. Section 456.7-706.3(1). The grandchildren
have not appealed this alternative basis for the trial court's judgment, which would be fatal to their first point on
appeal had we determined that Missouri law applied to resolve administrative matters effecting the trusts. City of
Peculiar v. Hunt Martin Materials, LLC, 274 S.W.3d 588, 590-91 (Mo. App. W.D. 2009) (holding that to establish
grounds for reversal, an appellant must challenge all grounds on which the trial court ruled against it); STRCUE, Inc.
v. Potts, 386 S.W.3d 214, 219 (Mo. App. W.D. 2012) (holding that the failure to challenge an alternative basis for
the trial court's finding or ruling is fatal to appeal).
14
All statutory references are to the official bound volumes of the K.S.A. unless otherwise indicated.
13
a trustee, K.S.A. 58a-706(b)(4) requires "a substantial change in circumstances." The
grandchildren admitted at oral argument that they have not alleged, and would be unable
to establish, a "substantial change in circumstances" warranting UMB's removal as
trustee pursuant to K.S.A. 58a-706(b)(4).
We are cognizant that the trial court did not address the plain language of K.S.A.
58a-706(b)(4) in rejecting Count II of the grandchildren's petition. Instead, the trial court
circuitously found that Count II of the petition was an indirect attempt to modify the
trusts under K.S.A. 58a-412. The trial court then found that the grandchildren did not
prove the conditions to modification required by that statute: (i) the existence of
circumstances not anticipated by the settlor and a need to modify the trust provisions to
further the purpose of the trust; and (ii) that continuation of the trusts under their existing
terms would "be impractical or wasteful or impair the trust's administration." K.S.A.
58a-412(a), (b). We need not determine whether the trial court correctly concluded that
Count II of the petition was an indirect attempt to modify the trusts under K.S.A. 58a-412
given our conclusion that K.S.A. 58a-706(b)(4) does not authorize removal of a trustee
based on unanimous consent of the beneficiaries. Though the trial court did not refer to
K.S.A 58a-706(b)(4) in rejecting Count II of the petition, we are to affirm the trial court's
judgment on any basis supported by the law and the facts. McDermott, 934 S.W.2d at
287.
The grandchildren's first point relied on is denied.
14
Point Two--Summary Judgment Denying Claim Seeking to Modify Trusts
Standard of Review
We review the grant of summary judgment de novo. ITT Commercial Corp. v.
Mid-American Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). We will
uphold the trial court's grant of summary judgment "if there is no genuine dispute of
material fact and the movant is entitled to judgment as a matter of law." White v. Cole
County, 426 S.W.3d 27, 30 (Mo. App. W.D. 2014). We view the evidence and any
inferences in the light most favorable to the non-movant. ITT Commercial Corp., 854
S.W.2d at 376.
Analysis
The grandchildren's second point on appeal argues that the trial court erred in
granting UMB's motion for summary judgment on Count I of its petition which sought to
modify the testamentary trusts pursuant to section 456.4B-411 based on the unanimous
consent of all beneficiaries. The modification would have added a provision to the trusts
permitting removal of a trustee with or without cause with the consent of a majority of all
beneficiaries. The trial court found that Hudson's testamentary trusts were charitable
trusts and could not be modified with the unanimous consent of the beneficiaries under
Kansas law.15 The grandchildren argue that the characterization of the trusts as charitable
trusts is legally erroneous, and that under either Missouri or Kansas law, the trusts could
be modified with the unanimous consent of the beneficiaries.
15
We explain the trial court's reliance on Kansas law, instead of section 456.4B-411, infra.
15
Before we can address the merits of this point on appeal, we have a duty to
examine the finality of the trial court's judgment as we only have jurisdiction to review
final judgments. Steinmetz v. Mo. Highway & Transp. Com’n, 645 S.W.2d 36, 38 (Mo.
App. W.D. 1982). The post-trial written judgment refers to the trial court's earlier grant
of UMB's motion for summary judgment on Count I of the petition. However, the trial
court did not issue a written order granting summary judgment on Count I prior to trial on
Counts II and III. Other than a brief mention in the transcript at trial, the court’s
references in the post-trial judgment are the only evidence in the record on appeal that
summary judgment was earlier granted on Count I.
A final judgment can be derived from several orders which, when combined
together, dispose of all the issues as to all parties and leave nothing for future
determination. RLI Ins. Co. v. S. Union Co., 341 S.W.3d 821, 828 (Mo. App. W.D.
2011). Under Rule 74.02, however, an order must be in writing to be valid. Sangamon
Assocs., Ltd. v. Carpenter 1985 Family P'ship, Ltd., 112 S.W.3d 112, 117 (Mo. App.
W.D. 2003). Though no written order granting summary judgment was issued by the
trial court prior to trial, the trial court's several references in its post-trial judgment to the
fact of, and basis for, its earlier grant of summary judgment on Count I afford sufficient
written findings in combination with the post-trial disposition of Counts II and III to form
a final judgment. The references in the post-trial judgment confirm that the trial court
granted summary judgment on Count I of the petition because it concluded that Hudson's
16
testamentary trusts were charitable and that Kansas law did not permit their modification
notwithstanding the purported consent of all beneficiaries.16
The trial court explained in the post-trial judgment that when it entered summary
judgment on Count I, it operated under the assumption that Missouri was the principal
place of administration of the trusts given the grandchildren's assertion to this effect in
the petition. The trial court explained, however, that "[b]ecause the relief sought [under
Count I] was modification of the Trusts' terms, the Court determined that section 456.1-
107(2) was applicable and used the totality of the circumstances approach to determine
that Kansas was the State having the most significant relationship to the matter at issue
and the appropriate choice of law for Count I." In effect, the trial court found
modification of a trust to involve a dispositive (as opposed to an administrative) matter
such that the law of the jurisdiction having the most significant relationship to the trust's
creation should control resolution of the matter.17 The trial court then explained that it
granted UMB summary judgment on Count I of the petition because K.S.A. sections 58a-
410 through 58a-417 do not permit modification of the trusts' terms, regardless the
purported unanimous consent of the beneficiaries, because the trusts are charitable trusts.
16
See footnote number 12.
17
As previously noted, the U.T.C. provides that the "law of the place having the most significant
relationship to the trust's creation will govern the dispositive provisions." Unif. Trust Code section 107 (amended
2005), 7C U.L.A. 437 cmt. (2006) (emphasis added). The grandchildren do not contest the trial court's conclusion
that modification of a trust involves a dispositive (and not an administrative) matter, or the conclusion that pursuant
to section 456.1-107(2), Kansas is the jurisdiction with the most significant relationship to the trust for dispositive
matters because it is most connected to the trust's creation. As explained, supra, at footnote number 8, the
"significant relationship" analysis required by section 456.1-107(2) remains relevant to determine governing law to
resolve dispositive matters in the absence of a governing law designation by the settlor, though the same analysis is
superseded by the statutory definition of "principal place of administration" when determining the governing law
which controls resolution of administrative matters.
17
The grandchildren have not appealed the trial court's determination that Kansas
law governs their right to modify the trusts, and seemingly acquiesce in this
determination (notwithstanding their contrary assertion in their petition) as they argue on
appeal that both Kansas and Missouri law would have permitted modification of the
trusts, had they been characterized as noncharitable. Because the trial court plainly relied
on Kansas law, however, to enter summary judgment in favor of UMB on Count I of the
petition, we need only address whether the trial court's determination was legally
erroneous under Kansas law.18
Under Kansas law, a charitable trust is defined as "a trust, or portion of a trust,
created for a charitable purpose described in subsection (a) of K.S.A. 58a-405." K.S.A.
2013 Supp. 58a-103(3). K.S.A. 58a-405(a) provides that a "charitable trust may be
created for the relief of poverty, the advancement of education or religion, the promotion
of health, governmental or municipal purposes, or other purposes the achievement of
which is beneficial to the community." K.S.A. 58a-405(a). Here, there is no factual
dispute that the remainder beneficiary of the testamentary trusts, Shriners, is a charitable
beneficiary. There is no factual dispute that Hudson expressed his intent to distribute the
remainder interest of each trust "free of trust" to Shriners to be used for charitable
purposes. The grandchildren thus do not contest that the remainder interests of the trusts
are charitable. They argue, however, that because the lifetime income beneficiary
18
We nonetheless observe, ex gratia, that section 456.4B-411 plainly would not have authorized
modification of the trusts in the manner requested by the grandchildren. Though that statute permits modification of
a noncharitable trusts with consent of all "adult beneficiaries having the capacity to contract consent," it does so only
to "modify the terms of a noncharitable irrevocable trust so as to reduce or eliminate the interests of some
beneficiaries and increase those of others, change the times or amounts of payments and distributions to
beneficiaries, or provide for termination of the trust at a time earlier or later than that specified by its terms." The
statute makes no provision for modification of a trust to address removal of a trustee.
18
distributions from the trusts are noncharitable, the trusts are not charitable trusts as a
matter of law.
The grandchildren cite Obermeyer v. Bank of America, N.A., 140 S.W.3d 18 (Mo.
banc 2004) in support of their position. However, their reliance on Obermeyer is
misplaced given the trial court's uncontested determination that Kansas law controls the
resolution of Count I of the petition. In any event, Obermeyer is not persuasive. The
trust in Obermeyer provided income for the life of the settlor's nieces and nephews, with
the remainder to be given to Washington University’s Dental Alumni Development Fund
free of trust. Id. at 20. When the last of the nieces and nephews died, Washington
University no longer had the Dental Alumni Development Fund or a dental school,
making it impossible to honor the settlor's specific intent. Id. The issue was whether the
trust could be modified pursuant to the cy pres doctrine, a doctrine "based on the
concerns of equity to protect and preserve charitable bequests." Id. at 22-23.
Significantly, both parties agreed that the trust in question was charitable. Id. at 21-22.
However, the Supreme Court neither analyzed nor questioned this characterization,
opting instead to conclude that the cy pres doctrine applied to permit modification of the
intended charitable gift whether or not it was a gift under the trust, or "free of trust"
because it followed the trust's termination. Id. at 23. Contrary to the grandchildren's
assertion, Obermeyer does not hold that a trust which directs noncharitable distributions
to lifetime income beneficiaries cannot be a charitable trust.
The grandchildren fail to address a Kansas Supreme Court decision involving a
trust that is strikingly similar to Hudson's testamentary trusts. In In re Estate of Somers,
19
89 P.3d 898 (Kan. 2004), the settlor created a testamentary trust for her grandchildren.
Id. at 901. The trust terms provided that on the death of the settlor's grandchildren, the
trust would terminate and Shriners Hospital would receive the remainder free from trust.
Id. The Kansas Supreme Court held:
Clearly, this is a charitable trust as defined by K.S.A. 2003 Supp. 58a-
103(3), which describes a "charitable trust" as "a trust, or portion of a trust,
created for a charitable purpose described in subsection (a) of K.S.A. 2003
Supp 58a-405, and amendments thereto." . . . The parties do not dispute that
this is a charitable trust.
Id. at 903-04. Like the settlor's grandchildren in Somers, the grandchildren are the
lifetime income beneficiaries of Hudson's testamentary trusts. The remainder of the
grandchildren's trusts will also be paid to Shriners, a charitable organization, free of trust
when each grandchild dies. In light of the holding in Somers, the trial court did not error
in concluding that Hudson's trusts are charitable trusts.
K.S.A. 2013 Supp. 58a-411(b) provides that "[a] noncharitable irrevocable trust
may be modified upon consent of all of the qualified beneficiaries if the court concludes
that modification is not inconsistent with a material purpose of the trust." By its plain
terms, K.S.A. 2013 Supp. 58a-411(b) does not apply to charitable trusts. The court in
Somers expressly held, in fact, that a prior, but not materially different version of K.S.A.
2013 Supp. 58a-411(b) "by its express terms, applies [only] to the modification or
termination of a noncharitable trust."19 89 P.3d at 903-04.
19
Somers did hold that although K.S.A. 2003 Supp. 58a-411, which is not materially different than the
current version, applies only to modification or termination of noncharitable trusts, the RESTATEMENT
(SECOND) OF TRUSTS remains good law to address when a charitable trust can be modified, terminated, or
partially terminated, as the Restatement does not differentiate between charitable and noncharitable trusts. 89 P.3d
at 904. The grandchildren did not claim in their petition or in response to UMB's motion for summary judgment,
20
The trial court did not err in entering summary judgment in favor of UMB on
Count I of the petition because K.S.A. 2013 Supp. 58a-411 does not permit the
modification of a charitable trust, notwithstanding the purported unanimous consent of all
beneficiaries.
The grandchildren's second point relied on is denied.
Conclusion
We affirm.
__________________________________
Cynthia L. Martin, Judge
All concur
and do not argue on appeal, that the RESTATEMENT (SECOND) OF TRUSTS affords them the authority to
modify the trusts, whether or not they are charitable, upon the unanimous consent of the beneficiaries. In any event,
though the RESTATEMENT (SECOND) OF TRUSTS makes provision for termination of a trust with the consent
of all beneficiaries, (section 337), it makes no provision for modification of a trust with the consent of all
beneficiaries.
21