Wescott v. First & Citizens National Bank
227 N.C. 39, 1946 N.C. LEXIS 347, 40 S.E.2d 461 (1946)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
To create a valid express trust, the settlor must transfer a present beneficial interest in the property to the beneficiary during the settlor's lifetime; an arrangement where the settlor retains sole ownership and control, with the property to pass to another only upon the settlor's death, is a testamentary disposition that is invalid unless it complies with the statutory requirements of a will.
Facts:
- In January 1945, Ulysses C. Robbins, a U.S. Army Sergeant serving in Italy, sent a letter to a bank to establish an account.
- The letter requested an 'in trust for' account, stating, 'I am the only person who can withdraw from it.'
- Robbins's letter further stipulated that in the event of his death, his grandfather, Wescott, would be the beneficiary, eligible to receive the money five years after his death.
- The bank credited the deposits, totaling $6,900, to an account solely in the name of 'Sgt. Ulysses C. Robbins.'
- In a separate letter to his grandfather, Robbins explained that he intended to use the money for his business after the war and that the five-year delay was a precaution in case he was wrongly reported as deceased.
- Ulysses C. Robbins was killed in Italy on June 19, 1945.
Procedural Posture:
- The plaintiff, Wescott, sought to claim funds deposited by his deceased grandson, Ulysses C. Robbins, from the defendant Bank.
- The trial court found that an express trust existed and entered a judgment in favor of the plaintiff, Wescott.
- The defendants, the administrator of Robbins's estate and the bank, appealed the trial court's judgment to the Supreme Court of North Carolina.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a depositor's letter to a bank create a valid express trust when it directs that an account be opened in the depositor's name, that he retain sole power to withdraw funds, and that a named beneficiary become eligible to receive the money only upon the depositor's death?
Opinions:
Majority - Devin, J.
No. The depositor's letter does not create a valid express trust because it fails to transfer a present beneficial interest to the beneficiary. To constitute an express trust, there must be a transfer of title by the settlor for the benefit of another, and the gift must be executed rather than executory upon a contingency. Here, Robbins retained exclusive ownership and control over the funds during his lifetime, indicating he had no intention of conveying a present interest to his grandfather, Wescott. The language in the letters, specifying that Wescott would only become 'eligible' to receive the money after Robbins's death, demonstrates that the intended disposition was testamentary in nature. Because the letters did not comply with the statutory formalities for a will, they cannot operate to transfer the property after death, and the funds must therefore pass to the administrator of Robbins's estate.
Analysis:
This case illustrates the critical distinction between a valid inter vivos trust and an invalid testamentary disposition that fails to adhere to the Statute of Wills. The court's decision reinforces the strict requirement that a trust must convey a present beneficial interest to the beneficiary. By finding that the settlor's retention of complete control and ownership rendered the arrangement testamentary, the court upheld the policy of requiring formal execution for post-death dispositions of property. This precedent serves as a clear warning against informal estate planning and clarifies that merely using words like 'in trust for' is insufficient to create a trust if the settlor does not actually part with a present interest in the property.
Unlock the full brief for Wescott v. First & Citizens National Bank