Johnson, J. C., Jr.

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Trusts -- Exercise by Will of a Reserved Power of Revocation

University of North Carolina School of Law

NORTH CAROLINA LAW REVIEWVolume 29 | Number 2 Article 182-1-1951Trusts -- Exercise by Will of a Reserved Power ofRevocationJ. C. Johnson Jr.Follow this and additional works at: http://scholarship.law.unc.edu/nclrPart of the Law CommonsThis Note is brought to you for free and open access by Carolina Law Scholarship Repository. It has been accepted for inclusion in North Carolina LawReview by an authorized editor of Carolina Law Scholarship Repository. For more information, please contact law_repository@unc.edu.Recommended CitationJ. C. Johnson Jr., Trusts -- Exercise by Will of a Reserved Power of Revocation, 29 N.C. L. Rev. 216 (1951).Available at: http://scholarship.law.unc.edu/nclr/vol29/iss2/18NORTH CAROLINA LAW REVIEWseem persuasive enough to justify denying a child recovery for an in-jury willfully and maliciously inflicted upon him by his parent.The North Carolina Supreme Court adopted the general rule ofnonliability in Small v. Morrison,19 a negligence case, notwithstandingthe vigorous dissent of Chief Justice Clark, which closely parallels theopinion of the majority of the court in the Oregon case.20 However,the question as to whether an unemancipated minor may sue his parentfor a willful or malicious tort does not seem to have been yet presentedin this state. The Oregon court, by refusing to apply a hard and fastrule of nonliability to the facts in this case, has recognized a trendwhich the North Carolina court should seriously consider when thequestion is presented in this state.EARL W. VAUGHN.Trusts-Exercise by Will of a Reserved Power of RevocationIn Cohn v. Central National Bank of Richmond' the revocationclause in an insurance trust agreement read:"The right is reserved to the insured [settlor]; to revoke orannul this agreement in whole or in part, and to modify theterms in any respect . . . on the written demand of the insured,the trustee shall deliver to him any or all of the policies heldunder the terms of this agreement."Held, the attempted exercise by will of the reserved power of revo-cation was ineffectual to revoke the trust.It is clear that a settlor may validly reserve a power to revoke atrust and stipulate the manner in which such power is to be exercised.2When a particular mode of revocation is specified in the reserved powerof revocation, however, it is essential that it be strictly complied within order to make the revocation effective.3 When the revocation pro-1 185 N. C. 577, 118 S. E. 12 (1923), 2 N. C. L. REv. 113 (1924).20 Clark argues that neither the common law nor statutes deny the child aright to sue his parent in tort and that the court should never create a precedentupon a supposed public policy which will deprive anyone of just rights.'191 Va. 12, 60 S. E. 2d 30 (1950).'E.g., Nichols v. Emery, 109 Cal. 323, 41 Pac. 1089 (1895); Cramer v.Hartford-Conn. Trust Co., 110 Conn. 22, 147 Atl. 139 (1929) ; Kelley v. Parker,181 Ill. 49, 54 N. E. 615 (1899) ; Jones v. Old Colony Trust Co., 251 Mass. 309,146 N. E. 716 (1925); Nat. Newark & E. Banking Co. v. Rosahl, 97 N. J. Eq.74, 128 Atl. 586 (1925) ; Richardson v. Stephenson, 193 Wis. 89, 213 N. W. 673(1927). The settlor may reserve a power to revoke the trust only during hislifetime, or he may reserve also a power to revoke by will. 3 Scorr, TRusTs§330.8 (1939). The settlor has power to revoke the trust if and to the extentthat by the terms of the trust he reserved such power. RESTATEMENT, TRuSTS§330(l) (1935).'Hill v. Cornwall & Bro.'s Assignee, 95 Ky. 512, 26 S. W. 540 (1894) (powerto revoke by deed is not exercised when deed is undelivered) ; Brown v. FidelityCo., 126 Md. 175, 94 Atl. 523 (1915) (settlor reserved power of revocation upon[Vol. 29NOTES AND COMMENTSvision is ambiguously worded, as in the principal case, then the prob-lem is one of interpretation by the courts as to whether the agreementcontemplated a revocation only during the settlor's lifetime or includedrevocation at death by his will.4The landmark case of Chase National Bank v. Tonagno,5 where thetrust agreement provided for "a written revocation filed with the trus-tee, executed by the settlor," indicates the criteria and factors to betaken into account in determining the modes of revocation actually re-served. The court there said: "This trust indenture does not specif-ically provide whether these powers of modification must be exercisedduring the lifetime of the settlor or whether they may be exercised bywill. However, this indenture provides that the power reserved shallbe exercised by filing with the trustee a written notice of the revocation,modification or change. In such circumstances it seems clear that thesettlor intended that the power should be exercised only during herlifetime." In the recent case of Leahy v. Old Colony Trust Co.6 therevocation provision read: "The trust indenture may be amended orrevoked at any time during the lifetime of the said J. M. L. by aninstrument in writing signed by her, and also by A. A. C. if she beliving." The court said that "it is settled that a power to revoke 'dur-ing the lifetime' of the settlor, means a revocation taking effect beforethe death of the settlor, and it cannot be exercised by a will that inthe nature of things cannot take effect before the death of the testator."giving 20 days' notice, same to be executed in office of trustee under hand andseal, properly attested and acknowledged; settlor sent letter evidencing intent torevoke and took no further action, held to be no revocation) ; In re Solomon'sEstate, 332 Pa. 462, 2 A. 2d 825 (1938) (where two settlors reserved to them-selves power to modify jointly a trust agreement, the power was extinguished whenone of the settlors died and the trust was deemed irrevocable) ; Reese's Estate,317 Pa. 473, 177 At. 742 (1935) (where the settlor reserved a right to revokeby giving 60 days' notice, gave the notice, but died before the 60 days had elapsed.there was no valid revocation); 4 BoGERT, TRUSTS AND TRUSTEEs §996 (2d Ed.1948); 3 Scorr, TRUSTS §330.8 (1939); RESTATsmENT, TRUSTS §330, comment j(1935). i' Gal v. Union Nat. Bank of Little Rock, 203 Ark. 1000, 159 S. W. 2d 757(1942) (reserved right to revoke by giving written notice at least six monthsin advance; held, notice must be given in lifetime and there can be no validrevocation by will) ; Broga v. Rome Trust Co., 151 Misc. 641, 272 N. Y. Supp.101 (1934) (revocation provision was "grantor may, by instrument in writing,delivered to the trustee, modify or alter this agreement"; attempted revocationby will was ineffective) ; In re Shapley's Deed of Trust, 53 D. & C. 123, aff'd,353 Pa. 499, 46 A. 2d 227 (1945) (right to revoke limited "to a proper instru-ment or instruments in writing executed by me and lodged with the trustee";lodging of probated will so revoking held not a sufficient compliance); In reLyon's Estate, 164 Pa. 140, 63 A. 2d 415 (1947) (trust agreement provided that30 days' notice be given to trustee, same not revoked by settlor's will) ; RESTATE-MENT, TRUSTS §330, comment j (1935).'172 Misc. 560, 14 N. Y. S. 2d 759 (1939). For case in accord both as tofacts and law see Kelley v. Snow, 185 Mass. 288, 70 N. E. 89 (1904).893 N. E. 2d 238 (Mass. 1950).1951]NORTH CAROLINA LAW REVIEWIn the principal case7 the same reasoning was followed as the rei~ocationprovision was said to "carry with it the thought that whatever is doneto effect a revocation must be done in the lifetime of the settlor." Thecourt found no language authorizing the revocation of the trust agree-ment by will, or from which an inference to that effect could be drawn.Conversely, where the settlor reserves a power to revoke only bywill, an attempted revocation during his lifetime is ineffective as it isnot in accord with the mode specified by the reserved power ofrevocation.8A third situation exists where a power of revocation is reservedwithout specifying the manner in which it is to be exercised. An ex-ample of this type of reserved power in its simplest form is "this trustshall be revocable." It seems that this would allow the settlor to exer-cise his reserved power in any manner which clearly evidences hisintention to revoke.9In the cases where a settlor attempts to revoke an inter vivos trustby his will, or by an act during his life, and fails because he has notreserved the power to revoke in the manner attempted, his latest inten-tion has been thwarted. The remedy, however, was within the grasp ofthe original draftsman. The settlor should be instructed as to his rightto reserve a power to revoke by an inter vivos transaction or by hiswill. If the settlor is uncertain at the time as to which mode he willin the future prefer to exercise, the draftsman, by clear and conciselanguage, should include both modes in the reserved power of revo-cation. This would leave no possibility of ambiguity. By the use ofthis method the settlor's intent as to the mode of future revocationscould be effectuated, and the courts would be spared the troublesomeproblem of interpreting such agreements.J. C. JOHNSON, JR.Wills-Pretermission Statute-Sufficiency of Life InsuranceAs Provision for After-Born ChildUnder the North Carolina pretermission statute,1 children born afterI Cohn v. Central Nat. Bank of Richmond, 191 Va. 12, 60 S. E. 2d 30 (1950).'Underhill v. U. S. Trust Co., 227 Ky. 44, 13 S. W. 2d 502 (1929); Dickeyv. Goldsmith, 60 Misc. 258, 111 N. Y. Supp. 1025 (1908).' Security Trust Co. v. Spruance, 20 Del. Ch. 195, 174 AtI. 285 (1934) ; Hoffav. Hough, 181 Md. 472, 30 A. 2d 761 (1943); Lambdin v. Dantzebecker, 169 Md.240, 181 AtI. 353 (1935) ; Barnard v. Gantz, 140 N. Y. 249, 35 N. E. 430 (1893).But cf. Mayer v. Tucker, 102 N. J. Eq. 524, 141 Atl. 799 (1928); Stone v.Hackett, 12 Gray 227 (Mass. 1858).1 N. C. GEN. STAT. §31-45 (1943): "Children born after the making of theparent's will, and whose parent shall die without making any provision for them,shall be entitled to such share and portion of the parent's estate as if he or shehad died intestate, and the rights of any such after-born child shall be a lienon every part of the parent's estate, until his several share thereof is set apart inthe manner prescribed in §28-153 to 28-158."[Vol. 29

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Trusts -- Exercise by Will of a Reserved Power of Revocation

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