Re: Cause No. 1209-90
Trustees of F. O. Birmingham Memorial Trusts vs. Wylie I.S.D.
The Court recognizes that there has been, from time to time, expectations or at least hopes that this case would settle or the issues reduced. The Court has been asked to decide the motions for summary judgment heard more than 2 years ago, and there being to no settlement or agreement as to how certain of the issues can be resolved, the Court renders summary judgment as follows. The judgment is a declaration of the rights of the parties as they relate to certain trust instruments. These instruments are not ambiguous, and the Court has endeavored to declare their clear meaning in the disputed areas.
This summary judgment is only partial and does not resolve certain fact issues raised by the pleadings and upon which no application for summary judgment was filed. Therefore, the remaining issues are to be set for trial to be tried within 60 days, if not resolved sooner.
The Court declares as follows:
- The trusts determine the course areas to which the trusts relate. The areas are mechanical arts, domestic economy, advanced American History and Chemistry. No net income received from the trusts by WISD can be spent except within these four course areas.
- Within those four course areas, the trustees of the WISD (hereinafter referred to as WISD) determine the courses to which the net income from the trusts are to be applied, and this may vary from time to time by additions and deletions of courses within those areas as the times and circumstance require, as determined by WISD within the four course areas. The trustees of the trusts do not make this determination; WISD does, subject to the requirement of the trusts and within the four course areas.
- No portion of the net income by either trust to WISD can be used for bonds, obligations, or debts of any kind, except those existing at the time the trusts were created. The money paid, or to be paid, may not be pledged or hypothecated, obligated, promised or any other way encumbered by the trustees of the trusts or by WISD.
- The trusts do not distinguish between the categories of replacement or supplanting of funds and supplementing funds. The obligation of the beneficiary WISD is to use the net income received from the trusts within the four course areas, among other obligations. The trust allows latitude on the part of WISD, and no part of the trusts are conditioned on whether WISD receives or doesn't receive funds from any other source relating to the four course areas.
- "Net income" is only vaguely defined by the settlors of the trusts by excluding certain income (namely: oil, gas and other mineral leases and royalty which may be paid under such leases) from the definition of net income. This distinction was made by the settlors because income from mineral leases and royalty payments is administered in ways different from the "net income" involved in this case.
The settlors refer to a responsibility of the trustees to conserve, keep and maintain the trust property, and so expenses for that purpose are correctly chargeable against gross income. This would include those charges permitted by the Trust Code subsection 113.111 except where there is direct conflict between the statute and the terms of the trusts (e.g. compensation for trustees).Once net income is thus established, the trustees fund the "emergency fund" per the trust instruments, and then pay over all the rest of the net income to WISD as provided in the trust instruments.
- A claim to modify the trusts pursuant to subsection 112.054 of the Trust Code is not barred by limitations, by estoppel or by res judicata.
- Issues of whether the parties complied with the trust requirements, allocated net income correctly, are to reimburse the trusts, or expended net income contrary to the provisions of the trusts are all fact issues to be resolved.
SIGNED this the 28th day of February, 1994.