FROM THE MISSISSIPPI COUNTY CIRCUIT COURT, OSCEOLA DISTRICT.
NO. CV 2011-101. HONORABLE RANDY F. PHILHOURS, JUDGE.
K. WOOD, Associate Justice. DANIELSON and GOODSON, JJ.,
K. WOOD, Associate Justice
Presbytery appeals from a Mississippi County Circuit
Court's order which applied the doctrine of cy
pres to reform a trust. On direct appeal, Covenant
Presbytery argues first that the circuit court erred in
applying the cy pres doctrine because there was no
charitable trust and because the gift to First Presbyterian
vested upon the settlor's death. Second, it argues that,
if the circuit court was correct to apply cy pres,
then the court's application of the doctrine does not
comport with the settlor's intent. In its cross-appeal,
First Baptist contends that the circuit court erred in
denying its claim that the trustee, SunTrust, breached its
fiduciary duty. We granted First Baptist's petition for
review of the court of appeals' decision. When we grant a
petition for review, we consider the appeal as though it had
been originally filed in this court. See, e.g.,
In re Matter of Hamilton Living Trust, 2015 Ark.
367, 471 S.W.3d 203. We vacate the court of appeals'
opinion, reverse on the direct appeal, and dismiss the
Factual and Procedural Background
of 1965, Stanley D. Carpenter executed a document entitled
" Last Will and Testament" (" will"
). The document named National Bank of
Commerce trustee and executor,
I nominate, constitute and appoint the National Bank of
Commerce in Memphis, Tennessee, as executor and trustee of my
estate, granting to them full power and authority to take
possession of, hold, manage, invest and in every way to
control and supervise all of my property in accordance with
the terms of this Last Will and Testament and under the laws
of the State of Arkansas; . . .
owned 237.87 acres of farmland in Mississippi County, and the
will further provided that Carpenter's four relatives
each would receive a one-fourth interest in the " net
farm rents" for " life." Additionally, two
Osceola churches, First Presbyterian and First Baptist, were
to receive " [a]ll the rest, residue and remainder"
of the estate in equal shares. The will directed the trustee
" to sell all real estate in their discretion as soon as
the law permit[s], taking into consideration the existence of
the life estates hereinbefore created, and distribution of
the proceeds therefrom in accordance with this bequest."
died in 1967. When Carpenter's will was probated, his
farmland was transferred, pursuant to court order, to
National Bank of Commerce, as trustee. National Bank leased
the farmland and disbursed the income to the four life-estate
beneficiaries. As a life-estate beneficiary died, National
Bank would divide and remit the deceased beneficiary's
income equally to First Presbyterian and First Baptist.
2004, First Presbyterian voted to dissolve its congregation.
In an " Overture of Dissolution" all assets of the
church that had not previously been sold or distributed were
transferred to Covenant Presbytery. First Presbyterian
notified National Bank that First Presbyterian had dissolved
and requested that all future payments from Carpenter's
estate be made to Covenant Presbytery. Thereafter, National
Bank distributed the income share to Covenant Presbytery.
2005, SunTrust acquired National Bank and succeeded as
trustee for the trust. SunTrust continued to distribute
payments to beneficiaries, including First Baptist and
Covenant Presbytery. In 2011, a First Baptist board member
contacted the trust advisor assigned to the trust and
expressed his belief that the trust payments to Covenant
Presbytery were improper. Thereafter, SunTrust filed a "
Petition and Request for Instructions and Declaration of
Rights" against First Baptist and Covenant Presbytery
requesting that the circuit court determine the rights and
interests of these parties in the farmland and its income.
First Baptist counterclaimed against SunTrust for breach of
a bench trial in December 2012, the circuit court concluded
that the will created a testamentary trust for the benefit of
two churches in Osceola--First Presbyterian and First
Baptist. Finding that Carpenter's intention was to
benefit churches in his community and that First Presbyterian
no longer had a church in Osceola, the circuit court applied
the cy pres doctrine and reformed the trust to
provide that First Presbyterian's distributions from the
summer of 2011 forward should be transferred to First
Baptist. The circuit court also held that SunTrust did not
breach its fiduciary duty because it did not obtain actual
knowledge of a potential dispute over payments with Covenant
Presbytery until the summer of 2011. We granted First
Baptist's petition for review of the court of
appeals' decision to reverse and remand.