             IN THE COURT OF APPEALS OF TENNESSEE
                         AT NASHVILLE

                                                      FILED
SHERRY BROWN, as next friend            )            September 14, 1998
and natural mother of her minor         )
children, AMANDA DANETTE                )             Cecil W. Crowson
MCMULLIN and ADAM MCMULLIN,             )            Appellate Court Clerk
                                        )
       Plaintiff/Appellee,              )
                                        )   Appeal No.
                                        )   01-A-01-9710-CH-00561
VS.                                     )
                                        )   Lawrence Chancery
                                        )   No. 6489-93
DORRIS MCMULLIN, LARRY                  )
MCMULLIN, HELEN MCMULLIN,               )
and THE ESTATE OF EUGENE                )
MCMULLIN,                               )
                                        )
       Defendants/Appellants.           )


      APPEALED FROM THE CHANCERY COURT OF LAWRENCE COUNTY
                  AT LAWRENCEBURG, TENNESSEE

             THE HONORABLE JAMES L. WEATHERFORD, JUDGE




JANE M. JENNINGS
231 Mahr Avenue
Post Office Box 794
Lawrenceburg, Tennessee 38464
      Attorney for Plaintiff/Appellee

J. DANIEL FREEMON
Freemon, Hillhouse & Huddleston
327 West Gaines Street
P. O. Box 787
Lawrenceburg, Tennessee 38464
       Attorney for Defendants/Appellants



                             AFFIRMED AND REMANDED



                                            BEN H. CANTRELL, JUDGE

CONCUR:
TODD, P.J., M.S.
CAIN, J.
                                OPINION
              The dispositive question in this appeal is whether a successor trustee

of a revocable savings account trust has the power after the death of the original

trustee to revoke the trust and claim the trust assets as his own. The Chancery court

of Lawrence County ordered the trust assets paid into the Clerk and Master’s Office

to be held for the original beneficiaries. We affirm.



                                           I.



              The essential facts have been stated in a former opinion of this Court.

We quote from that opinion:

                     The proceeds of a policy of insurance on the life of
              Donnie McMullin were paid to his mother, Edith McMullin,
              the named beneficiary, who, jointly with her husband,
              Eugene McMullin, deposited these funds in a trust
              account, having first executed a Discretionary Revocable
              Joint Trustee Agreement which designated them as joint
              trustees of the funds of their grandchildren, Amanda and
              Adam McMullin (children of their son, Donnie McMullin,
              the insured decedent) as beneficiaries. Edith and Eugene
              McMullin had two other sons, Larry and Dorris McMullin.

                    Six years later, Edith McMullin died and Eugene
              McMullin continued to serve as trustee. The trust funds
              remained intact and productive until October 21, 1993,
              when they were paid out by the depository bank under
              unusual circumstances.

                       The surviving trustee, Eugene McMullin, became
              mortally ill. He was being transported to a hospital on
              October 21, 1993 [one week before his death] by Larry
              McMullin and Helen McMullin (wife of Dorris), when they
              stopped en route at the depository bank. Eugene was too
              ill to leave the car. Larry and Helen entered the bank and
              prevailed upon the bankers to change the beneficiaries of
              the trust from Adam and Amanda McMullin (both minors)
              to Larry and Dorris McMullin, the brothers of the minors’
              deceased father. Not the least lacking in cooperation, the
              bank issued two cashiers checks, each in the amount of
              $49,945.53 to Larry and Dorris McMullin.

                     It is not disputed that Eugene McMullin, the trustee,
              did not enter the bank on October 21, 1993, and did not
              communicate with a banker. He signed no instruments of
              any kind. The record offers little explanation of the
              somewhat remarkable banking practice evidenced from
              the foregoing recitation.

Brown v. McMullin, No. 01A01-9603-CH-00113 (Nashville, August 16, 1996).

                                         -2-
             The opinion dealt with only one narrow issue: that Larry and Helen

McMullin had no authority to revoke the trust. The court affirmed the lower court’s

judgment on that issue and remanded the cause for further proceedings.



             The chancellor ordered the defendants to pay the money they had

withdrawn from the trust into the office of the Clerk and Master. In subsequent

proceedings, the chancery court decreed that the funds should be held by the Clerk

and Master for the benefit of the original beneficiaries and that withdrawals would be

made only for income tax payments or emergency expenses.



                                          II.



             The document creating the trust was entitled, “Discretionary Revocable

Trust Account” and it provided that

             (1)     The trustees are authorized to hold, manage,
             invest, and reinvest said funds in their sole discretion;
             (2)     The undersigned grantors reserve the right to
             revoke said trust in part or in full at any time, and any
             partial or complete withdrawal by the original trustees, if
             they be both of the grantors, shall be a revocation to the
             extent of such withdrawal, but no other revocation shall be
             valid unless written notice by both of such trustees is
             given to the institution named on the reverse side of the
             card;
             (3)     In the event of the death, resignation, removal or
             incompetence of both of said trustees, DORRIS
             McMULLIN is appointed successor trustee . . . and such
             successor trustee shall have the powers of the original
             trustees;
             (4)     This trust, subject to the right of revocation, shall
             continue for the life of the grantors and thereafter until the
             beneficiary is TWENTY-FIVE years of age and then the
             proceeds shall be delivered to the beneficiary; . . . .



              Similar trusts have been upheld against a charge that they are

testamentary in nature and invalid because they do not comply with the Wills Act.

Leader Federal S & L Association v. Hamilton, 330 S.W.2d 33 (Tenn. App. 1959);


                                         -3-
Peoples Bank v. Baxter, 298 S.W.2d 732 (Tenn. App. 1956). And in Bumbaugh v.

Burns, 635 S.W.2d 518 (Tenn. App. 1982) this court held that the corpus of a savings

account trust, described as a “joint discretionary revocable trust,” did not become a

part of the settlor/trustee’s estate at her death and, absent some provision in the trust

itself, the trust could not be revoked by the settlor/trustees’ will. We think these cases

lead to the inescapable conclusion that the trust created by a savings account

instrument is a continuing trust and that upon the death of the settlor(s) the beneficial

interest in the remaining funds vests in the beneficiaries according to the trust’s terms.

In this case, the beneficial interests of Adam and Amanda McMullin vested at the

death of Eugene McMullin, the last surviving grantor.



              This conclusion is supported by two separate statements of the general

law. The first is the Restatement of Trusts § 58 which provides:

              Tentative trusts of savings deposit: “Where a person
              makes a deposit in a savings account in a bank in his own
              name as trustee for another person, intending to reserve
              a power to withdraw the whole or any part of the deposit
              at any time during his lifetime, and to use as his own
              whatever he may withdraw, or otherwise to revoke the
              trust, the intended trust is enforceable by the beneficiary
              upon the death of the depositor as to any remaining on
              deposit on his death if he has not revoked the trust.”



              The second is a part of our banking law, Tenn. Code Ann. § 45-2-704.

It provides in part:

              (a)(1) Whenever any deposit shall be made in any bank
              by any person in trust for another, and no other or further
              notice of the existence and terms of a legal and valid trust
              shall have been given in writing to the bank, the bank is
              entitled to deem the following with respect to such
              deposit, that:

                      (A) The person designated as trustee is the owner
              of the deposit account;
                      (B) The owner retains the right during the owner’s
              lifetime to withdraw, assign or pledge the balance of such
              deposit account, in whole or in part, as though no survivor
              beneficiary had been named, and to delete or change a
              survivor beneficiary; and
                      (C) The interest of a person designated as
              beneficiary shall not vest until the death of the owner, or

                                          -4-
              in the case of joint owners, until the death of the last
              surviving owner, and such interest shall be subject to any
              lien, assignment, pledge, right of offset or other claim
              which the bank could have asserted against the owner.

              (2) No change in the designation of the survivor
              beneficiary is valid unless executed on a form and in a
              manner prescribed by the bank.

              (3) The following terms shall be deemed to apply to such
              account, unless the owner notifies the bank otherwise:

                     (A) The interest of the beneficiary in the account
              vests, only if the beneficiary survives the last surviving
              owner;
                     (B) Multiple beneficiaries surviving the last
              surviving owner shall be entitled to equal shares of the
              account; and
                     (C) If no beneficiary survives, the account shall
              remain in the estate of the last surviving owner;



              It can be seen that this Act plugs the gaps that remain (and with which

the courts have had to struggle), when a deposit is made in a bank in trust for a third

party and there are no other provisions that govern how the bank may deal with the

funds. Admittedly, the trust instrument in this case is more complete (it allows

revocation in whole or in part and it directs the remaining funds to be held until the

beneficiaries reach the age of twenty-five) but a gap still remains as to when the

interest vests. The Act fills that void by providing that the interest vests in the

beneficiary only if he/she survives the last surviving owner.



              The only claim by the successor trustee named in the trust instrument

is based on the fact that the trust provides that he shall have all the powers of the

original trustees. He construes that provision as passing on to him the power to

revoke the trust -- for his own benefit if he so decides. We think this construction of

the trust would defeat the obvious intent of the settlors to provide a benefit for their

grandchildren whose father provided the funds through insurance on his life. It is true

that the settlors reserved the right to encroach on the corpus of the trust -- and to that

extent effect a partial revocation -- but the remaining funds vested in the beneficiaries



                                          -5-
at the death of the surviving settlor. The successor trustee’s powers could not then

be exercised in a way to defeat the trust purposes.



             In addition, we think the successor trustee’s contention amounts to a

claim that some beneficial interest in the trust corpus passed to him at his father’s

death. In our view, that result could only be accomplished by a valid will.



             The provision giving the successor trustee the same powers as the

original trustees should be read as a part of the whole instrument. One of the reasons

for having a successor trustee was the incompetence of the settlors. In that event,

while the settlors still lived, the successor trustee would have had the power of

encroachment/revocation for their benefit. But we are still of the opinion that at the

death of the last surviving grandparent the beneficial interest in the remaining funds

vested in the children. Only the enjoyment of the benefit was postponed until they

reached the age of twenty-five.




                                         III.



             After remand, the trial judge overruled a motion made by the successor

trustee and the other family members to assert a claim against the bank. The trial

judge reasoned that any claim the original defendants had against the bank could be

asserted in a separate action and should not delay a final resolution of the issues in

this case.




                                        -6-
              We think that whether to add the bank as a party to this action was a

decision resting within the discretion of the trial judge. The bank was not a necessary

party in this action, Rule 19, Tenn. R. Civ. Pro., and the permissive joinder of a party

is subject to the trial judge’s authority to “make other orders to prevent delay or

prejudice.” Rule 20.02, Tenn. R. Civ. Pro.



                                           IV.



              The appellants also argue that the parties should be placed in status

quo; that the trust should be reinstated instead of placing the funds in the custody of

the Clerk and Master. We think, however, that the power of the chancery court to

remove a trustee when the trustee has threatened to violate his trust, Tenn. Code

Ann. § 35-1-106(a)(2)(B), or for other good cause, id. (2)(F), is authority for the court’s

decision not to return to the status quo. In addition, the trial court’s action is in

substance a continuation of the trust with the Clerk and Master serving as the trustee.

The only duty imposed on the trustee is the investment of the funds and the payment

of the corpus to the beneficiaries when they reach the age of twenty-five.



              The judgment of the court below is affirmed and the cause is remanded

to the Chancery Court of Lawrence County for any further proceedings necessary.

Tax the costs on appeal to the appellants.




                                                   ____________________________
                                                   BEN H. CANTRELL, JUDGE



CONCUR:




                                           -7-
_______________________________
HENRY F. TODD, PRESIDING JUDGE
MIDDLE SECTION




_____________________________
WILLIAM B. CAIN, JUDGE




                                -8-
