Linda K. Manges, Appellant-Respondent v. Robert Swenson and Dianna Swenson, Appellees-Petitioners (2025)

MEMORANDUM DECISION

Case Summary

[1] Linda Manges, a beneficiary of the Martha Roberts Family Farm Trust (“the Trust”), appeals the order of the trial court determining that Robert Swenson and Dianna Swenson, co-trustees of the Trust (“Trustees”), could sell the Trust's farm to Linda's brother, Robin Roberts. Linda ¹ claims that the trial court's interpretation of the instrument establishing the Trust (“the Trust Instrument”) is erroneous as a matter of law. We disagree and, accordingly, affirm.

Issue

[2] Linda presents one issue, which we restate as whether the trial court's interpretation of the Trust Instrument is erroneous as a matter of law.

Facts

[3] Glen and Martha Roberts had seven children: Linda Manges, Diana Swenson, Judy Shivers, Mary Nutley, Roger Roberts, Pamela McCord, and Robin Roberts. Glen operated a family farm with the assistance of his son, Robin. Over the years, Glen acquired 618 acres, of which 580 acres were tillable farmland. As Glen aged, Robin became progressively more active in running the farm. After Glen's death, Robin continued to operate the farm, and, in 2019, Martha established the Trust and transferred ownership of the farm to the Trust.

[4] The Trust Instrument named Martha's daughter, Diana, and Diana's husband, Robert, as Trustees. The Trust named Martha as the beneficiary of the Trust, with Martha's seven children named as beneficiaries following Martha's death. Under the terms of the Trust Instrument, Robin had the exclusive right to farm the land owned by the Trust as long as he was in compliance with an attached Cash Rent Lease. The Cash Rent Lease agreement established a rent of $100 per acre, for a total annual rent of $58,000, which all parties agree is below market value.

[5] The Trust Instrument provided that the proceeds of the Trust—the rent received from Robin—were to be distributed equally to the beneficiaries; but if Robin no longer operated the farm, then the Trustees were required to liquidate the Trust property and distribute the proceeds equally to the beneficiaries. The Trust Instrument also authorized the Trustees, at their discretion, to sell Trust property “in accordance with the intent to permit Robin Roberts to continue to operate the family farm.” Appellant's App. Vol. II p. 20.

[6] Sometime after the Trust was established, Martha died, and the income generated by the Trust—Robin's annual rent of $58,000—was distributed to the beneficiaries. At some point in 2024, Robin offered to purchase the Trust property for $2,800 per acre—a total of $1,680,000, the most he could afford. This price was also below fair market value.²

[7] On November 21, 2024, the Trustees filed a petition seeking clarification from the trial court regarding whether they were permitted to sell the family farm to Robin without the approval of the beneficiaries. On December 10, 2024, Linda, joined by her sisters Pamela, Judy, and Mary, objected to the sale of the farm to Robin. The trial court held a hearing on the matter on December 16, 2024. And on January 22, 2025, the trial court entered findings of fact and conclusions thereon in which it determined that the Trust Instrument permitted the Trustees to sell the farm to Robin. The relevant part of the court's order provides:

51. [T]he Court gives the following instructions to the Trustees:

a. The Roberts Family Farm Trust provides the power and authority to sell, convey, or transfer any real or personal property of the Trust, and in general to deal otherwise with the Trust property in accordance with the intent to permit Robin Roberts to continue to operate the family farm, and in such manner, for such prices, and on such terms and conditions as any individual might do as outright owner of the property.

b. This includes the sale of The Roberts Family Farm Trust corpus, real or personal, to Robin Roberts.

52. The Court withholds any specific instructions as to purchase price, manner of sale, terms of sale, or otherwise as this is beyond the Court[’s] authority or scope.

53. Provided the authority the Court sets out herein, the Trustees shall act in a manner consistent with this order and their duties to The Roberts Family Farm Trust.

WHEREFORE THE COURT ORDERS THE FOLLOWING:

a. Trustees, Robert Swenson and Dianna Swenson, are vested with the authority to sell, convey, or transfer any real or personal property of the Trust, and in general to deal otherwise with the Trust property in accordance with the intent to permit Robin Roberts to continue to operate the family farm, and in such manner, for such prices, and on such terms and conditions as they deem appropriate and consistent with that intent. Included in this is the sale of real or personal property to Robin Roberts․

Appellant's App. Vol. II pp. 12-13. Linda and the beneficiaries who joined her in opposition to the sale filed a motion to correct error on January 30, 2025. The trial court held a hearing on this motion on March 3, 2025, and denied the motion on March 7, 2025. Linda now appeals.

Discussion and Decision

[8] Linda claims that the trial court erred by concluding that the Trust Instrument permitted the Trustees to sell the family farm to Robin. Linda does not claim that the trial court erred in any of its factual findings; rather, she attacks only the trial court's legal conclusions.

A. Standard of Review

[9] We review a trial court's conclusions of law de novo. Town of Linden v. Birge, 204 N.E.3d 229, 234 (Ind. 2023); TKG Associates, LLC v. MBG Monmouth, LLC, 259 N.E.3d 306, 315 (Ind. Ct. App. 2025), reh'g denied. The interpretation of a trust instrument is also a question of law we review de novo. Paloutzian v. Taggart, 931 N.E.2d 921, 925 (Ind. Ct. App. 2010) (citing Univ. of S. Ind. v. Baker, 843 N.E.2d 528, 532 (Ind. 2006)).

[10] Section 3 of the Trust Code, Indiana Code Section 30-4-1-3, provides:

The rules of law contained in this article shall be interpreted and applied to the terms of the trust so as to implement the intent of the settlor and the purposes of the trust. If the rules of law and the terms of the trust conflict, the terms of the trust shall control unless the rules of law clearly prohibit or restrict the article which the terms of the trust purport to authorize.

[11] Accordingly, we have held that:

[t]he primary purpose of the court in construing a trust instrument is to ascertain and give effect to the settlor's intention and carry out this intention unless it is in violation of some positive rule of law or against public policy․ This Court is not at liberty to rewrite the trust agreement any more than it is at liberty to rewrite contracts. When a trust instrument must be construed by a court, we attempt to discern the settlor's intent in light of the facts and circumstances existing at the time the instrument was executed.

Paloutzian, 931 N.E.2d at 925 (citations and internal quotations omitted).

[12] “We look at the trust [instrument] as a whole and cannot take individual clauses out of context. If the trust [instrument] is capable of clear and unambiguous construction, we must give effect to the [instrument]’s clear meaning.” Fulp v. Gilliland, 998 N.E.2d 204, 207 (Ind. 2013) (citations and internal quotations omitted). We follow the four corners rule, under which extrinsic evidence is not admissible to add to, vary, or explain the terms of a written instrument so long as the terms of the instrument are susceptible of a clear and unambiguous construction. In re Walter Penner Tr., 22 N.E.3d 593, 597 (Ind. Ct. App. 2014), trans. denied. A trust instrument's language is not ambiguous simply because the parties disagree about its meaning; instead, the language of the instrument is “ ‘ambiguous only if reasonable people could come to different conclusions as to its meaning.’ ” Id. (quoting Baker, 843 N.E.2d at 532).

B. The Trust Instrument authorizes the Trustees to sell the Trust property to Robin.

[13] Here, neither party claims the Trust Instrument is ambiguous; they merely disagree on how we should interpret its terms. The parties also agree that the relevant portions of the Trust Instrument are Articles II, III and V. We agree that the language of the Trust Instrument is unambiguous. And reading the four corners of the Trust Instrument and construing its provisions to determine its meaning and intent, we conclude that the trial court did not err.

[14] Article II provides in relevant part:

The Trustee shall operate the Roberts Family Farm Trust, administer the Trust principal and any net income thereof as follows:

A. The Trustee shall rent the farm land and grain storage to Robin Roberts ․ on the terms indicated in the Cash Rent Lease attached to this instrument, for as long as he shall desire to farm and for as long as he is in compliance with the terms of said Cash Rent Lease.[3] Robin Roberts shall be entitled to use the farm equipment listed on the Schedule of Property provided that he insures the equipment and farm operation and maintains the equipment in a manner consistent with good practice. Robin Roberts shall, with the consent of the Trustees (which consent shall not be unreasonably withheld) be permitted to trade farm equipment when it is advisable to do so in the prudent operation of the farm operation.

Appellant's App. Vol. II p. 18 (emphasis added).

[15] Article III provides in relevant part:

A. Following my death, the Trustees shall continue to operate the Roberts Family Farm Trust in accordance with the provisions of Article II A, and they shall then distribute the net proceeds annually, in equal shares, to my seven children, or their issue: ․ At such time as Robin G. Roberts no longer operates the Roberts Family Farm Trust, whether by his choice or as the result of default on his obligations under the Cash Rent Lease, the Trustees shall liquidate the remaining Trust property and distribute the proceeds equally among my seven children listed above or their issue.

Id. at 18-19 (emphases added).

[16] It is clear that, in Article II(A) and Article III(A), Martha established the Trust with the intent that Robin be allowed to lease the farm and operate the farm for as long as he wants or as long as he is able to pay the rent. If Robin does not pay the rent or continue operating the farm, the farm shall be sold, with the proceeds to be distributed equally to Martha's seven children.

[17] The relevant portion of Article V provides:

A. The Trustees shall have the following powers with respect to each Trust held under this instrument, exercisable in the discretion of the Trustees:

* * * * *

2. To sell at public or private sale, wholly or partly on cash or on credit, contract to sell, grant or exercise options to buy, convey, transfer, exchange, or lease (for a term within or extending beyond the term of the Trust) any real or personal property of the Trust, and to partition, dedicate, grant easements in or over, subdivide, improve, remodel repair, or raze improvements on any real property of the Trust, and in general to deal otherwise with the Trust property in accordance with the intent to permit Robin Roberts to continue to operate the family farm, and in such manner, for such prices, and on such terms and conditions as any individual might do as outright owner of the property[.]

Id. at 21 (emphases added). Article V(A) thus grants specific powers to the Trustees, but it does not establish Martha's intent, other than conditioning the Trustees’ power on permitting Robin to “continue to operate the family farm.” Id.

[18] Linda reads these provisions to mean that Robin can farm the Trust property as long as he wants, so long as he pays the annual rent of $58,000 pursuant to Article II(A), but the Trustees cannot sell the Trust property unless and until Robin stops farming it, thereby triggering the mandatory sale of the Trust property pursuant to Article III(A). Because Robin continues to farm, Linda claims that the Trustees have no authority to sell the farm.

[19] The Trustees basically agree with Linda's interpretation of Articles II and III, but they disagree with Linda's interpretation of Article V(A)(2), which they read as permitting them to sell “any real or personal property of the Trust” at their discretion “in accordance with the intent to permit Robin Roberts to continue to operate the family farm.” Id. at 21. We agree with the Trustees.

[20] Article V(A)(2) grants the Trustees the “discretion” to sell the farm: (1) so long as Robin is permitted to “continue to operate the family farm” and (2) “in such manners, such prices, and on such terms and conditions as any individual might do as outright owner of the property.” Id. Accordingly, under this provision, the Trustees must allow Robin to “operate the family farm,” but other than that, the Trustees have the power to sell the farm for a price that an “outright owner” would be able to sell the farm with the encumbrance of Robin's lease. Id.

[21] The powers granted to the Trustees give them wide discretion within the confines to do so as an “outright owner of the property would do.” Id. This preserves the interests of the beneficiaries, yet allows the Trustees the flexibility to sell the farm on terms and conditions as any owner would do as long as it does not interfere with Robin's right to operate the farm. The Trustees have the unenviable position of determining when to sell the farm and at what price. Whether they sell before or after Robin is done farming the land is in the discretion of the Trustees. It is not the responsibility of the Trustees to determine Martha's intent regarding the price and person to whom the farm should be sold.

[22] Still, Linda claims that the discretion of the Trustees to sell the Trust property is restrained by the language in Article II providing that the Trustees “shall rent the farm land and grain storage to Robin ․ for as long as he shall desire to farm and for as long as he is in compliance with the terms of [the] Cash Rent Lease.” Appellant's App. Vol. II p. 18 (emphasis added). Linda argues that the cited language means that, so long as Robin wishes to farm the family farm, the Trustees can only rent the land to Robin. When read together with Article V(A)(2), however, we construe this provision to mean that the Trustees must rent the land to Robin so long as he wishes to continue to do so, but it does not limit the Trustees’ authority in Article V to sell the farm so long as the sale is in accordance with the settlor's intent to allow Robin to continue to operate the family farm.⁴

[23] Accordingly, we agree with the trial court that the Trust Instrument permits the Trustees to sell the family farm to Robin.⁵

Conclusion

[24] The trial court did not err by concluding that the Trust Instrument authorizes the Trustees to sell the Trust property to Robin for a price “as any individual might to as outright owner of the property.” We, therefore, affirm the trial court's judgment.

[25] Affirmed.

FOOTNOTES

1.   Since many of the parties share a common surname, we refer to them by their given names.

2.   The Trustees estimated that a fair market value for the land was $9,000 to $11,000 per acre, but this was for unencumbered property. The Trust property, however, was encumbered by Robin's right to farm the land for a yearly rent of only $100 per acre. Thus, Robert testified: “who would pay $7 million for a property that had a fixed income at $58,000 per year?” Tr. Vol. II p. 11.

3.   As noted above, the Cash Rent Lease agreement established a rent of $100 per acre, for a total annual rent of $58,000.

4.   Linda notes that Article III provides that the Trustees’ obligation to sell the Trust assets is not triggered until Robin “no longer operates the Roberts Family Farm Trust.” Appellant's App. Vol. II p. 19 (emphasis added). In contrast, Article V(A)(2) states that the Trustees have the discretion to sell or otherwise deal with the Trust property “in accordance with the intent to permit Robin Roberts to continue to operate the family farm.” Id. at 21 (emphasis added). Linda claims that the reference to the “Family Farm Trust” in Article III must be a scrivener's error, as Robin operates the farm, not the Trust. Thus, Linda claims that Article III should be read so that the Trustee's must sell the Trust property when Robin “no longer operates the Roberts Family Farm,” not the “Roberts Family Farm Trust.” According to Linda, this reading “better harmonizes [Article III] with Article V, which affirms Robin's right to farm the family farm under the Cash Rent Lease” and “better harmonizes with the Trust's second intent: to preserve the value of the Trust property and equally divide the proceeds of the Trust property among Martha's seven children when Robin ceases farming the Trust farmland.” Appellant's Br. p. 19. But even under Linda's proposed reading of Article III, we read Article V(A)(2) to give the Trustees the discretion to sell the Trust property so long as that is in accordance with the intent to permit Robin to continue to operate the family farm.

5.   Robin expressed an intent to farm the land “indefinitely.” Tr. Vol. II p. 9.

Tavitas, Judge.

Judges Vaidik and Felix concur. Vaidik, J., and Felix, J., concur.