Shiba v. Shiba

2008 UT 33
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
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Masakazu Shiba; Shizue F. Shiba; 	No. 20060560
Masakazu Shiba, Trustee of the Riye
Shiba Marital and Family Trust; and
Masakazu Shiba, Trustee of the
Masazo Shiba Marital and Family Trust,
Plaintiffs and Appellants,
v.
Toshiro Shiba; Jean O. Shiba;
Seiji Shiba; Della Kono Shiba;
Ronald Nishijima; Natsuye Nishijima;
Ronald Nishijima and Natsuye
Nishijima, Trustees of the Ronald
and Natsuye Family Trust; Toshiro
Shiba, Trustee of the Riye Shiba
Marital and Family Trust;
Toshiro Shiba, Trustee of the
Masazo Shiba Marital and Family 	F I L E D
Trust; and Does 1-10,
Defendants and Appellees. 	May 13, 2008
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Fourth District, Provo Dep’t
The Honorable James R. Taylor
No. 000401595
Attorneys: 	M. James Brady, Margot Edwards, Provo, for
plaintiffs
Evan A. Schmutz, Andrew V. Wright, M. Reed Adams,
Provo, David Ray Carter, Salt Lake City, for
defendants
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WILKINS, Justice:
¶1 	Appellant Masakazu Shiba appeals the trial court’s
determination that Appellee Toshiro Shiba is entitled to fifty
percent of the proceeds from the sale of their father’s
residence. 	Masakazu also appeals the trial court’s conclusion
that the distribution scheme in the family trust was never
amended and, therefore, the assets were intended to remain in

1 The eight named limited partners were Mas, Riye Shiba,
(continued...)
No. 20060560 	2
the estate until their father’s death. 	We conclude that the
trial court’s determinations were correct and therefore affirm.
BACKGROUND
I. 	THE SHIBA FARM AND THE MASAZO MARITAL AND FAMILY TRUST
¶2 	Appellant Masakazu Shiba (“Sok”) and Appellees Toshiro
Shiba (“Tosh”), Natsuye Nishijima (“Nats”), and Seiji Shiba
(“Seiji”) are the children of Masazo (“Mas”) and Riye Shiba, both
of whom are deceased. 	During the 1950s, Mas, Tosh, and Sok began
to acquire farmland in Lehi, Utah (the “Shiba Farm”). 	In early
1959, Mas and Tosh acquired an additional one hundred acres of
land by warranty deed, with each retaining an undivided fifty
percent interest as joint tenants. 	Within that one hundred acres
was a thirty-acre parcel that Tosh and Mas used to build their
homes.
¶3 	On December 31, 1985, Mas acted as Trustor in executing
the Masazo Shiba Marital and Family Trust (the “Trust”). 	Tosh
and Sok were named as joint trustees of the Trust. 	The Trust
provided, among other things, that upon Mas’ death, Tosh’s home--
including the 1.49 acre lot upon which it was built--should be
distributed to Tosh and his heirs. 	Furthermore, the Trust
provided that Mas’ primary residence and lot should be
distributed to Sok and his heirs. 	Also on December 31, 1985, Mas
conveyed his right title and interest in the Shiba Farm
(including the thirty-acre parcel of land where his and Tosh’s
homes were located) to the Trust. 	Tosh, however, did not convey
his interest in the thirty-acre parcel to the Trust; instead,
Tosh retained his fifty percent interest in both of the homes and
the land upon which they were built.
II. 	THE SHIBA FARM LIMITED PARTNERSHIP
¶4 	On December 31, 1985, Mas and Riye created the Shiba
Farm Limited Partnership (the “Partnership”) as part of their
overall estate plan. 	On that same day, Mas and Riye conveyed the
Shiba Farm to the Partnership, and it became the Partnership’s
primary asset. 	Also on December 31, 1985, Mas and Riye
transferred their interest in the Partnership to the Trust.
¶5 	The Limited Partnership Agreement (the “LP Agreement”)
named Sok and Tosh as general partners and named eight limited
partners. 1 	The LP Agreement provided, among other things, that

1
(...continued)
Jean Shiba, Shizue Shiba, Seiji, Della Shiba, and Nats and Ronald
Nishijima.
2 Section 15.8 states as follows:
Amendments. 	If the General Partners shall propose in
writing to the Limited Partners the adoption of an
amendment to this agreement, and if, within thirty (30)
days of the giving of a notice containing such
proposal, more than fifty-one percent (51%) in
ownership interest of the partners, including the
General Partners, shall have given their written
consent thereto, then each Limited Partner, shall, if
requested, promptly execute or cause to be executed one
or more amendments to this agreement and certificates
of the partnership as may be required to reflect such
amendments under the laws of the jurisdictions in which
the partnership does business at such time.
3 	No. 20060560
the profits could be distributed “provided that all of the
partners shall participate in any such distribution pro rata in
accordance with their respective capital contributions.” 	The LP
Agreement also stated that upon dissolution, the general partners
could “elect to distribute undivided interests in partnership
property to the partners in kind in proportion to their capital
accounts at the time of distribution.” 	Finally, the LP Agreement
could only be amended by compliance with section 15.8 of the
Articles of Incorporation. 2
III. 	AMENDMENTS TO THE TRUST
¶6 	On December 4, 1990, Mas executed the First Amendment
to the Trust, which provided that the interest in the Partnership
owned by the Trust “shall be distributed in such a way as to
achieve a final percentage of ownership” of any real property
held by the Trust among the Shiba children as follows: (1) Sok,
43.5%; (2) Tosh, 43.5%; (3) Nats, 6.5%; and (4) Seiji, 6.5%.
(Emphasis added.) 	On December 27, 1990, Mas executed the Second
Amendment to the Trust, which simply provided a legal description
of Mas’ residence. 	No additional amendments were made to the
Trust.
IV. 	THE FAMILY AGREEMENT
¶7 	At some point prior to 1994, Tosh and Sok became unable
to cooperate and manage the Trust or the Partnership. 	These
difficulties subsequently led to litigation. 	As a result of the
litigation, it was decided that the Shiba Farm would be sold.

3 The revelant portion of the No Change Pledge states as
follows: “I will cooperate by amending my trust to facilitate
[the Exchange Plan] outlined in the document entitled ‘Exchanging
Properties From Farm Sale presented in family meeting on December
3, 1994.’”
No. 20060560 	4
After consulting a lawyer, the partners decided that in order to
avoid a significant capital gains tax on the sale of the Shiba
Farm, they would effect a Section 1031 “like-kind” exchange (the
“Exchange Plan”), which would substitute suitable property into
the Partnership to replace the Shiba Farm. 	The Exchange Plan
proposed allocating the Partnership assets to the various
children, who would each then be responsible for locating a
property to “replace” their designated share. 	The Partnership
would then sell the Shiba Farm and purchase those prospective
properties with the proceeds; any income, loss, or expenses for
the future properties would be attributed to the individual who
located the particular asset. 	After further review, however, the
lawyer determined that implementation of the Exchange Plan
required modification of the LP Agreement to allow specific
allocation of assets, income, and expenses among the various
partners. 	The LP Agreement, however, was never modified or
amended.
¶8 	On December 3, 1994, the Shiba family met in an effort
to implement the Exchange Plan. 	During the meeting, all of the
partners executed an agreement that incorporated and specifically
indicated an intent to be bound by four identified documents:
(1) the “No Change Pledge to the Masazo Shiba Marital and Family
Trust Agreement” (the “No Change Pledge”) (2) the “Exchanging
Properties From Farm Sale--December 3, 1994,” (the “Exchange
Document”), (3) the “Pre-Allocation Plans A & B . . . December 1,
1994,” and (4) the “Present Ownership Schedule . . . Oct. 22,
1994” (the “P.O. Schedule”). 	Collectively, these four documents
are referred to as the Family Agreement.
¶9 	In order to facilitate the Exchange Plan, Mas had to
amend the Trust to allow for the specific allocation of assets,
income, and expenses among the various partners. 	Mas agreed to
do this by executing the No Change Pledge.3 	However, Mas never
amended the Trust in the manner contemplated. 	Furthermore,
although the fourth paragraph of the No Change Pledge gives the
beneficiaries of the Trust the ability to acquire exchange
properties upon the sale of the Shiba Farm using their
anticipated trust inheritances, the paragraph also specifically
states that “[t]he pre-allocated amount and its earnings shall
remain [Mas’] property until such time of distribution from my
estate.” 	(Emphasis added.)

4 The following parties purchased the Clinic in the
following percentages of ownership: 69.48% ($1,118,628) from the
Partnership; 13.76% ($221,536) each from Tosh and Sok; and 3%
($48,300) from the Trust.
5 In 2000, the Partnership, as Grantor, conveyed the
Farmington Lot to Ron and Nats by warranty deed. 	All other
property has been retained in the name and title of the
Partnership.
5 	No. 20060560
¶10 	After the December 1994 meeting, each of the partners
began looking for their respective “replacement” properties.
Only two of the partners, however, were successful in locating
any property: 	Nats and her husband Ron located a building lot in
Farmington (the “Farmington Lot”), and Sok located a medical
office building (the “Clinic”). 	The Shiba Farm was subsequently
sold in January 1995, thus triggering the need for the exchange
properties in order to avoid the capital gains taxes. 	Because
replacement properties could not be found by all the partners,
the family decided that Tosh, Sok, and the Trust would contribute
funds to purchase the Clinic on the express condition that when
Sok located appropriate financing, their funds would be promptly
released. 	On July 6, 1995, the Clinic was purchased for
$1,610,415. 4 	The warranty deed delivered in connection with the
purchase of the Clinic established title to the parties in the
same percentages as they had contributed to the purchase price.
¶11 	For several years, the Partnership made tax
declarations and accountings indicating that all of the
Partnership properties--including the Farmington Lot,5 the
Clinic, and various investment accounts--were held by the
Partnership in the same percentage of ownership as the Shiba Farm
had been before it was sold. 	Pursuant to the advice of
accountants, Tosh performed re-accountings according to the pre-
allocations for the tax years 1996 through 1999. 	The partners
were not satisfied with the 1999 accounting; specifically, Sok
believed he had “cashed out” the other partners and believed he
now owned the Clinic outright and had no need to account.
Distribution of the proceeds from the sale of the Clinic pursuant
to the Trust is one of the issues Sok now disputes on appeal.
V. 	THE FIDELITY ACCOUNT
¶12 	Some time after 1959, Mas and Tosh both built
residences on the thirty-acre parcel located within the one
hundred acres they had acquired by warranty deed. 	Title to those
properties was originally placed in the name of Mas and Tosh as
joint tenants. 	As previously discussed, Mas subsequently

6 The parties indicate that the home was sold for $150,000.
After $8,000 in costs and fees, $142,000 remained.
7 The proceeds from the sale of Tosh’s residence were
directed to Tosh pursuant to the terms of the Trust.
8 Pursuant to section 14.2 of the LP Agreement, “the General
Partners may elect to distribute undivided interests in
partnership property to the partners in kind in proportion to
their capital accounts at the time of distribution.”
No. 20060560 	6
conveyed his interest in the parcel to the Trust by quitclaim
deed, which severed the joint tenancy and created a tenancy in
common. 	Tosh, however, retained his interest. 	Subsequently,
when the family sold the Shiba Farm in January 1995, the Trust
and Tosh also sold their interests in the thirty-acre parcel,
including their interests in the two residential lots and homes.
The proceeds from the sale of Mas’ home and land--$142,0006 --were
separated and placed in a separate Fidelity account (the
“Fidelity Account”). 7 	Sok now disputes how the Fidelity Account
is to be distributed between him and Tosh.
VI. 	THE TRIAL COURT’S DECISION
¶13 	In 1998, Mas died. 	After numerous failed attempts
between Tosh and Sok to resolve their disputes over the
Partnership and Trust, it was determined that the Partnership
would be judicially dissolved. 	After bifurcating the
proceedings, the trial court entered Findings of Fact,
Conclusions of Law, an Order, and a Memorandum Decision. 	The
trial court concluded that the Family Agreement validly amended
the Trust to allow each partner to select and manage replacement
properties and that the intent “was to preserve the tax advantage
of a like-kind exchange for farm property to be sold and to
diversify management of the assets.” 	The trial court also
concluded, however, that because Mas never made the necessary
amendment to the Trust, the Family Agreement “did not remove the
replacement propert[ies] from the estate plan . . . [but instead]
specifically required that ownership of the properties remain
within the partnership and ultimately be distributed in
accordance with the [Trust].” 	Moreover, the trial court
concluded that the Family Agreement modified the LP agreement,
but only as to management of the replacement properties, and that
distribution of the Partnership assets upon dissolution had to be
effectuated as originally established by the LP Agreement.8
Finally, the trial court concluded that Tosh was entitled to
fifty percent of the funds held in the Fidelity Account. 	Sok
subsequently filed this interlocutory appeal, which we granted.

7 	No. 20060560
ANALYSIS
¶14 	Sok raises two issues on appeal. 	First, Sok contends
that the trial court erred when it concluded that Tosh is
entitled to fifty percent of the proceeds held in the Fidelity
Account. 	Second, Sok argues that the trial court erred in
concluding that distribution of the Partnership assets was not
modified by the Family Agreement. 	These questions involve
principles of contract interpretation. 	Because neither of the
parties claim that the Family Agreement is ambiguous, we look to
the four corners of the document to determine how the terms
impact the outcome. 	This is a legal conclusion, reviewed for
correctness. 	Kimball v. Campbell, 699 P.2d 714, 716 (Utah 1985).
I. 	THE FIDELITY ACCOUNT
¶15 	Sok argues that the trial court erred when it concluded
that Tosh is entitled to fifty percent of the proceeds from the
sale of Mas’ residence. 	More specifically, he contends that Tosh
and Mas held the thirty-acre parcel as joint tenants, and when
Mas conveyed his interest in the acreage to the Trust by
quitclaim deed, he severed the joint tenancy, creating a tenancy
in common. 	Moreover, Sok contends that when the tenancy in
common sold the commonly owned acreage, each cotenant had a right
to share in the proceeds of the sale according to their
proportionate interests because tenants in common are presumed to
hold equal, undivided shares in the commonly owned property.
When Tosh and Sok agreed to be bound by the P.O. Schedule,
however, Sok avers that they validly modified the distribution in
a manner other than equal shares. 	In other words, Sok argues
that the P.O. Schedule modified their original agreement
regarding their individual interests in the thirty-acre parcel,
effectively “rebutting” the tenancy in common presumption of
equal, undivided interests in the property. 	Accordingly, Sok
argues that the trial court erred when it concluded that Tosh had
“never transferred [his interest] by any document or agreement
until the entire farm was sold” and that Tosh retained legal
title to fifty percent of the property.
¶16 	Tosh, on the other hand, contends that the P.O.
Schedule is not an agreement whereby he agreed to convey his
interest in Mas’ residence to Sok. 	First, the P.O. Schedule does
not contain any language suggesting a conveyance, nor is there
any deed or record of Tosh conveying his interest in Mas’ home.
Furthermore, while language in the No Change Pledge references
the P.O. Schedule, it actually refutes Sok’s contentions because
it explicitly states that the “pre-allocated amount and its
earnings shall remain [Mas’] property until such time of
distribution from my estate.” 	(Emphasis added.) 	Tosh argues

9 After the conveyance, the Trust owned Mas’ fifty percent
interest in the land. 	When the property was sold as part of the
sale of the Shiba Farm, Tosh was entitled to fifty percent of the
proceeds of his home and was entitled to the other fifty percent
of the proceeds of his home through his inheritance from the
Trust. 	As to the proceeds from Mas’ home, Tosh was entitled to
fifty percent of proceeds since he still maintained a fifty
percent interest after it was conveyed to the Trust. 	Sok was
entitled to the other fifty percent as a specific devise of the
Trust.
No. 20060560 	8
that this language shows that Mas clearly intended to retain
ownership of the property until it was distributed from his
estate. 	Accordingly, Tosh retained his interest in Mas’
residence and the trial court correctly to concluded that the
Family Agreement did not modify or vary the original plan for
distribution of the Fidelity Account. 	We agree.
¶17 	It is well settled that under a joint tenancy, both
parties hold a concurrent ownership in the same property with a
right of survivorship, i.e., each is “afforded the eventuality of
a full ownership interest, conditioned upon the tenancy remaining
unsevered, and one out-living the other.” 	Estate of Breckon v.
State Tax Comm’n, 591 P.2d 442, 443 (Utah 1979) (footnote
omitted). 	It is also well settled that “a joint tenant of real
property by conveying . . . his interest therein by a valid deed
. . . severs and terminates the joint tenancy by the creation of
a tenancy in common.” 	Tracy-Collins Trust Co. v. Goeltz, 301
P.2d 1086, 1090 (Utah 1956). 	Moreover, “a joint tenant cannot
dispose of more than his own interest in joint tenancy property,
i.e., one-half thereof.” 	Breckon, 591 P.2d at 444.
¶18 	In this case, Tosh and Mas acquired, by warranty deed,
the one hundred acre parcel as joint tenants. 	When Mas
subsequently conveyed his interest in the acreage to the Trust,
including the thirty-acre parcel where the homes were located, he
severed the joint tenancy, thus creating a tenancy in common.
Mas could only convey, however, his one-half interest in the
property to the Trust. 	See id. 	Tosh never conveyed his interest
to the Trust. 	Because Mas had only a fifty percent interest to
convey to the Trust, Tosh retained legal title to half of the
property. 	Accordingly, the trial court correctly awarded only
fifty percent of the Fidelity Account to Sok as a specific devise
of the Trust because the account should be shared equally by Sok
and Tosh.9

9 	No. 20060560
II. 	THE EFFECT OF THE FAMILY AGREEMENT ON DISTRIBUTION OF THE
PARTNERSHIP ASSETS
¶19 	Sok agrees with the trial court’s determination that
the Family Agreement constituted a valid amendment to the Trust
and the LP Agreement. 	Sok disagrees, however, with the trial
court’s conclusion that
the intent and effect of such amendment was
not to remove the designated replacement
properties . . . from [the] overall estate
but to temporarily delegate selection and
management of replacement assets upon the
sale of the farm land, and that such
properties would remain in [the] estate until
[Mas’] death when they would be distributed
in accordance with the terms of [the Trust].
Instead, Sok argues, it is clear from the parties’ intent and
actions, i.e, extrinsic evidence, that the Family Agreement was
not just an amendment that diversified management but also an
amendment that modified distribution of the Partnership assets
upon dissolution.
¶20 	In contrast, Tosh contends that there has never been an
effective amendment to the Trust or LP Agreement modifying
distribution of the Partnership assets upon dissolution. 	More
specifically, Tosh argues that because the LP Agreement clearly
designates how the partners are to effectuate an amendment, the
trial court correctly concluded that it did not have the
equitable power to vary the terms of the LP Agreement to alter
distribution of ownership shares where the partners had failed to
properly amend the LP Agreement in compliance with section 15.8.
Accordingly, Tosh urges, the Partnership assets should be
distributed as set forth in the unamended LP Agreement.
¶21 	We conclude that neither the Trust nor the LP Agreement
was validly amended as to distribution of the Partnership assets.
Although the Family Agreement is a valid contract which
authorizes modification of distribution under the Trust and the
LP Agreement, that modification never occurred. 	Indeed, Mas
specifically indicated in the No Change Pledge that an amendment
was forthcoming: 	“I will cooperate by amending my trust to
facilitate exchanging of properties outlined in the [Exchange
Document]”. (Emphasis added.) 	The amendment, however, was never
made.
¶22 	Although no amendment to the Trust or LP Agreement
regarding distribution ever occurred, based on the plain text in

10 If, as Sok contends, the Clinic was supposed to be
exclusively Sok’s property, that language never made it into the
Trust. 	Accordingly, 69.48% of the Clinic should be considered
the property of the Trust and distributed in such a way as to
achieve the percentages delineated by the Trust, i.e., 43.5% to
Sok, 43.5% to Tosh, 6.5% to Nats, and 6.5% to Seiji. 	See supra
note 4.
No. 20060560 	10
the Family Agreement documents, it is clear that Mas intended
only to “temporarily delegate selection and management of
replacement assets upon sale of the farm” and not to “remove the
designated properties from his overall estate plan.” 	See LDS
Hosp. v. Capitol Life Ins. Co., 765 P.2d 857, 858 (Utah 1988)
(“[A] cardinal rule in construing [a] contract is to give effect
to the intentions of the parties and, if possible, these
intentions should be gleaned from an examination of the text of
the contract itself.” (emphasis added)). 	For example, the No
Change Pledge specifically indicates that the beneficiaries “can
use a pre-allocated amount equal to their expected (inherited)
share based on value determined at the time of farm sale . . .
[but that the] pre-allocated amount and its earnings shall remain
[Mas’] property until such time of distribution from [his]
estate.” 	(Emphasis added.) 	Furthermore, the No Change Pledge
states that “[i]t is my continued desire that the estate plans as
previously written, are to pass on my property . . . as
prescribed in the first amendment of [the Trust].” 	(Emphases
added.) 	The Exchange Document also explicitly states that “all
replacement properties will remain in the partnership and are its
property until such time that the partnership is dissolved.”
(Emphases added.) 	If, as urged by Sok, certain assets should be
removed from the distribution, this sentence would be rendered
meaningless. 10
¶23 	In this case, then, the plain language of the Family
Agreement indicates an intent “to preserve the tax advantage of a
like-kind exchange for farm property to be sold and to diversify
management of the assets . . . [and] . . . not [to] remove the
replacement property from the [Trust].” 	It is clear that the
Family Agreement intended to transfer only the ability to select
and manage exchange properties but that the properties would
remain in the estate until Mas’ death. 	Accordingly, we conclude
that the trial court correctly determined the Trust and LP
Agreement were modified to “allow the selection and management of
replacement properties . . . but that ultimate ownership and
. . . distribution upon dissolution of the partnership would be
as previously established.”

11 	No. 20060560
CONCLUSION
¶24 	We conclude that Tosh retained his fifty percent
interest in Mas’ property and thus is entitled to fifty percent
of the proceeds held in the Fidelity Account. 	Furthermore, we
conclude that the Family Agreement did not modify the Trust or
the LP Agreement as to distribution of the assets and that
distribution should proceed as designated in the Trust.
Affirmed.
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¶25 	Chief Justice Durham, Associate Chief Justice Durrant,
Justice Parrish, and Justice Nehring concur in Justice Wilkins’
opinion.