The Attorney General of the United States, acting in his capacity of successor to the Alien Property Custodian, 1 appeals from decree of distribution in the estate of Berta Zuber, deceased, because it denies him any participation therein by virtue of the custodian’s vesting order of .November 1, 1945. The challenged ruling was made upon the theory that respondents had a mere expectancy and did not take under decedent’s will any interest which the custodian could seize.
Decedent, a citizen of this country and a resident of Los Angeles County, died on February 7, 1944, leaving a last will which was executed on October 31, 1940. The principal asset of. her estate was a parcel of realty.
Paragraph Third of the will made certain specific legacies, three of which named German nationals and residents as recipients. They embraced a watch, silver teapot and porcelain lamp. The will provided that “each such bequest . . . be effective only in the event the beneficiary shall survive distribution of the article bequeathed.” Also that, as Germany was then at war, the executor was authorized to defer transmittal to legatees residing in Germany until after termi- ■ nation of the war or such еarlier time as he might be satisfied that same could be delivered in good order in Germany. In the event that Germany should be at war when the estate became otherwise ready for distribution, said articles were given to H. A. Gebhardt as trustee for the said named "beneficiaries, to be held in trust until in the judgment of the trustee they could be delivered in good order.
Paragraph Fourth disposes of the residue in the following manner. The executor, Mr. Gebhardt, is given discretionary power to sell the same during the ordinary course of the probate proceeding, and in that event testatrix gives all the proceeds to a neрhew, Heinrich Sehlette, and a niece, Emilie Exner, both of whom were German nationals and residents, “share and share alike, if they both survive distribution,-” but in the event of either of them failing to survive that event his or her share to go to the surviving children of . that decedent by right of representation. It is also provided that, in the event the executor does not sell the property during pendency of the probate proceeding, said residual estate is *587 given to Mr. Gebhardt as trustee for the benefit of the said Heinrich Sehlette and Emilie Exner, and to the surviving children of either of them who might decease, by right of representation; testatrix further directs that the property then constituting the trust estate be sold within three years after its receipt by the trustee and the proceeds of the sale distributed, share and share alike, to said nephew and niece and the children of either of them who may have died prior to such distribution. The concluding paragraph of Fourth confers upon the trustee, notwithstanding “anything which is apparently to the contrary in the foregoing paragraphs, ’ ’ uncontrolled discretion “during the life of said trust” to make remittances from time to time to or for the benefit of either of the German beneficiaries “for their maintenance or education in such amounts and at such times as he in his sole discretion may consider for their best interests.”
During the progress of the administration the executor, under court order and for the purpose of avoiding condemnation, sold the realty to the city of Los Angeles, and the court in confirming the sale ordered “ [t] hat the proceeds of said sale shall at all times be deemed to be real property and retain the original character of real property.” This was but the application of a familiar equity principle (18 Cal.Jur.2d § 14, p. 127), and the parties present this apрeal upon that basis, doubtless being persuaded thereto by
Clark
v.
Allen,
The trial court ruled that the specific legacies to German beneficiaries and-the residue of the estate should be distributed to Mr. Gebhardt as trustee; “ [t]hat the trust is valid and free from any claim of the United States arising by virtue of Vesting Order Number 5329 for the reason that at the time of the Vesting Order, to wit on November 1, 1945, and at the time of the death of the testatrix, to wit: on February 7, 1944, there was no right, title and interest of the residuary legatees, their interests arising only upon distribution and contingent upon the survival of Heinrich Sehlette and Emilie Exner, residuary beneficiaries, and the fact that distribution can be made personally to the beneficiaries, this being a con *588 dition precedent, the interests of the foreign heirs arising only upon the distribution of the estate.” Distribution was made accordingly. It is that order from which the appeal is taken.
Essentially the ruling is thаt the German legatees had no estate or interest which the custodian could seize because their rights were subject to a condition precedent which prevented their having any cognizable interest until the contingency ripened into a vested estate and that could happen only upon distribution by the court. Counsel for respondent take substantially the same position in their brief. 2 The appellant argues that respondents took under the will a contingent future estate which is an interest subject to seizure under the Trading with the Enemy Act. 3
Section 5(b) thereof authorizes the vesting of “any property or interest” and section 7(c) permits seizure of “any money or other property including (but not thereby limiting the generality of the above) . . . choses in action, and rights and claims of every character and description” belonging to or held for the benefit of any enemy alien (50 U.S.C.A. App., §§ 5(b) and 7(c), pp. 32 and 58). Executive Order Number 9095, §2(e) authorized the vesting of “any other property or interest within the United States of any nature whatsoever owned or controlled by, payable or deliverable to, held on behalf of or on account of, or owing to, or which is evidence of ownership or control by, a designatеd enemy country or national thereof . . . ,” and subdivision (f), “any property of any nature whatsoever which is in the process of administration by any person acting under judicial supervision or which is in partition, libel, condemnation or other similar proceedings and which is payable or deliverable to, or claimed by, a designated enemy country or national thereof.” (50 U.S.C.A. App., following § 6, pp. 43-44.)
The language of the vesting order is: “All right, title, interest and claim of any kind or character whatsoever of Heinrich Schlette, children, names unknown, of Heinrich Schlette, Emilie Exner, children, names unknown, of Emilie Exner, Richard Exner, and Kaethe Semmerau, and each of them, in and to the Estate of Berta Zuber, also known as Katherine Auguste Berta Zuber, deceased.”
Discussion of the problem thus raised will be directed to the status of the residue, except as otherwise indicated.
*589
Reference to the will discloses that, fairly construed with a view to immediate vesting (Prob. Code, § 28;
Estate of Prior,
It makes little difference, however, whether the condition in this case is precedent or subsequent. Contingent future interests are recognized as estates by statute in California. Civil Code, section 701: “Interests in real property. In respect to real or immovable property, the interests mentioned in this chapter are denominated estates, and are specially named and classified in part two of this division.” Section 688 of the same code classifies interests as present or future with respect to time of enjoyment. Section 690 defines a future interest as one entitling the owner to possession of the property only at a future period. Section 693 divides future interests into those which are vested and those which are contingent. Section 695 says: “Contingent interests. A future interest is contingent, whilst the person in whom, or the event upon which, it is limited to take effect remains uncertain.” Section 697 provides that a future interest is not void “merely because of the improbability of the- contingency on which it is limited to take effеct.” In part two of the same division, mentioned in section 701, are found sections 767, 773 and 778, which read as follows: “§ 767. Future estates, what. A future estate may be limited by the act of the party to commence in possession at a future day, either without the intervention of a precedent estate, or on the termination, by lapse of time or otherwise, of a precedent estate created at the same time.” “§ 773. Remainders, future and contingent estates, how created. Subject to the rules of this title, and of part one of this division, a freehold estate, as well as a chattel real, may be created to commence at a future day; an estate for life may be crеated in a term of years, and a remainder limited thereon; a remainder of a freehold or chattel real, either contingent or vested, may be created, expectant on the determination of a term of years; and a fee may be limited on a fee, upon a contingency, which if it should occur, must happen within the period prescribed in this title.” 5 “§778. Remainder *591 upon a contingency. A remainder may be limited on a contingency which, in case it should happen, will operate to abridge or determine the precedent estate; and every such remainder is to be deemed a conditional limitation. ’ ’ Section 699, which is сaptioned “Qualities of expectant estates” provides: “Future interests pass by succession, will, and transfer, in the same manner as present interests.”
The original Code Commissioners in their note to section 741, Civil Code, 6 say in part: “. . . Much nice learning has been thrown around the subject of contingent remainders, and many nice distinctions and refinements have accumulated, but in many of the States, and by this Code, future interests include all estates in expectancy, vested, and contingent, and all future interests are descendible, devisable, and alienable in the same manner as estates in possession, so that a thorough examination of the common lаw rules concerning remainders, and the delicate questions springing therefrom, must be esteemed as of more interest in showing the learning and scholarly attainments of the early law writers rather than as of any practical utility.”
The decisions have followed this view rather consistently. They establish the general rule stated in 18 California Jurisprudence 2d, section 4, page 389, as follows: “A future interest, whether vested or contingent, is transferable, and may be encumbered.” (See also
Sinclair
v.
Crabtree,
Respondent presents this ease upon the postulate that the German nationals have nothing except as conditioned in the first part of section Fourth of the will, i.e., surviving distribution by the court. That such is not the true concept appears from the preceding discussion, but if it be accepted as the proper basis of decision no different result follows. In that event section 767, Civil Code, becomes operative, and as applied to the present situation in which (supposititiously) respondent Emilie Exner takes nothing unless or until she survives distribution, there is presented a contingent future interest created by will which has no supporting particular estate; that is known as an executory devise. 2 Tiffany on Real Property, third edition, section 360, page 109, describes the nature and effect of such an interest: “In view of these considerations, and in analogy to the doctrines whiсh prevailed in regard to the limitation of uses, it was decided that devises of freehold estates might be made to take effect in the future, that is, at a time subsequent to the testator’s death, either with or without a preceding limitation to another. Such a limitation by way of devise of an estate to arise in futuro, which could not be regarded as creating a contingent remainder, became known as an ‘executory devise,’ a term which is also frequently applied to the prospect or possibility of an estate created by such a devise.
“As examples of an executory devise may be mentiоned a devise to A of an estate to commence six months after the testator’s death, or when he becomes a citizen of the United States, provided he does so within a limited time. In such a case, the limitation of an estate to commence in the future not being preceded by a limitation in favor of another, the testator’s fee simple vests in his heir or heirs with a right to the accruing rents and profits, until the estate vests under the executory devise by reason of the satisfaction of the condition precedent, unless there is a *593 residuary devise, in which case the fee simple will pass thereunder subjеct to the possibility of subsequent displacement. ” That such estates are recognized in California appears from the code commissioners’ explanation of section 767 and their reference to the note to section 741 above quoted. They say, under section 767: “See note to Sec. 741, ante. The definition in this section comprehends every species of expectant estates created by the act of the party; remainders strictly so called, future uses and executory devises. The words, with or without the intervention of precedent estate, embrace what are technically known as estates in futuro. The words ‘lapse of time or otherwise,’ provide for contingent limitations operating to abridge or defeat the prior estate.—Nicoll v. N. Y. & Erie R. R., 12 N.Y.Rep., pp. 121, 139. Expectant estates, says Chancellor Walworth, ‘include every present right and interest, either vested or contingent, which may by possibility vest at a future day. ’— Lawrence v. Bayard, 7 Paige, p. 76.” See also 10 California Jurisprudence, section 8, page 605.
As such interests have the status of estates they are assignable under section 699. That executory devises are transmittable future estates is the general law. (21 C. J. § 231, p. 1032; 31 C.J.S. § 122h, p. 140; 19 Am.Jur. § 132, p. 587.) While it is said in the decisions of some sister statеs that “ [e]xecutory limitations which are so worded as to convey no interest unless the executory devisee survives the happening of the contingency have been held to carry no interest either devisable, descendible, or alienable, prior to the contingency happening” (31 C.J.S. § 122h, p. 141), that rule does not apply in California. The specific language of our statutes, construed in the light of the Code Commissioners’ explanations above quoted, leaves little room for doubt on this.
If such an estate is created by an inter vivos instrument it is known as an “executory interest,” which'is also recognized as an alienable estate. See 2 Tiffany on Real Property, third edition, § 356, p. 103, § 363, p. 114, § 367, p. 120; 3 Simes Law of Future Interests, § 709, p. 147, § 713, p. 154, § 714, p. 156; 19 Am.Jur. § 95, p. 555, § 132, p. 587; 31 C.J.S. § 15, p. 28; Rest. Law of Property, § 162, p. 591. Comment c on this section of the Restatement, at page 592, says: “Except when the form of the transfer provides otherwise, the transferee acquires all the potentialities held by the transferring owner, that the share or proportion ulti *594 mately constituting the future interest will be greater than the presumptive share of the transferring owner at the time of such transfer (see Illustration 4 I).”
The cited case of
Estate of Jameson,
Under California statutes and decisions above cited respondent Exner took under the Zuber will an interest which
*595
was not less than a contingent future estate, transmissible by way of assignment or bequest. That the custodian had the right to seize such an estate is clear. The Schneider case,
supra,
“The conclusion is, therefore, unavoidable that at the time of the vesting order, in 1946, the estate of each legatee and the beneficial interest of each beneficiary of the trust was subject to seizure under the Trading with the Enemy Act, as amended.”
The same ruling has been made in other jurisdictions. (See
In re Bendheim’s Estate,
Certain authorities relied upon by respondent (and those making similar holdings) cannot control the decision herein, for they proceed upon the predicate that, for one reason or another, the enemy alien never acquired any right, title or
*596
interest whatever and hence there was nothing to seize. Such cases as
Monarski
v.
Greb,
Respondent relies heavily upon
Anglo California Nat. Bank
v.
Kidd, supra,
“ The above rule does not prohibit the outright sale or transfer of the uncertain, prospective interest of a legatee providing the sale or assignment is fair and not against public policy.” 2 Freeman on Executions, section 178, page 905, is cited in support of the ruling that a contingent interest is not subject to execution until reduced to possession. Reference to that work ’ (third edition) discloses that the basis of the rule is the ont-moded common law doctrine that a contingent interest is not assignable.
San Diego Trust etc. Bank
v.
Heustis,
That immunity to seizure under execution is not a test of substantial existence sufficient to sustain a vesting order is evidenced by the settled rule that' the spendthrift feature of that type of trust does not preclude acquisition of the beneficiary’s interest by the custodian. (See 1 Scott on Trusts, § 157.4, p. 798; Griswold on Spendthrift Trusts (Second Edition), § 344, p. 406; Rest., Trust, §157, comment b, p. 391.)
In an appeal to the court’s sense of justice respond
*597
ent Exner emphasizes the fact that she is a permanent resident and now a citizen of the United States. She further asserts (and it does not seem to be denied) that she came to the United States in 1921, resided with Mrs. Zuber and her husband in New York until 1927, filing naturalization papers in 1926. In 1927 she returned to Germany to marry Karl Exner. She lived with him about 15 months, bearing a son whose exclusive custody was awarded her when she divorced Exner in December, 1930. Thereafter, she resided permanently in Germany; she says she had intended to return to the United States but was compelled to remain where she was in order to take care of two incapacitated aunts, that during that period she received financial aid from Mrs. Zuber. Immediately upon cessation of hostilities she made application for immigration to the United States, obtained a quota number and arrived here in January, 1950, becoming a permanent resident and eligible for citizenship which she obtained in due course. She also avers in her Petition To Enforce Trust Under Will that she has never been a member of the Nazi party or its affiliated organizations. Respondent’s brief further says (although this seems to be an enlargement on the petition) : “. . . that she was never disloyal to the United States, never a member of any Nazi organization, never aided or assisted Germany in its war effort, always intended and expected to return to and become a citizen of the United States and has always regarded her statement in her first declaration of intention to become an American citizen, filed in 1926, wherein she agreed to renounce any allegiance or fidelity to any foreign country, as a binding obligation upon her. It further states that she always regarded herself as a potential American citizen, at all times friendly to the United States and never as its enemy, even during the period when she was in Germany. After the death of her two aunts in Germany and while Germany was at war, she found it was impossible for her to leave that country and return to the United States.” Counsel’s suggestion is that this change of status brings respondent within the rule of
Guessefeldt
v.
McGrath,
In
Estate of Schneider, supra,
The briefs contain considerable discussion of the right of the attorney general to vest property at this time,—all of which is beside the point. We have no such subsequent or amended vesting order as was presented in the Schneider case, supra. We therefore have no occasion to discuss the Jay Treaty of Friendship of 1923, or the effect of the Bonn Convention of 1953, which reaffirmed and reinstated the Jay Treaty.
Thе condition of the Zuber bequest has now been fulfilled. The contingent estate was transferred to the custodian by the vesting order; the estate has ripened into a vested one which belongs to the Attorney General as successor to the Custodian. The time has come for distribution to the Attorney General, notwithstanding the terms of the trust, for those terms can never be fulfilled. (See
In re Kuhirt’s Estate, supra,
The legacies of the watch, silver teapot and porcelain *599 lamp to German nationals are strictly in the class of executory devises; as such they were subject to the seizure power which was exercised by the custodian. They must be distributed to the Attorney General.
The judgment is reversed with instructions to entеr judgment distributing to the Attorney General of the United States the watch, silver teapot and porcelain lamp mentioned in the will, together with the residue of decedent’s estate, free of any claims of respondents and other persons mentioned in decedent’s will as legatees, devisees or beneficiaries of the trust respecting same.
Moore, P. J., and Fox, J., concurred.
A petition for a rehearing was denied December 31, 1956, and the petition of respondent H. A. Gebhardt for a hearing by the Supreme Court was denied January 30, 1957. Carter, J., Schauer, J., and McComb, J., were of the opinion that the petition should be granted.
Notes
By Executive Order Number 9788 of October 14, 1946 (3 C.F.R., 1946 Supp. 169; 50 U.S.C.A. App., p. 48, following § 6), the authority and property vested in the Alien Property Custodian were transferred to the Attorney General.
Respondent Heinrich Schlette has not appeared in this court and counsel disclaim any representation of him.
50 U.S.C.A. App., pages 32 and 58.
The intervention of a trust does not affect the nature or transferability of the future estates herein discussed. (69 C.J. §1674, p. 595; 33 Am.Jur. § 107, p. 564.)
Neither side raises at bar any problem of perpetuities or suspension of the power of alienation.
Code Commissioners’ notes are accepted aids to the determination of the intent and meaning of the code sections so annotated.
(Rowe
v.
Chandler,
§ 700. “A mere possibility, such as the expectancy of an heir apparent, is not to be deemed an interest of any kind.”