178 P. 846 | Cal. | 1919
Virginia A. Lord filed a petition in the matter of the administration of the estate of Josephine A. Phelps, deceased, *705 to obtain an order construing the will of the said decedent and directing the executors to pay to her certain sums of money alleged to be due her under the terms of said will. Thereupon the court made an order directing the executors to sell property of the estate and out of the proceeds to pay to the petitioner the sums claimed by her to be due to her at that time under said will. From this order said W.F. Chipman and Union Trust Company, as executors of the said will, appeal.
The decision of the case depends upon the meaning and effect of the will, and upon the law of this state regarding the jurisdiction and powers of the superior court sitting as a court of probate in the administration of an estate.
The second article of the will nominated Chipman and the Trust Company "as executors and trustees of this my will." The third article gave to the petitioner, Mrs. Lord, the use of the dwelling-house of the decedent, and the inclosed premises surrounding it, and certain personal property thereon, during her life. The fourth article gave to Eugenie H. Schroeder the use during her life of certain property of small value. The fifth article opens as follows:
"Fifth. All the rest and residue of my estate, including the property described in the two preceding articles, after termination of the life estates of my said sisters Virginia A. Lord and Eugenic H. Schroeder respectively therein, but excluding the personal property described in the sixth and seventh articles hereof, I devise and bequeath to my executors and trustees in trust for the following uses and purposes:
"A. To lease until sold as hereinafter provided all of my real estate upon such terms as to them may seem best, and until the accumulation of the fund hereinafter provided, I direct my executors and trustees from the time of my death to pay monthly out of the net income of my estate from whatever source accruing, to my sisters and brothers hereinafter named, the annuities set opposite their respective names, to wit:
"1. To my sister Virginia A. Lord three hundred dollars.
"2. To my sister Eugenie H. Schroeder three hundred dollars.
"3. To my brother Edward T. McLean and his wife Mattie McLean jointly and to the survivor of them one hundred dollars. *706
"4. To my sister Amanda A. Swasey one hundred dollars.
"5. To my brother Alfred A. McLean one hundred dollars.
"Should the income in any month be insufficient to pay all of said annuities in full, I direct my executors and trustees to pay the annuities to my sisters Virginia A. Lord and Eugenie H. Schroeder in full and prorate the balance among the remaining annuitants, and whenever there shall be more than sufficient to pay all of said annuities in full, I direct my said executors and trustees to pay such annuitants as have not received their annuities in full a sufficient sum to make up such deficit but without interest."
The will then proceeds to direct the "executors and trustees" to sell sufficient of the property to create a fund of two hundred and forty thousand dollars, and to invest and keep invested the sums derived from such sales and use the income from that money in payment upon the above annuities until the entire fund is raised, and then and thereafter to invest and keep such fund invested and pay the net income therefrom to said annuitants in the following proportions, to wit: Three-eighths to Mrs. Lord, three-eighths to Mrs. Schroeder, one-twelfth to Edward T. and Mattie McLean jointly, one-twelfth to Amanda A. Swasey, and one-twelfth to Alfred A. McLean. Upon the death of these respective beneficiaries the corpus of the fund is to go to certain successors of them respectively in the proportions above stated. The surplus of the estate remaining after providing for said fund is to be sold and the proceeds paid by the executors and trustees to a number of persons in specific amounts aggregating two hundred and eighty thousand six hundred dollars, and the excess, if any, is to be paid in equal parts to Mrs. Lord, Mrs. Schroeder, and the said W.F. Chipman, her nephew. The final clause of the fifth article was as follows; "Although it is my intention to have all of my estate, with the exceptions already stated, converted into cash, I desire that my executors and trustees shall make sales with the sole object that my two sisters and my nephew above mentioned shall receive substantial sums out of the remainder of my estate. My estate at present valuations is ample for that purpose, and I do not wish it sacrificed to satisfy the importunities of those, who while dear to me, are not the first in my affections." The entire estate was of the value of $535,860.17, according to the appraisement returned by the executors. *707
The decedent died on December 5, 1916, the will was admitted to probate, letters testamentary were issued to the aforesaid persons named as "executors and trustees," and they have ever since been acting as executors of the estate. On June 15, 1917, all the persons named as annuitants in the above-quoted clause of the will, and the said executors, entered into a stipulation, in pursuance whereof the court made an order directing said executors to pay out of the general assets of the estate from the time of the death of said decedent to June 5, 1917, to Mrs. Lord and Mrs. Schroeder, the sum of two hundred dollars a month each, and to the other annuitants respectively, two-thirds of the sums directed by the will to be paid to them during the aforesaid period, and thereafter, during the administration of the estate, to continue to pay monthly to each of the said annuitants, two-thirds of their respective annuities. The appellants pleaded this stipulation and the order thereon as an adjudication of the matter and as a bar to the relief applied for. The court found that the stipulation was not entered into in settlement or compromise of the respective claims of the said annuitants, and its conclusion was that the order thereon did not bar them from afterward claiming the remainder of the said annuities out of the general assets of the estate or otherwise.
The order appealed from recites that there was no net income from the estate of the decedent and would not be for a long time in the future, nor any money or funds in the possession of the executors with which to pay the annuity to Mrs. Lord, and it directs that the executors forthwith proceed to sell, subject to confirmation by the court, property of the estate to obtain money to pay the sum of one thousand three hundred dollars, due at the time upon the aforesaid annuity to Mrs. Lord, and thereafter, until the net income of the estate was sufficient to pay said annuity, to continue to convert the general assets of the estate into money and therefrom to pay the said annuity monthly as it became due. It proceeds upon the theory that the will does not make the annuities payable exclusively out of the net income of the estate and that the general assets may be resorted to for that purpose; that the sums paid under the prior order above recited were payments on account and should be credited upon the sums due under the will from the date of the death of the decedent to the time of making the order; that the balance unpaid should be paid *708 out of the funds raised by sales, so as to make complete payment of the entire annuity up to that time; that thereafter the entire annuity should be paid out of the general assets of the estate whenever it was necessary to resort to them for that purpose; and that all this was to be done and could be done by the executors, prior to distribution, and as part of their duties as executors in the administration of the estate.
The respondent relies on subdivisions 2 and 3 of section
"2. A legacy is demonstrative when the particular fund or personal property is pointed out from which it is to be taken or paid; if such fund or property fails, in whole or in part, resort may be had to the general assets, as in case of a general legacy;
"3. An annuity is a bequest of certain specified sums periodically; if the fund or property out of which they are payable fails, resort may be had to the general assets, as in case of a general legacy."
The provisions regarding payment of general legacies out of general assets are found in section 1360. It describes the order in which the general assets may be resorted to, and makes all the property of the testator available for that purpose.
The appellants insist that this theory is contrary to law and that it involves an erroneous construction of the will. Their position is that the annuities are payable only out of the trust property and not out of the general assets, and that these interim annuities are not to be paid except out of the net income and the interest derived from the proceeds of sales accruing during the time when the two hundred and forty thousand dollar trust fund is being accumulated.
The third and fourth articles of the will give to Mrs. Lord and Mrs. Schroeder, respectively, for life, the use of certain parts of the property of the estate. This life interest is not included in the property given in trust. The fifth and seventh articles make an absolute disposition of certain personal property, and this also is excluded from the property given in trust. It necessarily follows, therefore, that the annuities are not made a charge on the general assets of the estate, nor upon the net income of the entire estate, since these parcels of property are entirely excluded from the provisions of the trust under which the annuities are payable. It is a necessary conclusion, *709 therefore, that the phrase, "net income of my estate from whatever source accruing," in the second paragraph of the fifth article of the will, refers only to the net income of the property set apart for the trust purposes and not to the income of the entire estate. At all events, this trust property is the only property that can be looked to for the payment of the annuities.
The performance of the trust created by the fifth article of the will is a duty devolving upon the persons named as executors and trustees in their capacity as trustees. It forms no part of their duty in their capacity as executors in the administration of the estate proper. Furthermore, the trust property was given to the trustees and vested in them immediately upon the death of the testatrix, and the court, sitting in probate, cannot direct them in their capacity as trustees, with respect to their duties in carrying out the trust. The order appealed from does not even purport to direct them as trustees, but is addressed to them solely as executors. This is fully settled by the authorities. In Estate of Mackay,
We are also of the opinion that even if the order were otherwise proper, the court erred in its conclusion that the general property of the trust fund could be resorted to to supply any deficiency of the net income to pay these annuities. Taking the trust provision as a whole it does not fairly bear this construction. It is the intention of the testatrix that must be ascertained, and when that is found it controls the disposition of the property. The express language is that the annuities are to be paid "out of the net income," and there is no word or phrase indicating an intention to make their payment a charge upon the general trust property itself, or a purpose that they should be paid at all events, regardless of the sufficiency of the net income. "The leading principle of the cases is that, when a testator bequeaths a life annuity in such a manner as to show a separate and independent intention that the money shall be paid to the annuitant at all events, that intention will not be permitted to be overruled merely by a direction in the will that the money is to be raised in a particular *711
way or out of a particular fund." (3 C. J. 216, sec. 34, note to 50 [a].) There is no such intention discernible from the terms of this will. The immediately succeeding clause of the trust article shows a positive intent that the annuitants should not receive more than the net income would supply. It declares that if in any month the income was insufficient to pay all the annuities in full, that then Mrs. Lord and Mrs. Schroeder should have preference over the others; that the others should take the balance, if any, pro rata, and that thereafter whenever there should be more than sufficient income therefor, the arrears upon the annuities should be paid "but without interest." Except for the quoted phrase the annuities would bear interest from the date of the death of the testatrix. (Civ. Code, sec.
The general conclusion from the whole case is that the court below erred in making the order appealed from and that it has no power to direct the executors in their executorial capacity, to pay the money derived from the trust property to the beneficiaries of the trust.
This conclusion makes it unnecessary to determine whether or not the order made in pursuance of the stipulation of the respective annuitants is an adjudication upon the merits of their claims to full payment, either out of the net income or out of the corpus of the trust property. That question must remain until the administration of the trust property comes before some court for determination.
The order appealed from is reversed.
Sloss, J., and Lawlor, J., concurred.
Hearing in Bank denied.
All the Justices concurred.