154 P. 306 | Cal. | 1915
Plaintiff, by two instruments of the same date and forming "parts of the same transaction," made by one of them a transfer to defendant, absolute in form, of certain property, real and personal. By the second, contemporaneous therewith, she declared the trusts upon which the defendant, as trustee, was to hold this property. At the time when plaintiff executed the transfer and trust agreement she was, and still is, an unmarried woman over the age of twenty-one years, having no child nor other lineal descendant. Plaintiff's mother, however, is living, and her mother would be entitled to inherit and succeed to all the property, real and personal, of plaintiff if she should die intestate and unmarried, leaving her mother surviving. Plaintiff also has other relatives now living who would be entitled to succeed to and inherit her property if she should survive her mother and thereafter die intestate unmarried, leaving no child surviving her and leaving surviving her the other relatives referred to or any of them. Helen D. Gray subsequently brought this action to terminate the trust, her contention being that notwithstanding she did not reserve in the instruments creating it any power of revocation, nevertheless by Virtue of the terms of the trust itself it is determinable at her pleasure. The terms of the trust itself therefore demand presentation.
The conveyance was made to defendant "to manage said trust property as hereinafter provided." The property subject to the trust came to plaintiff through the will of one Mary E. Bithell. The "original investment" of funds received from the estate of Mary Bithell could be made only with the concurrence of the trustor. After this original investment made with the concurrence of the trustor, the trustee *639 is empowered "thereafter from time to time to make investments and reinvestments as in its discretion may seem necessary and proper without consulting the trustor." Certain limitations upon the power of the trustee to make these investments are declared, but they have no bearing upon the question presented on this appeal. "The net income and revenue and profit, less the charge for services of the trustee, shall be paid by said trustee to said trustor," and an accurate account is to be kept. The trustee is entitled to receive for its services two per cent of the gross income of the trust property, and finally the trust instrument declares: "This trust shall be irrevocable and shall last during the lifetime of said trustor, and upon her death the trust property shall go to and vest as she shall provide in her last will and testament, and leaving no last will and testament, said property shall go to and vest in her heirs at law, according to the laws of succession of the State of California as such laws now exist."
The facts were stipulated, the stipulation embracing the matters of fact above set forth. Drawn from these facts the court made additional findings of fact, which are in reality misplaced conclusions of law. The most important of these is as follows:
"That plaintiff is the only person having any interest in any of the real or personal property mentioned in the said assignment or in the said agreement, except said defendant, Union Trust Company of San Francisco, for the compensation which it is entitled to receive for its services as trustee, under the terms of the said trust agreement."
It was under this finding, which manifestly is a conclusion of law embodying the court's construction of the trust and its determination that defendant held but the naked fee, while every beneficial interest in all of the property was vested in plaintiff, that the court concluded that the trust was one which should be dissolved and terminated by its decree, and gave judgment accordingly. From that judgment defendant appeals, and no serious objection can be raised to its right to appeal. Indeed, it is its duty to do so if it believes that there be other persons than Helen Gray whose rights would be impaired or destroyed by the dissolution of this trust. Those persons, if they exist, would be Helen Gray's "heirs at law according to the laws of succession of the State of California as such laws now exist." But those *640 persons, in the contingency provided for by the trust, would not take as inheritors from Helen D. Gray. The laws of succession as they existed at the time of the creation of the trust would fix the class entitled to take, and that class would take not as heirs of Helen Gray by virtue of her intestacy, but as a class designated in the trust instrument in the event that Helen Gray failed to exercise her power to nominate others. In other words, by a change in the laws of succession conceivably it could happen that those who would be entitled to take under the trust instrument, in the event of the death intestate of Helen Gray, would no one of them be an heir at law of Helen Gray at the time of her death. And finally upon this proposition, it should be pointed out that upon the death of Helen Gray intestate it would not be the court in probate which would determine to whom the trust property should go. The class entitled to take would be determined by a court of equity in an action brought by the trustee to determine that precise question. The trustee, therefore, owes precisely the same duty to protect the rights of this indeterminable class of beneficiaries as it does to protect the right of the named beneficiary, Helen D. Gray.
The ultimate question then is over the power of the court of equity to terminate such a trust as this. The primary questions first to be determined, and in whose determination the answer to the ultimate question will be found, go to the nature and scope of the trust itself. What, then, are the nature and scope of the trust? First, there is conveyed to the trustee the whole legal title, since so much is plainly necessary for the purposes of the trust (Civ. Code, sec.
We have so far refrained from using the word "remainder" or "remaindermen" in connection with this trust, for the creation by the trust of such remainders and remaindermen is the very heart of the controversy between these litigants. By appellant it is contended that such remainders are created and with them estates in the remaindermen, which it is beyond the just exercise of the powers of equity to destroy. Upon the other hand, it is contended that no such remainders are created; that the whole equitable estate is in the trustor, plaintiff herein, and that she is entitled to address herself to equity for the relief here obtained — the relief which will terminate a dry and naked trust, establishing the legal estate in the person who possesses the full equitable estate.
It is only when all the parties in interest are before a court, when each is sui generis, and all join in the application, that a court of equity ever terminates a valid trust. And even when all these circumstances exist, equity does not do so by force of the application, but only when a decree so doing is meet and proper. When such circumstances exist power is in the court of equity to terminate the trust, but with that power is not necessarily imposed the duty so to do. It is still discretionary. (Perry on Trusts, sec. 920; 39 Cyc. 99; Eakle v. Ingram,
Our Civil Code (section 769) declares that "When a future estate, other than a reversion, is dependent on a precedent estate, it may be called a remainder, and may be created and transferred by that name." We have in this trust apt language to create such a future estate, dependent for its enjoyment upon the termination of a precedent life estate. We have therefore apt language to create a remainder, and it is quite permissible that it should be created to commence at a future day and be limited upon a life estate. (Civ. Code, sec.
"It must therefore be determined just what the interest of these children is. The effect of the deed was to vest in the *643 plaintiff an equitable life estate in the property, with a general power of appointment by will to any person or persons whom she might designate. In default of an appointment of successors to the property pursuant to the power, the deed created a remainder to the lawful issue of the plaintiff who should survive her.
"It is a well-established rule, both of the common law and by statute, in this state that estates in remainder which are limited to take effect upon default in the exercise of a power of appointment are not prevented from vesting by the existence of the power, but take effect in the same manner as if no power existed, subject, however, to be divested by an exercise of the power. . . .
"By virtue of this clause of the deed there sprung into being upon the birth of each child of the plaintiff a vested remainder, subject to open up and let in after-born children, and to be divested either by the death of such child without issue before the death of the plaintiff or by the plaintiff's exercising her power of appointment by will.
"It is needless to add that such an interest is alienable. (Moore v. Littel,
Respondent places reliance upon certain cases as supporting the decree of the court terminating this trust. Those cases, however, deal with a dry, naked trust or with a trust where every party in interest is before the court joining in the application, or rest expressly or by necessary implication upon the rule in Shelley's case. But this ancient rule was of feudal origin and policy, and did deliberate and designed violence to the deed of the grantor or the will of the testator, to the end that the laws of inheritance should prevail over the wish of the grantor or testator. It arbitrarily declared that apt words which indisputably created a remainder in the heirs should be held as a "limitation." In other words, as a definition of the estate which the grantee or devisee took, and that that estate was the fee simple, the remaindermen *644
being thus cut off and taking nothing. So obnoxious was this rule to justice that it was always subjected to rigidly strict construction, till finally in many states, as in this state, it was absolutely repealed. (Civ. Code, sec.
A brief review of the cases relied on by plaintiff should follow the general statement concerning them which has been given above. The first of these is Eakle v. Ingram,
In Dodson v. Ball, 60 Pa. St. 492, [100 Am. Dec. 586], the rule in Shelley's case, prevailing in Pennsylvania, is the unquestioned foundation of the construction of the trust and of the decree given. The discussion is too long to quote, but the holding is that the words employed bring the trust within the rule in Shelley's case; that remainders therefore are not created; that all the equitable interest is in Mrs. Dodson and that the legal estate should therefore be executed in her. And a sufficient exemplification of this may be found in the following single sentence, where that court, after reviewing many of its own authorities, said: "Those cases decide that a devise for life, with remainder to children and their heirs, and in some of the cases with superadded words of distribution, gave an estate of inheritance to the life tenant."
In Raffel v. Safe Deposit Trust Co.,
Cornwell v. Orton, 126 Mo. 360, [27 S.W. 536], was not an action to terminate a trust, but an action in ejectment brought by the heirs at law. The grantor conveyed property to a trustee on the trust that he would allow Mrs. Cornwell to occupy the property conveyed and have all the rents and profits thereof, and that the trustee "would at any and all times thereafter, at the request and direction of said Catherine Cornwell, expressed in writing, signed by her, or by her authority, bargain, sell, mortgage, convey, lease, rent, or thereupon dispose of said premises or any part thereof, . . . and that he would at her death convey and dispose of the premises and all profits and proceeds thereof in such manner, to such person or persons, and at such time or times, as Catherine Cornwell by her last will and testament, or by any other writing signed by her or her authority, direct or appoint, and in default of such appointment then he would convey said property to James Cornwell, his heirs and assigns," James Cornwell being the husband of Catherine. The contention upon the one hand was that the deed vested a fee-simple estate in Mrs. Cornwell, and that the direction of the trustee to convey to James Cornwell, his heirs and assigns in the event that Catherine Cornwell failed to nominate, was a nugatory provision, as it was an attempt to create a remainder upon an absolute fee. The opposing contention was that under the true construction of the deed it conveyed a life estate only to Mrs. Cornwell, with power in the trustee to convey the fee in remainder to her husband or his heirs, in the event that she failed to exercise her right to appoint. The court considered at length the terms of the trust, the absolute power of disposition given to Mrs. Cornwell over all of the property during her lifetime, the compulsion upon the trustee to do any and all things concerning the property which Mrs. Cornwell might direct, declared that the language was inadequate to create a mere life estate and was fully adequate to the creation of a fee-simple absolute, and determined that the trust was a naked trust and that the fee simple absolute did vest in Mrs. Cornwell; wherefore the remainder attempted to be erected upon it was void. It needs no argument *647 to show that such a conclusion could not, and would not, be arrived at in construing a trust such as this, where the beneficiary of the equitable life estate not only has no power of disposition of the corpus of the trust property, but no power to control its investments, no power even to dispose of the property except by a disposition taking effect upon her death under her will, which, to be a will, must of course be an instrument complying with all the terms of our statutes in regard thereto.
Sears v. Choate,
In Warner v. Sprigg,
In Angle v. Marshall,
This concludes the review of all the cases upon which respondent relies, and if it shall be thought that this review does not justify to the fullest extent the comments heretofore made as to their general inapplicability, it may be said in conclusion upon the matter that the question is satisfactorily and conclusively disposed of against respondent's contention by our own decision in Barnett v. Barnett,
The conclusiveness of this determination, its immediate and direct bearing upon the language of this trust deed, are so plain as to relieve the question from the need of further discussion.
The decree appealed from is therefore reversed, with directions to the trial court to deny to plaintiff the relief sought.
Melvin, J., and Lorigan, J., concurred.
Hearing in Bank denied.