19 Haw. 52 | Haw. | 1908
Lead Opinion
OPINION OF THE COURT BY
The plaintiff seeks a decree ordering the trustee to transfer to it such portion of certain money and other property held under the trusts of the will of Dowager Queen Emma Kaleleonalani for payment of certain annuities as is not required in order to produce sufficient income for the annuities now outstanding, two of the annuitants having died. By her will, executed October 21, 1884, Queen Emma appointed Alexander J. Cartwright her trustee, bequeathed, for their respective lives, to the defendant Lucy Peabody $900 per annum, to the defendant Grace ICahoalii $300 per annum, to Hikoni (w) and Mary Liwai, each now deceased, $600 and $300, respectively, per annum, directing “such annuities to be paid by my said trustee or his successors in regular monthly payments,” and bequeathed to St. Andrew’s Priory $600 per annum to be applied towards the maintenance of four yearly scholarships of $150 each, and devised seven parcels or tracts of land to Alexander d. Cartwright in trust “to devote the rents, income and profits thereof to the payment of the aforesaid annuities and scholarships.” The will provides: “Upon the death of said annuitants then the trustee or his successor may sell any one or more of the aforesaid pieces of real estate free and discharged of any trust, provided the real estate remaining will, in the opinion of the supreme court, produce a yearly income sufficient to provide for the aforesaid scholarships, the proceeds derived from the sale of any land as aforesaid to be divided one-half to the
The defendants’ demurrer, on the ground that the trustee is required by the will to retain all of the trust property until the death of all the annuitants and cannot safely or prudently deliver over to the plaintiff any part of the corpus of the trust fund and that the defendants are entitled to insist that he retain it, was sustained and the plaintiff appealed.
The plaintiff submits that “it is clear from these provisions that if all the annuitants were dead and St. Andrew’s Priory had ceased to exist, the Queen’s Hospital, being the only remaining beneficiary, would be entitled to receive the whole corpus of the estate. The annuities and scholarships having lapsed the trust would have become a dry one and the statute ox uses would apply,” or else “the court would declare the trust terminated and order the trustee to convey.” In support of the claim of “a portion of the corpus in view of the fact that two of the annuitants are alive and the Priory is also still in existence” it is argued that “the principle applicable to cases where the objects of the trust have ceased to exist is applicable pro tanto to a case in which the objects have been partly performed and there remains in the trustee a large fund greatly exceeding what is necessary to carry out the remaining purposes, and where the trust property consists of several distinct parcelsin other words, “that this trust has, in effect, become
The contention of the defendants is that there is no express authority for the proposed action given by the will, nor is there any implied authority, the power to sell after the death of the annuitants showing that the testatrix did not wish this to be done before then although having in mind the inconvenience of keeping the whole estate in trust merely that the scholarships might be provided for; that equity has no power to modify or set aside the provisions of a trust and can only terminate it when all its purposes have been accomplished or, according to much authority, when all the beneficiaries desire its termination and no good reason appears to the contrary; that the testatrix had a legal and moral right to withhold the capital trust fund from the hospital until the death of the annuitants, and the court cannot say what reason she had for doing this entirely aside from protecting the annuitants, citing Floyd v. Davis, 98 Cal. 591, 600; Young v. Snow, 167 Mass. 287; Claflin v. Claflin, 149 Mass. 19; Hawley v. James, 5 Paige 318.
The plaintiff submits that there is an inconsistency between the provision for a sale upon the death of the annuitants of one or more ¡Dieces if what remains will in the opinion of the court-produce income for the scholarships and for distribution of the proceeds and the provision for selling, after the death of the annuitants, the remainder of the land and reinvesting the proceeds. It was the intention, it is suggested, although not expressed, that the first provision should apply to a sale of portions of the trust property before the death of all the annuitants, hence the phrases “remainder of said real estate,” and “remaining land or lands” in the second provision, and the
If it were not for the life annuities and scholarships remaining to be paid out of the income of the trust property the plaintiff would be its sole ultimate as well as present beneficiary and as such would be entitled to a conveyance of it by a termination by decree of a court of equity of the bare trust of merely collecting and paying oyer the income. It is against the policy of the law to allow the legal title to be held' for no other purpose than as a medium for transferring to another all the incidents of ownership by means of what is termed a passive, dry, naked or bare trust. Something more is required of a trustee than merely to collect and pay over the income without discretion as to its application in order to prevent the merger of an equitable with a legal estate. This familiar doctrine is illustrated in the cases cited by the plaintiff, and to some extent in Harris, Assignee, v. Judd, Administrator, 3 Haw. 121.
Whether this doctrine which the plaintiff invokes would be applicable after the death of all the life annuitants or upon a release or satisfaction of the remaining life annuities, if the trustee should then decline to dispose of the trust property as
The American cases cited in support of the plaintiff’s claim do not go as far as it asks the court to go in this case. Eor instance, in Turnage v. Greene, 55 N. C. 63, the fund which was ordered to be paid to a daughter of the testator was eventually to go directly and meanwhile the whole profits went to her. “In her, then, are united the present right to the whole profits and the absolute ultimate dominion which gives as perfect a property as is known to law.” A similar case was presented in Inches v. Hill, 106 Mass. 575, and in Sears v. Hardy, 120 Mass. 524. But the same court dismissed bills to terminate a trust in two cases cited by the defendants in which the circumstances were somewhat similar to those of the present case. In the first, Claflin v. Claflin, 149 Mass. 19, the trust created by the will was to pay the proceeds of the sale of the residue of the testator’s estate to his son, $10,000 when twenty-one years of age, $10,000 when twenty-five years of age and the balance at the age of thirty years. The court said: “The strict execution of the trust has not become impossible.”- In the second case, Young v. Snow, 167 Mass. 287, the testator had left the residue of his estate to trustees to be held by them for twenty years 'and then it was to go to his heirs at law, certain annuities meanwhile being required to be paid to his children from the income, surplus income to accumulate for ten years and then be paid to his heirs until the end of twenty years when all of it was to go to them. There was more than enough income -for the annuities. The plaintiff, as assignee- of one of the children .of her share of the trust property, brought a bill to terminate the trust in respect of that share, the other children consenting, but the court said: “Whether the testator made these provisions for one purpose or another is immaterial, since he had the right to order as he did.”
At first glance Harbin v. Masterman appears to be on all fours with the plaintiff’s case and in conflict with American decisions. But the facts in the two cases will be found upon examination to be so essentially dissimilar as to justify and, perhaps, require a different treatment in the English case than in the case at bar. There was a bequest to trustees of the residue of the testator’s personal estate upon trust to permit the same to remain in its actual state of investment or to alter or vary the investments and to pay out of the annual income several annuities to certain persons, of whom at his death ten were living. The will required the trustees in every year to invest any surplus income of the trust moneys, whether it should arise from the determination of any annuity or otherwise, upon certain securities named, and, after the death of the survivior of the annuitants, to convert the trust funds and the accumulations into money and stand possessed thereof upon trust in favor of five charities. Directly after the death of the testator his executors instituted a suit for the administration of his estate. In this suit the estate was administered and considerable sums of money were from time to time paid into court and consols purchased therewith and carried over
If the trustee could sell this land and should buy U. S. bonds with the proceeds — at present rates $93,600 would buy two per cent, registered bonds yielding an income of $1800, the amount of the outstanding annuities — the annuities would be fully secured. But this course would not only be of doubtful value to the hospital, — it would nullify the direction of the testatrix that the lands be held by the trustee.
In view of the facts we think that a decree such as was made in the Harbin case might, under like conditions, be made by any court of equity jurisdiction. That it was not a departure from practice appears in Weatherall v. Thornburgh, 8 Ch. D. 261, which, upon the doctrine of the American cases cited by the defendants, held that a person entitled to a trust fund, subject to payment of an annuity and legacies, was not entitled to it immediately upon a sufficient sum being reserved to provide for the payment since the testator’s language did not permit this, and “he had a perfect right to do what his language shows he did, and he did that not merely for the purpose of
The following cases illustrate the rule. In a trust to pay over the residue cof trust funds after expenditure of certain sums of money in establishing an observatory and public baths, erecting a group of bronze statuary and founding a school of mechanical arts although, after sale of the Lick House there were ample funds for all the purposes named, the residuary legatees could not be paid until all the other trusts were performed, since “the will of the trustor is its (the court’s) will” (Floyd v. Davis, 98 Cal. 591, 601), but a trust to pay the rents, issues and profits to A for life and then to B for life may be terminated by consent of all who are beneficially interested, the trustee’s interest in his compensation being “no reason for the continuance of the trust.” Eakle v. Ingram, 142 Cal. 15.
The object of the trust created in this will is clear. The iands of the testatrix, situated in various parts óf Oahu and Kauai, are devised as follows: Two tracts of land to Elizabeth Pratt, one to Mary Liwai, a house lot to Lucy Davis, two pieces of land and a house lot to Grace Kahoalii, two parcels and a house lot to Stella Keomailani, rights of residence to Hikoni (w) and to John and Loui Blossom, nine parcels of land, including the Nuuanu Valley .residence and Waikiki residence, to the Queen’s Hospital, five tracts of land to the trustee to pay the rents to Kunuiakea for life over to his lawful issue, with power in the trustee at the request of Kunuiakea to sell the same free from the trust holding the proceeds upon the same trust, seven tracts of land to the trustee to divide equally the income, after payment of the annuities and scholarships, between the hospital and Kunuiakea. Whether the income would exceed the annuities or not, it was not until
Nothing has occurred which the testatrix would not reasonably have anticipated unless the compulsory taking of part of the lands which, without lessening previous revenues, has placed large sums of money in the trustee’s hands. But the money must stand in place of the land, “subject to the same trust and to the same ultimate disposition.” Gibson v. Cooke, 1 Met. 75; Holland v. Cruft, 3 Gray 180; Hovey v. Dary, 154 Mass. 12. She might have devised the la!nds to the hospital charged with payment of the life annuities and scholarships and of one-half of the surplus income to Kunuiakea for life, but she preferred, as she had a right to do, to accomplish her object- through the medium of a trustee with full knowledge that each time an annuity should fall in the amount of the other annuities would be lessened and the surplus, now payable to the hospital, would be larger.
Decree appealed from affirmed.
Concurrence Opinion
CONCURRING OPINION OF
I concur only in the conclusion of the court, but with considerable hesitation, however, for the reason that, while techni