94 S.W.2d 236 | Tex. App. | 1936
This appeal is from the action of the trial court refusing to sanction the mortgage of trust property by the trustee, to pay taxes, and to make repairs or improvements. The proceedings, in the nature of an agreed case, was instituted by appellant Mrs. Dorothy Smith, as trustee and guardian, to obtain the sanction of the court to mortgage trust property to pay accrued taxes, and prevent the eventual sale of the property for taxes, and to make permanent repairs or improvements actually necessary to preserve the trust estate; a peculiar situation having arisen which precluded the payment of the taxes when due and the making of the repairs or improvements when needed out of such rentals as could be realized from the dilapidated and antiquated trust estate building. *237
We have reached the conclusion that the trial court erred in refusing to sanction the mortgage of the trust property for the purposes stated under the peculiar circumstances of this case. The trust estate was created by a provision of the will of John W. Harris, deceased, which read: "I hereby devise and bequeath unto my two beloved grandchildren, named Evelyn Annette Smith and Harris Holloway Smith, the two children of my daughter Dorothy Smith, the brick building situated * * * in San Angelo, Tom Green County, Texas, said property to be held in trust by my Independent Executrix, hereinafter named, until said children reach the ages of twenty-five years respectively, and then to vest in fee simple, share and share alike in said children, and it is my desire that all the rents and revenues received from said building, less the taxes and repairs, insurance, etc., and that said rentals be paid to the mother of said children who is hereby named trustee for said children, and who is also named independent executrix hereinafter to be mentioned, said rentals to be used for the support, education, etc., of said children."
Appellant accepted the trust, qualified as independent executrix under the will, and by appointment of the probate court became the guardian of the estate of the said Evelyn Annette and Harris Holloway Smith, whose ages at the time of the trial were ten and twelve, respectively. The trust estate consisted of two lots in San Angelo, upon which was situated a brick business building, 50 feet by 125 feet, which comprised the entire estate of said minor children. At the time the will was executed and when the testator died, in 1928, the building was rented for $200 per month and continued to be so rented by the trustee through 1929. In the latter part of 1930 the building became vacant, due to local economic conditions and because of the general depression prevailing everywhere. The trustee reduced the rents, but was unable to secure a permanent tenant, and the building was last rented for about six months in 1933 as a storage place for automobiles in connection with a nearby hotel, at a rental of $40 per month. The building had become antiquated. Its walls had become marred and defaced, the floors were in a bad state of repair, and the plate-glass front had been broken. In such condition the building was deteriorating and going to waste and could only be saved by encumbering the trust property to secure money to pay accrued taxes and to make permanent repairs and improvements on the building. Taxes in the sum of $2,250 had accrued against the property and it would eventually be sold for taxes. The repairs or improvements contemplated would cost $2,750. This sum would remodel the building and improve the lots for use as a complete modern automobile service station and a news or concession stand. As thus improved the trust property could be immediately rented for $150 per month or more, which would be sufficient to care for future taxes and repairs, pay the interest, and amortize a $5,000 loan in five years, with possibly a small balance for use in the support and education of the minor children.
Appellee Mrs. Nellie Davis Drake, as guardian of the estate of Koa Drake Cook, a minor, agreed to make the loan of $5,000 necessary to pay the taxes and make the repairs or improvements, upon the condition that her attorney approve the authority of the trustee and guardian to mortgage the trust property. The attorney refused to approve the loan, being of the opinion that the testamentary trust created was an active trust, and that the trust instrument did not authorize the trustee to mortgage the trust property. Whereupon appellant Mrs. Dorothy Smith, as independent executrix and as trustee and guardian of the estate of said minor children, joined by her husband, who also joined as plaintiff and next friend of the minor children, instituted this proceeding to construe the testamentary trust, and to obtain the sanction or instruction of the trial court to mortgage the trust property for the purposes stated.
The trial court denied the relief sought, upon the ground that the testamentary trust was an active trust, excluding the jurisdiction of the probate court over the estate of the minors; and that the instrument creating the trust did not expressly nor impliedly authorize the trustee to mortgage the trust property to pay the accrued taxes and to make the permanent repairs or improvements actually necessary to preserve the trust estate.
In reaching its conclusion, the trial court followed the rule of construction often applied by courts of equity in the interpretation of testamentary trusts, which in the language of the authorities is that the trustee's power to mortgage trust property depends upon the terms of the trust instrument; that the trustee cannot mortgage trust property unless such power is *238
expressly given, or intent to confer it can be implied from the terms and circumstances surrounding the trust; and that courts of equity cannot add or subtract anything from a testamentary trust, but must leave it as the testator made it, giving it only such construction as he intended. Jackson v. Templin (Tex.Com.App.) 66 S.W.2d 666, 92 A.L.R. 873; Faulk v. Dashiell,
This rule was recognized in Texas in the case of Kennedy v. Pearson (Tex. Civ. App.)
In the cases of Dantzler v. McInnis,
In our above conclusions, we have construed, as did the trial court, the trust instrument as appointing appellant trustee of an active testamentary trust until each of said minor children reached the age of twenty-five years, at which time both the *239 legal and equitable title shall vest in the cestuis in fee simple. That is, the precatory language of the will directed that the "property be held in trust * * * until said children shall reach the age of twenty-five years, respectively, and then to vest in fee simple, share and share alike, in said children, and it is my desire that all the rents and revenues received from said building, less taxes and insurance, repairs, etc. be paid to the mother of said children, who is hereby named trustee for such children * * * to be used for the support, education, etc. of said children."
This language of the testator indicated his intention to vest the legal title to the trust property in the trustee until the minor children became twenty-five years of age, "and then to vest in fee simple * * * in said children." At least, such is a reasonable construction of the ambiguous language used in the trust instrument. In view of this conclusion that an active testamentary trust estate was created with appellant named as trustee, and in whom the legal title vested, her acts in the execution of the notes and mortgage on the trust property is peculiarly in her capacity as trustee, and not as independent executrix under the will, nor as guardian under appointment of the probate court; and therefore the rules of law controlling acts of the trustee are applicable. Ewing v. Foley, Inc.,
The judgment of the trial court will be reversed, and the cause remanded, with instruction to the trial court to sanction or direct the execution of such mortgage or encumbrance as will in its opinion best protect and preserve the trust property or estate in suit.
Reversed and remanded with instruction.