Opinion
Decided December 24, 1934.
Trusts — Agreement incorporated in will subsequently executed — Cannot be altered by supplemental agreement not executed as will, when.
When a trust agreement, which reserves the right to alter, change or amend, is incorporated in a will subsequently executed, it cannot be altered by a supplemental trust agreement not executed in compliance with the statute of wills.
APPEAL: Court of Appeals for Lucas county.
Mr. Percy F. Taylor, for plaintiff.
Messrs. Yager, Bebout Stecher, for defendants.
This is an action to construe a will, and comes before this court on appeal from the Common Pleas Court of Lucas county, where a decree was entered for the defendants, The Toledo Trust Company and others.
On June 1, 1926, the decedent, Gustav Waldner, entered into a contract with the defendant, The Toledo Trust Company, by the terms of which he established a trust fund of which he was to be beneficiary during his lifetime, his widow to be the beneficiary after his death, and his daughter, Lillian W. Koeninger, the plaintiff herein, to be the sole beneficiary after the death of her mother. The Toledo Trust Company was named trustee, and the petition alleges that the trust company later acquired title, as trustee, to all the estate of decedent, both real and personal, not specifically disposed of by certain legacies in decedent's will. Contemporaneous with the execution of the trust agreement, the donor transferred to the trustee two notes valued at $15,000. This was the only property transferred to the trustee during the donor's lifetime.
Two days after the execution of the trust agreement the donor executed his will, containing Item 3, a residuary devise to The Toledo Trust Company of all the property not previously disposed of, "to be managed and disposed of in accordance with the terms and provisions of a certain trust agreement by and between said Toledo Trust Company and myself, dated June 1, 1926, and known as Trust No. 170." The Toledo Trust Company was named executor of the will.
Nine days after the execution of the will the donor executed a supplementary trust agreement in which he named two new beneficiaries, but in all other respects he specifically ratified and re-affirmed all the provisions of the original agreement of June 1. The controversy arises over the question as to what effect, if any, the execution of the supplemental agreement of June 12 had upon the original agreement of June 1, which had been specifically incorporated into his will on June 3.
It is conceded by plaintiff that the original trust agreement of June 1 was properly incorporated in the will by reference, but plaintiff claims that said original agreement of June 1 was discharged and wholly superseded by the execution of the supplemental agreement of June 12, and that since the latter agreement postdated the will it could not be incorporated therein by reference and the residuary devise in Item 3 of the will failed, and, therefore, as to all the property which would otherwise pass by the will, Gustav Waldner died intestate, thereby causing the property therein mentioned to vest at once in the plaintiff as the sole heir at law, subject only to her mother's dower rights.
The defendants contend that since the original trust agreement of June 1 became a part of the will by incorporation therein, the testamentary trust was not affected by the execution of the supplementary agreement of June 12, since the latter agreement was not executed in conformity with the statute of wills.
In the Court of Common Pleas a demurrer was filed to the petition by the trustee and the widow of donor, on the grounds that the petition shows no present necessity for the construction of the will by the court; that the plaintiff has no present interest in any property which the trustee or executor may have in its hands, inasmuch as the trust agreement, incorporated in the will, made the donor's widow the sole beneficiary during her lifetime; that as she is still living there is no present or impending controversy requiring the decision of the court, and that no such controversy can arise until the death of plaintiff's mother. The court overruled this demurrer, but in our opinion it should have been sustained. However, this estate has been in litigation since 1928, involving several trials in Common Pleas Court and two in this court, and we will pass on the merits of the controversy raised by the issues here presented.
Counsel for plaintiff stresses the case of Union Trust Co. v. Hawkins, Admr., 121 Ohio St. 159, 167 N.E. 389, 73 A.L.R., 190, as authority for the contention that the two trust agreements must be construed together, as one, and as of the date of June 12, the date of the supplementary agreement. The case cited, however, does not involve a will, and an examination of that case shows material difference from the facts in the case at bar, the question of the incorporation of a trust agreement into a will being not there involved. In that case the "trust agreement made no attempt to make any disposition of property, or to give any control of it beyond the date of the death of the creator."
The plaintiff also relies largely on the case of Atwood v. Rhode Island Hospital Trust Co., 275 F., 513, 24 A.L.R., 156, the clause in testator's will in that case containing this language:
"I give the residue of my estate to said Trust Company to be disposed of to such persons and in such proportions as I may have instructed or shall hereafter instruct said Trust Company." (Italics ours.)
It does not attempt to incorporate in the will any definite existing document, as does the will in the case at bar. In the Atwood case that clause was properly held void because it did not contain a definitely ascertainable disposition of the property sought to be devised. The court there specifically found that the will "does not incorporate by reference any existing trust instrument." In fact, an examination of the will in the Atwood case fails to show any reference to any existing document, and leads to the conclusion that if there had been an incorporation by reference a different conclusion would have been reached.
The will in question here has heretofore been before this court as a result of a will-contest case, which resulted in a directed verdict in the Common Pleas Court finding certain items (Items 3 and 4) void. This court reversed the court below for error in so directing a verdict, and in the opinion written by Judge Richards, certain language was used which is quoted and stressed in plaintiff's brief herein. Toledo Trust Co. v. Koeninger, 14 Ohio Law Abs., 633. The language referred to is the following:
"The trust agreement executed subsequent to the making of the will does not purport to revoke the will or any part thereof, but at most only has the effect of making certain portions of the will inoperative."
It will be noted that the court does not say in fact that it does make portions of the will inoperative, but it follows with this significant language:
"So, in the case at bar, the supplementary agreement executed nine days after the will, does not in any sense revoke the will or any portion of it. If uncertainty arises as to the interests which pass under the will and under the trust agreement, the law provides an appropriate method for construing the instruments and thus determining such controversy."
The words above pertain, of course, to a will construction case such as we now have here.
Having before us for construction the will in question, in connection with the trust agreements, we have considered very carefully the helpful briefs of counsel, and the cases therein cited, together with all the facts involved in this particular case, and we find in no case the exact facts presented here. Having in mind the primary purpose of seeking the true intention of the testator, and of carrying into effect that intention so far as the law permits, we are of opinion that the finding and judgment of the Court of Common Pleas were correct. The provision in the supplementary trust agreement directing the transfer of ten acres of land to the donor's nephew, Gustav H. Eppler, which land passed to the trustee by devise in the will, is therefore ineffective and void. The provision in said supplementary trust agreement directing the payment of $500 to the donor's nephew, John G. Eppler, after the death of donor and his wife, is valid, but that sum can be paid only out of the property transferred by Gustav Waldner during his lifetime to the trustee under the trust agreement.
It is true the original trust agreement reserved the right to alter, change or extend that agreement, but when the donor carried that trust agreement into his will he waived this right if not done by an instrument complying with the statute of wills. It was the manifest intention of Gustav Waldner to provide for his widow a safe and comfortable income during her life, and, at her death, the daughter, plaintiff herein, was to be the sole beneficiary. This was entirely natural and regular. His first trust agreement and his will make full, clear and unmistakable provisions for the natural objects of his bounty. After the trust agreement and the will were executed he evidently felt that his two nephews should have been remembered, and he thereupon undertook to modify his will, which included the trust agreement, by modifying the trust agreement, which, if the will had not intervened, he would have had a legal right to do. The testator, however, could not alter the will by a supplemental agreement which did not comply with the statute of wills. There is no certification that the witnesses signed in the presence of Gustav Waldner, or saw him sign it, or heard him acknowledge it as a will or anything purporting to be a will. This question should have been raised in the Probate Court, if at all.
Having been executed subsequent to the making of the will, and attempting to modify the former trust agreement which had already been incorporated in his will, the supplemental trust agreement, not complying with the statute of wills, must fail.
We are of opinion that the provisions of Article 3, Section C of the original trust agreement, do not violate the rule against perpetuities, as argued in plaintiff's supplemental brief. The final distribution of this estate is to take place on the death of a person in being (the widow), going then to the daughter. There is no gift over after the death of the daughter, and it is the apparent intention of the testator that the entire trust estate should be distributed to plaintiff at some time in her lifetime.
A decree is accordingly entered for the defendants in accordance with the above opinion.
Decree accordingly.
LEMERT, J., of the Fifth Appellate District, sitting by designation in the Sixth Appellate District, and LLOYD, J., concur.