Opinion
November 18, 1940.
1. — Trusts — Deeds — Construction. Under spendthrift trust providing that it was intended to insure beneficiary an income reasonably sufficient to provide for his support during his lifetime, held regardless of difference in opinion as to ambiguity, circuit court did not err in holding that there were reasonable grounds to authorize trustee to petition for guidance as to whether he could use corpus of trust for support of beneficiary.
2. — Trusts — Deeds — Construction. Determination of question of whether trustee could take from corpus of estate for support of beneficiary trust deed must be considered from its four corners.
3. — Trusts — Deeds — Construction. Grantors in trust deed who were the legal owners of corpus of trust fund had absolute right to deed property to a trustee and give such directions as to its future uses and vesture as they saw fit unless the transfer and future use and vesture be in fraud of creditors, for some unlawful purpose, or in violation of the rule as to perpetuity.
4. — Trusts — Deeds — Construction. The fact that the instrument makes an irrevocable vesture of corpus in trustee, with directions only for distribution of income during pendency of trust, and vests absolute title to contingent remainderman gives validity to instrument as a deed, as distinguished from an instrument testamentory in character, which, not being executed as a will, renders such an instrument void.
5. — Trusts — Deeds — Construction. The polar star for construction of a deed is the intention of the grantor as gathered from the four corners of the instrument.
6. — Trusts — Deeds — Construction. In the construction of words found in deeds and wills, such meaning must be given as is consistent with the whole instrument, and, if trust is created, so interpreted; if possible, as not to destroy the trust.
7. — Trusts — Deeds — Construction. The determination of the question of vesture must always be in contemplation in giving construction to a deed as the law abhors failure of vesture.
8. — Trusts — Deeds — Construction. Where deed created spendthrift trust, contained provision in reference to three of four life beneficiaries that it was intended to insure the life beneficiary an income sufficient for himself during the period of his natural life and provided that beneficiary shall not have the power to assign, sell or pledge previous income to payment to him by way of any anticipation and there was language in the deed prohibiting any anticipation or alienation of the corpus of the trust estate by any beneficiary held there was no intent to vest any right, title or interest in corpus to any beneficiary.
9. — Trusts — Deeds — Construction — Words and Phrases. Since one estate must begin where the other ends, it is essential to the existence of a remainder that there be nominated a person who will be in esse at the termination of the particular estate competent to take remaining estate, but it is not necessary that the remainderman be in esse at the time when the remainder is created as it is sufficient if he be in being at time when estate must vest in possession if it is to vest at all, and whether or not he is in being before that time merely affects the character of the remainder as vested or contingent.
10. — Trusts — Deeds — Construction — Words and Phrases. Remainders in personal property may be created by will or by deed.
Appeal from Buchanan Circuit Court. — Hon. Emmett J. Crouse, Judge.
REVERSED.
W.M. Morton for appellant, Ladies Union Benevolent Association.
(1) The deed creating the trust involved in this suit is not ambiguous and constitutes no basis for a reasonable doubt on the part of the plaintiff as to his duties in the administration of the trust and plaintiff's petition should, therefore, have been dismissed. Warner v. Mettler et al., 260 Ill. 416, 103 N.E. 259; Hill v. Moors, 224 Mass. 163, 112 N.E. 641. (2) The language appearing in the trust instrument in question to the effect that "it is intended by this conveyance to insure the said Wallace B. Young an income sufficient for himself for the period of his natural life, but he, the said Wallace B. Young, shall not have the power to assign, sell, or pledge the same previous to the payment thereof. . . .," does not give to the said Wallace B. Young any right under any circumstances to any of the corpus of this trust estate. Dunbar v. Aldrich (Miss.), 31 So. 341; 2 Devlin on Real Estate (3 Ed.), sec. 838; Mauzy v. Mauzy, 79 Va. 537; Bain Bro. v. Buff's Administrator, 76 Va. 371; Weakley v. Barrow, 137 Tenn. 224, 192 S.W. 927; Newton v. Rebenack, 90 Mo. App. 650. (3) The trust instrument in question vests no discretionary powers in the plaintiff, as trustee, to determine what is "sufficient" income for Wallace B. Young, and even if defendant, Wallace B. Young, is entitled to receive any part of the principal by reason of the insufficiency of the income (and this the appellant, Ladies' Union Benevolent Association, vigorously denies) such encroachment upon the principal can only be made upon the order of a court of equity in appropriate proceedings wherein the trustee is instructed and directed as to the time, manner and extent of such use of the principal of the trust fund. (4) The pleadings in the case at bar present no issue as to the payment of operating expenses, including trustee's fees and attorney's fees, out of the corpus of the trust estate, nor are any issues properly presented as to acts done and transactions had in the past by the plaintiff trustee or his predecessors in office. Hill v. Moors, 224 Mass. 163, 112 N.E. 641, l.c. 642. Roscoe P. Conkling for appellant, Maggie Adcock.
(1) The trial court erred in refusing to rule that plaintiff's bill is without equity, and erred in refusing to dismiss plaintiff's bill for want of equity and lack of jurisdiction in the court construing the same, because (a) The deed creating the trust contains no ambiguity. State ex rel. v. Trimble et al., 334 Mo. 920, l.c. 925; Wendorff v. Mo. State Life, 318 Mo. 363; State ex rel. Nat. Life Ins. Co. v. Allen, 301 Mo. 631, l.c. 636, 637. (b) In the absence of unequivocal express authority affirmatively conferred by the trust instrument itself (and the deed at bar contains no such authority), and in the face of objections by the residuary beneficiaries (as here) a trustee has no power whatever to distribute to a beneficiary having only a life estate in net income any portion of the principal of the trust estate. To justify any court in making any exception to the above rule for any purpose under any circumstances, the express direction and permission of the settlor must affirmatively be expressed in the trust instrument in the clearest manner. In re Boyles' Will, 251 N.Y.S. 197; Ashby v. Standard Pipe (Tex.), 56 S.W.2d 223. (2) The trial court erred in construing the deed to mean and erred in finding and decreeing that the trustee of the trust has the power and authority in his discretion to pay to Wallace B. Young portions of the corpus of the trust estate. Weakley v. Barrow (Tenn.), 192 S.W. 927; Stewart v. Hamilton (Tenn.), 270 S.W. 79; Clark v. Hearne (Mass.), 160 N.E. 309. (3) The trial court erred in decreeing that the trustee in his discretion could invade the corpus of the trust estate and distribute the same to Wallace B. Young, because any such invasion of the corpus cannot be left to the uncontrolled discretion of the trustee, but presents a judicial question for control by the court as to the purposes, the conditions precedent, the necessity therefor and the extent of such invasion. No authority for vesting the trustee with such uncontrolled discretion is to be found in the instrument creating the trust. Even if the trust instruction had expressly, affirmatively and unequivocally declared that, if the trustee should determine that the net income be insufficient "to insure to Wallace B. Young an income sufficient for himself during the period of his natural life," the trustee could pay to Wallace B. Young a portion of the corpus to supplement net income (and no such authority in the trustee is even remotely hinted at in the deed at bar), even then the trustee could not arbitrarily invade the corpus, and the exercise of the discretion of the trustee would be subject to judicial control. First Nat. Bank v. Snead, 24 F.2d 186; Stecker v. Foster (Mass.), 60 N.E. 407; Hoxie v. Finney (Mass.), 18 N.E. 593; Farlin v. Sanborn (Mich.), 126 N.W. 634. (4) The trial court erred in admitting in evidence testimony of extrinsic circumstances in the family relationship and erred in admitting in evidence the testimony of Wallace B. Young that there was a feeling of unfriendliness between his sister, Maggie Adcock, and his father and mother and that his sister had filed lawsuits against his father (71-75). Parol evidence is inadmissible in the attempted construction of an unambiguous instrument, and surrounding circumstances will not be permitted to place a construction on a deed inconsistent with the plain words used therein to add to, detract from or alter the intent. Warne v. Sorge, 258 Mo. 162. (5) The trial court erred in admitting in evidence testimony of extrinsic circumstances in the family relationship, and erred in admitting in evidence the testimony of Kay G. Porter that George W. Young and Cynthia A. Young were very bitter toward their daughter, Maggie Adcock (86-89). Parol evidence is inadmissible in the attempted construction of an unambiguous instrument. Warne v. Sorge, 258 Mo. 162.
Strop Strop for respondent, Glenn E. Brumbaugh, Trustee of the Estate of Cynthia A. Young, deceased.
(1) A trustee can petition the court for guidance in the administration of trust matters when doubt exists as to the proper administration of the trust. Warner v. Mettler, 103 N.E. 259. (2) No evidence as to the integrity of Trustee Brumbaugh being offered, it is improper for the court to indulge in the assumption that the trustee would connive with a beneficiary for the dissipation of the trust funds. (3) The controversy in question involves the defense of the trust.
Groves Watkins for respondent, Wallace B. Young.
(1) Under the terms of the trust deed, the trustee is empowered to pay to the respondent, Wallace B. Young, sums of money sufficient to insure the said Wallace B. Young an adequate income for his support, whether the same be from income, or from the corpus of the estate. Pierrepont v. Edwards, 25 N.Y. 128, l.c. 131, 134; Smith v. Fellows, 131 Mass. 20; First Trust Co. of Wichita v. Varney, 45 P.2d 582, l.c. 583; Blumer v. Gillespie, 93 S.W.2d 939, 338 Mo. 1113. (2) Where a testator or settlor uses certain language in similar successive bequests and omits said language from another successive bequest, it is presumed that such omission was intentional on the part of the testator or settlor, and is indicative of his desire that the particular words used should be given effect where used. In other words, where different words are used in a will or trust instrument, applying to the same subject matter in similar bequests, such use of different words indicates that the testator or settlor had in view different results from the use of said words. Strickland et al. v. Delta Investment Co. (Miss.), 137 So. 734, l.c. 736; Williams v. Fundingsland (Colo), 63 A.L.R. 77, l.c. 80. (3) The intention of the settlors is the pole star for the interpretation of the trust deed in question. The intention of the settlor shall govern and this intention may be expressed anywhere in the instrument. Goins v. Melton, 343 Mo. 413, 121 S.W.2d 821, l.c. 823; Blumer v. Gillespie, 338 Mo. 1113, 93 S.W.2d 929. (4) If the trust deed is ambiguous, the court may consider extrinsic evidence of the facts and circumstances surrounding the settlors at the time of the execution of the trust deed to assist the court in ascertaining the true intention of the settlors. 65 C.J., 500; First Tr. Co. of Wichita v. Varney (Kan.), 45 P.2d 582, l.c. 584. (5) Considering the evidence showing the facts and circumstances surrounding the settlors at the time of the execution of the trust deed, there can be little doubt that the settlors intended the trustee to expend for Wallace B. Young, any amount that might be necessary for his support, whether the same be from income or corpus of the trust estate. Pierrepont v. Edwards, 25 N.Y. 128, l.c. 131, 134; Smith v. Fellows, 131 Mass. 20; First Trust Co. of Wichita v. Varney, 45 P.2d 582; Blumer v. Gillespie, 338 Mo. 1113, 93 S.W.2d 939.
The issue in this case involves the construction of what is termed a General Warrantee Trust Deed executed by Cynthia A. Young and George W. Young, husband and wife, to Charles F. Strop, Trustee.
The deed was executed in Buchanan County, where the parties lived and where the property conveyed was located, on April 28, 1921. The deed created a trust; the corpus of which, at the time the trust was made, consisted of real estate. However, under the provisions of the deed, power was given trustee to, under certain restrictions, sell the real estate and invest the proceeds. In fact, insofar as the trust fund is concerned, the trustee is given a broad delegation of control, including right of designating his successor.
The present trustee is shown to be a trustee in lawful succession, and this action was brought by him for the purpose of having the court construe the deed for a determination of the question as to whether or not he can take of the corpus of the trust fund and give it for support to a present surviving beneficiary to whom the net income of said trust fund now enures.
The respondent, petitioning trustee, asserts ambiguity in the language of the deed, and asks the court for guidance and to construe the deed.
Two appellants, Maggie Adcock and Ladies Union Benevolent Association, claim there is no ambiguity, and take the position that the corpus cannot be used. Wallace B. Young, the present surviving beneficiary of the net income, asserts right to partake of the corpus for his support.
The issues were presented to the Circuit Court of Buchanan County, Missouri, and the orders and decrees of that court are as follows:
"The Court finds that there is sufficient difference in the language of the several provisions of the deed creating the trust in issue in these proceedings to raise a reasonable doubt in the mind of the trustee and authorize a construction of the entire instrument for the information and guidance of the trustee; that said deed, dated April 28, 1921, by which said trust was created, means and the Court construes it to mean that during the life time of the said Wallace B. Young he should receive from said trust estate an income reasonably sufficient for his purposes, that is to say, reasonably sufficient to provide for his support;
"And the Court Does Hereby Order, Adjudge and Decree that if in the discretion of the Trustee of the trust estate created by a certain trust deed (dated the 28th day of April, 1921, and recorded in book 529, at page 6 in the office of the Recorder of Deeds within and for Buchanan County, Missouri) the net income of said trust estate at any time be not sufficient to insure to said Wallace B. Young an adequate income, that said trustee shall have the power and authority at any time, in his discretion, to use such portion of the corpus of said trust estate as may, in the discretion of said trustee, be necessary to insure to said Wallace B. Young an adequate income during the lifetime of said Wallace B. Young.
"It Is Further Ordered, Adjudged and Decreed that the costs of this proceeding be paid out of the trust estate, and that the Trustee is ordered to pay the same."
Maggie Adcock and Ladies Union Benevolent Association have duly appealed from the aforesaid judgment, orders and decrees.
Regardless of the facts, as to whether or not students of law might differ in opinion as to ambiguity, still we conclude that we are justified by the showing before us in holding that the circuit court did not err in holding that there were reasonable grounds to authorize the trustee to petition for guidance.
As to the determination of the question of taking from the corpus for the support of the present beneficiary, the deed must be considered from its four corners under the established rules of interpreting such instruments.
The grantors in the deed were the legal owners of the corpus of the trust fund in issue. As owners, these grantors had the absolute right to deed the property to a trustee and give such directions, as to its future uses and vesture as they saw fit, unless the transfer and future use and vesture be in fraud of creditors, for some unlawful purpose, or in violation of the rule as to perpetuity.
The grantors in the deed in question clearly divest themselves of title and vest the trustee with title during the life of the trust. Such benefits as enure to user of beneficiaries are limited to life with absolute restrictions as to alienation by the beneficiaries before payment direct to them. In other words, as to each life beneficiary, there is created what is designated, in common parlance, as a "Spendthrift Trust."
There are three contingencies expressed in the deed, the happenings of which terminate the trust and absolutely vest title in the corpus.
The first life beneficiary is George W. Young, one of the grantors in the deed. The provision of trust as to George W. Young is as follows:
". . . the said trustee is empowered and directed to pay the entire net income from said real estate to George W. Young so long as the said George W. Young may live, such net income to be paid to said George W. Young quarterly, semi-annually or annually, as may be most convenient to said trustee and to said George W. Young, and said payments of income are to be made to said George W. Young personally when convenient, otherwise upon his written order or receipt in writing, but in either case free from the interference or control of his creditors. It is expressly understood and agreed that the use of said income shall not be anticipated by assignment by the said George W. Young. It is the intention by this conveyance to insure the said George W. Young an income reasonably sufficient for himself during the period of his natural life, but he, the said George W. Young, shall not have the power to sell, assign or pledge the same previous to the payment thereof to him, as aforesaid, by way of anticipation, and it is intended by this conveyance that no future creditor of the said George W. Young shall have any right to subject said income or any part thereof to the payment of his debts." (Italics ours.)
We have underscored the words above that have given rise to this controversy. The second beneficiary is Cynthia A. Young, also grantor in the deed. The same language as to use and restrictions as to alienation appear as set forth in grant to George W. Young, supra.
George W. Young and Cynthia A. Young have departed this life. Their son, Wallace B. Young, is living. The provision made for Wallace B. Young is as follows:
"It is further expressly understood and agreed that after the death of George W. Young and after the death of Cynthia A. Young, provided Wallace B. Young, their son, is then surviving, said trustee is empowered and directed to pay the entire net income from said trustee estate to Wallace B. Young so long as said Wallace B. Young may live, such net income to be paid to said Wallace B. Young quarterly, semi-annually or annually, as may be most convenient to said trustee and to said Wallace B. Young, and said payments are to be made to said Wallace B. Young personally when convenient, otherwise upon his written order or receipt in writing, but in either case free from the interference or control of his creditors. It is expressly understood and agreed that the use of said income or payments shall not be anticipated by assignment by the said Wallace B. Young. It is intended by this conveyance to insure the said Wallace B. Young an income sufficient for himself during the period of his natural life, but he, the said Wallace B. Young, shall not have the power to assign, sell or pledge the same previous to the payment thereof to him, as aforesaid, by way of anticipation, and it is intended by this conveyance that no creditor of said Wallace B. Young shall have any right to subject said income or any part thereof to the payment of his debts. (Italics ours.)
"It is further understood and agreed that after the death of the said George W. Young, Cynthia A. Young and Wallace B. Young, if the said Wallace B. Young, leave issue surviving, said trust will cease and terminate, and said trustee estate shall become the absolute property of the heirs of the said Wallace B. Young."
In the last above paragraph, there appears the first contingency for termination of trust and absolute vesture of the trust estate. Following the above provisions, the following appears:
"It is further expressly agreed and understood that after the death of the said George W. Young, Cynthia A. Young and Wallace B. Young, and provided the said Wallace B. Young does not leave issue surviving, and provided Maggie Adcock, the daughter of said George W. Young and Cynthia A. Young, is then surviving, the said trustee will pay the entire net income from said trust estate to said Maggie Adcock so long as she may live, such net income to be paid to said Maggie Adcock quarterly, semi-annually or annually as may be most convenient to said trustee and the said Maggie Adcock, and said payments of income are to be made to said Maggie Adcock personally when convenient, otherwise upon her written order or receipt in writing, but in either case free from interference or control of her creditors. It is expressly understood and agreed that the use of said income shall not be anticipated by assignment by the same Maggie Adcock. It is the intention of this conveyance that the said Maggie Adcock shall not have the power to sell, assign or pledge said income previous to the payment thereof to herself, as aforesaid, by way of anticipation, and it is the intention by this conveyance that no creditor, present or future, of the said Maggie Adcock shall have the right to subject said income or any part thereof to the payment of her debts.
"It is further expressly understood and agreed that after the death of the said George W. Young, Cynthia A. Young, Wallace B. Young, and provided said Wallace B. Young does not leave issue surviving him, and after the death of the said Maggie Adcock and provided said Maggie Adcock leaves issue, said trust is to cease and terminate, and the said trust estate is to become the absolute property of the bodily heirs of the said Maggie Adcock.
"It is further expressly understood and agreed that after the death of the said George W. Young, Cynthia A. Young, and Wallace B. Young and Maggie Adcock, and provided the said Wallace B. Young does not leave issue surviving him and provided the said Maggie Adcock does not leave issue surviving her, then the aforesaid trust is to terminate and said trust estate is to become the absolute property of the Ladies Union Benevolent Association, a corporation for the use and benefit of the Memorial Home, sometimes called the `Old Peoples Home.'
"It is further agreed that the said trustee is empowered, at the expense of said trust estate, to defend the trust herein created and to that end, at the expense of said estate, to employ and engage the service of such attorneys as may be necessary therefor."
In the second and third paragraphs above, the second and third contingencies for termination of trust and vesture of the estate appear.
As the instrument in question herein unqualifiedly makes an irrevocable vesture of the property in the trustee, we conclude the instrument to be a deed and not testamentary in character.
The fact that the instrument makes an irrevocable vesture of corpus in trustee, with directions only for distribution of income during the pendency of the trust, and vests absolute title to contingent remainderman gives validity to the instrument as a deed, as distinguished from an instrument testamentary in character, which, not being executed as a will, renders such an instrument void.
The polar star for construction of a deed is the intention of the grantor as gathered from the four corners of the instrument. [Goins v. Melton et al., 323 Mo. 413, 121 S.W.2d 821.]
The contention of defendant Wallace B. Young, to the effect that he is entitled under the deed to partake of the corpus of the trust estate, is based upon the language, to-wit: "It is intended by the conveyance to insure the said Wallace B. Young an income sufficient for himself during the period of his natural life." Contention is based upon the fact that such language, while occurring in prior clauses of the deed, does not occur in the clause referring to Maggie Adcock and bodily heirs.
In the construction of words found in deeds and wills, such meaning must be given as is consistent with the whole instrument, and, if trust is created, so interpreted if possible, as not to destroy the trust. The determination of the question of venture must always be in contemplation in giving construction to a deed. Law abhors failure of vesture as nature abhors a vacuum. There must be a vesture or no deed. In the case at bar, temporary vesture is in trustee. Such vesture, we conclude, is irrevocable by the grantors in the deed, and is in that sense absolute until the termination of the trust. It is characteristic of the deed in issue that there is no contingency expressed in the whole instrument that can be construed to create, even by implication, any vesture in any of the life beneficiaries in and to the corpus of the trust estate. Consistent with the intent of the grantors, no vesture is made to them, even in the net income, until same has been paid direct to the beneficiary by the trustee.
In the construction of the deed in issue, we must give consideration to the fact that the provisions of payment to, and the restrictions placed on anticipation and alienation by the life beneficiaries are uniform. In other words, the same as to each. The payment is limited to net income exclusively and paid direct to the person. The language as to anticipation is, "shall not have the power to assign, sell or pledge previous to payment thereof to him, as aforesaid, by way of any anticipation." There is no language in the deed prohibiting any anticipation or alienation of the corpus of the trust estate by any beneficiary. This alone is conclusive of the fact that there was no intent to vest any right, title or interest in the corpus to any beneficiary who is limited to receive only during the term of natural life. If such be not the case, then a contingent interest in the corpus, whereby a judgment creditor could have execution and whereby a bankruptcy court could list same as an asset of such creditor would certainly destroy the intent of the grantors.
It is clear, from consideration of the instrument from its four corners, that the intent of the grantors, when the deed was made, was to suspend vesture by and through vesture in a trustee for term of the trust and until the happening of the event that expressly terminates the trust, and vests the estate in party designated.
The fact that situations are often presented wherein no one can know to what person or persons vesture will enure suggests the thought of no vesture. Such though vanishes when the rule in such situation be considered. The rule in such a situation is well stated in the text of Sec. 18, Chap. 4, page 492, Vol. 23, R.C.L., as follows:
". . . Since the one estate must begin where the other ends, it is essential to the existence of a remainder that there be nominated a person who will be in esse at the termination of the particular estate competent to take the remaining estate. But it is not necessary that the remainderman be in esse at the time when the remainder is created; it is enough if he be in being at the time when the estate must vest in possession if it is to vest at all, that is, at the termination of the particular estate. Whether or not he is in being before that time merely affects the character of the remainder as vested or contingent. As we shall see presently, if the remainderman is in esse when the remainder is created and there is no other contingency the right vests immediately; if not, the right is suspended, but exists in consideration of law, until he comes into being, whereupon it vests."
Insofar as the law of this case is concerned, it is the same as applies to a trust estate wherein the corpus is real estate and wherein vesture is placed in trustee for term of trust, and wherein vesture is suspended as to the remainderman until the event terminating the trust and vesting in remainderman.
It is the present rule that remainders in personal property may be created by will or by deed. By the express terms of the deed in issue, there is designated remainderman as follows: First, to the issue of Wallace B. Young, if surviving him, and if not surviving issue of Wallace B. Young, then the surviving issue, if any, of Maggie Adcock, if surviving her, and if none surviving her, then Ladies Union Benevolent Association, a Corporation.
As to these contingent remaindermen, there is no restriction as to alienation, and the remaindermen are so vested in the corpus of the estate as present right and title enures to sell and convey or to subject their interest to execution by a judgment creditor; grantees and creditors, of course, to take subject to the terms of the provisions of the trust until the trust is terminated. We note here that one of the terms of the trust is a salutary self-defense clause to the trust which provides for the defense of the trust to the diminuation of the corpus, if the need arises.
Based upon the premises above set forth, the judgment of this court is that the expression "intent," as appearing in preceding clauses to the clause as to Maggie Adcock, and the failure of such expression in the clause as to her, cannot be construed as giving right to Wallace B. Young to enure to any right to partake of the corpus or any right to the trustee to deplete the corpus by paying therefrom to said Wallace B. Young.
We have above set forth our conclusion as to use of corpus to defend the trust. The judgment of the circuit court is reversed. All concur.