Opinion
No. 79-727
Decided April 23, 1980.
Wills — Construction — Residuary clause — Testamentary power of appointment not exercised, when.
A general residuary clause in a will does not exercise a limited testamentary power of appointment when the clause does not specifically refer to the power.
APPEAL from the Court of Appeals for Clinton County.
On August 12, 1942, A. Graves Williams executed his last will and testament. Item III of his will created separate trusts for each of his children. In Paragraph 6 of Item III, he gave each child a limited testamentary power of appointment over his or her share of the trust fund. In the event that any child should fail to exercise the power by will, Paragraph 7 provides that that child's share was to pass outright to his or her descendants then living.
Williams died on June 25, 1946, and his will was admitted to probate shortly thereafter. The First National Bank of Cincinnati was appointed the duly qualified acting trustee under Item III of Williams' will.
On May 17, 1966, Kathryn W. Stopp, stepdaughter of Williams and donee of a limited testamentary power of appointment under his will, was granted a divorce from Ralph G. Stopp (appellant herein). Two children, Matthew and Ralph, Jr., were issue of said marriage. Custody of the then minor children of the parties was granted to Mrs. Stopp, who provided the maintenance and support for both children.
On September 6, 1972, Mrs. Stopp executed her last will and testament containing a general residuary clause which reads as follows:
"All the rest, residue and remainder of my estate, of every kind and nature and wheresoever situated, which I may own or have the power to dispose of at the time of my death, I hereby give, devise and bequeath to the Clinton County National Bank Trust Company, of Wilmington, Ohio, as Trustee, in augmentation of the assets held by it under the Trust Agreement entered into by me and said Bank on this date but prior to the execution hereof for management and disposition in accordance with the provisions thereof as now constituted or hereafter amended.***"
Prior to the execution of her will, Mrs. Stopp had executed three trust agreements with the Clinton County National Bank Trust Company (appellee herein). The record is devoid of any evidence that Mrs. Stopp made any express reference in her will or in those agreements to the limited testamentary power of appointment in her stepfather's trust or to assets in that trust.
On April 14, 1974, Mrs. Stopp died, leaving her two sons as her sole surviving issue, heirs at law and next of kin. On March 17, 1976, Ralph Stopp, Jr., died intestate, leaving his father, Ralph G. Stopp, as sole heir at law and next of kin.
On February 2, 1977, appellee, as Mrs. Stopp's executor, filed a complaint in the Probate Division, Court of Common Pleas of Clinton County, against the First National Bank of Cincinnati, Ralph G. Stopp and Matthew D. Stopp. The complaint requested a declaratory judgment that the general residuary clause in the will of Mrs. Stopp served to exercise a power of appointment given to her in accordance with the will of her stepfather, and that the Cincinnati bank distribute Mrs. Stopp's share of the trust assets under that will to appellee.
On December 13, 1977, the trial court held that the will of Mrs. Stopp did not exercise the limited testamentary power of appointment granted to her under her stepfather's will.
On April 4, 1979, the Court of Appeals reversed the lower court's decision and held that the assets in Williams' trust were properly appointed by Mrs. Stopp in her residuary clause.
The cause is now before this court pursuant to the allowance of a motion to certify the record.
Messrs. Buckley Miller and Mr. Frederick J. Buckley, for appellee. Messrs. Walker Chatfield, Mr. Henry H. Chatfield, Mr. Timothy L. Bouscaren and Mr. John L. Campbell, for appellant, Ralph G. Stopp.
The sole issue germane to this appeal is whether a general residuary clause, such as in Mrs. Stopp's will, can exercise a limited testamentary power of appointment absent a specific reference to such power.
Paragraph one of the syllabus in Carr v. Stradley (1977), 52 Ohio St.2d 220, reads as follows:
"In the construction of a will, the sole purpose of the court should be to ascertain and carry out the intention of the testator. Such intention must be ascertained from the words contained in the will. (Paragraphs one and two of the syllabus in Townsend's Exrs. v. Townsend, 25 Ohio St. 477, approved and followed.)"
Furthermore, it is emphasized in 3 Restatement on Property 1917-1918, Section 343, Comment e, that "[t]he only circumstances that are material [to the determination of whether the donee of a power intended to exercise his power] are those existing at the time the language of alleged appointment was formulated. Later changes in circumstances have no importance except so far as they are foreseeable at that time and therefore constituted elements in the situation then existing.***"
In addition to the foregoing rules of construction for exercising a testamentary power of appointment, it is stated in Annotation, 15 A.L.R. 3d 346, at page 354, as follows:
Massachusetts has a contra viewpoint holding that, even without a specific reference to the power of appointment and any applicable statutory authority, a general residuary clause of a will, or a general devise and bequest of all the testator's property, is presumed to be intended to exercise any powers of appointment which the testator has authority to exercise by will. Annotation, 15 A.L.R. 3d 346, 357, and cases cited therein.
Yet, "the Massachusetts rule, involving a presumption that a general residuary clause, or a general devise and bequest of all of the testator's property, constitutes an exercise of a power of appointment, was held not applicable to limited powers of appointment in Fiduciary Trust Co. v. First Nat. Bank (1962), 344 Mass. 1, 181 N.E.2d 6." Id., at page 359.
Besides being opposite to the rationale espoused in the cause sub judice, any application of the Massachusetts rule to the facts in the case at bar is improper, since the instant cause involves a limited testamentary power of appointment.
"***[I]t is the general rule that if the donee of a power of appointment, without expressly referring to such power, executes a general residuary clause, or a general devise or bequest of all his property, all his real property, or all his personal property, such a testamentary disposition, by itself, does not sufficiently manifest the donee's intention to exercise the power. It has often been emphasized in this connection that the donee's intention to exercise his power of appointment must be proved and must clearly appear from the evidence, and that any doubts as to whether the donee intended to exercise the power will be resolved against holding the power exercised. And there is, in general, a rule of construction that the donee, by purporting to dispose of all his `estate' or `property,' is manifesting an intention to dispose only of such property as is owned by himself, but not of property over which he merely has a power of appointment." (Emphasis added.) See Kiplinger v. Armstrong (1930), 34 Ohio App. 348.
As previously noted, the residuary clause in the will of Mrs. Stopp does not expressly refer to her power of appointment. There is no reference in the will or in the record to indicate that Mrs. Stopp knew she had a power of appointment under her stepfather's trust.
This court is cognizant of Dollar Savings Trust Co. v. Kirkham (1969), 21 Ohio Misc. 163. That case, a decision of the Court of Common Pleas of Mahoning County, involved the will of a deaf mute who also exercised his power of appointment by his general residuary clause in his will.
The evidence in that case revealed that the physically disabled testator considered the trust to be part of his property and thus part of his residual property. The unique factual background in Kirkham is clearly distinguishable from the instant cause and our holding.
The rule espoused herein is that a residuary clause disposes only of property owned by decedent and not property over which the decedent merely has a power of appointment. The general residuary clause in Mrs. Stopp's will, which provides for the distribution of property "which I [Mrs. Stopp] may own or have the power to dispose of at the time of my death," does not constitute a specific reference to her power of appointment.
This rule was essentially codified in 1976, in R.C. 2107.521, which states, in pertinent part:
"A general residuary clause in a will *** does not exercise a power of appointment held by the testator unless specific reference is made to the power."
The statute is inapplicable, however, to the instant cause, because its effective date is subsequent to the occurrences herein. Yet the statute is properly noted for its consistency with the judicial rule stated above.
Accordingly, we hold that Mrs. Stopp did not exercise her limited testamentary power of appointment, which was granted to her under her stepfather's trust. Therefore, the mandate of Paragraph 7, Item III of A. Graves Williams' will shall be in effect due to the failure of Mrs. Stopp to properly exercise her power of appointment.
Therefore, the judgment of the Court of Appeals is reversed.
Judgment reversed.
CELEBREZZE, C.J., HERBERT, W. BROWN, P. BROWN, SWEENEY and HOLMES, JJ., concur.