Opinion
H029770
5-18-2007
DAVID M. STANTON, Plaintiff and Respondent, v. LINDA J. JEFFERY, Defendant and Appellant.
NOT TO BE PUBLISHED
Linda Jeffery appeals from a judgment entered following a two-part trial on a petition by David Stanton, under Probate Code section 17200, to determine distribution of trust property. She contends that the trial court incorrectly interpreted the trust language, and then improperly modified the trust contrary to the law and the trustors intent. We find the trial courts rulings were supported by the evidence and the law. Accordingly we will affirm the judgment.
BACKGROUND
Linda Jeffery (appellant) and David Stanton (respondent) are brother and sister and are the surviving children of Dale Stanton, who died on April 14, 1998. Appellant and respondent are the beneficiaries and successor co-trustees of the Dale Stanton Living Trust dated October 26, 1993, as amended and restated November 14, 1995. The trust provided that upon the death of Dale Stanton, the trust estate was to be divided into two shares. Appellants share was to consist of all of the interest in a residence in San Jose at 1500 Norman Avenue, and "a one-half interest in the back one hundred acres of 20460 Reynolds Ave., Los Gatos." Respondents share was to consist of the remaining interest in the property at 20460 Reynolds Avenue, in Los Gatos (the "Reynolds Road property"). The trust further provided that the beneficiaries shares were to be distributed to them free of trust if they survived their father by 120 days.
On November 20, 2001, respondent filed a petition to determine construction of the trust, pursuant to Probate Code sections 17200 and 17201. The petition alleged that the Reynolds Road property consisted of approximately 205 acres. The "back one hundred acres" was intended to pass to appellant and respondent, with each owning a one-half interest, and the remaining approximately 105 acres, where respondent lived, was to pass to respondent. The precise geographical area of the "back one hundred acres" was nowhere defined by any recorded legal instrument. Respondent therefore requested a judicial determination as to the approximate geographical configuration of the "back one hundred acres" of the property, as well as the remaining 105 acres, so that legal descriptions could be formulated and title perfected in the respective trust beneficiaries.
The first part of the trial in this matter was held over five days in May of 2003. At trial appellant took the position that the designation "back one hundred acres" was ambiguous, that her father did not know exactly where the "back one hundred acres" was located, and that it probably referred to land on the east side of the property behind the house occupied by respondent. She sought a distribution whereby she and her brother would be co-owners of the entire Reynolds Road property. Based on an estimated total acreage of 205 acres, she would have a 24 percent undivided interest and respondent would have a 76 percent interest in the entire property.
By the time of trial, respondent had determined that the Reynolds Road property was actually two separate legal lots. He had applied for and had received from the County of Santa Clara two "Certificates of Compliance" showing that the northernmost lot nearest the road contained approximately 120.90 acres, and the southernmost lot contained approximately 93.69 acres. Respondent contended that his father referred to the northernmost part of the property as the front and the southernmost part as the back. Respondent asked the court to comply with the trust language and declare that he and his sister were co-owners of the back lot, each as to a one-half interest, and that he was full owner of the front lot.
The court took evidence and made extensive findings in a written statement of decision filed August 21, 2003. The court found that the description "back one hundred acres" was ambiguous and the court therefore received extrinsic evidence to determine what was intended. The court had the benefit of several taped and transcribed consultations between Dale Stanton and several different estate planning attorneys. From these the court found it was clear that Stanton referred to the developed portion of the Reynolds Road property, where his son lived, as the front of the property, and the more hilly portion that was "just open country" as the back one hundred acres. His expressed intent, the court found, was to give his daughter a half interest in the back part of the property, and he wanted his son to be able to continue living on the front portion of the property, where he had lived for almost all of his life.
The evidence showed that Dale Stanton had been present when a survey was done on the property in 1984 by Kevin Fisher, and that Stanton was aware of a stake located along the eastern boundary line, where a township or section line intersected the boundary. An extension of this township or section line across the property parallel to its northern boundary divided the property roughly in half. The court wrote: "Dale knew of the Fisher survey and was generally aware of the Township Line or section line bisecting his property. He had seen the stake on the eastern boundary of his property marking that line. It is reasonable to conclude that Dale knew that the Township Line approximated the division he intended; however, he knew a survey would be needed to describe the back 100 acres, because while the line approximated that quantity, no one had ever confirmed the acreage south of that line." The court found that the extension of the township line across the property "generally depicted the northern border of what Dale Stanton referred to as the back 100 acres."
The court found that the two Certificates of Compliance, which had been recorded on July 17, 2002 with the County of Santa Clara, showed that the southern portion of the property was actually a separate lot, consisting of 93.69 acres, and that the front portion of the property nearer the road consisted of 120.90 acres. These two portions of the property were two separate legal lots with separate legal descriptions, and they could be sold, leased or financed separately, even though they did not yet bear separate parcel numbers.
The court found it was "fair and just, and in keeping with the basic intention of Dale Stanton," to give appellant a one-half interest in the 93.69 parcel and to compensate her with money for the 6.31 acres representing the difference between 93.69 acres and 100 acres. The court found that the back one hundred acres were valued at $6,250 per acre. Thus the value of the 6.31 acres was $39,438. The court therefore ordered respondent to pay appellant one half of this amount, or $19,719.
The court found that Dale Stanton was aware that there would need to be an easement across the front portion of the property to access the back one hundred acres. The court found that the location, width and description of this easement were to be determined in a subsequent court proceeding.
The second phase of the trial was held over two days in September of 2004. The parties submitted evidence from their respective experts as to the location of an easement crossing the northern portion of the property to reach the southern portion. A court-appointed engineer also testified. In a written statement of decision filed November 15, 2004, the court found that respondents expert was "more persuasive." The route devised by respondents expert used much of an existing road, did not require extensive grading, minimized the destruction of existing vegetation, and avoided going through the yard of the developed portion of the northern lot. The court-appointed engineer agreed that this was the most appropriate route. The court declared an easement over this route one hundred feet in width.
Judgment was entered on November 16, 2005. It summarized the above findings regarding Dale Stantons intent to give appellant one-half of the "back one hundred acres" of his property; the location and configuration of the "back one hundred acres"; the determination that this portion of the property was actually 93.69 acres; the cash award to appellant of $19,719 to make up for the discrepancy in acreage; and the location of the easement accessing the "back one hundred acres." The court retained jurisdiction over issues relating to the easement. Since respondent had been awarded $12,893.37 in costs, the court offset this amount and ordered respondent to pay appellant the amount of $6,825.63.
ISSUES
Standard of Review
Appellant contends that the courts interpretation and modification of the trust are both reviewable by us de novo. We disagree. "In construing trust instruments, as in the construction and interpretation of all documents, the duty of the court is to first ascertain and then, if possible, give effect to the intent of the maker." (Estate of Gump (1940) 16 Cal.2d 535, 548; see Ephraim v. Metropolitan Trust Co. (1946) 28 Cal.2d 824, 834 ["the primary rule in construction of trusts is that the court must, if possible, ascertain and effectuate the intention of the trustor or settlor"].) In reviewing a trial courts construction of a trust, "we are free to independently interpret the instrument as a matter of law unless the trial courts interpretation turned upon the credibility of extrinsic evidence or required resolution of a conflict in the evidence." (Estate of Verdisson (1992) 4 Cal.App.4th 1127, 1135; Estate of Goyette (2004) 123 Cal.App.4th 67, 70.) Where a written instrument is ambiguous and the court receives conflicting extrinsic evidence as an aid in resolving the ambiguity, we apply the substantial evidence rule to any factual findings made by the trial court. (Estate of Dodge (1971) 6 Cal.3d 311, 318-319.) In such a case, "any reasonable construction will be upheld if it is supported by substantial evidence." (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955; Roden v. Bergen Brunswig Corp. (2003) 107 Cal.App.4th 620, 625.) In conducting a substantial evidence review, we resolve any conflicts and draw all legitimate and reasonable inferences in favor of the judgment. (Estate of Bristol (1943) 23 Cal.2d 221, 223.)
Here, the court found that the meaning of "the back one hundred acres" was ambiguous, and appellant does not disagree with this finding. The court then accepted evidence from both sides in order to endeavor to resolve the ambiguity and to interpret this phrase consistently with the testators intent in the trust document. If necessary, the use of extrinsic evidence is proper to determine the intention of the transferor. (Prob. Code, § 21102, subd. (c).) We disagree with appellants contention that the evidence was "not in substantial conflict." Witnesses for both sides testified over several days of trial as to the intended meaning of this phrase. We therefore review the courts factual findings and resolution of the conflicts in the evidence under the substantial evidence standard. (Estate of Dodge, supra, 6 Cal.3d at pp. 318-319.)
Appellant next argues that the trial courts modification of the trust, by ordering a compensatory monetary payment from respondent to appellant and by creating an easement in favor of the southern lot, is reviewable by this court de novo. Appellant contends such a modification is not allowed under Probate Code section 15409, and that even if it were allowed under the Probate Code, the court failed to take into consideration all of the relevant facts in modifying the trust. Respondent contends that the modification was allowed under Probate Code section 15409, and that we review the courts decision under the abuse of discretion standard. We agree with respondent.
Probate Code section 15409 provides that a court "may modify the administrative or dispositive provisions of the trust or terminate the trust if, owing to circumstances not known to the settlor and not anticipated by the settlor, the continuation of the trust under its terms would defeat or substantially impair the accomplishment of the purposes of the trust." (Prob. Code, § 15409, subd. (a).) Where statutes use the term "may" and direct the court to consider the circumstances in reaching its decision, this denotes an exercise of discretion. Further, in a petition under Probate Code section 17200 to determine questions concerning construction of a trust instrument, "the court in its discretion may make any orders and take any other action necessary or proper to dispose of the matters presented by the petition, . . ." (Prob. Code, § 17206.)
The abuse of discretion standard of review is well established. "The appropriate [appellate] test for abuse of discretion is whether the trial court exceeded the bounds of reason." (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478; In re Stephanie M. (1994) 7 Cal.4th 295, 318-319.) A ". . . showing on appeal is wholly insufficient if it presents a state of facts, a consideration of which, for the purpose of judicial action, merely affords an opportunity for a difference of opinion. An appellate tribunal is neither authorized nor warranted in substituting its judgment for the judgment of the trial judge." (Brown v. Newby (1940) 39 Cal.App.2d 615, 618.) "The test is not whether we would have made a different decision had the matter been submitted to us in the first instance. Rather, the discretion is that of the trial court, and we will only interfere with its ruling if we find that under all the evidence, viewed most favorably in support of the trial courts action, no judge reasonably could have reached the challenged result." (Estate of Billings (1991) 228 Cal.App.3d 426, 430.)
With these standards of review in mind, we turn to appellants substantive arguments in this case.
Location of the "Back One Hundred Acres"
Appellant argues that the language in the trust giving her a one-half interest in the "back one hundred acres" was simply too uncertain to enforce, and that the court should not have allowed extrinsic evidence to define its location. Various experts testified that the terms "front" and "back" are not commonly used in describing the location of land because they are too vague. Although the terms front and back, in reference to acreage, are by themselves uncertain, here there was evidence from which the court could determine the trustors intent when using the term as part of the phrase "back one hundred acres." The court was entitled, in the face of an ambiguity in the language, to resolve the ambiguity and to determine whether the evidence defined the location of the back one hundred acres with sufficient specificity. (See Estate of Dodge, supra, 6 Cal.3d at pp. 318-319.) We review the evidence to see whether it supports the courts ruling that the term "back one hundred acres" was capable of describing a precise location of acreage, consistent with the trustors intent when he used the language.
Appellant argues that there was evidence supporting her contention that Dale Stanton used the term "back" when referring to the eastern side of the property rather than the southern portion of the property. She testified as to conversations she had with her father when he referred to the back of the property as they were standing in the kitchen of the house on the Reynolds Road property and looking out the window towards the east. Furthermore, in a conversation with appellants attorney, Stanton had referred to a "spring over in the back there." There was evidence that there was a spring on the Reynolds Road Property, known as Barrel Springs, and that it was located on the eastern side of the property, not on the southern portion. In addition, respondent had testified that his father did not like that people had access across "the back of the property." He testified further that the access road his father was referring to was a jeep trail that ran generally in an easterly direction through the northern part of the property. There was further testimony by the purchaser of land to the east of the Reynolds Road property, who explained that the jeep road provided access to his lands to the east.
While this evidence could possibly constitute support for a finding that Dale Stanton meant the eastern side of the property when referring to the "back" of the property, other evidence fully supports the trial courts finding that the "back one hundred acres" referred to the southern half of the property. Under the substantial evidence rule, we are required to credit the evidence supporting the courts finding. The entire Reynolds Road property was roughly in the shape of a rectangle with the length running north and south. Access to the property was from Reynolds Road on the north, and the house and other buildings were located in the northwestern corner. A township or section line ran roughly across the middle of the property, parallel to the northern boundary, and this line approximated the natural division of the northern and southern portions formed by a ridge line. Respondent testified that he had talked with his father many times over the years about the back half of the property and that his father was referring to the southern half.
In 1984, a survey was recorded by Kevin Fisher, which showed a dotted line crossing the middle of the property parallel to the northern boundary. Respondent testified that his father was aware that this survey was being done, had paid for the survey, and had talked with Fisher. The survey map showed a clear "dividing line," where the township or section line crossed the property. Respondent and his father referred to the property to the north of the line as the front part of the property and the property to the south as the back part. Respondent testified that after the survey was done he had pointed out to his father a stake on the easterly boundary representing the intersection of the township or section line with the eastern boundary. His father had talked with him several times over the years about selling the "back one hundred acres" to the neighboring property owner or to an open space group, referring to the acreage below this line.
In addition to this testimony, the court had the tapes and transcriptions from three meetings between Stanton and estate planning attorneys in 1995 and 1996. These reflected that Stanton was aware that the "back one hundred acres" was "a little less than half" of the entire property. He wanted his son to have the front half of the property, where the houses were, and he wanted both children to have a one-half interest in the back half of the property. He referred to the front part as the developed part of the property and the back half as "open country."
The court also heard testimony from Zachary Carter, the planner who researched, prepared, and then recorded the 2002 Certificates of Compliance, based on a search of historical deeds. These deeds showed a property line dividing the Reynolds Road property into a northern piece and a southern piece, each of which could be separately conveyed. The dividing line was the section or township line that was depicted on the Fisher survey. Appellant argues that the two lots defined by the Certificates of Compliance were unknown to Dale Stanton at the time he created the trust document. However, although the Certificates of Compliance had been prepared following Stantons death, the evidence supported a finding that he was aware of the general configuration of the two parcels because he had ordered the Fisher survey and was aware of the location of the dividing line separating the back acreage from the front part of the property.
In sum, substantial evidence supports the courts determination that Dale Stantons reference in the trust document to the "back one hundred acres" was intended to refer to the southern portion of the property defined by the division of the property into roughly two halves by the extension of the township or section line across the property.
Modification of the Trust
Appellant argues that Stanton never intended for the Reynolds Road property to be divided into two parcels, but rather intended that his two children would own the entire property together. Based on the total acreage of approximately 215 acres, she contends she should have a 23 percent undivided interest in the entire Reynolds Road property. She argues further that the trust document did not mention an easement, and did not provide for any payment of cash. Appellant contends that the court erred in modifying the terms of the trust, and that the modifications did not carry out the trustors primary intent to achieve a substantially equal division of his property between his two children.
As we have noted, Probate Code section 15409 provides that a court may modify the dispositive provisions of the trust if necessary in order to avoid defeating the purposes of the trust. (Prob. Code, § 15409, subd. (a); § 17206.) "California courts have long had the equity power to modify the terms of a trust where such modification is necessary to preserve the trust or serve the original intentions of the trustor. . . ." (Ike v. Doolittle (1998) 61 Cal.App.4th 51, 79; Stewart v. Towse (1988) 203 Cal.App.3d 425, 428.) Furthermore, the court is authorized to take any necessary action to dispose of matters presented by the petition. (Prob. Code, § 17206; Estate of Sigourney (2001) 93 Cal.App.4th 593, 605.)
Here, the trust provided that appellant and respondent were each to own a one-half interest in the back one hundred acres of the property and that respondent was to have full ownership of the front portion of the property where his home was located. And it further provided that each beneficiarys share was to be distributed to them free of trust. In order to accomplish these purposes, it was necessary to ascertain the precise location of the back one hundred acres and to provide legal descriptions of the back part of the property and the front part of the property so that title could be perfected in each of the beneficiaries. In addition, since the back portion of the property would be landlocked without access through the front portion, it was further necessary to provide for an easement. The evidence showed that Dale Stanton contemplated that a survey would have to be performed and that an easement would have to be provided. Furthermore, because the court found that the Certificates of Compliance defined the front and back portions of the property, consistent with Dale Stantons intent, and that the back lot actually consisted of less than one hundred acres, it was necessary for the court to compensate appellant for the difference.
The trial court articulated a sound factual basis for exercising its discretion to make these changes in the trust document in order to accomplish its purposes, and the record supports the courts decision. Appellant had suggested several times during estate planning sessions with her father, at which she was present, that she and her brother should simply share ownership of the entire Reynolds Road property. Stanton had resisted these suggestions, consistently indicating a desire that respondent have full ownership of the front portion and both of his children have a half interest in the back acreage. Respondents expert testified at trial that there were two separate, legal lots on the Reynolds Road property, and that the dividing line was defined by the existing township or section line. The evidence showed that Dale Stanton was aware of the approximate location of this line and that it generally delineated the front and back portions of the property. The two recorded Certificates of Compliance, which for the first time calculated the precise acreage of the two parts of the property, provided a basis for a modification of the trust while carrying out the intentions of the trustor.
There was evidence that the entire Reynolds Road property was thought at the time the trust was created to contain approximately 205 acres. Stanton was aware that the back, or southern, portion was "a little less than half." When the propertys area was more precisely calculated, it was found to contain approximately 215.59 acres. The back portion, based on the township line, contained approximately 93.69 acres. Consequently, in order to be consistent with Stantons expressed intent to give appellant a one-half interest in the back one hundred acres, the trial court determined that a cash compensation for the additional 6.31 acres must be made.
Appellant objects to the courts calculation of the cash owed to compensate her for the fact that she would receive only one half of 93.69 acres rather than one half of 100 acres. The court based its calculation on the value per acre ($6,250) of the southern portion of the property. She points out that the value of the front acreage, containing the home, outbuildings, and access off Reynolds Road, was $34,782 per acre. She argues that the extra 6.31 acres comes from this front parcel and should therefore be valued at $34,782 per acre. At the very least, she argues that the court should have calculated the cash compensation based on an average per acre value over the entire Reynolds Road property. Since there was a recent appraisal of the entire property at $4.2 million, this would calculate at approximately $19,000 per acre. She contends that any equalizing payment for her one half of the additional 6.31 acres should be calculated at one of these higher amounts.
The courts calculation was reasonable and was based on the evidence. Appellants share of the property is a one-half interest in the back one hundred acres, which is open space. There is no reason to value this acreage, for purposes of compensating her for a shortfall, at the value of the front parcel, which is served by a county road and contains a home and other improvements. Appellant was never intended to have any share in this front portion of the property, which is where respondent lives. The court properly exercised its discretion to calculate the shortfall in kind, based on the value of the acreage to which appellants interest attached.
Appellant argues that the courts division of the Reynolds Road property and cash award resulted in an unequal distribution of the trust estate, contrary to Dale Stantons express wishes. However, as respondent points out, the Reynolds Road property was not the only asset in the trust estate. The record shows that Dale Stanton gave to appellant a residential property at 1500 Norman Avenue, in San Jose. She had already received distribution of this asset as her sole property. In addition, she received approximately $25,000 from a bank account she and her father held jointly. An early valuation of the trust estate for a federal estate tax return showed that her share of the trust estate was worth slightly more than respondents share.
Under all of the circumstances, we conclude that the court properly modified the trust in accordance with, and in order to accomplish, the intent of the trustor. "To be entitled to relief on appeal from the result of an alleged abuse of discretion it must clearly appear that the injury resulting from such a wrong is sufficiently grave to amount to a manifest miscarriage of justice . . . ." (Brown v. Newby, supra, 39 Cal.App.2d at p. 618.) We find no abuse of discretion on this record. (See Estate of Gilkison (1998) 65 Cal.App.4th 1443, 1449.)
DISPOSITION
The judgment is affirmed.
WE CONCUR:
MIHARA, J.
MCADAMS, J.