MOXLEY v. TITLE INS. & TRUST CO. et al.
This is an appeal from a judgment of dismissal which was based upon an order sustaining general and special demurrers to the amended complaint without leave to amend.
The instant action was brought by appellant, Peggy Ann Moxley, to set aside, cancel and annul a trust created on September 19, 1932, by the will of her mother, Mabelle E. Kent. It is alleged in the amended complaint that under the terms of the testamentary trust, respondent Title Insurance and Trust Company and Sidney R. Kent were named as trustees, to hold and administer the trust estate for the use and benefit of appellant, said trustees being given absolute discretion to apply any part of the net income for her support, care and education. It was also provided that when appellant should reach the age of 35 years, the trust estate and all accumulations thereof should be transferred and delivered to her, whereupon the trustees were to be discharged from the trust; that if appellant should die before reaching the age of 35 years, the trust estate and accumulations should be transferred and delivered to any child or children of appellant; but in the event appellant should die without issue before reaching the age of 35 years, said trust estate to be transferred to any beneficiary designated by the deed or testamentary disposition of appellant, and in the absence thereof to appellant's sister; or in the event such sister did not survive appellant then to the issue of said sister.
Mabelle E. Kent, the trustor, died on October 14, 1932, and on March 16, 1934, the trust estate was distributed to the named trustees who entered upon their duties and continued to act as joint trustees until the death of Sidney R. Kent (appellant's father) on March 19, 1942. Since then the corporate trustee has acted alone.
It is also alleged that when the will creating the trust was executed, appellant was fifteen years of age, living with her mother and attending school in Los Angeles; that it was contemplated by the trustor, appellant's mother, that if she should die before appellant attained the age of 35 years, the latter could live with her father, Sidney R. Kent, who would provide for her independently of the benefits to be derived from the trust, and therefore it would be unnecessary for appellant to receive the corpus of the trust prior to her attainment of that age; that the trustor believed that appellant's father then living would participate in the management of the trust, but by reason of his death, this is no longer possible; that the income from the trust is negligible and wholly inadequate to support appellant in the manner consistent with her station in life; that by reason of her father's death she is unable to receive the comforts and necessities to which she had been accustomed during his lifetime, all of which was contemplated by the trustor at the time of the creation of the trust; ‘that in view of plaintiff's lack of funds and the acute shortage of suitable housing accommodations, plaintiff is unable to acquire or purchase a home which she would otherwise be able to do if her father were now living. That the income which plaintiff is now receiving, independent of the trust herein, is insufficient for the purpose of purchasing a home, maintaining the same or otherwise providing herself with the comforts and necessities of life to which she had become accustomed and which it was contemplated she would have at the time of the creation of said trust.
‘That the plaintiff has arrived at the age of majority and is now of the age of 26 years, happily married and living with her husband, Capt. E. D. Moxley, presently in the United States Army. That plaintiff is in good health and fully capable of managing the estate which was conveyed by her mother in trust to the Title Insurance and Trust Company, defendant herein. That plaintiff is desirous of purchasing a home as aforesaid for the purpose of permanently establishing herself and her husband in the City of Los Angeles.
‘That the conditions aforesaid have arisen since the creation of the trust and were not taken into consideration by the plaintiff's mother at the time of its creation and said situation was not contemplated by plaintiff's mother and therefore no provision was made for the same.
‘That the objects and purposes of the trust have been accomplished in that the plaintiff has been protected during her minority when she was incapable of providing for herself, and she is now able to take care of her own affairs. That the said trust was created primarily to provide for the support and education and maintenance of plaintiff, and the provision with reference to the remaindermen's interest was collateral to, subsidiary and secondary to those of plaintiff herein. That it was not contemplated that the trust could not be earlier revoked. That there is nothing in the terms of the trust that makes the same irrevocable before the period prescribed for its duration, nor was the same intended to be irrevocable, nor was the trust a spendthrift trust making it incapable of termination before the full period prescribed for its duration.’
It is further alleged that appellant's interest in the trust estate created by the last will of her father, Sidney R. Kent, has a value in excess of the sum of one-half million dollars, and that appellant by virtue of the powers granted her thereunder, ‘for a good and valuable consideration, did irrevocably designate and appoint as beneficiary any child or children which might be born to the plaintiff who might be living when she reached the age of 35 years and that the amount so bequeathed, devised and directed to be paid to such beneficiary or beneficiaries upon the contingency mentioned aforesaid is in excess of the total amount of the estate devised and bequeathed to the defendant, Title Insurance and Trust Company, herein. That by virtue of such irrevocable designation and appointment under the last will and testament of the plaintiff as aforesaid, the issue of plaintiff's body, if any there be, should she die before reaching the age of 35, will not be prejudiced, nor will any detriment accrue to such contingent beneficiaries and for said reason there is not nor can there be any hostility of interest between plaintiff and such defendant remaindermen.’
It is further alleged in the amended complaint that appellant has no living issue and pursuant to the provisions of the trust she has by good and sufficient deed conveyed to her husband, E. D. Moxley, all of her right, title and interest in the estate created thereby, to take effect in the event she should die without issue surviving her before reaching the age of 35 years, and has also by last will and testament disposed of all of her property of every kind, character and description, including her interest in this trust.
Thereafter, to-wit, on September 23, 1943, upon the petition of appellant, the respondent R. E. Allen was appointed as guardian ad litem for any child or children now unborn but who may be living at the time of the death of appellant should she die before she reaches the age of 35 years.
General and special demurrers to the amended complaint were interposed by respondent trustee and said guardian ad litem, which, as heretofore stated, were sustained without leave to amend.
The demurrers were grounded upon the following propositions: ‘I. The court will not terminate a trust at the instance of the life beneficiary, if there are persons yet unborn who have a contingent interest in the trust. Estate of Easterday, 1941, 45 Cal.App.2d 598, 114 P.2d 669. II. Equity lacks jurisdiction to terminate a trust when all parties in interest are not before the court. Gray v. Union Trust Co., 1915, 171 Cal. 637, 154 P. 306; Fletcher v. L. A. Trust, etc., Bank, 1920, 182 Cal. 177, 187 P. 425; Woestman v. Union Trust, etc., Bank, 1920, 50 Cal.App. 604, 195 P. 944.’
In the case of Mabry v. Scott, 51 Cal.App.2d 245, 254, 124 P.2d 659, it was held that unborn contingent remaindermen may be represented, in case there are no living members of this class, by persons holding estates which precede theirs, provided there is no hostility of interest between the two groups, and that in such action brought by the settlor to cancel a trust which was to terminate on the death of all beneficiaries, namely, the settlor, his former wife and their four children, then to go first to the living issue of such children—where the beneficiaries other than the settlor, together with the trustee, were named defendants, there was virtual representation of the unborn contingent remaindermen by the living children. In the cited case, the court quoted from County of Los Angeles v. Winans, 13 Cal.App. 234, 109 P. 640, to the following effect: ‘The interests of representative and represented must, however, be so identical that the motive and inducement to protect and preserve may be assumed to be the same in each.’ [51 Cal.App.2d 245, 124 P.2d 664.]
Section 183, chapter 12, page 735 of volume II of Restatement of the Law of Property, Future Interests, enumerates the prerequisites for representation of unborn persons, and in connection with such section there appears, in a pocket supplement of California annotations attached thereto, the following comment: ‘* * * if the judgment or decree which is sought would not operate with equal record for the possible interests of the person joined as a party and of the unborn person, no principle of representation will be invoked to cut off the right of the unborn person. Thus, where parties seek to terminate a trust and have the property distributed absolutely to them such termination will not be decreed if unborn persons have contingent interests in the trust. Gray v. Union Trust Co. of San Francisco, 1915, 171 Cal. 637, 154 P. 306; Fletcher v. Los Angeles Trust & Savings Bank, 1920, 182 Cal. 177, 187 P. 425; Woestman v. Union Trust & Savings Bank, 1920, 50 Cal.App. 604, 195 P. 944.’ (Emphasis added.)
In the instant case, the only ascertainable beneficiary of the trust here under attack is appellant, and if she succeeds in obtaining a termination of the trust she will thereby destroy the entire interest of her unborn children therein. Thus it appears that her interest in the trust and the interests of her unborn children are completely hostile and, under the allegations of the complaint, there are no other living persons whose interests in any way resemble those of her unborn issue.
In this regard, appellant urges that the guardian ad litem may represent the contingent unborn remaindermen. While it is true that the court in the Mabry case, supra, quoted from section 182 of volume II, Restatement of the Law of Property, Future Interests, which section indicates that the interests of unborn persons may be bound when a guardian ad litem is appointed for them, nevertheless, the comment therein indicates that such future interests may be so bound only when a statute authorizes the appointment of a guardian ad litem. A special note on page 734 of said Restatement is as follows: ‘Caveat: The Institute takes no position as to whether the general power of equity includes power apart from statute, to appoint a guardian ad litem for the interests limited in favor of unborn children and thereby to permit a judicial proceeding to become binding as against such interests.’ In the California annotations on said section 182, it is stated: ‘The general provisions for the appointment of a guardian ad litem, Code Civ.Proc. secs. 372 and 373, do not appear to apply to wards not yet in being.’
Again referring to the Restatement, section 186 is to the effect that an unborn person may be represented by the trustee when the latter is competent to represent such future interest, and it is stated in comment (a) under section 181 at page 724, discussing those actions wherein a trustee is competent to represent living beneficiaries, that: ‘Ordinarily, therefore, in actions affecting the subject matter of the trust brought by the trustee against third persons, or by third persons against the trustee, the beneficiaries are represented by the trustee and are not necessary parties. In an action, however, in which there is a conflict of interests between the trustee and the beneficiary or where the beneficiaries have conflicting interests, the trustee does not represent them and they are necessary parties to the litigation.’ See, also, Estate of Easterday, 45 Cal.App.2d 598, 114 P.2d 669.
Applying the principles of law here enunciated, it appears that the unborn contingent remaindermen are indispensable parties to the instant action, since they cannot be virtually represented by either appellant beneficiary or respondent trustee, or by the guardian ad litem. Therefore, the court properly sustained the demurrers to the amended complaint without leave to amend.
For the reasons stated, the judgment of dismissal is affirmed.
YORK, Presiding Justice.
DORAN and WHITE, JJ., concur.