IN RE: ESTATE of FERRY

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District Court of Appeal, First District, Division 2, California.

IN RE: ESTATE of FERRY, Deceased. Harry L. Silva and Mamie Silva, Appellants, Joseph Telles and Clarence Telles, Appellants and Respondents, Isabelle Ferry, known as Isabelle Lucas, Rose Murphy, May Ferry and Joe Dutra, Testamentary Trustee, Respondents.*

Civ. 18878.

Decided: October 28, 1960

Moore & Snider, Castro Valley, for appellants Silva. LeRoy A. Broun, Fremont, for cross-appellants and respondents Telles. Harris, Darter & Older, Oakland, Guernsey Carson, San Francisco, for respondents Ferry, etc.

This appeal is taken from a judgment and decree of the trial court finding that appellants Silva were not entitled to any part of the estate of J. S. Ferry, deceased, and awarding the entire estate to respondents. Also involved is an appeal of appellants Clarence Telles and Joseph Telles, from the decree awarding them one-fourth of the residue of the estate.

On June 13, 1942, decedent, J. S. Ferry, executed a will the pertinent provisions of which left $1 only to each of his three daughters Isabelle Lucas (formerly Isabelle Ferry), May Ferry and Rose Murphy, and the residue of his estate to his son, Joseph J. Ferry. On May 5, 1949, decedent executed a codicil to his will which established a trust in lieu of the aforementioned residuary clause, while at the same time confirming his bequest of $1 only to each of the three daughters. The trust was to terminate twenty years from the date of the codicil's execution or upon the death of Joseph J. Ferry, whichever occurred first, the residue thereof to go to said Joseph J. Ferry if living, otherwise to his wife and issue if such there be, otherwise to decedent's sister, Mary Silva. Decedent died on July 23, 1951, survived by his wife (not here involved), his son, his three daughters, and his sister. His will and codicil were admitted to probate, and on April 23, 1952, a decree of final distribution was made and entered.

Mary Silva died intestate on December 18, 1953, leaving her daughter, Mamie Silva, and son, Harry Silva, as her sole heirs. Mamie Silva and Harry Silva are the appellants herein. Joseph J. Ferry died testate on January 14, 1957, survived by neither wife nor issue. He left whatever interest he had in decedent's estate to Joseph and Clarence Telles, his sole devisees, who are cross-appellants herein. Devisees Telles were subsequently substituted for Joseph J. Ferry's executor as parties herein. They are not related to decedent.

By its decree of distribution of the trust estate, the trial court held that title thereto never had vested either in Joseph J. Ferry or Mary Silva, it having been decedent's intention to create contingent interests only in said persons. It held that by reason of their deaths at the time and in the order in which they occurred and the resulting non-fulfillment of conditions precedent imposed by the codicil, and by reason of decedent's failure to otherwise dispose of the residue of his estate, that decedent had died intestate as to the remaining trust property. The decree ordered the estate distributed one-fourth in equal shares to Joseph and Clarence Telles and one-fourth each to the three daughters of the decedent.

Appellants Mamie and Harry Silva, the children and sole heirs of Mary Silva, contend that the trust estate did vest in their mother and should, therefore, be distributed to them. Joseph and Clarence Telles, cross-appellants and sole distributees of the estate of Joseph J. Ferry, contend that the trust estate vested in the latter and should, therefore, be distributed to them.

The material part of the original decree of distribution on April 23, 1952, is an almost verbatim excerpt from decedent's codicil, and reads as follows:

‘It is further ordered, adjudged and decree that the sum of $1.00 be, and the same is hereby distributed to each of the following named daughters of said decedent, to wit: Isabelle Lucas, (designated in said Will as Isabelle Ferry), Rose Murphy, and Mae Ferry (designated in said Will as May Ferry).

‘It is further ordered, adjudged and decreed that all of the rest, residue and remainder of said decedent's estate, hereinafter particularly described * * * be and the same is hereby distributed to said Joe Dutra, in trust nevertheless, for the uses and purposes and with the powers as follows:

‘1. To possess, manage and control the trust estate; to sell any part or all of the trust estate as to him may seem best; to loan, reloan, invest and reinvest any part or all of the trust estate in such securities, properties or investments, as is permissible by law for investment of trust funds.

‘2. To receive and collect the income from the trust estate, and to pay therefrom any and all expenses of the trust estate, and pay the remaining income to Joseph J. Ferry, son of decedent, commencing as of July 25, 1951, such income to be paid in such sums and at such times as may be deemed reasonable and proper by said Trustee.

‘3. Said Trustee may, in his discretion pay to said Joseph J. Ferry from the corpus of said trust estate such sums as said Trustee may deem proper and necessary, but in no event to exceed the sum of $1000.00 per year. Said Trustee is further directed to permit said Joseph J. Ferry to reside in the home of said decedent without the payment of any rent and said Trustee may, in his discretion, permit said Joseph J. Ferry to farm the farm land constituting a portion of this trust estate without the payment of any rent.

‘4. The trust herein created shall terminate on May 5, 1969, at which time said Trustee shall distribute all of the residue of the trust herein created to said Joseph J. Ferry, or to his wife and to his issue, in equal shares, should the said Joseph J. Ferry be then deceased; and if he shall leave no wife or issue then said Trustee shall distribute said trust estate to Mary Silva, sister of deceased. Should the said Joseph J. Ferry die before the natural termination of this trust, said trust estate shall be distributed immediately to the wife and the living issue of said Joseph J. Ferry, in equal shares, and if none, then to Mary Silva, sister of decedent.’

Appellants Silva argue that since decedent made no provision for his daughters other than the bequest of $1 to each and no more, he expressly barred them from other participation in his estate; that upon decedent's death a life estate in the trust property possessing the potential of expanding into a fee simple absolute upon the fulfillment of certain conditions vested in Joseph J. Ferry; that said conditions were never fulfilled; that upon decedent's death, Mary Silva acquired a vested future interest in the trust estate, subject to divestiture upon the happening of a condition subsequent, to wit, either the survival of Joseph J. Ferry until May 5, 1969, or his death prior to that time, leaving him surviving either wife or issue; that no condition which could have resulted in such divestiture was fulfilled; and that as a matter of law the future interest of Mary Silva thus became an indefeasible fee simple, and passed to her heirs, appellants Mamie and Harry Silva, upon her death. It is also contended by appellants that Joseph J. Ferry's interest was the same as that of Mary Silva, i.e. a vested, defeasible future interest, and that his death prior to May 5, 1969, resulted in such divestiture.

Cross-appellants Telles concur in the contention of appellants that decedent's daughters are not entitled to any part of the trust residue. They argue that Mary Silva acquired a mere contingent future interest therein, and that when her death prior to that of Joseph J. Ferry made compliance with the condition subsequent impossible, her interest lapsed and was extinguished; that because of this appellants Silva took no interest whatsoever in the residue of the trust estate; that Joseph J. Ferry acquired a vested contingent remainder therein; that Mary Silva's death removed said contingency, and that Joseph J. Ferry thereby acquired an equitable fee simple absolute; that such equitable fee title to the residue of the trust estate passed by Joseph J. Ferry's will to cross-appellants; that since the purposes of the 20-year limitation on alienation contained in the decree are no longer applicable, the trust is now ‘dry’, and the trust estate should, therefore, be distributed to cross-appellants forthwith in fee simple absolute.

Respondents Isabelle Lucas, Rose Murphy and May Ferry, daughters of decedent, contend that title did not vest in Joseph J. Ferry, son of decedent; that title did not vest in Mary Silva, sister of decedent; that since the events upon which the contingencies turned did not occur, decedent died intestate; that respondent heirs are not barred by any terms in the will from succeeding to intestate property.

At the inception of this discussion, it should be stated as pointed out by Justice Peters in Leonardini v. Wells Fargo Bank, 131 Cal.App.2d 9, at page 15, 280 P.2d 81, 86, 49 A.L.R.2d 1085:

‘* * * The cases on this subject are in hopeless conflict, and seldom, if ever, turn solely upon the words ‘or his heirs' or their equivalent. The great majority of them turn upon all the provisions of the trust, the courts trying to ascertain the intent of the testator. See Anno. 128 A.L.R. 306.'

In this connection, Probate Code Section 101 provides:

‘* * * A will is to be construed according to the intention of the testator. Where his intention can not have effect to its full extent, it must have effect as far as possible.’

This rule of construction is held to be a ‘paramount canon in the construction of wills' (Estate of Haney, 174 Cal.App.2d 1, at page 9, 344 P.2d 16, 21). Moreover, the object of testamentary construction is to ascertain the intention of the testator from the language of his will in the light of all surrounding circumstances at the time it was made and to give the full effect. Estate of Sessions, 171 Cal. 346, 153 P. 231.

To ascertain the present state of the law applicable to this controversy, some of the cases cited should be reviewed and compared. In Anglo California Nat. Bank v. Kidd, 58 Cal.App.2d 651, 137 P.2d 460, 462, cited by respondents, property belonging to a decedent's estate was distributed to a trustee with directions to pay to decedent's son, Carl, annually the income therefrom until he reached the age of 30, at which time he was to be paid the principal sum. In case of Carl's death prior to his reaching said age, and in the event he left no lawful issue, the estate was to vest in other named parties. While Carl was not yet 30, an execution was levied upon the trust property and his interest therein was purportedly sold. The court said ‘Carl's interest was not a present, but a future, interest; not vested but contingent. Until he reached the age of thirty years his only interest or title was in the income. * * * A postponement of payment does not ipso facto create a future contingency. The nature of the contingency is dependent upon the language used describing it, and circumstances surrounding the making of the bequest. In the present instance the testator devised the legal title to the trustee—the trust to terminate in the event of Carl's death before he reached the age of thirty years, in which event the trust property was to go, not to the estate of Carl, but in the event he left no lawful issue to certain designated persons. Under such provision the estate in fee in the whole property could not vest in Carl unless he reached thirty years of age. Attaining that age was a condition precedent.’ The court found appellant's argument that Carl's interest was not contingent, but rather, a vested interest, liable to divest on the contingency of his death before reaching the designated age unconvincing, but finally held that in any event an interest dependent upon a dubious or uncertain event is not subject to execution until reduced to possession. This decision established the rule that it is against public policy to permit execution upon a contingent interest which depends as it does upon a dubious or uncertain event.

In Estate of Zuber, 146 Cal.App.2d 584, 304 P.2d 247, cited by appellants, the court in discussing an estate which it characterized as a defeasible fee subiect to a conditional limitation, stated that it made little difference, in that case, whether the condition was precedent or subsequent inasmuch as all future interests, including all estates in expectancy, vested and contingent are descendible, devisable and alienable in the same manner as estates in possession. The court held that where testatrix had died, thereby making said defeasible fee subject to a conditional limitation the property of her legatees (German nationals), that the estate was subject to seizure by the alien property custodian. The condition having been subsequently fulfilled, the estate then ripened into a vested one.

In discussing the Anglo California National Bank v. Kidd, supra, the court found that any analogy between the execution there discussed and the vesting order in the case before it to be incomplete, inasmuch as the latter involved the federal government and the exercise of its war powers, over which state policy could exercise no control. Moreover, it noted that the Kidd decision had proceeded, not on the basis of nonexistence of an interest which could be seized, but rather upon one of policy.

In the Estate of Faris, 89 Cal.App.2d 515, 201 P.2d 63, the terms of a will provided for a deferred time of distribution to decedent's son and for the handling of the property in the meantime, and for the gift of the property to other designated persons in the event of the son's death without children. The court held that such discloses not only the intention to create a trust, but also an intention to make both a delayed and a conditional gift to the son, stating at page 517 of 89 Cal.App.2d, at page 65 of 201 P.2d, that:

‘It has frequently been held that a ‘gift over’ clause in a will is a strong indication that the testator did not intend an immediate vesting of interest in the beneficiary at the time of the testator's death. (citing Estate of Blake, 157 Cal. 448, 108 P. 287).'

In Estate of Haney, supra, cited by appellants and respondents, the court recognized the validity of the presumption in favor of a vested interest as espoused by the Supreme Court in Estate of Stanford, 49 Cal.2d 120, 315 P.2d 681, and in reference thereto said:

‘The net result of the Stanford case is that a condition precedent of survivorship will not be implied, in a will which omits the technical term ‘vest,’ to defeat the presumption in favor of vested interest merely because (1) words of a present gift are absent, or (2) a trustee is to deliver the property at a later date, or (3) the gift of a future interest is to a class, or (4) any combination of these three factors.

‘Pursuant to this presumption in favor of vested interest, no condition precedent of survival will be found unless ‘there is a literal basis for such implication because the direction in the will cannot be effectively carried out unless the devisee or legatee survives.’'

In the instant case, as in the Estate of Haney, there is a literal basis for such a finding as to Joseph J. Ferry. In fact, decedent's direction, as expressed in the decree, that ‘[s]hould the said Joseph J. Ferry die before the natural termination of this trust, said trust estate shall be distributed immediately to the wife and the living issue of said Joseph J. Ferry, in equal shares, and if none, then to Mary Silva * * *,’ necessitates this finding. As was said in the Haney case, supra, ‘We need not be influenced today by the uneasiness of feudal law in the face of a title not vested. The [decedent's] intent should not be subordinate to a legalistic preference for vested interests.’ Therefore, upon Joseph J. Ferry's death prior to the natural termination of the trust, the interest which may have vested in him expired. Cross-appellants therefore could receive no part thereof by devise.

Even if Joseph J. Ferry's interest in the trust estate be considered as having been vested, subject to divestiture, which is the alternative suggested by Anglo California Nat. Bank v. Kidd, supra, and Leonardini v. Wells Fargo Bank, and cogently urged by both appellants and cross-appellants, the result is the same. 128 A.L.R. 335; and 131 A.L.R. 724. Under this interpretation, Joseph J. Ferry's death prior to May 5, 1969, divested him of any interest whatsoever in said estate, which thereupon passed either in substitution according to the terms of the will, or, as the trial court held, under the laws of intestacy. In either event, cross-appellants must fail.

As has been previously indicated, appellants make a similar contention as to Mary Silva's status upon the death of decedent, i. e. that she acquired a vested interest in the trust estate, subject to defeasance. On the other hand, cross-appellants argue for a contingent estate. Estate of Jameson, 93 Cal.App.2d 35, 208 P.2d 54, 58, lends weight to appellants' position. There, devises to testatrix' husband were made upon a condition precedent: that he survive distribution. ‘Accordingly, neither his life estate in the realty nor his interest in the residue could vest until such condition was fulfilled. Until that time he had a mere expectancy in the property devised. In the interim, title to the life estate and to the residue vested in the remaindermen, * * * subject to divestiture upon fulfillment of the condition.’

Basically, therefore, the problem to be resolved here is whether the terms of the codicil required that Mary Silva survive Joseph J. Ferry in order that she or her heirs take any part of the estate. A thorough review of the language of the will leads us to the conclusion that such survivorship was neither necessary nor intended. Moreover, after considering all of the circumstances existing at the time the codicil to the will was executed and giving full support to the rule that the intention of the testator is controlling, it is obvious that the decedent intended to debar the three named daughters from any participation in testator's estate; that son Joseph J. Ferry should enjoy a life estate which would expand into a fee in simple absolute upon the happening of certain conditions; that said conditions were never fulfilled; that a fee simple estate subject to defeasance vested in Mary Silva (then living) immediately upon the death of her brother, Joseph S. Ferry, which inured to the benefit of the two living issue of Mary Silva, viz. Harry L. Silva and Mamie Silva. In the Estate of Clancy cited by respondents, 3 Coff.Prob. 343, there the will provided that if a son should die before distribution, the share to which he would have been entitled should go to testator's sister. The court, referring to Civil Code, Section 695, held that while the son remained alive and his death before distribution was uncertain, the sister's future interest was contingent. Section 695 says that ‘[a] future interest is contingent, whilst the person in whom, or the event upon which, it is limited to take effect remains uncertain.’

As we pointed out at the outset, and as was noted in Leonardini v. Wells Fargo Bank, supra, the cases on this subject are in hopeless conflict. However, whether Joseph J. Ferry's estate or Mary Silva's estate was contingent, or vested, subject to divestiture, is now of little importance since the decision handed down by the Supreme Court in Estate of Stanford, 49 Cal.2d 120, 315 P.2d 681, 683. Here the court stated ‘in construing the language of a bequest, such as we have here, the primary common law rule in favor of early vesting of title in remaindermen and the preference for vested rather than contingent remainders is firmly established in this state.’

A review of the authorities discussed reveals that the present state of the law is such that there is no distinction to be drawn between conditions precedent and subsequent. Section 699 of the Civil Code provides that future interests may pass ‘by succession, will, and transfer, in the same manner as present interests.’

The court in the Estate of Zuber, supra, found this section to be applicable to every species of expectant estates. Therefore, when Mary Silva died, her interest passed to her heirs at law, appellants Silva, and upon Joseph J. Ferry's subsequent death prior to May 5, 1969, survived by neither wife nor issue, that interest ripened into a fee simple absolute.

We find no merit in respondents' contention that the language of decedent's will implied that Mary Silva had to survive Joseph J. Ferry in order to take under the will of the decedent since he failed to add to her name the words ‘her heirs'. Probate Code, Section 107 provides ‘the term ‘heirs,’ or other words of inheritance, are not requisite to devise a fee, and a devise of real property passes all the estate of the testator unless otherwise limited.'

Finally, Estate of Clancy, supra, is not persuasive or helpful in resolving this problem as it is clearly inconsistent with present day law in this jurisdiction.

The judgment is reversed and the trial court is instructed to distribute the trust estate to the heirs of Mary Silva; appellants Silva to recover their costs on appeal.

McGOLDRICK, Justice pro tem.

DRAPER, Acting P. J., and SHOEMAKER, J., concur.

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