IN RE: VAN DEUSEN'S ESTATE. (1946)

By her will dated June 20, 1932, Florence Lenore Van Deusen left the residue of her estate (after certain minor bequests) to American Security and Trust Company, in trust, to hold, manage and invest the same, and ‘to pay over the net income arising therefrom, in equal shares, unto my aforesaid daughters, Glayds Van Deusen Bright and Hazel Van Deusen Lee’ (petitioners and respondents herein), ‘during the period of their joint lives, and in case of the death of either of them, then all of said net income unto the survivor, for and during the natural life of such survivor.’ The will further provided that upon the death of the survivor of the two daughters the trust should cease and the entire fund be paid in equal shares to the grandchildren of the testatrix then living, and surviving issue of a deceased grandchild to take per stirpes the share the deceased grandchild ancestor would have taken if living. Upon the death of the testatrix in 1944, the will was admitted to probate, and the named trustee declining to act, the appellant herein, Bank of America National Trust and Savings Association, was appointed administrator-with-the-will-annexed. In due course the estate was distributed to appellant bank as trustee. Thereafter the respondent daughters filed their petition for an order directing the trustee to pay to each of them the sum of $200 per month from the net income of the estate and further providing that should the net income be insufficient for this purpose the deficiency should be paid from the corpus of the trust. From the order granting such petition this appeal is prosecuted.

In their petition respondents alleged that it was contemplated by the testatrix during her lifetime that the provision she had made for her daughters was such that the net income of the trust investments would be sufficient to provide for their needs and that neither of them would be in want; that the testatrix believed that at least $200 per month would always be available for each of her daughters from the net income of the trust and believed and intended that not less than said sums should be paid, regardless of whether the net income should be sufficient therefor; that said sums would amply provide for her daughters and were necessary to maintain them. Respondents then alleged that since the creation of the trust the daughter Gladys Van Deusen Bright has been afflicted with a disease believed to be incurable, and in the treatment thereof she has been required to employ specialists and secure special care and attention, and will in the future require special attention and possible hospitalization at great expense; that the daughter Hazel Van Deusen Lee, by reason of her health and advanced years, is unable to work or provide for herself and must rely upon the income from the trust to provide her with the necessities of life and the station to which she has been accustomed.

It was further alleged that the primary purpose of the trust was the safeguarding of the daughters from penury due to lack of funds with which to provide their reasonable needs, ‘among which said testatrix always regarded medical care and attention as essential and had in mind that during the declining years of said petitioners their lives should be made as comfortable as possible. That the aforesaid avowed purpose and object is failing of accomplishment and cannot be fulfilled * * * unless petitioners each derives at least $200 per month from said trust. * * * That in providing for said trust, it was contemplated by petitioners' mother that if it should become necessary to use a portion of the corpus of said trust to supply petitioners with their needs, essential advances should be made, if necessary, from the corpus of said trust for the purpose of accomplishing the purpose thereof when, as and if required.’

In support of the petition, T. J. Bright, a retired Navy commander, testified that he was the husband of the daughter Gladys Van Deusen Bright; that the decedent confided in him concerning her business affairs and he counselled her concerning her investments; that at the time of the creation of the testamentary trust in 1932, the yield on decedent's securities was approximately $400 per month; that the income has dropped a great deal since that time; that about the time of the creation of the trust decedent told him she expected her daughters would enjoy an income of $200 per month each; that she wanted them always taken care of; that she confirmed these expressions in a letter; that in a letter received from decedent about September 6, 1943, she stated, ‘I will arrange it that it will be used to the advantage of Gladys and Hazel, no others'; that decedent ‘did make a statement with respect to seeing that her children were not impoverished as a result of illness, or any unforeseen contingencies.’

No issue was raised by the trustee as to the need of the respondents, and it was stipulated by the trustee that if relief could property be granted the sum of $200 per month was a reasonable amount.

The trial court made findings of fact in accordance with the allegations of the petition hereinbefore set forth, and further, ‘that the main benefits under said trust were intended for the petitioners herein who were the primary objects of the testatrix’ solicitude and that the primary purpose of the trust could not be accomplished by a strict adherence to the terms of the declaration of the trust * * * and that it is the purpose of said trust that the said petitioners herein receive the sum of $200 each per month * * * and that unless each of the petitioners receives the sum of $200 per month the object and purpose of the creation of said trust will be defeated.'

Appellant first contends that the trial court erred in admitting evidence of the testatrix' intentions, citing authorities to the effect that where the meaning of the will is entirely clear from its language and no latent ambiguity is shown, evidence of extrinsic circumstances may not be received to show that the testatrix intended something not expressed. Prob.Code, Sec. 105; Estate of Chamberlain, 46 Cal.App.2d 16, 115 P.2d 235; Gore v. Bingaman, 29 Cal.App.2d 460, 469, 470, 85 P.2d 172.

Respondents urge that the purpose for which the trust was created was not expressed in the instrument, and that in such circumstances extrinsic evidence is admissible to determine the purpose and gneral intention. Estate of Easterday, 45 Cal.App.2d 598, 114 P.2d 669; Taber v. Bailey, 22 Cal.App. 617, 620, 135 P. 975; Booth v. Oakland Bank of Savings, 122 Cal. 19, 54 P. 370; 2 Rest. Trusts, 1022. The intention and purpose of the trustor, as found by the court, was to secure her daughters against want. Such purpose cannot be carried out if the terms of the trust permitting payments to be made from the income only must be adhered to.

A court of equity may modify the terms of a trust when the purpose or plan of the trustor would be thwarted by a slavish adherence to the terms of the trust. Adams v. Cook, 15 Cal.2d 352, 359, 101 P.2d 484; Pennington v. Metropolitan Museum of Art, 65 N.J.Eq. 11, 55 A. 468; 65 Cor.Jur. 792; Mertz v. Guaranty Trust Co., 247 N.Y. 137, 159 N.E. 888, 57 A.L.R. 1114; Marsh v. Reed, 184 Ill. 263, 56 N.E. 306.

If there is any substantial competent evidence to support the trial court's finding in the instant case that the primary ‘purpose’ of the testatrix was to provide for her children and secure them against want in their old age, then under the authorities cited the trial court was warranted in permitting an invasion of the principal of the trust for that purpose. The only evidence of such ‘purpose’, aside from permissible inferences to be drawn from the document itself, is that of the testatrix' declarations, hereinbefore narrated.

The powers and duties of the court with regard to the modification of trusts are thus stated by our Supreme Court in the case of Adams v. Cook, supra, 115 Cal.2d at page 360, 101 P.2d at page 488, wherein approval is given to the following language taken from Curtiss v. Brown, 29 Ill. 201: ‘Exigencies often arise not contemplated by the party creating the trust, and which, had been anticipated, would undoubtedly have been provided for, where the aid of the court of chancery must be invoked to grant relief imperatively required; and in such cases the court must, as far as may be, occupy the place of the party creating the trust, and do with the fund what he would have dictated had he anticipated the emergency.’

In the instant case it seems only reasonable to assume that had the testatrix at the time her will creating the trust was executed, or at any time thereafter during her lifetime, had any knowledge that economic conditions would deplete the yield from the corpus of the trust to the extent that her daughters would be reduced to the necessitous circumstances in which they now find themselves, she would have had the trust provisions of her will provide for relief against such misfortune in the lives of her daughters. This we say because the great weight of the evidence, if such evidence of her declarations is admissible, shows that the testatrix did not intend that her daughters should in their old age be without means of support if for any reason the income from the trust should fail. One of her leading, if not her main, purposes, according to the foregoing testimony, was that the necessary means of support for her daughters should be furnished by her estate in any event. That this purpose cannot be executed in the particular manner she intended furnishes no valid reason why it should not be executed at all.

One of the essentials of a voluntary trust is the ‘purpose’ thereof. Civ.Code, sec. 2221. If it can be said that the ‘purpose’ of the trust is in controversy, then parole evidence was admissible to supply, in respect to the ‘puprose’, what was omitted from the document creating the trust. Appellant, however, insists that the will here involved is not deficient as to the plan or purpose of the testatrix; that such plan or purpose was to vest her estate in a trustee during the lifetime of her daughters, with directions to pay the net income to them, and upon their deaths to distribute the corpus to the grandchildren. But there is no indication in the will that the testatrix desired and intended that all of the corpus existent at the time the trustee took over should go without impairment to the contingent beneficiaries. In other words, what her plan or purpose was is not manifest from a reading of the testamentary document. Respondents herein, as the daughters of the testatrix, were the natural objects of her bounty, and to assume that in providing for their care through income from the corpus, which at the time she executed her will was yielding $400 per month, she intended that even though the income might shrink to an amount totally inadequate to provide the necessities of life for her daughters, thereby reducing them to penury, the principal should nevertheless remain intact, would do violence to the usual propensities and natural impulses of a mother. Certainly the testamentary document herein manifests no such purpose with reference to the trust therein created. The purpose for which the trust was created, and the motive which prompted it, not being expressed in the instrument, extrinsic evidence was admissible to determine the purpose and general intention. Estate of Easterday, supra; Taber v. Bailey, supra; Booth v. Oakland Bank of Savings, supra; 2 Rest.Trusts 1022; Jordan v. Price, Ohio App., 49 N.E.2d 769; Fidelity & Columbia Trust Co. v. Gwynn, 206 Ky. 823, 268 S.W. 537, 38 A.L.R. 937.

Without fear of contradiction, it can certainly be said in the instant case that the will creating the trust does not disclose what motive prompted the testatrix to deliver her estate to the trustee to hold. Furthermore, ‘* * * The rule against courts modifying the terms of a contract, and that they should construe it presicely as the parties had made it, does not apply to declarations of trust, where the primary purpose of the trust would not be accomplished by a strict adherence to the terms of the declaration of trust and that when it is made to appear in a court of equity, as was shown in the present case, that the benefits and advantages which the trustors desired to confer upon the beneficiaries would not accrue to them by ‘a slavish adherence to the terms of the trust’, the court may modify the terms of the trust to accomplish the real intent and purpose of the trustors. This rule does not run contrary to any of the canons of construction of contracts contained in the Civil Code of this state, as these sections of the code are applicable to the legal interpretation of contracts as expressed by the parties, and have no reference to the equitable powers of a court of equity to modify the terms of a trust indenture in order to meet exigencies that have later arisen and which, unless the trust were modified, would defeat the prime purpose for which it was created.' Adams v. Cook, supra, 15 Cal.2d at page 361, 101 P.2d at page 489.

And even the strict rule with reference to the interpretation of a contract permits of explanation ‘By reference to the circumstances under which it was made, and the matter to which it relates.’ Civ.Code, sec. 1647. Evidence of ‘surrounding circumstances' is not admissible in connection with a written contract to add or take away anything from the terms, but this rule of evidence is invoked in cases where upon the face of the contract itself there is doubt, ‘to dispel that doubt, not by showing that the parties meant something other than what they said, but by showing what they meant by what they said.’ United States Iron Works v. Outer Harbor, etc., Co., 168 Cal. 81, 84, 141 P. 917, 920. So in the instant proceeding, evidence was not admitted for the purpose, nor would it have the effect, of varying the terms of the will. It was admitted for the purpose of interpretation and to establish the ‘purpose’ and motive of the testatrix which were not disclosed in the testamentatry document.

In the case at bar it is conceded that at the time of the execution of the will here in question the yield from the properties constituting the corpus of the trust was $400 per month. Manifestly, the testatrix' ‘purpose’ was to provide her daughters with such a sum each month for their maintenance and support. At the time of the hearing of the instant proceeding in the court below, the value of the corpus of this trust was about $100,000. The contingent beneficiaries are the grandchildren of the testatrix, who are children of the two daughters named as beneficiaries of the income from the trust. Two of the grandchildren appeared in this proceeding through counsel and offered no objection to increasing the allowance to $150 per month, while the other grandchild, although served with process, made no appearance. At the hearing counsel for the trustee said, ‘But with reference to the view, as trustee, I may say that the bank, as well as myself, is thoroughly in sympathy with the predicament of these ladies.’ (Respondents herein.) The position of the trustee was, as declared in the probate court, that ‘if there is a judgment rendered, we will be protected.’

The petition filed herein alleges that Gladys Ven Deusen Bright, one of the petitioners, ‘has been afflicted with a malady and disease which the said petitioner Gladys Van Deusen Bright has been informed and believed, and therefore alleges may be incurable. That in the treatment of said disease and affliction, said petitioner has been required to employ specialists and has required special care and attention. That the said petitioner will continue to require further medical care and attention and possible future hospitalization, the expense of which will be great.’

As to petitioner Hazel Van Deusen Lee, it is alleged that she ‘is unable to provide for herself and must rely as a means of livelihood upon the income derived from the trust created in this estate. That her health and advanced years are such that she is unable to seek employment or any gainful occupation or vocation, and that it is necessary that she receive a sum from the said trust estate, in the sum indicated above, to provide her with the necessities of life and the station to which she has been accustomed.’

These allegations, we are persuaded, show the existence of an emergency and peculiar circumstances which were not reasonably within the contemplation of the testatrix when she directed that respondents' benefits from the trust should emanate from the income thereof.

Estate of Markham, 28 Cal.2d 69, 168 P.2d 669, 674, relied upon by appellant, is distinguishable from the case at bar. In the cited case a fully expressed plan and purpose is set forth in the will, and changed conditions arising subsequent to the execution of the testamentary document establishing the trust were not involved. In the Markham case the court, in deciding that resort should not be had to the corpus, had this to say: ‘In view of the heretofore discussed reference to net income, and the solicitude for the Palmer children as shown by the fact that they were the chief objects of his bounty, and were to receive some benefits even during the life of the other beneficiaries, we do not believe that the use of the term ‘remainder’ should be construed to mean that the remaindermen were to receive only what was left after the beneficiaries had been paid by resorting to the principal.' Other cases cited by appellant also present situations where the court was considering testamentary documents in which were contained well-defined testamentary plans. Here we are confronted with a case wherein an acute and necessitous condition has arisen as to the beneficiaries named to receive the income from the trust. The property of the estate is now worth about $100,000, and while it was producing a yield of about $400 per month during the lifetime of the testatrix, the present income is insufficient to pay such an amount to the named beneficiaries. No plan or purpose being set forth in the testamentary document creating the trust, and extrinsic evidence being admissible to enable the court to determine the general purpose and intention, such evidence supports the court's finding that during her lifetime the testatrix contemplated ‘that the provisions set forth in said will for the benefit of petitioners herein would be such that the net income arising from the investments by the trustee in the trust property would be of sufficient yield as to provide her said daughters' (petitioners herein) ‘with their necessary expenses and needs, and that neither of them would be in want, nor would their necessities of life be unprovided,’ and the further finding that the testatrix ‘believed at the time of the creation of the said trust under said last will and testament, that at least the sum of $200 per month would always be available from said trust to be paid to each of the petitioners herein from the net income of said trust and believed and intended that not less than the sum of $200 per month should be paid to each of said petitioners regardless of whether said net income would be sufficient to make said payments and that the said sums would amply provide all the needs and financial demands of said petitioners, and that said sum or sums were necessary to maintain them and each of them.’

The court was therefore justified in allowing resort to the corpus rather than permit the purposes of the testatrix to be completely frustrated, and her children, who were the natural objects of her bounty, to suffer want and privation in their declining years, to the end that the grandchildren of the testatrix should eventually receive an augmented principal.

Finally, appellant contends that the court, proceeding under the provisions fo section 1120 of the Probate Code, was without jurisdiction to make the challenged order because one of the residuary beneficiaries was a minor. In this contention appellant cannot be upheld. It must be borne in mind that the instant proceeding was not instituted to terminate the trust, but was a petition for instructions to the trustee, in the nature of a request for modification. Section 1120 of the Probate Code expressly provides that ‘The trustee may also petition such court, from time to time, for instructions as to the administration of the trust,’ and further provides that due notice shall be given to the beneficiaries as provided in section 1200 of the Probate Code. As to notice, the foregoing provisions of the statute were complied with. It has been held that the language employed in section 1120 of the Probate Code ‘was intended to broaden the jurisdiction of the probate court so as to give that court jurisdiction over practically all controversies which might arise between the trustees and those claiming to be beneficiaries under the trust.’ Estate of Marré, 18 Cal.2d 184, 187, 114 P.2d 586, 589; Estate of Keet, 15 Cal.2d 328, 100 P.2d 1045. Therefore, in this particular proceeding the probate court had jurisdiction of the parties and the subject matter. It was invested with the power to hear and determine, in the mode provided by law, the controversy between the trustee and certain beneficiaries of the trust. We are persuaded that in the case with which we are here concerned, wherein it was necessary in order that justice might be done to respondent beneficiaries, that the interest of one of the residuary beneficiaries who was a minor could be and in fact was represented by the trustee, who vigorously and ably voiced its opposition, both in the trial court and before this court, to the order instructing the trustee to invade the corpus of the trust to make payments of $200 per month to each respondent herein. Mabry v. Scott, 51 Cal.App.2d 245, 257, 124 P.2d 659. The case just cited presents another equally cogent and persuasive argument in support of the validity of the trial court's order herein. At page 256 of 51 Cal.App.2d, at page 665 of 124 P.2d this court said: ‘* * * Courts may be safely entrusted with the protection of rights of unborn remaindermen. And it is in cases of this sort, in which there is jurisdiction in equity of the controversy, that such rights are protected by the courts themselves. In the present case we can confidently assume that this duty was performed by the trial court.’ In the case at bar the same assumption may be indulged in as to the rights of a minor beneficiary.

For the foregoing reasons the order appealed from is affirmed.

WHITE, Justice.

YORK, P. J., and DORAN, J., concur.