BIXBY v. CALIFORNIA TRUST CO (1948)

Appeal by plaintiff from a judgment for defendant in an action to terminate a trust. Plaintiff also appeals from an order denying a motion for an order setting aside the order for judgment for defendant and from an order denying his motion for a new trial.

On February 17, 1947, appellant, without consideration, delivered $75,000 to respondent. The money was appellant's property. Contemporaneously therewith, appellant ‘as Trustor and/or Beneficiary,’ and respondent, as Trustee, executed a declaration of trust in writing. The declaration acknowledged receipt of the money in trust. The trust instrument provides that it should be irrevocable. It says that after payment of any expenses of management and administering the trust, including compensation of the Trustee, all income available for distribution shall be distributed monthly to appellant ‘Trustor and Beneficiary herein during his lifetime.’ The pertinent provision reads: ‘Upon the death of said Trustor and Beneficiary, Fred H. Bixby, Jr., and after payment of any expenses of management of the Trust Estate and administering this Trust, including the compensation for the services of the Trustee, and the expenses of the last illness and funeral of said Fred H. Bixby, Jr., all of the residue and remainder of said Trust Estate shall be by said Trutee, or its successor, distributed and delivered to the heirs at law of said Fred H. Bixby, Jr., in accordance with the laws of succession of the State of California then in effect * * *.’

Appellant sued in equity for a decree terminating the trust, claiming that he is the sole beneficiary named in the trust instrument and, as such, is entitled in equity to a decree of termination. It was stipulated that appellant has a wife, a father, a mother, and sisters living. The trial court decided that appellant was not the sole beneficiary and rendered judgment for respondent.

Respondent says that under the decisions in Barnett v. Barnett, 104 Cal. 298, 37 P. 1049, Gray v. Union Trust Co., 171 Cal. 637, 154 P. 306, and Bixby v. Hotchkis, 58 Cal.App.2d 445, 136 P.2d 597, appellant is not the sole beneficiary named in the instrument. Appellant says that these cases are not controlling; that the question upon the facts here has not been decided in California; that under general principles of jurisprudence and authoritative, wellconsidered decisions in other jurisdictions, he is the sole beneficiary named in the instrument and entitled in equity to a decree terminating the trust.

It is well settled that where a valid and effective voluntary trust has been created and no power of revocation has been reserved, it cannot be revoked by the creator without the consent of the beneficiaries thereunder. If any of the beneficiaries are not in being or are not sui juris and, hence cannot consent, the trust agreement cannot be revoked. Scrivner v. Dietz, 84 Cal. 295, 297, 24 P. 171; Kopp v. Gunther, 95 Cal. 63, 74, 30 P. 301; Gray v. Union Trust Co., 171 Cal. 637, 641, 154 P. 306; Woestman v. Union Trust Etc. Bank, 50 Cal.App. 604, 608, 195 P. 944; Estate of Madison, 26 Cal.2d 453, 465, 159 P.2d 630; 54 Am.Jur. p. 80, sec. 78; Annotations 38 A.L.R. 941; 91 A.L.R. 102; 131 A.L.R. 457.

It is equally well settled that where all of the beneficiaries under a trust agreement, other than a spendthrift trust, are sui juris and consent to a termination, the agreement may be terminated by a court of equity if the court concludes that it is to the best interests of the beneficiaries. This is so even though the agreement expressly provides that it shall be irrevocable. Fletcher v. Los Angeles Trust Etc. Bank, 182 Cal. 177, 179, 187 P. 425; Eakle v. Ingram, 142 Cal. 15, 16, 75 P. 566, 100 Am.St.Rep. 99; Moor v. Vawter, 84 Cal.App. 678, 682, 258 P. 622; Estate of Easterday, 45 Cal.App.2d 598, 607, 608, 114 P.2d 669; Rest., Trusts, p. 1021, sec. 337.

A court of equity, in its discretion, may terminate a trust upon the request of a sole beneficiary even though it is provided in specific words by the terms of the trust instrument that the trust shall be irrevocable and although the purposes of the trust have not been accomplished. Gray v. Union Trust Co., 171 Cal. 637, 154 P. 306; Whittingham v. California Trust Co., 214 Cal. 128, 134, 4 P.2d 142; Rest., Trusts, p. 1038, sec. 339; 3 Scott on Trusts, p. 1861, sec. 339.

The parties agree that as to this phase of the case the question is whether appellant is the sole beneficiary under the trust instrument. Civil Code section 779 provides: ‘When a remainder is limited to the heirs, or heirs of the body, of a person to whom a life estate in the same property is given, the persons who, on the termination of the life estate, are the successors or heirs of the body of the owner for life, are entitled to take by virtue of the remainder so limited to them, and not as mere successors of the owner for life.’

In Barnett v. Barnett, 104 Cal. 298, 37 P. 1049, a deed of conveyance of land was executed to the plaintiff by which the grantor purported to ‘give, grant, alien, and confirm unto the said party of the second part, and to his heirs * * * all those certain lots, pieces, or parcels of land, * * * to have and to hold, all and singular, the said premises, together with the appurtenances, unto the said party of the second part * * * for and during his natural life, and to the issue and heirs of the body of the said party of the second part.’ The plaintiff claimed that the instrument conveyed the land to him in fee. The defendant, the sole issue of the plaintiff, claimed that the plaintiff took only a life estate and that at his death the heirs of his body took the fee. The court said that at common law and in this state prior to the adoption of the Civil Code, by the rule in Shelley's Case, the instrument gave the plaintiff an estate in fee tail; but that the effect of the enactment of section 779 of the Civil Code was to abrogate the rule in Shelley's Case. After quoting Civil Code section 779, the court declared page 301 of 104 Cal., page 1050 of 37 P. ‘By section 779, Civ.Code, the term ‘heirs' is changed from a word of limitation to one of purchase, and becomes a specific designation of a class which will have the right to the property upon the termination of the life estate. Upon that event they take the property, not by descent or as successors of the plaintiff, but by virtue of the remainder which was created for them at the execution of the deed to him. This remainder, although not capable of immediate enjoyment (Id. § 690), and therefore denominated a ‘future interest,’ is, nevertheless, an estate in the property capable of being transferred in the same manner as a present interest. Id. § 699.'

Gray v. Union Trust Co., 171 Cal. 637, 154 P. 306, 307, had to do with a declaration of trust which contained this provision: ‘This trust shall be irrevocable and shall last during the lifetime of said trustor, and upon her death the trust property shall go to and vest as she shall provide in her last will and testament, and leaving no last will and testament, said property shall go to and vest in her heirs at law, according to the laws of succession of the state of California as such laws now exist.’ In the Gray trust, as here, the trustor had transferred the property subject to the trust, to the trustee and was entitled to the net income. The court held that the heirs of the trustor, in the contingency provided by the trust, did not take as inheritors of the trustor; that the laws of succession, as they existed at the time of the creation of the trust, would fix the class entitled to take; and that class would take, not as heirs of the trustor by virtue of her intestacy but as a class designated in the trust instrument in the event that the trustor failed to exercise her power to nominate others. The court also said that upon the death of the trustor intestate, it would not be the court in probate but in equity which would determine to whom the trust property would go. It was further said that the trustor's ‘usufructuary interest in the whole estate during her life is here equitable life estate, * * *.’ It was stated that the question whether the trust created ‘a remainder’ or ‘remaindermen’ was the heart of the controversy; that if it did, and each remainderman was ‘sui generis' and before the court, it was within the discretionary power of a court of equity to terminate the trust. On the other hand, ‘If all of the parties in interest are not before the court, equity has no power to terminate the trust.’ In determining that remainders were created, the court, in the Gray case, reasoned page 642 of 171 Cal., page 308 of 154 P.: ‘Our Civil Code, § 769 declares that: ‘When a future estate, other than a reversion, is dependent on a precedent estate, it may be called a remainder, and may be created and transferred by that name.’ We have in this trust apt language to create such a future estate, dependent for its enjoyment upon the termination of a precedent life estate. We have therefore apt language to create a remainder, and it is quite permissible that it should be created to commerce at a future day and be limited upon a life estate. Civ. Code, § 773. There is in this trust a power of appointment or nomination reserved to the trustor. It can be exercised in but one way, and that is by her will. But such power of appointment does not prevent the vesting of the future estate in remainder. Civ. Code, § 781. Everything then which the law contemplates shall exist for the creation of equitable remainders or remainders in trust is found in this trust. Whether they be regarded as vested or contingent is immaterial, for in either case the estate and interest are alienable. Davis v. Willson, 115 Ky. 639, 74 S.W. 696; McDonald v. Bayard Sav. Bank, 123 Iowa, 413, 98 N.W. 1025; Sikemeier v. Galvin, 124 Mo. 367, 27 S.W. 551. But in truth these remainders are to be regarded as vested remainders, subject to divestiture only upon the exercise of the power of nomination by will reserved to the trustor.' Cases relied upon by the respondent in the Gray case as supporting the decree terminating the trust were reviewed at length and distinguished as dealing with a dry, naked trust or with a trust where each party in interest was before the court, joining in the application, or resulting—expressly or by necessary implication—upon the rule in Shelley's Case. The court concluded its discussion by saying that the question before it was conclusively disposed of by Barnett v. Barnett, 104 Cal. 298, 37 P. 1049.

In Bixby v. Hotchkis, 58 Cal.App.2d 445, 136 P.2d 597, the plaintiff executed a trust instrument creating an irrevocable trust. Later, the plaintiff's father, with the approval of the plaintiff, transferred additional assets to the trustee subject to the trust. The relevant provision of the trust instrument read: ‘Upon the expiration of the term of this trust, hereinabove specified, to-wit, a period of Twenty (20) years from the date hereof, my trustee shall distribute, or cause to be distributed, my trust estate, together with all accumulations, in the manner following: (a) The whole thereof to me personally if I be living at the time. (b) In the event that I should die prior to the expiration of said period the whole thereof to my heirs at law in accordance with the laws of succession of the State of California then in effect.’ The court concluded page 451 of 58 Cal.App.2d, page 600 of 136 P.2d, that the plaintiff was not the sole beneficiary ‘for it is provided in the instrument that in the event of plaintiff's death prior to the expiration of the twenty year period the estate at the end of the period is to pass to plaintiff's heirs at law. One who creates a voluntary trust is not the sole beneficiary if he manifests an intention to create a contingent interest in others, such as his heirs at law. Restatement of the Law of Trusts, Comment b, p. 1039; Gray v. Union Trust Co., supra [171 Cal. 637, 154 P. 306].’

The rule for ascertaining whether the trustor is the sole beneficiary as declared by the Restatement is this: ‘The settlor is the sole beneficiary of a trust if he does not manifest an intention to give a beneficial interest to anyone else. If, however, he manifests an intention to create a vested or contingent interest in others, as for example, his children, or the persons who may be his heirs or next of kin on his death, he is not the sole beneficiary, unless such intended interests are invalid, either under the rule in Shelley's Case or otherwise. * * * Illustrations: * * * 2. A transfers property to B in trust to pay the income to A for life and on A's death to pay the principal as A may by deed or by will appoint and in default of appointment to A's heirs or next of kin. A reserves no power of revocation. A can compel B to transfer the property to him.’ (Rest., Trusts, pp. 1038, 1039, sec. 339.) The Restatement also says: ‘Where the owner of property transfers it in trust to pay the income to himself for life and upon his death to pay the principal to his heirs or next of kin, he is the sole beneficiary of the trust if the rule in Shelley's Case is in force (see Comment d), and even if the rule in Shelley's Case is not in force he is the sole beneficiary in the absence of a manifestion of intention by him that his heirs or next of kin should also be beneficiaries of the trust. * * * Illustrations: * * * 2. A transfers property to B in trust to pay the income to A for life and on A's death to pay the principal as A may by deed or by will appoint and in default of appointment to A's heirs or next of kin. A is the sole beneficiary of the trust.’ (Rest., Trusts, pp. 321, 322, sec. 127.)

Scott, in his work on Trusts, says (p. 656): ‘A * * * difficult question arises where the settlor conveys property in trust to pay the income to himself for life and on his death to pay the principal to his heirs or next of kin. In such a case it has been held in a number of cases that the settlor is the sole beneficiary of the trust.’ He says that one ‘ground for the result is the common-law rule that a disposition in favor of the heirs of the heirs of the grantor creates a reversion in him and not a remainder in his heirs' and that ‘Under the modern authorities the question is whether the settlor in the particular case intended to create an interest in the persons who should be his heirs at the time of his death, or whether he intended to retain the whole beneficial interest in the property. The inference is that he doe not intend to create an interest in his heirs which would prevent him from dealing with the beneficial interest as he likes. The inference is the opposite of that which arises where the settlor gives a life interest to a third person with a limitation over to the heirs of the third person. In the latter case, as we shall see, the inference is that he intends the first taker to have only a life estate. Where, however, he reserves a life estate for himself, he does not ordinarily intend to create an interest in his heirs.’ (1 Scott on Trusts, p. 656, sec. 127.1)

The case chiefly relied upon by appellant is Doctor v. Hughes, 225 N.Y. 305, 122 N.E. 221. Scott says it is the leading case on the subject. In that case, a trustor, called ‘grantor’ in the opinion, conveyed a house and lot to a trustee. The conveyance provided for payment of the income to the trustor and upon his death the trustee was to ‘convey the said premises (if not sold) to the heirs at law of the party of the first part.’ In case of a sale, he was to pay to the heirs at law ‘the balance of the avails of sale remaining unexpended.’ In the opinion by Cardozo, J., it was said page 221 of 122 N.E.: ‘The direction to the trusteee is the superfluous expression of a duty imposed by law. ‘Where an express trust is created, every legal estate and interest not embraced in the trust, and not otherwise disposed of, shall remain in or revert to, the person creating the trust or his heirs.’ Real Property Law, § 102. (Consol. Laws, c. 50.) What is left is not a remainder (Real Property Law, § 38), but a reversion (Real Property Law, § 39). To such a situation neither the rule in Shelley's Case (1 Coke Rep. 104), nor the statute abrogating the rule (Real Property Law, § 54), applies. The heirs mentioned in this deed are not ‘the heirs * * * of a person to whom a life estate in the same premises is given.’ Real Property Law, § 54. The life estate belongs to the trustee. The heirs are the heirs of the grantor. There is no doubt that a gift to A. for life, with remainder to A.'s heirs, gives to such heirs a vested, though defeasible, estate. [Citations.] But here the question is not whether a remainder is contingent or vested. The question is whether there is any remainder at all. In the solution of that problem, the distinction is vital between gifts to the heirs of the holder of a particular estate, and gifts or attempted gifts to the heirs of the grantor. ‘A man cannot, either by conveyance at the common law, by limitation of uses, or devise, make his right heir a purchaser.’ [Citations.] ‘It is a positive rule of our law.’ Hargrave's Law Tracts (1787) p. 571. ‘If a man make a gift in taile, or a lease for life, the remainder to his own right heirs, this remainder is void, and he hath the reversion in him; for the ancestor during his life beareth in his body (in judgment of law) all his heires, and therefore, it is truly said that haeres est pars antecessoris.’ Co. Litt. 22b. To the same effect are all the commentators. [Citations.] The heirs have a mere expectancy, spes successionis (Matter of Parsons Stockley Parsons, L.R. 45 Ch.D. 51, 55), which may be barred by deed or will. This rule, that a reservation to the heirs of the grantor is equivalent to the reservation of a reversion to the grantor himself, is not to be confused with the rule in Shelley's Case. The two are quite distinct. Alexander v. De Kermel, 81 Ky. 345, 351, 352. The one ‘applies only to the acts of an ancestor as between him and his own heirs.’ Hargrave, supra. The other is confined to the limitation of estate of inheritance to the heirs of a person who has taken under the same instrument a prior estate of freehold Campbell v. Rawdon, 18 N.Y. 412, 420; 29 L.R.A.,N.S., 1016.

‘At common law, therefore, and under common-law conveyances, this direction to transfer the estate to the heirs of the grantor would induibitably have been equivalent to the reservation of a reversion. * * * to transform into a remainder what would ordinarily be a reversion, the intention to work the transformation must be clearly expressed. Here there is no clear expression of such a purpose. * * * They [the heirs] had an expectancy, but no estate.’

The New York statute which abolished the rule in Shelley's Case is almost identical with Civil Code section 779 and is, no doubt, its predecessor. N.Y. Real Property Law, Consol.Laws, C. 50, sec. 54; Thornton v. White, 186 App.Div. 566, 174 N.Y.S. 666.

In later New York cases it has been held that the doctrine of Doctor v. Hughes, supra, 225 N.Y. 305, 122 N.E. 221, was no more than a prima facie precept of construction which may serve to point the intent of the author when the interpretation of the trust instrument is not otherwise plain. See, Engel v. Guaranty Trust Co. of N.Y., 280 N.Y. 43, 47, 19 N.E.2d 673, 675; Minc v. Chase Nat. Bank of City of N.Y., 263 App.Div. 141, 31 N.Y.S.2d 592, 595, holding that a provision for distribution at the end of the trust period to the next of kin and heirs at law of the trustor according to the ‘Statutes of Descent and Distribution of the State of New York,’ indicated a gift by purchase.

After referring to Doctor v. Hughes, supra, 225 N.Y. 305, 122 N.E. 221, Scott says: ‘On the other hand, in some cases the courts have reached the opposite result, holding that where the grantor created a trust for himself for life, and on his death as he might by will appoint and in default of appointment for his heirs, the heirs took as purchasers,’ citing Gray v. Union Trust Co., 171 Cal. 637, 154 P. 306. 1 Scott on Trusts, p. 658, sec. 127.1.

Other cases relied upon by the appellant will be reviewed briefly:

In Berlenbach v. Chemical Bank & Trust Co., 235 App.Div. 170, 256 N.Y.S. 563, affirmed 260 N.Y. 539, 184 N.E. 83, the trustor, with a wife and infant son, brought suit to terminate the trust, urging that he was the sole person beneficially interested. The facts are identical with those in Bixby v. Hotchkis, 58 Cal.App.2d 445, 136 P.2d 597, except that in the Berlenbach case the trustee was without power to change the investments constituting the trust estate without the trustor's consent. The court relied on Doctor v. Hughes, 225 N.Y. 305, 122 N.E. 221, and found from the trust instrument that it was not the intention of the trustor to create a remainder in his heirs.

Bottimore v. First & Merchants Nat. Bank, 170 Va. 221, 196 S.E. 593, supports appellant's contention. The opinion states that the authorities are not in accord on the subject but that the better reasoned decisions support the view that upon a state of facts, such as we have in the instant case, the trustor merely conveyed to the trustee a life interest in the property for the benefit of the trustor's heirs, leaving in the trustor a reversion in the property and that she was the sole beneficiary.

Stephens v. Moore, 298 Mo. 215, 249 S.W. 601, Dunnett v. First Nat. Bank & Trust Co. of Tulsa, 185 Okl. 82, 85 P.2d 281, and Burton v. Boren, 308 Ill. 440, 139 N. E. 868, support appellant's claim. The conclusions are predicated upon the rule of the worthier title, which is this: If one makes a limitation to another for life, with a remainder over, either mediately or immediately, to his heirs or the heirs of his body, the heirs do not take remainders at all, but the word ‘heirs' is regarded as defining or limiting the estate which the first taker has, and his heirs take by descent and not by purchase. See, also, Shawmut Bank v. Joy, 315 Mass. 457, 53 N.E.2d 113; 4 Tiffany, Real Property, p. 378, sec. 1118.

Fidelity Union Trust Co. v. Parfner, 135 N.J.Eq. 133, 37 A.2d 675, supports appellant's claim. The conclusion that the words ‘next of kin’ merely indicate a reversion retained by the trustor, was based on the intention of the trustor as disclosed by the trust instrument.

The principle applied in the cases relied upon by appellant, is that, in the absence of a contrary intent deducible from the trust instrument, the rule of the worthier title applies and that the word ‘heirs,’ when used in the trust instrument, should not be construed as a word of purchase unless it is clearly used with that intent.

The worthier title principle, more properly called, says Warren of Harvard Law School, ‘a rule against a remainder to a grantor's heirs' (22 Tex.L.Rev. 22, 26), has been held to be unaffected by statutes abrogating the rule in Shelley's Case through a provision similar to Civil Code section 779, to the effect that where a remainder is limited to the heirs of a person in whom a life estate in the same property is given, the persons who are heirs at the termination of the life estate shall take as purchasers by virtue of the remainder so limited to them. Wilcoxsen v. Owen, 237 Ala. 169, 185 So. 897, 901, 125 A.L.R. 539; Doctor v. Hughes, 225 N.Y. 305, 122 N.E. 221; Whittemore v. Equitable Trust Co. of New York, 223 App.Div. 693, 229 N.Y.S. 440, 442, reversed on other grounds 250 N.Y. 298, 165 N.E. 454; Robinson v. Blankinship, 116 Tenn. 394, 92 S.W. 854, 855; Mayes v. Kuykendall, Ky., 112 S.W. 673; 1 Simes, Law of Future Interests, p. 266, sec. 148. Almost all of the American courts, to which the problem of the application of the rule against a remainder to the grantor's heirs has been presented, have applied the common law dogma. 39 Col.L.Rev. 628, 661, and cases cited; 24 Ill.L.Rev. 627, 642, and cases cited. Gray v. Union Trust Co., 171 Cal. 637, 154 P. 306, is said to be contra to these decisions. 17 Minn.L.Rev. 346, 347.

Although the result of the application of the rule in Shelley's Case and the rule against a remainder to the grantor's heirs is the same in that it vests in one person the entire interest, their spheres of application are different. The rule in Shelley's Case operates upon a limitation to the heirs of the grantee; the other rule, upon a limitation to the heirs of the grantor. If the limitation is to the heirs of the grantor and the rule against a remainder to the grantor's heirs is applicable, it is held that the heirs do not take by purchase and that the grantor can terminate the trust because he is the sole beneficiary. May v. Marx, 300 Ill.App. 144, 20 N.E.2d 821, 824; Biwer v. Martin, 294 Ill. 488, 128 N.E. 518; Akers v. Clark, 184 Ill. 136, 56 N.E. 296, 75 Am.St.Rep. 152; 1 Simes, Law of Future Interests, p. 266, sec. 148; 34 Ill.L.Rev. 835, 35 Ill.L.Rev. 590, 592.

Nossaman, in his exhaustive and comprehensive treatise on ‘Trust Administration and Taxation,’ says (sec. 303): ‘Some courts do not apply the rule in Shelley's case to equitable interests; and in some jurisdictions, including California, the rule does not apply at all. In others, it has been abolished in case of limitations over to heirs. In such cases, remainders are created in their favor,’ discussing Gray v. Union Trust Co., 171 Cal. 637, 154 P. 306, and citing Bixby v. Hotchkis, 58 Cal.App.2d 445, 136 P.2d 597. The doctrine applies in Doctor v. Hughes, 225 N.Y. 305, 122 N.E. 221, is stated by Nossaman to be cognate to the rule in Shelley's Case. It is the rule against a remainder to the grantor's heirs. Nossaman comments, ‘More quaint than sensible, the rule seems to have no place under other than a feudal system * * *.’ (Nossaman, Trust Administration and Taxation, pp. 284, 285, sec. 303.) (See, Rest., Property, sec. 314; 24 Ill.L.Rev. 627; 43 Mich.L.Rev. 976; 44 Dickenson L.Rev. 247; 4 Md.L.Rev. 50; 39 Col.L.Rev. 628, 656. The rule was abolished in England in 1833. (3 and 4 Wm. IV, c. 106, sec. 3.)

Simes says that the fedual reasons for the rule against a remainder to the grantor's heirs ‘have long since disappeared, and no other valid ones have come to take their place. If it is a positive rule of law, like the rule in Shelley's Case, as the rule under consideration was in the English law, then its principal function would seem to be to defeat the legitimate intent of a grantor. Indeed, about all that can be said for the rule, if it be a positive rule of law, is that it tends to make land more readily alienable. This has not been said by the courts, however, and, if it were, it would seem to be quite as inadequate to justify the rule as it is to justify the rule in Shelley's case, in support of which it has been sometimes urged. Hence, it is not surprising to find a tendency among modern courts to minimize its legal effect.’ He says that Gray v. Union Trust Co., 171 Cal. 637, 154 P. 306, held that a remainder interest was created. (1 Simes, Law of Future Interests, p. 265, sec. 147 and footnote.)

It appears to be true, as appellant says, that the rule of the Restatement, and the overwhelming weight of authority, is that by the language used in the instrument here, the heirs take by descent from the trustor and not by purchase under the terms of the trust instrument; that the instrument did not create a remainder in the heirs but was a reservation of a reversion in the trustor, and that appellant is the sole beneficiary. It is also true, as appellant urges, that in Gray v. Union Trust Co., 171 Cal. 637, 154 P. 306, the grant was to the heirs of the grantor as they existed on the date of the grant; while here, the grant is to the heirs of the grantor as they exist on the day of his death. It is also true that the court in the Gray case relied, at least in part, upon the abrogation of the rule in Shelley's Case, when, in fact, the rule in Shelley's Case was not applicable to the situation by reason of the fact that the grant was to the heirs of the grantor and not to the heirs of a grantee. The limitation was not within the terms of the rule in Shelley's Case. (4 Cal.L.Rev. 354.) The heirs mentioned in the trust instrument were not ‘the heirs * * * of a person to whom a life estate in the same property is given, * * *.’ Civ.Code, sec. 779. It is also true that the court in the Gray case did not give consideration to the fact that the weight of authority is to the effect that the rule against a remainder to a grantor's heirs applies even though the rule in Shelley's Case has been abolished. We are also inclined to the view urged by appellant that in Bixby v. Hotchkis, 58 Cal.App.2d 445, 136 P.2d 597, the distribution to the heirs of the trustor was to take place at a specified time of distribution (twenty years from the date of the creation of the trust) according to the laws of succession in effect at such time, and not in accordance with the laws in effect on the date of death of the trustor. See, Schoellkopf v. Marine Trust Co., 267 N.Y. 358, 196 N.E. 288; 1 Scott on Trusts, p. 659, sec. 127.1.

However, the Gray case definitely held that by section 779 of the Civil Code, the word ‘heirs' is changed from a word of limitation to one of purchase and becomes a specific designation of a class which will have the right to the property upon the termination of the life estate, and that the heirs take the property not by descent but by reason of the remainder which was created for them by the execution of the declaration of trust. Consequently, we are constrained to agree with Nossaman, Scott, Simes, and other authorities, that the effect of the decision in the Gray case is that the rule against ‘a remainder to the grantor's heirs' is not applicable in California; that Civil Code section 779 is effective to create a remainder in the grantor's heirs when it is preceded by a valid life estate. We are unable to concur in appellant's contention that this case is controlled by the authorities upon which he relies.

We conclude that the effect of the instrument was that appellant reserved a life estate in himself with a remainder to his heirs. The heirs take by purchase and not by descent. Using the word ‘heirs' in a strict and accurate sense, there can be no person answering that description until the death of the ancestor and the remainder is contingent. Blackburn v. Webb, 133 Cal. 420, 65 P. 952; County of Los Angeles v. Winans, 13 Cal.App. 234, 242, 109 P. 640. Appellant is not the sole beneficiary.

As a valid and effective trust was created and no power of revocation reserved, and as appellant is not the sole beneficiary, the trust cannot be terminated without the consent of the other beneficiaries thereunder. If any of the beneficiaries are not in being or are not sui juris and, hence, cannot consent, the trust cannot be terminated. All who might, by survival, or other event, become members of the class entitled to the remainder at the time of the trustor's death, have a beneficial interest in the trust. The heirs of appellant having taken by purchase, their interest prevents him from acquiring the fee. Their interest may not be destroyed without their consent. None of the beneficiaries, other than appellant, is a party to this suit or has consented to the termination of the trust. The court may not, therefore, terminate it.

Appellant next contends that the trust should be declared terminated or extinguished as an invalid spendthrift trust. The declaration of trust contains spendthrift provisions. Respondent concedes that the spendthrift provisions of the trust are invalid as to appellant but not as to the other beneficiaries. We take it that this concession means no more than that creditors of appellant could subject the assets of the trust to the payment of his debts. Where a person creates a trust for his own benefit, with a provision restraining the voluntary or involuntary transfer of his interest, his creditors can reach his interest. McColgan v. Magee, Inc., 172 Cal. 182, 186, 155 P. 995, Ann.Cas.1917D, 1050; Rest., Trusts, p. 386, sec. 156; Annotation, 119 A.L.R. 35. The doctrine does not depend upon fraudulent intent of the trustor. McColgan v. Magee, Inc., supra. We have not been cited to any law holding that a trust should be terminated or extinguished because it was created by a trustor for his own benefit with a provision restraining transfer of his interest. Appellant relies upon McColgan v. Magee, Inc., 172 Cal. 182, 155 P. 995, Ann.Cas.1917D, 1050. All that was held in the McColgan case was that where the beneficiary of a trust transferred property to trustees upon a trust which provided that the income should be paid to him free from all claims of creditors, the property was subject to execution in the same manner as any other property. Whether the trust could be terminated or extinguished was not discussed or mentioned. To the same effect, see Estate of Camm, 76 Cal.App.2d 104, 106, 172 P.2d 547.

The rule of the Restatement is that a settlor cannot revoke a trust if, by the terms of the trust, he did not reserve a power of revocation, except where he is the sole beneficiary, or the power of revocation was omitted by mistake, or upon grounds upon which a transfer of property not in trust can be rescinded or reformed. (Rest., Trusts, secs. 330, 331, 332, 333.) The Restatement says that if the settlor creates a trust for himself for life with remainder to others because of the fact that he was a spendthrift, the mere fact that he subsequently ceased to be a spendthrift is not a sufficient ground for enabling him to revoke the trust. (Rest., Trusts, p. 1007, sec. 332.) A person having placed property out of reach of his creditors may not compel a reconveyance. Tognazzi v. Wilhelm, 6 Cal.2d 123, 56 P.2d 1227.

As respondent says, there is no evidence in the case that appellant created the trust for the purpose of defrauding his creditors or for any other improper purpose. Had he done so, he coudl not take advantage of his own wrong in a court of equity to compel termination or extinguishment of the trust on that ground. As we have held, the declaration of trust created contingent remainders in appellant's heirs. Its purpose was to secure the income to appellant and to preserve the principal for his heirs. Equity treats it as void only insofar as it operates to defeat claims of appellant's creditors. In all other respects it is valid and its purposes have not been accomplished.

In view of our conclusion that appellant is not the sole beneficiary of the trust and that it cannot be revoked, consideration need not be given to appellant's further claim that the court erred in not receiving evidence for the purpose of enabling it to exercise its discretion in determining whether the trust should be terminated.

The order denying plaintiff's motion for an order settling aside the order for judgment was made prior to the entry of judgment. An appeal does not lie from that order. Litvinuk v. Litvinuk, 27 Cal.2d 38, 43, 162 P.2d 8. An order denying a motion for a new trial is not an appealable order. Carlin v. Prickett, 81 Cal.App.2d 688, 184 P.2d 945. The appeals from the order denying plaintiff's motion for an order setting aside the order for judgment and from the order denying the motion for a new trial are dismissed.

Judgment affirmed.

VALLEE, Justice pro tem.

SHINN, Acting P. J., and WOOD, J., concur.