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IN RE: ESTATE of Charles S. ASH (1965)

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

IN RE: ESTATE of Charles S. ASH, Deceased. Joseph HANCK and Crocker-Citizens National Bank, Trustees, Petitioners and Respondents, v. James LARKIN and Frank B. Lippman, Administrators of the Estate of Frank Ash, Deceased, Objectors and Appellants.

Civ. 22578.

Decided: October 19, 1965

W. T. Fitzgerald, L. Martin Blaha, Morrison, Foerster, Holloway, Clinton & Clark, San Francisco, for appellants. John A. Sproul, San Franscisco, for respondents.

This is an appeal by the personal representative of the Estate of Frank Ash from a minute order dated July 30, 1964, construing paragraph 11 of the will of Frank's cousin, Charles Ash (hereafter referred to as testator). The respondents are the named trustees of Trust B established by the will. The court's order did not suggest any subsequent formality and was apparently intended to be final. It is, therefore, appealable under Probate Code section 1240 as a determination of persons to whom trust property should pass (Estate of Spence, 57 Cal.App.2d 922, 135 P.2d 419). The principal question presented is whether the court properly found that Frank's remainder interest in Trust B lapsed because he failed to survive the life-income beneficiary.

The pertinent facts are as follows: The testator died in 1959, his will was admitted to probate, and respondents (hereafter referred to as trustees) appointed as the trustees of the two trusts created by the will. The will, after the usual recitations and provisions for specific legacies and the disposition of particular items of personal property, transferred all of the testator's estate to the trustees to be held in two separate trusts. Trust A was created for the benefit of the testator's wife, Cora, who was to receive the entire net annual income and was also given a testamentary power of appointment over the corpus. Paragraph 10 of the will, so far as pertinent, provides: ‘In the absence of such testamentary appointment by my wife, I direct said Trustees, upon her death, to distribute, deliver and pay over the residue of Trust A, including accumulated income, if any, to the following persons, organizations and universities, in amounts and proportions, as follows: * * *

‘My said cousin, FRANK ASH, the sum of $10,000.00, and if he shall predecease the termination of said trust, said sum shall be paid to his wife, if she be living.’

Trust B was created for the benefit of the testator's sister, Marie. The trustees were directed to pay 75 per cent of the net annual income of Trust B to Marie as long as she lived and to accumulate the remaining 25 per cent of the net income.

Paragraph 11 of the will provides: ‘Upon the death of my sister Marie, in the event my wife shall have predeceased her, said Trust B shall terminate and said Trustees are directed to distribute, deliver and pay over the remaining property therein, including accumulated income, if any, to the persons, organizations and universities whose names are set forth in the Tenth Paragraph hereof, in the amounts and proportions and under the conditions providing for the distribution and pro ration of the residue therein set forth.’

The testator's wife Cora died on January 17, 1961, without having exercised her power of appointment. Frank Ash died on May 22, 1963, after his wife had predeceased him. The testator's sister Marie died on May 30, 1964. By the decree of partial distribution, $10,000 was distributed to Frank Ash pursuant to paragraph 10 in Trust A. The trustees concede Frank's share in the residue of Trust A. This controversy concerns only Frank's asserted remainder interest in Trust B.

After Marie's death, appellants contacted the trustees and asserted that Frank's estate should share in the distribution of Trust B because under the terms of paragraph 10 as incorporated into paragraph 11, Frank had to survive only the testator's wife, and not Marie as well, in order to receive his remainder interest in Trust B. The trustees took the position that since Frank had predeceased Marie, his remainder interest in Trust B lapsed.

The sole question here presented is whether Frank had to survive the life beneficiary of Trust B before he or his estate could share thereunder. As no extrinsic evidence was admitted, the question is one of law and we must make an independent determination of the meaning of the language in the will and the intent of the testator (Parsons v. Bristol Development Co., 62 Cal.2d 861, 44 Cal.Rptr. 767, 402 P.2d 839).

Appellants contend 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 interests merely because the words of a present gift are absent or the trustee is to deliver the property at a later date (Estate of Stanford, 49 Cal.2d 120, 315 P.2d 681; Estate of Haney, 174 Cal.App.2d 1, 11, 344 P.2d 16). It is conceded, however, that in the construction of wills, the paramount rule to which all others must yield is that a will is to be construed according to the intention of the testator and this intention must be given effect so far as possible (O'Farrell v. American Trust Co., 149 Cal.App.2d 691, 698, 309 P.2d 60).

Appellants, relying on Estate of Ritzman, 186 Cal. 567, 199 P. 783, argue that the intent of the trustor was merely to postpone Frank's possession until the death of the life tenant of Trust B. In Ritzman, the testator devised the income to his wife ‘so long as she lives'; on her death, the residue of the estate was to be divided into six equal parts for the testator's six children. One of the children predeceased the income beneficiary. The court, holding that the remainderman was not required to survive the income beneficiary, said at page 569, 199 P. at page 784: ‘There is absolutely nothing in the will upon which to found a suggestion that this gift to the children, as distinguished from the possession and enjoyment of the property given, was to be postponed to the time of the death of the wife, except the words preceding the words of disposition, viz.: ‘Upon the death of my wife Sarah Ritzman I give,’ etc. But these words, coming immediately after the limited disposition to the wife for ‘so long as she lives,’ and used in connection with the gift of the remainder, clearly appear to us to have been used simply as defining the time of commencement of the enjoyment of the property given. Such words so used are usually taken as in no way indicative of an intent to postpone the vesting in right, and as relating ‘to the time of taking effect in possession and not to the time of taking effect in interest.’' Appellants argue that the language used by the testator in the creation of Trust B (‘* * * Trustees shall pay 75 percent of the net annual income * * * to my sister Marie * * * so long as she lives * * *’) evidenced a similar intent here. This contention completely overlooks the fact that in the instant case, we have two separate and distinct trusts and a specific provision that Trust B was to terminate on the death of Marie and the residue then be distributed. No such termination provision is found in Estate of Ritzman, supra.

Appellants cite Brown v. Union Trust Co. of Greensburgh (1951) 229 Ind. 404, 98 N.E.2d 901, and O'Brien v. Lewis (1911) 208 Mass. 515, 94 N.E. 750. In the Brown case, the testatrix bequeathed a fixed amount to her sister for life, the remainder to her sister's children. The testatrix then left the residue of her estate to her sister ‘on the same terms and conditions as named in Item Five hereof.’ (98 N.E.2d p. 903.) The court held that the conditions of the specific bequest had been incorporated in the residuary gift. In the O'Brien case, the testator left property in trust to A for life, then to B for life, with a remainder to B's issue with a gift over if B died without issue. By a subsequent codicil, the testator bequeathed one-third of his residuary estate to the trustee, subject to the same trusteeship and conditions as had been stated in the will. The court held that the limitations and conditions of the will were fully incorporated into the residuary bequest.

Appellants argue that both of these cases are determinative of the instant case, i. e., the terms set forth for distribution of the residue of Trust A are the only terms and conditions required for the distribution of the residue of Trust B. They contend that by incorporating the language ‘if he shall predecease the termination of said trust’ found in paragraph 10 of the will (relating to Trust A) into the provisions concerning the distribution of the residue of Trust B in paragraph 11, the testator intended the words ‘said trust’ to refer only to the termination of Trust A and not to the termination date of Trust B. Or, in other words, Frank's interest in Trust B is to be determined on the same basis as his interest in Trust A, his survivorship of the wife of the testator.

Appellants' contention ignores the intent of the testator as evidenced by his entire scheme of distribution, namely, the creation of two separate and distinct trusts. Each trust terminates on the death of its income beneficiary: Trust A on the death of the testator's wife, and Trust B on the death of the testator's sister. Since the testator carefully provided for a separate and distinct termination date for each of the two trusts, the list of persons and the amounts and conditions from paragraph 10 are incorporated into paragraph 11 merely to save space. It is a convenient way of again noting the various beneficiaries and the amounts to be paid to each. The conditions providing for distribution of the residue of Trust A provide that if Frank shall predecease the termination of ‘said trust,’ the amount specified was to be paid to his surviving spouse if then living. The term ‘said trust’ as incorporated into paragraph 11 refers to the trust referred to in paragraph 11, which specifically states: ‘Upon the death of my sister Marie, in the event my wife shall have predeceased her, said Trust B shall terminate.’ (Italics added.)

Under the interpretation suggested by appellants, there would be no point in the testator's provision for two separate trusts or for a different termination for each. Appellants' argument would make sense only if, as in all of the cases they cite, there was a single trust with a single provision for remaindermen and some question about the disposition of a single residue.

We hold that the legacy of Frank Ash in Trust B lapsed when he died before the life-income beneficiary Marie and that his representatives have no right of recovery.

The order is affirmed.

TAYLOR, Justice.

SHOEMAKER, P. J., and AGEE, J., concur.

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IN RE: ESTATE of Charles S. ASH (1965)

Docket No: Civ. 22578.

Decided: October 19, 1965

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

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