Summary
In Budreau v. Mingledorff, 207 Ga. 538, 546 (4) (63 S.E.2d 326) (1951), a testamentary trust was determined not to be invalid because of the unlimited discretion given to the trustees in determining whether or not income and corpus of the trust would be paid to the testator's son.
Summary of this case from Ivey v. GroganOpinion
17294.
JANUARY 8, 1951.
REHEARING DENIED FEBRUARY 15, 1951.
Equitable petition. Before Judge Price. Chatham Superior Court. August 17, 1950.
Cowart Cowart and Reese, Bennet Gilbert, for plaintiff.
Shelby Myrick, for defendants.
1. A trust is executory when something remains to be done by the trustee, either to secure the property, to ascertain the objects of the trust, to distribute according to a specified mode, or some other act, the doing of which requires the trustee to retain the legal title.
2. A valid trust may be created in this State for a person sui juris with remainder over in trust to another.
3. An estate in fee will not be reduced to a life estate by a subsequent limitation in a deed or will, unless the intent to limit is unmistakable.
4. Construing Items 10 and 11 of the will under consideration along with other items, the devise of the interest of John Miller Budreau in the residue of the estate clothed the trustees with full legal title to such estate, to hold such interest for the use and benefit of John Miller Budreau, in whole or in part, in the discretion of the trustees, during his life, and at his death the remainder interest to be held for such remaindermen as come within the provisions of Items 11 and 23, and these remaindermen are ascertainable only upon the death of the life tenant.
No. 17294. JANUARY 8, 1951. REHEARING DENIED FEBRUARY 15, 1951.
This case is here on exceptions to an order of the trial court, sustaining the general demurrers of the defendants to a petition brought by a devisee under the will of Joseph L. Budreau Sr., praying that a decree be entered declaring the trust provided in the will for the plaintiff terminated, and ordering the defendant executors and trustees to deliver to the plaintiff his share of the estate, and for an accounting.
In his petition the plaintiff, John Miller Budreau, alleged that Citizens Southern National Bank and others were executors and trustees under the will of his father, Joseph L. Budreau Sr.; and that his father died in 1946, leaving a will which has been probated, copy of the same with codicils being attached to the petition. He alleged: that under Item 11 of said will a trust was created in his favor; that such trust was executed; that, he, being sui juris, was entitled to take possession of his share of said estate, which was in the hands of the defendants as executors and trustees; that they had refused to deliver the same to him; and that he was also entitled to an accounting by the trustees and executors.
Item 10 of the will provides as follows: "All of my other property, real, personal and mixed, of whatever kind and wherever situated, I give, devise and bequeath equally to my three children, Mary Louise Mingledorff, John Miller Budreau, and Remer Lane Budreau, the shares and interest in my estate hereby bequeathed to [said three children] however to be in trust for their use and benefit, as hereinafter provided for."
Item 11 makes the following provision: "The share and interest of the said John Miller Budreau in my estate, by reason of his ill health is hereby devised and bequeathed to the trustees as hereinafter named, to be held by them for the use and benefit of the said John Miller Budreau for and during his life. If he should die without leaving any child or children, his portion of my estate shall revert to my estate, to be divided equally between my daughter, Mary Louise Mingledorff, and my son, Remer Lane Budreau. If the said John Miller Budreau should die leaving any child or children, his said share and interest in my estate, or whatever is left of same, shall vest in said child or children. The said trustees of the said John Miller Budreau are authorized and empowered to encroach upon the corpus of the said estate at any time, in their discretion, for his proper maintenance and support, and to pay over to the said John Miller Budreau such portion of said corpus for such purpose as they may see fit and deem proper for his best interest, or they may only pay over to the said John Miller Budreau the interest and income of said corpus, or such part of the said interest and income of said corpus as they may see fit to pay to him. In the event that my said trustees should at any time consider and determine that the said John Miller Budreau is capable of successfully engaging in the managing of a business, my said trustees are hereby authorized and empowered to encroach upon the corpus of the estate in such amount as in their discretion they may deem sufficient and proper for him to successfully engage in such business or enterprise, and to pay over such amount to him or the said trustees are authorized and empowered to administer the operation of such business as they deem fit, until they are satisfied that the said John Miller Budreau can operate the business himself. The said John Miller Budreau shall not have the right to sell, assign or transfer any of his interest in my estate without the written consent of the executors and/or trustees. The said trustees are hereby authorized and empowered to sell any portion or all of said interest and share of the said John Miller Budreau in my estate at public or private sale, without the order of any court, for the purpose of reinvestment, or for the purpose of paying over to the said John Miller Budreau any sums of money which they may see fit to give him at any time. As has been my custom with my children, who have married, I give, devise and bequeath to John Miller Budreau the sum of" $5000 "absolutely and outright at the time of his marriage, or any portion thereof in the discretion of the trustees and executors, depending upon whether the estate can afford to pay such gift. Any such gift so made, shall be deducted from my estate and not from his share of the corpus."
Item 23 of the will reads as follows: "The same trustees and executors shall act for any child or children as trustees, executors and/or guardians for any child or children of the said Mary Louise Mingledorff, John Miller Budreau and Remer Lane Budreau, provided one or more of the three heirs mentioned in this item should die, whereby their child or children become heir or heirs to Mary Louise Mingledorff, John Miller Budreau's or Remer Lane Budreau's interest in my estate, and continue to act as trustees, executors and/or guardians for them until they reach the age of 21 and will continue to act as trustees, executors and guardians after said child or children reach the age of 21 years, provided the said guardians, trustees, and executors in their discretion feel that it would be for the best interest of said child or children."
The will with the codicils, after providing for the testator's burial and payment of debts in Items 1 and 2, makes certain specific bequests in Items 3, 4, 5, 7, 8, and 9. Item 4 gives to the testator's daughter, Mrs. Mingledorff, the testator's home place, household goods, and three lots, in fee simple. Item 10 devises all of his other property of every kind to his three children, the plaintiff, John Miller Budreau, Mrs. Mingledorff, and Remer Lane Budreau, "in trust for their use and benefit as hereinafter provided." Immediately following the quoted words, is Item 11, which has been fully set out heretofore, wherein the interest of John Miller Budreau is devised and bequeathed to the trustees named in the will, "to be held by them for the use and benefit of said John Miller Budreau for and during his life"; and this item further provides that, if this son should die without leaving any child or children, his portion of the estate should revert to the testator's estate and be equally divided between his daughter and other son, but if John Miller Budreau should die leaving any child or children, his share shall vest in his child or children. In this item the trustees are authorized to encroach upon the corpus in their discretion for the proper maintenance and support of such son, and pay over to him for such purposes as they may deem fit and proper for his best interest any portion of the corpus, or to pay over to him only the interest and income of his part of the corpus. This item provides that the son shall not have any right to sell, assign, or transfer any of his interest in the estate without the consent of the trustees, and such trustees are empowered to sell any portion of such son's interest at public or private sale for the purpose of reinvestment, or paying over to said son any sum which they may see fit to give him at any time. Item 12 devises and bequeaths to the trustees the interest of Remer Lane Budreau for the use and benefit of such son during his minority and until he is 26 years of age, with discretion vested in the trustees to pay over to him at the time he arrives at the age of 26 years 25% of his interest in the estate; and, if the trustees deem it for the best interest of said son that he shall not receive the 25% interest, they are to turn over to him approximately 10% of the corpus and the remainder shall be held for the benefit of such son for and during his natural life, with authority in the trustees to deliver to such son from his share of the corpus whatever amounts they may deem best for his interest; and that, if he shall die without leaving any child or children, his portion of the estate shall revert to the estate of the testator and be divided equally between the daughter and the trustees of John Miller Budreau; but, if he shall die leaving a child or children, then his share shall vest in such child or children. The trustees are given power to sell such portion of the estate and reinvest the same. Item 13 devises and bequeaths the share of Mrs. Mingledorff to the trustees, to be held by them for the use and benefit of such daughter, and when she reaches the age of 33 years 25% of her share shall be delivered to her, in the discretion of the trustees. The trustees are given the same discretionary power in this regard towards payment of the share to the daughter as is given in reference to the share of the son, Remer Lane Budreau, in Item 12. Similar provision is made in the event of her dying with or without children as is provided in the items regarding the other two children. In Items 12 and 13, the testator expressly provides that the legatee named therein shall have no right to sell or transfer any interest in the estate without the consent of the trustees. Items 14, 15, 16, 17, 18, and 19 relate to the powers and duties of the trustees. In Item 22 the testator nominates and appoints, as trustees and executors, Citizens Southern National Bank and three individuals, and provides for six alternates. Item 23 provides that the trustees and executors shall act for any child or children of his three children upon the death of one, whereby they left a child or children surviving; and the trustees are directed to act (in their discretion) for such child or children until it or they reach the age of 21 years. Item 25 provides that all decisions pertaining to liquidation of the estate and recommendations as to payments to any of the testator's heirs must be by unanimous agreement of all the executors or trustees.
1. A trust is executory when something remains to be done by the trustee, either to secure the property, to ascertain the objects of the trust, to distribute according to a specified mode, or some other act, the doing of which requires the trustee to retain the legal estate. Code, § 108-111. Where an executed trust is created for the benefit of a person capable of taking and managing the estate in his own right, the legal title is merged immediately into the equitable title, and the perfect title vests in the beneficiary according to the terms and limitations of the trust. § 108-112. In Thomas v. Crawford, 57 Ga. 211, a bequest was made to one Crawford of certain property "to be held by him in trust for the following purposes, towit: the rents, issues, and profits of the same to be paid over by him annually to William G. Howard during his lifetime, and at his death, the corpus of said property to be turned over by the said trustee to the children of the said William G. Howard, should he leave any children surviving him, and in the event of his death without leaving any child or children, then it is my will that said property shall be given to Margaret R. Crawford, if she is alive, and if she be dead, then to go to her children," with discretionary power in the trustee to sell any part of the property during the trust and reinvest; and it was held to be a valid, subsisting executory trust, with the legal title to the corpus of the estate remaining in the trustee to keep the same secure for the contingent beneficiaries, to ascertain who they would be and divide the estate among them when they were ascertained, on the happening of the contingencies contemplated by the testatrix. It was held in Cushman v. Coleman, 92 Ga. 772 (1) ( 19 S.E. 46), that, "Where the terms of a conveyance by deed to a trustee are large enough to embrace the fee in the premises described, and this fee is carved up into an estate for life in favor of one beneficiary and a remainder in behalf of other beneficiaries, who are uncertain and unascertained, the instrument should be construed as clothing the trustee with full title, and the title as to the remainder should be considered as abiding in him so long, at least, as the identical persons who are to take and enjoy it are not ascertainable. Up to that time, the trust is executory, and the remainder is an equitable, not a legal, estate." In that case, a grantor by deed conveyed property to a named trustee and his heirs in fee simple, in trust for the sole and separate use of a married woman during her natural life, and at her death in trust to be equally divided between such children of her and her present husband as may be in life at her death and the "representatives of any one or more of said children, if any, as may have died before." It was held that such deed passed the fee in the premises to the trustee; that, the persons who were to take in remainder being uncertain and unascertainable until after the death of the life tenant, the remainder was contingent until after the death of the life tenant and could not become vested until after the death of the life tenant; and that the trust was executory and the remainder was an equitable and not a legal estate. In Sparks v. Anderson, 150 Ga. 58 ( 102 S.E. 423), this court had under consideration the provisions of a will whereby the testator gave to his granddaughter certain property for her sole and separate use for and during her natural life, and upon her death unto such child or children as she might have living at her death, and in default of any child or children living at the time of her death the lands were to revert to the estate and be equally distributed among his children and their lineal representatives per stirpes. It was held: that this provision of the will created an estate for life in the granddaughter, with remainder to such child or children as she might have living at the time of her death; that, if she left no such child or children, then in trust to be distributed among the class named in the will; that the trustees appointed in the will were not trustees for the life tenant only, but for the life tenant and the remaindermen; and that the trust was executory at least until the death of the life tenant.
In this same connection, see also Watts v. Boothe, 148 Ga. 376 (1) ( 96 S.E. 863); Woodbery v. Atlas Realty Co., 148 Ga. 712 ( 98 S.E. 472); Burton v. Patton, 162 Ga. 610 (2) ( 134 S.E. 603); Duncan v. Verner, 172 Ga. 553 (1, 2) ( 158 S.E. 322).
2. A valid trust may be created in this State for a person sui juris with remainder over in trust to another. Sinnott v. Moore, 113 Ga. 908 (4) ( 39 S.E. 415); Palmer v. Neely, 162 Ga. 767 ( 135 S.E. 90). In Leavitt v. Leavitt, 149 Ga. 601 ( 101 S.E. 670), Leavitt Sr. brought an action against Leavitt Jr., individually and as trustee, to annul and set aside a deed which had been jointly executed by them in trust for certain specified purposes. Leavitt Sr. had by deed conveyed certain property in trust for the support and maintenance of himself and his family, consisting of his son, the grantee, and the son's wife, and for the support of any children that might be born to the grantee; providing for disposition of the property upon the death of the grantor and in the event of the grantee dying childless. The grantor of the trust sought to set aside the deed, on the ground that it was intended to create a trust for a person sui juris and not mentally weak or under any legal disability. It was held that the deed created several estates for persons other than the grantor, including contingent estates for any children that might be born to the grantee, and that the deed could not be set aside and the property restored to the grantor, even if, as to the grantor, it created a spendthrift trust.
3. Though use of the word "heirs" or its equivalent in a grant or devise is not necessary to create an absolute estate, and every properly executed conveyance must be construed as conveying the fee unless a less estate is limited in such conveyance. "If a less estate is expressly limited, the courts shall not, by construction, increase such estate into a fee, but, disregarding all technical rules, shall give effect to the intention of the maker of the instrument, as far as the same is lawful, if the same can be gathered from its contents; and if not, the court may hear parol evidence to prove the intention." Code, § 85-503. An estate in fee will not be reduced to a life estate by a subsequent limitation in a deed or will, unless the intent to limit is unmistakable. Thomas v. Owens, 131 Ga. 248 (1) ( 62 S.E. 218); Moore v. Cook, 153 Ga. 840 (2) ( 113 S.E. 526). So, where a testator gives in one part of his will an absolute estate, and by a subsequent clause expressly cuts down such absolute estate to a lesser estate, the prior gift is restricted accordingly. Sheftall v. Roberts, 30 Ga. 453 (2); Cochran v. Hudson, 110 Ga. 762 (1) ( 36 S.E. 71). "A testator unquestionably has the power, after having given, in one item of his will, a bequest to a legatee for himself and his heirs forever, to attach a condition, by a later item, under which the property will revert upon a certain contingency. If the contingency did not happen, the legatee would have an absolute title. If it did happen, there would be a reversion." Lamar v. Lamar, 137 Ga. 734, 743-44 ( 73 S.E. 1057). See also Patterson v. Gaissert, 147 Ga. 472 ( 94 S.E. 563); Palmer v. Atwood, 188 Ga. 99 (3) ( 3 S.E.2d 63); Smith v. Smith, 200 Ga. 373 ( 37 S.E.2d 367).
4. Since the construction of a will is for the court, the dismissal of the plaintiff's petition on general demurrer means that the trial court construed the will, with reference to the matters in controversy, as contended by the defendants. Armstrong v. Merts, 202 Ga. 483 (1) ( 43 S.E.2d 512).
The main question for determination is: what is the nature and character of the interest of John Miller Budreau in the estate of his father, devised to him under Items 10 and 11 of the will? To ascertain the intention of the testator as to the disposition of his estate under these items, we consider them in relation to the will as a whole.
It is evident from a reading of the entire will that it was the intention and purpose of the testator, in devising the residuum of his estate in Items 10 and 11, to create a trust estate, whereby the legal title to the interest of John Miller Budreau would be vested in the trustees, and the beneficial use of the estate was to be in John Miller Budreau for his life, with the remainder equitable interest to vest in the child or children of the life tenant surviving him, and the legal title would be held by the trustees until such child or children reached the age of 21 (provided the trustees deemed it for the best interest of such child or children); and, in the event the life tenant died leaving no child or children, such remainder interest would revert to the testator's estate and be delivered by the trustees to the surviving children of the testator; and, in the event they or either of them did not survive the life tenant, then their interest would go to their heirs at law, and if they were minors, the trustees would hold the legal title to their interest during their minority. And it was also the intent of the testator to give such trustees full and complete power to manage said estate during the life of John Miller Budreau, with full power vested in them in their discretion to deliver to him any part or all of his interest in the residue of the estate, or to pay him his share of the income from the residuary estate. As we construe Items 10 and 11 of the will, the testator set up an executory trust, whereby the trustees now hold the legal title to the estate both as to the life estate of John Miller Budreau and the remainder interest. This, because it can not be determined until after the death of John Miller Budreau to whom the remainder interest will eventually go. The management and control of John Miller Budreau's interest in the corpus of the estate is vested in the trustees; and if the life tenant dies leaving a child or children not 21 years of age, the trustees are directed (in their discretion) to act as trustees for the benefit of such child or children until they reach the age of 21 years. If he should die leaving no child or children surviving, and in the event any child or children of the life-tenant's brother or sister should become heirs to the interest of the life tenant, the trustees should act as trustees for such child or children during their minority. We therefore hold that the provisions of Items 10 and 11, as to the interest of John Miller Budreau, do not constitute an executed trust.
In addition to the authorities cited in this opinion, our ruling is sustained by Sides v. Shewmaker, 188 Ga. 672 ( 4 S.E.2d 829). There the testator conveyed the residue of his property to a trustee, for the following uses: "All the residue of my property, of whatever character, real or personal, whether now owned or hereafter acquired, . . I will to Trust Company of Georgia, a Georgia corporation with an office in Atlanta, as trustee, in trust, however, for the following uses: A. The trustee shall pay to my wife during her natural life or widowhood the entire net income from the trust estate, to be used as she in her sole discretion deems best for the support and maintenance of herself. If the net income is insufficient, in the uncontrolled discretion of my trustee, to suitably provide for my wife, then my trustee shall encroach upon the corpus of the trust to such an extent and so often as may be necessary in its opinion to provide ample funds for such purposes. B. Upon the death of my wife all of the income from my property, whether real or personal, shall go to Luella Shewmaker (now 17 years of age) . . to be used as she sees fit, until she reaches 21 years of age. When the said Luella Shewmaker reaches her majority, all of my property, principal and interest, shall be conveyed to her in fee simple." In construing this to be an executory trust, the court said: "A valid trust may thus be created in favor of a minor, not only where the trustee takes the legal title for him in fee simple, but where the trustee takes it in trust for a life-tenant who is sui juris, with remainder over in fee to the minor. In such a case the trust embraces both estates, where it is created for both, and the trustee is empowered to act and manage the property for both."
It is insisted that the provisions of Code § 108-103 are applicable in this case. This section deals with trusts sought to be created by the use of precatory or recommendatory words, and has application where a trust is sought to be inferred from the use by the grantor or testator of words of entreaty or persuasion, such as "praying," "requesting," or "recommending" that certain uses be made of his estate, and has no application where the words used are mandatory and the creation of an express trust plainly appears from the deed or will. A mere casual reading of the will of the testator in this case shows that he created an express trust, and that there is no occasion to apply Code § 108-103.
It is contended by counsel for the plaintiff that the discretionary power given by the testator to the trustees — to pay over to his son, John Miller Budreau, "such portion of said corpus for such purpose as they may see fit and deem proper for his best interest, or they may only pay over to the said John Miller Budreau the interest and income of said corpus, or such part of the said interest and income of said corpus as they may see fit to pay to him" — renders the trust void for indefiniteness; and, even if sufficiently definite to be valid, the trust is invalid because of the unlimited discretion given to the trustees.
Generally, a testator may by will confer upon another person the power to do any act with reference to the property of the testator which he could lawfully have done himself. Redfearn on Wills and Administration of Estates (2d ed.), 369-70, § 209. A testator may leave the time and manner of execution of the trust to the discretion of trustees; and, in the absence of bad faith, they cannot be compelled to exercise the powers granted in the will. Redfearn on Wills and Administration of Estates (2d ed.), 370-71, § 210. Scott in his treatise on Trusts says: "By the terms of the trust it may be provided that the trustee may in the exercise of his discretion terminate the trust. . . More commonly it is provided by the terms of the trust that the trustee may in the exercise of his discretion terminate the trust by transferring the trust property to the beneficiaries or to certain of the beneficiaries of the trust. In such a case the trustee may in the proper exercise of his discretion convey the trust property to the beneficiaries and thereby terminate the trust. The court will not interfere with the trustee in the exercise of his discretion unless he is guilty of an abuse of discretion." 3 Scott on Trusts, 1825-26, § 334.1.
The testator in this case devised his son's interest in the residuary estate to trustees during the life of the son with remainder in trust, for reasons of which he was the sole judge; and these reasons, enumerated in the will, were the son's ill health and incapacity to engage in or manage a business of his own. The testator's will clearly shows that it was his desire for his son not to have the control or benefit of such interest unless he became capable of looking after his interest. The testator no doubt thought that after his death his son might reach a stage where he would be capable of being entrusted with the corpus of his interest; and, in order that such determination might be made, he invested his trustees with authority to make such determination in their discretion. We know of no legal barrier that prevents a testator from having such desire carried out. A court of equity, in the absence of bad faith or collusion, will not control the exercise of such discretion. Code, § 37-602. The discretionary powers vested in the trustees under the will under consideration are plain and specific, and are such as could be lawfully granted to trustees and performed by them.
In view of these rulings, it becomes unnecessary for us to pass upon the contention of the defendants that the trust created in these items was a spendthrift trust, under Code § 108-114.
It was not error for the trial court to sustain the general demurrers of the defendant and to dismiss the petition as amended.
Judgment affirmed. All the Justices concur, except Duckworth, C. J., and Atkinson, P. J., who dissent.