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Children's Hospital & Research Center Foundation v. Knowles

California Court of Appeals, First District, First Division
Jun 11, 2010
No. A126754 (Cal. Ct. App. Jun. 11, 2010)

Opinion


CHILDREN’S HOSPITAL & RESEARCH CENTER FOUNDATION, Plaintiff and Respondent, v. JESSICA KNOWLES et al., Defendants and Appellants. A126754 California Court of Appeal, First District, First Division June 11, 2010

NOT TO BE PUBLISHED

Alameda County Super. Ct. No. HP-07358226

Dondero, J.

Defendant Jessica Knowles, on behalf of herself and her brother Jeremy Anderson, appeals from the probate court’s ruling that the antilapse statute (Prob. Code, § 21110) does not apply to the share of decedent Ron Morelli’s trust that had been allocated to his mother Tillie P. Severa, who predeceased him. Knowles, the granddaughter of Severa, claims the trial court erred in directing that Severa’s share be distributed to plaintiff and residuary beneficiary Children’s Hospital & Research Center Foundation (CH). We agree and reverse.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On December 28, 2001, decedent executed a declaration of trust, establishing the Ron Morelli Revocable Living Trust (the Trust). Part 10 of the Trust, pertaining to beneficiaries, provides as follows:

By our own motion, we have augmented the record on appeal to include this document. (Cal. Rules of Court, rule 8.155(a)(1)(A).) While Knowles attached a copy of the trust document as an exhibit to her opening brief, this is not the proper vehicle for introducing documents into the record.

“At the death of the grantor, the trustee shall distribute the trust property as follows, subject to provisions in this Declaration of Trust that create children’s subtrusts or create custodianships under the Uniform Transfers to Minors Act:

“1. James V. Morelli, Tillie P. Severa, Rory Penticost and Leah Meagher shall be given all the grantor’s interest in the trust property in equal shares.

“2. Children’s Hospital, Oakland, California shall be given all trust property not otherwise specifically and validly disposed of by this Part.”

James V. Morelli is decedent’s father and Tillie P. Severa was decedent’s mother. Rory Penticost and Leah Meagher were friends of decedent. Severa had two children, decedent and Cynthia Ironside. Ironside, who died on September 18, 1986, was the mother of Knowles and Anderson. Decedent died on June 26, 2006, leaving no issue. Severa predeceased decedent on January 29, 2005.

On July 6, 2009, CH filed a petition pursuant to Probate Code section 11702, subdivision (a), seeking to claim the share designated for Severa in its capacity as the residual beneficiary. Knowles and Anderson contested the petition, contending that under the antilapse statute, Severa’s share had passed to them as her sole living heirs.

Probate Code section 11702, subdivision (a), provides, in part: “Any interested person may appear and, at or before the time of the hearing, file a written statement of the person’s interest in the estate.” All further statutory references are to the Probate Code.

On August 7, 2009, the probate court filed its order finding that section 21110 “does not apply because [decedent] expressed a contrary intention in his trust.” This appeal followed.

DISCUSSION

I. Standard of Review

We interpret the language of the Trust de novo because this case involves no extrinsic evidence. (Estate of Russell (1968) 69 Cal.2d 200, 213.) In interpreting a trust, we seek first to discern the “intention of the transferor as expressed in the instrument....” (§ 21102, subd. (a).) A trust should be interpreted so as to effectuate, where possible, the decedent’s “general scheme and dominant purpose....” (Estate of O’Connell (1972) 29 Cal.App.3d 526, 531.) “Once the testamentary scheme or general intention is discovered, the meaning of particular words and phrases is to be subordinated to this scheme, plan or dominant purpose....” (Id. at pp. 531–532.) In addition, separate parts of a will should be harmonized, with all parts construed “in relation to each other... to form a consistent whole.” (§ 21121.) “The words of an instrument are to receive an interpretation that will give every expression some effect....” (§ 21120.) The words “are to be given their ordinary and grammatical meaning....” (§ 21122.)

II. The Antilapse Statute

Generally, when a transferee “fails to survive the transferor of an at-death transfer, ” the gift lapses. (§ 21109, subd. (a).) But under the antilapse statute, when the deceased transferee is kindred of the transferor, the transferee’s lineal descendants take the gift “in the transferee’s place....” (§ 21110, subd. (a); id. at subd. (c).) “ ‘Antilapse statutes serve an extremely important function in the law, for they give effect to strong human impulses in some cases and, in others, to what are perceived as highly probable intentions. They prevent unintended disinheritance of one or more lines of descent, by presumptively creating an alternative or substitute gift in favor of the descendants of certain of the decedent’s predeceased relatives.’ [Citation.]” (Estate of Mooney (2008) 169 Cal.App.4th 654, 658–659.) If, however, “the instrument expresses a contrary intention or a substitute disposition, ” the gift to a kindred transferee lapses. (§ 21110, subd. (b).) For example, a survivorship requirement “constitutes a contrary intention.” (Ibid.)

Section 21110 provides:

To avoid the application of the antilapse statute, an exception must be clearly stated: “It is well settled that the California antilapse statute will not be applied where the testator has expressed, with sufficient clarity, a contrary intention.... ‘While that portion of the section dealing with legatees predeceasing the testator and leaving lineal descendants says nothing about the testator’s intention it is universally held that antilapse statutes are not automatically applied, but the testator’s intention must, if possible, be ascertained.’ Since a testator is presumed to know the law at the time of making the will, section 92 of the Probate Code [now section 21110] must be read into the will unless a contrary intent appears. [Citation.] The paramount question is whether such intent is plainly indicated [citation] or is shown with a reasonable degree of certainty.” (Estate of Salisbury (1978) 76 Cal.App.3d 635, 639 (Salisbury), quoting Estate of Carroll (1956) 138 Cal.App.2d 363, 365; see also Cal. Law Revision Com. com., Deering’s Ann. Prob. Code (2010) foll. § 21110, p. 763 [regarding substitute gifts, “care must be taken not to ascribe to the transferor too readily or too broadly an intention to override the antilapse statute, the purpose of which is to lessen the risk of serious oversight by the transferor”].)

The same rules of construction apply to a trust as to a will. (§ 21101.)

CH contends decedent expressed a contrary intention to application of the antilapse statute, such that the gift to Severa lapsed and devolved to it by operation of the second numbered clause in Part 10 of the declaration of trust. It argues that its entitlement to “all trust property not otherwise specifically and validly disposed of by this Part” expresses decedent’s “intention that the anti-lapse statute should not apply to his trust.” We disagree.

The lone case relied on by CH in support of its position is Salisbury, supra, but that case is readily distinguishable. In Salisbury, the appellants were the decedent’s two grandchildren and her residual beneficiaries. They contended that the decedent’s will clearly expressed her intent that the antilapse statute not apply to a devise of real property given to her brother. (Salisbury, supra, 76 Cal.Ap.3d 635, 639.) The will contained only two dispositive provisions: one that devised the real property to decedent’s brother, and one that left the entire residue of her real and personal property, “ ‘including all failed and lapsed gifts, ’ ” to the appellants. (Id. at p. 638, italics omitted.) They argued that, since the devise of real property to the decedent’s brother was the only other gift that she made, the language in the clause regarding “ ‘failed and lapsed gifts’ ” could only have referred to that devise. (Id. at p. 639.) The appellate court found the document clearly expressed the decedent’s intent that the antilapse statute should not apply to the gift and that the real property in question should go to appellants in the event that her brother predeceased her. (Id. at pp. 643–644.)

Here, the phrase “all trust property not otherwise specifically and validly disposed of” does not state a reasonably clear contrary intention to the application of the antilapse statute. Rather, it provides for the disposition of the trust assets, if any, not included in the disposition or deemed to be invalidly disposed. In particular, unlike the clause at issue in Salisbury, it does not reference lapsed gifts. Nor can it properly be read to pertain only to a specific beneficiary’s disposition. Its reference to gifts not “specifically and validly disposed of” can readily be harmonized with the antilapse statute. Simply put, a gift to a predeceased beneficiary is “specifically and validly disposed of” by the operation of section 21110. Thus, the trust document does not plainly indicate that decedent intended to avoid the operation of this statute.

As Knowles notes, the Trust can best be read as having granted CH a residuary interest in the Trust’s proceeds. Had either of decedent’s two friends predeceased him, their shares would not have been subject to the antilapse statute, because they are not kindred of decedent. Therefore, the clause pertaining to CH served an important purpose within the Trust as it provided for the alternative disposition of their shares in the event they predeceased decedent. We thus disagree with CH’s contention that the clause in question is not a residual clause. To read it as operating to defeat the antilapse statute as it pertains to Severa’s share is, in our view, contradictory to the purpose and spirit of section 21110. As appellate courts have stated, “the simple existence of a residual clause adequate to avoid intestacy is not sufficient to avoid the operation of the [antilapse] statute.” (Estate of Casey (1982) 128 Cal.App.3d 867, 873.) The failure of the Trust to mention Knowles and her brother does not alter this result, as it is established “that exclusion of unmentioned heirs or relatives from [testamentary] dispositions... does not sufficiently express or manifest an intent to arrest the operation of the antilapse law following a [beneficiary’s] death.” (Estate of Tolman (2010) 181 Cal.App.4th 1433, 1438.) In sum, “Since the statute provides a pattern of distribution in the case of a lapsed gift which is to be preferred over use of a residual clause or intestacy, some formality, in the nature of a clearly expressed intent, is necessary to avoid its operation.” (Estate of Casey, supra, at p.874.) The provision of the trust pertaining to CH does not contain any such “clearly expressed intent.”

“A residuary gift is a transfer of property that remains after all specific and general gifts have been satisfied.” (§ 21117, subd. (f).)

We note that treatises dealing with drafting wills and trusts command that lawyers be explicit on the desire of the transferor to avoid the antilapse consequences of the law. (See, e.g., Drafting California Revocable Trusts (Cont.Ed.Bar 4th ed. 2003) § 8.20, p. 425.)

DISPOSITION

The order is reversed.

We concur: Marchiano, P. J.Banke, J.

“(a) Subject to subdivision (b), if a transferee is dead when the instrument is executed, or fails or is treated as failing to survive the transferor or until a future time required by the instrument, the issue of the deceased transferee take in the transferee’s place in the manner provided in Section 240. A transferee under a class gift shall be a transferee for the purpose of this subdivision unless the transferee’s death occurred before the execution of the instrument and that fact was known to the transferor when the instrument was executed.

“(b) The issue of a deceased transferee do not take in the transferee’s place if the instrument expresses a contrary intention or a substitute disposition. A requirement that the initial transferee survive the transferor or survive for a specified period of time after the death of the transferor constitutes a contrary intention. A requirement that the initial transferee survive until a future time that is related to the probate of the transferor’s will or administration of the estate of the transferor constitutes a contrary intention.

“(c) As used in this section, ‘transferee’ means a person who is kindred of the transferor or kindred of a surviving, deceased, or former spouse of the transferor.”


Summaries of

Children's Hospital & Research Center Foundation v. Knowles

California Court of Appeals, First District, First Division
Jun 11, 2010
No. A126754 (Cal. Ct. App. Jun. 11, 2010)
Case details for

Children's Hospital & Research Center Foundation v. Knowles

Case Details

Full title:CHILDREN’S HOSPITAL & RESEARCH CENTER FOUNDATION, Plaintiff and…

Court:California Court of Appeals, First District, First Division

Date published: Jun 11, 2010

Citations

No. A126754 (Cal. Ct. App. Jun. 11, 2010)