Bank of California v. Ager, 28038.

• Decision Date: 18 January 1941
• Docket Number: 28038.
• Citation: 7 Wn.2d 179,109 P.2d 548
• Parties: BANK OF CALIFORNIA v. AGER et al.
• Court: Washington Supreme Court

109 P.2d 548

7 Wn.2d 179

BANK OF CALIFORNIA v. AGER et al.

No. 28038.

Supreme Court of Washington

January 18, 1941

Department 2.

Action by the Bank of California, N. A., a national banking association, as trustee under the last will and testament of Edward C. Finch, deceased, against Ilene Grieb Ager and another, as executors of the estate of Gladys Grieb Finch deceased, and others, to ascertain to whom excess income of testamentary trust should be paid. From the decree, plaintiff and others appeal, and named defendant and another cross-appeal.

Reversed on the appeal and affirmed on the cross-appeals.

Appeal from Superior Court, Pierce County; E. D. Hodge, judge.

Bogle Bogle & Gates and Shorts & Hartson, all of Seattle, for appellants.

G. E Peterson, of Tacoma, and Arthur C. Bannon, of Seattle, for respondent.

MILLARD Justice.

Prior to the execution of his last will August 19, 1932, Edward C. Finch, who died September 25, 1933, was divorced from his first wife. There were born of that marriage three children, viz., Elizabeth Finch Abrams, Louise Finch Travers and Margaret Finch. November 10, 1928, Finch married Gladys Grieb, who was his wife at the time of his death. No children were born of this second marriage. Finch's will, in which the Bank of California, N. A., was named executor and trustee, was probated in King county October 3, 1933. By decree of September 5, 1935, the trust estate, which was the separate property of Finch, was distributed to the bank as trustee.

Gladys Grieb Finch, second wife of Edward C. Finch, died April 28, 1938.

Finch bequeathed: $1 to his daughter, Margaret, $1,000 to his sister, $500 to each of the three daughters of his sister and certain personalty to his daughters, Elizabeth and Louise. He bequeathed to his wife, Gladys Grieb Finch, $1,000 payable able to her as soon as possible after the testator's death. He directed that, within one month after his death, and monthly thereafter until the residue of his estate was transferred to the trustee of the estate, the executor pay to his wife $500 for her maintenance and support during such period. The monthly payments of $500 were to be from the income of the estate, but if the income was not sufficient the payments were to be made out of the corpus of the estate. Finch bequeathed to his brother, H. K. Finch, $100 monthly during the period subsequent to one month after the death of the testator until the estate was transferred by the executor to the trustee.

Article XIII of the will recites that on November 8, 1928 (which was two days prior to the marriage of Finch to Gladys Grieb), Gladys Grieb and Finch entered into an antenuptial agreement, 'and the provisions in this my Last Will and Testament for the establishment of the trust and the payment to her of amounts out of the corpus and/or income of the trust estate, are all made by me in pursuance of and for the purpose of carrying out, with possible additions for her benefit, my obligations under said antenuptial agreement, and are intended to be in full satisfaction of all my obligations under said antenuptial agreement.'

Article XIV, under which all of the residue of Finch's estate is devised and bequeathed to the Bank of California, National Association, as trustee, is subdivided into paragraphs 1 to 37, inclusive. Paragraph 2 directs the trustee to pay to Gladys Grieb Finch 'for and during the term of her natural life' $500 monthly and such payments are defined as 'regular payments.'

Paragraphs 3 and 5 provide that, in the event Mrs. Finch requires, during the probate or trust periods, as a result of serious illness, medical, surgical, nursing or hospital care the cost of which in addition to her normal living costs and expenses requires disbursement on her part in excess of the 'regular payments,' the trustee shall pay to her such additional amounts as, 'in the sole discretion of the Trustee, are necessary and proper to enable my said wife to meet and pay such additional costs and expenses.'

Paragraphs 4 and 6 provide that in the event of the death of Mrs. Finch during the probate or trust periods, respectively, the executor or trustee, as the case may be, shall pay all such 'unpaid costs and expenses of the last sickness, funeral' and interment of Mrs. Finch as in the sole discretion of the trustee are fair, reasonable and proper.

Paragraph 7 defines payments made by the trustee to the testator's wife under the provisions of paragraphs 3 and 5 as 'emergency payments.'

Paragraph 8 makes each calendar year an 'income period' for accounting purposes. That paragraph further provides that on January 15 of each year the trustee shall 'compute the amount of the net income of the trust estate during the preceding income period.'

Under paragraph 9 the 'regular payments' to Mrs. Finch under paragraph 2 are made a first charge against the trust estate 'prior and superior to the rights of any other beneficiary.'

[7 Wn.2d 183] Paragraph 10 defines as 'excess income' the net income, if any, remaining after payment to Mrs. Finch of 'regular payments' and 'emergency payments,' and directs the trustee to pay such excess income, if any, to the beneficiaries entitled to receive the same in monthly installments as provided in paragraph 18.

Paragraph 11 provides that out of the 'excess income' for any 'income period' the trustee shall pay (first) to the testator's brother, H. K. Finch, 'if he be then alive,' $1200, and if such 'excess income' be less than $1200, all of such 'excess income' shall be paid to H. K. Finch, the testator's brother; and shall pay (second) the remainder, if any, if such remainder does not exceed twice the amount paid to Mrs. Finch as 'regular payments' and/or 'emergency payments' during such 'income period,' in equal shares to his daughters, Elizabeth Finch Abrams and Louise Finch Travers. If such remainder exceeds twice the amount paid to Mrs. Finch as 'regular payments' and/or 'emergency payments' during such 'income period,' the trustee shall pay the remainder in equal shares to Elizabeth Finch Abrams, Louise Finch Travers and Mrs. Finch. Paragraph 11 also provides that if Mrs. Finch remarried, her right to receive 'excess income' for any 'income period' shall cease from and after her remarriage; and thenceforth any 'excess income' over and above that paid to the testator's brother, H. K. Finch, shall be paid in equal shares to the testator's daughters, Elizabeth Finch Abrams and Louise Finch Travers.

Paragraph 12 provides that payments to the testator's brother, H. K. Finch, 'shall cease and terminate immediately upon his death.'

Paragraph 13, which reads as follows, provides that after the death of the last survivor of Mrs. Finch and the testator's brother all the net income of the trust estate, computed as in paragraph 8, shall be paid by the trustee in equal shares to the testator's two daughters, Elizabeth and Louise: 'From and after the death of the last survivor of my said wife and my said brother, all the net income of the trust estate computed as aforesaid shall be by the Trustee paid as follows: One-half thereof to my said daughter, Elizabeth, and onehalf thereof to my said daughter, Louise.'

Paragraph 14 provides that from and after the death of his daughter, Elizabeth, the payments of net income which she would be entitled to receive if living 'shall be paid per stirpes to her descendants.'

From and after the death of the testator's daughter, Louise, the payments of net income which she would be entitled to receive if living, are to be paid, under the provisions of paragraph 15, per stirpes to the descendants of Louise.

Paragraphs 16 and 17 provide that in the event of the death of either of his two daughters (Louise and Elizabeth), and all her descendants, during the life of the trust, then the net income payable to her shall be paid to the testator's other daughter (Louise or Elizabeth, as the case may be), 'for and during the term of her natural life, and thereafter per stirpes to the descendants of my said daughter * * *.'

Paragraph 18, reading as follows, provides that when, on January 15 of any year, the amount of the 'excess income' for any 'income period' to be paid to any beneficiary has been determined, such amount shall be paid during such year to such beneficiary in twelve equal monthly installments: 'When, on January 15 of any year, the amount of the 'excess income' for any 'income period' to be paid to any beneficiary has been determined, such amount shall be paid during such year to such beneficiary in twelve (12) equal monthly installments as near as may be.'

Paragraph 19, which reads as follows, provides that the trust shall terminate on the date when there shall die the last survivor of Mrs. Finch, the testator's brother, the two daughters (Elizabeth and Louise), and the children of his daughters born prior to the date of the death of the testator, and names as distributees the then living descendants of each of his two children: 'The final distribution date of the trust estate shall be that date on which shall occur the death of the last survivor of my said wife, my said brother my said daughters, Elizabeth and Louise, and the children of my said daughters born prior to my death. As soon as possible after said final distribution date, the Trustee shall divide the trust estate, including any accumulated net income, into as many equal parts as there may be then living children of my said daughters born after my death, and deceased children of my said daughters (whether born Before or after my death) leaving descendants them surviving and then living. Forthwith upon making said division, the Trustee shall pay one of such parts to each such then living child of my said daughters, and one of...