Bankers Trust Co. v. Garver

• Decision Date: 31 July 1936
• Docket Number: 43156.
• Citation: 268 N.W. 568,222 Iowa 196
• Parties: BANKERS TRUST CO. v. GARVER et al.
• Court: Iowa Supreme Court

268 N.W. 568

222 Iowa 196

BANKERS TRUST CO. v. GARVER et al.

No. 43156.

Supreme Court of Iowa.

July 31, 1936

Appeal from District Court, Polk County; F. S. Shankland, Judge.

Appeal from judgment dismissing plaintiff's petition.

Reversed and remanded.

Gamble, Read & Howland, of Des Moines, for appellant.

Parrish, Guthrie, Watters & Colflesh, of Des Moines, for appellees.

STIGER, Justice.

The last will and testament of John A. Garver, Sr., was admitted to probate on December 17, 1915, in the district court of Polk county, Iowa.

Item No. 4 of said will reads as follows:

" Item No. 4. I hereby devise and bequeath the remainder of my property, real, personal, mixed and any kind whatsoever to C. W. Pitcairn, Ella G. Pitcairn and B. S. Walker, in trust, however, and for the purposes herein mentioned."

It is this trust property referred to in item No. 4 that is involved in this suit and the terms of the trust are found in item No. 8 of the will read in conjunction with item No. 7.

Item No. 8 reads as follows:

" Item No. 8. It is my will and I direct that said Trustees hold the remainder of my property in trust for the use and purpose to-wit; from the income they to pay all taxes, costs and expenses pertaining to the care and settlement of my estate, the balance of the income they divide equally between said children named in Item Seven. To use and have the same discretion in holding in trust said property or in equally dividing and distributing among said four children or their lawful issue said fund the same as provided for the disposition of the funds in Item Seven. The income from said fund and the fund itself to be used, treated and disposed of the same as the fund in Item Seven. Five years after the death of my wife, said Trustees may close up this fund equally as provided for closing up funds in Item Seven of this my will, but because said Trustees may decide to close up funds in Item Seven do not preclude their continuing this trust under Item Eight, if in their discretion they think it wise to do so, only continuing to distribute the income and hold the trust intact."

Item No. 7 reads as follows:

" Item No. 7. It is my will and I hereby direct that my said Trustees shall set apart four funds of Twenty-Thousand dollars each, one fund being for Ella G. Pitcairn, one for Emma G. Sperry, one for Laura G. Wright, one for John A Garver, Jr., said Trustees to have full discretion in the management of each and all of said funds, to use their best judgment as to whether it would at any time be a safe, wise and prudent thing to pay over to either or any one, or all, any parts or all said fund. Should said Trustees in their discretion think best, they may pay over the said fund or any part, but should said Trustees think it an unwise and imprudent thing to pay any child any part or all said fund they must not do it. Said Trustees shall invest each said fund as in their judgment seems best and to pay to said children the income produced from the fund annually. Should either of said four children die leaving lawful issue of their body, said Trustees shall pay the income from that respective fund to the said lawful issue until such time as the youngest reaches twenty-one years, when, if in the judgment of said Trustees they deem it unwise to turn over said fund to said lawful issue upon the youngest reaching twenty-one years they must not do it, but the Trustees shall pay and continue to pay the income during their life and upon their death the fund to go to their lawful issue, if no lawful issue, to revert to my remainder. Said Trustees may after the expiration of five years from the death of my wife, close up these said trust funds, either by paying each child its said fund or investing said fund for his or her benefit during life, then to his or her children."

The Bankers Trust Company, plaintiff herein, recovered a judgment against defendant John A. Garver, Jr., one of the beneficiaries of the trust, May 22, 1933.

The plaintiff states in its petition that the action is brought under section 11815, 1931 Code, to subject the interest of John A. Garver, Jr., in the estate to the judgment and to establish a lien thereon; that said Garver, Jr., has no other property against which execution could be issued to enforce payment of the judgment. Plaintiff further alleges in its petition that the trust purporting to have been created by and arising under the last will and testament of John A. Garver, Sr., deceased, is and always has been void, unlawful, and of no force nor effect, for the reason that the said trust is so ambiguous, conflicting, and confusing that the same is incapable of interpretation or administration; and for the further reason that the disposition of the " remainder" of the estate by items No. 4, No. 7, and No. 8 of the will is in violation of, and contrary to, section 10127, Code of Iowa 1931 (formerly section 2901, Code of 1897), in that such disposition suspends, or purports to suspend, the absolute power of control of such property for a longer perriod of time than permitted by said statute; and for the further reason that it is impossible to ascertain the true intent and purpose of the testator under the terms and provisions of the trust. Plaintiff further alleges that no fee or title to the said property asserted to have passed to the named trustees by virtue of the provisions of the last will and testament of Garver, Sr., deceased, did in fact pass or become vested, and that no trust now, or ever has, in fact existed as to the purported trust estate, and that, on the contrary, the heirs at law of the said John A. Garver, Sr., deceased, became the owners of all the property purporting to have passed into said trust estate according to the provisions of the laws of the state of Iowa, respecting the descent of property, and that the defendant Garver, Jr., personally is, and at all times has been, one of such heirs at law, and that his interest in the said property asserted to constitute the purported trust estate is subject to the lien of the judgment held by plaintiff against Garver, Jr.; that, irrespective of whether said trust lawfully arose, the said Garver, Jr., is, under the terms and provisions of the said will, the beneficial owner of an undivided one-fourth thereof, and said interest should as a matter of equity and law be subjected to the lien of plaintiff's judgment; that by the terms of said will the said trust may be terminated upon the conditions named therein.

The plaintiff further alleges that, unless aided by a discovery under sections 11815 to 11818, inclusive, Code of Iowa 1931, it will or may be remediless in the premises. Plaintiff prays that the trust be held null and void in so far as it is purported to effect the interest of defendant Garver, Jr., in his personal capacity in the properties asserted to be included in the trust estate of which the trustees, defendants, assert ownership and right of possession; that plaintiff's judgment be established as a lien on the undivided interests of defendant John A. Garver, Jr., in the real estate or interests included in the trust, and that such interest be sold in so far as is necessary for the purpose of realizing sufficient amount to pay such judgment with interest, attorney fees, and costs; that said judgment be so established and the interests sold irrespective of whether said trust shall be declared and held null and void.

The appellees interpose three defenses to the petition:

(1) Denial that the will violates the statute of perpetuities.

(2) The action is barred by statutes of limitation, namely, sections 11882, 11007, and 10378 of the Code.

(3) Denial that plaintiff as a judgment creditor of a beneficiary under a will has any standing in court to either have the will construed or set aside.

The lower court held plaintiff was not entitled to the relief prayed for and dismissed its petition.

Plaintiff appeals from the judgment.

I.

We will first determine whether or not the trust offends the statute against perpetuities, section 10127, Code of 1931.

Appellees contend that the period of suspension of absolute power over the trust property and the beneficiaries of the trust are found in the following clause in item No. 8 of the will: " To use and have the same discretion in holding in trust said property or in equally dividing and distributing among said four children or their lawful issue said fund the same as provided for the disposition of the funds in Item Seven."

That is, appellees claim that the trust concerns only the four children of the testator and their lawful issue. This is an incorrect interpretation of item No. 8. The above clause must be read in conjunction with the sentence which follows, which reads as follows: " The income from said fund and the fund itself to be used, treated and disposed of the same as the fund in Item Seven."

We turn to item No. 7 for the solution of this question.

Item No. 7 gives the trustees power to pay to any child all or any part or none of the respective funds as in the exercise of their discretion they may deem wise and prudent. Upon the death of a child, the income from the fund shall be paid to his lawful issue, if any, until the youngest reaches the age of twenty-one years, at which time the trustees may or may not, in their discretion, pay the fund to such issue. If they do not, they shall pay the income to them during their natural life, and upon their death the fund shall go to their lawful issue, and, if none, to the testator's remainder.

Is the estate in remainder of the property passing in trust under the will vested or contingent?

In the case of Horner v. Haase, 177 Iowa 115, on page 119 158 N.W. 548, 549, the court states: " A remainder is contingent...