Catch v. Phillips

• Decision Date: 15 July 1999
• Docket Number: No. H018483,H018483
• Citation: 86 Cal.Rptr.2d 584,73 Cal.App.4th 648
• Parties: , 99 Cal. Daily Op. Serv. 5707, 1999 Daily Journal D.A.R. 7269 Jack CATCH, Petitioner and Respondent, v. Allan PHILLIPS, Objector and Appellant.
• Court: California Court of Appeals Court of Appeals

Page 584

86 Cal.Rptr.2d 584

73 Cal.App.4th 648, 99 Cal. Daily Op. Serv. 5707,

1999 Daily Journal D.A.R. 7269

Jack CATCH, Petitioner and Respondent, v. Allan PHILLIPS, Objector and Appellant.

No. H018483.

Court of Appeal, Sixth District, California.

July 15, 1999.

As Modified July 27, 1999.

Certified for Partial Publication. ^*

Larry S. Dushkes, Woodland Hills, Attorney for Objector and Appellant.

Rutter, Hobbs & Davidoff and Terence S. Nunan and Geoffrey M. Gold, Los Angeles, Hoge, Fenton, Jones & Appel and Paul Breen, San Jose, Scott M. Tansey, Beverly Hills, Attorneys for Petitioner and Respondent.

ELIA, J.

In this case, we consider whether an exercise of a power of appointment was valid even though it was not exercised by will or codicil as required by the terms of the trust. (Prob.Code, §§ 630, 631.) ¹ The trial court determined that the exercise was invalid and granted respondent Jack Catch's motion for judgment on the pleadings. Allan Phillips appeals. For reasons we will explain, we affirm.

Facts and Procedural Background

J.D. Mayer and Esther Catch Mayer established the 1983 Mayer Trust. After J.D. Mayer died in 1992, the trust estate was divided into three separate trusts, known as Trust A, Trust B, and Trust C.

Esther could revoke Trust A during her lifetime. Esther was also granted a general testamentary power of appointment over Trust A. Specifically, the Trust provided, "After the death of the surviving Trustor, the Trustee shall distribute all or any part of the balance of Trust A to or for the benefit of such one or more persons or entities, including the estate of the surviving Trustor, on the terms and conditions, either outright or in Trust, as the surviving Trustor may appoint by a Will or Codicil thereto specifically referring to and exercising power of appointment." (Emphasis added.) If Esther did not exercise her power of appointment, then upon Esther's death, Trust A was distributable to Trust C.

In December 1996, Esther executed five documents. These were (1) a Second Amendment to the 1983 Mayer Trust appointing appellant Allan Phillips, Esther's nephew, as successor trustee, and ratifying all other aspects of the Mayer Trust; (2) a new will nominating Allan as her executor; (3) two durable power of attorneys, both of which named Allan as her attorney in fact; and (4) an undated and unwitnessed document titled "Exercise of General Testamentary Power of Appointment."

In the appointment document, Esther sought to exercise the power of appointment in favor of her nephew, appellant Allan Phillips. The document provided, in pertinent part, that "After my death, the Trustee shall distribute the balance of Trust A to ALLAN B. PHILLIPS...." ² It is undisputed that the document was not a will or codicil as required by the Mayer Trust.

In May 1997, Esther died at the age of 80 of liver cancer and metastic brain cancer. If Esther's exercise of the power of appointment was valid, then Allan would receive 100 percent of Trust A. If it was not, then the assets of Trust A would be distributed according to the terms of Trust C. Esther's nieces and nephews, including appellant, each hold a 25 percent share in Trust C. ³ Thus, if the assets of Trust A were distributed according to the terms of Trust C, then the four nieces and nephews would each receive 25 percent of Trust A.

After Esther died, Allan filed a verified petition for instructions in case number 1-97-PR-139702. A few weeks later, Allan filed a verified petition to ascertain beneficiaries. Allan's petitions sought to determine whether Esther's attempted exercise of her power of appointment was valid even though it was not exercised by will or codicil as required by the terms of the 1983 Mayer Trust.

Respondent Jack Catch is the trustee of Trust C. In August 1997, Catch filed a verified petition for declaratory relief. He also filed a petition for instructions. (Prob.Code, § 21320.) Among other things, Catch sought to oppose Allan's petitions, seek Allan's removal as trustee of Trust A, contest Esther's will, and invalidate the December 1996 amendment to the Mayer Trust. However, Catch first sought to determine whether his actions would constitute a contest under the terms of any "no contest" clause. ⁴ Bruce Phillips, Jeni Catch, and Neil Catch, who are Esther's other nieces and nephews, joined Catch's petition for declaratory relief.

On December 15, 1997, Judge Alden Danner granted Catch's petition in part and denied it in part. Judge Danner decided that Catch's opposition to Allan's petitions was not a contest because the court needed to resolve the uncertainty of whether the power of appointment was exercised. In issuing his ruling, Judge Danner noted that Allan's petitions acknowledged the uncertainty. Judge Danner reasoned that the policy supporting enforcement of no contest clauses--to avoid litigation--could not be promoted by enforcing the no contest clause given the acknowledged uncertainty.

Allan petitioned for a writ of mandate, seeking to overturn the trial court's ruling. We denied the writ, and the California Supreme Court also denied Allan's petition for review.

In March 1998, Catch filed a response and objections to Allan's petitions. Catch also filed a motion for judgment on the pleadings. On March 25, 1998, the trial court granted the motion for judgment on the pleadings and dismissed, without leave to amend, Allan's petition to ascertain beneficiaries. ⁵

This appeal ensued.

Discussion

I. Probate Code Sections 630, 631

Was Esther's exercise of her power of appointment valid even though the trust required that the power be exercised by will or codicil? After examining the pertinent provisions of the Probate Code, we conclude that the exercise was invalid.

We begin with established principles of statutory construction. In interpreting a statute, we ascertain the Legislature's intent so as to effectuate the purpose of the law. To determine the Legislature's intent, we first examine the words of the statute, making sure that we give the language its usual and ordinary meaning. If the language contains no ambiguity, then we presume the Legislature meant what it said. In this situation, the plain meaning of the statute governs. We must be sure to read the statutory words in context, considering the nature and purpose of the statutory enactment. We will not view sentences in isolation but will analyze them in light of the statutory scheme. (Lewis v. Superior Court (1999) 19 Cal.4th 1232, 1239, 82 Cal.Rptr.2d 85, 970 P.2d 872.)

Section 630 provides, in pertinent part, "(a) Except as otherwise provided in this part, if the creating instrument specifies requirements as to the manner, time, and conditions of the exercise of a power of appointment, the power can be exercised only by complying with those requirements."

Section 631 states, in pertinent part: "(a) Where an appointment does not satisfy the formal requirements specified in the creating instrument as provided in subdivision (a) of Section 630, the court may excuse compliance with the formal requirements and determine that exercise of the appointment was effective if both of the following requirements are satisfied: [p] (1) The appointment approximates the manner of appointment prescribed by the donor; [p] (2) The failure to satisfy the formal requirements does not defeat the accomplishment of a significant purpose of the donor...."

According to Catch, section 631 only applies to excuse the failure to comply with donor-imposed requirements that exceed requirements imposed by law. Under this view, section 631 cannot be used to save Esther's attempted exercise of the power of appointment because the appointing document, which was unsigned by any witnesses, did not satisfy the legal prerequisites for wills or codicils.

We agree with Catch. Our conclusion is based upon the Law Revision Commission Comments and Legislative History. Examination of these materials is necessary because section 631 is ambiguous. Specifically, section 631 potentially excuses compliance with "formal requirements specified in the creating instrument" as provided in section 630, subdivision (a). Section 631's use of the word "formal" creates some ambiguity because that word is not used under section 630. The words "specified in the creating instrument" also create ambiguity since the words could be construed to exclude legal requirements on the grounds that legal requirements for the appointment instrument are expressed only implicitly.

Because the statutory language does not unambiguously reveal whether section 631 may be invoked to excuse the failure to comply with requirements imposed by law for the appointing instrument, we turn elsewhere for guidance.

The Legislative History reveals that section 631 was enacted in 1992, as part of a bill relocating the power of appointment statutes, including section 630, from the Civil Code to the Probate Code. (Stats.1992, ch. 30 (AB 1722), § 22.) In its report, the California Law Revision Commission recommended that section 631 be enacted. (Relocation of Powers of Appointment Statute, 21 Cal.L.Revision Comm'n. Reports 91 (1991).) Consistent with that report, section 631, along with the Commission's comments, were enacted by the Legislature without change. (Stats.1992, ch. 30 (AB 1722), § 22.) Consequently, the 1992 Law Revision Commission Comments provide us with a valuable tool in ascertaining section 631's meaning. "Explanatory comments by a law revision commission are persuasive evidence of the intent of the Legislature in subsequently enacting its recommendations into law." (Brian W. v. Superior Court (1978) 20 Cal.3d 618, 623, 143 Cal.Rptr. 717, 574 P.2d 788; Van Arsdale v. Hollinger (1968) 68 Cal.2d 245, 249-250, 66 Cal.Rptr. 20, 437 P.2d 508.) "This is particularly true where the statute proposed by the commission is adopted by the Legislature without any change whatsoever and where the commission's comment is brief, because in...