Estate of Sharp

• Decision Date: 30 June 1971
• Court: California Court of Appeals Court of Appeals
• Parties: In re the ESTATE of Thomas E. SHARP, Deceased. SAN DIEGO HOSPITAL ASSOCIATION and Continental Illinois National Bank and Trust Company of Chicago, Objectors and Appellants, v. TITLE INSURANCE AND TRUST COMPANY, Executor and Respondent. Civ. 10178.

Page 816

95 Cal.Rptr. 816

18 Cal.App.3d 565

In re the ESTATE of Thomas E. SHARP, Deceased.

SAN DIEGO HOSPITAL ASSOCIATION and Continental Illinois National Bank and Trust Company of Chicago, Objectors and Appellants, v. TITLE INSURANCE AND TRUST COMPANY, Executor and Respondent.

Civ. 10178.

Court of Appeal, Fourth District, Division 1, California.

June 30, 1971.

[18 Cal.App.3d 568] Procopio, Cory, Hargreaves and Savitch and Gerald M. Dawson, San Diego, for appellant San Diego Hospital Association.

Ferguson, Ferguson & Newburn, La Jolla; Glenn, Wright, Jacobs & Schell, and Leroy A. Wright, San Diego, for appellant Continental Illinois National Bank and Trust Company of Chicago.

Scales, Patton, Ellsworth & Corbett and Leon W. Scales, San Diego, for executor and respondent.

OPINION

WHELAN, Associate Justice.

Thomas E. Sharp (testator), a man of wealth, died November 29, 1959, in his sixty-ninth year, in San Diego, his place of residence.

His typewritten will of 42 pages, dated October 12, 1955, with a typewritten codicil of 11 pages, dated April 24, 1958, was admitted to probate on December 18, 1959. Title Insurance and Trust Company (Title) was named and qualified as executor.

Administration proceedings were long and complicated. Some of the assets of not less than $18,000,000.00 subject to disposition by will, were held by four banks in New York, five banks in three Australian cities, several banks in San Diego, and banks in Chicago, Canada and London. Ancillary probate proceedings were had with regard to real property interests in Nevada and Texas. The dissolution of five wholly owned corporations was necessary.

The determination of death taxes involved the appraisal of the assets of and dealings with the trustees of 13 different Inter vivos trusts, including one in Canada.

The California inheritance tax was fixed at.$2,552,613.89. The federal estate tax liability was finally determined in September 1966 to be $10,249,185.17. That was the result of an agreement approved by joint congressional committee in a Tax Court proceeding to contest a delinquency assessment of $5,009,525.81 after the filing of a timely return showing an estimated tax of $11,171,402.35.

San Diego Hospital Association (Hospital), owner of the Donald L. Sharp Memorial Community Hospital, and Continental Illinois National Bank and Trust Company of Chicago (Bank) have separately appealed from a judgment determining the amount of Hospital's bequest under testator's will and codicil.

Bank, as trustee under trust #40680, created by the testator during his lifetime, is the residuary legatee under the will and codicil.

The primary issue on appeal is the proper method of computing the amount of Hospital's bequest.

Both will and codicil were carefully drafted by the testator. The will, in article seven, section 3, provided for a bequest to Hospital as follows:

'I hereby give, devise and bequeath to the SAN DIEGO HOSPITAL ASSOCIATION * * * FIFTY THOUSAND DOLLARS ($50,000.00), provided that the Directors (thereof) will use the said bequest as a portion of the Building Fund for structural additions to the existing hospital, or for the erection of additional buildings (such as a dormitory for nurses, or a convalescent unit) on the grounds of, or adjacent to the existing (hospital).'

That bequest was cancelled and another made in its stead by the following provisions of the codicil:

'I hereby cancel and annul each and all of the sections, in their entirety, of ARTICLE SEVEN * * * of (my) Will * * * and in lieu of such cancelled and annulled sections the following sections are hereby substituted and hereafter shall be of full force and effect:

'Section (1): * * *

'* * *

'I hereby give and bequeath to the said SAN DIEGO HOSPITAL ASSOCIATION * * * the following:

'Such an amount as shall be equal to one-tenth (1/10th) of the value of that portion of my estate which shall remain prior to the deduction of any and all State and/or Federal death or inheritance taxes, but after the deduction of Probate and Administration expenses of my said estate, including proper debts, attorneys' fees, executors' fees, accountants' fees, appraisers' fees, court costs, etc.

'For the purpose of determining what constitutes the aforementioned one-tenth (1/10th) of the value of the said portion of my said estate, the following shall be deemed to be a part of, and shall be included in the said one-tenth (1/10th) of the portion of my estate referred to in the paragraph immediately preceding:

'(D) The appraised value of any and all real property bequeathed by me to the said SAN DIEGO HOSPITAL ASSOCIATION under my Last Will and Testament and/or under any Codicil thereto; and

'(E) The appraised value of the Corpus of Trust No. 34365 * * * if the said Trust * * * shall be in existence at the time of my death and if the Trust Instrument, at the time of my death, provides for the distribution of the Corpus of the said Trust, upon its termination, to the said SAN DIEGO HOSPITAL ASSOCIATION; and

'(F) The appraised value of the corpus of such other Trusts (if any) as shall have been created by me, and shall be in existence at the time of my death, and the Trust Estates of which will be distributed to the SAN DIEGO HOSPITAL ASSOCIATION upon the termination of such Trust or Trusts.'

This court has determined that the bequest to Hospital was a general pecuniary legacy. ¹ The method of determining the amount thereof is discussed hereafter.

Hospital finds fault with the decision of the lower court insofar as the lower court held (1) that the value of the corpora of the revocable but unrevoked Inter vivos trusts created by the testator was not to be a part of the value of the estate of which Hospital was to receive one-tenth; (2) that the provision in the codicil that within Hospital's one-tenth should be the appraised value of the corpus of Inter vivos trust #34365, of which Hospital was remainderman, meant the full value of the corpus rather than the present value of the remainder interest; (3) that the appraised value of a particular asset, the Monte Vista Ranch (the ranch), for purposes of sale, was the correct value to use in computing the total value of the estate for the purpose of Hospital's bequest; (4) that real property taxes accruing after testator's death were deductible from the total value of the estate in determining the amount of Hospital's bequest.

Hospital also takes issue with the making of findings by the trial court.

Bank finds fault with the trial court's decision insofar as it held (1) that $1,000,000.00 paid to Hospital in a preliminary distribution was to be applied first to payment of interest on the legacy, and the balance on account of principal; (2) that certain expenses were not deductible from the total value of the estate in determining the amount of Hospital's legacy.

Without reciting in detail the findings made by the trial court, they generally expressed interpretations of the will and applications of law to undisputed facts contrary to the contentions made respectively by Hospital and Bank on appeal.

Testator was survived by a brother; a sister; the issue of two predeceased brothers; a daughter, Madeleine Sharp Healy (Madeleine), her issue; the widow of his son, Donald, and their daughter Diane.

In his will, testator referred to his brother and sister, their descendants and the descendants of his predeceased brothers as the 'Australian family'; to his own descendants and his son's widow as the 'American family.'

Donald was reported killed during World War II, in the shooting down of an American bomber over Germany.

In a drive to raise funds for a hospital, testator was solicited for a gift. He deposited one-half million dollars in a trust to be paid to Hospital when a like amount had been raised from other sources. It may be inferred the trust agreement required that the name Donald L. Sharp be a part of the name of Hospital and that a plaque in memory of Donald and commemorating the gift be placed in the hospital lobby, the wording and form to be that of the testator.

Thereafter testator, during his lifetime, made various gifts to Hospital, of $44,000.00 in 1956; $125.00 in 1957; and $60,409.96 in 1958.

From the will it appears that the possibility his son Donald might still be alive was ever present in the mind of the testator. The fingerprints of the son were preserved so there could be no successful imposture of the son. If the son were alive and trust #40680 were not in existence, the son was to receive one-half of the residue in one contingency, and two-thirds of it in another, and if there were no other descendant of the testator living and no member of the Australian family living, the son was to take all the residue; in a parallel situation, if it were the daughter rather than the son who survived, she would take all, and the Australian family would take all in default of all living lawful descendants of the testator.

The chief objects of the testator's concern were those to whom he was related in blood. Included therein were children and other descendants of a deceased brother, the names and whereabouts of whom were unknown to him when he wrote his will.

Hospital was named as a contingent residuary of his estate but only in the event that trust #40680 were not in existence and that there were no living lawful descendant of the testator nor any living member of the Australian family comprising his brothers and sister, whether living or dead, and their lawful descendants.

We are not concerned, of course, with what the testator would have been likely to do based upon his probable preferences in the way of beneficiaries. We are solely concerned with his intention as actually expressed in the language used in the will.

The crux of the controversy is what was intended by the testator when, with regard to the legacy to Hospital, in the codicil he stated it should be 'such an amount as shall be equal to one-tenth (1/1...