Estate of Wood
| Decision Date | 11 June 1973 |
| Citation | 108 Cal.Rptr. 522,32 Cal.App.3d 862 |
| Court | California Court of Appeals Court of Appeals |
| Parties | , 60 A.L.R.3d 123 In re ESTATE of Willard S. WOOD, Deceased. SOUTHERN CALIFORNIA FIRST NATIONAL BANK et al., Petitioners and Respondents, v. Morton T. SWARTH et al., Objectors and Appellants. Civ. 11389. |
Gray, Cary, Ames & Frye, John M. Cranston, Timothy v. McFarland and Browning E. Marean, San Diego, for objector and appellant Morton T. Swarth.
Luce, Forward, Hamilton & Scripps and Michael Ibs Gonzalez, San Diego, for appellants Mrs. Arthur (Judy) Mathews and Thomas Peake.
Colin Peters, Palo Alto, for appellants Alan Peake Mathews, Arthur Joseph Mathews, Michael Cahlan Mathews, Cheryl Elizabeth Peake and Meredith Louise Peake.
Scales, Patton, Ellsworth & Corbett and Peter K. Ellsworth, San Diego, for appellant Mary Grinnell.
Haskins, Lewis, Nugent & Newnham, Gerald J. Lewis and Stephen L. Newnham, San Diego, for respondent Genevieve L. Knight.
There are four separate appeals from a judgment directing Southern California First National Bank, as trustee of trusts created by the decree of distribution in the Estate of Willard S. Wood, to distribute the assets of one of the trusts in accordance with an appointment made by Florence Wood, widow of Willard S. Wood and donee of a power to appoint those assets.
The controversy arises out of the question whether the power of appointment given Florence Wood by her husband's will was exercised, and, if so, in whose favor it was exercised.
The will of Willard S. Wood, executed August 18, 1964 and admitted to probate after his death on May 27, 1967, disposed of all the community property of the spouses. Mrs. Wood had elected to take under the will and waived all claims to any share of the community property.
The will directed that the residue of his estate be divided into two trusts, Trust 'A' and Trust 'B.' Mrs. Wood was named life beneficiary under both trusts and was given a general inter vivos power of appointment over Trust 'A' as follows:
'Anything herein to the contrary notwithstanding, if my wife survives me, then she shall have the absolute power exercisable only by a written instrument other than a will delivered to the Trustee during her lifetime to appoint any part of the principal and any undistributed income of Trust 'A' in favor of herself, her estate or any person.' (Emphasis added.) 1
The will contained the following additional provisions:
'If there should be a failure of disposition of all or any portion of Trust 'A' either in connection with the exercise or as a result of the non-exercise of the power of appointment, then upon my wife's death all of Trust 'A' not so disposed of shall be added to Trust 'B,' to be held, administered and distributed as a part of Trust 'B."
Upon the death of Mrs. Wood Trust 'B' was to be distributed as follows: 1/2 thereof in equal shares to Thomas Peake and Mrs. Arthur (Judy) Mathews; 1/4 to Willard F. Grinnell, Stuart W. Grinnell, Mary Elizabeth Grinnell and Richard Grinnell, children of Mrs. Joseph Grinnell; and 1/4 to George Selwyn Swarth and Morton Themmen Swarth.
The decree of distribution, made and entered March 10, 1969, quoted the language of the will verbatim and ordered distribution of all the estate to the named trustee, except for a specific devise of books valued at $100.
There was filed with the Trustee on December 12, 1967 an instrument dated November 6, 1967, signed by Mrs. Wood, which contained the following language:
'With the intention of exercising said power of appointment given me by the Will of my late husband, WILLARD S. WOOD, I devise and bequeath all of the property over which I have the right of appointment under the Will of my said husband to the following persons in the following proportions upon my death:
'(a) One-third to the children of THOMAS PEAKE, 20 Vista Del Mar, Orinda, California 94563.
'(b) One-third to the children of Mrs. Judy Mathews, 15 Cordova Court, Portola Valley, California.
'(c) One-third to Morton T. Swarth, 6850 Snake Road, Oakland, California.'
There was also filed with the trustee during the lifetime of Mrs. Wood an instrument signed by her, dated April 30, 1969, by which she declared she did thereby:
'. . . exercise said right and power of appointment as follows:
'1. I hereby direct that upon my decease one-half of the trust estate of Trust A go and be distributed to MORTON T. SWARTH, my husband's nephew, or if he should fail to survive me such share shall go and be distributed by right of representation to his issue living on the date of my death.
'2. I hereby direct that upon my decease one-half of the trust estate of Trust A go and be distributed to MARY ELIZABETH GRINNEL (sic) (MOLLY), or if she should fail to survive me such share shall go and be distributed by right of representation to her issue living on the date of my death, or if she leaves no issue surviving me, in equal shares to WILLARD F. GRINNELL, STUART GRINNELL, and RICHARD GRINNELL, or if any of them should fail to survive me his issue shall take the share of such decedent by right of representation.
Mrs. Wood signed the following instruments also: an instrument, witnessed on October 28, 1970, and received by the trustee on December 28, 1970, which stated:
'I hereby revoke any power of appointment that I may have exercised under my husband's Will dated August 18, 1964, probate number 85739 and exercise all powers of appointment that I may have in favor of GENEVIEVE KNIGHT.';
and an instrument dated November 3, 1970, in which she declared she did thereby:
'. . . exercise said right and power of appointment as follows:
'1. I hereby direct that upon my decease the trust estate of Trust A go and be distributed to GENEVIEVE KNIGHT, my companion.
The separate appeals of persons having three mutually conflicting claims have been consolidated. The appeals are from a judgment declaring that Genevieve L. Knight should receive the remainder of the trust.
The claimants who have appealed are: (1) Morton T. Swarth; (2) Alan Peake Mathews, Arthur Joseph Mathews, Michael Cahlan Mathews, Cheryl Elizabeth Peake and Meredith Louise Peake, Mrs. Arthur (Judy) Mathews and Thomas Peake; (3) Mary Grinnell.
Alan Peake Mathews, Arthur Joseph Mathews, Michael Cahlan Mathews, (children of Judy Mathews) and Cheryl Elizabeth Peake and Meredith Louise Peake (children of Thomas Peake), who with Morton T. Swarth were appointees under the 1967 instrument, state this position: The 1967 instrument was an irrevocable exercise of the power of appointment because the donee did not reserve to herself in that instrument the power to revoke; and the later attempts to exercise the power were ineffective because Mrs. Wood, being under conservatorship, lacked the legal capacity to exercise the power.
Morton T. Swarth, one of the appointees named in the 1967 instrument, makes the same contentions as the Mathews and Peake claimants; and contends that the 1970 appointing instrument was also ineffective because the instrument was not delivered to the trustee during Mrs. Wood's lifetime and when delivered the delivery was not by Mrs. Wood but by the man who had been acting as her attorney at the time of her death and whose authority ended with her death.
Mary Grinnell, one of the appointees named in the 1969 instrument, takes this position: All three of the three appointing instruments were revocable, the conservatorship did not impair the ability of Mrs. Wood to make an appointment effective only at her death; but the appointing instrument of 1970 was ineffective because not delivered to the trustee until after Mrs. Wood's death.
Mrs. Arthur (Judy) Mathews and Thomas Peake, remainder beneficiaries of 1/2 of the assets of Trust B under the will of Willard S. Wood, and so takers of 1/2 of the assets of Trust A in default of the exercise of the power of appointment, state this position: Mrs. Wood had capacity to and did revoke the two prior exercises of the power by her instrument of October 28, 1970, although that instrument was not received by the trustees until after Mrs. Wood's death; however, the instrument of November 6, 1970 was ineffective as an exercise of the power because it was not delivered to the trustee until after the death of Mrs. Wood; consequently the power remained unexercised at the death of Mrs. Wood.
A determination whether the 1967 instrument effected a present and irrevocable transfer calls for a consideration of the state of the then existing law with regard to the revocability of an appointment made under a power.
The writers of the Restatement of the Law of Property declared the following:
'An appointment may be revoked by the donee if, and only if,
'(a) the power is general, or, the power being special, the donor does not manifest an intent that appointments shall be irrevocable; and
'(b) the donee manifests an intent to reserve to himself the power of revocation.' (§ 366, p. 2026.)
In 1969 the California Legislature adopted Civil Code section 1392.1, subdivision (b), effective July 1, 1970, which declares:
'Unless made expressly irrevocable by the creating instrument or the instrument of exercise, an exercise of a power of appointment is revocable if the power to revoke exists pursuant to Section 2280 or so long as the interest to the appointive property, whether present or future, has not been transferred or become distributable pursuant to such appointment.'
That legislation can have application only as to the one appointment made after the effective date of section 1392.1.
The Restatement rule is traceable to the decision of Heli v. Bond, decided by the House of Lords in 1717, which was...
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