Estey v. Commerce Trust Co.

• Decision Date: 19 October 1933
• Docket Number: No. 30839.,30839.
• Citation: 64 S.W.2d 608
• Parties: HELEN S. ESTEY ET AL., Appellants, v. COMMERCE TRUST COMPANY, Trustee under will of JAMES W. WEED ET AL.
• Court: Missouri Supreme Court

64 S.W.2d 608

HELEN S. ESTEY ET AL., Appellants, v. COMMERCE TRUST COMPANY, Trustee under will of JAMES W. WEED ET AL.

No. 30839.

Supreme Court of Missouri, Division 1.

October 19, 1933.^*

Appeal from Jackson Circuit Court. — Hon. Brown Harris, Judge.

REVERSED AND REMANDED.

Omar E. Robinson for appellants.

(1) Under the law and evidence, the life tenants were entitled to the income from the trust estate from the date of the death of the testator. "The American Law Relating to Income and Principal" by Edwin A. Hawes, Jr., Chap. V; 40 Cyc. 1882; 28 R.C.L. 355; Cushing v. Burrell, 137 Mass. 21, 70 A.L.R. 647; Levering v. Minot, 9 Cush. 151; Will of Leitsch, 185 Wis. 257; Bradford, Admr., v. Fidelity Trust Co., 12 Del. Ch. 56; Woerner, Administration (3 Ed.) sec. 458, p. 573; Loring, Trustees, p. 172; Lewin on Trusts and Trustees (11 Ed.) p. 333; Underhill, Trusts, p. 233 et seq.; Perry on Trusts and Trustees (7 Ed.) sec. 550; Bank of Niagara v. Talbot, 110 App. Div. 519, 96 N.Y. Supp. 976; New Jersey Title, Guarantee & Trust Co. v. Smith, 90 N.H. Eq. 386, 108 Atl. 16; Wallace's Will, 106 Misc. 305, 175 N.Y. Supp. 730; Ayer v. Ayer, 128 Mass. 575; R.S. 1929, sec. 238. (2) The courts favor a life tenant when he is a near relative and seems to have been the main object of the testator's bounty. Burt v. Gill, 89 Md. 145; Williams v. Bradley, 3 Allen, 270; In re Catron's Estate, 82 Mo. App. 416; Asbury v. Shain, 191 Mo. App. 667; "The American Law Relating to Income and Principal" by Edwin A. Hawes, Jr., chap. V, p. 59. (3) The cardinal rule in the construction of wills is to ascertain testator's intention, and in order to ascertain that intention, the conditions which surrounded him at the time of the execution of the will must be considered. In re Catron's Estate, 82 Mo. 416; Bond v. Riley, 296 S.W. 404; Doneghy v. Robinson, 210 S.W. 658; Settle v. Shafer, 229 Mo. 568; Coleman v. Haworth, 8 S.W. (2d) 931; In re McClelland's Estate, 257 S.W. 808; Duval v. Duval, 291 S.W. 488, 316 Mo. 626; Barnhardt v. McGres, 5 S.W. (2d) 77, 319 Mo. 680; Mo. Baptist Sanitarium v. McCune, 87 S.W. 93, 112 Mo. App. 332. (4) The words "devise and bequeath" used by the testator in leaving the residue of his property to his daughter and daughter-in-law, in trust, are not words of futurity, but on the contrary, they import a present vesting of the legal title in the trustee, immediately upon the death of the testator. Trautz v. Lemp, 46 S.W. (2d) 135; Nichols v. Emery, 109 Cal. 330, 41 Pac. 1089; Lewis v. Curnutt, 130 Iowa, 429, 106 N.W. 914; Marshall v. Myers, 96 Mo. App. 643. (5) The judgment of the court is not responsive to the evidence, the pleadings, nor to the findings of the court; is contradictory thereto, and inconsistent therewith, 33 C.J., pp. 1169, 1173-4, secs. 106-7.

James E. Goodrich, Wm. Bush and Hugh M. Hiller for respondents.

(1) Where testator in a will leaves property in trust for the preservation of the principal for remaindermen and directs the income to be paid to the life tenants, the term "income" necessarily means the net income remaining after deducting from the gross receipts the necessary expenses incurred in the management, preservation and protection of the principal of the estate. Expenditures for the upkeep of the property, for payment of the interest on incumbrances, the payment of taxes, the making of necessary and ordinary repairs, a reasonable allowance to the trustee, the payment of insurance and reasonable attorneys' fee expended in protecting the corpus of the estate, as well as all other necessary expenses incurred by the trustee in preserving intact the corpus of the trust property, must be deducted from the gross receipts in determining the net income that is payable to the life tenant. Melbin v. Hoffman, 235 S.W. 116, 290 Mo. 464; Peck v. Kinney, 143 Fed. 76; Stanton v. Zercher, 172 Pac. 559, 101 Wash. 383; Ex parte McComb, 4 Bradf. Sur. 151; Andrews v. Boyd, 5 Greenl. 199; Earl v. Rowe, 35 Me. 414; Johnson v. Perley, 2 N.H. 56; Beers v. Narramore, 22 Atl. 1061, 61 Conn. 13; Niland v. Niland, 154 Wis. 514, 143 N.W. 170, Ann. Cas. 1915B, 1127, with cases cited in the note 1129; Hays v. St. Louis Union Trust Co., 298 S.W. 91, 317 N.W. 1028, 56 A.L.R. 1276; In re Holmes, 40 S.W. (2d) 616.

STURGIS, C.

This is a suit to construe the will of James W. Weed, deceased, and more particularly to determine whether the income derived from the residuary estate during the time the estate was in the process of administration by the executor in the Probate Court of Jackson County, Missouri, should be paid to the life tenants for their support and maintenance or become part of the residuary estate, the income of which goes to the life tenants. The life tenants are the plaintiffs here and the Commerce Trust Company, who is both executor of the will and trustee of the residuary estate, is defendant, joined with certain persons who are interested in the remainder. When we speak of defendant, we mean Commerce Trust Company.

James W. Weed, whose will and estate gives rise to this controversy, died testate in Kansas City, Jackson County, Missouri, on July 28, 1927, leaving an estate, mostly personal, of the approximate value of $138,000. The testator by his will, duly admitted to probate soon after his death, provided that his debts and funeral expenses be paid by his executor, made a few specific legacies of little value and as to which there is no controversy, and then disposed of practically his entire estate by this clause:

"Fifth. All the rest, residue and remainder of my estate, whatsoever, real, personal and mixed, wherever situate and in whosesoever possession the same may be found, and whether the same be a present, future or contingent estate, I give, devise and bequeath to the Commerce Trust Company, a corporation of Kansas City, Missouri, to be by it held in trust with full power and authority." (Such power and authority being set forth in the clauses which follow.)

Large and almost unlimited authority is given to the trustee in handling the estate, retaining any property or securities owned by testator at his death, selling, conveying, loaning, investing and reinvesting the property of the estate, selling and purchasing bonds, notes and securities, etc., including these clauses:

"(g) To collect, receive and receipt for any and all income that may be derived from the property placed under the terms hereof or from the investment or reinvestment of the proceeds thereof, and to pay out of said income before any distribution, or out of the principal, if at any time it be necessary, all taxes and costs of administration, including reasonable compensation to the trustee for its services, and all costs and expenses, which in the discretion of the trustee may be necessary and/or advisable to incur for the preservation, maintenance and protection of the trust property... .

"(j) To make division or distribution of the trust estate as and when it is required under the provisions of this will, in kind — that is to say — in real estate, stocks, bonds, mortgages or other securities belonging to the trust estate, and such property so distributed shall be at such valuations as the trustee may establish therefor."

As to the disposition to be made of the income derived from the trust estate and the corpus of such estate on the termination of the trust, the will provides:

"Sixth. The income derived from the trust estate, together with the principal or corpus thereof, shall be held, handled, used, divided and distributed by the trustee as follows, to-wit:

"(a) The net income derived from my three houses, located at 3128, 3134 and 3136 Chelsea Avenue, Kansas City, Missouri, or from the proceeds of the sale of said houses, if the trustee shall sell one or more of said houses, shall be paid by the trustee to my daughter, Helen S. Estey, so long as she shall live, or should my said daughter desire to use any one of said houses as a home, she shall have the right to do so, and said trustee shall not sell said house used by her as a home so long as she chooses to use it as a home. Upon the death of my said daughter, the income from said houses shall be held, handled, used, divided, and distributed as hereinafter provided for the distribution of the remaining income from this trust estate.

"(b) The remainder of the income derived from the trust estate shall be divided into three equal parts; one of said parts shall be paid over and delivered to my daughter, Blanche McLaughlin, who now lives in Rupert, Idaho; one part shall be paid over and delivered to my daughter, Helen S. Estey, of Kansas City, Missouri; and one part shall be paid over and delivered to my daughter-in-law, Rena Weed, of Lawrence, Kansas." (Note: It is this clause of the will especially which gives rise to this controversy and which the court is called on to construe.)

The remaining portions of this provision of the will provide for the disposition of the income in case of the death of any one or more of these three life tenants, to the general effect that same shall be used to support and educate the children and lineal descendants of each, and the final distribution of the trust estate to be made to the lineal descendants of such life tenants when all three of the life tenants are dead and all their children are of the age of twenty-one. We are not attempting to state these provisions in detail or perhaps accurately, except when quoted, as they are not in controversy. The will then nominates and appoints the defendant Commerce Trust Company executor of the estate.

The record shows that the executor named qualified as such in the probate court, administered the estate and made final settlement of its administration on June 26, 1929, approximately twenty-two months after taking charge of the estate as executor. The executor then, in form at least, delivered the residue of the estate to itself as trustee, although the testator by his will...