Gay v. Focke

• Decision Date: 20 August 1923
• Docket Number: 3989.
• Citation: 291 F. 721
• Parties: GAY et al. v. FOCKE et al.
• Court: U.S. Court of Appeals — Ninth Circuit

291 F. 721

GAY et al. v. FOCKE et al.

No. 3989.

United States Court of Appeals, Ninth Circuit.

August 20, 1923

The testator, after naming executors and trustees and directing payment of funeral expenses, gave, devised, and bequeathed unto Mary Ellen Gay and Herman Focke all of his estate, real, personal, or mixed wheresoever situate, in trust, nevertheless, for the uses and purposes thereinafter set forth; that is to say:

'To pay the rents, income, issues and profits arising from and out of my said estate to my wife Mary Ellen Gay for the term of her natural life, and to be applied by her for the support of herself and the support, maintenance and education of my children born of the body of my said wife Mary Ellen. And from and after the death of my said wife I direct my said trustee Hermann Focke or his successor in said trust to pay the rents, income, issues, and profits arising from and out of said trust estate as follows One-half thereof for the support and maintenance of my sons' (naming three), 'share and share alike; and as to the other part thereof, to pay the same for the support, maintenance and education of my daughters' (naming four) 'share and share alike.

'And from and after the death of all my children born of the body of my said wife Mary Ellen, I direct my said trustee or his successor to convey one-half of said trust estate and all additions or increase thereto, unto the children of my sons' (naming same three), 'share and share alike, and the child or children of any deceased child to take the parent's share. And as to the remaining portion of said trust estate and all additions or increase thereof, I direct my said trustee or his successor in said trust to convey the same unto the children of my said daughters' (naming same four), 'share and share alike, and the child or children of any deceased child to take the parent's share.

'And I direct my said trustee or his successor in the event of the death of any of my children born of the body of my said wife Mary Ellen to pay the share or portion of the income belonging to such child to the heirs that may survive such child dying. * * *

'It is my wish and I hereby direct that my said trustees or their successors or successor, shall manage, conduct and carry on the business of ranching and stock raising at Mokuleia on the Island of Oahu, so long as it can be done so profitably, and without loss; and I hereby empower them or their successors or successor at any time when in their discretion they think that a sale of all the property at said Mokuleia would by reinvestment of the money realized from such sale of said property be beneficial and inure to the benefit of or increase the trust estate created under this will, to sell and convey the said property at Mokuleia free and barred of the trust created by this will.'

The testator died in 1893; his widow died in 1895. Testator's estate consisted of two leaseholds, together with live stock, furniture, implements, and certain other personal property, which latter the trustees sold for about $4,065, and now held. The Mokuleia leasehold was for 50 years and will expire in 1934; the Ookala leasehold expired in 1908. The trustees hold the Mokuleia leasehold, the property described therein being sublet for periods somewhat less than the unexpired term of the head lease. The trustees paid over all of the net rentals of both leaseholds to the testator's widow and children. To ascertain whether their acts were proper, this suit was brought for instructions. The circuit court of the territory approved the conduct of the trustees. On appeal the Supreme Court of the territory held that with respect to the Mokuleia lease the trustees were authorized to retain the head lease, and that whatever sums they received for its use were income, and the life tenants were entitled to receive them, but that upon the testator's death the trustees should have converted the Ookala lease and held the proceeds as part of the corpus of the estate. Accordingly, the court remanded the matter and directed the trustees to account. When the matter again came before the circuit court, it was held that the sums which, if invested at the time of the testator's death, with interest at 6 per cent. per annum, with annual rests, would equal the net rentals received, when they were received from the Ookala leasehold, were corpus, and that the balance of the net rents were income. From this decision the grandchildren by their guardian ad litem again appealed to the Supreme Court of the territory, which affirmed the decision of the circuit court and ordered final decree, from which the grandchildren by their guardian ad litem appealed to this court. Neither the children nor the trustees appeal.

Henry Holmes and H. Edmondson, both of Honolulu, Hawaii, and Warren Gregory, of San Francisco, Cal., for appellants.

William O. Smith and Louis J. Warren, both of Honolulu, Hawaii, and Edward M. Leonard, of San Francisco, Cal., for appellees life tenants.

W. L. Stanley, of Honolulu, Hawaii, and S. Hasket Derby, of San Francisco, Cal., for appellees trustees.

Before GILBERT, HUNT, and RUDKIN, Circuit Judges.

HUNT Circuit Judge (after stating the facts as above).

We pass extended notice of questions of practice presented by appellees by saying that while in the first decision of the Supreme Court of the territory the court, in a sense, determined the law applicable to the Mokuleia leasehold, still the decree was not final or appealable, and no decree was made which became final in form until after the second appeal. Rumsey v. New York Life Ins. Co. (C.C.A.) 267 F. 554. We therefore consider appellants' main assignments of error as presenting for consideration the questions: (1) Whether the net rents or part of them, received from the Mokuleia leasehold, are corpus; and (2) whether the correct method was pursued in determining what portions, if any, of the net rents from the leaseholds are corpus.

It is argued by the appellants that the will is free from ambiguity, that parol evidence was not admissible to show the intent of the testator against the construction on the face of the will, and that the state of his property at the time of his death cannot be resorted to to explain testator's intention. We are unable to agree with the appellants that the will is clear and 'singularly free from ambiguity' and therefore speaks for itself. No real estate was involved; all the assets were perishable or wasting, but under the will there was the clause directing the conveyance of the trust estate, with all additions and increase thereto to the grandchildren. It was therefore natural that counsel for the trustees should question the acts of his clients in construing the will as requiring that all of the net rentals should be paid to the life tenants without making provision for the preservation of the corpus of the estate for the benefit of the remaindermen. It is our duty, therefore, to follow that 'first and great rule,' what was the intention of the testator? Let us endeavor to put ourselves in the situation of Mr. Gay when he made his will, and from that position gather what he intended. Adams v. Cowen, 177 U.S. 471, 20 Sup.Ct. 668, 44 L.Ed. 851.

At the time of his death testator had a wife and seven children ranging in age from 4 to 16. Testator lived with his family on the Mokuleia ranch, and, as already shown, his personal property, excluding the leaseholds, was of small value; his cash was about $816. Testator carried on the business of ranching and sublet various parts of the Mokuleia estate from which he received rentals. Referring to the Ookala lease, testator had a sublease with a sugar company; the lease yielding certain percentage rentals of the sugar produced upon the land. About the time of the death of Mr. Gay, the gross annual rentals from the subleases of portions of the Mokuleia property amounted to less than $3,000, out of which he was obliged to pay a head rent of $1,250 to his lessor. This left a very limited sum. The receipts from the Ookala lease for the year just before the death of Mr. Gay were $643, and the taxes were about $40. During 1893-94 the lease yielded gross $642; in 1894-95, gross $851. At the time of the death of the testator the lessee under the Ookala lease had possession for 12 years, and but 7 years were left under the sugar contract. While it is true that in after years the profits from the Ookala lease increased very materially, still during the first 7 years of the trust the average amount received from that lease was about $1,400. No definite amount can be ascertained of other revenue received by Mr. Gay from the ranching business, but taking the business as conducted by the trustees during the first seven years of the trust, the average net return on the Mokuleia property was less than $1,000 per annum, after including income from all sources at Mokuleia and from the subleases, sale of cattle, and ranch profits generally. The widow and children lived on the ranch until 1895, when the widow died, and the children were taken away. At the time of the death of the testator he owed about $5,000. In the inventory the value of the Mokuleia leasehold was $7,500, and of the Ookala leasehold $5,000. The evidence is that about the time of testator's death the sugar business was undeveloped. That Mr. Gay expected his trustees to go ahead with the business of ranching and stock raising at Mokuleia is evidenced by the specific statement to that effect in his will, and there is nothing to show that he believed there would be such development in the raising of sugar as that some of his grazing land would become more valuable for sugar raising than for stock. Another circumstance is that Mr. Gay was mortally ill when he...