Harbaugh's Estate, Matter of

• Decision Date: 11 June 1982
• Docket Number: No. 53823,53823
• Citation: 646 P.2d 498,231 Kan. 564
• Parties: In the Matter of the Trust ESTATE OF Mayme HARBAUGH, Deceased. Pauline Kathryn McCLARY, Appellee, v. Pete Harold HARBAUGH, Trustee-Appellant.
• Court: Kansas Supreme Court

Page 498

646 P.2d 498

231 Kan. 564

In the Matter of the Trust ESTATE OF Mayme HARBAUGH, Deceased.

Pauline Kathryn McCLARY, Appellee, v. Pete Harold HARBAUGH, Trustee-Appellant.

No. 53823.

Supreme Court of Kansas.

June 11, 1982.

Syllabus by the Court

1. Unless continuation of a trust is necessary to carry out a material purpose of the trust, if all the beneficiaries of a trust consent and none of them is under an incapacity, they can compel termination of the trust. Following Restatement (Second) of Trusts § 337 (1959).

2. The primary consideration in construing a will is to determine the testator's intent. If that intent can be determined from the four corners of the will it is not necessary to give consideration to any other element. If the testator's intent cannot be determined from the will itself, the will is ambiguous and extrinsic evidence is admissible to assist in defining the intent of the testator.

3. When a trustee acts in good faith he is entitled to fees and expenses but the amount of that award is within the discretion of the trial court.

4. In an appeal from an order terminating a testamentary trust it is held the trial court did not err in: 1) Ordering the termination of the trust; and 2) refusing to award the trustee fees and expenses.

Phillip S. Frick, of Foulston, Siefkin, Powers & Eberhardt, Wichita, argued the cause and J. Raymond Eggleston, Medicine Lodge, was with him on the brief for trustee-appellant.

W. Luke Chapin, of Chapin, Penny & Goering, Medicine Lodge, argued the cause and was on the brief for appellee.

HERD, Justice:

This is an appeal from an order terminating a testamentary trust. Mayme Harbaugh died July 19, 1977, survived by her three children: Pauline McClary, age 64, Louise Kirkbride, age 62, and Pete Harbaugh, age 60. Her last will and testament, dated October 24, 1969, was admitted to probate, and Pete, who was named executor in the will, was duly appointed and the estate was probated and closed.

Mayme Harbaugh's will left her farm real estate, an undivided one-half interest in 1,040 acres, in equal shares to Pete and Louise. These two children already owned the other one-half interest in the property. The will made the following provision for Pauline McClary:

"All the rest and residue of my property shall, after payment of debts, costs of administration, and Federal Estate Taxes, if any, to go to Pete Harold (Pat) Harbaugh, my son, in trust, however, to manage, control, and operate said trust for the benefit of my daughter Pauline Kathryn McClary.

"My said trustee, after the payment of all costs of administering said trust, shall pay to my said daughter, Pauline Kathryn McClary, the income therefrom semiannually.

"This trust is to continue for the natural life of my said daughter, Pauline Kathryn McClary, and upon her death and after payment of all costs of administering the trust and the expenses of the funeral of said Pauline Kathryn McClary said trust shall terminate and the assets thereof shall go to my two grandchildren, the children of said Pauline Kathryn McClary, to-wit:

1. Cherlyn Hamilton, and

2. John Michael McClary, share and share alike.

"The said trust and my said trustee shall have the powers as provided in Article 12 K.S.A.1968 Supp. entitled 'Uniform Trustees Powers Act' and any amendments thereto, except as otherwise herein provided."

The residuary estate contained $47,615.00. It was delivered to Pete, as trustee under the will, and he invested $47,000 in a thirty-month certificate of deposit at 9.25% interest. The remaining $615.88 was deposited in a passbook savings account. Interest rates soared but Pete did not change the investment. Pete also failed to make the semi-annual distributions to Pauline on time and was late in making his annual accounting to the court. Pauline McClary and her two children became dissatisfied with Pete's performance.

On March 9, 1981, by an instrument entitled "Agreement and Conveyance", Cherlyn Hamilton and John Michael McClary assigned their remainder interest in the trust estate to their mother, Pauline McClary. On March 23, 1981, Pauline filed a "Petition to Terminate Trust Estate and Distribute to Pauline Kathryn McClary" requesting "the trust be terminated and the trust property be distributed to her after payment of any reasonable expense of administration of the trust." The magistrate judge granted the petition.

On appeal with a trial de novo the district court also granted Pauline's petition and ordered the trust terminated and the "corpus together with accumulated income paid over to Pauline." Subsequently the trustee's petition for allowance of attorney fees and expenses was denied. Both rulings are appealed to this court.

Appellant first contends it was error for the trial court to order the trust be terminated. The question here is whether once Pauline McClary obtained her children's remainder interest in the trust she could force the termination of that trust. This issue has been discussed by various authorities. In Scott on Trusts § 337.1, pp. 2658-61 (3rd ed. 1967), it is stated:

"Where a trust is created under which the income is payable to one beneficiary for life and on his death the principal is payable to another, and it does not appear that the settlor had any other purpose in creating the trust than to enable the beneficiaries successively to enjoy the trust property, the beneficiaries, if they both consent and if neither of them is under an incapacity, can compel the termination of the trust. So also where the life beneficiary acquires the interest of the beneficiary entitled in remainder, whether by conveyance inter vivos or by testate or intestate succession, he can compel the termination of the trust....

....

"The result is different, however, where the purpose of the settlor in creating the trust was not merely to enable the beneficiaries to enjoy the property successively, not merely to give the income to one and to preserve the principal for the other. In such a case the beneficiaries cannot terminate the trust even though they all desire to terminate it and none of them is under an incapacity, or one of them has acquired the interests of the others and wishes to terminate it. Even though the interests of the beneficiaries are alienable, the court will not terminate the trust at their request if it appears that such termination would defeat a material purpose of the settlor in creating the trust."

Similarly, Bogert, Trusts & Trustees § 1003, 517-20 (2nd ed. 1962), observes:

"In a number of cases where the interests of equitable life cestui and legal or equitable remainderman have become vested in the same person by conveyance or operation of law, after the trust began, the courts have decreed that the trust was ended or terminable; but in other cases, where some useful purpose was deemed to be capable of accomplishment by the continuance of the trust, the courts have refused to regard the single ownership of the two items of property as fatal to the trust."

Finally, Restatement (Second) of Trusts § 337 (1959), states:

"(1) Except as stated in Subsection (2), if all of the beneficiaries of a trust consent and none of them is under an incapacity, they can compel the termination of the trust.

"(2) If the continuance of the trust is necessary to carry out a material purpose of the trust, the beneficiaries cannot compel its termination." p. 158.

This court recognized the above rules generally and the Restatement version specifically in In re Estate of Sheets, 175 Kan. 741, 748-51, 267 P.2d 962 (1954).

In light of the foregoing, the dispositive question becomes whether termination of the case at bar would frustrate a material purpose of the trust. To determine the purpose behind the trust we must first turn to Mayme Harbaugh's will. There is no explicit purpose stated. It is thus difficult to perceive a clear purpose from reading the will as a whole. Appellant argues, however, the will is unambiguous; the purpose behind the trust was to protect Pauline McClary and termination of the trust will frustrate this purpose. He further claims it was improper for the trial court to admit extrinsic evidence to clarify the testator's intent and define the purpose of the trust.

Let us examine this issue. Appellant relies on In re Estate of Wernet, 226 Kan. 97, Syl. P 1, 596 P.2d 137 (1979), where it is stated:

"Where a court, either trial or appellate, is called upon to determine the force and effect to be given the terms of a will, its first duty is to survey the instrument in its entirety and ascertain whether its language is so indefinite and uncertain as to require the employment of rules of judicial construction to determine its force and effect, and where from an analysis of the entire instrument no ambiguity or uncertainty is to be found in its language, the intention of the testator being clearly and unequivocally expressed, there is no occasion to employ rules of judicial construction and the will must be enforced in accordance with its terms and provisions."

See also, Johnston v. Gibson, 184 Kan. 109, 334 P.2d 348 (1959). Other rules governing the construction of wills naturally compliment this precept. The primary consideration in construing a will is, of course, to determine the intent of the testator. If that intent can be determined from the four corners of the will itself the will is not ambiguous and it is not necessary to give consideration to any other element. See e.g., Trustees of Endowment Fund of Hoffman Hosp. Ass'n. v. Kring, 225 Kan. 499, 592 P.2d 438 (1979); In re Estate of Showers, 207 Kan. 268, 485 P.2d 299 (1971); Giese v. Smith, 195 Kan. 607, 408 P.2d 687 (1965); Householter v. Householter, 160 Kan. 614, 164 P.2d 101 (1945). Evidence as to the testator's intention is inadmissible for the purpose of giving unambiguous language in a will a different meaning. In re Estate of Laue, 225 Kan. 177, 184, 589 P.2d 558 (1979); In re Estate of...