Howell v. Alexander, 6826SC399

• Decision Date: 15 January 1969
• Docket Number: No. 6826SC399,6826SC399
• Citation: 3 N.C.App. 371,165 S.E.2d 256
• Court: North Carolina Court of Appeals
• Parties: Mary Brevard Alexander HOWELL et al. v. Mary R. ALEXANDER et al.

Page 256

165 S.E.2d 256

3 N.C.App. 371

Mary Brevard Alexander HOWELL et al. v. Mary R. ALEXANDER et al.

No. 6826SC399.

Court of Appeals of North Carolina.

Jan. 15, 1969.

McCleneghan, Miller, Creasy & Johnston, by F. A. McCleneghan and H. Morrison Johnston, Charlotte, for appellant.

Ervin, Horack & McCartha, by Benjamin S. Horack, and William S. Lowndes, Charlotte, for Mary R. Alexander, appellee.

BROCK, Judge.

The exceptions to the conclusions of law and the exception to the entry of the judgment present the questions whether the facts found support the conclusions of law and the judgment entered pursuant thereto. Schloss v. Jamison, 258 N.C. 271, 128 S.E.2d 590.

It seems evident that the trial judge concluded that the will granted to the life tenant an unrestricted power of appointment with respect to the real and personal property in which she was given a life estate by the will, even to the extent of appointing it to herself in fee simple adversely to the interests of the remaindermen. This interpretation would allow the life tenant, by the simple expedient of appointing all of the real and personal property to herself in fee simple, to completely frustrate any testamentary disposition of the remainder interest; and, in effect, to convert her life estate to an estate in fee simple in the entire property devised and bequeathed by the testator.

We must therefore examine the instrument in the light of well established rules of construction to determine the extent of the power granted to the life tenant. 'An instrument, such as a deed or will, creating a power of appointment is to be interpreted so as to ascertain the intention of the donor and to give it effect unless some rule of law prevents. Effect should, if possible, be given to every word or clause in the instrument, so long as they are not inconsistent with the general intent of the instrument as a whole.' 41 Am.Jur., Powers, § 9, p. 812. 'The intention of a testator as gathered from an entire instrument is the primary object in interpreting a will, and must be given effect unless it is contrary to some rule of law or at variance with the public policy, for the intent of the testator is his will.' 7 Strong, N.C. Index 2d, Wills, § 28, p. 595.

In Item II of the will testator clearly granted to his wife a life estate in all of his property. Then, by proviso, he gave to her broad powers to sell, convey, use, invest and reinvest the proceeds from such sales, and provided that she was not accountable to anyone for any of the property or the proceeds of any sale. In Item III testator gave, upon the death of his wife, all of his estate to his daughter, subject to the provisions of Item II. Thereafter followed provisions in the event his daughter predeceased his wife.

'The rule followed generally now in almost all jurisdictions is that a life estate expressly created by the language of an instrument will not be converted into a fee, or into any other form of estate greater than a life estate, merely by reason of their being coupled with it a power of disposition, however general or extensive. In other words, where an estate for life, with remainder over, is given, with a power of disposition in fee of the remainder annexed, the limitation for life of the first taker will control, and the life estate will not be enlarged to a fee, notwithstanding the power of the life tenant to dispose of the fee.' 28 Am.Jur.2d, Estates, § 81, p. 182; Darden v. Boyette, 247 N.C. 26, 100 S.E.2d 359, 68 A.L.R.2d 1098; Harris v. Carolina Distributing Co., 172 N.C. 14, 89 S.E. 789. 'It is also well settled that a general power of appointment conferred upon a life tenant does not enlarge his estate.' Harris v. Carolina Distributing Co., supra.

In this case, defendant Mary R. Alexander used a note which was payable to testator, and in which she was given a life estate with the power of disposition, and she exchanged, or invested, it in a 107.11 acre tract of land which was not a part of the estate; in doing so she caused the deed to her to be drawn so as to convey to her a fee simple title in the real estate. The trial judge concluded that she did this intentionally, and that this intent coupled with the powers set out in the will served to vest in her a fee simple title to the 107.11 acre tract free and discharged of any interest in the remaindermen. This we hold to be error.

By Item II and Item III of his will, S. B. Alexander, Jr., intended that his widow, the defendant Mary R. Alexander, should have a life estate in all of his property, and that the remainder after the life estate should go to his daughter, the plaintiff Mary Brevard Alexander Howell. During the pendency of the life estate testator intended that his widow should not suffer or be in need so long as any of his property remained. Therefore, he gave his widow, as life tenant, plenary authority to absolutely dispose of his property for her best interests, comfort, luxury, and support during her lifetime. She was authorized to exchange, invest and reinvest for the obvious purpose of maintaining income producing property in the estate, and for the obvious purpose of making any other advantageous sale or exchange. All of this the life tenant could do in her discretion, but it was testator's intention that these powers be exercised for her personal benefit during her lifetime. He did not intend that these powers might be exercised by the life tenant to convert his devise and bequest to her into a fee simple title whereby the property would be disposed of at her death as her estate, either by will or intestacy; otherwise his disposition of the remainder interest would be wholly frustrated.

In Anderson v. Kennon, 353 S.W.2d 241 (Tex.Civ.App.1961), the court, stating that al life tenant could not by fraudulent means defeat the rights of the remainderman by dealing with himself, reversed a judgment dismissing a suit brought by remainderman to set aside a conveyance by the life tenant to a corporation which reconveyed the property to the latter. Although the language of the will which created the life estate was very broad in emplowering the life tenant to dispose of the property ('she may from time to time, in any manner or to any extent as she may deem best, mortgage, sell, convey and dispose of, conveying fee simple title threto, for such consideration and on such terms as she may desire, without limitation or restriction whatever'), the court said that the will did not authorize her to convey the land, or any part of it, to herself as her separate property. Annot., 89 A.L.R.2d 651 (1963).

In Cales v. Dressler, 315 Ill. 142, 146 N.E. 162, a deed by life tenant to her lawyer's stenographer, and reconveyance of the stenographer to the life tenant which was done in order that the property might pass under her will instead of the will of her testator were held ineffective to defeat the testator's intention that the remainder should pass by his will to the remainderman designated by him in the will. Annot., 89 A.L.R.2d 650 (1963).

Under will giving widow life estate with full power to sell or use, but disposing of remainder at wife's death, wife had power to dispose of property only for her personal use and benefit during her lifetime, and purported conveyance to trustee with gifts over to others at wife's death was ineffective. Parsons v. Smith, 190 Kan. 569, 376 P.2d 899. Annot., 89 A.L.R.2d 649 (1963), (Later Case Service, 1968).

'Questions as to what title, if any, a life tenant has to proceeds (or property obtained with proceeds) coming to his hands by reason of his exercise of a power of sale or disposal are of course wholly dependent upon the terms and intent of the will or other instrument creating the power and property interests. However, under nearly all instruments thus far in litigation, especially where the case has been merely the simple one of a life estate with superadded power of sale, the proceeds (or property obtained therewith) have been regarded as taking the place of the property sold so that title was held to be in the remainderman subject to such rights of possession, user, investment, reinvestment, expenditure, or consumption as may have been given the life tenant.' Annot., 158 A.L.R. 480 (1945). See, Darden v. Matthews, 173 N.C. 186, 91 S.E. 835.

A life tenant with such broad discretionary powers of disposition as are contained in this will administers the life estate property in the nature of a trustee for the benefit of herself and the remainderman. And, although she may have the unbridled discretion to subject the entire estate to her own use during her lifetime, even to the extent of a complete dissipation of the estate, she cannot take title in herself to the exclusion of the interest of the remainderman.

'The conduct of a life tenant with respect to the property in which the estate exists may be such that it will justify the intervention of equity to preserve the property not only for the remainderman but also for the life tenant, and to protect the interests of all.' 31 C.J.S. Estates § 60, p. 122. 'A remainderman may have relief in equity when the life tenant is claiming a right to the property adverse to that of the remainderman.' 31 C.J.S. Estates § 60, p. 123.

In this action the plaintiffs seek the equitable aid of the court to impose a constructive trust on the...