McKenna v. Seattle-First Nat. Bank, 31114.

• Decision Date: 10 February 1950
• Docket Number: 31114.
• Citation: 35 Wn.2d 662,214 P.2d 664
• Parties: McKENNA et al. v. SEATTLE-FIRST NAT. BANK et al. SEATTLE-FIRST NAT. BANK v. McKENNA et al.
• Court: Washington Supreme Court

214 P.2d 664

35 Wn.2d 662

McKENNA et al. v. SEATTLE-FIRST NAT. BANK et al.

SEATTLE-FIRST NAT. BANK v. McKENNA et al.

No. 31114.

Supreme Court of Washington

February 10, 1950

Department 2

Seattle-First National Bank, a national banking association, as trustee under the living trust of Hugh L. Watson, dated July 18 1921, sued Margaret Watson and Cecil Langston and others to determine persons to whom certain realty held by it in trust should be conveyed and John A. McKenna and others sued Margaret Watson and Cecil Langston and others to quiet title.

The Superior Court, King County, Robert M. Jones, J., rendered a decree, and the first named defendants appealed.

The Supreme Court, Robinson, J., held that a trust providing that if the settlor predeceased the life tenants, the property was to be conveyed to his legal heirs, created an indefeasible reversion in the settlor and the purchasers of such interest at a sheriff's sale were entitled to the realty as against the heirs of the settlor.

Decree affirmed.

Emory Howe, Davis & Riese, Seattle, John M. Harding, Seattle, of counsel, Clarke, Stone & Hoover, Seattle, for appellants.

Hyland Elvidge & Alvord, Monroe Watt, John Veblen, Seattle, Albert D. Rosellini, Seattle, J. Will Jones, Seattle, for respondents.

ROBINSON Justice.

This is an appeal from a decree entered after trial, in the superior court of King county, of two actions which were consolidated for trial because they grew out of the same facts and presented essentially the same questions of law. One of the actions was instituted by the Seattle First-National Bank for the purpose of obtaining a declaration as to the person or persons to whom it should convey certain real property held by it in trust. The other action was brought by one John A. McKenna, and certain others, claiming title to the real property in question, plaintiffs praying that their title be quieted as against the bank and as against certain other persons claimaing interests in the property as heirs of the settlor of the trust. The trial court entered a decree quieting title in favor of McKenna and the other parties plaintiff in the second action. This appeal has been taken by the heirs of the settlor. Although the trustee bank is named as one of the respondents, we shall, for convenience, use that term to designate only McKenna and those claiming under him.

The appeal presents no issues of fact, since the facts are stipulated. The background of the consolidated cases may be epitomized as follows:

One June 9, 1921, or thereabouts, a cause of action in tort for damages arose in favor of respondent John A. McKenna, and against Hugh L. Watson, now deceased. July 18, 1921, or thereabouts, Hugh L. Watson delivered the sum of $6,300 to the predecessor of respondent Seattle First-National Bank, with written instructions to the bank to purchase certain real property and to hold it in trust for the benefit of the settlor's grandmother, Helen Langston, and mother, Nellie C. Watson, for their respective lives, and for the life of the survivor of them. Pursuant to these instructions, the bank purchased the property in question and executed a declaration of trust, in terms substantially identical to those of the trust instructions. This document read in part, as follows:

'2. The said Helen Langston and Nellie C. Watson during their lifetimes, and during the lifetime of the survivor of them, have the right to occupy and use said property as a home for the two of them jointly so long as they both live, and as a home for the survivor of them until the death of such survivor, irrevocable by any act of said trustee or of the said Hugh L. Watson or by any act of them the said trustee and the said Hugh L. Watson.

'3. Upon the death of the survivor of the said Helen Langston and said Nellie C. Watson said property shall be by said trustee conveyed to the said Hugh L. Watson in case he shall then be alive; or in case he shall have died prior to the death of the survivor of them as aforesaid, then in such case said property shall be conveyed by the trustee to the legal heirs of the said Hugh L. Watson.'

This case turns entirely upon the interpretation to be given paragraph No. 3.

December 30, 1921, a default judgment was entered in favor of respondent McKenna and against Hugh Watson, the settlor, in connection with the tort cause of action. April 26, 1924, execution having been issued upon the judgment, the interest of Hugh Watson in the real property held in trust was sold at sheriff's sale and conveyed to respondent McKenna by sheriff's deed. Such interest as respondent McKenna acquired by the sheriff's deed was held by respondents McKenna, Gilbert, Tucker, Hyland, and Elvidge at the time of trial.

In 1935, the settlor, Hugh Watson, died; in 1937, Helen Langston, one of the two life tenants, died; and in 1947, Nellie C. Watson, the second of the two life tenants, died. The sole heirs at law of the settlor, Hugh Watson, were appellants, Margaret Watson, his widow, and Nellie C. Watson, his mother. Appellant Cecil Langston is the brother of Nellie C. Watson and her sole heir at law.

Appellants contend that this trust instrument created concurrent contingent remainders in Hugh Watson, as settlor, and in his 'legal heirs.' Their argument, as we understand it, is as follows: Hugh Watson's interest, being entirely contingent upon his surviving the life tenants, terminated with his death. Upon this event, the contingent remainder in the heirs became a vested remainder in Margaret Watson, his widow, and Nellie C. Watson, his mother, these being his heirs as determined at the date of his death. Nellie C. Watson, of course, was also life tenant of the property by virtue of the terms of the declaration of trust. Upon her death, her share of the remainder interest descended to Cecil Langston, her brother, and the remainder became possessory in him and in Margaret Watson, the surviving widow. Appellants argue that respondents, whose claim is based solely upon their status as successors in interest to Hugh Watson, can now make no claim to the property, the only contingency upon which it was limited to return to the settlor having failed to occur.

Putting aside, for the moment, the question of whether the heirs held a valid contingent remainder, we may note that, in no event, could Hugh Watson's interest be so described. The trustee bank took only such an interest as would enable it to carry out the objects and purposes of the trust. The trust itself was to expire with the death of the life tenants, Hobbie v. Ogden, 178 Ill. 357, 53 N.E. 104, and the provision directing the bank to convey the trust property upon that event was superfluous, Doctor v. Hughes, 225 N.Y. 305, 122 N.E. 221, since it would have been required to do so in any case. Livingston v. Ward, 247 N.Y. 97, 159 N.E. 875. The bank, therefore, took an interest which could endure for a term no greater than that embraced by the life estates. 'The result is, therefore, the same as it would have been if the estate of the trustees had only been an estate pour autre vie, * * *.' Ellis v. Page, 7 Cush. 161, 61 Mass. 161. See In re Kenyon, 17 R.I. 149, 158, 20 A. 294. Consequently, the settlor, Hugh Watson, retained a reversion (1 Simes, Law of Future Interests, p. 67, § 46); for, when an owner in fee simple transfers a life estate, even if it is to be followed by a contingent remainder in fee, the transferor, having disposed of less than his entire interest, has a reversion by operation of law. Burby on Real Property, p. 459, § 287; Clark v. Hillis, 134 Ind. 421, 34 N.E. 13. The nature of this estate cannot be changed by calling it a remainder. Robinson v. Blankenship, 116 Tenn. 394, 92 S.W. 854. As is said in the last cited case: '* * * So that if after the creation of this life estate * * *, he [the grantor] had simply reserved a remainder to himself without more, the law fixing the character of the estate which remained in him as a reversion would have let him into the possession upon the determination of the estate granted as a reversion, rather than as remainderman. * * *'

It is true that the limitation to Hugh Watson was conditional in form, providing that the property 'shall be by said trustee conveyed to the said Hugh L. Watson in case he shall then be alive; or in case he shall have died * * * to the legal heirs of the said Hugh L. Watson.' But since Hugh Watson already possessed the estate in reversion, from which he had never been parted, and since it is axiomatic that all reversions are vested estates (Gray, The Rule Against Perpetuities (4th ed.), p. 102, § 113), this limitation cannot be said to have imposed a condition precedent to the vesting of his interest. If it had any effect, it imposed a condition subsequent, which might operate to divest that interest. Thus, Gray states (p. 105, § 113.2): 'When an estate is given on a condition, the condition is always both precedent and subsequent; it is precedent as to the estate which is given on the condition, it is subsequent as to the estate which now exists and will continue to exist if the condition is not fulfilled. The vesting of an estate is not affected by the fact that if may be divested by a condition subsequent.'

Appellants' claim, therefore, must rest on the argument that, even though Hugh Watson's estate was vested, it was subject to be divested by his decease prior to the termination of the life estates; that, by this instrument, Hugh Watson intended to create life estates in his mother and grandmother, and to create a remainder in fee in his heirs, contingent on his predeceasing the life tenant; and that, as the contingency happened, the remainder vested. Wells v. Kuhn, Mo., 221 S.W. 19. Had the ultimate remainder been...