McMillan v. Barnard Free Skin & Cancer Hospital

• Decision Date: 31 July 1924
• Docket Number: 24858
• Parties: NEIL A. McMILLAN et al., Trustees under Will of GEORGE D. BARNARD, v. BARNARD FREE SKIN & CANCER HOSPITAL et al., Appellants
• Court: Missouri Supreme Court

264 S.W. 410

304 Mo. 635

NEIL A. McMILLAN et al., Trustees under Will of GEORGE D. BARNARD, v. BARNARD FREE SKIN & CANCER HOSPITAL et al., Appellants

No. 24858

Supreme Court of Missouri

July 31, 1924

Motion for Rehearing Denied July 31, 1924.

Appeal from St. Louis City Circuit Court; Hon. Frank Landwehr, Judge.

Affirmed.

Allen C. Orrick for appellant.

(1) The real intention of the testator, as gathered from the whole will, is the controlling rule for the construction of wills. Cox v. Jones, 229 Mo. 53; Lane v. Garrison, 293 Mo. 530. (2) It is also the law that words in a will must be given their ordinary meaning and grammatical construction unless it is manifest from the whole instrument that they were used in a different sense. Meiners v. Meiners, 179 Mo. 614. (3) The word "may," as applied to the use of the reserve fund, is permissive and not mandatory. State ex rel. v. Blair, 245 Mo. 680, 693; President v. Miller, 5 Johns. Ch. (N. Y.) 101; Northwestern Traveling Men's Association v Crawford, 126 Ill.App. 468, 266 Ill. 57; Davies v Dovey, 85 S.W. 725; McIntyre v. McIntyre, 16 A. 783 (Penn.) ; In re Ellis, 203 P. 957; Ellis v. Aldrich, 70 N.H. 219. (4) In the clause, relating to the building up of the reserve fund, the testator uniformly uses the word "shall," while in the clause relating to the use of the reserve fund he uniformly uses the word "may." These clauses occur in the same paragraph of the will, and clearly show that the testator understood the difference between the words "shall" and "may," and that, when he used the word "may," he meant "may" and not "shall."

Eliot, Blayney, Bedal & Eliot, Lewis & Rice and George C. Hitchcock for respondents.

(1) The real intention of the testator, as gathered from the whole will, is the controlling rule for the construction of wills. Sec. 555, R. S. 1919. (2) The word "may" when used in a written instrument is ordinarily construed as vesting a discretion. However, it may be construed to be mandatory, thus giving it the force of "shall" whenever such construction is necessary to carry out the intent of the author of the instrument, whether a testator, legislature or contractor. This construction is most often resorted to if the rights of third persons or of the public depend on the exercise of the power or the performance of the duty to which the word "may" refers. Ellis v. Aldrich, 70 N.H. 219; Deming v. Metropolitan Eng. & Const. Co., 154 Mo.App. 540; Supreme Council Catholic Benev. Legion v. Grove, 176 Ind. 356; Williams v. Williams, 236 S.W. 938. (3) The word "may" as used by testator in the clause of his will relating to the use of the reserve fund was not intended by him to vest a discretion and should be construed to have the effect of "shall" so as to make it the duty of the trustees to use the reserve fund upon the happening of the contingencies specified by the will.

Jourdan, Rassieur & Pierce also for other respondents.

(1) The controlling rule, of course, is that it is the duty of the court to ascertain the testator's real intention as such intention may be gathered from the whole will. Lane v. Garrison, 293 Mo. 530. (2) If it is apparent that the testator intended, in case of a deficit in annual income for any year, that the reserve fund should be resorted to to make good such deficit and pay the annuities in full, then other technical rules of construction will be disregarded and the word "may" will be construed as mandatory, the same as "shall" or "must." Ellis v. Aldrich, 70 N.H. 219; Deming v. Metropolitan Eng. & Con. Co., 154 Mo.App. 540; Nichols v. Boswell, 103 Mo. 151, 160. (3) It is not contended by appellant that the trustees were not empowered to pay the deficit out of the reserve fund. Appellant claims that a discretion is vested in the trustees whether they should or should not do so. The trustees did not decide that the reserve fund should not be used -- they brought this proceeding, asking for advice and direction in the premises, and the court by its decree has so advised and directed. Therefore the decree should stand, unless it was erroneous, for the court under the circumstances so to advise. (4) But even if the trustees had decided that the deficit should not be met out of the reserve fund, the court could properly order them to do so. Only $ 12,920.87 is required to make up the deficit. Fifty thousand dollars was lying in the reserve fund for just such a contingency. There was no evidence to indicate that any unexpected expenses were anticipated, therefore, no apparent need for the use of the fund except to take care of the deficit. Under the circumstances, if the trustees had decided that the deficit should not be met out of the reserve fund, their conduct would have amounted to an abuse of discretion, if discretion in that regard were vested in them, and such abuse may be corrected by the court. 28 Am. & Eng. Enc. Law (2 Ed.) 991; 2 Perry on Trusts (6 Ed.) sec. 511a; Collister v. Fassett, 163 N.Y. 281; In re Hodges, L. R., 7 Ch. Div. 754.

Graves, C. J. All concur, except David E. Blair and Woodson, JJ., who dissent, David E. Blair, J., in opinion filed.

OPINION

GRAVES

Plaintiffs are the trustees of a trust estate created by the last will and testament of the late George D. Barnard of the city of St. Louis. Barnard died May 31, 1915, leaving an estate estimated at $ 2,000,000. He left no children. His will made provision for his wife, but she elected to take under the law and not under the will. The administration of the estate closed long since, and the trust estate created by the will is now, and from 1917 has been, in the hands of a board of trustees created by the will. As said, this board of trustees constituted the plaintiffs herein. The defendants constitute all the beneficiaries in this trust estate. The board of trustees, having reached a point where they could not pay all the annuities out of the income of the estate for the year ending May 31, 1922, brought this suit for the interpretation of the will, or rather certain portions of the will. The residuary benficiary of the estate is the Barnard Free Skin & Cancer Hospital, which is an institution (purely charitable) established by Mr. Barnard. The will provided for the creation of a "reserve fund" to be raised by taking $ 10,000 or less each year from the net income of the trust estate. When the annuities became due for the year 1922, there was $ 50,000 in this trust fund. By the term annuities, we include all payments to be made out of the income of the estate, whether they be annual, semi-annual or monthly. These charges upon the net income of the estate amounted to $ 22,650, in 1922, and the trustees had but $ 9729.13 with which to pay, unless they had power to go to this reserve fund. The trial court in its decree ruled as follows on this disputed question:

"The court doth further find that it was the intention of testator in creating each and all the annuities mentioned in testator's will to provide for the payment of each and every annuity without priority or preference one over the other in respect to the annual amount received by each annuitant by reason of the fact that in some instances testator provided that said annuities should be paid 'annually,' 'semi-annually,' 'monthly' or 'per month;' and that said testator, by the eleventh clause of his will, in providing that in the event of a deficit of income in any one year the income should be prorated among annuitants, intended that all annuitants should be placed upon the same basis and participate ratably in any funds available for distribution.

"The court doth further find that in and by the twelfth clause of testator's will testator directed the trustee of said trust estate to establish a 'reserve fund' as therein provided, and that in and by said twelfth clause specifically limited the use to which said reserve fund may be placed, as follows:

"'The reserve fund may be used by the board of trustees for the purpose of meeting unexpected expenses, and should there be any year in which the income shall be insufficient to pay the monthly or annual bequests for that particular year, the same may be met and paid out of this reserve fund, and this may be repeated as often as it occurs, and any depletion so occasioned in said reserve fund may be made up as is hereinabove authorized.'

"The court doth further find that at the end of the fiscal year ending May 31, 1922, said reserve fund amounted to fifty thousand dollars; that the amount payable on account of all bequests and annuities mentioned in testator's will for the year ending May 31, 1922, was $ 22,650, but that the total income received during said fiscal year, available for the payment of said annuities or bequests, was only $ 9,729.13, leaving a deficit for said fiscal year between the amount of annuities then payable and the amount of income applicable thereto of $ 12,820.87. The court doth further find that it was the intention of testator in establishing said reserve fund to assure all the various beneficiaries of the trust, established by said testator's will, the payment of their respective annuities in full in the event there should be a deficit in any particular year, provided, further, that, in the judgment of said trustees, said reserve fund was not needed for the payment of 'unexpected expenses' during such year, or reasonably anticipated for the ensuing year."

From this portion of the decree the Barnard Free Skin & Cancer Hospital has appealed. It is the only appellant which completed an appeal. Portions of certain named paragraphs in the will become pertinent. One of our learned Commissioners has culled these out, thus:

Paragraph 11 reads:

"In case the annual income from the trust estate herein created under Clause Nine of...