Rosenauer v. Title Ins. & Trust Co.

• Decision Date: 30 January 1973
• Citation: 106 Cal.Rptr. 321,30 Cal.App.3d 300
• Court: California Court of Appeals Court of Appeals
• Parties: , 81 A.L.R.3d 953 Robert O. ROSENAUER, etc., Plaintiff and Appellant, v. TITLE INSURANCE AND TRUST COMPANY, Defendant and Respondent. Civ. 40285.

Page 321

106 Cal.Rptr. 321

30 Cal.App.3d 300, 81 A.L.R.3d 953

Robert O. ROSENAUER, etc., Plaintiff and Appellant, v. TITLE INSURANCE AND TRUST COMPANY, Defendant and Respondent.

Civ. 40285.

Court of Appeal, Second District, Division 2, California.

Jan. 30, 1973.

Barrett, Hubbard, Doggett & Van Zyl, Beverly Hills, for plaintiff and appellant.

Agnew, Miller, Carlson & Powers, Maynard J. Klein, Los Angeles, for defendant and respondent.

COMPTON, Associate Justice.

Plaintiff Robert Rosenauer, as executor of the estate of Elizabeth Rosenauer, deceased, and as a beneficiary under deceased's will, seeks to determine conflicting claims to the proceeds of a revocable inter vivos trust established by deceased. Defendant Title Insurance and Trust Company (TI) is trustee. The trial court sustained a demurrer without leave to amend to the first amended complaint. A judgment of dismissal followed. Plaintiff appeals.

The trust agreement provides in Article V as follows:

'The Trustor shall have the right At any time during her lifetime to amend any of the provisions of this Trust Agreement, or of any amendment thereto by an agreement in writing executed by the Trustor and the Deceased's will which has been admitted to Probate provides: 'This will revokes the Revocable Trust Agreement dated April 27, 1965 Number PP--15545 between myself as trustor, and Title Insurance Company and Trust Company, as the trustee.'

Trustee, and to revoke this Trust in whole on in part By an instrument in writing executed by the Trustor and delivered to the Trustee. Furthermore, notwithstanding[30 Cal.App.3d 302] any other provision contained in this trust instrument, the Trustor retains and shall have the right to appoint the principal, together with any income accrued or received and undistributed, of the Trust Estate as shall remain undisposed of upon her death, which power may be exercised by the Trustor's written instrument Other than a Will filed with the Trustee.' (Emphasis added.)

The will further provided: 'Sixth: All funds are to come from my Trust Account at Tile Insurance and Trust.' Following the admission of the will to probate, plaintiff as executor filed a copy with TI. Neither the will nor any other writing purporting to be a revocation of the trust was delivered to the trustee during the lifetime of the trustor.

Plaintiff contends that by the execution of the will deceased effectively revoked those provisions of the trust agreement which would otherwise have been effective upon her death and that TI should deliver the trust fund to plaintiff as executor of deceased's estate.

Alternatively, plaintiff urges that the execution of the will constituted a valid exercise of the power of appointment so as to require distribution of the trust fund in accordance with the terms of the will rather than the trust instrument.

TI on the other hand contends that the purported revocation was ineffective because it was not done in compliance with the Trust Agreement or with Civil Code section 2280 governing the revocation of trusts. It also maintains that the purported exercise of the power of appointment was ineffective because the Trust Agreement prohibited the exercise of such power by a will.

THE REVOCATION

Civil Code section 2280 reads in part as follows:

'Unless expressly made irrevocable by the instrument creating the trust, every voluntary trust shall be revocable by the trustor by writing filed with the trustee.'

According to plaintiff this statute embodies the California preference for free alienability of property and revocability of trusts. Thus he contends that the statute should control regardless of the recitals in the trust instrument concerning the method of revocation. Plaintiff's position is that since the statute contains no requirement that the revocation be filed with the trustee during the life of the trustor and since the statute does not exclude 'will' from the definition of a 'writing', his filing of the will with the TI after the death of deceased complies with the statute.

The issue presented appears to be one that has not been previously decided in California.

The Restatement of Trusts, section 330(1), comment (j) provides as follows:

'If the settlor reserves a power to revoke the trust only in a particular manner or under particular circumstances, he can revoke the trust only in that manner or under those circumstances. If the settlor reserves a power to revoke the trust by transaction inter vivos, as for example, by a notice to the trustee, he cannot revoke the trust by his will.'

Case law throughout the country is found to be in support of the Restatement view.

In Leahy v. Old Colony Trust Co., 326 Mass. 49, 93 N.E.2d 238, the Supreme Judicial Court of Massachusetts held that a trust was not revoked by a will under facts similar to our own case. In so holding the court stated at page 240:

'Plainly Jennie M. Luhrs could not alter or revoke the trust except in accordance with some power to do so reserved in the trust instrument. (Citations.) The power of amendment or revocation, reserved in the trust instrument, was a power to do so only 'during the lifetime of said Jennie M. Luhrs.' A will does not take effect during the lifetime of the testator, but operates only from and after his death.'

In National Shawmut Bank of Boston v. Joy, 315 Mass. 457, 470--471, 53 N.E.2d 113, 122, it was said: 'The distinguishing feature of a testamentary disposition is that it remains ambulatory until the death of the one who makes it. Until he dies, his...