Seattle First Nat. Bank v. Crosby

• Court: Washington Supreme Court
• Writing for the Court: DONWORTH; GRADY; OLSON; SCHWELLENBACH
• Citation: Seattle First Nat. Bank v. Crosby, 254 P.2d 732, 42 Wn.2d 234 (Wash. 1953)
• Decision Date: 13 March 1953
• Docket Number: No. 31929
• Parties: SEATTLE FIRST NAT. BANK, v. CROSBY et al.

Page 234

42 Wn.2d 234

254 P.2d 732

SEATTLE FIRST NAT. BANK, v. CROSBY et al.

No. 31929.

Supreme Court of Washington, en Banc.

March 13, 1953.

Merle D. Cohn, Seattle, for appellants.

Holman, Mickelwait, Marion, Prince & Black and Burroughs B. Anderson, Seattle, for respondent.

Jacob Kalina and Michael S. Curtis, Seattle, of counsel, for guardian ad litem, respondent.

DONWORTH, Justice.

In this action, brought under § 4 of the declaratory judgment act, RCW 7.24.040, plaintiff trustee sought a declaration of rights and instructions with regard to certain assignments of principal and income of a trust made by William Shaw Crosby, the beneficiary thereof. From a judgment declaring that the trustee had no duty to honor any of the assignments and no right to honor the assignments of principal, all the defendants, except William Shaw Crosby, have appealed.

The allegations of the complaint (in which the documents material to this controversy were incorporated) were admitted by defendants. Thus, the following factual background is established:

The trust is one established pursuant to the will of Agnes H. Anderson, who died April 5, 1940. By her last will, executed September 24, 1937, Mrs. Anderson left certain property to William Shaw Crosby with the provision that

'* * * if [William Shaw Crosby] * * * shall be under the age of Thirty-Five (35) Years when ultimate distribution of my * * * [Estate] is made, the * * * [property] so bequeathed to * * * [him] shall not be turned over or delivered to * * * [him] until he * * * attains the age of Thirty-Five (35) Years. Until such time all such [property] shall, upon ultimate distribution as hereinabove referred to, be delivered to a trustee to be appointed by the executors of this Will by an instrument in writing duly executed by said executors * * *, such trustee to hold the same and to receive all dividends and income therefrom and to pay over such part of such dividends and income as may be necessary or required for the education, support and maintenance of * * * [William Shaw Crosby], and when * * * [he] shall have attained the age of Thirty-Five (35) Years all such * * * [property] and unused dividends and income shall be by said trustee turned over and delivered to * * * [William Shaw Crosby] * * *. If * * * [William Shaw Crosby] shall die before attaining the age of Thirty-Five (35) Years, the trustee shall distribute and deliver * * * [his] share to * * * [his] heirs at law.' (Italics ours.)

The testatrix provided that her executors might postpone ultimate distribution of her estate for a period of time not to exceed five years from the date of her death. If William Shaw Crosby died without leaving a child or children surviving him, prior to the ultimate distribution of the estate, it was provided in the will that the devise and bequest to him should lapse. If, before the testatrix died, he died survived by issue living at the time of the testatrix' death and at the time of ultimate distribution, such child or children should take his share.

William Shaw Crosby (to whom we shall refer herein as Crosby) was born June 10, 1918. He was nineteen when the will was executed, twenty-one when the testatrix died, and will become thirty-five years of age, if living, on June 10, 1953.

Pursuant to the directions in the will, the executors of Mrs. Anderson's estate entered into a trust agreement with respondent on September 13, 1943, and delivered to respondent, as trustee, real and personal property then valued at $129,000, being Crosby's share of the estate. The pertinent terms of the trust agreement correspond to those of the will and empower the trustee:

'2. To collect and receive the income of the trust property and to pay over to or for the use of said William Shaw Crosby such part of said income (less the reasonable costs of administration) as may be necessary or required for his education, support and maintenance.

'3. When and if said William Shaw Crosby attains the age of thirty-five (35) years, to pay over and deliver to him the whole amount of said trust property, and accumulated income (if any), less proper and reasonable costs of administering and closing said trust.

'4. In case said William Shaw Crosby dies before attaining the age of thirty-five (35) years, at his death to pay and deliver the whole of said trust property to his surviving heirs at law.'

Crosby and appellant Rhoda Crosby intermarried at some time subsequent to the death of Mrs. Anderson. A daughter, Margaret Judith Crosby, was born of this marriage in 1945 and a son, Daniel Wechsler Crosby, in 1947.

Respondent, in determining the amounts necessary for the support and maintenance of Crosby, has taken into consideration not only Crosby's own needs, but the requirements of his family as well. In February, 1949, respondent was paying to, or for the use of, Crosby income from the trust at the rate of $1125 per quarter, or $4500 per annum.

On January 26, 1949, Crosby and Rhoda Crosby, who were residents of California, entered into a property settlement agreement, with the stipulation that it might be incorporated in a decree of divorce obtained by either.

In the settlement agreement Crosby agreed, among other things, to pay to Rhoda Crosby four hundred dollars per month until distribution of the trust, of which sum two hundred sixty dollars was for the support and maintenance of the two minor children and one hundred forty dollars for the support of Rhoda Crosby. In this agreement, he purported:

(1) To assign to Rhoda Crosby, as security for the $400 monthly payments, all of the payments made by respondent trustee to which he is entitled, not to exceed, however, $4800 per annum.

(2) To assign to Rhoda Crosby, individually, 30% of his interest in the trust corpus.

(3) To assign to Rhoda Crosby and Leah Rachel Holmes, as trustees for the two minor children under the terms of a trust set forth in the property settlement agreement, 40% of his interest in the trust corpus.

By this property settlement agreement, each party relinquished his or her right to share in the estate of the other, except as a creditor under the agreement. They also agreed that Rhoda Crosby should have sole custody of the two children, with Crosby 'to have reasonable rights of visitation only upon approval of competent medical authority.'

This agreement was incorporated in an interlocutory judgment of divorce obtained by Rhoda Crosby in the superior court of Los Angeles county, California, on March 11, 1949.

Respondent trustee was not a party to the divorce action, nor were any of the trust assets situated in California. Crosby appeared in the divorce action but did not contest it. The record does not reveal whether a final decree of divorce has been entered, although one could be procured at any time subsequent to March 11, 1950.

On February 7, 1949, Crosby executed, 'pursuant to the terms of' the property settlement agreement, two separate instruments wherein he assigned (1) his interest in the trust income, not to exceed $4800 per annum, and 30% of his interest in the total trust property to Rhoda Crosby; and (2) 40% of his interest in the total trust property to Rhoda Crosby and Mrs. Holmes, as trustees for the two Crosby children.

The part of the assignment to Rhoda Crosby, relating to trust income, is qualified only as to amount (not to exceed $4800 per annum); it contains nothing other than its reference to the property settlement agreement which indicates that it is intended only as collateral security for Crosby's promise to pay her $400 per month. The part relating to assignment to her of 30% of Crosby's interest in the trust recites that it covers 30% of the value of the total trust property to be distributed 'upon the expiration and termination of said Trust, i. e., when I attain the age of thirty-five (35) years.' The same language is employed in the assignment of 40% of Crosby's interest in the total trust property to Rhoda Crosby and Mrs. Holmes, as trustees for the children. In each of the assignments Crosby declared that 'it is my intent that this assignment shall not be and it is not revocable.'

On February 26, 1949, Rhoda Crosby, individually and as trustee, and Leah Rachel Holmes, as trustee, caused executed copies of the assignments to be served upon respondent trustee, together with notices that they requested and required the trustee 'in due course to pay the same to us when payable.' A copy of the California divorce decree, which had incorporated in it the property settlement agreement, was also furnished to respondent.

On January 31, 1950, respondent brought this action, setting out the foregoing facts in its complaint and praying that its rights, liabilities and duties be determined. It specifically sought instructions as to whether it had the duty or right to comply with the assignments of income or principal, and if so, in what manner and degree. It also asked that, in the event it had the duty or right to comply with the assignments, the court instruct it as to how it should be guided in determining the amounts of income, if any, to be paid to Crosby and Rhoda Crosby. Respondent also prayed that it be awarded, from the income of the trust, a fee for its own services and those of its attorneys.

Jacob Kalina, a member of the bar, was appointed by the court February 14, 1950, to act as guardian ad litem for the two Crosby children. Nevertheless, all of the defendants, including the two children and Crosby, appeared by the same counsel and filed a joint answer to the complaint. They admitted all the allegations thereof and alleged that the will of Mrs. Anderson and the trust agreement did not prohibit Crosby from assigning his interest in the trust estate or the income therefrom. They prayed that the court declare the assignments to be valid instruments which put upon the trustee the liability and duty, or, if not the duty, then the right, to comply therewith. They...