Spencer's Estate, In re

• Decision Date: 29 August 1975
• Docket Number: No. 2--57068,2--57068
• Citation: 232 N.W.2d 491
• Parties: In the Matter of the ESTATE of L. J. SPENCER, Deceased. In the Matter of the ESTATE of Fern E. SPENCER, Deceased. Appeal of Harold SPENCER, Executor of the Estate of L. J. Spencer, Deceased, and Eugene R. Melson, guardian ad litem for the minor grandchildren of L. J. Spencer and Fern E. Spencer.
• Court: Iowa Supreme Court

Page 491

232 N.W.2d 491

In the Matter of the ESTATE of L. J. SPENCER, Deceased In the Matter of the ESTATE of Fern E. SPENCER, Deceased Appeal of Harold SPENCER, Executor of the Estate of L. J. Spencer, Deceased, and Eugene R. Melson, guardian ad litem for the minor grandchildren of L. J. Spencer and Fern E. Spencer.

No. 2--57068.

Supreme Court of Iowa.

Aug. 29, 1975.

Cudahy, Wilcox, Handley & Magee, Jefferson, and Dickinson, Throckmorton, Parker, Mannheimer & Raife, Des Moines, for appellant, Harold Spencer, Executor of the Estate of L. J. Spencer, deceased.

E. R. Melson, Jefferson, guardian ad litem for minor grandchildren of L. J. Spencer and Fern E. Spencer.

William C. Ostlund, Jefferson, guardian ad litem for great grandchildren of L. J. Spencer and Fern E. Spencer.

Kurth & Bunger, Carroll, for appellee Lyle Spencer, Trustee of the trust established under the will of Fern E. Spencer.

Heard before MOORE, C.J., and MASON, RAWLINGS, LeGRAND and McCORMICK, JJ.

LeGRAND, Justice.

This appeal involves the construction of trust provisions established under the will of Fern E. Spencer, deceased, and the related exercise of a power of appointment which she granted to her husband, L. J. Spencer. The trial court found the purported exercise of the power of appointment by L. J. Spencer in his last will and testament was invalid. In the absence of either a gift over or a residuary clause in Fern E. Spencer's will, the trial court decreed the trust property reverted to her estate to be disposed of as intestate property. The executor of the L. J. Spencer estate and the guardian ad litem for the minor grandchildren of L. J. Spencer and Fern E. Spencer appeal. The guardian ad litem for the grandchildren did not file timely notice of appeal, and this proceeding must be dismissed as to him.

No oral evidence was offered. The case was submitted below, and is determinable here, on the wills of Fern E. Spencer and L. J. Spencer, together with the files in both estates, which were introduced into evidence by agreement.

The factual background of this family dispute is as follows: L. J. Spencer (hereafter referred to as L. J.) and Fern E. Spencer (hereafter referred to as Fern), husband and wife, between them owned a section of land in Greene County, L. J. owned 480 acres, and Fern owned the remaining 160-acre quarter-section.

Fern died in 1944. By her will she left her real estate (the Northeast Quarter of Section 4, Township 85 North, Range 31 West of the 5th P.M. Greene County) in trust for the benefit of her four children--Donna Ilene Spencer, Lyle Darwin Spencer, Dale Eldon Spencer and Harold L. Spencer. She designated L. J. as trustee with power to dispose of the real estate by will or deed by granting a life estate to the four children heretofore named, the remainder to go to their children (her grandchildren). This power was to be exercised when L. J. made an 'equitable' distribution of his own 480 acres in the same manner as provided for Fern's land. If any child of L. J. and Fern died without children, the share of such child went to his or her surviving brothers and sister.

The pertinent provisions in the Fern Spencer will, paragraphs three and four, are here set out:

'Three. I hereby nominate and constitute my beloved husband L. J. Spencer, as Trustee, without bond, of the following described real estate owned by me, towit:

The Northeast Quarter (N.E. 1/4) of section Four (4) in Township Eighty-Five (85) North, Range Thirty-One (31) West 5th P.M. Iowa.

and authorize and direct my said Trustee to take charge of said real estate on March 1, 1945, and to rent and manage the same during his lifetime or until such time as he makes distribution of his individual property, among his children, as hereinafter provided such rents * * * to be paid to my said children, Harold Lee Spencer, Donna Ilene Spencer, Lyle Darwin Spencer and Dale Eldon Spencer, in equal shares, at such time and under such conditions as said Trustee deems proper. Each of said four children to share equalily in the income thereof. * * *

'Four. My said husband, L. J. Spencer, being the owner of all of said Section Four (4) Township Eighty-five (85) North, Range Thirty-one (31) West 5th P.M. Iowa, except the Northeast Quarter (NE 1/4) thereof, which is owned by me, and it being the intention of both myself and my husband, that the entire of said Section Four remain in the family for the benefit of our said children; and therefore, pursuant to the purpose of both myself and my said husband, it is my will and I hereby direct that my said husband L. J. Spencer be and he is hereby, authorized and directed, either by his last will and testament or by deeds executed by him prior to his death, to dispose of (my real estate) * * * to my said children hereinbefore named, if living, and to the survivors of any of my said children if deceased, leaving no child or children of his or her own body, in connection wtih the disposal of the balance of the lands in said Section Four (4) Township Eighty-five (85) North, Range Thirty-one (31), all of which shall be disposed of by him as a general disposition among said children, it being understood hereby that the said L. J. Spencer shall only dispose of said (real estate) * * * along with his land above referred to, and constituting the entire of said Section Four (4) in the equitable disposition of the entire of said Section Four (4) among said children, as he, in his judgment, finds best, and it being understood hereby that the said L. J. Spencer, in making disposition of said property among said children, shall dispose of the same to said children, granting of a life estate to such children with the remainder going to the survivors of such child or children of his or her own body. And further providing that in the event of the decease of any of said children prior to the division thereof, without leaving any issue by his or her own body then and in that event the life estate in said Northeast Quarter of Section Four and the life estate in the entire of said Section Four shall be granted to the survivors of said children, with the remainder in the children of said survivors respectively, it being the intention hereby that no power is granted to the said L. J. Spencer to dispose of said Northeast Quarter of said Section Four, except in the manner herein provided for in the equitable distribution of the entire of said Section Four among my children as hereinbefore specified.'

L. J. survived his wife by twenty-eight years. He died in 1972 without having exercised by deed the power of appointment Fern had conferred upon him. He was survived by all four of the children heretofore named, by thirteen grandchildren, and by one great grandchild.

L. J.'s will, a long and minutely detailed instrument, included the following provisions:

'ITEM IV. I hereby give, devise and bequeath unto the Trustee, hereinafter named, all of my real estate of every kind, nature and description, including land owned by me in Humboldt County and Greene County, Iowa, or wherever situated and in particular in this connection, I direct that the trust shall include the 160 acres of land * * * which was property owned by my wife, Fern Spencer, and as to which real estate I have under her Will, a power of appointment to dispose of either by Deed or Will.

'* * *

'(b) The trust herein created is equally for the benefit of my four children, * * * and their legal heirs in the event of their death, and in the event that any of my children should die, leaving children, then and in that event, said children shall take the share which would ordinarily have gone to their parents. If any child of mine dies without leaving a child of their own, the share shall be divided between my other living children.

'* * *

'* * *

'(e) Any sums remaining on hand after the establishment of the working balance, as hereinbefore provided, * * * shall be divided by the trustee into four equal shares to be held by the trustee for the use and benefit of each of my children during their lifetime.

'* * *

'(h) The trust shall continue for the longest period permitted by law, which I understand to be that the trust can continue until the death of the last of the persons in being at the time of my death, who will take under this Will, plus 21 years. I would think, therefore, that this trust could and will continue to be in full force and effect, for as long as any of my children or great grandchildren or any of their descendants who are alive at the time of my death, plus 21 years. The trustee shall continue to make payments to the persons entitled thereto, upon the same basis as to my children during their lifetime. In the event that the law should be changed in any way extending the time that a trust might legally be in force, I hereby establish said trust for such longer period that the law permits. The trust contemplated hereunder is to be a legal trust complying fully with the laws of the State of Iowa, and the Court shall construe this Will to be a trust for as long a period as is legally possible, at the time that the trust would normally terminate, it is my wish that the persons benefiting under the trust, shall voluntarily extend the trust for a longer period.'

The trial court found the purported exercise of the power of appointment by use of a trust, instead of an outright life estate, violated the terms of the power and was therefore invalid. In its decree the trial court said:

'The intent of Fern Spencer in granting the power to dispose of her real estate to L. J. Spencer was that he would make an equitable distribution of all of Section 4 by the granting of a life estate to her children with the remainder to their children. Fern specifically stated that it was her intention that no power was granted to dispose of her real estate except in the manner for which she provided.

'* * *

'The attempted exercise of the power by L. J. Spencer was void for exceeding the...