Case Title: In Re Estate of Berryman

Citation: 226 Kan. 116, 595 P.2d 1120

Docket Number: 50,322

State: kansas

Court: Kansas Supreme Court

Date: 1979-06-09T00:00:00Z

Document:
226 Kan. 116 (1979)
595 P.2d 1120
In the Matter of the Estate of James W. Berryman, Deceased, and in the Matter of the Testamentary Trust "B" for United Presbyterian Foundation Under the Will of James W. Berryman, Deceased.
UNITED PRESBYTERIAN FOUNDATION, Appellant,
v.
ELOISE O. BERRYMAN, FIRST NATIONAL BANK IN WICHITA, Appellees.
No. 50,322

Supreme Court of Kansas.
Opinion filed June 9, 1979.
Harold S. Herd, of Coldwater, was on the brief for appellant.
Willis A. Shattuck, of Ashland, was on the brief for appellees.
The opinion of the court was delivered by
HOLMES, J.:
This matter is before the court on an appeal from *117 an order of the district court interpreting certain provisions of the will of James W. Berryman, deceased. Mr. Berryman, whose death occurred May 12, 1974, had executed a will on September 6, 1972 which was admitted to probate in Clark County on June 14, 1974. Mr. Berryman left an estate valued at $3,567,530.44 and a dispute has arisen over the proper construction of Article IV of his will which reads as follows:
"ARTICLE IV
It has been contended that by reason of the language used in Article IV, paragraph 1, only one trust was established and that the interest of trust B in the residue of the Berryman estate is not an undivided portion of the decedent's entire interest in the property which constitutes such residue. It was argued that the following language in Article IV, paragraph 1:
reflects an intent of the testator that only one trust be established and that trusts A and B are not separate entities each owning an undivided interest in the residue. The trial court held that two separate trusts were contemplated and established by the will and that each trust owned, as a tenant in common with the other trust, an undivided interest in the mineral and real property interests included in the residuary estate of the decedent, free and clear of any interest of the other trust. This appeal followed.
The primary function of the court in the interpretation of wills is to ascertain the testator's intent as derived from the four corners of the will and, once ascertained, the intent will be executed unless contrary to law or public policy. In re Estate of Cline, 170 Kan. 496, 227 P.2d 157 (1951).
In Johnston v. Gibson, 184 Kan. 109, 334 P.2d 348 (1959), we held:
The rules of construction were summarized in In re Estate of Ellertson, 157 Kan. 492, 142 P.2d 724 (1943):
We elaborated upon these rules in Russell v. Estate of Russell, 216 Kan. 730, 534 P.2d 261 (1975):
See also In re Estate of Wernet, 226 Kan. 97, 596 P.2d 137 (1979).
An application of these general rules and a careful analysis of *120 the Berryman will discloses the obvious intention of the testator to create two separate trusts, trust A for the benefit of his wife and trust B, a charitable trust for the benefit of the United Presbyterian Foundation. Mr. Berryman provided for co-trustees of trust A and a single trustee for trust B. Trust A may be terminated in whole or in part at anytime the beneficiary chooses to do so. Trust B cannot be terminated. Trust A is given a three-fourths fractional share of the residuary estate and trust B a one-fourth fractional share. These shares are distinct and separate and no provision of the Berryman will would allow the noncharitable trust to reach or invade the assets of the charitable trust, or vice versa. The one-fourth fractional share of trust B is to be applied to charitable uses, both as to income and corpus. Trust A is subject to the whim and control of Mrs. Berryman. Article V of the will sets forth certain powers and duties of the trustees including the requirement that the trustees maintain separate books of account recording all transactions of each trust. Article V (h)(1) and (2) specify certain duties and obligations for the trustee of trust B which do not apply to the trustees of trust A.
The reference in Article IV, paragraph 1, to "the entire trust estate," and "said trust estate" and the suggestion by the testator that there "be no physical segregation or division of trust assets as between the separate trusts" must be considered and read in conjunction with numerous other references in the will which reflect the intent to establish two separate trusts. A will is to be construed so as to give effect to every part thereof, providing an effect can be given to it which appears to be consistent with the overall intent of the testator. To read the above quoted language out of context and conclude that one trust was intended would do violence to the obvious intent of the testator. The better reasoning would appear to be that the testator, in using the language "trust estate" in said article, was referring back to his gift of the entire residuary estate which by specific language in the same paragraph directed a division into two trusts. The questioned language would then read:
The testator has referred consistently throughout the will to *121 trust estates, trustees and other expressions indicative of two separate trusts. Where a trustor uses plural expressions such as "trust estates," "trusts," "said estates," "trust funds," "several trust estates," and "respective trust estates," the indication is that he had in mind not one, but several trust estates. 76 Am.Jur.2d, Trusts § 16. The initial directive in the will clearly specifies "I direct that my residuary estate be divided into two trusts," and essentially all of the language of the will is consistent with that directive. Subsequent portions of the will must be read in light of the testator's primary direction and purpose to establish two separate trusts. It perhaps should be pointed out that the trial court has already approved the establishment of separate trusts and has ordered the distribution of assets to the separate trusts. Intangible personal property, consisting of cash and corporate stocks readily distributable in kind, have been assigned three-fourths to trust A and one-fourth to trust B. Certain mineral and real property interests have also been assigned to the two trusts in undivided interests on the same ratio. We find the action of the district court in making such distributions to the two separate entities entirely proper.
If there could be any doubt as to the intent of the testator, it is dispelled by Article VI, paragraph (f) of the will wherein the testator makes it clear that his intent is that trust B shall be a separate charitable trust which qualifies for a charitable deduction under the Internal Revenue Code. That provision of the will reads:
"ARTICLE VI
As might be expected many of the cases which have arisen involving the determination of whether one or more trust entities have been intended are cases involving federal estate or gift taxes.
The United States Supreme Court in U.S. Trust Co. v. Commissioner, 296 U.S. 481, 486-487, 80 L. Ed. 340, 56 S. Ct. 329 (1936), stated:
The United States Circuit Court of Appeals for the Third Circuit has held that words such as those used in the will of James W. Berryman have the effect of creating separate trusts rather than one trust. In Union Trust Co. of Butler v. Commissioner of Internal Revenue, 84 F.2d 386, 387 (3rd Cir.1936), it is stated:
More recently, in the case of Estelle Morris Trusts, 51 T.C. 20, 36 (1968), aff'd 427 F.2d 1361 (1970), the United States Tax Court had a similar issue upon which it ruled as follows:
It is well settled that the res of a trust may be a fractional or undivided interest without violating the requirement that the subject matter of the trust be definite. Bogert, Trusts & Trustees, § 111 (2d ed. 1965 and 1978 Supp.); Bogert & Bogert, Law of Trusts § 25, (5th ed. 1975); McHarg v. Fitzpatrick, 210 F.2d 792 (2d Cir.1954); Caskey v. Cowgill, 243 S.W.2d 1000 (Ky. App. 1951).
The remaining issue is a determination of the nature of the interest held by each trust in the assets of the Berryman residuary estate. The language of the will specifies trust A shall consist of a three-fourths undivided interest and trust B a one-fourth undivided interest in the residue. An undivided right or interest is defined in Black's Law Dictionary 1697 (4th ed. 1968), as:
In determining whether a tenancy in common, as opposed to a joint tenancy, has been created Kansas favors the former. K.S.A. 58-501 provides in part:
We hold that the will of James W. Berryman created two separate trusts, A and B; that each trust owns in fee simple absolute an undivided interest in the entire residuary estate of the decedent; that the interest of trust A is an undivided three-fourths interest and that of trust B an undivided one-fourth interest; that each trust owns its interest as a tenant in common with the other trust and that such ownership is subject to all of the rights of a tenant in common including the right to demand partition of any or all of the property at any time; that trust B owns the entire fee simple interest including both the income and remainder interest in one-fourth of the decedent's residuary estate, as a tenant in *124 common with trust A, free and clear of any other interest or claim of trust A; that trust A owns the entire fee simple interest in three-fourths of the decedent's residuary estate as a tenant in common with trust B, free and clear of any other interest or claim of trust B; and that the decision of the trial court as may be modified by the foregoing be affirmed.
The judgment is affirmed in accordance with the views expressed herein.
HERD, J., not participating.