Title: In Re Estate of Freeman

State: kansas

Issuer: Kansas Supreme Court

Document:

195 Kan. 190 (1965)
404 P.2d 222
In the Matter of the Estate of D.N. Freeman, Deceased.
MARGARET ELIZABETH PEROTTI and NANCY ANN HOWELL (formerly Nancy Ann Braile), Appellees,
v.
THE FIRST NATIONAL BANK OF TOPEKA, Executor, Appellant.
No. 44,084

Supreme Court of Kansas.
Opinion filed July 10, 1965.
Terry L. Bullock, of Topeka, argued the cause, and R.L. Hamilton and Harry W. Gantenbein, both of Beloit, Robert L. Webb, Ralph W. Oman, Philip E. Buzick, William B. McElhenny, James D. Waugh, James L. Grimes, Jr., and Donald J. Horttor, all of Topeka, were with him on the briefs for the appellant.
Wendell S. Holmes, of Hutchinson, argued the cause, and Geo. E. Teeple, of Mankato, and Thomas M. Howell, of Kansas City, Missouri, were with him on the briefs for the appellees.
The opinion of the court was delivered by
HATCHER, C.:
This is an appeal from a judgment in an action to construe a will which held a devise in trust void as in violation of the rule against perpetuities.
The facts material to the determination of the controversy are not in dispute.
D.N. Freeman died December 21, 1959, leaving a will which he had executed November 10, 1955.
Although it may burden this opinion an attempt to construe the instrument will be meaningless unless we present the verbatim language used by the testator. Only the portions of the will essential to the determination of the questions before us will be considered. The will provides insofar as material to the issues to be determined as follows:
FIRST ARTICLE
SECOND ARTICLE
*192 THIRD ARTICLE
FOURTH ARTICLE
..............
FIFTH ARTICLE
Named in the will as beneficiaries were the following persons or corporations who were then living or in existence:
All of the above named were living or in existence on the date the will was made and on the date of the testator's death, but Margaret Annan Freeman had remarried and for that reason the bequest to her was ineffective and was by the terms of the will given instead to the testator's granddaughter, Nancy Ann Braile. In addition, Margaret Elizabeth Perotti had adopted a daughter, Michelle, and three children, Daniel Joseph, Linda Ann and Pamela Rose, had been born to Nancy Ann Braile.
On February 24, 1961, Margaret Elizabeth Perotti and Nancy Ann Braile filed a petition in the probate court for construction of will. The petition for construction was transferred to the district court and as amended heard on its merits. The district court entered its judgment upon the amended petition on June 4, 1964. The district court held:
The effect of the court's decree was to uphold the first three articles of the will and void the balance, leaving the greater part of the estate to pass intestate.
The executor has appealed.
The appellant frankly concedes that some of the alternative contingencies are too remote to avoid the application of the rule against perpetuities.
The common law rule against perpetuities has long been in force in Kansas. (In re Estate of Dees, 180 Kan. 772, 308 P.2d 90.) The rule has reference to the time within which the title vests and it is not concerned with the postponement of enjoyment or possession. (In re Estate of Swingle, 178 Kan. 529, 289 P.2d 778.) It prevents the creation of any future interest in property which does not vest within twenty-one years after some life or lives presently in being plus the period of gestation if gestation is in fact taking place. (In re Estate of Davis, 171 Kan. 605, 611, 237 P.2d 396.) In re Estate of Woods, 181 Kan. 271, 311 P.2d 359, states at page 280 of the opinion:
In ruling upon whether a future interest violates the rule against perpetuities, speculation concerning the probabilities of various subsequent developments is not indulged in by the courts. It is a sufficient violation of the rule if an interest might possibly vest beyond the period permitted. The test for determining whether an interest violates the rule is simple: Can a hypothetical case be posed, based upon the facts as they existed at the date of the testator's death, in which the interest will vest later than lives in being and 21 years? If so, the interest in question is void.
The testator, in the terms set forth in Article Fifth of his will, has provided for three inconsistent alternative contingent gifts of the same corpus interest. Only one of these gifts can take effect. Each alternative gift depends upon the occurrence of the event upon which it is contingent for its effectiveness. Which gift of the three will ultimately take effect can only be known upon the occurrence of one of the three inconsistent events upon which that gift only is dependent.
The appellant in substance suggests that the gift of the corpus of the estate, and two other possible class gifts of income, are made contingent upon three separate events and given in the alternative by the Fifth Article in the following manner:
FIRST: If Margaret and Nancy leave no issue surviving them at the date of their respective deaths, whichever occurs later, the entire corpus of the trust is given out-right to the Community Hospital of Beloit, Kansas.
SECOND. If Margaret and Nancy both leave issue (it is suggested that the context indicates that "issue" was used by the testator to mean children) surviving them at the time of their respective deaths, one-half of the net income from the trust is given to the surviving children of Margaret for life and one-half to the surviving children of Nancy for life. At the termination of these life income class gifts, a second class gift of income is given to the *197 surviving grandchildren of Margaret and Nancy until the youngest shall reach twenty-one years of age. When the youngest grandchild reaches twenty-one, the corpus of the trust is then given outright to such grandchildren as may then be living.
THIRD. If Margaret or Nancy, but not both, leave issue (used to mean children) surviving her death, a life income gift is given to those children. Upon the termination of this life income class gift, a second class gift of income is given to the surviving grandchildren of either Margaret or Nancy until the youngest of such grandchildren reaches the age of twenty-one years. When the youngest of the grandchildren reaches the age of twenty-one, the corpus is given outright to such grandchildren as may then be living.
In the case at bar the contingent income gift to the grandchildren of Margaret and Nancy and the ultimate contingent disposition of corpus to those same grandchildren under the second and third Alternative Contingent Gifts above, violate the rule. A hypothetical case based upon the facts at the date of the testator's death can easily be posed whereby these interests vest later than the time period permitted by the rule against perpetuities.
The remorseless construction and the infectious invalidity rule was followed at one time by most courts recognizing the rule against perpetuities. If there was a possibility that any part of a devise might vest beyond the period permitted the entire devise was stricken down.
Later the intention of the testator was made the "pole star" in construing ambiguous language contained in a will, and, by the same token, many courts sought to make the desire or wish of the testator the controlling factor in determining what parts of a devise would be permitted to remain where some of the provisions could not be harmonized with the rule against perpetuities. It will be understood that none of the courts found fault with the general purpose of the rule which was to prevent dispositions which tie up property for remote periods. It was the infectious invalidity rule that came under criticism. If some of the contingencies are too remote there would appear to be no reason why the valid contingencies should fall if it appears that standing alone they would have been desired by the testator.
An effort to escape the harsh application of the rule against perpetuities has fostered numerous named doctrines and many independent decisions which have caused considerable confusion. Our *198 attention has been called to the "wait and see" doctrine, the "second look" doctrine, the "alternative contingency" doctrine, "striking modifying clauses" doctrine and the "partial invalidity excision" doctrine.
Under the "wait and see" doctrine the courts "wait and see" to determine whether the contingency happens within the period of the rule. A judicial decision is simply postponed until all possible valid contingencies and possibilities for vesting has occurred. (Simes and Smith, The Law of Future Interests, § 1230, p. 126.)
This court has not and does not now place its approval on the "wait and see" doctrine. The creating instrument takes effect upon the death of the testator, the contingent future interest immediately comes into existence and the validity of the interest should be determined as of that time.
The "second look" doctrine indicates a further tendency on the part of the courts to be as lenient as possible in the application of the rule which tends to defeat the testator's intention and desire. This doctrine is applied in situations where the instrument creating the life estate gives the life tenant power or authority to appoint or select his successor in interest. Under the early law in order to determine the validity of the appointment or selection it must be read back into the original instrument creating the power  the computation of time was to begin with the date of the original instrument. The "second look" doctrine qualified the foregoing rule by permitting the words used by the donee of the power in appointing or selecting his successor to be construed as they are at the time the power is exercised. (Morris and Leach, The Rule Against Perpetuities, p. 143.) The brief summation is sufficient to refute appellees' contention that the theory the appellant would apply is nothing more than the "second look" doctrine. There is no power of appointment extended, therefore the doctrine has no application to the facts before us. Any further discussion of this particular doctrine would be unwarranted.
The "alternative contingency" doctrine is explained in 41 Am. Jur., Perpetuities and Restraints on Alienation, § 59, p. 102, as follows:
Under this doctrine the nature of the contingent interest and the time it will vest, if ever, is determined as of the effective date of the instrument creating the devise. It is this doctrine that appellant contends should be applied to the devise under consideration.
Perhaps the next two matters to be discussed should be designated as "rules of construction" rather than "doctrines." However, their importance in the field of the law under consideration requires that they be treated with the same dignity as the first three doctrines discussed.
The "striking the modifying clause" doctrine means just what the language indicates. Where the language creating a gift contains a clause which taken by itself is sufficient to create an outright gift which is valid under the rule against perpetuities but a second clause appears which expresses a different intent and declares a life estate plus a remainder which is void under the rule, the qualifying clause will be stricken and the valid clause permitted to stand. (American Law of Property, Vol. 6, § 25.28, p. 233.)
The "partial invalidity excision" doctrine has been the one most commonly used by the courts not wedded to the "infectious invalidity" rule. In case the failure to vest title within the time limits of the rule against perpetuities causes the invalidity of part but not all of the limitations in a devise under a will, the invalid parts will be deleted and the valid limitations permitted to stand. (American Law of Property, Vol. 6, § 25.65, p. 321.) This doctrine, as all others, is subject to the general proposition that if the deletion of a part causes a distortion of the testamentary plan the entire devise must fall.
There would appear to be nothing in the three doctrines or rules of construction, last discussed, which would in anyway conflict with the disposition this court has made of devises some part of which violated the rule against perpetuities.
*200 This court has never adhered to the classical view of "remorseless" construction developed in England. Neither has it become a slave to the rule of "infectious invalidity." On finding an instrument ambiguous this court has gone far in resolving the ambiguity in favor of the construction which will uphold the gifts. (Klingman v. Gilbert, 90 Kan. 545, 135 Pac. 682.) It has also gone far in striking invalid provisions and leaving valid provisions stand where the procedure appears to be in harmony with the wishes of the donor. The appellees contend that if we strike a part of the will and leave the remainder stand we are rewriting the testator's will. They also contend:
We do not agree. As previously stated we do not approve of the remorseless rule of construction. Neither do we believe that the infectious invalidity rule should be remorselessly applied. Striking of void provisions does not place the court in the position of rewriting the testator's will. The rule itself renders nugatory the invalid parts. We cannot assume that because the testator could not have all that he desired that he wanted no part. The deleting of invalid provisions and leaving the valid ones stand does no violance to the purpose of the rule against perpetuities, which is to keep property alienable within the reasonable limits fixed by the rule.
At this point an analysis of our past decisions may be helpful.
In Dreisbach v. Spring, 93 Kan. 240, 144 Pac. 195, the testator's will provided that his property was to be held in trust for the use and benefit of his four named grandchildren, "or the survivors of them, during their natural lifetime, but only the net income from said real and personal property thus held in trust shall be paid to my said grandchildren or their survivors in equal shares, said income to accumulate in the hands of the trustee until each of said grandchildren becomes of age, when its respective share is to be paid to it, and thereafter to be paid annually, and at the death of the last survivor of my said four grandchildren all of the estate held in trust, both real and personal, shall be equally divided between the heirs of my said grandchildren being issue of their bodies, *201 but should they all die without issue, then said estate is to go to the heirs at law of my brothers and sisters and their heirs and assigns forever...." The clause which provided that should the four grandchildren all die without issue the estate should go to the heirs at law of the testator's brothers and sisters and their heirs and assigns forever was held void in the district court as in violation of the rule against perpetuities. On appeal it was argued that the void provision destroyed the entire will. This court held:
In Blake-Curtis v. Blake, 149 Kan. 512, 89 P.2d 15, a provision in the will directed the executor to control and manage testator's ranch until he could sell the same for $20 per acre or an aggregate sum of $40,000, and then to divide the proceeds among certain named children. The direction to hold the property was held to violate the rule against perpetuities, however, it was held:
In Beverlin v. First National Bank, 151 Kan. 307, 98 P.2d 200, it is stated in the syllabus:
The Beverlin case followed paragraph 3 of the syllabus in the Blake-Curtis case previously quoted.
*202 In McEwen v. Enoch, 167 Kan. 119, 204 P.2d 736, it was stated in the syllabus:
Although what was done in the McEwen case was called "acceleration," it amounted to nothing more than a deletion of the void provisions.
In re Estates of Dees, 180 Kan. 772, 308 P.2d 90, has not been overlooked. However, the case discusses both the rule against perpetuities and the common law rule against restraints on alienation. The two rules were not distinguished and it is difficult to determine which rule carried the most weight. The fifth paragraph of the syllabus is in harmony with the cases heretofore discussed. It reads:
Our last consideration of the questions is to be found in In re Estate of Foster, 190 Kan. 498, 376 P.2d 784, 98 A.L.R.2d 795. The clause of the will under consideration was summarized by the court as follows:
It was stated on page 504 of the opinion:
Both parties have cited numerous cases in support of their various contentions. The cases are of very little aid to us. It may be safely said that at the present time cases may be found to support any theory that might possibly be presented in connection with the rule against perpetuities.
Appellees also suggest that the devise violates the common law rule against accumulations. We cannot agree. The income from the trust was to be accumulated in part only until the deaths of Margaret and Nancy who are lives in being. After their death the entire net income from the trust was to be distributed. There could be no further accumulation after the deaths of the lives in being, therefore, the accumulation anticipated by the will did not violate the common law rule against accumulations. The rule against accumulations is concerned only with the time of accumulation and not with the dollar amount. Kansas must follow the common law rule since we have no statute. (In re Estate of Yetter, 183 Kan. 340, 328 P.2d 738.) The leading American case on accumulations at common law is generally said to be Gertman v. Burdick, 123 Fed.2d 924. In that case it was held that the period of limitations for accumulations is the same as the common law rule against perpetuities, i.e. lives in being plus 21 years. This court discussed the common law rule in In re Estate of Foster, supra.
It is obvious that the testator's dominant purposes were:
1) to provide life interests only for Margaret and Nancy and thus prevent their dissipating the corpus of the estate,
*204 2) to vest the corpus of the estate in the Community Hospital of Beloit should Margaret and Nancy die without leaving issue,
3) to leave the issue (children) of Margaret and Nancy, if any, a life interest only,
4) to vest the title to the corpus in the grandchildren of Margaret and Nancy, if any, when the youngest reached the age of 21 years.
It is conceded that the testator's purposes 3 and 4 violate the rule against perpetuities and are void. However, purposes 1 and 2 do not offend against the rule.
We conclude that the devise to Margaret's and Nancy's issue and then to the issue of the body of such issue when the youngest reaches the age of 21 is void and must be stricken.
The life interests devised to Margaret and Nancy are valid and will be permitted to stand. If they should die without leaving issue the property covered by the trust will pass in fee to the Community Hospital at Beloit. If they should die and either of them leave issue the trust must fail.
At this point we no doubt have followed the doctrine of "alternate contingencies." However, if we follow that doctrine alone and permit the valid provisions to stand without striking the void contingencies the trust must fail at the death of either Margaret or Nancy whichever dies first leaving issue, because it is then known that the valid alternate contingency can never take effect. We see no reason why the testator's valid wish, definitely expressed, should not be carried out, and Margaret and Nancy continue to receive the income under the provisions of the will until they are both deceased.
There remains to be determined what disposition should be made of the corpus of the estate when and if the trust fails. The question was considered by this court in Kirkpatrick v. Kirkpatrick, 112 Kan. 314, 211 Pac. 146, where a trust was in violation of the rule against perpetuities but the will contained a residuary clause. It was held:
It was stated in the opinion:
We would suggest that if it clearly appears that passing the property under the residuary clause will tend to distort the testator's desire, then the property may pass the same as if there was no residuary clause.
The will which we are considering does not contain a residuary clause. In the absence of such clause we are forced to conclude that should the trust fail on the death of both Margaret and Nancy, because either leaves issue, the corpus of the trust passes to the heirs of the testator by intestate succession. (Lasnier v. Martin, 102 Kan. 551, 171 Pac. 645.)
The judgment is reversed and the case remanded for such further proceedings as are necessary and not inconsistent with this opinion.
APPROVED BY THE COURT.
FONTRON, J., not participating.
FATZER, J., dissenting:
The appellant and the majority opinion concede that the common-law rule against perpetuities is in force and effect in this state, and further concede that the devise in paragraph V of the will creates contingencies which will not vest in interest within the period of time prescribed by that rule. Those concessions should terminate the litigation and require this court to affirm the judgment below.
While the majority opinion concedes that the devise in question violates the rule against perpetuities, the court proceeds to use the scissors on those provisions which violate the rule and "cut out" or in legal parlance "excise" the invalid portions and declare the remaining provisions of the devise to be valid and unaffected. In my judgment, the devise is wholly valid or wholly invalid. All the various doctrines advanced in the majority opinion are only a means to circumvent full application of the rule against perpetuities. I adhere to my dissent in In re Estate of Foster, 190 Kan. 498, 507, 376 P.2d 784, 98 A.L.R.2d 795, and cases cited therein, and I would affirm the judgment of the district court.