Title: Nichols v. First Nat. Bank of Baker

State: oregon

Issuer: Oregon Supreme Court

Document:

Reversed December 2, 1953.
*660 Blaine Hallock, of Baker, argued the cause for appellant. On the brief were Hallock, Banta, Silven & Horton, of Baker.
A.S. Grant, of Baker, argued the cause for respondent. On the brief were Grant & Fuchs, of Baker.
*661 Before LATOURETTE, Chief Justice, and ROSSMAN, LUSK and PERRY, Justices.
REVERSED.
LATOURETTE, C.J.
This is an appeal by Edith F. Nichols, widow of James H. Nichols, deceased, from a decree in a declaratory judgment proceeding against the First National Bank of Baker, as trustee, which held against her claim to the corpus of a trust fund created by the will of her husband. The construction of decedent's will, which was executed on January 14, 1929, is before us.
At the time the will was executed, his wife, Edith F. Nichols, and his daughter, Elizabeth Nichols, were living, the daughter being about nine years of age. Decedent died during the month of May, 1929, and his will was thereupon admitted to probate in Baker county and estate proceedings were closed shortly thereafter. After decedent's death, his daughter Elizabeth married one James Filor. Two sons were the issue of this marriage. On August 27, 1951, the daughter, her husband and two children simultaneously met their death in an airplane accident, the daughter at that time being 31 years of age.
The will in question made certain bequests and devises to relatives and friends, and then bequeathed to his wife all of the real property situate in Oregon owned by him at the time of his death, in addition to the sum of $20,000. She was also made the beneficiary in certain insurance policies.
The following clauses of the will are before us for construction:
After the death of the husband, the daughter Elizabeth, pursuant to clause eight of the will, received income from the trust fund during her lifetime and after *663 her death the wife was entitled to, and received, such income. There is no argument about this.
As to clause eight of the will we find that the testator made provision for the disposition of the corpus of the trust fund as follows:
Since the daughter did not survive the wife, provisions 1 and 3 above set out are ineffective, and since the daughter was of the age of 31 years at the time of her death and did not dispose of the principal by will, section 2 above is inoperative.
Under the circumstances of the case, no disposition of the corpus of the trust, under clause eight of the will, has been effectuated, to which all the parties to this proceeding agree.
The question is, what disposition, if any, shall be made of the corpus of the trust at this time?
1. It is the law that where one is the beneficiary of a contingent gift under a will and dies after the death of the testator, before the gift vests, there is a failure of such gift. Jorgensen v. Pioneer Trust Co., 198 Or 579, 258 P2d 140; 4 Page, Wills, 163, § 1414.
2. Where a contingent gift fails, such gift falls back into the estate of decedent and descends under the law of descent in the absence of a residuary clause. Kaser v. Kaser, 68 Or 153, 159, 137 P 187. See In re Estate *664 of McCoy, 193 Or 1, 236 P2d 311; Lee v. Albro, 91 Or 211, 178 P 784.
3. However, where the decedent dies testate and has a residuary clause in his will, upon a failure of such gift the same passes to the residuary legatee under the residuary clause of the will. Witham v. Witham, 156 Or 59, 66 P2d 281; 57 Am Jur 949, Wills, § 1418; 108 ALR, Annotation, beginning at p 464.
4. Where there are two residuary legatees and there is a lapsed or failure of legacy as to one of them, the surviving legatee will not take such legacy as a survivor unless survivorship is distinctly expressed by the terms of the will, or is clearly implied therefrom, but the same will fall into the estate of decedent and descend according to the laws of descent as of the date of the death of the testator. Kaser v. Kaser, supra, at p 159; In re Estate of McCoy, supra; Armstrong Junior College Commission v. Livesey, 189 Ga 825 7 SE2d 678, 132 ALR 1063, and Annotation, 132 ALR 1069.
5, 6. The untimely death of the daughter, her children and husband, brought about a contingency which occasioned the failure of the gift, and since the mother could not take the daughter's share as a survivor under the residuary clause, it would fall into the estate of the husband and descend to the mother, she being the sole remaining heir at law of her husband and daughter, thus giving her the entire trust estate.
The trustee urges that the trusteeship should continue until the death of the widow and bases its contention on the language of the will found in clause eight of the will:
It is said by the trustee that this language is unequivocal,
The trial court adopted the above view in the following language:
7. The language of the will creating the trusteeship, of course, is clear and unambiguous, but in construing the will we are not limited to the language in any specific part of the will. It is our duty to ascertain the intention of the testator by considering the will in its entirety. Fields v. Fields, 139 Or 41, 3 P2d 771, 7 P2d 975.
Had the corpus of the trust estate devolved according to the provisions of clause eight of the will, the language regarding the trust, of course, would be controlling. But the contingency that has arisen, which brought about the failure of the bequest, was obviously not within the contemplation of the testator when he executed the will. Therefore, we must consider the circumstances attending the death of the daughter and *666 family and construe the trust provision in the light thereof. We said in Adkinson v. Blomquist, 128 Or 211, 214, 274 P 312:
And in Lent v. Title & Trust Co., 137 Or 511, 516, 3 P2d 755, we said:
8. Where there is a merger of beneficial estates in the same person, a trust may be terminated unless a spendthrift, support or similar trust is created. It is said in 54 Am Jur 86, Trusts, § 89:
9. The trust created by the instant will was not a spendthrift or support trust so far as the widow was concerned. That the testator had great confidence in his wife's ability to handle money is evidenced by the *667 provisions of the will giving her $20,000 in cash, all his real estate in Oregon, and the proceeds of insurance policies. The primary support provision of the will was directed to his daughter, and the fact that he provided secondarily for his wife, so far as the income from the trust is concerned, does not indicate that the same was for her support any more than he desired to augment her inheritance from the estate.
A typical spendthrift trust is that treated in the case of Jorgensen v. Pioneer Trust Co., supra, and a support trust is one created in the will involved in Lent v. Title & Trust Co., supra.
It is inconceivable to us that the testator, an attorney of high standing in the Oregon bar, intended that his widow should be deprived, under the circumstances and exigencies of this case, of the full enjoyment of the trust fund, and that the same should at her death devolve to unknown or unthought of heirs.
The decree will be reversed with instructions to terminate the trust and pay the proceeds therefrom to Edith F. Nichols, after deducting costs and disbursements in both courts.