Title: Bell v. Killian
Citation: 93 So. 2d 769
Docket Number: N/A
State: Alabama
Issuer: Alabama Supreme Court
Date: March 21, 1957

93 So. 2d 769 (1957)
A. L. BELL, as Adm'r, etc., et al.
v.
G. W. KILLIAN, as Adm'r, etc., et al.
7 Div. 223.

Supreme Court of Alabama.
March 21, 1957.
*772 Scott, Dawson &amp; Scott, Fort Payne, for appellants.
John B. Isbell, L. L. Crawford, W. M. Beck and W. W. Watson, Fort Payne, for appellees.
GOODWYN, Justice.
This is an appeal by respondents below from a final decree of the circuit court of DeKalb County, in equity, rendered in a suit brought by appellees, residuary legatees under the will of H. H. Killian, deceased, for a construction of said will and incidental relief. In the first appeal of this case, the decree of the trial court overruling demurrer to the bill was sustained. Bell v. Killian, 256 Ala. 24, 53 So. 2d 604.
The provisions of the will, executed in 1909, which are pertinent to a decision of the case are as follows:
On the death of H. H. Killian in 1945 his wife Roxiene Killian was duly appointed as executrix. At that time the estate consisted of several tracts of land valued in excess of $50,000 and about $9,000 in bank deposits.
About two years after Mr. Killian's death, Mrs. Killian married A. L. Bell, one of the respondents below and an appellant here. In January, 1950, she died intestate. Her husband was appointed administrator of her estate.
The ultimate effect of the evidence in the case at bar was to show that at the time of Mrs. Bell's death none of the assets of the Killian estate remained in their original form. The uncontroverted evidence showed that while serving as executrix she sold all of the estate's land and transferred the bank deposits of the estate into her personal account. As concluded by the trial court, there was a general commingling of the funds of the estate with Mrs. Bell's personal funds. The evidence further showed that Mrs. Bell purchased a farm with a part of the proceeds of the Killian estate, with herself and A. L. Bell as joint grantees, that another portion of the funds of the estate was used to purchase government bonds in which Mrs. Bell and other parties were designated as coowners; and that the remainder of the funds of the Killian estate was placed in a joint bank account with Mrs. Bell and A. L. Bell as joint depositors. As a result of Mrs. Bell's actions there were no funds or property left in the Killian estate at the time of her death.
The complainants are Bailey Killian and the heirs of Demoville S. Killian. Their bill alleges that under the will of H. H. Killian the widow's right was limited to the use of so much of the property of the estate as was reasonably necessary for her maintenance, well-being, comfort and support, with a remainder over to the two named residuary legatees or their heirs; that the property of the testator's estate not so used, but fraudulently or improperly converted to the use of the widow and her second husband, Bell, was rightfully owned by the residuary legatees, subject to the continued administration of testator's estate until all matters pertaining thereto had been finally and properly concluded.
The first problem to be resolved is the proper construction of the Killian will. It is apparent that it is ambiguous in its provisions, and that judicial construction is necessary.
At the outset, it should be fixed firmly in mind that the ultimate purpose and duty of the courts in construing any will is to ascertain the intention of the testator and give it effect to the extent which the law will permit. Patterson v. First National Bank of Mobile, 261 Ala. 601, 603, 75 So. 2d 471; Watters v. First National Bank of Mobile, 233 Ala. 227, 234, 171 So. 280. To this end the court will put itself as far as possible in the testator's position by taking into consideration the circumstances surrounding him at the time of the execution of the will. Patterson v. First National Bank of Mobile, supra; Adams v. Jeffcoat, 252 Ala. 501, 503, 41 So. 2d 183; Smith v. Nelson, 249 Ala. 51, 55, 29 So. 2d 335; George v. Widemire, 242 Ala. 579, 7 So. 2d 269. Further, the court will consider the will itself as a whole, giving effect to each of its provisions, if possible, so as to form one consistent scheme effectuating the intention of the testator. Watters v. First National Bank of Mobile, supra; Blackwell v. Burketts, 251 Ala. 233, 235, 36 So. 2d 326.
The trial court construed the will as follows:
Appellants insist that the trial court erred in its construction of the will. Their theory of construction is as follows: Paragraph 3 of the will creates an absolute fee in the wife, and subsequent provisions giving the wife the power to control, manage, and sell the assets of the estate merely affirm the testator's intention to give her a clear title to all of his property. Appellants contend that the attempted residuary legacy in paragraph 8 is so vague and uncertain that it cannot cut down the clear gift of a fee to the wife contained in paragraph 3. It is insisted that the following canon must govern our construction of the will: "An absolute estate created in clear and decisive terms, cannot be taken away or cut down to a lesser estate or interest by subsequent words, which are not as clear and decisive." Schowalter v. Schowalter, 217 Ala. 418, 420, 116 So. 116; Hatcher v. Rice, 213 Ala. 676, 678, 105 So. 881; Ralls v. Johnson, 200 Ala. 178, 180, 75 So. 926; O'Connell v. O'Connell, 196 Ala. 224, 229, 72 So. 81.
While this is a recognized principle in the construction of wills, we do not think it is applicable in construing the will before us for the reason that paragraph 3, does not create an absolute fee in clear and decisive terms. The provision reads:
Under our cases, a general devise of this nature which fails to specifically define the extent of the estate created, does not necessarily import an absolute fee if subsequent provisions of the will indicate that the testator intended a lesser estate. Patterson v. First National Bank of Mobile, supra; Higdon v. Higdon, 243 Ala. 571, 574, 11 So. 2d 140; Schowalter v. Schowalter, supra; Hatcher v. Rice, supra.
The applicable rule is thus stated in Patterson v. First National Bank, supra, 261 Ala. page 607, 75 So.2d at page 475.
The reasoning which supports this rule is sound. As with all canons of construction the purpose of the rule is merely to guide the courts in ascertaining the intention of the testator. In order to determine this intent it is obvious that the will must be considered as a whole. Therefore, when the testator makes a general devise without defining the extent of the estate which he wishes to create, and he subsequently provides for a remainder in the same property, it seems only logical to assume that he intended to qualify or limit the initial gift. There is no repugnancy between such provisions and none should be read into the will by the courts.
The rule which appellants rely on has application only when there is direct repugnancy between two provisions in a will. When there is an unqualified provision in a will creating "an absolute estate in clear and decisive terms" it is obvious that any subsequent clause which attempts to *775 cut down or qualify this estate is repugnant to the first clause. Therefore, the courts have soundly reasoned that the intention of the testator to cut down an initial gift of an absolute estate must also be in clear and decisive terms in order to have effect.
The distinction between the fields of application of the two rules of construction set out above is clearly drawn in Schowalter v. Schowalter, supra [217 Ala. 418, 116 So. 118]:
It is our conclusion that the trial court correctly held that the Killian will did not convey a fee simple estate to the wife, and that her interest was qualified by the provision for a remainder to the testator's brothers or their heirs.
However, it is evident that Mr. Killian intended his wife to have more than a bare life estate. Paragraph 5 of the will gives the wife a limited power of disposition:
This provision should be construed in connection with paragraph 7 which gives the wife an absolute power of sale over all of the testator's property:
Here, a careful distinction should be drawn between the wife's "power of sale" and her "power of disposition." An absolute power of sale is given the wife in paragraph 7 of the will. A naked power of sale, even though absolute, is only the authority to pass a good title to property, and does not confer upon the person exercising the power the right to use the proceeds of the sale for his own benefit. In essence, the power of sale merely gives the wife the authority to change the nature of the corpus of the estate without *776 the right to consume any of it. A limited power of disposition is given the wife in paragraph 5 of the will. A power of disposition confers the right to actually consume or use up the corpus. Here, the wife's power of disposition is limited to her reasonable necessities within her own sound discretion. Winn v. Winn, 242 Ala. 324, 328, 6 So. 2d 401.
Construing these two provisions together it seems clear to us that the testator intended to clothe his wife with the absolute authority to sell any of his property, but to limit her consumption of the corpus of the estate to her reasonable necessities within her own sound discretion. Upon her death the unconsumed portion of the corpus passed to the testator's brothers or their heirs, under the express provisions of paragraph 8. It necessarily follows that if the wife exercises her power of sale during her lifetime and thus changes the nature of the corpus, that the remaindermen are entitled to the unconsumed portion of the corpus in whatever form it may be as long as it can be identified. To hold that the rights of the residuary legatees are extinguished merely by the exercise of the power of sale would defeat the clear design of the testator. Winn v. Winn, supra; Smith v. Cain, 187 Ala. 174, 177, 65 So. 367, 368.
In Smith v. Cain, supra, the language of the will under consideration was different from the Killian will, but the testator's overall scheme was essentially the same. The pertinent portion of the opinion in that case is as follows:
Of similar import is Winn v. Winn, supra. The will under consideration in that case provided for a remainder after a life estate with a limited power of disposition for the purpose of support. There we held that upon the death of the life tenant the unconsumed portion of the proceeds from a sale of real estate under the power of disposition passed to the remaindermen.
Having concluded that a mere change in the nature of the corpus of the estate *777 through an exercise of the wife's power of sale does not of itself extinguish the rights of the remaindermen, we are next faced with the question whether the wife could cut off the remaindermen by giving away the assets of the estate to third parties under her power of disposition.
The trial court found that Roxiene Killian Bell, the testator's wife, attempted to defeat the remainder to the testator's brothers by inter vivos gifts of all the assets of the Killian estate. This finding is sustained by the evidence. We are clear to the conclusion that the wife could not defeat the remaindermen in that manner. Such an exercise of the power would impinge on the rights of the remaindermen and defeat the clear intention of the testator. It is expressly stipulated in the will that the wife could consume the corpus only for the purpose of providing for her reasonable necessities. If the wife were allowed to give away the corpus under her power of disposition the intention of the testator would obviously be violated. Braley v. Spragins, 221 Ala. 150, 158, 128 So. 149; Yockers v. Hackmeyer, 203 Ala. 621, 622, 84 So. 709.
In Braley v. Spragins, supra, it is indicated that a life tenant, even though having an absolute power of disposition, could not defeat a stipulated remainder by giving away the assets of the estate. In that case we said [221 Ala. 150, 128 So. 156]:
"In 27 A.L.R. 1388, it is said:
In Yockers v. Hackmeyer, supra, the testator gave to his wife a life estate with a power of disposition limited to several specific purposes. Upon her death the unconsumed remainder of the corpus was to be divided equally among his children. During her lifetime the wife conveyed certain real property belonging to the estate to one of the children without consideration. There we held that the conveyance must *778 be set aside, because the wife's exercise of the power was limited to the purposes set out in the will, and an inter vivos gift of the assets was a violation of her authority.
In conclusion, we find no error in the trial court's construction of the will that under the will "Mrs. Killian, the widow, became a life tenant with power of disposition of so much of the property of the estate as was reasonably necessary for her maintenance, well-being, comfort and support, with remainder over to the two named residuary legatees or their heirs." Such a construction gives a field of operation to each of the provisions of the will in such a manner as to form a cohesive, consistent scheme which we have found to be in accord with the principles of law laid down in our cases, and which we believe to be in accord with the intention of the testator.
It is evident under this construction of the will that upon the death of the life tenant, Mrs. Bell, the unconsumed corpus of the Killian estate must be distributed among the complainants as the residuary legatees. The problem now arises as to exactly what remained of the corpus at the time of her death.
In its decree the trial court found, in effect, that the following property could be identified as the unconsumed corpus of the estate:
(1) A 20 acre tract known as Berry farm the record title to which is in Mrs. Bell and A. L. Bell as grantees, (2) three lots in Pinellas County, Florida, the record title to which is in A. L. Bell, (3) several U. S. Government bonds registered to Mrs. Bell and various third parties as joint owners, (4) $5,000 paid into court as part of the purchase money for the Killian homestead, (5) bank account in the name of Mrs. H. H. Killian in Chattanooga, (6) bank account in the name of A. L. Bell, as administrator, in the State National Bank of Fort Payne.
The trial court found that all of these properties and accounts were actually portions of the corpus of the Killian estate or had been purchased with funds of the estate. The court also concluded from the evidence that Mrs. Bell had attempted to alienate all of this property from the estate by giving it away or by improperly placing it in her own name. Applying the law to these conclusions of fact the trial court held that the residuary legatees were entitled to this property as the unconsumed corpus of the Killian estate. The decree effectuated this holding by imposing a trust upon the property in favor of the complainants as remaindermen.
It seems clear to us that the trial court's application of the law to its conclusions of fact was correct. As we have said earlier, Mrs. Bell could not dispose of the assets of the Killian estate by inter vivos gift. Braley v. Spragins, supra; Yockers v. Hackmeyer, supra. Nor could she withdraw from the Killian estate any of the corpus thereof by placing it in her own name. Bynum v. Swoope, 201 Ala. 19, 75 So. 170; Smith v. Cain, supra. Therefore, any gifts of the estate property by Mrs. Bell, or attempted conversions to her own individual estate, were properly set aside by the court. Further, it is clear that the trial court could impress the trust upon any property which could be actually identified as a part of the corpus of the Killian estate even though it had been changed in form by investment of the estate funds in other types of property. "[For] so long as trust property can be followed, the property into which it has been converted remains subject to the trust." Evans v. Evans, 200 Ala. 329, 330, 76 So. 95, 96; Kennedy v. Carter, 217 Ala. 573, 574, 117 So. 182; Hanover National Bank of New York v. Thomas, 217 Ala. 494, 496, 117 So. 42; Hutchinson v. National Bank of Commerce, 145 Ala. 196, 201, 41 So. 143, 144.
The appellants do not question the general authority of the court to follow the trust property, but they insist that the court erred in impressing the trust upon the Berry farm and the Government bonds.
*779 First we review the correctness of the decree with respect to the Berry farm. The real problem in this phase of the case lies in actually tracing the estate funds to this property.
The difficulty in following the trust funds arises from the fact that the fiduciary, Mrs. Bell, generally and continually commingled her personal funds with the funds of the estate in a single bank account. The evidence shows that during Mrs. Bell's administration of the estate, funds of the estate in excess of $50,000 came into her hands as executrix. A large part of these funds was placed in her personal account at the State National Bank of Ft. Payne, and comprised the great bulk of the deposits made in the account. The evidence is convincing that the entire purchase price of Berry farm was paid by a check drawn on this commingled account. An examination of the bank account indicates that at the time this check was drawn Mrs. Bell's withdrawals had already exceeded her deposits of individual funds. Upon this evidence the trial court concluded that Berry farm had been purchased entirely with funds of the estate and thus impressed the trust thereon.
We think the trial court's decree was clearly correct in this respect. The guiding rule is stated in Hutchinson v. National Bank of Commerce, supra, as follows:
And thus (with closer applicability to this particular situation) in Bank of Florence v. United States Savings and Loan Company, 104 Ala. 297, 300-301, 16 So. 110, 111:
See, also, Evans v. Evans, supra; and Kennedy v. Carter, supra.
Under the authority of these cases we think that the trial court was clearly justified in impressing the trust on this property.
The last question raised on this appeal concerns the correctness of the trial court's decree with respect to the U. S. Government bonds. The decree affects 21 bonds having a total face value of $18,150. Each of these bonds is registered in the names of Mrs. Bell and one of the respondents as co-owners. The trial court found that Mrs. Bell had purchased all of these bonds with funds of the Killian estate and impressed thereon a constructive trust in favor of the complainants. The decree attempts to divest all interest in the bonds out of the various surviving co-owners and to vest title thereto in the administrator cum testamento annexo of the Killian estate. The applicable portion of the decree reads as follows:
Appellants do not appear to question the trial court's finding that all of the bonds were purchased with funds of the Killian estate, but insist that the sole ownership of the bonds is vested in the surviving co-owners by virtue of Treasury Regulations regardless of the equities involved. Their position is that on authority of Ex parte Little, 259 Ala. 532, 67 So. 2d 818, we should hold that the surviving registered co-owners are the sole owners and entitled to possession regardless of the circumstances, legal or equitable.
The holding in Ex parte Little, supra, was as follows: That a U. S. savings bond is a contract between the Federal government and the purchasers, and the rights of the surviving co-owner of a bond arises solely from that contract; that the effect of the Treasury Regulations relating to savings bonds is that upon the death of one co-owner the survivor takes title thereto as sole owner; and that the Treasury Regulations are incorporated into the contract by reference and are beyond the reach of state law to modify or destroy.
That decision appears to be in accord with the view taken by the overwhelming majority of federal and state courts. Chambless v. Black, 250 Ala. 604, 607, 35 So. 2d 348; 91 C.J.S., United States, § 126, p. 316; Annotation, 37 A.L.R.2d 1221.
It seems clear, therefore, that it was beyond the power of the trial court to divest the title out of the registered surviving co-owners by a direct decree. Hence, the decree must be modified so that it will not impair the contractual obligations between the Federal government and the purchasers of the bonds.
Although it is clear that the trial court could not divest title to the bonds out of the surviving co-owners by direct decree (Ex part Little and Chambless v. Black), there is nothing in the Treasury Regulations to prevent the court from imposing a trust on the proceeds of the bonds. In re Hendricksen's Estate, 156 Neb. 463, 56 N.W.2d 711, 719; District of Columbia v. Wilson, 94 U.S.App.D.C. 399, 216 F.2d 630, 633; Moore v. Brodrick, D.C., 123 F. Supp. 108, 109; Anderson v. Benson, D.C., 117 F.Supp, 765, 780; Katz v. Driscoll, 86 Cal. App. 2d 313, 194 P.2d 822, 828; Union National Bank v. Jessell, 358 Mo. 467, 215 S.W.2d 474, 477; Ibey v. Ibey, 93 N.H. 434, 43 A.2d 157, 159.
As is said in District of Columbia v. Wilson, supra [94 U.S.App.D.C. 399, 216 F.2d 633]:
The possible results flowing from an unqualified adoption of appellant's theory is well stated in another Federal case, viz.:
In Katz v. Driscoll, 86 Cal. App. 2d 313, 194 P.2d 822, 828, supra, it is said:
It is our conclusion that the trial court was correct in holding that the complainants were entitled to the beneficial interest in the bonds, but the decree should have impressed the trust upon the proceeds of the bonds and not upon the bonds themselves. The decree should be modified to require the surviving co-owners to cash the bonds and pay the proceeds into court for transfer to the administrator of the Killian estate.
Modified and affirmed.
LIVINGSTON, C. J., and SIMPSON and COLEMAN, JJ., concur.