Court Opinion

ID: 9611098
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:51:55.900125+00
Date Added: 2024-06-11T18:03:10.152772
License: Public Domain

SPENCE, J.
By this action plaintiff sought to terminate a testamentary trust prior to the time expressly provided for such termination. General and special demurrers to plaintiff’s amended complaint were sustained without leave to amend, a judgment of dismissal was entered, and plaintiff appeals therefrom.
In her amended complaint plaintiff sets forth the establishment and operation of the trust as follows: The trust was created by the will of plaintiff’s mother, Mabelle E. Kent, which will was executed on September 19, 1932. Under the terms of the trust the Title Insurance and Trust Company and Sidney B. Kent were named as trustees, with the direction that “the entire net income of said trust estate shall be held and accumulated by said trustees and reinvested by them for the beneficiaries thereof hereinafter named; provided, that any part of said net income may be paid, applied and expended by said trustees in their absolute discretion for support, care and education of’’ plaintiff. It was also pro*460vided that when plaintiff should reach the age of 35 years, the trust estate and all accumulations thereof should be transferred and delivered to her, whereupon the trustees were to be discharged from the trust; that if plaintiff should die before reaching the age of 35 years, the trust estate and accumulations should be transferred and delivered to any child or children of plaintiff; but in the event plaintiff should die without issue before reaching the age of 35 years, said trust estate should be transferred to any beneficiary designated by the deed or testamentary disposition of plaintiff, and in the absence of such appointment, to certain other named beneficiaries.
Mabelle E. Kent, the trustor, died on October 14, 1932, and on March 16, 1934, the trust estate was distributed to the trustees, who entered upon their duties and continued to act as joint trustees until the death of Sidney R. Kent, plaintiff’s father, on March 19, 1942. Since then the corporate trustee has acted alone.
It is next alleged that plaintiff has no living issue, and that she has conveyed all her interest in the trust to her husband “to take effect in the event that plaintiff herein should die without issue surviving her before reaching the age of” 35 years. Named as defendants in this action to terminate the trust are the corporate trustee, Title Insurance and Trust Company; plaintiff’s husband, E. D. Moxley; “contingent remaindermen under said trust”; and R. E. Allen, appointed on petition of plaintiff as “guardian ad litem for any child or children now unborn but who may be living at the time of the death of plaintiff herein should said plaintiff die before she reaches the age of 35 years. ’ ’
It is further alleged in the amended complaint that “notwithstanding the provisions of the trust that the plaintiff should receive the entire trust estate, together with the accumulations thereof, upon reaching the age of 35, it was contemplated by plaintiff’s mother at the time of the creation of said trust that should the occasion arise or circumstances exist warranting the earlier termination of said trust for the purpose of relieving plaintiff from any undue hardship or unexpected contingency, the trust could be earlier terminated”; that such “circumstances exist” in' that, when the will creating the trust was executed, plaintiff was a schoolgirl 15 years of age, living with her mother, and not capable of looking after her financial affairs; that it was contemplated by the trustor, plaintiff’s mother, that if she should die before *461plaintiff should attain the age of 35 years, plaintiff would live with her father, Sidney R. Kent, who would provide for her independently of the trust, and therefore it would be unnecessary for plaintiff to receive the corpus of the trust prior to her attainment of the designated age; that the trustor believed that plaintiff’s father, then living, would participate in the management of the trust, but by reason of his death, this- is no longer possible; that the income from the trust is negligible and wholly inadequate to support plaintiff in a manner consistent with her station in life; that plaintiff’s income apart from the trust is similarly insufficient; that by reason of her father’s death, plaintiff is unable to have comforts and necessities and to buy a home as she could if her father were alive; that plaintiff is now 26 years of age, happily married and living with her husband, capable of managing the estate left in trust by her mother, and is desirous of purchasing a home; that “the conditions aforesaid have arisen since the creation of the trust . . . and said situation was not contemplated by plaintiff’s mother and therefore no provision was made for the same. ’ ’
It is further alleged that the primary purpose of the trust was to protect plaintiff during her minority in providing for her support, education and maintenance; that such purpose has been accomplished; that the interests of the remainder-men are secondary to those of plaintiff; that the trust is not a spendthrift trust nor made irrevocable by its terms “making it incapable of termination before the full period prescribed for its duration.”
It is further alleged that plaintiff’s father by will created a trust and gave plaintiff a testamentary power of appointment of the trust estate; that plaintiff for “valuable consideration, did irrevocably . . . appoint as beneficiaries any child or children which might be born to the plaintiff who might be living when she reached the age of 35 years and that ... by virtue of such irrevocable . . . appointment under the Last Will and Testament of the plaintiff . . . the issue of plaintiff’s body, if any there be, should she die before reaching the age of 35 will not be prejudiced . . . and for said reason there is not nor "can there be any hostility of interest between plaintiff and such defendant contingent remaindermen.” According to the amended complaint the securities in the trust created by plaintiff’s mother have a value of about $37,500, while the value of plaintiff’s interest in the *462trust created by her father is alleged to be “in excess of the sum of one-half million dollars.”
Both the corporate trustee and the guardian ad litem for the contingent remaindermen demurred to the amended complaint upon the following grounds: (1) Failure to state facts sufficient to constitute a cause of action; (2) lack of jurisdiction of the court; and (3) defect of parties defendant in that unborn contingent remaindermen were not and could not be represented in the action.  The order of the court sustaining the demurrers is general in its terms and does not indicate the grounds upon which the court acted. In such situation the law is settled that “If the demurrer is well taken as to any of the grounds stated therein, then the order of the court sustaining the demurrer must be affirmed by the reviewing court.” (Haddad v. McDowell, 213 Cal. 690, 691-692 [3 P.2d 550], and authorities there cited.) Plaintiff’s pleading here is vulnerable to defendants’ first point of objection above enumerated, and the other grounds of demurrer need not therefore be considered. (Hays v. Temple, 23 Cal.App.2d 690, 696 [73 P.2d 1248].)
In Fletcher v. Los Angeles Trust & Sav. Bank, 182 Cal. 177 [187 P. 425], the rule is stated as follows at pages 179-180: “Where . . . discretion as to the amount of the income to be devoted to the needs of the beneficiary is vested in the trustee (Estate of Hemphill, 180 Pa.St. 95 [36 A. 409]; In re Stewart’s Estate, 253 Pa.St. 277 [Ann.Cas. 1918E, 1216, 98 A. 569]), or where the effect of the trust is to direct accumulations of the income until a fixed time (Claflin v. Claflin, 149 Mass. 19 [14 Am.St.Rep. 393, 3 L.R.A. 370, 20 N.E. 454]; Shelton v. King, 229 U.S. 90 [57 L.Ed. 1086, 33 S.Ct. 686, see, also, Rose’s U.S. Notes]), the trust cannot be terminated by the court during the period fixed by the trustor, even where all the beneficiaries are sui juris and consent thereto.” This is the rule in a majority of American jurisdictions with respect to active trusts (annotation, 123 A.L.R. 1427) and has its foundation in the well-established principle that, within the limits of the law, every man may do as he pleases with his own property. (Estate of Easterday, 45 Cal.App. 2d 598, 604 [114 P.2d 669].)  Ordinarily, the function of the court with reference to active trusts is not to remake the trust instrument, reduce or increase the size of the gifts made therein or accord the beneficiary more advantage than the donor directed that he should enjoy, but rather to ascer*463tain what the donor directed that the donee should receive and to secure to him the enjoyment of that interest. (4 Bogert, Trusts and Trustees, p. 2936; Claflin v. Claflin, 149 Mass. 19 [20 N.E. 454, 14 Am.St.Rep. 393, 3 L.R.A. 370].)
It is axiomatic that we must look to the instrument creating the trust to determine the nature, extent and object of said trust. (Civ. Code, § 2253; Restatement, Trusts, § 4; Ringrose v. Gleadall, 17 Cal.App. 664, 667 [121 P. 407].)  From plaintiff’s pleading of the terms of the trust created by her mother’s will, it is clear that the testatrix intended to establish an active and subsisting trust for a definite duration, with large powers and duties committed to the trustees. Thus, under the testamentary plan the trustees are expressly invested with “absolute discretion” in their application of the net income to the use of plaintiff until she reaches the age of 35 years, at which time they are directed to transfer “all of said trust estate and all accumulations thereof” to plaintiff and “thereupon be fully discharged.” Such plain arrangement for the trustees to retain complete control of the corpus and “absolute discretion” with respect to the income of the trust estate for the stated period would manifestly be violated by a judicial termination of the trust prior to the expiration of such stated period. The expressed wishes of the testatrix must be followed. (Estate of Yates, 170 Cal. 254, 257 [149 P. 555].)
That the trust lacks spendthrift features would not authorize its termination prior to the time specified, for the testatrix may have had good reason for desiring that the corpus of the trust should not go to plaintiff until she should attain the specified age. (Estate of Easterday, 45 Cal.App.2d 598, 607 [114 P.2d 669].) “The fact that because of the particular wording of a valid trust the legatee may himself impair its efficacy is not a justification for equity so to do.” (Estate of Yates, 170 Cal. 254, 257 [149 P. 555].) In connection with such situation and the authorities applicable thereto, it is said in 4 Bogert, Trusts and Trustees, at pages 2938-2939: “. . . it can be maintained with some force that the destruction of trusts by court action is anti-social in that it encourages donees to spend and waste in an age where there is an all too clear tendency to extravagance and neglect of the future. The settlor has said that the cestui shall enjoy the gift over a period of years. Shall the court be a party to a violation of that intent and thus encourage the possible squandering of the bounty! Even though the cestui will be *464able to squander through the device of sale at a sacrifice, should not the court do what it can to discourage wastage, by refusing the decree of termination, in the hope that the cestui will not think of alienation, or will find it too costly to use, or will be unable to find a buyer for his interest?”
Except under circumstances not shown here, courts cannot substitute their judgment for that of the trustor. In dealing with this question in a similar case, the Supreme Court of the United States said: “Upon what principle, then, is a court of equity to control the trustee by compelling a premature payment? It is a settled principle that trustees having the power to exercise discretion will not be interfered with so long as they are acting bona fide. To do so would be to substitute the discretion of the court for that of the trustee. Upon the same and even stronger grounds a court of equity will not undertake to control them in violation of the wishes of the testator. To do that would be to substitute the will of the chancellor for that of the testator.” (Shelton v. King, 229 U.S. 90, 94-95 [33 S.Ct. 686, 57 L.Ed. 1086].)
Plaintiff makes the sweeping allegation that “notwithstanding the provisions of the trust,” the testatrix contemplated that “for the purpose of relieving plaintiff from any undue hardship or unexpected contingency, the trust could be earlier terminated.” Then follow averments purporting"to substantiate plaintiff’s two theories for equitable relief: (1) change of circumstances not anticipated by the testatrix; and (2) accomplishment of the objects of the trust. Such claims, imputing to the testatrix purposes inconsistent among themselves and different from the purpose plainly appearing from the terms of the will creating the trust, add nothing to plaintiff’s cause of action. Manifestly, they cannot supply a basis for materially changing the testamentary plan which denied to plaintiff the management of the corpus until she should reach the age of 35 years. In her specific allegation as to the “contemplated” indispensability of her father to serve as trustee and in her claim that his death, after she attained her majority and was capable of handling her own affairs, would sustain the present termination of the trust, plaintiff ignores the import of the provisions of her mother’s will emphasizing the testatrix’ intention that the trust should not so fail, by fixing a definite period for its duration and by making a corporate trustee, as well as plaintiff’s father, responsible for its administration.  Presumably the testatrix in so pro-*465Tiding had knowledge of the general law of trusts in this state and elsewhere that “On the death, renunciation, or discharge of one of several co-trustees the trust survives to the others.” (Civ. Code, §2288; 2 Scott on Trusts, 1939 ed., § 195, pp. 1057-1060.) These circumstances demonstrate the pertinency here of the statement made in the case of Shelton v. King, 229 U.S. 90, at page 101 [33 S.Ct. 686, 57 L.Ed. 1086] : “In the case at bar nothing has happened since the will which was not anticipated by the testatrix.” In substance, plaintiff’s pleading of “changed conditions” amounts to no more than the pleading of mere considerations of convenience to herself as ground for frustration of the testamentary design for administration of the trust, and she cannot prevail. As was aptly said in Shelton v. King, supra, at page 101: “There is no higher duty which rests upon a court than to carry out the intentions of a testator when the provision is not repugnant to settled principles of public policy and is otherwise valid.” The cases in this jurisdiction cited by plaintiff in support of her alleged cause of action possess distinctive features which render them of no avail here.  That a court of equity has the power to terminate a dry, simple or passive trust before the time fixed for the termination thereof by the trust instrument cannot be disputed. Thus, in Eakle v. Ingram, 142 Cal. 15 [75 P. 566, 100 Am.St.Rep. 99]; and Moor v. Vawter, 84 Cal.App. 678 [258 P. 622], dissolution of passive trusts before the stated time was decreed upon application of the beneficiaries. (Cf. 123 A.L.R. 1442-1443.) The Eakle case at page 17 expressly declared the defendant to have no “standing in court to dispute [plaintiffs’] application [because] he was a mere hare trustee.” (Italics added.) In the Moor case the provision in the trust instrument for the accumulation of income beyond the age of minority of the petitioning beneficiaries was held void under authority of section 724 of the Civil Code (amended in 1929 to allow such accumulation) ; and with such active duty of the trustee eliminated from consideration the principle governing the termination of a dry trust was applied as the basis for according the beneficiaries the relief sought in the light of those facts. (Moor v. Vawter, 84 Cal.App. 678, 684 [258 P. 622].) In Gray v. Union Trust Co., 171 Cal. 637 [154 P. 306], the court observed at pages 640-641 that the plaintiff’s application for relief did not concern “a dry, naked trust, since active duties are imposed upon the trustee during the life of the plaintiff [in *466making investments and reinvestments as in its discretion may seem necessary and proper], and a no less active duty upon her death in causing to be determined, should she fail to nominate, those entitled to take the property.” The language in that case is directed to the point that remaindermen were created by the trust instrument and they were not before the court, so that a decree of dissolution was improperly entered. But there is nothing in the Gray ease which is contrary to the limitations stated in the Fletcher case, supra, and it is only in connection with “a dry and naked trust” that the Gray case is cited in Moor v. Yaivter, supra, as authority for the trial court’s exercise of its discretion in determining whether or not to enter a decree for termination as there sought.
Whittingham v. California Trust Co., 214 Cal. 128 [4 P.2d 142], and Bennett v. Nashville Trust Co., 127 Tenn. 126 [153 S.W. 840, Ann.Cas. 1914A 1045, 46 L.R.A.N.S. 43], illustrate a limited class of cases in which the court, under certain circumstances, may modify the terms of the trust, increase or reduce the trustee’s powers, and direct advances of income or principal to the beneficiaries. Thus, in the Whittingham case, plaintiff, by reason of a drastic change in her condition of health following the time of the creation of the trust, was in an admittedly necessitous condition and she based her application for relief upon that ground. The trustees were invested with the power of “management and control of the trust estate,” but it does not appear from the opinion exactly what the duties were. Declaring plaintiff to be “the only person beneficially interested” in a certain fraction of the income and principal of the trust estate, the court deemed it proper upon equitable grounds that one-third of plaintiff’s portion be distributed to her; but the trust itself was not terminated. In the Bennett case plaintiff, a minor beneficiary, alleged that it was necessary in order to complete her education that she be granted permission to use currently the income from certain money left in trust for her under the testator’s direction that it “be held . . . with all accumulations” by the executor until she should attain the age of 25. Analyzing at pages 841-842 [153 S.W.] the application as “one which relates merely to the better or more judicious mode of managing and controlling the subject-matter of the trust in order that the design and wishes of the donor may be more completely accomplished [rather than] to devest the trustee of title to the property which is the subject-matter of the trust and vest such title in *467direct opposition to the will of the donor,” the court concluded that plaintiff should have the advancement of income sought; but again the trust was not terminated.
Akin in character insofar as modification, rather than termination, of a trust is concerned is the ease of Adams v. Cook, 15 Cal.2d 352, 353 [101 P.2d 484], There certain real property was conveyed in trust to be sold at a price fixed in the trust instrument. Active duties relating to the management Of the trust property were conferred upon the trustee. The beneficiaries applied for equitable relief in the administration of this property following the discovery of oil thereon, a circumstance which markedly affected its value and which was not contemplated at the time of the creation of the trust. In such situation it was there aptly said at page 361 where the primary purpose of the trust would not be accomplished by a strict adherence to the terms of the declaration of trust and . . . when it is made to appear in a court of equity, as was shown in the present case, that the benefits and advantages which the trustors desired to confer upon the beneficiaries would not accrue to them by ‘ a slavish adherence to the terms of the trust, ’ the court may modify the terms of the trust to accomplish the real intent and purpose of the trustors.” (Italics added.)
It thus appears that plaintiff’s contention that the complaint states a cause of action for the termination of the active trust in question finds no support in any case heretofore decided in this jurisdiction and finds no support in the decisions representing the great weight of authority in this country. On the other hand, both reason and the great weight of authority indicate that courts should respect the admittedly valid and reasonable terms of a trust instrument creating an active trust and should not assume the power to terminate an active trust prior to the time expressly fixed by the trust instrument for such termination. That the trust under consideration is an active trust rather than a so-called dry, simple or passive trust, cannot be disputed and we therefore conclude that the trial court properly determined that plaintiff’s complaint fails to state a cause of action for its termination.
While plaintiff’s argument is confined to her claim that she is entitled to termination rather than to modification of the trust, certain authorities cited by plaintiff deal with modification and it may be assumed that if plaintiff’s complaint *468states a cause of action for modification, the demurrer thereto should not have heen sustained. We are satisfied, however, that plaintiff’s complaint fails to state a cause of action for either termination or modification of the trust.
It is only under peculiar circumstances, such as those exemplified in Adams v. Cook, 15 Cal.2d 352 [101 P.2d 484], that a court has the power to modify an active trust. (See, also, Whittingham v. Californit Trust Co., 214 Cal. 128 [4 P. 2d 142]; Bennett v. Nashville Trust Co., 127 Tenn. 126 [153 S.W. 840, Ann.Cas. 1914A 1045, 46 L.R.A.N.S. 43].) In the cited cases, the courts were dealing with exceptional situations in which modification was decreed in order to carry out, rather than to defeat, the primary purpose of the trustor as expressed in the trust instrument. Plaintiff’s allegations in the present case have been heretofore considered and we find no such peculiar circumstances alleged here. Plaintiff does not allege facts showing anything in the nature of an emergency or any peculiar circumstances which were not reasonably within the contemplation of the testatrix when she expressly directed that the corpus of the trust should be withheld from plaintiff until plaintiff should attain the age of 35 years. Plaintiff alleges that she desires to purchase a home but her allegations regarding the insufficiency of her income for that purpose fail to show such necessitous circumstances as would warrant a court in disregarding the plain provisions of the trust.  And while we do not believe that a trust should be modified merely upon a showing of the beneficiary’s desire to purchase a home and a showing of the insufficiency of the beneficiary’s income to make such purchase or to support herself in the manner to which she has been accustomed, it is significant to note that plaintiff makes no allegation that her husband, to whom she alleges she is happily married and to whom she may look for support, has not sufficient income to purchase said home and to support her in such manner. Plaintiff’s allegations fall far short of presenting a situation such as is disclosed in any of the cited cases dealing with modification of active trusts and, in our opinion, such allegations are wholly insufficient to justify such modification.
The judgment is affirmed.
Shenk, J., Edmonds, J., and Schauer, J., concurred.