Court Opinion

ID: 9670577
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:22:43.2528+00
Date Added: 2024-06-11T18:16:05.103473
License: Public Domain

*248BROWN, Justice
(dissenting).
On the former appeal from a decree of the circuit court sustaining the defendants’ demurrer to the bill filed by some of the next of kin and heirs at law of Charles Henderson, deceased, against the Troy Bank and Trust Company, a corporation, executor and trustee of his estate and the legatee and trustee of his residuary estate, and other persons interested in his will and éstate, the complainants (appellants now and on the former appeal), challenged the validity of the bequest to said trustee on two grounds. To state them in general terms: (1) that said bequest violated the rule against perpetuities and (2) that it created or attempted to create an unlawful trust for accumulation in perpetuam. The specific bequests set up for the use of the testator’s wife, sister and other favored relatives are not questioned- in this proceeding.
In the opinion of the Court on the former appeal in which the writer concurred the will was construed as setting up a single trust; that the provisions made for the use of testator’s wife and sister were not separate trusts but separate accounts resting on the corpus of the residuary estate. This thought seems to have been advanced as a basis for answering the appellants’ contention that the major trust embracing the residuary estate of $3,000,000 existing at the testator’s death, producing an income of $130,000 per annum and since testator’s death accumulated to $5,000,000 and producing an annual income of $150,000, was intended by the testator as a trust for accumulation in violation of public policy and the laws of this state. This appears from the following pronouncements in the opinion on the former appeal: “We think the gift is unconditional and vested immediately upon the probate of the will. Futurity is connected with the trust only as to the disbursement of income which goes first to certain named individuals, then for public schools and then to a hospital-. From the time -of the death of Charles Henderson the fund and the income therefrom are dedicated to charity and in the initial stage for payment out of the income of certain charges, it being expressly provided that the charges must and within lives in being or twenty years. The legai estate vested immediately in the trustee and the equitable estate in the part of the public to be benefited, subject to certain allowances payable only from accrued income.” Henderson v. Troy Bank & Trust Co., 250 Ala. 456, 466, 34 So.2d 835, 843. [Italics supplied.]
Referring to the testator the opinion Observed: “At the time of his death in 1937 Charles Henderson had an estate worth $3,000,000, which produced an annual net-income of $130,000. He had no children or grandchildren: No one was dependent on him for support except his wife and perhaps his sister. His first concern was. to provide for his wife and sister for whom he provided an aggregate income of $30,000. It seems to us that the will shows real concern that they should receive this amount tax free and further that his estate might not produce this amount. He -instructed his trustee to set up separate accounts for them, not separate trusts, but an arrangement of ‘preferring them over the others’ and also of preserving the tax free idea. He made the allowances to his collaterals, aggregating $8600, secondary to those of his wife and sister. * * [Italics supplied.] Henderson case, supra.
It is familiar law often declared in our decisions that one who has accumulated an estate may dispose of it by will as he may desire and the intention of the testator is the law of the will so long as it does not violate the public policy of the state as. evinced by the constitution and laws thereof. To state this principle in different words, “A testator has the right to dispose of his entire estate with such restrictions and limitations, not repugnant to established law, as he sees fit.” Pearce v. Pearce, 199 Ala. 491, 74 So. 952; Thurlow v. Berry, 249 Ala. 597, 32 So.2d 526.
We return to paragraphs 8 and 9 of Item Four of the will setting up the trusts for the use and benefit of Mrs. Henderson and Mrs. Julia Weedon:
“8. Upon my death, the trustee shall set aside in a separate fund sufficient tax free securities so that the net income therefrom, as provided in the con*249tract tor the payment of interest thereon, shall not be less than $25,000 per year. The sum of $25,000.00 per annum to be paid to my beloved wife, Laura M. Henderson, in monthly installments, so long as she shall live. The said income so paid to her to be used by her for her support, maintenance and comfort, but as to the use, expenditure of disposition and application of same, she shall be the sole judge.
“In the event there be any excess or any income of and above the sum of $25,000 payable to my said wife from the securities set aside in this fund, said excess income shall he treated as any other part of the income of the estate and shall become a part of the residue of the income.
“9. Upon my death, the trustee shall likewise set aside in a separate fund, sufficient tax free securities so that the net income therefrom shall be not less than $5,000 per year, and shall pay the said sum of $5,000 per year to my beloved sister, Julia H. Weedon, in monthly installments, so long as she shall live. The said income to be paid to her to be used by her for her support, maintenance and comfort, but as to the use, expenditure of, disposition and application of the same, she shall be the sole judge.”
It seems to be clear that the intention of the testator here was to set up independent trusts for each his wife and sister resting upon a distinct corpus carved out of the residuary estate, such trusts to continue during the lives of the named beneficiaries and at their deaths the separate corpuses to revert to the residuary estate and become unexpendable for all time.
Various and sundry provisions in said will show the intent of the testator that the trust created by the bequests to the bank as trustee should accumulate and that lapsed legacies and unused or unexpended income should be added to the corpus and become unexpendable. The bequests made to specific individuals are so inconsiderable as compared to the immense estate left the bank as trustee as to shed little or no light on the testator’s intent other than he intended to remember them to the extent of such bequests, yet with the major purpose of building up and accumulating the unexpendable corpus.
The rule against perpetuities and the rule against setting up trusts for accumulation are essentially and basically rules of public policy founded upon the known cupidity of mankind to hold on to and attempt to control earthly accumulations beyond the grave. These rules are designed to prevent “ironhearted schemes of settlement which result in withdrawing property for so long from all the uses and purposes of social life.” See 4 Kent. 283, 13th Ed. 307, footnote. Such scheme violates the statute and also the common law rule against accumulations-.
The statutory requirement against accumulations is as follows: “No trust of estate for the purpose of accumulation only can have any force or effect for a longer term than ten years, unless for the benefit of a minor in being at the date of the conveyance, or if by will, at the death of the testator; in which case the trust may extend to the termination of such minority.” Code of 1940, Tit. 47, § 146. The effect of our statute is to limit the period of accumulation to ten years from the date of testator’s death or until the termination of the minority of such minor. Code of 1940, Tit. 1, § 3; Carter v. Balfour’s Adm’r, 19 Ala. 814; Clark v. Goddard, 39 Ala. 164, 84 Am.Dec. 777; Nelson v. McCrary, 60 Ala. 301.
An examination of the will here involved, as we will undertake to show, reveals a studied design and purpose on the part of the testator to set up- a pattern of settlement which would tie up the residuary estate and its accumulations (which must necessarily follow), not for ten years or for twenty years from the testator’s death, but in perpetuam. To hold that such settlement does not violate our statute (Code of 1940, Tit. 47, § 146), would be to emasculate said statute by judicial ipsi dixit. The opinion on the first appeal upholds the alleged charitable trust on the theory that the legal estate vested immediately on. the *250death of the testator in the trustee and the equitable estate "in the part of the public benefited,” a class wholly undefined and undefinable. Crim et al. v. Williamson et al., 180 Ala. 179, 60 So. 293.
The language of Item Four of the will is as follows:
“I hereby give, devise and bequeath all the rest and residue of my personal property, real, personal and mixed, including all choses in action, stocks, bonds and other securities, of which I may die seized and possessed or over which I may have testamentary control, or to which I may be in any way entitled, of whatsoever the same may consist, and wherever situated, to Troy Bank and Trust Company, its successors and assigns, to have and to hold, absolutely and in fee simple forever, the said residue and remainder, in trust, however, with the power and for the following uses and purposes, to-wit: * * *.” [Italics supplied.]
This item of the will leaves no room for doubt as to the character of title the testator intended to vest in said trustee nor the duration of its holding. The language "to have and to hold absolutely and in fee simple forever,” embraces the entire title to the corpus, leaving nothing to vest in any one or in any class or group, except-an equity in the usufruct, rents and earnings of the corpus which remains the property of said trustee unless vested in some other legatee by the provisions of the will, within the rule against perpetuities.
The language of Item Five of the will is as follows:
“At the expiration of twenty years after my death and after all the bequests herein shall have been paid as herein directed, my said trustee shall cause to be formed an association to be known and styled as the rCharles Henderson Education Association.’ This Association shall have no- capital stock, have its principal place of business in Troy, Pike County,, Alabama, and its purpose shall be to encourage and foster education by the erection and equipment of school buildings as Hereinafter set out. The directors or managers of said association shall be three in number, bona fide citizens of Pike County, Ala., men of good repute• and standing in their community, of recognized ability, and interested in the welfare of said County. They shall’ be elected annually by the directors of the Troy Bank and Trust Company of Troy, Alabama, and may be selected in whole or in part from its directors,, and shall serve until their successors are elected and qualified. The first election of such directors or managers shall be on the formation of such association, then annually thereafter. After said association has been fully-formed, the corpus of the estate, including what has been added to the-corpus since my death, shall be held intact by the trustee and the trustee-shall pay to the association, which has-been formed, from time to time as-needed, the income of the estate. The-county is deficient in suitable school' buildings, and the whole net earnings, from the estate are to be devoted to< building school buildings within the-County of Pike as may be needed.. The State Superintendent of Education shall be ex-officio a member of the.Board.
“No more than $50,000.00 shall be: devoted to the construction and equipment of any one school building. This-cost shall be independent of the cost of the lot. The lot upcm zvhich the-building is to be erected is supposed, to be donated by individuals or the community in which the building is erected. No funds are to be spent in the nature of repairs or enlarging; buildings, and the buildings erected, shall be with brick, stone or concrete. All buildings erected shall be on .land,, the title to which shall be in the name-of the State of Alabama.

“The funds that are to be used in ■any particular year, must be paid from the income of the pan'ticular year. If .all the income of any one year shall not be used for the buildings erected that particular yew, at the end of the year it shall go into the corpus of the estate-r 
*251
and be treated thereafter as part of the original corpus.

“1. When the said association has been so formed cmd supplied with funds, the directors or managers thereof shall determine when and where they will commence their first building. All buildings shall be of some permanent material, brick, stone or cement, and shall be erected in incorporated towns or cities, and in duly constituted .school districts which are levying the -constitutional three mill tax. The location of suitable lands for such buildings shall be first provided by the towns ..and cities or school districts in which they are located cmd be free of all .enmmbrances before any sicch buildings are erected thereon. The amount •of funds to be expended on each of .such buildings shall be as said directors may deem adequate and to be paid ■directly to the contractor erecting or ■egiúpping the same, with proper vouch■efs.
“Every building shall be erected ac•cording to plans and under the direction and co-operation of an architect secured and paid by the directors. On ■each building there shall be the following inscription, ‘Memorial to Charles Henderson.’ The buildings herein provided for shall be complete individual •units and not in the nature of additions to other buildings.” [Italics supplied.]
These provisions of the will, like the ■provisions of Item Four, leave no room for ■doubt as to when the beneficial use will vest, if at all, nor as to the beneficiary named. There is no provision in the will for supplying funds for school house sites •or for maintaining or repairing school houses if and when they are once constructed, or for vitalizing them with management and teachers. They are left, if •ever erected, as cold monuments of brick .and stone.
As heretofore pointed out as to the special •devise to the wife and sister, the will sets up for each a special corpus consisting of tax free securities to produce an income •of $30,000, twenty-five thousand for the use of the wife and five thousand for the use of the sister to continue for their respective lives, the excess or surplus of such income each year to go to vest and become a part of the unexpendable corpus of the residuary estate. At the death of the respective beneficiaries such special tax free securities constituting the special corpus and any unused part of the income return to and become a part of said unexpendable residuary corpus.
Commencing one year after the testator’s death and continuing up to twenty years after the testator’s death the net income from the major or “charitable trust” is dedicated by the will to the support of the bequest to favored relatives of the testator and his wife and to accumulation of the corpus. The amount of the net income necessary to support and meet such devises, — $8,600 being about five percent of that income. The net income for the first 'year after testator’s death and the surplus or unused income thereafter until the end of twenty years go to accumulation and become a part of the unexpendable corpus of said residuary estate.
In the face of the explicit provisions of the will illustrating and delineating the testator’s intent, no part of the surplus of the income from the alleged “charitable trust” could vest in any person, group or corporate entity other than the trustee bank and then only for accumulation until after the expiration of twenty-one years.
Therefore, the holding of the Court in the opinion on the first appeal that said net income from said trust vested in “that part of the public benefited” at Henderson’s death is contrary to the provisions of ,the will. So also are the utterances in the opinion of my brother Mr. Justice Foster,— “The devotion of the entire income to charity, the construction and equipment of school buildings, is a fixed and vested dedication of all the income to that purpose.” To adopt such view would be tantamount to rewriting Charles Henderson’s will and not an interpretation thereof. This the Court has no power to do.
So far as the- use for the construction of school buildings is concerned, futurity is annexed to the substance of the gift. *252Crawford v. Carlisle, 206 Ala. 379, 89 So. 565. The beneficial use for erecting school buildings is by the will attached to the current year’s income and under Item Five cannot attach until the expiration of twenty years from the death of the testator. Therefore the first year’s income to which the use could attach for building school houses is the income for the twenty-first year which, according to business custom and practice prevailing at the time of the testator’s death and the strict provisions of the will, could not be paid to the educational association until it was earned and available at the end of .the twenty-first year. It has been suggested in consultation, the payments for this year’s income could be made monthly. The will does not so provide and if such arrangement could be made it would not save the trust from the application of the rule against perpetuities. Under this rule the beneficial use must, not may, vest to be valid. And the year’s income could not be. used then until the board selected the site and lot and such lot was purchased and paid for by some individual or by the town, city or school district in which the school building is to be located and this lot must “be free from all incumbrances before any such building can be erected thereon” and “All buildings erected shall be on land, the title to which shall be in the name of the State of Alabama.”
The State of Alabama, named the beneficiary, may, if the devise is valid, accept the trust and the burden of maintaining and vitalizing it by supplying management and teachers for using the same. Such acceptance must be by legislative act and rests in legislative discretion. Mayor and Aidermen of City of Huntsville v. Smith et al., 137 Ala. 382, 35 So. 120.
“The courts in applying the rules against perpetuities regard all limitations as void ab initio which are not so framed as to take effect of necessity within the legal period (under the facts of this case 21 years), if at all. * * [Parenthesis supplied]—Lyons et al. v. Bradley, 168 Ala. 505, 514, 53 So. 244, 247; Ould v. Washington Hospital, 95 U.S. 303, 24 L.Ed. 450; Crawford v. Carlisle, 206 Ala. 379, 89 So. 565; Ramage v. First Farmers & Merchants National Bank of Troy, 249 Ala. 240, 30 So.2d 706; Fosdick v. Fosdick, 6 Allen, Mass., 41.
. The rule against perpetuities applies to a devise to the state the same as to individuals, classes or corporations. Yates v. Yates, 9 Barb., N.Y., 324.
This rule is applicable to both real and personal property. Code of 1940, Tit. 47, § 16.
The- restrictions and limitations stated in the will by the testator as “conditions precedent” to the vesting of the beneficial use were erroneously treated in the first opinion as “but rules or regulations under which the communities are to be selected to receive the aid of the fund already vested.” The use of the words “at”, “when”,, “after”, “before” and “provided”, “restrictions,” “limitations” and “condition” used in the will necessarily make said restrictions, limitations and conditions, “conditions” precedent to the vesting of any interest, rendering such interest contingent. Phinizy v. Foster, 90 Ala. 262, 7 So. 836; American National Bank of Camden v. Morganweck, 114 N.J.Eq. 286, 168 A. 598.
We, therefore, conclude that the limitations over against the vesting of the beneficial use or charitable interest violate the rule against perpetuities and render the bequest void ab initio and it must fall.
As going to show the intent and temper of the testator in drafting his will and his major purpose to accumulate his estate and guide its administration via mortmain and his disregard of the public policy of the State, we note the following:
“And the stock in the Troy Bank and Trust Company (of which testator owned 65%) shall not be sold or otherwise disposed of by the executor or trustee so long as said Troy Bank and Trust Company remains trustee of the trust hereinafter provided. [Parenthesis supplied.]
“The proceeds of all such sales, as well as any other funds belonging to the estate which are not necessary to be otherwise used in the administration of this trust, shall be by the trustee from *253time to time invested in such classes of securities or investments as the trustee may in its discretion deem advisable, whether such investments are authorised by the constitution or laws of the State of Alabama or not. The trustee is authorized in its discretion to retain and hold in trust any stocks, bonds, securities, or other property, real, personal or mixed, in which my estate or any part thereof may be invested at the time of my death, of to which my estate may become entitled after my death.” [Italics supplied.]
“In the event that there be any excess of income over and above the $5,000.00 payable to my said sister from the securities set aside as above mentioned, said excess shall be treated as any other part of the income of said estate and shall be subject to all the terms and conditions and limitations hereinafter provided with regard to the said residue.” [Italics supplied.]
“Upon the death of my said wife or sister, the securities in the fund of the person so dying shall become part of the residue of the trust estate, subject to all the terms, conditions and limitations as hereinafter provided.” * *
“The corpus of the estate should increase, especially with the provision .that when any of the bequests mature, either from death of the beneficiary, or otherwise, the amount of such beneficiary’s bequest shall remain and become a part of the corpus of the estate after each year when the bequests have been paid, and all expenses with taxes have been satisfied, that whatever remains from income of that particular year shall be entered as part of the corpus of the estate and subject to the same treatment thereafter as the original corpus of the estate.” [Emphasis supplied.]
“I hereby designate and appoint my faithful friend, Lane Enzor, of Troy, Alabama, as special agent, attorney-in-fact or proxy to vote at any and all meetings of stockholders, the shares of stock held by me at the time of my death in said Troy Bank and Trust Company, the trustee above designated, and also the shares of stock held by me at the time of my death in the Standard Telephone and Telegraph Company. And in the event said trust estate shall thereafter acquire any further or additional shares of stock in said Troy Bank and Trust Company or Standard Telephone and Telegraph Company, he shall likewise be empowered to vote such additional shares at any and all meetings of stockholders. He is thoroughly familiar with these properties and has shown himself to be a man of good judgment. On the death of said Lane Enzor or his resignation, refusal or incapacity to act, the directors of the Troy Bank and Trust Company, or a majority of them, shall select and designate a suitable successor to him who will perform the said duties above referred to. And likewise, thereafter, when a vacancy occurs a successor shall likewise be chosen. Said power to. vote said shares of stock shall exist and continue so long as the Troy Bank and Trust Company continues to act as trustee of my estate and so long as said trust estate owns shares in the Standard Telephone and Telegraph Company.” * * *
“ * * * the watchword shall be that nothing but the income from the estate must be used from year to year, 'but sums added to the corpus each year should be striven for.
“ * * * If any part of the income for any one year shall not be used, it shall be returned to the trustee and by the trustee added to the corpus of the estate and invested as funds theretofore shall have been invested, so as to increase the income of the estate. * * * ”
These provisions clearly show that the testator intended to set up a trust for accumulation in violation of our statute and the rules of the common law.
The cy pres doctrine repudiated by this Court more than a hundred years ago and repeatedly since, renders that doctrine inapt. The doctrine of equitable approximation having to do only with administra*254tive details arising from the unanticipated circumstances since the creation of the trust has nothing to do with the vesting of an interest or the rule against perpetuities. Thurlow v. Berry, 247 Ala. 631, 25 So.2d 726. Neither of these doctrines can he invoked to save the major trust from the infirmities heretofore pointed out.
A trust resting on the residuary estate being void ab initio, is a part of the general estate of Henderson, passing to the next of kin under the laws of descent and distribution. Tarver v. Weaver, 221 Ala. 663, 130 So. 209.
I therefore respectfully dissent.1

. The following cases support the conclusions stated in the foregoing opinion.
Perpetuities.
Yates v. Yates, 9 Barb., N.Y., 324; Bascom v. Albertson, 34 N.Y. 584; National Bank of Greece v. Savarika, 167 Miss. 571, 148 So. 649; Easton v. Hall, 323 Ill. 397, 154 N.E. 216; Holmes v. Welch, 314 Mass. 106, 49 N.E.2d 461, 157 A.L.R. 896; City of Columbia v. Monteith, 139 S.C. 262, 137 S.E. 727; In re Lord Strathden v. Campbell, 3 Chancery 265 (Brit.); Muir v. Archdall, (B.R.C.) 10 B.R.C. 559; Malmquist v. Detar, 123 Kan. 384, 255 P. 42; Salvation Army of Topeka v. Watts, 130 Kan. 714, 288 P. 764; Lovelace v. Marion Institute, 215 Ala. 271, 110 So. 381; Crawford v. Carlisle, 206 Ala. 379, 89 So. 565; Lyons v. Bradley, 168 Ala. 505, 53 So. 244; Fosdick v. Fosdick, 6 Allen, Mass., 41.
Accumulations.
Hewitt v. Green, 77 N.J.Eq. 345, 77 A. 25 (Headnote 10); Pearce v. Pearce, 199 Ala. 491, 74 So. 952; Henderson v. Henderson, 210 Ala. 73, 97 So. 353; Boynton v. Hoyt, 1 Denio, N.Y., 53.