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  • J. L. Drennen and Frank L. Parsons, both of Birmingham, for appellant. Regard must be given the words of the will in all its parts in determining whether appellant is an independent beneficiary and as such entitled to a portion of the trust fund. Kehoe v. Ames, 96 Me. 155, 51 A. 870. It is only by regarding her, as well as her father, as a beneficiary of the trust fund that full force and meaning can be given to all parts of the will. Kehoe v. Ames, supra. There being no facts showing that there is a condition or special situation demanding that the father should receive more than appellant, he is not entitled to more than appellant, even though it should be held that the proportions in which the trust fund should be distributed are entirely a matter within the discretion of the trustee, or, when called upon, by the court. Kehoe v. Ames, supra. Appellant is an independent beneficiary, under the will, of the net income, and as such is entitled to her proportionate part thereof, independent of any obligation on the part of her father to support and educate her, and independent of his desire to make provision for her. Ownership of the entire net fund under the will was vested in the father and appellant, and hence her right to her proportionate share does not depend upon the discretion of the trustee. Talbot Ellis, D. H. Markstein, Jr., and Lange, Simpson, Brantley Robinson, all or Birmingham, for appellee Basil M. Clarke. When a trust is created for a person and for the maintenance and support of his family (if he has a family), the extent of the interest of that family depends upon the manifestation of the intention of the settlor. Ordinarily it is held that the intention of the testator or settlor is that the various members of the family should be entitled in accordance with their necessities. Durant v. Hospital Life Ins. Co. of Mass., Fed.Cas. No. 4188, 2 Lowell 575; Cosby v. Ferguson, 3 J.J. Marsh (Ky.) 264; Flournoy v. Johnson Tingley, 7 B.Mon. (Ky.) 693; Rudd v. Hagan, 86 Ky. 159, 5 S.W. 416, 9 Ky.Law Rep. 465; Bradlee v. Andrews, 137 Mass. 50; Proctor v. Proctor, 141 Mass. 165, 6 N.E. 849; Phelps v. Phelps, 143 Mass. 570, 10 N.E. 452; Johnson v. Johnson, 215 Mass. 276, 102 N.E. 465; Greene v. Smith, 17 R.I. 28, 19 A. 1081. The testatrix provides for the contingency of her son having a family. This is not a bequest of any definite interest or amount. This contingent provision awards only "Comfortable support and maintenance" for a family, if there be a family. This cannot be construed as entitling appellant to one-half the income. Rugely v. Robinson, 10 Ala. 702; Robertson v. Johnston, 36 Ala. 197; Jones v. Reese, 65 Ala. 134.
Judges
  • SIMPSON, Justice. SIMPSON, Justice.
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  • J. L. Drennen and Frank L. Parsons, both of Birmingham, for appellant. Regard must be given the words of the will in all its parts in determining whether appellant is an independent beneficiary and as such entitled to a portion of the trust fund. Kehoe v. Ames, 96 Me. 155, 51 A. 870. It is only by regarding her, as well as her father, as a beneficiary of the trust fund that full force and meaning can be given to all parts of the will. Kehoe v. Ames, supra. There being no facts showing that there is a condition or special situation demanding that the father should receive more than appellant, he is not entitled to more than appellant, even though it should be held that the proportions in which the trust fund should be distributed are entirely a matter within the discretion of the trustee, or, when called upon, by the court. Kehoe v. Ames, supra. Appellant is an independent beneficiary, under the will, of the net income, and as such is entitled to her proportionate part thereof, independent of any obligation on the part of her father to support and educate her, and independent of his desire to make provision for her. Ownership of the entire net fund under the will was vested in the father and appellant, and hence her right to her proportionate share does not depend upon the discretion of the trustee. Talbot Ellis, D. H. Markstein, Jr., and Lange, Simpson, Brantley Robinson, all or Birmingham, for appellee Basil M. Clarke. When a trust is created for a person and for the maintenance and support of his family (if he has a family), the extent of the interest of that family depends upon the manifestation of the intention of the settlor. Ordinarily it is held that the intention of the testator or settlor is that the various members of the family should be entitled in accordance with their necessities. Durant v. Hospital Life Ins. Co. of Mass., Fed.Cas. No. 4188, 2 Lowell 575; Cosby v. Ferguson, 3 J.J. Marsh (Ky.) 264; Flournoy v. Johnson Tingley, 7 B.Mon. (Ky.) 693; Rudd v. Hagan, 86 Ky. 159, 5 S.W. 416, 9 Ky.Law Rep. 465; Bradlee v. Andrews, 137 Mass. 50; Proctor v. Proctor, 141 Mass. 165, 6 N.E. 849; Phelps v. Phelps, 143 Mass. 570, 10 N.E. 452; Johnson v. Johnson, 215 Mass. 276, 102 N.E. 465; Greene v. Smith, 17 R.I. 28, 19 A. 1081. The testatrix provides for the contingency of her son having a family. This is not a bequest of any definite interest or amount. This contingent provision awards only "Comfortable support and maintenance" for a family, if there be a family. This cannot be construed as entitling appellant to one-half the income. Rugely v. Robinson, 10 Ala. 702; Robertson v. Johnston, 36 Ala. 197; Jones v. Reese, 65 Ala. 134.
Judges
  • SIMPSON, Justice. SIMPSON, Justice.
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Smart Summary

Factual and Procedural Background

This appeal arises from the construction of Item 3 of the will of Susie M. Carter. Item 3 created a spendthrift trust, vesting legal title to certain real estate in the First National Bank of Birmingham as trustee, and provided initially that "The Trustee shall pay to or for the benefit of my son, Basil M. Clarke, during his life, all of the net income from the trust property," subject to a qualifying clause giving the trustee discretion to "expend, use and apply the income for a comfortable support and maintenance of my said son, and or his family, if he has a family." The testator also included spendthrift provisions and a concluding clause that "the income shall be used and applied for the support and maintenance of my son, and his family, if he has a family, so as to provide a support and maintenance at all times."

Basil M. Clarke later married; his wife predeceased the opinion, and the appellant (the only daughter of that marriage) contends she is an independent beneficiary under Item 3 and entitled to share equally with her father in the net income of the trust. The father contended that he alone was the beneficiary and that references to family were merely expressive of the motive of the gift.

The trial court sustained demurrers to the appellant's petition and dismissed it. The appellant appealed from the Circuit Court of Jefferson County (E. M. Creel, Judge). The appellate court issued its opinion on October 5, 1944, and rehearing was denied November 16, 1944.

Legal Issues Presented

  1. Whether, under Item 3 of Susie M. Carter's will, the appellant (the daughter) is an independent beneficiary entitled to participate in distributions from the trust.
  2. If the appellant is a beneficiary, what is the extent of her interest — specifically, whether she is entitled to one-half of the net income or only to such amounts as reasonably provide for her "comfortable support and maintenance" under the trustee's discretion.

Arguments of the Parties

Appellant's Arguments

  • Counsel for appellant argued that the words of the will must be regarded in all their parts and that, to give full force and meaning to Item 3, the daughter must be regarded as an independent beneficiary entitled to a portion of the trust fund. (Kehoe v. Ames, cited in counsel's brief.)
  • Appellant asserted she is an independent beneficiary of the net income and therefore entitled to her proportionate part thereof, independent of any obligation on the father's part to support or educate her; ownership of the entire net fund, counsel argued, vested in the father and appellant so her right does not depend upon trustee discretion.

Appellee's (Father's) Arguments

  • Counsel for appellee argued that the trust was created for the son primarily and that provisions concerning the maintenance and support of his family are contingent and govern the extent of family members' interests according to the settlor's intention; such contingent provision awards only "comfortable support and maintenance" and cannot be construed as entitling the daughter to one-half the income. Several authorities were cited for the proposition that family members' shares depend on manifest intention of the settlor and on necessities.
  • The father asserted that the initial declaration for his single benefit made him the sole primary beneficiary and that subsequent provisions mentioning family merely expressed motive rather than creating equal ownership or fixed shares in the income.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Kehoe v. Ames, 96 Me. 155, 51 A. 870 Counsel cited it for the proposition that the words of the will must be regarded in all its parts to determine beneficiaries and that a beneficiary may be independent under the will. The court referenced Kehoe among authorities that support construing a will so as to give effect to provisions benefitting family members; it was cited as corroborative authority for treating the daughter as within the class of beneficiaries created by Item 3.
Durant v. Hospital Life Ins. Co. of Mass., Fed.Cas. No. 4188, 2 Lowell 575 Cited by appellee's counsel in a list of authorities on how family interests depend on settlor's manifested intent. Included among authorities demonstrating the principle that family members' interests depend on the settlor's intention; not further analyzed by the court beyond citation in counsel's brief.
Cosby v. Ferguson, 3 J.J. Marsh (Ky.) 264 Cited by appellee's counsel regarding family members' interests depending on settlor's intention. Listed among supporting authorities; court did not separately analyze the case but relied on the general principle it was cited to support.
Flournoy v. Johnson Tingley, 7 B.Mon. (Ky.) 693 Cited by appellee's counsel on the same general point about family interests and settlor intention. Referenced as part of the array of authorities addressing interpretation of family provisions in trusts; not separately discussed by the court.
Rudd v. Hagan, 86 Ky. 159, 5 S.W. 416, 9 Ky.Law Rep. 465 Cited by appellee's counsel for the principle that the extent of family interest depends on settlor intent. Included in counsel's supporting authorities; court relied on the general principle rather than on this case specifically.
Bradlee v. Andrews, 137 Mass. 50 Cited by appellee's counsel among authorities regarding family interest contingent on intent. Part of the cited body of authority; the court did not analyze the case individually.
Proctor v. Proctor, 141 Mass. 165, 6 N.E. 849 Cited by appellee's counsel on contingent family provisions; also later cited by the court ("See also"). The court listed Proctor as confirmatory authority supporting its construction that family members may be entitled to comfortable support under similar provisions.
Phelps v. Phelps, 143 Mass. 570, 10 N.E. 452 Cited by appellee's counsel among cases concerning family interests dependent on intention. Included among cited authorities; not separately discussed in the opinion's analysis.
Johnson v. Johnson, 215 Mass. 276, 102 N.E. 465 Cited by appellee's counsel on the same general principle about the contingent nature of family provisions. Listed among supporting authorities; the court did not separately apply it.
Greene v. Smith, 17 R.I. 28, 19 A. 1081 Cited by appellee's counsel as authority on family-member interests under testamentary trusts. Included in counsel's authorities; no separate application in the court's reasoning beyond general support.
Rugely v. Robinson, 10 Ala. 702 Cited by appellee's counsel and later by the court in a group of Alabama cases on construction of such provisions. The court included Rugely among Alabama authorities establishing the uniform construction that family members are entitled to reasonable support under similar provisions.
Robertson v. Johnston, 36 Ala. 197 Cited by appellee's counsel regarding the construction that such contingent provisions do not create fixed shares. Part of counsel's cited authority; court treated the matter as supported by Alabama precedent generally.
Jones v. Reese, 65 Ala. 134 Cited by appellee's counsel and by the court as an Alabama authority on the subject. The court cited Jones among its uniform line of decisions construing similar testamentary provisions to afford reasonable support to family members rather than fixed shares.
McDonald v. McDonald, 92 Ala. 537, 9 So. 195 Cited by the court as illustrative authority where named beneficiary children were entitled to "a reasonable part of the rents, income and profits" for comfort, support and education. The court relied on McDonald as closely analogous and used its rationale to support the conclusion that the appellant is entitled to reasonable distributions for support, not to a one-half share.
Hill v. McRae, 27 Ala. 175, 176 Cited by the court as part of the uniform Alabama decisions construing comparable will provisions. Included among authorities the court cited to reaffirm the established construction applied to Item 3.
Rugely Harrison v. Robinson, 10 Ala. 702, 704, 705 Cited by the court as an Alabama case exemplifying the construction given to similar testamentary provisions. Listed as part of the court's precedent confirming that beneficiary-family provisions create rights to reasonable support rather than fixed fractional interests.
65 C.J. 536, § 285 Cited for the general principle that the intention of the creator of the trust, as ascertained from all provisions, controls the extent of interests. The court invoked this authority for the proposition that the settlor's intention must be given effect in determining the extent of the appellant's interest (i.e., limited to comfortable support and maintenance).
First Nat. Bank of Birmingham v. Basham, 238 Ala. 500, 510, 191 So. 873, 125 A.L.R. 656 Cited for the trustee's duty to exercise discretion with proper motives, good faith, wisdom and reasonable judgment. The court applied this principle to explain that the trustee's broad discretion must be exercised in good faith and that proper exercise satisfies administration of the trust.
Hoglan v. Moore, 219 Ala. 497, 122 So. 824 Cited with First Nat. Bank v. Basham for trustee duties regarding reasonable exercise of discretion. Used to support the court's statement that trustees must act with proper motives and reasonable judgment when making distributions.
2 Scott on Trusts, § 187, pp. 986-7 Cited for the proposition that when trustees transact in good faith and with proper discretion, the trusteeship is properly administered. The court relied on this treatise to reinforce that proper discretionary distributions, made in good faith, constitute proper administration of the trust.

Court's Reasoning and Analysis

The court's analysis begins with a careful construction of Item 3 as a whole. Although the initial clause gives to Basil M. Clarke "all of the net income" during his life, this clause is immediately qualified by language granting the trustee discretion to expend income "for a comfortable support and maintenance of my said son, and or his family, if he has a family," and by a concluding clause reiterating that the income shall be used for the support and maintenance of the son and his family.

The court held that the later provisions cannot be ignored: to give them effect, the daughter must be regarded as a beneficiary. The court observed that Item 4 of the will made specific bequests to Basil alone and did not mention his family; this contrast reinforces that, by naming the family only in Item 3, the testator intended to include the family among the objects of the Item 3 trust. Thus, the trust opened upon Basil's marriage and the daughter's birth, entitling them to "comfortable support and maintenance," subject to the trustee's discretion.

The court emphasized that the settlor's intention, as gathered from all provisions of the trust, controls the extent of the daughter's interest, and that the qualifying language in Item 3 limits that interest to "a comfortable support and maintenance." The substantial initial declaration in favor of Basil indicates he was the primary beneficiary; the daughter became a recipient only by virtue of her being a member of his family and the qualifying clauses that opened the gift for her participation.

The court further relied on the fact that the trustee was vested with extensive discretion to expend income for beneficiaries "as the trustee may deem best," which indicates the testator did not intend to declare fixed fractional shares. Citing McDonald v. McDonald and other Alabama authorities, the court treated the daughter's right as to a reasonable portion for comfort, support and maintenance, to be determined with regard to the size of the estate, her condition and station, and the father's circumstances.

Finally, the court explained that the reasonableness of distributions is left to the trustee's discretion, but that the trustee has a legal duty to exercise that discretion properly — with proper motives, in good faith, with wisdom and reasonable judgment — and, if so exercised, the trusteeship will be regarded as properly administered.

Holding and Implications

Holding: The appellate court affirmed the trial court's decree sustaining demurrers and dismissing the appellant's petition. The court held that the appellant is an independent beneficiary of the trust created by Item 3 but is not entitled to one-half of the net income as she claimed; rather, she is entitled only to such distributions as are reasonably necessary for her "comfortable support and maintenance" as determined in the trustee's discretion.

Implications:

  • The direct effect on the parties is that the appellant has a recognized beneficial interest in the trust limited to reasonable support and maintenance; she cannot demand a fixed one-half share of net income.
  • Distributions to the appellant must be determined with regard to the settlor's intent, the size of the estate, her station and condition in life, and the father's circumstances, and will ordinarily be left to the trustee's sound discretion subject to duties of good faith and reasonable judgment.
  • On rehearing the court expressly ordered that the costs of the proceedings accruing from and after the filing of the petition giving rise to this appeal be paid out of the trust estate.
  • No new broad legal principle was declared; the court applied and reaffirmed existing Alabama precedent construing similar testamentary provisions to afford reasonable support to family members rather than fixed fractional interests.
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CLARKE v. CLARKE et al.

SIMPSON, Justice.

A proper construction of Item 3 of the will of Susie M. Carter gives rise to this appeal.

Item 3, seeking to establish a spendthrift trust for the benefit of the testator's son Basil M. Clarke (unmarried when the will was executed) and his family, should he have a family, vested the legal title of certain real estate in the First National Bank of Birmingham as trustee, with provision, first, that: "The Trustee shall pay to or for the benefit of my son, Basil M. Clarke, during his life, all of the net income from the trust property." This provision is then qualified by a stipulation following that, in the discretion of the trustee, instead of paying the net income or any part thereof to said son, the trustee may and "it shall be its duty * * * to expend, use and apply the income for a comfortable support and maintenance of my said son, and or his family, if he has a family,"; then, after certain "spendthrift provisions," follows the final clause of the paragraph that "it is my will that the income shall be used and applied for the support and maintenance of my son, and his family, if he has a family, so as to provide a support and maintenance at all times."

The beneficiary, Basil M. Clarke, did later marry, but his wife is not now living. Appellant, an only daughter, is the issue of this marriage, and is contending that under the provisions of said Item 3 she is an independent beneficiary and, as such, entitled to share equally with her father in the net proceeds of the trust.

The father, on the contrary, asserts that by reason of the first declaration for his single benefit he is the sole beneficiary of the trust and the subsequent provisions dictating the use of the net income for the support and maintenance of his family, as well as himself, are merely expressive of the motive of the gift to him.

Giving consideration to the whole of Item 3, it must be held that, under the terms of the trust, appellant, also, is a beneficiary and entitled to participate to the extent provided therein. Otherwise, the several later provisions, following the single bequest to Basil, directing that the net income of the trust be utilized, at the trustee's discretion, for the benefit of his "family, if he has a family," must be entirely ignored and rejected, which cannot be done, under any sort of judicatory interpretation.

This construction is strengthened by the further fact that in Item 4 of the will specific and substantial bequests were made directly to Basil alone, without any mention of his family. If what the testator intended was simply to benefit her son exclusively, leaving the support and maintenance of his family entirely dependent upon his affection, or the performance of the duty exacted of him by law in that regard, then it is difficult to discern why the family should be named in connection with the disposition of the trust (Item 3) and nowhere else. It is only by regarding the daughter, as well as Basil, as a beneficiary of the trust fund that full force and meaning can be accorded all the provisions of the bequest. The concluding clause quoted above, "the income shall be used and applied for the support of my son, and his family * * * so as to provide a support and maintenance at all times," clearly manifests this intention of the testator and forecloses any adverse argument.

Even though her main solicitude was for her son, members of his family were also the contemplated objects of the testator's bounty, and when he married, the gift opened and let in his wife, and the appellant when she was born, entitling them to "comfortable support and maintenance," within the discretion of the trustee to be reasonably exercised. Such has been the uniform construction placed by this court upon substantially correspondent provisions in other wills, and we reaffirm it here. McDonald v. McDonald, 92 Ala. 537, 9 So. 195; Jones v. Reese, 65 Ala. 134, 136; Hill v. McRae, 27 Ala. 175, 176; Rugely Harrison v. Robinson, 10 Ala. 702, 704, 705.

See also Kehoe v. Ames, 96 Me. 155, 51 A. 870; Proctor v. Proctor, 141 Mass. 165, 6 N.E. 849.

But, this holding by no means entitles appellant to a one-half interest in the net proceeds of the trust, as claimed by her in her petition, nor to the right to dictate this or any other amount of disbursement to her or for her benefit.

In determining the extent of her interest, the intention of the creator of the trust, as ascertained from a consideration of all of its provisions, must be given effect (65 C.J. 536, § 285), and when so considered it becomes manifest that this interest is limited (in the language of the bequest) to "a comfortable support and maintenance."

The initial provision that, "The trustee shall pay to or for the benefit of my son, Basil M. Clarke, during his life all of the net income from the trust property," clearly indicates this and evinces the undoubted purpose of the testator to create a trust primarily for her son. He is the main beneficiary. The appellant is made a recipient of her grandmother's largess only because she is the child of this principal beneficiary, her father, and the bounty thus bestowed upon her by the subsequently qualifying clauses, which opened the gift for her participation therein, likewise limited that gift for her "comfortable support and maintenance at all times."

This conclusion is fortified by the investment in the trustee of such extensive discretion whereby, rather than paying the trust funds to Basil, the income may be expended for the benefit of said beneficiaries "and or" any of them "as the trustee may deem best," thus clearly establishing that no fixed amount or interest was intended to be declared by the testator.

Illustrative, is the rationale of the McDonald case, above cited, where, in construing a provision not greatly dissimilar, the substance of the holding was that the named beneficiary children were entitled to "a reasonable part of the rents, income and profits" for their comfort, support and education. So, appellant here is likewise entitled to distributions from the trust fund, not of one-half the net revenues, as claimed by her, but of a reasonably sufficient amount to properly maintain and support her, having due regard to all the attendant circumstances including the size of the estate, her own condition and station in life and that of her father.

The reasonableness of the distributions to her is left to the discretion of the trustee by the terms of the trust, with the legal duty imposed to act with proper motives, in good faith, with wisdom and reasonable judgment. First Nat. Bank of Birmingham v. Basham, 238 Ala. 500, 510, 191 So. 873, 125 A.L.R. 656; Hoglan v. Moore, 219 Ala. 497, 122 So. 824. And when thus transacted the trusteeship is regarded as having been properly administered. 2 Scott on Trusts, § 187, pp. 986-7.

There is no legal or equitable basis for the contention of appellant that the father's share of the revenue of the trust should be diminished, and hers thereby proportionately aggrandized, so that she may obtain more money to protect certain mortgaged investments left her by her mother, or that she may engage in any other business enterprise. This seems to form the basis of her claim for an increase to one-half of the net revenues and is patently unsustainable.

So considered her petition was without equity, and the decree of the trial court sustaining the demurrers thereto and dismissing said petition is here affirmed.

Affirmed.

THOMAS, FOSTER, LIVINGSTON, and STAKELY, JJ., concur.

On Rehearing.

SIMPSON, Justice.

The Court adheres to its original view that the petition, rested upon appellant's assertion of the right of a distribution from the trust estate equal to that of her father, was without equity. In order that a petition for a different distribution from the trust estate contain equity it must find basis in an allegation showing an inequitable distribution to her for her proper maintenance and support, commensurate with the size of the estate and regardful of her station and condition in life.

The case though has finally resulted in a construction of the will (that appellant is an independent beneficiary) which not only is adverse in that respect to the contention of appellees, but also establishes for the trial court a standard for future guidance. In view of this, it is but equitable and just that the costs of the proceedings, accruing from and after the filing of the petition giving rise to this appeal, be paid out of the trust estate, and it is so ordered.

THOMAS, FOSTER, LIVINGSTON, and STAKELY, JJ., concur.

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CLARKE v. CLARKE
(Nov 16, 1944)