Black v. Harman

December 18, 1923. The opinion of the Court was delivered by The following statement appears in the record:

"This is an action against the defendant, Harriet F. Harman, the mother of the plaintiff, for an accounting of the rents and profits of certain lands described in the complaint, which lands had been devised to the defendant by her father, Frederick H. Dominick, in the year 1891. The plaintiff claims `that under the terms of the devise she has a vested interest in the income from the said lands to the extent of one-tenth thereof, the said income being subject to equal distribution among the said Harriet F. Harman and her said children,' and that she `is entitled to an accounting and to her distributive share of the income from the said lands,' and demands judgment for such alleged share. The other defendants are the children of Harriet F. Harman, and brothers and sisters of the plaintiff. There are in all nine children, all of whom were living at the time of the death of Frederick H. Dominick on the 24th day of July, 1891, and are now living, except the defendant J.W. Harman, who has died since the commencement of this action intestate and unmarried. His death does not affect the issues in the action.

"The action was commenced February 23, 1920, and the defendants duly answered, admitting that Harriet F. Harman had had exclusive control of the said lands; had received the annual rents and income; had used same for the benefit of herself and children; that all of the said children had been treated alike; that she had kept up the land, paid the taxes on same, and maintained herself and family; that the plaintiff is married and living with her husband apart from the defendants, but the defendant, Harriet F. Harman, has largely contributed to her support and maintenance, the plaintiff having received more from her mother than any of the other children. The defendant Harriet F. Harman further claims that she has a life estate in the said lands, with the right to use the income therefrom as she may desire without accounting, and that the children have a vested remainder in the said lands, and are entitled to the same upon her death, share and share alike. She denies that the plaintiff is entitled to an accounting and any distributive share of the income from the lands, and denies that she has any right, title, or interest in or to the rent or income or profits derived from the said lands.

"The lands devised to Harriet F. Harman were devised to her `to have and to hold to the use and benefit of herself and her children during her life, and then to her children absolutely, as in the case of each of my other children.' The devises in the case of each of the other children were made subject to the same uses and limitations as are prescribed in the devise to his son, Jacob L. Dominick, which was `to have and to hold the same during his natural life for the use and benefit of himself and children, and at his death to go to his children absolutely, share and share alike, the children of a predeceased child to take the share to which their parent would have been entitled.' Frederick H. Dominick was survived by five children.

"On September 23, 1921, the attorneys for the defendants gave notice of demurrer, in writing, to the attorneys for the plaintiff, upon the ground that the complaint does not state facts sufficient to constitute a cause of action, in that the plaintiff has no such interest as is alleged in the complaint in the income, rents, and profits received from the lands described in the complaint, nor is the plaintiff entitled to an accounting thereof or to any of the relief demanded in the complaint.

"On May 10, 1920, the case was referred to the Master for Newberry County for his report on all issues, but by consent the issues of law were withdrawn from the Master, to be determined by the Court, and at the December term, 1922, the case was marked heard, and written arguments submitted to the presiding Judge."

On the 23d of February, 1923, his Honor the Circuit Judge, filed the following order:

"The principal facts in the above case are undisputed.

"Frederick H. Dominick, of said County, died in 1891, seized and possessed of considerable lands and personal property. He was survived by five children and several grandchildren, among them being his daughter, the defendant Harriet F. Harman, and her children, of whom the plaintiff is one, and the others are made defendants.

"The said Frederick H. Dominick left a will, the thirteenth clause of which is as follows: `I will to my daughter Harriet Harman my Tinsley place and my Carlisle place, to have and to hold to the use and benefit of herself and her children during her life, and then to her children absolutely, as in the case of each of my other children.'

"All of the said children of Harriet F. Harman, the plaintiff being one, have long since attained their majority. The said Harriet F. Harman at, or about the date of the death of the testator, went into possession of the said lands, and is still in possession of same. The plaintiff claims that she is entitled to a distributive share of the rents and profits of said realty, which the defendant denies. A proper construction of the above set out clause of the will in question will settle the issue.

"The only safe rule in construing a will is to assume that the testator means what he says, if the language is clear and unmistakable. This is the case before us. The property in question is to be used by the defendant Harriet F. Harman for her own benefit and that of her children so long as she lives. The possession of the land is vested in her for life, but impressed with a trust in favor of the children, to the effect that they shall share with the mother whatever benefits may be derived from the use of the lands, and as to such benefits in the way of rents, profits, etc., the mother and children are tenants in common in equal shares and proportions. This sharing of the rents, profits, etc., of said lands is to continue so long as the mother lives, then the property in question goes to the children absolutely. In my view this is the only reasonable construction to be given the said clause. In no other provision of the will is there any expression which might show a different intention to that set out in the above construction. See, also, the cases of Feemster v. Good, 12 S.C. 573, and Hunter v. Hunter,58 S.C. 388; 36 S.E., 734; 79 Am. St. Rep., 845."

The defendant appealed upon the following exceptions:

"(1) That his Honor, the presiding Judge, erred in not sustaining the demurrer of the defendants upon the ground that the complaint does not state facts sufficient to constitute a cause of action for the reason that the plaintiff has no such interest in the income, rents, and profits of the land described in the complaint, as is alleged in the complaint.

"(2) That his Honor, the presiding Judge, erred in holding that the land, and the possession of the land, was impressed with a trust in favor of the children, to the effect that the mother and children are tenants in common in equal shares and proportions in the income, rents, and profits of the land, it being respectfully submitted that, under the will of Frederick H. Dominick, the children are not tenants in common in equal shares and proportions in the income, rents, and profits of the land.

"(3) That his Honor, the presiding Judge, erred in holding that the land was impressed with a trust under the will and the children entitled to equal shares and proportions in the income, rents, and profits of the land, it being respectfully submitted that, if the land were impressed with a trust, it was not such a trust as the Court can take cognizance of and enforce, in that (a) there are no words showing the precise nature of the trust intended to be impressed; (b) there are no mandatory words in the will showing the creation of a trust, or the manner in which the alleged trust is to operate; (c) the beneficiaries are not named; (d) the interest which each beneficiary is to take is not shown by the will; (e) the proportion to which each is entitled is not shown by the will."

OPINION The ruling of his Honor the Circuit Judge, which gives rise to this appeal, is as follows:

"The property in question is to be used by the defendant Harriet F. Harman for her own benefit and that of her children so long as she lives. The possession of the land is vested in her for life, but impressed with a trust in favor of the children, to the effect that they shall share with the mother whatever benefit may be derived from the use of the lands, and as to such benefits in the way of rents, profits, etc., the mother and children are tenants in common in equal shares and proportions."

It was not the intention of the Circuit Judge to decide the rights of the parties in the remainder to the children, for the reason that the possession of the land was vested in the mother for life, and was to be used by her for her own benefit and that of her children, so long as she lives; and therefore that there could be no merger of the remainder and the other estates created by the will, so as to execute the use devised to the mother and her children.

The question, therefore, is, whether there was a merger of the life estate and the equitable estates of the mother and children, whereby the use in the life estate was executed. It will be seen, by reference to the opinion of Mr. Justice Cothran, that he uses these words:

"It is by no means certain that the will creates a trust in Harriet P. Harman. There is no appointment of her as trustee; the word `trust' is not used in the will; and, while this fact is not conclusive, and no formal words are necessary to create a trust, when the intention to do so is manifest, the requirements of such an implied or constructive trust must possess the elements of an express trust; a definite subject matter reasonably certain or ascertainable beneficiaries; a definite object or purpose of the trust. * * *"

"There is not a word in the will indicating an object or purpose of the alleged trust; nothing inconsistent with a legal estate for the life of Mrs. Harman, in her and her children. * * * But as this question has not been argued, and as both sides appear to concede that the will created a trust in Mrs. Harman, we will pass it by, and are not to be understood as deciding it.

"It will be assumed then that the will created a trust; that Mrs. Harman is constituted trustee; that her tenure as trustee is for life; that the subject of the trust is an estate for the life of Mrs. Harman; that the beneficiaries of the trust are Mrs. Harman and her children; that at the death of Mrs. Harman the trust expires by limitation, and the remainders in favor of the children, in fee, take effect in possession; that the children of Mrs. Harman take contingent remainders in fee, depending upon their survival of the mother; the possession of the fee being postponed until the trust estate for the life of Mrs. Harman shall have terminated by her death.

"The next inquiry, assuming the existence of a trust, is as to its character; Is it a passive trust, executed by the statute of uses, or an active trust, not executed?"

The following quotations from the argument of the appellant's attorneys induce us to doubt whether Mr. Justice Cothran may not have been in error as to the extent of the concessions made by the attorneys:

"Such fund was placed by the testator in the hands of his daughter, Harriet F. Harman, to be by her kept together, and used for the support, maintenance, and education of her children, as well as for the support and maintenance of herself. But that support and maintenance for her children was to be meted out to them, not in equal proportions, but as the exigencies in the case of each might determine.

"Since there is nothing in the will excluding the exercise of discretion in the distribution of that fund by Harriet F. Harman, and since it is manifest that testator intended that such discretion should be lodged somewhere, and since the gift is expressly and directly to her and not to her children, it would seem that she, and not they, was clothed with such discretion. Has there been any abuse of that discretion? None is alleged in the complaint.

"There is no question in this case as to the disposition of distribution of the property, given to Harriet F. Harman, after her death. Her children in esse at the death of testator took vested remainders, to take effect in possession upon the death of the life tenant, Harriet F. Harman, subject to open to admit other children, should such thereafter be born to the said Harriet F. Harman, and subject to be defeated upon the death of such children during the lifetime of the said life tenant, leaving children, in which event such children would take directly under the will, as substitutional remaindermen, the share their parent would have taken had he or she survived the life tenant, Harriet F. Harman — citing Rutledge v. Fishburne, 66 S.C. 155; 44 S.E., 564; 97 Am. St. Rep., 757. Pearson v. Easterling, 107 S.C. 265; 92 S.E., 619; Ann. Cas., 1918D, 980. Tindal v.Richbourg, 91 S.C. 404; 74 S.E., 932. Walker v. Alverson,87 S.C. 55; 68 S.E., 966; 30 L.R.A. (N.S.), 115.Brantley v. Bittle, 72 S.C. 179; 51 S.E., 561. Fishburnev. Sigwald, 79 S.C. 551; 60 S.E., 1105. Buist v. Walton,104 S.C. 95; 88 S.E., 357."

We do not understand from these quotations that it was the intention of the appellant's attorneys to concede that the life tenant was clothed with any other than a discretionary power or trust to use the rents and profits in such manner as to her might seem for the best interests of the beneficiaries. Such power or trust would impose a duty on the life tenant as trustee, which would prevent the execution of the trust. The proposition that the use cannot be executed if there is a duty to be performed by the trustee is so well settled that we do not deem in necessary to cite authorities to sustain it. Was there such a duty in this case?

The Statute of Henry VIII, now Section 5450, Code of Laws, 1922, is substantially as follows:

"Where any person * * * shall be seized of * * * any lands * * * to the use * * * of any other person * * * by reason of any * * * will, * * * the person * * * that * * * shall have * * * any such use * * * for term of life, * * * shall be deemed * * * in lawful seisin, estate, and possession of * * * the same lands, * * * to all intents, * * * and purposes * * * of * * * such like estates as they had * * * in use, trust, or confidence of or in the same."

It will be observed that it contains the words: "Shall be seized of * * * any lands * * * to the use * * * of any other person."

In the case of Foster v. Glover, 46 S.C. 522;24 S.E., 370, William Foster conveyed certain lands to William H. Foster, his heirs, and assigns forever:

"To have and to hold the premises above mentioned, unto the said William H. Foster, Trustee, his heirs and assigns forever, nevertheless, in trust for the sole and separate use of Mrs. Sarah A. Foster and her children."

William H. Foster, trustee, was a son of Sarah A. Foster. The question in the case was whether the use in Sarah A. Foster and her children was executed.

Mr. Justice Cothran relies upon that case, but we rely upon it also, for it states the rule as to the execution of a trust when the trustee is also a beneficiary. We quote as follows from that case:

"* * * W.H. Foster, the plaintiff, is not only trustee, who has paid a valuable consideration, but he is also one of the beneficiaries being a child of Sarah A. Foster. Now, while it may be true that the statute of uses would execute the trust, so far as it related to the estates of Sarah A. Foster, M.M. Glover, Mary E. Foster, and George W. Foster, since, as to his own interest as beneficiary, he is not `a person seized to the use of some other person,' one of the three circumstances necessary to the execution of a use by the statute (see Williams v. Holmes, 4 Rich. Eq., 485); still, under the doctrine of merger, the plaintiff took an absolute title to a part of said premises. `If the trustee beone of the beneficiaries of the trust, he is absolute owner ofa share of the estate equal to his interest.' 2 Wn. Real Prop., 516. Thought doubted by Chancellor Kent, 6 John Ch. R. 426, it is settled law that a merger may be protanto(Trimmier v. Vise, 17 S.C. 499), and as to certain persons among the cestuis que trust. 25 N.J. Law, 137;103 Ind., 533. Here, then, to the extent of the interest or estate of the plaintiff, W.H. Foster, as a beneficiary, was a union of the legal and equitable estates, and the equitable merged into the legal." (Italics added.)

The facts in that case were, however, quite different from those in the present case. In the case of Foster v. Glover,supra, the trustee did not have any beneficial interest in the lands, except as a child of Sarah A. Glover, while Mrs. Harman not only has a beneficial estate as life tenant, but likewise under the provision of the will that the lands should be held for the benefit of herself and children.

The duty rested upon the mother to retain the legal title to her life estate for the protection of her rights, as a merger of her life estate and the equitable estate of herself and children would result in the execution of the trust, and hereby enlarge her life estate so as to include the children as life tenants. The effect of such merger would also have the effect of greatly decreasing the value of her life estate, without making her any compensation whatever. This would deprive her of her rights without due process of law, which, of course, would be in violation of the State Constitution as well as the Federal. Such a merger would unquestionably defeat the intention of the testator.

Furthermore, the thirteenth clause of the will should be construed as if it now read:

"I will to my daughter Harriet Harman my Tinsley place and my Carwile place, to have and to hold to the use of herself and her children during her life, and then to her children absolutely share and share alike, the child or children of a predeceased child to take the share to which the parent would have been entitled."

It will be observed that the testator used the words, "share and share alike" in providing for the proportions in which the children should take in remainder, but made no such provision for the division of the rents and profits during the life of the mother, thus showing that he intended that she should exercise a discretion in disposing of them. This was no doubt due to the fact that such a provision, if applied to the income, would have prevented the exercise of the discretion which had been placed in the mother.

It was on account of the duty imposed upon the mother to exercise her discretion in disposing of the income for the benefit of herself and children that she was to receive a larger share than the children in the rents and profits. In order, however, to equalize the devises to the mother and children, he gave the children the remainders in all the lands.

The method for determining the value of a life estate is thus stated in Cain v. Cain, 53 S.C. 350; 31 S.E., 278; 69 Am. St. Rep., 863:

"The value of the estate in remainder is the difference between the value of the estate in fee and the value of the life estate. In the absence of the adoption in this State of any table of life annuities, we see no good reason why the rule, which experience has approved, of assessing the one-sixth of the fee-simple value of the estate in money, in lieu of the widow's dower, or life estate in one-third, simple value of the whole, then a life estate in the whole may not be adopted in estimating as an advancement the value of an estate in remainder after a life estate. If a life estate in one-third is valued at one-sixth of the fee — or any definite part, may be valued at one-half its fee-simple value. Hence an estate in remainder after a life estate may be valued at one-half of the fee-simple value of the whole."

It is the judgment of this Court that the order of the Circuit Court overruling the demurrer to the complaint be reversed, without prejudice to the right of the plaintiff to recover such damages as she may have sustained, by reason of a failure on the part of the appellant to exercise the discretionary trust confided to her in accordance with the provisions of the will.

MESSRS. JUSTICES WATTS and FRASER concur.

MR. JUSTICE MARION concurs in the result.

MR. JUSTICE COTHRAN: I dissent for the reasons given in opinion herewith filed and for the additional reason that the leading opinion assumes that Mrs. Harman took a life estate under the will. As I construe it, the will gives an estate in joint tenancy to her and the children during her life, which is quite different from giving her a life estate. It is of the same character as if it had been given to her and the children during the life of John Doe.