TRAYNOR, J. I dissent. The English courts hold that the sole beneficiary of a trust beyond the age of minority can [469]demand that the fund be conveyed to him and the trust terminated, even though the trust instrument provides that the enjoyment of the fund by the beneficiary shall be postponed until he has reached a certain age. “The principle . . . has always been to recognize the right of all persons who attain the age of twenty-one to enter upon the absolute use and enjoyment of the property given to them by a will, notwithstanding any directions by the testator to the effect that they are not to enjoy it until a later age—unless, during the interval, the property is given for the benefit of another. If the property is once theirs, it is useless for the testator to attempt to impose any fetter upon their enjoyment of it in full so soon as they attain twenty-one.” (Gosling v. Gosling, Johns. 265, 272; In re Couturier, (1907) 1 Ch.D. 470, 473; Saunders v. Vautier, 4 Beav. 115; see 3 Pomeroy, Equity Jurisprudence, 5th ed., § 991(b).) This doctrine has not been adopted in the United States. (See cases collected in 37 A.L.R. 1420, 1423, 123 A.L.R. 1427.) In the leading case of Claflin v. Claflin, 149 Mass. 19 [20 N.E. 454, 14 Am.St.Rep. 393, 3 L.R.A. 370], the court refused to follow the English authorities and held that a provision in a trust charging the trustee with the accumulation of income until the sole beneficiary reached an age beyond that of 21 years was binding on the beneficiary. (See Estate of Yates, 170 Cal. 254, 256 [149 P. 555].) The Claflin case, however, did not determine whether the trust would have been terminable upon equitable grounds, had the petitioner shown such grounds and not relied solely on the alleged invalidity of the provision restraining his enjoyment of the property. (See Sears v. Choate, 146 Mass. 395 [15 N.E. 786, 4 Am.St.Rep. 320].) In many American jurisdictions, the rule of the Claflin case has been extended to cover not only a suit to terminate a trust as a matter of course but also a suit based on equitable grounds. (See 123 A.L.R. 1427; 3 Scott, Trusts, § 337.3; 4 Bogert, Trusts, 1002.)
In this state, however, it has been recognized that a court of equity has inherent power to terminate a trust before the end of the period specified in the trust instrument. The beneficiaries of a trust other than a spendthrift trust may secure its termination if all the beneficiaries are sui juris and all agree upon its termination, and if a court of equity concludes that the best interests of the beneficiaries will be served thereby. (Whittingham v. California Trust Co., 214 Cal. 128, 135 [4 P.2d 142]; Gray v. Union Trust Co., 171 Cal. 637, 641 [470][154 P. 306]; Eakle v. Ingram, 142 Cal. 15 [75 P. 566, 100 Am.St.Rep. 99]; Moor v. Vawter, 84 Cal.App. 678, 682 [258 P. 622]; see, also, Bennett v. Nashville Trust Co., 127 Tenn. 126 [153 S.W. 840, Ann.Cas. 1914A 1045, 46 L.R.A.N.S. 43] and eases there collected.) The California cases allowing the termination of a trust in the interest of the beneficiaries are not limited to dry trusts, nor do they make the power of the court to terminate the trust dependent upon the existence of an emergency or upon changed conditions obviating the purposes of the trust that were unforeseeable by the settlor. Thus, in Moor v. Yawter, supra, the trust instrument provided for the accumulation of income, and it was not alleged that there were unforeseeable developments after the testator's death. The court stated at page 684: “It may not be denied that, generally speaking, the rule obtains as announced in the ease of Gray v. Union Trust Co., 171 Cal. 637, 641 [154 P. 306], to the effect that the termination of a trust is discretionary with the trial court. (See, also, Fletcher v. Los Angeles Trust & Sav. Bank, 182 Cal. 177, 180 [187 P. 425].) But such a pronouncement goes no further than does the ordinary principle regarding the general subject of judicial discretion. ... In the instant case it was stipulated that the beneficiaries were in all respects competent, not spendthrifts, and that all of them joined in the request that the trust be terminated. No reason of any sort based upon facts or equitable considerations was interposed by the trustees which might in any manner militate against the right of the beneficiaries of the trust in the premises.” In Gray v. Union Trust Co., supra, at page 641, this court declared: “It is only when all the parties in interest are before a court, when each is sui [juris], and all join in the application, that a court of equity ever terminates a valid trust. And even when all these circumstances exist, equity does not do so by force of the application, but only when a decree so doing is meet and proper. When such circumstances exist power is in th'e court of equity to terminate the trust, but with that power is not necessarily imposed the duty so to do. It is still discretionary. ’ ’ The opinion of Justice Henshaw in the Gray case cites for the foregoing rule Estate of Yates, 170 Cal. 254 [149 P. 555], in which the opinion was prepared by the same justice. Estate of Yates, supra, must therefore be understood as interpreted in the Gray ease.
Defendant relies on Fletcher v. Los Angeles Trust & Sav. Bank, 182 Cal. 177, 179, 180 [187 P. 425], for the proposition that this state follows the rule that if the trust instrument [471]directs the accumulation of the income until the beneficiary has reached a certain age, the trust cannot be terminated by the court before that time, “even where all the beneficiaries are sui juris and consent thereto.” The passage in the Fletcher ease to that effect, however, was only a dictum in that ease. The Fletcher case involved a trust instrument that provided, not for accumulation of income, but merely for the administration of the trust property and the distribution of income by the trustee. It was held that the trust would have been terminable but for the contingent interest of unborn issue. This court declared in that case that “The only discretion vested in the trustee” under the trust instrument in question was “as to the nature and character of the investments to be made” and that such discretion of the trustee does not “take the trust out of the general rule,” which the court stated at page 179: “Where the beneficiaries of the trust are all sui juris, and seek the termination of a trust, a court of equity may terminate the same even if the period for such termination fixed by the instrument creating the trust has not yet arrived. The court recognized that under this rule the “termination of the trust is, however, discretionary with the court. (Gray v. Union Trust Co., 171 Cal. 637 [154 P. 306].)” (182 Cal. 177, 180.) The dictum in the Fletcher case had no bearing on trusts in this state for the accumulation of income after a beneficiary had reached majority, for under sections 723 and 724 of the Civil Code, not amended until 1929 (Stats. 1929, p. 276), a trust instrument could not validly provide for the accumulation of income after the beneficiary had reached majority.
New York and other states by statute read a spendthrift clause into any trust whose income is designed for an individual beneficiary. (See 4 Bogert, Trusts, 2932-2933; 1 Scott, Trusts, 750; Griswold, Spendthrift Trusts, 194.) Courts in these states refusing to terminate such a trust before the time fixed in the trust instrument simply confirm the rule that spendthrift trusts are not terminable by court decree. In this state a trust is not a spendthrift trust if the trust instrument does not provide that the beneficiary’s interest shall be unassignable and not subject to the claims of his creditors. (Civ. Code, § 867; Fatjo v. Swasey, 111 Cal. 628, 637 [44 P. 225]; Blackburn v. Webb, 133 Cal. 420, 422 [65 P. 952]; see Griswold, Spendthrift Trusts, 129; 25 Cal.Jur. 324.) By declaring not terminable a trust like the present one, which contains no [472]spendthrift clause, the court would prevent a beneficiary from using the trust funds for urgent needs or highly desirable purposes.! It would not, however, prevent him from selling his equitable interest in the trust, and since a purchaser of that interest could not obtain the trust property before the end of the period specified in the trust instrument, it is not likely that he would pay a price commensurate with the present value of that interest. As has been aptly said: “Property sold in presentí, but not to be delivered for many years, must be sold at a sacrifice, and when the seller is a person of the character for whom such restraints are supposed to be useful, the chances are that it will be sold at a very great sacrifice. In fact, the law, by sanctioning such restraints, is exposing inexperienced youth to those ‘catching bargains’ against which the old-fashioned equity always strove to protect it.” (Gray, Restraints on Alienation, 2d ed. § 124(n); see, also, Sears v. Choate, 146 Mass. 395, 398 [15 N.E. 786, 4 Am.St.Rep. 320]; Scott, Control of Property by the Dead, 65 U. of Penn. L.Rev. 527, 632, 648-650.) It is absurd to refuse termination in such a situation for fear of frustrating the trustor’s intent, when the net result of the refusal is to continue the trust for the sole benefit of the trustee., (46 Yale L.J. 1005, 1011.) Moreover, the assets of the trust may be distributed to the beneficiary and the trust terminated by an agreement between the beneficiary and the trustee securing the latter’s full discharge. (See 4 Bogert, Trusts, 2938.) To preclude the same result by court decree is to “penalize cestuis who are over conscientious and seek the instruction of the court, or who have a trustee who is anxious to get the commissions from the trust and hence will not consent to termination.” (Bogert, ibid.)
When exercising its discretion as to whether a trust should be terminated, a court weighs the importance and urgency of the interests calling for the termination of the trust and determines whether or not the character of the trust property is such that, in view of the circumstances of the case, its administration by the trustee is called for. It considers whether the trust would otherwise end within a short time; whether the termination of the trust would defeat a particular purpose of the trust, such as withholding the administration of the trust property from the husband of a woman beneficiary (see In re Cornil’s Estate, 167 Iowa 196 [149 N.W. 65; L.R.A. 1915E 762]; 43 Yale L.J. 410); whether the beneficiaries have [473]sufficient experience to manage the trust property (see Eakle v. Ingram, 142 Cal. 15, 16 [75 P. 566, 100 Am.St.Rep. 99]; Moor v. Vawter, 84 Cal.App. 678, 684 [258 P. 622]); whether they are free from propensities that would endanger a reasonable management of the trust property (see Estate of Easterday, 45 Cal.App.2d 598, 603, 604, 607 [114 P.2d 669]); whether the circumstances that give rise to their interest in terminating the trust were probably anticipated by the trustor (Fletcher v. Los Angeles Trust & Sav. Bank, supra, p. 180; Whittingham v. California Trust Co., 214 Cal. 128 [4 P.2d 142]; see Adams v. Cook, 15 Cal.2d 352 [101 P.2d 484]) ; and whether the trust was intended primarily for the purpose of accumulating the income or for the administration of the trust property. (Fletcher v. Los Angeles Trust & Sav. Bank, supra; see, also, Woestman v. Union Trust & Sav. Bank, 50 Cal.App. 604, 607 [195 P. 944].)
There is no hard and fast rule preventing the termination of a trust if it is not proved that the settlor did not anticipate events subsequent to the creation of the trust. The principal purpose of a trust is to benefit the beneficiaries, and presumably a court will better serve the intentions of the settlor by weighing the actual interests of the beneficiary of a trust in its termination against the benefits intended by its continuance than by insisting that adequate proof be offered that the present circumstances could not be or were not anticipated by the settlor. “The majority American position to the effect that non-spendthrift trusts are indestructible as long as they are active and have a purpose to be performed has the appearance of strength, in that it stresses respect for the intent of the settlor, harmony with the spendthrift trust doctrine, and refusal by the courts to make wills and deeds; but it seems in fact an impractical rule which brings about an adherence to theory but no practical individual or social benefit.” (4 Bogert, Trusts, 2940.)
Nor is there any hard and fast rule that a trust providing for the accumulation of income cannot be terminated by a court. Although such a trust may now be valid (Civ. Code, §§ 723, 724) it does not follow that it cannot be terminated. The settlor intends by such a trust to secure the beneficiary’s well-being in the future, but it might be shown to the satisfaction of the court that the present needs of the beneficiary outweigh his interest in future security. Moreover, in the present case the settlor did not provide for an obligatory [474]accumulation of income, for the will provides that in the discretion of the trustees the income may be accumulated or paid to the beneficiaries. (No power was given to invade the corpus.) The will does not reveal whether this provision was made to empower the trustees to use only part of the income for the current requirements of the beneficiary, or to have the income accumulated while plaintiff was very young for distribution to her when she was older and her needs were greater, or whether it was made to avoid controversies and possible litigation as to what is income and what is corpus. If a provision in a will giving the trustee discretion to accumulate income precluded a court from determining that the corpus of the trust should be conveyed to the beneficiary and the trust terminated, the court would be bound to a rule of thumb regardless of the reasons for giving such discretion to the trustee. Whether the income can be accumulated or must be currently distributed affords no ground for deciding the entirely unconnected question whether the corpus of the trust can be distributed to the beneficiaries before the time stated.
The majority opinion holds that the trust in the present case could be terminated if it were a dry trust but that since it is an active trust it must continue until plaintiff has reached the age of thirty-five. It has long been recognized in California, however, that active trusts can be terminated on equitable grounds before the expiration of the period fixed in the trust instruments. This court has defined a dry or passive trust as follows: “The term ‘dry trust’ refers to a trust wherein the trustees would have no actual responsibilities as such and no active duties to perform. ’ ’ (Estate of Shaw, 198 Cal. 352, 363 [246 P. 48].) According to the Restatement of Trusts, “A trust is not active unless the trustee has by the terms of the trust affirmative duties to perform. If his sole duties are negative, that is not to interfere with the beneficiary in his enjoyment of the property, the trust is passive.” (Restatement, Trusts, § 69, Comment a.) In Eakle v. Ingram, 142 Cal. 15 [75 P. 566,100 Am.St.Rep. 99], the trustee was to hold certain real property and “to pay the rents, issues, and profits thereof” to named beneficiaries. Since the beneficiaries were entitled only to net income during the trust period, the duty of managing the property, as well as that of paying the income to the beneficiaries, was imposed on the trustee. The court used the term “bare trustee” in that case, not to indicate that the trust was a dry one, but as is evident [475]from the context (142 Cal. at p. 17), to emphasize that a trustee with an interest only in his compensation cannot object to the termination of the trust as can a person interested as a beneficiary in the trust property. In Moor v. Vawter, 84 Cal.App. 678 [258 P. 622] “the testator left all his property in trust” to be administered by the trustee for the benefit of the widow of the testator during her life, and, if she died within ten years after the testator’s death, for the benefit of the sons of the testator until the expiration of such ten-year period.. The trust was terminated during the ten-year period. The invalidity of the provision for the accumulation of income under the law at that time did not affect the active character of the trust but only the nature of the duties to be performed by the trustee. It is undisputed that management of the trust property and distribution of the net income thereof are duties of the trustee of an active trust and that the active character of a trust does not depend on the trustee’s duty to accumulate the trust income. In Whittingham v. California Trust Co., 214 Cal. 128 [4 P.2d 142], the trust was terminated as to one-third of the share of one of the beneficiaries. The trustees were charged with the management and control of the trust estate, the corpus of which consisted of a large number of mortgages, trust deeds, and mortgage guaranty certificates.
It is clear not only that the foregoing cases involved active trusts, but, as is evident from the quotation in Eakle v. Ingram, supra, from Underhill on Trusts and Trustees, and the original context of the quotation, that the court had no doubt that active trusts could be terminated upon equitable grounds before the expiration of the period fixed in the trust instruments.
The majority opinion regards the Whittingham ease as illustrative of a limited class of eases “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.” There is no essential difference, however, between a modification of a trust by reducing the period provided for its existence and other modifications of important provisions. The court in the Whittingham case made no differentiation between the partial termination of a trust and its complete termination. On the contrary, relying on Moor v. Vawter, supra, and Fletcher v. Los Angeles Trust & Sav. Bank, 182 Cal. 177 [187 P. 425], [476]it based its decision on the court’s power to terminate trusts on equitable grounds.
Plaintiff has adduced equitable grounds for the termination of the trust, which are sufficient in my opinion to allow her to go to trial. The facts are simple. A mother who lived separately from her husband, a successful businessman, made a testamentary trust to provide for the future security of her fifteen-year-old daughter, then living with her. There was then the possibility that this trust would be the only source of the daughter’s future security. The father’s wealth was subject to the contingencies of his business: he might remarry and in his will provide for others than his daughter. Had this situation remained unchanged, the continuation of the trust might well have served the best interests of the daughter. The father, however, has died leaving property to plaintiff under a trust that makes it unnecessary for her to depend entirely on her mother’s trust for future security, and her present income is insufficient to purchase and maintain a home on the scale to which she has been accustomed.
Defendant contends that even if the trust could be terminated if plaintiff were the sole beneficiary, the termination is precluded by the contingent interest of her unborn issue, who would be entitled to the trust property should plaintiff die and leave issue surviving before reaching the age of thirty-five. Plaintiff, who was 26 years old when her first amended complaint was filed in December, 1943, is without issue. She has exercised her right under the will to determine who shall be entitled to the trust fund should she die without issue before reaching the age of thirty-five years. In order to secure her unborn issue, should this trust be terminated and should she then have issue and die before reaching the age of 35 years, plaintiff has exercised in favor of her unborn issue a power of appointment given her as beneficiary of the trust created by the will of her father. Plaintiff has alleged that the value of the benefits that her issue would enjoy under this power of appointment greatly exceed the value of their interest in the present trust, and that therefore her issue would be adequately protected against any loss that might result from the termination of the trust.
A court of equity may frame its decree to suit the exigencies of the case. (Wills v. Porter, 132 Cal. 516, 521 [64 P. 896]; California etc. Co. v. Schiappa-Pietra, 151 Cal. 732 [477][91 P. 593]; Thakrah v. Haas, 119 U.S. 499, 502 [7 S.Ct. 311, 30 L.Ed. 486]; see 10 Cal.Jur. 559; McClintock, Equity, 42, 255.) It may make the termination of a trust conditional upon the furnishing of a fair equivalent for the contingent interests therein. (In re Colgan, 19 Ch.D. 305 (1881): see 2 Scott, Trusts, 853.) Its power in this respect is comparable to other powers affecting contingent interests. Thus a court, by approving a compromise, may diminish the contingent interest of unborn issue in a trust. (Loring v. Hildreth, 170 Mass. 328 [49 N.E. 652; 64 Am.St.Rep. 301, 40 L.R.A. 127]; Fisher v. Fisher, 253 N.Y. 260 [170 N.E. 912, 69 A.L.R. 918]; Copeland v. Wheelwright, 230 Mass. 131 [119 N.E. 667]; see Mabry v. Scott, 51 Cal.App.2d 245, 257 [124 P.2d 659].) It may allow, on grounds of necessity or “high expediency,” the sale of trust property in the absence of a power of sale in the trust instrument, despite a contingent interest of unborn or unascertained persons. (Mayall v. Mayall, 63 Minn. 511, 514 [65 N.W. 942]; Beliveau, v. Beliveau, 217 Minn. 235 [14 N.W. 2d 360].) Courts have even approved the destruction of the contingent interest when it is “so remote, and its actual enjoyment so improbable that its retention would appear to be nothing more substantial than a film of mist.”
It cannot be held that the unborn issue were not represented or that the trial court was precluded from terminating the trust because the guardian ad litem demurred to plaintiff’s action. A guardian ad litem may be appointed under the inherent powers of a court of equity to safeguard the interest of unborn issue in a trust. (Mabry v. Scott, 51 Cal.App.2d 245, 256 [124 P.2d 659], and cases there cited.) He is not free to give or withhold arbitrarily or capriciously his consent to the termination of the trust; he must act reasonably in protecting the interests that he represents. At all times he is under the control and subject to the orders of the court (see, 99 A.L.R. 747), for “The court is, in effect, the guardian— the person named as guardian ad litem being but the agent to whom the court in appointing him (thus exercising the power of the sovereign state as parens patriae) has delegated the execution of the trust.” (Cole v. Superior Court, 63 Cal. 86, 89 [49 Am.Rep. 78].) The guardian ad litem in the present case opposed plaintiff’s application to terminate the trust on the grounds that the contingent remaindermen were indispensable parties and that a trust cannot be terminated if [478]there are persons yet unborn who have a contingent interest in the trust. He might not have done so had he been properly instructed. In any event, the final determination as to whether or not the contingent interest of the unborn issue would be adequately protected rests with the court.
Since the allegations of plaintiff’s complaint set forth a prima facie case, the demurrer should not have been sustained.
Gibson, C. J., and Carter, J., concurred.
Appellant’s petition for a rehearing was denied January 31, 1946. Gibson, C. J., Carter, J., and Traynor, J., voted for a rehearing.