O'Mara v. Farmers & Merchants National Bank

WASTE, C. J. The final decree of distribution entered in decedent’s estate followed closely the provisions of his will concerning the creation of a trust and the payment by the trustee of the net income from the trust property to decedent's widow and two daughters, and further provided: “Upon the death or remarriage of said widow, the said trust shall terminate and said trustee shall distribute (italics added) the balance remaining in said trust fund to the two above-named daughters of decedent, in equal proportions, share and share alike.” Margaret 0’Mara, one of the daughters, predeceased the widow, and there was distributed to the Farmers and Merchants Bank, as trustee, the entire residue, to pay $50 a month to the widow of Wallace, a second wife, and any excess of $50 to be paid to his daughters by a former marriage, Jessie W. Buchanan and Margaret W. 0 ’Mara, and, in the event of the death or remarriage of the widow, then the trustee should turn over the balance remaining to these two daughters. The question for determination is [340]whether the daughters, under the decree of distribution of the father’s estate, acquired contingent or vested remainders in the trust property. Both the trial court and the District Court of Appeal held that they were contingent remainders, the effect of which, obviously, is intestacy as to one-half of the trust property because of the lapsing of one daughter’s interest in the remainder by reason of her death prior to the termination of the trust.

A construction favorable to testacy should obtain where the language used reasonably admits of such construction. (Estate of Dunphy, 147 Cal. 95-99 [81 Pac. 315]; Estate of Ingram, 104 Cal. App. 1-8 [285 Pac. 365].) In support of the contention that a contingent remainder only was created in the daughters, it is argued that to create a vested remainder it is necessary that there be a present conveyance of a future estate to the beneficiary; that the language employed in the decree of distribution here involved (which varies slightly from but is now controlling of the language of the will) (Keating v. Smith, 154 Cal. 186 [97 Pac. 300]), required independent actipn on the part of the trustee before title passed to the beneficiaries and that it contains no language giving to the daughters a present vested interest in the corpus of the estate.

The question presented is one of construction and turns principally upon the meaning of the words “shall distribute” appearing in the decree of distribution. The District Court of Appeal construed these words to be the equivalent of “to transfer and convey” and “shall deliver”, appearing in cited cases, and held no vested estate in remainder was created. On the other hand, the words “shall distribute”, employed in the present case, may reasonably be interpreted to mean that upon the death of decedent’s widow the trustee shall distribute or deliver possession of the trust res in which the decedent’s daughters already had a vested remainder. In construing the word “distribute” in Estate of Dunphy, supra, as used by the testator in that case, we stated: ‘ ‘ There is no direction whatever to the trustees to convey the property to the remaindermen and no direction to them at all upon that subject. There is nothing in the language used (as there was in the will of Fair) which necessarily means that title could pass only by a conveyance by the trustees, or which embarrasses the court in upholding the