Pagel v. Shipp

FOX, J. pro tem. This is an action for declaratory relief. Plaintiff, the former wife of defendant, Shipp, seeks an interpretation of a community property and support agreement (hereinafter called the agreement) entered into by said parties on August 2, 1932, and also an interpretation of a declaration of trust entered into at or about the same time by said parties and the California Trust Company, as trustee, for the purpose of carrying out certain of the provisions of the agreement. The action was dismissed as to the defendant Trust Company. The defendant Shipp appeals from a judgment in favor of the plaintiff.

On September 15, 1932, plaintiff obtained an interlocutory decree of divorce from the defendant Shipp (hereinafter called the defendant). She was granted custody of the minor children of the parties and the agreement was approved by the court. This decree became final on September 21, 1933. At the time of the trial of this action the children had attained their majority.

The agreement, after appropriate recitals concerning the marital and family status of the parties and of their com[14]munity property holdings, provides that “The party of the first part [defendant] undertakes and agrees to pay to the party of the second part [plaintiff], for and during her natural life, the sum of Three Hundred and Fifty Dollars ($350.00) per month. . . .” The agreement continues in paragraphs 3 to 6 to make provision for the support and custody of the minor children and for the immediate disposition of certain community, personal and real property.

Paragraph 7 sets up a scheme for securing to the wife the payment of the monthly sum of $350. In general, it provides for the creation of a trust containing as its res certain securities which had previously been listed as community property. So long as the husband is not in default, the agreement provides he may exercise all the incidents of ownership, including the collection of dividends, voting the stock and the right, within certain specified limits, to substitute other securities. Then follows a detailed enumeration of the conditions that shall constitute a default under said trust. Number 5 of said conditions is here important and provides that a condition of default shall exist when “the party of the first part shall fail to pay for the period of sixty (60) days, after written demand, to the party of the second part, at the time specified, any of the payments herein provided to be paid by the party of the first part to the party of the second part.” The agreement then provides that “Should a condition of default exist under said trust, and the party of the first part fail to remedy the same within sixty (60) days after demand for such performance, the Trustee shall, at the request of the party of the second part [wife], register said stocks in its name as Trustee and proceed to liquidate said trust property and convert the same into cash ...” (italics added) and out of the proceeds of the liquidation the trustee shall retain in what is designated as a “secondary trust” $75,000 (if such an amount is realized from said liquidation) and pay any surplus to first party. Should the liquidation yield $75,000 to the secondary trust the husband would be relieved of further payments to the wife. If, however, $75,000 should not be realized from such liquidation then the husband would be required to pay such additional sums as, when added to the net income from the secondary trust, shall equal $350 per month.