Brickell v. Powell , 148 Miss. 491 ( 1927 )

^* Corpus Juris-Cyc. References: Annuities, 3CJ, p. 211, n. 10; p. 212, n. 19 New, 21, 22, 23; p. 213, n. 24; Appeal and Error, 4CJ, p. 796, n. 15. As to whether testamentary annuity is payable out of corpus or income, see annotation in L.R.A. 1917E, 580 et seq., 2 R.C.L. 8; 1 R.C.L. Supp. 366. In the chancery court of Yazoo county, John F. Powell and Virginia Powell, his wife, exhibited their bill of complaint against H.H. Brickell, trustee of the estate of J.F. Powell, deceased, alleging that J.F. Powell, deceased, departed this life in 1909, testate. They make his will and the codicil thereto exhibits.

They allege that, under the terms of said will, the decedent provided for them jointly an annuity, payable monthly, of two thousand dollars per annum during their natural lives, and further recited the terms of the will, especially that said trustees were empowered thereby to increase their annuity, and that said trustees increased said annuity to five thousand dollars per annum.

The named trustees resigned and were lawfully succeeded by J.J. North, J.B. Ellis, and H.H. Brickell — subsequently North and Ellis resigned, and later the chancery court reduced the number of trustees to one, H.H. Brickell, who continues to be the lawful trustee of said estate.

It was further alleged that the rents, issues, profits, and income arising from said trust estate have been and are now insufficient to pay to them their annuity to which they were entitled under the terms of said will, and that the defendant trustee is in default in the payment of said annuity to the amount of thirty-eight thousand three hundred eighty-five dollars and twenty-six cents, of which amount John F. Powell is due thirteen thousand six hundred forty-three dollars and sixty-three cents, and Virginia Powell is due twenty-four thousand seven hundred forty-one dollars and sixty-three cents, to December 1, 1926, and that said sum is a debt due the complainants together, with legal interest thereon from the respective date said sum became in default.

The bill charged that the arrears of annuity alleged to be due the Powells was a charge on all the property embraced in the trust estate, and alleged that the will had been so construed by said chancery court on December 31, 1920, on a bill to construe same, and attached a copy of the court's decree to that effect, and the said petition prayed for said will to be construed.

It then describes many acres of land as constituting thecorpus of the estate, and charges that complainants were entitled to have all, or such parts, of said land sold as were necessary to pay their annuity in arrears.

The prayer of the bill was that the amount of annuity due and in arrears, and interest, be ascertained by the court, and that a charge of the Corpus of the estate be fixed by the court for said sum, and for a sale of the lands.

The answer of the defendant trustee admitted all the facts, but denied that, as a matter of law, the will should be so construed as to fix a charge on the corpus of the estate for annuity in arrears, or for interest, but averred that the annuitants could only resort to the rents, issues, profits, and income of the estate.

The court granted the decree prayed for, fixed the amount due as alleged, and ordered a sale of the lands to pay said amount and interest.

The material part of the will is item 4 and a part of the codicil, which we here set out:

"Item number four. All the rest and residue of my property, both real and personal, I will, bequeath and devise, in trust, to Thomas H. Campbell, Sr., trustee, for the purpose hereinafter specified and with the limitations and exceptions hereinafterwards mentioned, to have and to hold in trust for the use of my son, John F. Powell, and his wife, Virginia Powell, for and during their natural lives, and in the event of the death of either, for the use and benefit of the survivor for and during his or her natural life, and upon the death of the survivor, the trust herein mentioned shall terminate, and the property herein devised to said trustee shall vest in the children of John F. Powell, or the descendants of such children. And in the event of the death of said John F. Powell without children, or descendants of children, then upon the death of Virginia Powell, the wife of John Powell, the property devised in trust, as aforesaid, shall vest in my right heirs forever.

"I further direct that out of the rents, issues, profits and income of said property that said trustee, or his successor, shall pay John F. Powell and his wife, Virginia Powell, during their natural lives, jointly, the sum of two thousand dollars, per annum, said sum to be paid in monthly installments; and upon the death of either John F. Powell or his wife, said sum shall be paid to the survivor for and during his or her natural life; and the rest and residue of such rents, issues, profits and income, after the payment of all expenses necessary for the proper improvement, management and maintenance of said property, shall become a part of the corpus of my estate, and said trustee shall invest the same or any other idle moneys that he may have in his control, by lending out the same and taking as security therefor first mortgage on real estate or other undoubted security, at the highest rate of interest obtainable, which is consistent with safety and security.

"I further direct that the said trustee or his successor in office, may, with the consent of the chancellor of the Yazoo county chancery court, sell and dispose of the property bequeathed and devised to said trustee, and in case of sale shall invest the proceeds as aforesaid, but it shall not be incumbent on the purchaser to see to the application of the proceeds.

"The real estate herein devised to said trustee is upon the following conditions and limitations and exceptions, that I hereby devise the house and lot in Yazoo City now occupied by me as a residence to my son, John F. Powell directly, absolutely and in fee simple.

"I further direct that the said John F. Powell and his wife, Virginia Powell, may select as their home to be resided upon by them any of the plantations comprised in the real estate devised herein, and shall have the same free from all rent while so occupied by them, but the title to such plantation if so selected shall not be divested out of said trustee.

"The income herein provided for the benefit of John F. Powell and his wife, Virginia Powell, shall not be anticipated by them, or either of them, nor shall the property devised to said trustee be in any way liable for any debts incurred by said John F. Powell and Virginia Powell, or either of them.

"I further direct that, if from ill health or other unforeseen cause, in the opinion of said trustee, it should become expedient and proper, for the comfort and convenience of said John F. Powell and Virginia Powell, or either of them, that the income herein provided for their benefit should be increased, the said trustee shall have the power to do so."

"Codicil to Will. "This codicil to my foregoing will and testament made, published and declared this 19th day of August, 1909. In addition to T.H. Campbell, Sr., named in item 4 of my said will, I hereby appoint R.W. Crook and the Bank of Yazoo City as trustees to act jointly with said T.H. Campbell, Sr., and all powers vested in said Campbell as trustee are hereby vested in said T.H. Campbell, Sr., R.W. Crook, and the Bank of Yazoo City. In the event of the death of either the said Campbell or Crook, they shall have power to appoint by will their successors. I direct that the trustees herein named and the executor named in my will be not required to give any bond as such."

As agreed by counsel for appellant and counsel for appellees, the precise questions presented on this appeal are, first, whether or not the corpus of the estate can be subjected to the payment of the annuities; and second, whether or not the said estate is liable for interest on the annuities in arrears.

In stating the points submitted to us, we have been careful to quote literally from the brief of counsel for the appellant in order that it may be clearly understood that in this opinion we shall confine ourselves strictly to the questions presented to us by the briefs of counsel, and to no other.

First. It is necessary for us to consider the whole will in order to determine whether or not the corpus of this estate may be resorted to for the payment of the arrears of annuity provided for appellees.

Item 1 sheds no light as it provides for a number of legacies unnecessary to detail. Item 4 bequeaths and devises theresiduum of the testator's estate to Thomas H. Campbell, as trustee, for the purposes thereafter mentioned, and with the limitations thereafter mentioned. It provides that the estate is held in trust for the use of testator's son, John F. Powell, and his wife, Virginia Powell, during their natural lives, and likewise to the survivors of either during his or her life; and then the trust estate terminates, and the title to the property vests, first, in the children of John F. and Virginia Powell, or the descendants of said children; and, second, if there were no children or descendants of said children, then the property vested in the rightful heirs of the testator forever. The pleadings disclose that John F. and Virginia Powell never had any children.

It is next directed that out of the rents, issues, profits, and income of said trust property the trustee or his successor should pay to John F. and Virginia Powell, during their natural lives, jointly, the sum of two thousand dollars per annum, paid monthly, and if either died said sum was to be paid to the survivor for life. The rest of such issues, profits, and income, after payment of expenses, was to be and become a part of the corpus of the estate, with power vested in the trustee to safely invest. Power was vested in the trustee or his successor to sell the trust property, with the consent of the chancery court of Yazoo county, and reinvest the proceeds, and purchasers were relieved of seeing to the proper application of the proceeds of said sales.

The house and lot occupied by testator in Yazoo City were excepted from the trust and vested in John F. Powell in fee simple.

The further exception was that John F. and Virginia Powell were given the right to select as their home any of the plantations, free from rent; the title, however, vested in the trustee.

It was provided that the income was not to be anticipated by John F. and Virginia Powell, or either of them, nor to be liable for their debts, or the debts of either.

The said trustee was then given the power to increase the annuity if from ill health or other unforeseen cause, in the opinion of said trustee, it should become expedient and proper. Item 5 names Crook as executor and directs a speedy administration, etc.

The codicil names R.W. Crook and the Bank of Yazoo City as trustees to act jointly with T.H. Campbell, Sr., and gives to Crook and Campbell the power to name by will their successors.

It is apparent, from the terms of the will, that the testator had in mind the maintenance and support, in comfort, of his son John F., and daughter-in-law, Virginia. The testator owned much land and considered himself a wealthy man in that community. It has developed that rents, issues, profits, and income of the trust estate have not been adequate to pay the increased annuity.

Appellant's position is that from this whole will it is apparent that testator intended that the corpus of this trust estate should be held intact and finally delivered to the ultimate limitees, and insists that the language employed demonstrates that the corpus of the estate should not be disturbed during the lifetime of the annuitants. As evidence of this contention, it is pointed out that the testator directed annuity to be paid "out of the rents, issues, profits, and income of said property," and provides for the investment and management of said rents, issues, profits, and income with great care and particularity, evidencing a desire to augment same. Appellant further says that, but for the trust set up, the annuitants would have received a life estate, and hence in that court could not resort to the corpus of the estate. Appellant stresses the limitations and exceptions, among which are the reinvestment of surplus funds; that the trust estate is not to be liable for or subjected to the debts of the annuitants, or the income anticipated by them; and the fact that the testator provided the manner in which the corpus might be sold by the trustee for the purpose of reinvestment negatives the idea that it might be sold to pay the annuity, or for any other reason.

We have stated rather succinctly all the provisions to which the appellant directs us, not for the purpose of taking them up seriatim, as this is unnecessary in view of our conclusion.

We understand appellant and appellees to agree to the following fundamental rule of law which controls us in construing the will; but whether they so agree or not, it is correct, and is our polestar in this case. A direction to pay an annuity out of rents and profits of lands charges only such rents and profits, and not the corpus of the estate, unless a contrary intention appears, and can only be enforced against the trustee personally, in so far as he has received such rents and profits.

It cannot be gainsaid that the dominant thought of this testator was to provide for the maintenance and support, in comfort, of these annuitants, and if he has evinced this in his will, we must so hold.

The directions in this will as to this trust are consonant with, and reflect a good business man's desires and instructions, and do not reflect the view that, in an iron clad way, he desired to hamper and restrict his son, and his son's wife to less than a life of ease and comfort. The son was the natural object of his affection and bounty; the son and wife were, doubtless, well known to him and well beloved by him, while those who receive the remainder estate here, in the one contingency, were not in existence, and in the other, were collateral relatives, the identity of whom could not then, with certainty, be declared. He did not trust this son's business acumen and thrift, evidenced by the fact that he protected this estate from his son's debts, not to deprive the son of the estate, but to assure its preservation for the purposes of the trust, the main object of which was, clearly, the annuitants' maintenance in comfort.

Why do we say that? Because he did not trust his own judgment as to the amount to be paid these annuitants, his own judgment being that two thousand dollars per annum would care for them, but he does not stand upon that, but lodges the power in the said trustees to increase the annuity, but not to reduce it, thus rendering the amount of the annuity to be computed in their honest discretion, and resulting in the amount thereof indefinite and unlimited, looking only to the accomplishment of his purpose to devote this trust to the annuitants' maintenance, in comfort. Evidently, he realized that he could not foresee their necessities in the coming years, nor the shifting changes in values wrought by the lapse of years.

At all events, he evidently intended this trust estate to be devoted primarily for the use of the annuitants, otherwise he would not have invested the trustee with the broad, sweeping power to substitute his judgment for that of his own. This grant of power shows that he did not intend to relieve the corpus of his estate.

The mere use of the words, "out of the rents, issues, profits and income," does not show, at all, that he intended to relieve the corpus of the estate from the onus of a support, and maintenance for these annuitants, but, to the contrary.

In the case of Charter Oak Life Insurance Co. v. Gisborne, 5 Utah, 319, 15 P. 253, in this connection, the court said: "The meaning of the words, `rents, issues and profits' has often been before the courts; and by a long line of decisions the courts of chancery have declared that, unless these words be connected with other words which restrain the meaning of the terms to the rents, issues and profits as they arise (as if the trust is to pay debts out of the annual rents) the court will give the words a meaning broad enough to include the sale of the property itself. The strict meaning of the words, as opposed to land, is the annual rents, issues and profits; yet the courts hold that they should not be confined thereto, but should be taken, in a more enlarged sense, to include every mode by which land may be made to yield profits, out of which money so charged upon it may be taken, and, consequently, to include the sale of the property itself. The doctrine is thus laid down broadly by Judge Story in his work on Equity Jurisprudence."

The Gisborne case, supra, originated in the territory of Utah, and was appealed to the supreme court of the United States, and the conclusion of the territorial court was approved by that court in the case of Gisborn v. Charter Oak Life Ins. Co.,142 U.S. 326, 12 S.Ct. 277, 35 L.Ed. 1029. Also, see Story, Eq. Jurisprudence (11 Ed.), section 1064a; Pomeroy, Eq. Jurisprudence (4 Ed.), section 1237, pages 2971, 2972. Also, as analogous to this case is Gillespie v. Boisseau (Ky.), 64 S.W. 730.

In Heatherington v. Lewenberg, 61 Miss. 372, this court held that where an annuity springs alone from a will, there is no distinction between the terms "legacy" and "annuity."

In Perkins v. Bank, 81 Miss. 361, 33 So. 18, this court held: "If it is clear, either by express provision or necessary implication, that the legacy is to be paid at all events, and that is what the testator intended, that is the end of the matter, and the legacy is to be charged upon the lands."

The ultimate takers of the fee have only the remainder after the satisfaction of previous dispositions. Knotts v. Bailey,54 Miss. 238, 28 Am. Rep. 348.

As to the arrears, in such case, the rule is stated as follows: "Where it clearly appears that the annuity is charged upon thecorpus, the corpus, as a matter of course, will be liable for the payment of the arrears, and where an annuity is, by will, expressly charged on the corpus of an estate, subsequent words tending to show that the testator contemplated that it should abate in the event of the income of the property being insufficient, do not deprive the annuitant of the right to have the corpus applied toward making good any deficiency of income to meet the annuity. If the income of the whole estate is charged with the payment of an annuity, and the capital fund is limited over `after payment' or `subject to' the payment of the annuity, the corpus will be liable for the payment of arrears. If there is a simple gift of an annuity, with no indication of an intention that it shall be paid out of income, rather than corpus, or if the annuity is made an unlimited and indefinite charge upon rents and profits, resort may be had to the corpus, in case the income is insufficient." 3 C.J., section 29, p. 212.

Limiting this decision to the questions presented, we are of the opinion that the testator intended, at all events, to care for and maintain the annuitants in comfort, and that the gift being an indefinite and an unlimited charge on rents, issues, profits, and income, resort may be had to the corpus of this estate, the income being insufficient; and that, as presented here, the arrears of annuity may be charged upon the corpus of this trust estate.

We think the chancellor also correctly allowed interest thereon as it was a matter within his sound discretion, which does not appear to have been abused by the decree here under review. 3 C.J., 211, section 26, and note.

Affirmed.