Mississippi State University Foundation, Inc. v. Ruthella Clark ( 1995 )

IN THE SUPREME COURT OF MISSISSIPPI
NO. 95-CA-01346-SCT
IN THE MATTER OF THE ESTATE OF MARY
ELIZABETH HOMBURG, DECEASED:
MISSISSIPPI STATE UNIVERSITY
FOUNDATION, INC.
v.
RUTHELLA CLARK AND LYDIA QUARLES, CO-
EXECUTORS
DATE OF JUDGMENT: 11/14/95
TRIAL JUDGE: HON. DOROTHY WINSTON COLOM
COURT FROM WHICH APPEALED: LOWNDES COUNTY CHANCERY COURT
ATTORNEY FOR APPELLANT: JAMES K. DOSSETT, JR.
ATTORNEYS FOR APPELLEES: DOLTON W. MCALPIN
CHRISTINE A. ARIANS
NATURE OF THE CASE: CIVIL - WILLS, TRUSTS AND ESTATES
DISPOSITION: REVERSED AND REMANDED - 7/17/97
MOTION FOR REHEARING FILED:
MANDATE ISSUED: 8/7/97
BEFORE DAN LEE, C.J., PITTMAN AND ROBERTS, JJ.
ROBERTS, JUSTICE, FOR THE COURT:
STATEMENT OF THE CASE
¶1. This case comes before this Court on appeal from a Declaratory Judgment entered in the
Chancery Court of Lowndes County filed November 14, 1995. This Judgment was entered in
response to a petition filed on March 23, 1995, by Lydia Quarles and Ruthella Clark, Co-Executors
of Mary E. Homburg's estate in order to determine the proper distribution of the bequests of her will.
The issue on appeal is the legal effect of a provision in Ms. Homburg's will. The provision
bequeathed $100,000 to a testamentary trust for the benefit of Albert Corder during his life, with the
remainder to Mississippi State University (Foundation) and Mandy Spraggins, in equal shares.
Memoranda of Law were filed by both the Co-Executors and the Foundation. After hearing oral
arguments, the chancellor made findings of fact and conclusions of law. The chancellor refused to
give effect to the provision in the Will finding that the gift in trust to Corder had lapsed and would
devolve to the residue.
¶2. The Foundation, a remainder beneficiary of the testamentary trust held invalid, duly perfected this
appeal. The Court is asked to reverse the decision of the chancellor and render a judgement in the
Foundation's favor by directing the Co-Executors to comply with the provisions in the Will. This
would require the distribution of one half of the remainder of the funds bequeathed under Item IV of
the Will to the Foundation and Spraggins, which is $50,000 respectively.
STATEMENT OF THE FACTS
¶3. Before her death on September 30, 1994, Ms. Homburg resided in Lowndes County, Mississippi.
She died testate with a will dated March 31, 1989. Ms. Homburg had a half-sister as her primary
heir-at-law. The Will made several specific bequests, leaving $100,000 in trust to Corder, a former
servant, and left the residue of the estate to be divided among two named individuals and a named
charitable institution, Auburn University. A Petition for Probate of Will was filed in the Lowndes
County Chancery Court on November 8, 1994, by the Co-Executors. Also on November 8, 1994, the
Will was admitted to probate, and the Co-Executors received the letters testamentary after taking the
appropriate oaths.
¶4. On March 23, 1995, the Co-Executors filed with the court a Petition for Declaratory Judgment.
The Petition was filed in order to seek the court's guidance because a number of beneficiaries had
pre-deceased the testatrix and the need to interpret some of the language in the Will. The Co-
Executors requested a Declaratory Judgment as to the legal and proper distribution of the bequests in
the Will. The Petition provided, in part, the following:
3. Due to the advanced age of the deceased at her death, there are several lapsed legacies in her
will. Additionally, a number of these lapsed gifts were shared jointly under the Will with other
legatees. Therefore, the Executors would request that the Court rule on the proper and legal
recipients of the shared lapsed gifts.
¶5. The only issue on this appeal arises from the lower court's ruling as to the effect of Item IV of
Ms. Homburg's will. That item provides as follows:
ITEM IV.
I devise One Hundred Thousand Dollars ($100,000) to Robert C. Clark, Ruth Clark, and W.C.
Thomas, in trust, for Albert Corder. Should one or more of the individuals so named as co-
trustees become unwilling or unable to serve as a co-trustee of this trust for Albert Corder, then
it is my desire that the remaining co-trustees or trustee serve alone. It is my desire that so long
as Albert Corder is able to live independently or with the aid of his family (outside of
institutional care), he be paid over $1,000.00 a month from the interest and the corpus by my
trustees. In addition thereto, I grant my co-trustees broad discretion to pay over to Albert
Corder, from interest or corpus, any sums they believe reasonable to make his life more
comfortable. Should Albert Corder find it necessary to place himself in full time nursing care,
then I direct that my trustees to undertake to provide him such care as he may need, and to
invade corpus to the extent necessary to provide him with medical treatment that may be
meaningful to him. Upon the death of Albert Corder, this trust shall cease to exist and I hereby
direct my trustees to pay over one- half of any remaining corpus and interest to the daughter of
Albert L. Corder, namely Mandy, and the remaining one-half to the Mississippi State University
School of Veterinary Medicine, to be utilized by the school to establish an endowment in my
name for the provision of medical services to stray domesticated animals and an adoption
program upon the animal's rehabilitation by the school.
¶6. Corder died before Ms. Homburg. In their Memorandum of Law the Co-Executors took the
stance that the gift to the trust lapsed because Corder did not survive Ms. Homburg. The Co-
Executors maintained this position even though two of the three named recipients of a beneficial
interest in the $100,000 bequest, the Foundation and Mary Spraggins, were in existence at the time
of death of Ms. Homburg. Two of the three named recipients of legal title to the trust property, the
trustees, were also living at the time of Ms. Homburg's death.
¶7. The Co-Executors stated in their Memorandum of Law that because this was a lapsed legacy to
non-descendants the trust property should pass to the residuary beneficiaries. The surviving residuary
beneficiaries under the Will are Susan Hancock Ware ( residuary beneficiary), Auburn University (¼
residuary beneficiary), and Mildred Serdahely, the decedent's half sister ( residuary beneficiary).
¶8. The lower court entered the Declaratory Judgment on November, 14, 1995. The Foundation
states the chancellor adopted the position of the Co-Executors by ruling as follows:
7. The testamentary trust to Albert Corder failed because the beneficiary predeceased the
Testator [sic]. There is no properly manifested intention in the Will, as required by the
Restatement of Trusts, to prevent a resulting trust for the benefit of the residuary legatees under
the Will from arising. That is, there is no indication of intent on the part of the Testator [sic]
that if the trust fails at the outset, the disposition should be to Mandy Spraggins and Mississippi
State, instead of to the residue of her estate. . . . The trust was a specific gift to Albert Corder
which has lapsed and shall devolve into the residue.
¶9. The Foundation states the lower court's ruling and entire analysis with respect to the legal effect
of Item IV of the Will appears to be based on the identical misapprehension of the contents of the
Restatement (Second) of Trusts presented in the Co-Executor's Memorandum of Law. Thereby
aggrieved of the chancellor's legal conclusion, the Foundation perfected its appeal to this Court
alleging the following assignment of error:
I. WHETHER THE DEATH OF THE INTENDED LIFETIME BENEFICIARY OF A
TESTAMENTARY TRUST, PRIOR TO THE DEATH OF THE TESTATRIX,
DEFEATS THE SPECIFIC BEQUEST OF THE REMAINDER INTEREST IN THE
TRUST ASSETS TO NAMED, EXISTING REMAINDER BENEFICIARIES.
¶10. This Court has a clear standard of review in an appeal where there are legal question from a will
contest.
Typically this Court will not disturb a chancellor's findings of fact unless the chancellor was
manifestly wrong and not supported by substantial, credible evidence. Smith By Young v.
Estate of King, 579 So. 2d 1250, 1251 (Miss.1991); Bell v. Parker, 563 So. 2d 594, 596-597
(Miss.1990). This rule does not apply to questions of law. When presented with a question of
law, the manifest error/substantial evidence rule has no application and we conduct a de novo
review. Cooper v. Crabb, 587 So. 2d 236, 239 (Miss.1991); Holliman v. Charles L. Cherry &
Associates, 569 So. 2d 1139, 1147 (Miss.1990); Planters Bank & Trust Co. v. Sklar, 555 So
.2d 1024, 1028 (Miss.1990). Notwithstanding our respect for and deference to the trial judge,
on matters of law it is our job to get it right. That the trial judge may have come close is not
good enough. Cooper, 587 So. 2d at 239, quoting UHS-Qualicare, Inc. v. Gulf Coast
Community Hospital, Inc., 525 So. 2d 746, 754 (Miss.1987).
Estate of Mason v. Fort, 616 So. 2d 322, 327-28 (Miss. 1993).
¶11. This Court must determine if effect was given to the testat[rix]'s intent when reviewing the
decision of the chancellor. Tinnin v. First Bank of Mississippi, 502 So. 2d 659, 663 (Miss. 1987).
"For purposes of testamentary construction, it is the responsibility of a reviewing court to determine
and respect the intent of a testat[rix]. Where a will is susceptible to more than one construction, it is
the duty of the court to adopt that construction which is most consistent with the intent of the
testat[rix]." Estate of Williams v. Junius Ward Johnson, 672 So. 2d 1173, 1175 (Miss. 1996)
(internal citations omitted). This Court has previously held "[t]he surest guide to testamentary intent
is the wording employed by the maker of the will. . .[there is] authority to give effect to a testator's
intent only where that intent has received some form of expression in the will." Tinnin, 502 So. 2d at
663. In determining the testat[rix]'s intent, the Court is limited to the four corners of the Will. Estate
of Blount v. Papps, 611 So. 2d 862, 866 (Miss. 1993). The four cardinal rules of construction are:
First, the prime inquiry is the intention of the testatrix . . .
Second, the law favors the vesting of the estates at the earliest possible moment. . .
Third, in the absence of a clear intent to the contrary, that construction should be adopted
which will result in a just and reasonable disposition of the property. . .
Fourth, life tenancies are not favored.
Id. quoting In Raworth's Estate, 52 So. 2d 661, 662-63 (Miss. 1951) (emphasis added). "In
appropriate cases [this Court] may order modification or excision of testamentary terms incapable of
performance or enforcement for whatever reason." Tinnin, 502 So. 2d at 664.
¶12. The Will provided for a testamentary trust to benefit Corder for life, and upon his death the trust
was to terminate with the remainder going to the Foundation and Spraggins. Corder predeceased Ms.
Homburg such that at the time of the testatrix's death there was no life beneficiary of the trust. The
arguments presented by both sides are concise.
¶13. The Foundation argues that the only lapsed gift was that to Corder. Because the Foundation and
Spraggins were both named specifically and were capable of taking at the time of the testatrix's death,
they should have their remainders accelerated and receive the $100,000. As stated above, one of the
questions of construction favors the vesting of estates at the earliest possible moment. Estate of
Blount v. Papps, 611 So. 2d at 866. Also, charitable trusts are favored and should be enforced where
possible. Tinnin, 502 So. 2d at 670.
¶14. The Co-Executors argue that the gift to Corder lapsed, and because the trust never came into
existence, there can be no remainder of the trust. The language of the Will stipulates that the trust is
to cease to exist upon the death of Corder. Because neither of the remainders under Item IV of the
Will, namely the Foundation and Spraggins, the gifts to them were not saved by Miss. Code Ann. §
91-5-7(1), which is commonly referred to as the "anti-lapse" statute. The rule as to lapsed devises is
applicable primarily to instances where the devisee named in the will has died prior to the death of the
testat[rix]. Hayes v. Cole, 73 So. 2d 258, 263 (Miss. 1954). Therefore, the $100,000 should be
distributed through the residuary clause in the Will.
¶15. The case before this Court on appeal is a matter of first impression in the state of Mississippi.
Therefore, the Court must look to other jurisdictions for authoritative guidance.
It is a well-settled general principle that in the event of the death of a life tenant before that of
the testat[rix] whose Will sets up the life estate, the remainder interest succeeding the life estate
is not thereby defeated, but takes effect upon the testat[rix]'s death as if no such prior interest
had been limited in the Will, and in this sense, is "accelerated," unless the testat[rix] has
manifested an intention to the contrary. In other words, where a life tenant dies before the
testat[rix], and the party entitled in remainder survives him, the death of the life tenant only
extinguishes the life estate, and the remainderman is let in to the immediate right to the gift the
moment the will takes effect. . . . [The rule] has also been applied where the gift to the life
tenant was in trust.
28 Am. Jur. 2d, Estates § 308 (footnotes omitted).
¶16. A case addressing the same issue as in the case sub judice is Haskins v. Garrett, 820 P.2d 350(Colo. 1991). The will in that case provided for proceeds of the trust to be paid to the decedent's
brother until his death, and if he died without issue, to another named beneficiary. The personal
representative of an estate argued the proceeds from a trust constituted a part of the residuary of the
estate because the decedent's brother predeceased the decedent. The court stated "according to most
authorities, if the life beneficiary of trust predeceases the author of the will, the remainder beneficiary
takes as if the provision for the life estate was not made." Id. at 351; Rodway v. Estate of Orgill, 248
N.E.2d 241 (Ohio 1969); Restatement of Property § 230 (1936); Restatement of Trusts (Second) §
412 (1959).
¶17. In Rodway, the court stated where there are situations where a life tenant, including the life
beneficiary of a trust, predeceases the testat[rix], a very clear rule has emerged, which is well stated
in 133 A.L.R. 1367, at 1368:
. . .[I]n the event of the death of the tenant for life before the death of the testator, the
remainder interest which succeeds the particular estate is not thereby defeated, but takes effect
upon the testator's death as if no such prior interest had been limited in the will, and in this
sense is accelerated, unless the testator has manifested an intention to the contrary.
The doctrine is based upon the presumed intention of the testat[rix] that the remainderman should
take upon the happening of any event that prevents, destroys, or terminates the prior estate. Rodway,
248 N.E.2d at 242; Elliot v. Brintlinger, 33 N.E.2d 199 (Ill.1941).
¶18. The Co-Executors state that because Corder, the life beneficiary, predeceased the testatrix the
trust fails on its own terms. The trust was to cease at the death of Corder and any remainder to be
paid to the Foundation and Spraggins. The court in Rodway dealt with this precise point stating "[i]
nasmuch as the prior death of [life beneficiary] prevents the trust from coming into existence,
distribution should be made by the executor directly to the beneficiaries." Rodway, 248 N.E.2d at
244.
¶19. The gift to Corder, as life income beneficiary of the trust, lapsed when he predeceased Ms.
Homburg, the testatrix. However, the gift over to the remaindermen did not lapse.
Where a legatee predeceases the testatrix, the legacy to the legatee lapses. But where there are
other interests limited on that of the deceased legatee and the persons entitled in remainder
survive, the death of the life tenant only extinguishes the life estate and the remaindermen are
entitled to the immediate right to the gift as soon as the will takes effect.
In re Hayward's Estate, 91 A.2d 559, 561 (Vt. 1952) (internal citations omitted). The court went on
to hold that the legacy to the life beneficiary gift lapsed because of the beneficiary's death prior to the
testatrix. However, the remaindermen were entitled to receive the legacy provided for them, and the
proceeds were not a part of the residuary of the estate. Id.
¶20. In New Jersey the court "acknowledged that where there is a testamentary gift of a life estate
and a gift of the remainder after the termination of the life estate, the gift in remainder will be deemed
vested immediately in the absence of some controlling equity or some evidence in the will from which
a different intent is implied." Simpkins v. Simpkins, 24 A.2d 821, 823 (N.J.Eq. 1942). Likewise, the
Supreme Court of Utah held "that a will creating a testamentary trust, which provides for a life estate
followed by a remainder payable upon the death of the life tenant, may be accelerated upon the
release and termination of the precedent life estate if consistent with the terms of the will and not
contrary to the intent of the testat[rix]." Auerbach v. Samuels, 342 P.2d 879, 883 (Utah 1959).
¶21. This rule is well stated in 96 C.J.S. Wills S 1051, p. 682:
Where it is in accordance with the testat[rix]'s intention, remainders following invalid trust
provisions may be accelerated, but remainders will not be accelerated where to do so would
violate the intention of the testat[rix]. If a remainder following a void provision of a
testamentary trust is indefeasibly vested, it may be accelerated and the specified remainderman
will take on deletion of the void provision, but if the remainder is not so vested, or where it is
contingent or uncertain, it cannot be accelerated and will pass as intestate property or fall into
the residuary.
Estate of McNeill, 41 Cal. Rptr. 139, 142 (Cal. Dist. Ct. App. 1964). See Wachovia Bank & Trust
Co. v. McEwen, 84 S.E.2d 642 (N.C. 1954); Walter v. Thielke, 13 A.2d 649 (N.J.Eq. 1940);
Loomis v. Laramie, 282 N.W. 876 (Mich. 1938); In re Mill's Estate, 111 N.Y.S.2d 622 (Surr.1952)
; Sipe v. Merchants Trust Co., 34 N.E.2d 968 (Ind.App. 1941).
¶22. The doctrine of acceleration is explained in Elliot, where the court stated if the life estate fails
for any reason the remainder is accelerated. Elliot, 33 N.E.2d at 201.
The doctrine is based upon the presumed intention of the testat[rix] that the remainderman
should take upon the happening of any event that prevents, destroys or terminates the prior
estate.
***
Although the doctrine of acceleration applies more commonly where there is a renunciation of
the prior estate, it also applies where the preceding estate fails for any reason. . . .[The life
beneficiary] having died before the will took effect, so that the devise and the trust for his
benefit failed, the remainder was accelerated and took effect at once.
Id. (internal citations omitted).
¶23. This Court has embraced the doctrine of acceleration in its case law previously. "The rule is well
established that a renunciation by the widow of a life estate bequeathed her is equivalent to its
termination by her death so far as the vesting in possession of the remainder is concerned, unless a
contrary intention of the testator is manifest in the will. We recognize the rule of acceleration. Rose
v. Rose, 88 So. 513, 514 (Miss. 1921). "When a devise or bequest is followed by a limitation over on
the death of the devisee or legatee, the refusal of the devisee or legatee, to accept it is the equivalent
of his death, and the limitation over becomes then effective, unless it is manifest from the provisions
of the will that the testat[rix] intended otherwise." Greely et al. v. Houston et al., 114 So. 740, 742
(Miss. 1927).
¶24. In Cooper v. Simmons, 116 So. 2d 215 (Miss. 1960), this Court encountered a situation where
the testatrix devised a life estate in her property to her sister. The life estate included a lifetime power
to dispose of the property. The children of a brother received the remainder interest following the
aforementioned life estate. The life tenant predeceased the testatrix. This Court held that the entire
estate passed to the remaindermen, and in so doing stated:
The primary gift may lapse or fail if its object dies before the will can operate at all, but such
lapse or failure has no tendency to defeat an independent and ulterior limitation to other objects
who are living at the testat[rix]'s death. In such cases the question is not one of lapse, but of
interpretation and intention. The mere lapse of intervening estates will never be allowed to
defeat the remainder over unless these estates are coupled with conditions on which the
subsequent limitations are in some way made to depend. Thus, under a devise and bequest to
the testat[rix]'s son of real and personal property for life, and to his heirs in case he dies leaving
issue, or if he dies without issue to the testat[rix]'s nephews and nieces, if the son should die
without issue before the testat[rix], there would be no lapse, but the contingent limitation would
take effect in favor of the nephews and nieces.
Cooper, 116 So. 2d at 219; quoting 19 Am. Jur. 2d Estates § 130.
¶25. The chancellor ruled that the trust to Corder had lapsed and the gift over to the remaindermen
failed as well. She stated in her Order there was no properly manifested intention in the Will, as
required by the Restatement of Trusts, to prevent a resulting trust for the benefit of the residuary
legatees under the will from arising. In other words, the chancellor could not find specific intent on
the part of the testatrix that if the trust failed the disposition should be to the Foundation and
Spraggins.
¶26. While the chancellor did not cite to a specific section in the Restatement of Trusts, the appellant
and appellee both cite to Restatement (Second) of Trusts §§ 411(2), 412(3) to support their respective
theories on appeal. The Foundation agrees that a resulting trust should arise where there is no named
beneficiary and the original testamentary trust fails. "The rule stated. . .is applicable where the
intended trust fails because no beneficiary is named; because the intended beneficiary is nonexistent;
because the intended beneficiary is not properly designated; because the intended beneficiary is
incapable of taking the beneficial interest; because the intended beneficiary disclaims; because the
intended trust is invalid on the ground of remoteness." Restatement (Second) of Trusts § 411 cmt. g
(1959).
¶27. In the case sub judice the Foundation and Spraggins were named, in existence, properly
designated, capable of taking (both were fully vested), neither disclaimed their respective interests,
and the trust was not invalid on grounds of remoteness. By the very comment that enumerates to
which situations § 411 applies, it is apparent that § 411 did not apply to the facts in this case.
¶28. This Court finds that Restatement (Second) of Trusts § 412 is applicable. The comment to § 412
speaks of accelerating the future interest.
If the owner of property transfers it in trust for two or more persons in succession, and the prior
interest fails, no resulting trust arises if the future interest is accelerated. Thus, if a testat[rix]
bequeaths property in trust to pay income to a designated person for life and on his death to pay
the principal to a designated person, and if the life beneficiary disclaims, the principal ordinarily
becomes payable to the beneficiary in remainder.
Restatement (Second) of Trusts § 412 cmt. c. (1959).
¶29. The testatrix clearly manifested her intent as to how she wanted the $100,000 gift to be handled.
It was to be held in trust for Corder for his support and comfort for his life. Upon his death, the
remainder was to go to the Foundation and Spraggins. Corder predeceased the testatrix; yet, no other
provision was made as to how the $100,000 was to be distributed other than that originally
designated in the Will. It is clear from reading the entire provision in Item IV of the Will, the intent of
Ms. Homburg was for the Foundation and Spraggins to have whatever was left of the $100,000 at
the death of Corder.
¶30. Today we adopt the doctrine of acceleration as it is applies to remainders following failed life
beneficiary gifts of testamentary trusts where the intended life beneficiary denounces the gift or
predeceases the testatrix. Therefore, this decision is reversed and remanded for further proceedings
not inconsistent with the findings of this Court.
CONCLUSION
¶31. The caselaw from other jurisdictions, the Restatement (Second) of Trusts, and other authorities
are clear. Equity requires that the remainder should be accelerated where the life beneficiary of a
testamentary trust disclaims or predeceases the testatrix, unless there is a clear intent manifested
otherwise. The Will did not provide for disposition of the $100,000 in the event Corder predeceased
the testatrix. However, it was clear and unambiguous with explicit language as to where the money
was to go upon the death of Corder. This Court holds that the true intent of the testatrix was for the
money to be received by the remaindermen at the death of Corder. This Court adopts the rule of
acceleration of future interests as it applies to remainders following failed life beneficiary gifts of
testamentary trusts where the intended life beneficiary denounces the gift or predeceases the testatrix.
By specifically adopting this doctrine as law in Mississippi, this Court reverses the decision of the
chancellor. This case is reversed and remanded with instructions directing the Co-Executors to pay
the appellants their respective interests from the Will, along with any applicable interest that has
accumulated since the denial of payment by the Co-Executors.
¶32. REVERSED AND REMANDED FOR FURTHER PROCEEDINGS CONSISTENT
WITH THIS OPINION.
LEE, C.J., PRATHER AND SULLIVAN, P.JJ., PITTMAN, BANKS, McRAE, SMITH AND
MILLS, JJ., CONCUR.
1. Whenever any estate of any kind shall or may be devised or bequeathed by the last will and
testament of any testator or testatrix to any person being a child or descendant of such testator or
testatrix, and such devisee or legatee shall, during the lifetime of such testator or testatrix, die testate
or intestate, leaving a child or children, or one or more descendants of a child or children, who shall
survive such testator or testatrix, in that case, such devise or legacy to such person so situated as
above mentioned, and dying in the lifetime of the testator or testatrix, shall not lapse, but the estate
so devised or bequeathed shall vest in such child or children, descendant or descendants, of such
devisee or legatee in the same manner as if a legatee or devisee had survived the testator or testatrix
and had died intestate.
2. § 411 provides:
Where the owner of property gratuitously transfers it and properly manifests an intention that
the transferee should hold the property in trust but the trust fails, the transferee holds the trust
estate upon a resulting trust for the transferor or his estate, unless the transferor properly
manifested an intention that no resulting trust should arise or the intended trust fails for
illegality.
3. § 412 provides:
Where the owner of property transfers it upon a trust which fails, the transferee does not hold
the trust estate upon a resulting trust if the transferor properly manifested an intention that no
resulting trust should arise upon the failure of the trust.