First National Bank v. Stewart

116 N.W.2d 811, 263 Minn. 476, 1962 Minn. LEXIS 807
CourtSupreme Court of Minnesota
DecidedSeptember 7, 1962
DocketNo. 38,502
StatusPublished
Cited by4 cases

This text of 116 N.W.2d 811 (First National Bank v. Stewart) is published on Counsel Stack Legal Research, covering Supreme Court of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First National Bank v. Stewart, 116 N.W.2d 811, 263 Minn. 476, 1962 Minn. LEXIS 807 (Mich. 1962).

Opinion

Murphy, Justice.

We held in In re Trusteeship under Agreement with Mayo, 259 Minn. 91, 105 N. W. (2d) 900, which dealt with the administration of two inter vivos trusts, that changed economic conditions might permit deviation from investment provisions which forbade investment in corporate common stock. In the case before us we are asked to go a step further and hold that unforeseen economic conditions may authorize courts to vary the beneficial rights contained in a trust instrument.

It appears from the record that , the trustor, Ralph Whelan, a sue-[477]*477cessful Minneapolis lawyer, died in 1942, and pursuant to the terms of his last will, the trust with which we are here concerned was established. The trust provided for annual annuities payable quarterly in specific amounts to several life beneficiaries therein named. Three of them are still living and are the appellants here. One surviving life beneficiary is Mrs. Belle Stewart, a niece of the trustor, who receives an annuity of $3,500 per annum. The other two are Miss Louise M. Carlin and Miss Grace A. Green, employees of the trustor at the time of his death and for many years prior thereto. By the terms of the trust Miss Carlin and Miss Green have been receiving $2,500 per annum and $1,800 per annum, respectively. It appears that those sums represent the amount of salaries paid to them at the time the trustor’s will was made. The instrument further provides that upon the death of the last surviving life beneficiary and 15 years thereafter the Minneapolis Society of Fine Arts is to receive the corpus of the trust with the then accumulated income.

This matter arose by a petition of the trustee to the district court asking for an order authorizing it to deviate from the investment terms of the trust. In the same proceeding the appellants herein petitioned the court to deviate from the provisions of the instrument by increasing their annuities to an amount twice that provided in the will. The trial court under authority of the Mayo case granted the trustee’s petition to deviate from the investment terms of the trust. It denied the petition of the beneficiaries. The only issue before us is the correctness of the order of the trial court denying deviation as to the beneficial rights of the life beneficiaries.

The appellants’ counsel argues that, since this court has recognized that where because of economic inflation deviation may be permitted in an investment provision of the trust which will have the effect of preserving the value of the corpus, there is no reason why the court should not also permit a deviation from the provisions of the will which determine the beneficial interests of the parties. He ably argues for an interpretation of our authorities to the effect that necessity requires a change in the beneficial provisions to accomplish the intention of the donor and concludes “necessity requires in this case a change in [478]*478the specific sums due these appellants under the terms of this Trust to preserve their relative interests as beneficiaries of this Trust in accordance with the effect of the Order of the court authorizing deviation from investment provisions of the Trust.” He argues that the beneficiaries should be permitted to “retain their same relative positions that they were in at the outset in accordance with the original intents and purposes of the trust instrument.”

In considering the merits of appellants’ argument it is necessary to keep in mind certain clear and definite provisions of the will upon which our decision must necessarily turn.1 The will provides (1) that [479]*479when each annuitant dies the amount she was receiving thereafter falls back into the corpus instead of being given to the surviving annuitants; (2) that the excess income shall be accumulated and added to the corpus; and (3) should the net income be insufficient to cover the annuities, they shall abate proportionately. It must follow from the clear provisions of the will that the testator intended that the accumulations of income after payment of annuities be added to and become a part of the corpus for the benefit of the remainderman and [480]*480that any increase in annuities which the court might allow must be paid from funds which the testator intended to be a part of the corpus of the trust. The fatal weakness of appellants’ position is that they ask the court to take property from the remainderman and give it to the life beneficiaries.

We find no authority in this state and little elsewhere to support the position that the court may in the exercise of its equity power increase interests of the parties to the detriment of the remainderman. We think the issue in this case is controlled by our decision in In re Trust under Will of Cosgrave, 225 Minn. 443, 31 N. W. (2d) 20, 1 A. L. R. (2d) 175. While the facts in that case are not foursquare with those in the case before us, the applicable principles of law are correctly stated therein. In the Cosgrave case the testator had directed that the residue of his estate be placed in trust, one-third of the income to be paid to the widow and two-thirds to his daughters.2 At the widow’s death the residue was to go to the daughters. It also provided that if needed all of the income should be directed to the widow’s benefit. This soon became necessary and all of the income was paid to her for her benefit. Because of illness the widow’s financial needs exceeded the income of the trust and she requested additional payments out of the corpus. In denying this relief we noted that the cardinal rule in the construction of a will is that the testator’s intention is to be gathered from the language of the will itself. After ascertaining that it was the testator’s intention that the corpus should pass intact to the daughters at his wife’s death, we went on to say (225 Minn. 465, 31 N. W. [2d] 33):

“It being impossible to interpret the will as authorizing the trustees to encroach upon the corpus for the widow’s support, the question remains whether the court can confer upon them the power to do so. In support of the affirmative it is argued that where a trustee lacks power to do an act either because the trust instrument did not grant it or because it even forbade it the court may grant the power, and, as it said, authorize the trustee to ‘deviate’ from the terms of the trust. [481]*481As applied here, the court would confer power upon the trustees to take the corpus from the daughters as the remaindermen to provide for the widow as one of the beneficiaries of the income of the trust during her life. The consequences of the application of the rule strongly suggest that it is nonexistent. The daughters took vested remainders of the corpus at testator’s death. First & Am. Nat. Bank v. Higgins, 208 Minn. 295, 293 N. W. 585. The court lacks power to take property from one person and give it to another.”

The authorities relied upon by the appellants3 may be distinguished from the case before us. In the cases where the courts permitted deviation from the beneficial provisions of the will, they were permitted by a fair interpretation of the instruments to find an intention on the part of the testator to permit it. As an example, in Petition of Wolcott, 95 N. H. 23, 26, 56 A. (2d) 641, 643, 1 A. L. R.(2d) 1323, 1326, the widow of the decedent was to receive the income of a trust for life. Upon her death principal and accumulated income was to go to decedent’s issue.

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Related

Matter of Will of Kelly
266 N.W.2d 700 (Supreme Court of Minnesota, 1978)
In Re Will of Dereu
197 N.W.2d 229 (Supreme Court of Minnesota, 1972)
McKay v. Carlson
197 N.W.2d 229 (Supreme Court of Minnesota, 1972)
In Re Trusteeship Under Will of Whelan
263 Minn. 476 (Supreme Court of Minnesota, 1962)

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Bluebook (online)
116 N.W.2d 811, 263 Minn. 476, 1962 Minn. LEXIS 807, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-national-bank-v-stewart-minn-1962.