Opinion
STEPHENS, J.
This is an appeal by Margaret A. Colyear Halvorson (widow of Richard C. Colyear) from an order of the probate court denying her petition for instructions, wherein she sought an order instructing Richard Calhoun Colyear as testamentary trustee to distribute to the life income beneficiaries a stock dividend received by said trustee, and which had been paid out of retained earnings. Appellant is a life income beneficiary under the Richard C. Colyear Testamentary Trust, being entitled to 50 percent of the net income, with the right to invade the corpus of the trust in the event the net income is less than $1,000 a month. The trial court held the stock dividend to be corpus of the trust, and this appeal followed.
The statement of facts contained in appellant’s opening brief has been agreed to by the parties, and we set it forth here by way of footnote1 since [177]*177there is one controlling issue presented: Should 13,231 shares of common stock of Genuine Parts Company, distributed to the trustee herein as a 50 percent stock dividend on 26,462 shares of common stock of that [178]*178corporation and constituting an asset of the trust estate, be disbursed by the trustee to the income beneficiaries of the trust created by the will of Richard C. Colyear and carried forward into the order for preliminary distribution [179]*179and setting up trust, or should the stock dividend be retained as part of the corpus of the trust estate?2
Under California law, where a decedent directs the manner of allocation of income, dividends and profits between income and principal, [180]*180such direction is controlling. “The Principal and Income Law3 governs the ascertainment of income and principal then, unless the trust instrument contains a provision differing from a matter covered by this chapter, or the trustor directs the ‘manner of ascertainment of income and principal’ or grants ‘discretion’ to the trustee to do so.” (Estate of Bixby, 55 Cal.2d 819, 823 [13 Cal.Rptr. 411, 362 P.2d 43].)
There is no question that the intent of the testator must be ascertained from the will, and his “intent” is to be determined as of the time of the making of the will. (Estate of Hotaling, 74 Cal.App.2d 898, 903 [170 P.2d 111].) In the instant case, the trust being worded in accordance with that will and there being no other evidence to guide in its interpretation, we are not bound by the trial court’s interpretation. (Estate of Russell, 69 Cal.2d 200, 213 [70 Cal.Rptr. 561, 444 P.2d 353].) The first step in our determination of the controlling question posed in this case is to construe the trust in the light of the will to ascertain whether the testator directed the “manner of ascertainment of income and principal.” We note the similarity of the language used in the instant trust to that used in the trust in Estate of Talbot, 269 Cal.App.2d 526, 532 [74 Cal.Rptr. 920], where the court said: “[T]he testator’s will merely directs the trustee to ‘. . . receive the dividends, rents, issues, income and profits . . .’of the trust property, and ‘. . . to pay over the net income ... to [the life tenant] during her lifetime.” The listing of those items to be received by the trustee in the instant case includes one additional item, interest, not mentioned in Talbot. Since there is really no difference in the itemization, so far as the determination of the issue before us is concerned, we discern no reason to vary from the conclusion reached in Talbot as to the testator’s intent as expressed in his will. In Talbot, the court stated that the decedent there did not foresee the kind of distribution therein involved (an antitrust directive to du Pont to divest itself of stockholdings in General [181]*181Motors, accomplished by distribution thereof to its own stockholders). Likewise, in the instant case there is no suggestion that decedent envisaged the merger of the Colyear Motor Sales Company with the Genuine Parts Company some four and one-half years after his death. We adopt the conclusion reached in Talbot (p. 532): “It is clear that the testator did not foresee the kind of distribution made here and therefore gave no direction to his trustee as to how a distribution of this nature should be treated.” The argument of appellant relative to the gleaning of the intent of the testator goes beyond the intent to “direct the manner of ascertainment of income and principal,” and urges that the manner of such apportionment is included within the will because the effect of the law at the moment of the execution thereof would have apportioned income and principal in a specified manner. The opening brief argues: “It is the law in effect at the date of the will (January 30, 1953) that is written into the will and which becomes a part of the Trust which derives its existence from the will.” Appellant relies upon Estate of Hotaling, supra, to the effect that the law in effect at the time of execution of the will must be read into the will. Appellant reads too much into Hotaling, for it was not the existent law (as of the time of the execution of the will) which was read into the will in the absence of some clear expression of intent, but rather that decedent had in fact made an expression of intent when he stated “. . . so that said bequests, devises, and benefits under trusts shall be paid and delivered in full and without deduction,” thus declaring in effect that there should be no proration of the federal estate tax.4 While the result of Hotaling was to deny proration (and incidentally bring about the same result as would have been the case in the absence of the change in the tax law calling for proration in the absence of direction otherwise), it was the direction given in the quoted portion of the will which was determined to “otherwise direct(s).”
Once having reached the conclusion that there was no direction given to the trustee, the allocation must be made under the provisions of the Principal and Income Law, and its provisions as they read at the time of distribution of stock on November 20, 1967 govern. The parties agree that if it is determined that there was no directive given by the trustor, then former Civil Code section 730.07 applies. (Civil Code section 730.07 was amended effective July 1, 1968, and the subject of former section 730.07 has been moved to section 730.06 without significant change as it relates to this appeal.)5
[182]*182There is no contention that the stock distributed was not of the same kind and rank as the shares on which such dividend was declared; this being the case, Civil Code section 730.07 is the applicable section of the act in determining the question before us. This section, as it existed on November 20, 1967, provided in applicable part as follows:
“(1) All dividends on shares of a corporation forming a part of the principal which are payable
“(a) In shares of the declaring corporation of the same kind and rank as the shares on which such dividend is paid; and,
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Opinion
STEPHENS, J.
This is an appeal by Margaret A. Colyear Halvorson (widow of Richard C. Colyear) from an order of the probate court denying her petition for instructions, wherein she sought an order instructing Richard Calhoun Colyear as testamentary trustee to distribute to the life income beneficiaries a stock dividend received by said trustee, and which had been paid out of retained earnings. Appellant is a life income beneficiary under the Richard C. Colyear Testamentary Trust, being entitled to 50 percent of the net income, with the right to invade the corpus of the trust in the event the net income is less than $1,000 a month. The trial court held the stock dividend to be corpus of the trust, and this appeal followed.
The statement of facts contained in appellant’s opening brief has been agreed to by the parties, and we set it forth here by way of footnote1 since [177]*177there is one controlling issue presented: Should 13,231 shares of common stock of Genuine Parts Company, distributed to the trustee herein as a 50 percent stock dividend on 26,462 shares of common stock of that [178]*178corporation and constituting an asset of the trust estate, be disbursed by the trustee to the income beneficiaries of the trust created by the will of Richard C. Colyear and carried forward into the order for preliminary distribution [179]*179and setting up trust, or should the stock dividend be retained as part of the corpus of the trust estate?2
Under California law, where a decedent directs the manner of allocation of income, dividends and profits between income and principal, [180]*180such direction is controlling. “The Principal and Income Law3 governs the ascertainment of income and principal then, unless the trust instrument contains a provision differing from a matter covered by this chapter, or the trustor directs the ‘manner of ascertainment of income and principal’ or grants ‘discretion’ to the trustee to do so.” (Estate of Bixby, 55 Cal.2d 819, 823 [13 Cal.Rptr. 411, 362 P.2d 43].)
There is no question that the intent of the testator must be ascertained from the will, and his “intent” is to be determined as of the time of the making of the will. (Estate of Hotaling, 74 Cal.App.2d 898, 903 [170 P.2d 111].) In the instant case, the trust being worded in accordance with that will and there being no other evidence to guide in its interpretation, we are not bound by the trial court’s interpretation. (Estate of Russell, 69 Cal.2d 200, 213 [70 Cal.Rptr. 561, 444 P.2d 353].) The first step in our determination of the controlling question posed in this case is to construe the trust in the light of the will to ascertain whether the testator directed the “manner of ascertainment of income and principal.” We note the similarity of the language used in the instant trust to that used in the trust in Estate of Talbot, 269 Cal.App.2d 526, 532 [74 Cal.Rptr. 920], where the court said: “[T]he testator’s will merely directs the trustee to ‘. . . receive the dividends, rents, issues, income and profits . . .’of the trust property, and ‘. . . to pay over the net income ... to [the life tenant] during her lifetime.” The listing of those items to be received by the trustee in the instant case includes one additional item, interest, not mentioned in Talbot. Since there is really no difference in the itemization, so far as the determination of the issue before us is concerned, we discern no reason to vary from the conclusion reached in Talbot as to the testator’s intent as expressed in his will. In Talbot, the court stated that the decedent there did not foresee the kind of distribution therein involved (an antitrust directive to du Pont to divest itself of stockholdings in General [181]*181Motors, accomplished by distribution thereof to its own stockholders). Likewise, in the instant case there is no suggestion that decedent envisaged the merger of the Colyear Motor Sales Company with the Genuine Parts Company some four and one-half years after his death. We adopt the conclusion reached in Talbot (p. 532): “It is clear that the testator did not foresee the kind of distribution made here and therefore gave no direction to his trustee as to how a distribution of this nature should be treated.” The argument of appellant relative to the gleaning of the intent of the testator goes beyond the intent to “direct the manner of ascertainment of income and principal,” and urges that the manner of such apportionment is included within the will because the effect of the law at the moment of the execution thereof would have apportioned income and principal in a specified manner. The opening brief argues: “It is the law in effect at the date of the will (January 30, 1953) that is written into the will and which becomes a part of the Trust which derives its existence from the will.” Appellant relies upon Estate of Hotaling, supra, to the effect that the law in effect at the time of execution of the will must be read into the will. Appellant reads too much into Hotaling, for it was not the existent law (as of the time of the execution of the will) which was read into the will in the absence of some clear expression of intent, but rather that decedent had in fact made an expression of intent when he stated “. . . so that said bequests, devises, and benefits under trusts shall be paid and delivered in full and without deduction,” thus declaring in effect that there should be no proration of the federal estate tax.4 While the result of Hotaling was to deny proration (and incidentally bring about the same result as would have been the case in the absence of the change in the tax law calling for proration in the absence of direction otherwise), it was the direction given in the quoted portion of the will which was determined to “otherwise direct(s).”
Once having reached the conclusion that there was no direction given to the trustee, the allocation must be made under the provisions of the Principal and Income Law, and its provisions as they read at the time of distribution of stock on November 20, 1967 govern. The parties agree that if it is determined that there was no directive given by the trustor, then former Civil Code section 730.07 applies. (Civil Code section 730.07 was amended effective July 1, 1968, and the subject of former section 730.07 has been moved to section 730.06 without significant change as it relates to this appeal.)5
[182]*182There is no contention that the stock distributed was not of the same kind and rank as the shares on which such dividend was declared; this being the case, Civil Code section 730.07 is the applicable section of the act in determining the question before us. This section, as it existed on November 20, 1967, provided in applicable part as follows:
“(1) All dividends on shares of a corporation forming a part of the principal which are payable
“(a) In shares of the declaring corporation of the same kind and rank as the shares on which such dividend is paid; and,
“(b) In shares of the declaring corporation of a different kind and rank to the extent that they represent a capitalization of surplus not derived from earnings, shall be deemed principal.
“Subject to the provisions of this section, all dividends, other than those awarded to principal under (a) and (b) above, including ordinary and extraordinary dividends and dividends payable in shares or other securities or obligations of corporations other than the declaring corporation, shall be deemed income.” As to the appropriate reading of this section as quoted, appellant seeks to have us read the words “to the extent that they represent a capitalization of surplus not derived from earnings” found in subsection (1)(b) as applying not only to the shares of “a different kind or rank,” but also to “shares ... of the same kind and rank,” dealt with in subsection (1)(a). To follow the result which is urged by appellant would make meaningless subsection (1)(a), for then section (1)(b) could easily have been written by the Legislature to include all stock of whatever kind or rank and thus exclude (1)(a) in its entirety. We determine that the general rule of construction is that a modifying phrase is ordinarily to be read as applying only to the last antecedent unless the context or natural construction of the language used requires otherwise. (Anderson v. State Farm Mut. Auto Ins. Co., 270 Cal.App.2d 346, 349 [75 Cal.Rptr. 739]; Grant v. Hipsher, 257 Cal.App.2d 375, 383 [64 Cal.Rptr. 892].) The limiting clause “to the extent that they represent a capitalization of surplus not derived from earnings” is therefore a modification applying only to shares of “a different kind or rank”; a different reading would make meaningless the distinction between “shares of the same kind and rank” and those of “different kind or rank.” In other words, Civil Code section 730.07 specifies two situations in which dividends declared on shares of a [183]*183corporation which are part of the principal of the trust estate shall be deemed principal: (1) when the dividend is in shares of the declaring corporation and of the same kind and rank as the shares on which the dividend is paid; and (2) when the dividend is in shares of a different kind or rank, they shall be deemed principal to the extent that they represent a capitalization of surplus not derived from earnings. In other situations, dividends declared, whether ordinary or extraordinary, are deemed income. (31 Cal.Jur.2d, Life Estates, Etc., § 58, pp. 412-413.)
The final contention of appellant is that the successor trustee (having qualified, and acting, as the trustee prior to the distribution in question) is disqualified from objecting to the allocation of the stock dividend to “corpus” (income).6 We see no merit in this contention. Though there is a greater sharing by the successor trustee in the remainder than in the income, this was clearly within the contemplation of the trustor, and any conflict was one contemplated by that trustor, and not one in disparagement of the integrity or powers of the trustee.
The order is affirmed.
Kaus, P. J., and Aiso, J., concurred.
A petition for a rehearing was denied May 14, 1971, and appellant’s petition for a hearing by the Supreme Court was denied June 23, 1971.