Perfect Union Lodge No. 10 v. Interfirst Bank of San Antonio, N.A.

748 S.W.2d 218, 1988 WL 23629

• Court: Texas Supreme Court
• Decided: June 22, 1988
• Docket: C-5682
• Status: Published

Opinions

ROBERTSON, Justice.

This is a suit to construe the will of an attorney, A.H. Lumpkin. The pertinent provisions of his will are as follows:

IV.

I give, devise and bequeath to my beloved wife, Cornelia Lumpkin, all property of every kind and character I may own at my death, including real, personal and mixed, wheresoever situated, except the foregoing property given to her absolutely, for and during her natural life, to have the use and benefit thereof during her said natural life.

This bequest, however, to my said wife is in lieu of her community interest in our homestead comprised of approximately 133 acres on the Hausman Road, out of the Perry Davis Survey in Bexar County, Texas....

V.

Subject to the foregoing life estate devised to my wife, Cornelia Lumpkin, or in case she dies before I do, I give, devise and bequeath the hereinbefore described homestead in Bexar County, Texas and the 40 acres of land in Dim-mit County, Texas, and all the rest and residue of my property, real, personal and mixed, wheresoever situated, to Perfect Union Lodge No. 10A.F. & A.M. of San Antonio, Texas, in fee simple

VII.

I hereby nominate, constitute and appoint Charles W. Barrow and Travis M. Moursund Independent Executors of this my Last Will and Testament, and direct that no bond or security be required of them as such, and that no action be taken with reference to my estate other than the probating of this my Will and the filing of an inventory, appraisement and list of claims of my estate as may be required by law.

* * He * * *

My said Executors shall handle my estate during the life of my wife, Cornelia Lumpkin, and as long thereafter as may be reasonably necessary to carry out the terms of this my Will.

To the end that my said Independent Executors shall have full power and authority to handle and settle my said estate without the necessity of court orders, I hereby confer upon them all such powers as are given to Trustees under and by virtue of the provisions of the Texas Trust Act (Article 7425b, Vernon’s Civil Statutes of the State of Texas Annotated) as the same exists at the date of this my Will, regardless of whether such Act may hereafter be repealed or amended, as fully as though its provisions were written in this my Will; provided further that my said Independent Executors may also exercise any additional powers conferred on Trustees by any subsequent amendment of such Act, it being my intention that my Executors appointed by me in this my Will shall have full and complete power to manage, sell, mortgage, invest and reinvest and handle my estate as to such Executors may seem best and proper without the necessity of court orders.

(emphasis added).

The probate court concluded that the will created a testamentary trust with Cornelia Lumpkin as income beneficiary. The executor of the estate, Travis Moursund¹ was named trustee. Pursuant to section 113.-110 of the Texas Property Code, the court further ordered the trustee to sell certain real property which it found had been un-derproductive since 1975. The proceeds were to be distributed between Cornelia Lumpkin and Perfect Union Lodge according to section 113.110(a). The court of appeals affirmed the trial court judgment. 713 S.W.2d 391. We affirm the judgments of these courts.

The cardinal rule for construing a will requires that the testator’s intent be ascertained by looking to the provisions of the instrument as a whole, as set forth within the four comers of the instrument. The court shall effectuate that intent as far as legally possible. Stewart v. Selder, 473 S.W.2d 3, 7 (Tex.1971); Sellers v. Powers, 426 S.W.2d 533, 536 (Tex.1968). The will should be construed so as to give effect to every part of it, if the language is reasonably susceptible of that construction. Republic National Bank of Dallas v. Fredericks, 155 Tex. 79, 83, 283 S.W.2d 39, 43 (1955). However, the court will not redraft the will or add provisions under the guise of construction in order to effectuate some presumed intent of the testator. Shriner’s Hospital for Crippled Children v. Stahl, 610 S.W.2d 147, 151 (Tex.1980); Huffman v. Huffman, 161 Tex. 267, 273, 339 S.W.2d 885, 888 (1960).

The requisites of an express trust are provided by the Texas Trust Code (TEX.PROP.CODE ANN. §§ 101.001-115.-017 (Vernon 1984)); however, the new trust code provides that the Texas Trust Act (repealed 1984) will govern the creation of trusts entered into while the Act was in effect. TEX.PROP.CODE ANN. § 110.-006(2) (Vernon 1984). Under the Act, a testamentary trust is created through “[a] transfer by will by the owner of property to another person or persons as trustee for a third person or persons....” Texas Trust Act, ch. 148, § 7, 1943 Tex.Gen.Laws 232, 234, repealed and codified TEX. PROP.CODE ANN. § 112.001(3) (Vernon 1984). Implicit in this statutory definition is the requirement of a trustee with administrative powers and fiduciary duties. Nolana Development Ass’n. v. Corsi, 682 S.W.2d 246, 248 (Tex.1984). Even more fundamental than this, it is well established that the legal and equitable estates must be separated; the former being vested in the trustee and the latter in the beneficiary. Cutrer v. Cutrer, 334 S.W.2d 599, 605 (Tex.Civ.App.—San Antonio), aff'd, 162 Tex. 166, 345 S.W.2d 513 (1961); Miller v. Donald, 235 S.W.2d 201, 205 (Tex.Civ.App.—Fort Worth 1950, writ ref'd n.r.e.); G. BOGERT, TRUSTS & TRUSTEES § 141, at 4 (2d ed. 1979). This separation of the legal and equitable estates in the trust property is the basic hallmark of the trust entity.

Technical words of expression, however, are not essential for the creation of a trust. To create a trust by a written instrument, the beneficiary, the res, and the trust purpose must be identified. It is not absolutely necessary that legal title be granted to the trustee in specific terms. Therefore, a trust by implication may arise, notwithstanding the testator’s failure to convey legal title to the trustee, when the intent to create a trust appears reasonably clear from the terms of the will, construed in light of the surrounding circumstances. Dulin v. Moore, 96 Tex. 135, 139, 70 S.W. 742, 743 (1902); Najvar v. Vasek, 564 S.W.2d 202, 210 (Tex.Civ.App.—Corpus Christi 1978, writ ref’d n.r.e.); Gonzalez v. Gonzalez, 457 S.W.2d 440, 447 (Tex.Civ. App.—Corpus Christi 1970, writ ref’d n.r. e.); Heironimus v. Tate, 355 S.W.2d 76, 80 (Tex.Civ.App.—Austin 1962, writ ref’d n.r. e.); Paton v. Baugh, 265 S.W. 250, 252-53 (Tex.Civ.App.—Dallas 1924, no writ); see also McMurray v. Stanley, 69 Tex. 227, 235, 6 S.W. 412, 414-15 (1887).

In Dulin v. Moore, this court construed a will in which the testator, after devising real property in fee simple, provided that another person would be “trustee to receive and control the property” during the lives of the devisees. The court recognized the issue as being whether the testator intended to confer mere “naked powers” upon the trustee or to invest him with legal title for the purposes of the trust. The court concluded that “although the will contains no words which expressly convey legal title to Dulin, the intention that he should take the legal title is as clearly manifested as if express terms had been employed.” Dulin, 96 Tex. at 139, 70 S.W. at 743.

Similarly, in Heironimus v. Tate, the court construed a will in which there were no express words giving the executor legal title to any property. The will bequeathed property to two beneficiaries but further provided that the executors had discretion in making distributions to the beneficiaries during their lives, and upon their deaths the remainder passed to their lineal descendants. The court concluded that a trust had been created with legal title vested in the executors. Heironimus, 355 S.W.2d at 80.

As in Dulin and Heironimus, we must construe a will which lacks specific language conferring legal title upon the executors. From the provisions of the will as a whole, A.H. Lumpkin’s intent to create a testamentary trust can be ascertained. By its terms, Lumpkin devised all the residue of his estate to his wife for her life, with the remainder to Perfect Union Lodge. He clearly intended to separate the management and control of his residual estate from the beneficial interest conferred upon his wife. The provision in paragraph VII that “my said executors shall handle my estate during the life of my wife” indicates that Lumpkin intended to provide for more than a mere settlement of his business affairs and distribution of assets. Furthermore, the provision, granting the executors the powers found under the Trust Act, authorized Moursund to exercise greater control over the property than was necessary for administration of the estate. We hold that Lumpkin’s will created a testamentary trust for the life of his wife, which would terminate upon her death.

Perfect Union contends the Probate Court erred in assuming jurisdiction over the matter because it lacked subject matter jurisdiction under the Texas Probate Code. We disagree. All courts exercising original probate jurisdiction have the power to hear “matters incident to an estate.” TEX. PROB.CODE ANN. § 5(d) (Vernon Supp. 1988). The phrase “matters incident to an estate” includes the interpretation and administration of testamentary trusts. TEX. PROB.CODE ANN. § 5A(b) (Vernon Supp. 1988). Having concluded that the will created a testamentary trust, we hold the probate court properly exercised its jurisdiction.

Next, Perfect Union contends the court of appeals erred in holding Moursund had no discretion in determining whether to sell the underproductive property. We disagree. The trust property which Mour-sund was ordered to sell had been under-productive since 1975 in that it produced an annual net income of less than one percent of its value. TEX.PROP.CODE ANN. § 113.110(b) (Vernon 1984). Therefore, Moursund’s duty to sell the property arose in 1976, one year after the property became underproductive. TEX.PROP.CODE ANN. § 113.110(c) (Vernon 1984). Thus Mour-sund was properly ordered to sell the un-derproductive property and distribute the proceeds between Cornelia Lumpkin and Perfect Union Lodge. TEX.PROP.CODE ANN. § 113.110(a) (Vernon 1984).

Finally Perfect Union contends that, because Cornelia Lumpkin has died since the arguments were heard, the cause has become moot. It claims the interest in the property owned by the deceased terminated upon her death, regardless of whether the will created a life estate or a trust. Although we realize the trust terminated upon her death, we are also mindful of Trust Code section 113.110(a) which provides that “if the change [in investment] is delayed but is made before the principal is finally distributed ... the income beneficiary or the beneficiary’s estate is entitled to a share of the net proceeds_” TEX. PROP.CODE ANN. § 113.110(a) (Vernon 1984). Accordingly, we hold Cornelia Lumpkin’s estate is entitled to part of the proceeds from the sale as determined under section 113.110(a).

The judgment of the court of appeals is affirmed.

SPEARS, J., not sitting. RAY, J., dissented, joined by PHILLIPS, C.J., and WALLACE, J.

1 . Charles Barrow resigned as executor in 1978.