Smyth v. . McKissick

24 S.E.2d 621, 222 N.C. 644, 1943 N.C. LEXIS 398

• Court: Supreme Court of North Carolina
• Decided: March 17, 1943
• Status: Published

Opinion

Devin, J.

Ellison A. Smyth died 3 August, 1942, at the advanced age of ninety-four, leaving him surviving three daughters, the widow of a deceased son, nineteen grandchildren and twenty-four great-grandchildren. His estate was valued at approximately two million dollars. Some time before his death in order to provide for the distribution of his estate among his descendants he executed two trust indentures and a will whereby he conveyed a portion of his estate and devised the remainder to the plaintiffs as trustees and executors for the purposes therein expressed. These three instruments, covering different species of property, were similar in form and purpose, and the designation of the beneficiaries was in substantially the same language in each. The trustees, to whom the property was thus conveyed and devised, were charged with the duty of holding and investing the funds, and receiving the revenues, income and profits arising therefrom, and making distribution to the trustor’s children and grandchildren, both as to income and corpus. For the purposes of distribution he divided the beneficiaries, both under the trust indentures and in his will, into four groups or classes. These groups were designated and identified in each, instrument by the same letters a, b, c and d, and the trustees were directed to distribute both income and corpus of the funds to those embraced in these groups according to certain percentages. The three daughters and the daughter-in-law of the trustor were to .receive annually their respective percentages of the income during their natural lives, and then the income was to be distributed to their children in each group, with the proviso “e” that the child of any deceased child should take the part his parent would have been entitled to if living. There was the further provision in clause “f” that if there should be a failure of persons in any of the classes for the-division of the income from these trusts, then the share designated for such extinct class should be distributed among the surviving classes.

Upon the death of the survivor of the three daughters and daughter-in-law the trustees were directed then to make final distribution of the funds of the trusts and corpus of the estate to those embraced in the four groups according to the percentages fixed, with the same proviso “e” that the child of any deceased child should take the part to which his parent would have been entitled, if living, and with the additional proviso “f” for distribution in the event all the members of any class should become extinct. Subsequent to the execution of the trust indentures and the will, but before the death of the trustor, another angle was introduced into the situation by the fact that Thomas Smyth (embraced in group “b”), son of James Adger Smyth and grandson of the trustor, having no children born of his marriage with Frances Thrower Smyth, in 1938, adopted for life an infant named David Hutchinson Smyth, and thereafter in 1941 died leaving a last will and testament wherein he devised all his property to his said wife.

The plaintiffs as executors and trustees ask the advice of the Court as to the proper’distribution of the income and corpus of the trust funds, and for an adjudication of the respective rights of the beneficiaries under the trust indentures and the will.

At the outset two important questions are presented: (1) What, if anything, did Frances Thrower Smyth take under the will of Thomas Smyth? (2) What, if anything, did David Hutchinson Smyth, the adopted son of Thomas Smyth, take under the trust indentures and will of Ellison A. Smyth ?

1. While the trust indentures conveyed personal property to trustees with directions as to the distribution of the income and principal thereof, and the devise of an additional fund in the will contemplated the sale of real property and the distribution of the income and corpus thus devised, the ordinary rules of descent and distribution and those governing the devolution of estates are applicable to the provisions of the instruments under consideration, in order to determine the rights of those who are to participate in the benefits thereby conferred in accord with the ascertained intent of the trustor.

The trust indentures directed the trustees to pay the income derived from the trust property to the trustor’s descendants according to groups and classes. The group embracing the widow and children of the trustor’s deceased son, James Adger Smyth, was designated by the letter “b.” To this group was set apart 35% of'the total net income. Of this, one-third was to be paid the widow for the term of her natural life, the remaining two-thirds to be equally divided among the children of James Adger Smyth. As one of the children of James Adger Smyth, Thomas Smyth received one-eighth of two-thirds of 35% of the total net income from the trust property until his death in 1941. The trust indentures contained provision “e” to the effect that the child or children of any deceased child of James Adger Smyth should take the part to which his parent would have been entitled, if living. That meant that the child of Thomas Smyth, upon the death of the latter, would be the one to succeed to his share. Thus, the interest of Thomas Smyth, if vested,, was defeasible upon his death before the final vesting of the estate in the ultimate takers. The person to take on the death of Thomas Smyth was to be ascertained at that time. Mercer v. Downs, 191 N. C., 203, 131 S. E., 575; Trust Co. v. Stevenson, 196 N. C., 29, 144 S. E., 370; Woody v. Gates, 213 N. C., 792, 197 S. E., 561. As was said by Adams, J., in Trust Co. v. Stevenson, supra, “Considered in the light of these decisions the words ‘if living/ in the fifth item of the will, are manifestly referable to the death of the life tenant.” What then passed to Thomas Smyth’s devisee from the trust fund? It follows that when Thomas died his will so far as the trust fund was concerned conveyed nothing, and that the interest he would have been entitled to if living passed by the terms of the trust instruments to his child, if there was one capable of qualifying as such, or to those entitled to take upon his death during the lives of the first takers.

The contingency of one or more of the trustor’s grandchildren dying without children does not seem to have been specifically provided for, other than the direction in paragraph “f.” However, we think, by analogy to the statutes of distribution, the implication is that he intended in case one of his grandchildren died without issue, his part of the income from the trust would pass to his surviving brothers and sisters, and only upon extinction of an entire group would it pass to other surviving groups.

The' final distribution of the corpus of the trust funds established by the trust indentures was postponed until after the death of the trustor’s three daughters and daughter-in-law. It was declared that “upon the death of the survivor” of the 'four, “then and as soon thereafter as practicable,” distribution should be made by dividing the corpus into four parts, of which one part — 35%—should be divided among the children of James Adger Smyth, the child of any deceased child to take the part to which his parent would have been entitled if living. So that, if Thomas Smyth had survived to the time fixed for the final distribution, he would have received one-eighth of 35% of the corpus of the trust estate. Since he died in 1941, prior to that time, his child, if any, was the one designated as capable of taking the part to which Thomas Smyth would have been entitled. Thomas Smyth received the income from the trust as long as he was able to answer the annual roll call, and when he died his devisee could not answer for him. Mrs. Frances Thrower Smyth cannot bring herself within the description, expressed in the trust indentures and will, of the person to take upon the death of Thomas Smyth (Bowen v. Hackney, 136 N. C., 200, 48 S. E., 997). Likewise, when the last survivor of the life tenants shall pass away, “then” upon the final roll call only those then entitled can answer. gAt that time, it is provided that if there should be a failure of persons within any of the classes designated for distribution of the corpus of the trust, the share of such extinct class shall be distributed among the surviving classes.

In its simplest form we have this situation: The trustor conveys property to trustees in trust to pay the income derived therefrom annually to A during the lifetime of B, and, upon the death of B, to pay the corpus to A. A dies during the lifetime of B, leaving a will bequeathing all his property to 0. If that were all, the solution would not be difficult. But the addition of the further provision that in case of the death of A, his child should take the part A would have been entitled to if living, presents a different situation.

If the conveyance of property in trust for the payment of income to Thomas Smyth be regarded as creating in him a vested interest in the income and corpus of the trust fund, it was defeasible upon his-death before the expiration of the trust period, and it seems, from the language in which the beneficiaries are designated and the method of distribution declared, that the trustor’s intention should be ascertained to mean that upon the death of Thomas Smyth his child would stand in his shoes, and that both as to annual income and final distribution only those then entitled could answer to the roll call. This seems to be the rule established by the decisions in Bowen v. Hackney, 136 N. C., 187, 48 S. E., 997; Haywood v. Rigsbee, 207 N. C., 684, 178 S. E., 102; and Knox v. Knox, 208 N. C., 141, 179 S. E., 610. The distinction between these cases, here controlling, and those cases in which the person to take is determined at the death of the testator, is clearly drawn in Witty v. Witty, 184 N. C., 375, 114 S. E., 482.

The facts in the case at bar are distinguishable from those in Lyon v. Bank, 128 N. C., 75, 38 S. E., 251, where a fund was established for the payment of income to certain beneficiaries for life, with provision that as each one died his part of the corpus be paid to his personal representative. This was held subject to disposition by will.

True, the beneficiaries of trust property who are sui juris and whose rights are vested may dispose of their equitable interests in the trust property (26 R. C. L., 1264), but where the interest of a beneficiary is made defeasible upon his dying with children to whom the interest passes by substitution, a different rule applies. The distinction between the case where the devolution is dependent upon a contingency rendering uncertain who is to take, and the case where the vesting of the property right depends upon a contingency but the person to take is certain, is illustrated by Fisher v. Wagner, 109 Md., 243, 21 L. R. A. (N. S.), 121, In that case the devise was to Aminta Green, but in case she died without children, to Fisher, his heirs and assigns, absolutely. Fisher died in the lifetime of Aminta Green, leaving a will wherein he devised the property to his wife. The will of Fisher was held good, since the person to take in the event Aminta Green died childless was certain. See also Reilly v. Mackenzie, 134 Atl., 502, 48 A. L. R., 118.

It is suggested that the conveyance or devise of the income from the trust fund vests the title to the fund in the beneficiary, but we do not think this principle applicable here. It was said in Benevolent Society v. Orrell, 195 N. C., 405, 142 S. E., 493: “In the absence of a clear intention to separate the income from the principal an absolute devise of the income from the land passes the land itself.” But it was noted in that case that the rule would be otherwise if the trustor expressed an intention inconsistent with the transfer of the title to the beneficiary and indicated an intention to separate the income from principal, as by the appointment of a trustee. Cole v. Bank, 186 N. C., 514, 120 S. E., 54, 69 C. J., 402.

In support of the view that the trustor intended that the interests of the children of his son and daughters, both as to annual income and principal, should survive to those only who could answer to the description at the roll call, it may be noted that the grandchildren are designated by class rather than by name. Wooten v. Hobbs, 170 N. C., 211, 86 S. E., 811; Mebane v. Womack, 55 N. C., 301. However, from a consideration of the language in which the several instruments are couched, for the purpose of ascertaining the intent of the testator (Heyer v. Bulluck, 210 N. C., 321, 186 S. E., 356), we think the children of the trustor’s grandchildren took by purchase and not by descent, and that the interests of the grandchildren were defeasible upon their dying during the life of the first takers, leaving children, who, in that event, were to take the part to which their parents would have been entitled, if living, and that upon the death of a grandchild during the trust period only those coming within the description, or those then entitled, were capable of answering the roll call for annual or final distribution.

2. The trust indentures executed by Ellison A. Smyth in 1932 and 1936 became effective as of those dates. 'The rights and interests thereby conveyed became fixed, and the description of those who were to become beneficiaries was then defined. At that time Thomas Smyth was living and no child had been adopted. Therefore, it follows that the word “child” used in these instruments to designate the one to take upon the death of Thomas Smyth was not comprehensive enough to include a child adopted by him several years thereafter. Leeper v. Leeper, 347 Mo., 442, 147 S. W. (2d), 660, 133 A. L. R., 586, annotation 597; Re Puterbaugh, 261 Pa., 235, 104 Atl., 601, 5 A. L. R., 1277, annotation 1280, 1 Am. Jur., 664. Tbe general rule is that the word “child,” standing alone, when used in a deed as referring to those to take in succession, does not include the adopted child of another, unless it appears from the instrument itself or attendant circumstances that it was so intended. There is nothing in the language of the trust indentures here to indicate that the testator intended to include any others than those of his blood, and there were no extraneous circumstances, existing at the time of or before the execution of the trust indentures, which would lend color to the suggestion that an adoption by Thomas Smyth was anticipated or contemplated. 69 C. J., 177. Hence, we conclude that David Hutchinson Smyth, the subsequently adopted child of Thomas Smyth, is not entitled to take under the trust indentures, since it could not have been in the contemplation of the trustor, at the effective dates of these instruments, to include an adopted child within the meaning of the word “child” as used therein in paragraph “e” to designate those to take upon the death of the trustor’s grandchildren.

However, we think a different result is reached when we come to consider the right of the adopted child to take the part set aside for his father under the will. The will of Ellison A. Smyth spoke from his death in 1942. At that time Thomas Smyth was dead, leaving an adopted child. David Hutchinson Smyth had become in law the child of Thomas Smyth and Frances Thrower Smyth, as respects them, as much so as if he had been born to them by natural law. "While his adoption did not constitute him an heir of Ellison A. Smyth (Grimes v. Grimes, 207 N. C., 778, 178 S. E., 573), yet as the lawful child of Thomas Smyth he was entitled to take in substitution and .as representative of his adopting father. He was then qualified in every legal aspect, as the “child” of Thomas Smyth, to step into his father’s shoes, and as the son of his father take property rights which had been set aside for his father. This was evidently what Justice Brogden had in mind when he wrote for the Court, in Tankersley v. Davis, 195 N. C., 542, 142 S. E., 765, “The words of the deed ‘during the term of her natural life, and thereafter to any child or children she may have surviving her in fee,’ nothing else appearing, would undoubtedly vest the title to the property in the adopted child.”

In Mooney v. Tolles, 111 Conn., 1, 149 Atl., 515, 70 A. L. R., 608,, where a trust was created by will, for the benefit of a son and his child or children, with provision that upon the death of the son the principal of the trust should be paid to his child or children, it was held, under the Connecticut statute, that the word “child” included a child adopted some time before the death of the testatrix and with her knowledge and approval. In the annotation under tbe Mooney case in 70 A. L. R., 621, will be found numerous decisions bearing on this point.

We have recently dealt with the question of the hereditable rights of adopted children in Grimes v. Grimes, 207 N. C., 778, 178 S. E., 573. The facts in that case were these: T. J. Grimes died intestate in 1933. His son, W. T. Grimes, died intestate, and without issue in 1931, but having previously, in 1924, adopted for life a child, "William P. Grimes. It was held in a well considered opinion by Schenck, J., that the adopted child could not take as heir of T. J. Grimes. Under the statute then in force the adopted child, by virtue of the establishment of the relationship of parent and child, was entitled to take as heir and next of kin the real and personal property of his adoptive father, but the statute did not extend to the child the right to inherit from his father’s ancestors or other kindred. This interpretation of the statute is in accord with the concensus of-judicial opinion in other jurisdictions where similar statutes prevail. 120 A. L. R., 837, 70 A. L. R., 621; 1 Am. Jur., 662. However, the ruling on the facts in the Grimes case, supra, is not controlling on the facts of the case at bar, since they differ in material respects. Here the property passed by will, and the will used the word “child” to designate the one capable of succeeding to Thomas Smyth’s share of the fund. That designation must be held sufficient to include the adopted child, when considered in connection with the admitted fact that Ellison A. Smyth four years before his death knew and approved of the adoption of David Hutchinson Smyth, thereafter recognized him as a member of the family, and treated him as he did his other great-grandchildren, and so continued after Thomas Smyth died leaving no natural children, without changing his will or limiting the meaning of the word “child” to those related by blood.

Upon a due consideration of the will, in the light of all the surrounding circumstances, construing the provision that upon the contingency of the death of Thomas Smyth during the life of the first takers the one to take his part was his child, we think that David Hutchinson Smyth, who was at the time the will became effective legally qualified as the •child of Thomas Smyth, was capable, upon the death of Ellison A. Smyth, of taking by substitution the share already created and set apart for Thomas Smyth.

3. It follows from what has been said that the children of the trustor’s daughters, designated by the letters “a,” “c” and “d,” took a vested interest (subject to the life rights of their mothers), defeasible upon their dying during the lifetime of their respective mothers, since in that •event the child of any deceased child of Margaret S. McKissick, Annie P. Blake or Sarah S. Hudgens would “take the part to which his or her parent would have been entitled, if living.”

As Mrs. McKissick bad only one child, .in case of his death in her lifetime, his children would take the share he would have been entitled to if living; and in case of his death, before that of his mother, without children or issue of children, then his share would be divided among the surviving classes according to paragraph “f,” subject to the life right of Mrs. McKissick.

In the case of the children of Mrs. Blake and Mrs. Hudgens the same rule would be applied as herein applied to the children of James Adger Smyth, subject to the right of these daughters of the trustor to receive the percentage of income designated in the trust indenture and the will during the term of their natural lives.

Except as herein modified the judgment of Judge Alley is in all respects affirmed. The costs of this Court will be paid by the estate.

Modified and affirmed.

Schenck, J., took no part in the consideration or decision of this case.