Teague v. City National Bank & Trust Co.

146 N.E.2d 762, 76 Ohio Law. Abs. 417

• Court: Licking County Court of Common Pleas
• Decided: July 17, 1957
• Docket: No. 40976
• Status: Published

Opinion

OPINION

By HOLTSBERRY, J.

This action is one to construe a portion of the will of Orville C Teague, and obtain a declaratory judgment accordingly. The petitioi of plaintiffs and answer of the defendant Trustees puts in issue the divergent views and claims of the parties. The case was submitted tc this Court upon the pleadings, evidence, stipulations and statements oi counsel, and upon the briefs.

Item 5 of the will of Orville C. Teague provides in part:

“I further direct that my Executor as soon as practicable after mj decease, invest for each of my children the sum of Twenty-Five Thousanc ($25,000.00) Dollars in a refund annuity in some old line life insurance company or companies. In case such insurance annuity is not obtainable from such insurance company or companies satisfactory to mj Executor, then said fund of Fifty Thousand ($50,000.00) Dollars shall pass to the Trust hereinafter provided for.”

The dispute arises since the parties claim that Item 5 of the wil does not specify to whom the refund should be payable. It was stipulated that there were two children, Jean Elizabeth Teague and Carl O Teague, and that the executors did obtain the refund annuities which provided that if any refunds are payable they shall be paid to the trustees under the will of Orville C. Teague.

Grace H. Teague, the mother of Jean Elizabeth Teague, the incompetent daughter of testator, in her capacity as guardian of her daughter signed the applications for Jean Teague’s annuities, and the son, Carl O. Teague, signed the applications for his own annuities. In ail of said policies which were submitted to the Court it was provided that the refunds should be payable to the trustees of the estate. The beneficiaries under the trust include Grace H. Teague, who was the widow of the testator, said Carl O. Teague, and his wife, who are to receive income so long as they live, and may in addition, be paid five percent of principal per year. The principal, after the death of the life beneficiaries, is to be paid to the children of Carl O. Teague. The life beneficiaries have no power to sell or assign their interests in the trust, which interests are further restricted and protected by a “spendthrift” clause.

The entire will which is admitted in evidence, and has on two occasions been judicially determined in part, is as follows:

“LAST WILL AND TESTAMENT OF ORVILLE C. TEAGUE

“I, Orville C. Teague, do make this my Last Will and Testament.

“Item 1st: I desire that all of my just debts and the expenses of administration of my estate and all taxes, including inheritance and Federal Estate taxes be paid out of my estate.

“Item 2nd: I give and devise to my son Carl O. Teague the house and ot located at the North East Corner of Main and Church Streets in the Village of Utica, Ohio, together with all furniture and fixtures, including aeds and bedding, kitchen equipment and all other portable articles in and about said residence.

“Item 3rd: I give and devise to my wife Grace Hill Teague my home property at the North West Corner of Main Street and Factory Street projected west, together with all of the rest and residue of my furniture, fittings, household and other portable articles, also all books, papers, jewelry, portraits, silverware, clothing, and my automobile.

“Item 4th: I give and devise to my daughter Jean Elizabeth Teague my property consisting of a house and seven (7) acres of land on the Utica-Homer Read just west of Utica.

“Item 5th: I direct my Executor to hold the sum of Ten Thousand ($10X00.00) Dollars in money or in U. S. Bonds, for the purpose of paying and to pay to my said wife and son each an allowance of One Hundred and Seventy-five ($175.00) Dollars per month until such time as the income from the trust fund hereinafter provided for shall begin to be paid to them. I further direct that my Executor as soon as practicable after my decease, invest for each of my children the sum of Tv'/eniy-Flvc Thousand ($25,000.00) Dollars in a refund annuity in some old line life insurance company or companies. In case such insurance annuity is not obtainable from such insurance company or companies satisfactory to my Executor, then said fund of Fifty Thosuand ($50,000.00) Dollars shall pass to the Trust hereinafter provided for.

“Item 6th: I give and devise to my son, absolutely the following stocks and securities, viz:—

“$2500.00 par value in Studebaker 6% notes

100 Shares Armour & Company common stock

50 Shares Radio Corporation of America, Common Stock

150 Shares Pennroad, Common stock

25 Shares Hudson Motor Car Co., common stock

50 Shares Republic Steel Corporation common stock

100 Shares Curtis-Wright Corporation, common stock

50 Shares Inland Investors Corporation, common stock

5 1/10 Shares, Mission Corporation, common stock

“All of the stock and notes of the Utica Manufacturing Company in my name, or otherwise belonging to me.

“Item 7th: All of the rest, remainder and residue of my estate including money, bonds, stocks, and all other property of any nature whatsoever I give, devise and bequeath to the Union Trust Company of Newark, and to Harry L. Everts as co-trustees.

“IN TRUST NEVERTHELESS, for the following uses and purposes:

“A. To pay the net income of the trust fund in regular and approximately equal monthly installments shared as follows, to my said wife Grace Hill Teague, Forty (40) per cent thereof, to my son Carl O. Teague, Forty (40) per cent thereof, and to my daughter Jean Elizabeth Teague, Twenty (20) per cent thereof, or the survivor of them for the lifetime of each of them, provided that the share of any deceased beneficiary shall be divided as follows; if Grace Hill Teague or Jean Elizabeth Teague die, such share go the the survivors or primary beneficiaries share and sharH alike but from and after the death of my said son Carl O. Teague, m trustees shall hold the trust fund and his share of the future incom thereof plus such share of the income he receives or would have receivec if living, as survivor of either or both of the other two primary benefi ciaries, upon trust to pay his share of the income of the trust fund othe than stock dividends unto the present or any future wife of my said so¡ so long as she remain his unmarried widow share and share alike wit! the heir or heirs of his body who may happen to survive him until th death of both my said wife and daughter and also the death of my son’ wife, or unless she remarry in either of which events said trust shal cease and determine and the net corpus of said trust fund plus an undistributed income shall pass absolutely and in fee simple share an< share alike to the heirs of the body of my said son Carl O. Teague provided however, that from the share of the income from said trus fund available to be paid to my said wife, son and daughter for ant during the natural life of each of them same shall be paid only thi following express terms and conditions: such payment shall be madi in monthly installments on the 1st day of each month and each installment shall be payable and shall be paid only to each of said beneficiarle: personally, and the same shall not be payable to any other person bj reason of any transfer or assignment, by operation of law or otherwisi of any supposed or possible right of such beneficiary or beneficiaries tt receive the same. And in the event that any one of said beneficiaries shall by operation of law or by reason of any act of his or hers be barre» or prohibited from receiving the payment of any installment and applying the same to his or her own use as the case may be such installment! shall not be payable to him or to her but shall be payable by said Trustees to the corporate Trustee under this trust which shall expend the same or so much as in its discretion is advisable and expedient for the benefit of such beneficiaries and/or unmarried widow and child 01 children of said son which money shall be applied to the care, board anc clothing of such beneficiary or beneficiaries and/or the wife and chile or children of said son Carl O. Teague as far as may be proper or necessary in the judgment of the Trustees.

“B. My trustees shall have full power to manage all of my property as a trust fund, to purchase and/or sell mortgage, notes, stocks, bonds and other securities as they may deem proper, without being restricted to a class of investment which a Trustee is or may be permitted by law to make; provided, however, that not more than 50% of said fund shall be invested in common stock at any one time; and provided, further, that in all investments made, none shall be entered into without the express consent of Harry L. Everts if living or if dead of his duly appointed and qualified successor.

“C. The trustees may in their discretion and upon the written request of any of the beneficiaries of the trust, have the right to withdraw installments of principal and pay over to such beneficiary from time to time but not in excess of five (5) per cent of the then market value of his or her proportion of the principal of such trust fund in any one year for each such beneficiary. And such withdrawal shall in each instance operate to reduce the distribution of the income as provided in Section A hereof to each such beneficiary as may receive a portion of the principal of said trust fund in proportion to his or her share of the principal of said trust fund so reduced.

“D. Said Trustees shall receive such compensation for their services as shall be fixed by the Probate Court of Licking County, Ohio.

“E. In the event of a vacancy in the office of either or both Trustees, such vacancy or vacancies shall be filled by appointment of such Trustee or Trustees as the majority of the primary beneficiaries herein named, shall decide.

“F. No bond in excess of Five Thousand Dollars shall be required of the personal Trustee named under this trust.

“I hereby appoint Harry L. Everts as Executor of this will to serve without bond.

“IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of September, 1935.

ORVILLE C. TEAGUE

“Signed by the said Orville C. Teague and declared to be his last will and testament in our presence and at his request in his presence and in the presence of each other signed by us as witnesses this 12th day of September, 1935.

W. F. LEWIS

HORATIO D. BERRY.”

Jean Teague has died and her personal representative, her mother, seeks to secure for Jean’s personal estate the refunds due on the annuity policies on Jean’s life, Carl O. Teague seeks to have the refund provisions in his policies changed to make any refunds payable to his own estate rather than the trust. To reach a decision herein the Court must, as in all will questions, ascertain the intention of the testator, as the controlling object in the construction of a will is to ascertain and declare the testator’s intention, (Union Savings Bank & Trust Company v. Alter, 103 Oh St 188.)

As is sometimes expressed, the intent is to be ascertained from a full view of everything within the “four corners of the instrument,” in light of the circumstances surrounding the testator at the time of the execution of the will. (41 O. Jur., Wills, pg 600, Section 469.)

In determining the surrounding circumstances a court should, as far as possible, try and put itself in the position of the testator at the time of making the will. Intention must be determined from language used in the will as applied to the subject matter and read in the light of surrounding circumstances at the time of execution. (Setterman v. Bingham, 115 Oh St 35; Anderson v. Gibson, 116 Oh St 684; McMerriman v. Schiel, 108 Oh St 334; 41 O. Jur., Wills, pg 595, Section 468.)

Many rules of construction have been referred to by courts, but none should be permitted to thwart the desire and purpose of a testator if the desire and purpose of the testator can be ascertained from language employed, and- while the purpose of construction as applied to wills is unquestionably to arrive at the intention of the testator, that intention is not that which existed in the mind, but that which is expressed by the language of the will. Intention need not be declared in express terms in the will, but may be deduced as a matter of infer ence or implication from all provisions of the will taken and considerei together. (Clyde v. Simpson, 4 Oh St 455; Morgan v. First National Bank 84 Oh Ap 345.)

The question arises did Orville C. Teague intend that the refum be paid to the heirs of the annuitant or to the trust estate. Item 5 ii effect provides that “Each of my children,” shall receive whateve benefits can be derived by the executor expending Twenty-Five Thousam ($25,000.00) in a refund annuity. The benefits are provided for “eacl of my children.” The Court notes that the testator did not add word such as “their heirs,” or “executors or administrators,” which would ereat an absolute fee title.

It is provided however, that “in case such insurance annuity is no obtainable from such insurance company or companies satisfactory t< my executor, then said sum of Fifty Thousand ($50,00.00) Dollars shal pass to the trust hereinafter provided for.” This provision of the wil places considerable discretion in the executor and made it clear that i. certain circumstances existed the testator did not want the money t< go to the children or the estates of the children, but to the trust. Further, this direction for augmentation of the residuary trust clearly indicates that testator intended the benefits of the annuities were to be enjoyed by the children personally during their lives.

Let us further analyze the terms of the trust, itself. It makes provision for the payment of income and optional, but limited, amounts o: principal to the testator’s wife, daughter, son and daughter-in-law. The principal of the trust after the death of the life beneficiaries goes tc the heirs of the body of Carl O. Teague. Sums payable cannot be transferred or assigned by operation of law or otherwise and payments are further protected by a “spendthrift” clause which provides that if anj life beneficiary should be prohibited from receiving payment of anj installment such installments are to be paid for the benefit “of such beneficiaries and/or unmarried widow and child or children of said son which money shall be applied to the care, board and clothing of such beneficiary or beneficiaries and/or the wife and child or children of said son, Carl O. Teague, as far as may be proper or necessary in the judgment of the trustees.”

With respect to principal beneficiaries, they are given only restricted withdrawal rights. Testator was mindful of dissipation of principal as revealed by these provisions and took precautions in order that his trust estate would eventually go to grandchildren. It appears from language used that testator’s clear intent was that refunds, if any, were to go to the trust, and then through the trust to the grandchildren.

Testator did not create a straight or simple annuity, but was creating a refund annuity which is one where the insurance company agrees to pay an income for the life of the annuitant for which the purchaser pays a single premium; if the annuitant dies before the entire principal plus interest have been paid out in the form of income, then the unused part of the principal is refunded to a designated beneficiary.

The word “refund,” means a return to the source from which the payment originated. (See Words and Phrases, Volume 36, page 672.) further, the word “refund,” has been defined by Webster as meaning to ‘return in restitution, repayment; to supply again with funds; to reimburse.”

An annuity can continue only so long as the annuitant lives and by selecting such annuity testator indicated his intention to benefit his 3hildren during their lifetimes. Had he desired a type of investment to augment their estates he could have chosen some other type of investment which by express terms or operation of law would have descended through the estates of his children.

It is stated in 24 Corpus Juris Secundum, Section 1329, “Where the executor sets apart from the estate a sufficient sum to meet an annuity, he never parts with the title, and even if it is considered a trust fund for the benefit of the annuitant it must be returned to the executor for administration when the trust is terminated.”

The case of Merrill v. Wooster, 92 Me., 460, 59 Atl., 596 is cited. While it is true that the issue in the Maine Case is not precisely the same as the issue in the instant case, there is reasoning which appears sound and applicable herein.

After careful consideration this Court finds that it was the intent of the testator that the refunds are to be made to the trustees of the estate of Orville C. Teague. Having determined this matter on the question of intent the Court will devote very little time to the other contentions raised.

It is contended by defendants that the copies of applications and annuity policies themselves clearly evidence not only that the refunds are to be made to the trustees, but that the plaintiffs in the action clearly understood and agreed that this was proper.

Exhibits D, E and F are policies payable to Carl O. Teague, and in each it is expressly provided that the refund is to be paid to the trustees of the estate of Orville C. Teague, deceased, and in each instance said Carl O. Teague joined in application for the annuity, which application directs among other things to whom the payment is to be made. No right is reserved in said three policies to change the beneficiary.

Exhibits G, H and I are the policies payable to Jean Elizabeth Teague or Grace H. Teague, guardian of Jean Elizabeth Teague, and in each it is expressly provided that the refund is to be paid to the trustees of the estate of Orville C. Teague, deceased, and with respect to two of said contracts, Grace Hill Teague, guardian of Jean Elizabeth Teague joined in the application for the annuity, which application directs among other things, to whom the payment is to be made.

The defendants contend that since this was years ago in 1936, that the annuity contracts were written that such consent in 1936 of plaintiffs constituted a waiver, in any event, with respect to payment of the contracts of insurance in question. Defendants further contend that the relief sought by plaintiffs should be denied and that they are precluded from same under the provisions of §16598-40 GC, which was in effect between 1932 and 1940, and pertain to the filing of accounts and the final effect of such. They contend that since no exceptions were filed to the expenditure of funds for the annuities and refunds payable to the trust estate that Carl O. Teague and Grace H. Teague, then guardian, now administratrix of the estate of Jean Elizabeth Teague, are not now in position to challenge that which was done by the executors, irrespectiv of the fact that they did consent to what was done and joined in th applications for the issuance of the annuities with refunds payable t< the trustees.

The Court having decided the issues herein by ascertaining an< determining the intent of the testator does not deem it necessary t< determine these last questions raised.

Entry shall be prepared and submitted to this Court.

Exceptions allowed.