Thomas v. Harrison

92 Ohio Law. Abs. 175
CourtCuyahoga County Probate Court
DecidedJuly 1, 1961
DocketNo. 581463
StatusPublished
Cited by2 cases

This text of 92 Ohio Law. Abs. 175 (Thomas v. Harrison) is published on Counsel Stack Legal Research, covering Cuyahoga County Probate Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thomas v. Harrison, 92 Ohio Law. Abs. 175 (Ohio Super. Ct. 1961).

Opinion

Merrick, P. J.

The facts which have precipitated this declaratory judgment action have been adequately set forth [180]*180in the briefs and pleadings, so it seems unnecessary to repeat them here. The main issues with which the Probate Court is concerned are:

1. the validity of the discretionary trust under the rule against perpetuities;

2. the validity of the power of appointment, following the termination of such trust- under the rule against perpetuities; and

3. the applicability of the Ohio mortmain statute to the remainder interests to be appointed under the power of appointment.

I. VALIDITY OF THE DISCRETIONARY TRUST

The will directs in Item IV (3) that half of the residuary estate is to be held in trust for the benefit of testatrix’s son, Jean B. Harrison, his wife, and his issue. The trustees are given absolute discretion to expend so much of the income and/or principal of the trust as they deem necessary to alleviate the financial burdens of, or to provide education for, any or all of the designated beneficiaries and to accumulate in any year the income not so spent. The trust is to continue as long as any of the beneficiaries who are born within twenty years after testatrix’s death remain alive. This Court is asked to determine whether the provisions of this trust violate the rule against perpetuities.

In Ohio, the common-law against perpetuities has been codified. Section 2131.08, Revised Code, provides:

“No interest in real or personal property shall be good unless it must vest, if at all, not later than twenty-one years after a life or lives in being at the creation of the interest * * *. It is the intention by the adoption of this section to make effective in Ohio what is generally known as the common law rule against perpetuities.”

It has been said that the fundamental policy behind the rule is to preserve the freedom of alienation of property. Joseph Schonthal Co. v. Village of Sylvania, 60 Ohio App., 407, 21 N. E. (2d), 1008 (1938); Braun v. Central Trust Co., 104 N. E. (2d), 480 (Ohio C. P., 1951), aff’d. 92 Ohio App., 110, 109 N. E. (2d), 476. But Professor Gray, in his famous treatise, states that the immediate purpose of the rule is to prevent the crea[181]*181t-ion of interests which may vest too remotely. Gray, The Rule Against Perpetuities, Secs. 1-4 (4th ed., 1942). Consequently, the rule applies only to the vesting of interests. It applies to equitable as well as legal interests. Rudolph v. Schmaltstig, 25 Ohio Law Abs., 249 (C. P., 1937). Cf. Jones v. Webster, 133 Ohio St., 492, 14 N. E. (2d), 128 (1938); The Cleveland Trust Co. v. McQuade, 106 Ohio App., 237, 142 N. E., (2d), 249 (1957). Let us first see then, whether the interests created under this trust are vested.

An interest is not vested if, in order for it to come into possession, the fulfillment of some condition precedent other than the determination of the preceding estate is necessary. 20 Ohio Jurisprudence (2d), Estates, Section 136 (1956); Gray, The Rule Against Perpetuities, supra, Section 101; Restatement, Property, Section 157, comment a. A remainder may be contingent because it is to take effect upon the happening of some event not certain to occur which is independent of the termination of the preceding estate. 20 Ohio Jurisprudence (2d), Estates, Section 137 (1956). It may also be contingent because the person to whom the remainder is limited is not yet ascertained or not yet in being. Smith v. Block, 29 Ohio St., 488 (1876); Barr v. Denny, 79 Ohio St., 358, 87 N. E., 267 (1909).

In a discretionary trust the beneficiary has no definitely ascertainable interest. He cannot compel the trustee to give him any portion of the income where the trust gives the trustee absolute discretion as to the amounts of income to distribute. See Scott on Trusts, Section 128.3 (2d ed., 1956). The beneficiary cannot be certain that he will ever enjoy any of proceeds of the trust. Consequently, where the extent of the interest of the beneficiary is dependent upon the exercise of discretion by the trustee, that interest is contingent. Thomas v. Gregg, 76 Md., 169, 24 Atl., 418 (1892); Andrews v. Lincoln, 95 Me., 541, 50 Atl., 898 (1901); Moore v. Moore, 59 N. C. (6 Jones Eq.), 132 (1860); Angell v. Angell, 28 R. I., 592, 68 Atl., 583 (1908); Denny v. Hyland, 162 Wash., 68, 297 Pac., 1083 (1931), English: In re Vaux (1939), Ch., 465; In re Bernard (1916), 1 Ch., 552; In re Bleu (1906), 1 Ch., 624. Gray, Perpetuities, supra, Sec. 246; Restatement, Trusts (2d), Section 62q. Such interest does not vest until the trustee exercises his discretion.

[182]*182Viewed in another way, the discretion in a trustee to distribute principal and income to any or all members of a designated class is tantamount to a special power of appointment. Simes and Smith, The Law of Future Interests, 216, Section 1277 (2d ed., 1956); VI American Law of Property, Section 24.30 (1952). The exercise of the power is a condition precedent to the vesting of any interest in a beneficiary of the trust. Simes & Smith, supra, Section 1274; Gray, Perpetuities, supra, Section 515.

Thus it is obvious that the interests of Jean B. Harrison, his wife, and his issue, are contingent. Their interests in the income and principal of the trust are wholly dependent upon the trustee’s discretion. The interests of all the beneficiaries are contingent because subject to a condition precedent. In addition, they are contingent because the beneficiaries are unascertained, in the sense that the trustee may select one or more of them to receive proceeds from the trusts, or unborn in the case of possible further issue of Jean.

Having determined that these interests are contingent, it still remains to be seen whether these interests must vest within the period of the rule. The Ohio statute, echoing the common law, says that interests must vest, if at all, not later than twenty-one years after lives in being at the creation of the interest. Section 2131.08, Revised Code. As the statute expressly states, and as the authorities unanimously proclaim, the twenty-one year period must follow, not precede, the lives in being by which the period of the rule is measured. Simes & Smith, supra, Section 1225; Restatement, Property, Section 374, comment e, Illus. 6 comment o; VI American Law of Property, supra, Section 24.14. Furthermore the measuring lives must be lives in being at the creation of the interest, i. e. in the case of a testamentary trust, at the death of the testator. 42 Ohio Jurisprudence (2d), Perpetuities, Sections 27-28 (1960).

A simple illustration will indicate that the interests created under the testamentary trust of Mrs. Harrison will not necessarily vest within the period of the rule. Mrs. Harrison was survived by her son, Jean, his wife and their three children. Since the death of Mrs. Harrison, four more children have been born to Jean. Let us suppose that tomorrow Jean, his wife, and [183]*183the three children who were alive at the death of Clara Harrison are all killed in a common accident.

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Related

Schafer v. Deszcz
698 N.E.2d 60 (Ohio Court of Appeals, 1997)
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220 N.E.2d 739 (Cuyahoga County Probate Court, 1966)

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Bluebook (online)
92 Ohio Law. Abs. 175, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thomas-v-harrison-ohprobctcuyahog-1961.