Woodruff Oil & Fertilizer Co. v. Estate of Yarborough

142 S.E. 50, 144 S.C. 18, 1928 S.C. LEXIS 46

• Court: Supreme Court of South Carolina
• Decided: February 22, 1928
• Docket: 12378
• Status: Published

Opinions

The opinion of the Court was delivered by

Mr. Justice Beease.

The facts of this case are fully stated in the opinion of Mr. Justice Cothran.

I concur with so much of his opinion as holds that the limitation over of the corpus after the expiration of the term of 50 years from testator’s death (designated as “the ulterior provision”) is void for remoteness. I am not prepared, however, to concur with so much thereof as holds the trust term of 50 years (designated as “the primary provision”) void in toto (though not itself offending against the rule, must fall merely became the ulterior provision is void for remoteness). I shall briefly give my reasons for this view.

In cases of this kind, where the ulterior provision is void for remoteness, the primary provision may or may not be so related thereto that it must fall with the fall of the ulterior provision. If the two be so interwoven with, so interdependent upon, each other that they together constitute one scheme and cannot be separated, then if the ulterior provision be void the primary provision must also fall. But if they may be separated, if the existence of the ulterior provision is not necessary to the existence of the primary provision, if the primary provision subserves a purpose of its own, which it could and would serve if the ulterior provision had not been made,’and not created merely to support the ulterior provision, then, if the ulterior provision be void, the primary provision is good and should be sustained unless it itself offends against the rule. Gray, Perpetuities (3d Ed.), §§ 247-250; Section 186, Tiff. Real Estate (2d Ed.), and authorities there cited.

That the ulterior provision herein offends against the rule, I entertain no doubt. It clearly violates the rule, and is, for that reason, wholly void. So much of the will, therefore, as relates to this provision passes out of the case. Eliminating this provision from the will, what have we left? We have precisely the situation that would have obtained had testator never inserted such provision in his will, but contented himself with the trust term only, as it was well within his right to have done. Had he done that, could it be successfully claimed that such provision should not be sustained? Would paragraph 5 of the will be sustained, had paragraph 6 not been incorporated therein by the testator ? Is the limitation over of the corpus after the expiration of the trust term essential to the existence of the trust term itself ? Does not the trust term within itself subserve a pur pose of its own, or is its only function to support the ulterior provision? If its only function is to support the ulterior provision and subserves no independent purpose of its own, then it must fall with the fall of the ulterior provision. But if it subserves an independent purpose of its own, it must be sustained unless it, too, offends against the rule.

It is reasonable to 'suppose that testator had in mind quite as much the disposition of the annual rents, profits, etc., arising from the corpus during the term of 50 years from his death as he did the disposition of the corpus itself upon the expiration of that term. His purpose was clearly twofold: First, the disposition of the annual rents, profits, etc., during the trust term; and second, the disposition of the corpus after the first objective should have been accomplished. The provision for the first objective was incorporated in paragraph 5, that of the second, in paragraph 6, of his will. I think it is clear that the two provisions are clearly separable. True, the latter is supported by, and cannot take effect until the expiration of, the former, but that of itself does not make them inseparable. The existence of the latter provision is not essential to the existence of the former. The former provision subáerves a purpose of its own, independent of its purpose of supporting the latter, to wit, regulating the payment out of the rents, profits, etc., annually arising from the corpus, which had to be held to constitute a productive source from which the annual payments could be made. This purpose the primary provision could and would have performed had there been no limitation over of the corpus itself after the expiration of the trust term. Had the limitation over of the corpus not been made, the legal title thereto would have passed by the Statute of Distributions to the heirs at law of testator, upon his death, burdened with the trust term. The fact that such limitation was made but is void for remoteness gives pre cisely the same status that would have obtained had there been no limitation over of the corpus. It follows, therefore, that the primary provision should not be affected by the invalidity of the ulterior provision.

The decision in Johnston’s Estate, 185 Pa., 179; 39 A., 879; 64 Am. St. Rep., 621, on the point that the limitation over after a term of 75 years was void for remoteness, was not new, but in accordance with the well-established law of the land. The decision therein, however, upon the point that the first limitation must fall because the second or ulterior provision was void was new and wholly unsupported by authority. The learned Judge who prepared the opinion admits that he had no authority therefor. Reliance was had, however, upon Thorndike v. Loring, 15 Gray (Mass.), 391, a.nd upon three New York cases. In Section 249b, Gray, Perpetuities (3d Ed.), Professor Gray distinguishes these cases from Johnston’s Estate as follows:

“The New York cases were all decided, not at common law, but under the peculiar provisions of the New York Statutes. The difference between Thorndike v. Loring and Johnston’s Estate is this: In the former case the income was to be accumulated for 50 years in order that at the end of that time the accumulations might be given over, but the gift over was too remote, and could never take effect, therefore the object of the trust wholly failed; but in the latter case the object of the trust was not solely for the purpose of the remote gift over — in fact, it had nothing to do with the gift over — it was created solely to regulate the payment out of income during the 75 years. It would have effected its purpose had there been no gift over at all. There is a series of English cases opposed to Johnston’s Estate, and on the whole, with great submission, the decision seems difficult to maintain.” (It should be noted that the learned author is here considering the decision that the first limitation must fall because the second was too remote.)

In Thorndike v. Loring, and like cases, the object of the trust term was to accumulate a fund in order -that at the end of such term the accumulations might be given over. Since this limitation over offended against the rule, the trust term, subserving no useful purpose of itself, but created merely to support the limitation over upon its expiration, was inseparable therefrom and fell with the fall of the void limitation. But in Johnston’s Estate, as in the case at bar, the purpose of the trust term was to regulate the payment out of the rents, income, etc., during its duration. The limitation over after the accomplishment of this object therefore had nothing to do with it. As above pointed out, had there been no limitation over at all of the corpus, it would not have interfered with this purpose of the trust term. Had the primary provision provided for the accumulation of the rents, profits, etc., arising from the corpus during the duration of the trust term, and upon the expiration thereof the same had been limited over, then and in that event the primary provision would have been so interwoven with and so interdependent upon the ulterior provision that it would have fallen with the ulterior provision, as in Thorndike v. Loring. But since the primary provision in the case at bar, as well as in Johnston’s Estate, was intended to subserve a purpose of its own, it is not dependent upon the ulterior provision, and need not fall merely because the latter offends against the rule. In my opinion, therefore, the decision in Johnston’s Estate, and the holding of Mr. Justice Cothran herein, upon the second point, to wit, that the first limitation, though not itself offending against the rule, must fall because the second limitation was void for remoteness, is fundamentally wrong. The first or primary provision should be sustained unless it itself offends against the rule in whole or in part, and must not be condemned merely because the ulterior provision ran against the rocks of remoteness.

It is true that testator intended to dispose of his entire estate, and to die intestate as to no part thereof, but that of itself does not indicate that the two provisions are parts of a single plan' or scheme, inseparable and wholy interdependent. The two provisions may be separated as easily and readily as if the first had been for life and the later by way of remainder. This Court has repeatedly held that a gift over, which is void, cannot defeat a vested interest, previously given. Dougherty v. Dougherty, 2 Strob. Eq., 63; Finley v. Hunter, 2 Strob. Eq., 208; Young v.. Dinkins, Rich. Eq. Cas., 23.

The case of Lyons v. Bradley, 168 Ala., 505; 53 So., 244, reviews the authorities, and is, in my opinion, decisive of the question here presented. The decision therein in so far as the real estate was concerned, was governed by the peculiar Statute of that State, changing the common-law rule as to perpetuities. But the common-law rule of perpetuities was applied therein as to the personal property. The personal property was bequeathed in trust; the income to' be distributed every 6 months to the persons then constituting a certain class; the trust to exist for 25 years, when the principal was to be distributed to a class then to' be determined. The Court held that the gift of the principal was bad,' but that the semi-annual gifts of the income were good for 21 years.

It was held in Johnston’s Estate, that the primary provision does not offend against the rule. Is this true ? Had testator directed that the income, profits, etc., arising from the corpus be annually paid over to his children for and during their lives and the life of the survivor, there could be no question but that they would have taken vested interests therein, as they were then in esse, and the gift would have in no sense offended against the rule. But he did not do that. He provided that said rents, etc., should be paid over annually and every year to his children, share and share alike, and if one or more of said children should die without leaving a child or children, the share of such child should go to the survivior or survivors, and the child or children of a deceased child should take per stirpes the share the parent would take if living. It will be seen that it is wholly uncertain who the beneficiaries of any annual payment of such income, profits, etc., will be until the time of payment thereof, and for that reason it is likewise uncertain as to the size of the shares such beneficiaries, when determined, will take therein. The right of the several annual payments therefore cannot vest until the beneficiaries and the size of the shares are determined. The limitation as to the payment out of the rents, profits, etc., not being based upon any life or lives in being, but for an arbitrary period of 50 years, must be governed by the same rules invoked by Mr. Justice Cothran in determining whether or not the ulterior provision offended against the rule.

In note 3 to Section 249b, Gray, Perpetuities (3d Ed.), •Professor Gray observes:

“Although the reason by Stewart, P. J. (in Johnston’s Estate), for invalidating the trust term seems insufficient, yet were not the trusts of the term, in part at least, bad ? On each 1st of May for 75 years the income was to be divided among the children then living, and the issue per stirpes then living of children then deceased; the persons taking and the size of the shares at each period of distribution, could not be determined until such period, which might be long after the limits fixed by the rule against perpetuities. On the question whether such trusts could be sustained in part, see Section 410 et seq., post.”

Section 248 of Gray on Perpetuities (3d Ed.), is as follows:

“If the devise of a future interest is void for remoteness, but the prior devise is for life only or other limited period— for instance, if there be a devise to an unborn child for life, remainder to the unborn child of such unborn child — the property after the termination of the prior interest goes to the person to whom property which has been, invalidly devised or bequeathed goes. There is no difference in this respect between a devise or bequest void for remoteness and a devise or bequest void for any other reason.”

If a limitation over after the expiration of a trust term be void, it matters not what the reason; whether for remoteness or for some other reason. To hold that a trust for a term of years, though in itself vested and not offending against the rule, must fail merely because a limitation over, upon its expiration, is void would be to lay down a doctrine at once dangerous and far reaching in its consequences; a doctrine that would nullify a valid trust merely because the instrument creating the trust contained a void provision for the disposition of the corpus after the expiration of the trust term. If the trust term be valid, it should be carried out regardless of the validity or invalidity of the ulterior disposition of the corpus.

Eor the reasons stated and upon the authorities cited, I am of opinion that the primary limitation should be sustained for a period of 21 years from the date of testator’s death, for the reason that the annual payments falling due within that time do not offend against the rule; that the annual payments falling due more than 21 years from the date of testator’s death do offend against the rule and are void; that during the term of 21 years from the date of testator’s death, the rents, income, etc., should be paid to those who can bring themselves within the description of the designated beneficiaries at the time of each annual payment. The ulterior provision, and so much of the primary provision as exceeds 21 years from testator’s death, being alike void for remoteness, and there being no residuary clause in the will, the lands passed upon the death of testator to1 his heirs as intestate property, burdened with the trust term of 21 years from date of testator’s death.

This opinion was originally prepared as a dissent to some of the holdings of Mr. Justice Cothran; since a majority of the Court has agreed in the views herein expressed, it becomes the opinion of the Court.

It is the judgment of the Court that the decree of the lower Court be modified in accordance with the views of this' opinion, and that the case be remanded to that Court for further proceedings not inconsistent with the conclusions herein announced.

Messrs. Justices StabeEr and Carter concur.