Reagh v. Kelley

v. Bristol Development Co., 62 Cal.2d. 861 , 865 [ 44 Cal.Rptr. 767 , 402 P.2d 839 ].) We are, therefore, not necessarily bound by the interpretation made by the trial court. {Estate of Platt, supra; Parsons v. Bristol Development Co., supra, atpp. 865-866.)

Essentials of an Express Trust

In order to constitute a valid trust there must be a competent trustor, an intention on the part of the trustor to create a trust, a trustee, an estate conveyed to the trustee, an acceptance of the trust by the trustee, a beneficiary, a legal purpose, and legal terms. (See Civ. Code, §§ 2216, 2218, 2219, 2221 and 2222s^[1] see Estate of Johnston, 47 Cal.2d 265 , 270 [ 303 P.2d 1 ]; In re Walkerly, 108 Cal. 627 , 650 [ 41 P. 772 ]; see Hausfelder v. Security-First Nat. Bank, 77 Cal.App.2d 478 , 484 [ 176 P.2d 84 ]; Williams v. Miranda, 159 Cal.App.2d 143 , 152 [ 323 P.2d 794 ].) “The nature, extent, and object of a trust are expressed in the declaration of trust.” (§ 2253.) Such declaration must be reasonably certain in its terms. (Burling v. Newlands, 112 Cal. 476 , 484 [ 44 P. 810 ].) Accordingly, as to the trustor and the beneficiary, a voluntary trust is created “by any words of the trustor, indicating with reasonable certainty: (1) An intention on the part of the trustor to create a trust; and (2) The subject, purpose and beneficiary of the trust” (see Lefrooth v. Prentice, 202 Cal. 215 , 226 [ 215 P. 947 ]); and as to the trustee, such a trust is created by any words or acts of his indicating with reasonable certainty: 1. His acceptance of the trust, or his acknowledgment, made upon a sufficient consideration, of its existence; and 2. The subject, purpose and beneficiary of the trust. (See Title Ins. & Trust Co. v. Ingersoll, 158 Cal. 474 , 482 [ 111 P. 360 ].)

In determining whether the language employed in the instrument is.too vague and uncertain to create a valid trust, the statutory declarations of sections 2221 and 2222 are to be applied in conjunction with the principle that “The declaration of trust. . . must be reasonably certain in its material terms; and this requisite of certainty includes the subject-matter or property embraced within the trust, the beneficiaries or persons in whose behalf it is created, the nature and quantity of interests which they are to have, and the manner in which the trust is to be performed.” (Pomeroy, Equity Jurisprudence (4th ed.) § 1009; Wittfield v. Forster, 124 Cal. 418 , 421 [ 57 P. 219 ]; Lefrooth v. Prentice, supra, 202 Cal. 215 , 227-228.)

In addition to the foregoing requirements, a voluntary express trust with respect to real property can only be created or declared in California by virtue of the provisions of section 852^[2] and Code, of Civil Procedure

section 1971^[3] by a written instrament subscribed by the trustor or trustee. (See Doran v. Doran, 99 Cal. 311 , 314 [ 33 P. 929 ]; Smith v. Mason, 122 Cal. 426 , 427 [ 55 P. 143 ]; 48 Cal.Jur.2d, Trusts, § 31.) It is not necessary, however, that all of the conditions and terms of a trust in real property be expressed in a single paper. (Root v. Kuhn, 51 Cal.App. 600 , 604 [ 197 P. 150 ]; Weiner v. Mullaney, 59 Cal.App.2d 620 , 631 [ 140 P.2d 704 ]; Wood v. American Nat. Bank, 24 Cal.App.2d 313 , 318 [ 74 P.2d 1051 ]; Coyle v. Coyle, 212 Cal. 715 , 717-718 [ 300 P. 5 ]; Garnsey v. Gothard, 90 Cal. 603 , 607-608 [ 27 P. 516 ]; Hillman v. Stults, 263 Cal.App.2d 848 , 868 [ 70 Cal.Rptr. 295 ]; Rest. 2d Trusts, § 42, com. f, p. 109; 4 Witkin, Summary of Cal. Law (1960) Trusts, § 7, p. 2891.)

In the instant case no contention is made that decedent was not a competent trustor, or that she did not intend to create a trust; nor is any claim made that the purported trust fails for a lack of a trustee, or the conveyance of an estate to the trustee or because the trustee did not accept the trust. The attack upon the purported trust is predicated upon alleged uncertainties in the Deed and Declaration; upon the assertion that these instruments violate the rule against perpetuities; that the Deed is void because it restrains alienation; that the Declaration violates the statute of frauds; that the Deed attempts to make an oral trust of real propery; and that the Declaration is totally inconsistent with the Deed.

The Statute of Frauds

We first proceed to consider the claim with respect to the statute of frauds. We first observe that ho contention is made that the Deed does not satisfy the statute of frauds. The attack upon the Declaration is apparently based on the contention that it violates the statute because it is not signed by decedent and because it is a separate instrument from the Deed by which decedent purported to create the trust. In essence plaintiff argues that the Declaration cannot be used to cure the alleged defects in the Deed.

In considering these contentions we first observe that it is not necessary that the declaration of trust be signed by the trustor, but it may be signed only by the trustee. (§ 852.) With respect to trusts in real property, the essence of the requirement of the statute of frauds is that the declaration of

Adverting to the Deed, we conclude that it does not, in and of itself, constitute a valid trust, but not entirely for the reason advanced by plaintiff whose claim of uncertainty rests essentially upon the alleged failure to designate beneficiaries. It is, of course, essential that in order to create a valid trust there must be a beneficiary definitely ascertained at the time of the creation of the trust or definitely ascertainable within the period of the rule against perpetuities. (Rest.2d Trusts, § 112, p. 43; Fay v. Howe, 136 Cal. 599 , 601 [ 69 P. 423 ]; Estate of Reith, 144 Cal. 314 , 318 [ 77 P. 942 ].) Under this rule the members of a definite class of persons can be the beneficiaries of a trust. (Rest.2d Trusts, §120, p. 253.) However, the identity of all the individuals comprising the membership of the class must be ascertainable in order to satisfy the requirement of definiteness. (Rest. 2d Trusts, supra.)

The Deed recites that Kelley is trustee for Chaja Levina and other “cognated relations.” Levina is clearly an ascertainable person. With respect to the designation “cognated relations” we note that the adjective “cognate” is defined by Webster as “related by blood”: “kindred by birth” and “related on the mother’s side” (Webster’s Third New Intemat. Diet.), and that Black defines “cognates” as “Relations by the mother’s side, or by females.” (Black’s Law Diet. (4th ed.).) The term “cognated relations” has reference, therefore, to certain relatives of decedent.

When a trust is created for the benefit of “relatives” a trust does not fail in this state on the ground that the class is indefinite.^[4] The words “relatives” or “relations” when used in a devise or bequest are construed to mean, unless a contrary intention appears, those next of kin who in cases of intestacy would take under the statutes of distribution. (Estate of Trickett, 197 Cal. 20 , 25 [ 239 P. 406 ]; see Estate of Sowash, 62 Cal.App. 512 , 516 [ 217 P. 123 ].) In the present case, insofar as the language of the Deed is concerned, the designation “cognated relations” refers to a definite group whose members are ascertainable since the term can be construed to mean those persons living at the time of the subject conveyance who were related by blood to the decedent and who, in the case of intestacy, would have taken under the laws of intestacy had they survived her. (See Estate of Sowash, supra.)

The Deed, however, does not suffice as a declaration of trust because the nature and quantity of the interests the beneficiaries are to have, the dura

868 [deed and bill of sale to transferee and letter from transferee stating property vested in him for benefit of transferee’s brother]; Garnsey v. Gothard, supra, 90 Cal. 603 , 607-608 [deed absolute and verified answer in an action by grantee that property was conveyed to him in trust for certain purposes]; Roberts v. Taylor, 300 F. 257 , 258-259 [absolute conveyance of realty with written agreement by grantee to manage lands and pay profits to third person].)

In view of the foregoing, we conclude that a valid trust was created by the Deed (the instrument transferring the subject real property from decedent to Kelley) and the Declaration (by which Kelley declared that she held the property in trust for the beneficiaries therein designated and for the purposes therein stated).

Inconsistency

Plaintiff contends that the Declaration is totally inconsistent with the Deed in “nearly every material respect.” In considering this contention we observe that we are not confronted with two declarations of trust which we must reconcile. Here we have only one instrument that serves as a declaration of trust, i.e., the Declaration. The Deed merely serves as the instrument conveying the trust property, although, while insufficient in itself to serve as a declaration of trust because of uncertainty, it also serves as an indication of an intention to create a trust on the part of the decedent, it designates the trustee, and it designates beneficiaries. In any event, we perceive no material inconsistencies between the two instruments.

Plaintiff, although making the broad assertion of inconsistency, essentially specifies only three instances of claimed inconsistency. He first asserts that the Declaration adds to the res other real property than that described in the Deed. In considering this contention we observe, initially, that the only real property at issue is the same property particularly described in both instruments by metes and bounds. Moreover, the reference in the Declaration to other real property appears to refer to property which ; may become a part of the trust res upon the happening of certain contingencies which result in a sale or conversion of the subject real property, or which might be acquired from the income and profits of the trust. As already pointed out, since the terms and conditions of the trust are expressly stated in the Declaration which is not subject to any oral instructions,^[5] the reference in the Deed to oral instructions is merely an expression of ineffective language which in no way limits the trust estate.

The assertion of inconsistency on the basis that the Deed reserved no rights to decedent and that the Declaration does contain reservations in favor of decedent is without merit for the reasons already stated in our analysis of the ineffectiveness of the Deed as a declaration of trust. These same reasons also render unmeritorious the assertion that Muller’s right of possession in the Deed is contradicted by the provisions in the Declaration giving Muller and decedent a concurrent right of possession.

Rule Against Perpetuities

Plaintiff argues that both the Deed and the Declaration violate the rule against perpetuities. He urges that the Deed is violative of the rule because the class “cognated relations,” without any specification of which members thereof are to benefit, allows for an interest to vest at a time future outside the rule’s statute of limitations. Plaintiff concludes that this is so since decedent will have “cognated relations” forevermore. With respect to the Declaration, the objection is that the beneficiaries selected to govern the time of vesting are so numerous or so situated that evidence of their death “is likely to be unreasonably difficult to obtain.” Before considering the application of the subject rule, we again observe that the trust instrument is the Declaration, not the Deed. We are, therefore, primarily concerned with the provisions of the Declaration.

The California rule against perpetuities is found in Civil Code section 715.2 which provides, in pertinent part, that “No interest in real . . . property shall be good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest and any period. ...” The rule relates only to vesting rather than to the termination of an interest (Caffroy v. Fremlin, 198 Cal.App.2d 176 , 181 [ 17 Cal.Rptr. 668 ]; Fisher v. Parsons, 213 Cal.App.2d 829 , 841 [ 29 Cal.Rptr. 210 ]; Estate of Micheletti, 24 Cal.2d 904 , 908 [ 151 P.2d 833 ]); and it applies both to the vesting of equitable as well as legal estates in real and personal property. (Caffroy v. Fremlin, supra; Estate of Micheletti, supra) Moreover, the rule applies at the instrument’s inception, that is, the validity of the instrument with respect to the rule is judged by looking at the possibilities at the time the instrument is executed. (Estate of Campbell, 28 Cal.App.2d 102 , 104 [ 82 P.2d 22 ]; Haggerty v. City of Oakland, 161 Cal.App.2d 407 , 418 [ 326 P.2d 957 ].) Accordingly, all interests must vest within the time prescribed by the rule. (Estate of Campbell, supra; Haggerty v. City of Oakland, supra.)

In 1963 the Legislature enacted section 715.8^[6] which defined when an

interest became “vested” within the meaning of the rule against perpetuities. It has been suggested that this enactment is a codification of existing decisional law. (See Prime v. Hyne, 260 Cal.App.2d 397 , 403 [ 67 Cal.Rptr. 170 ].) In any event it is clear that with respect to instruments executed prior to the enactment of section 715.8, as is the case here, the decisions of this state, as well as those enunciative of the common law,^[7] refer to the time of the commencement of an estate or interest in property. (Estate of McCray, 204 Cal. 399 , 406 [ 268 P. 647 ]; Dallapi v. Campbell, 45 Cal.App. 2d 541 , 544 [ 114 P.2d 646 ]; 4A Thompson on Real Property (1961) § 2018, p. 629; 2 Tiffany on Real Property (3d ed.) § 391, p. 151.) Accordingly, the rule is stated thusly: “ ‘Any limitation or provision, the purpose or possible effect of which is to cause an estate to commence in the future, is invalid if, as a result thereof, an estate may commence more than twenty-one years after a life or lives in being.’ ” (Italics added; Estate of McCray, supra, 204 Cal. 399 , 406; Dallapi v. Campbell, supra; Tiffany, supra.)

In view of the foregoing it is clear that the rule against perpetuities applies only to the vesting of future estates and not to vested estates. (Caffroy v. Fremlin, supra, 198 Cal.App.2d 176 , 181; Victory Oil Co. v. Hancock Oil Co., 125 Cal.App.2d 222 , 230 [ 270 P.2d 604 ]; Fisher v. Parsons, supra, 213 Cal.App.2d 829 , 838; Haggerty v. City of Oakland, supra, 161 Cal.App.2d 407 , 417; Dallapi v. Campbell, supra, 45 Cal.App.2d 541 , 546; see 4A Thompson on Real Property, supra, at pp. 629-630.)

Adverting to voluntary trusts, we observe that a trust, valid at its creation, vests the legal title to real property and the whole estate therein in the trustee, subject only to the execution of the trust. (§ 863; Crystal Pier Co. v. Schneider, 40 Cal.App. 379 , 381 [ 180 P. 948 ].) Insofar as the beneficiary is concerned, the trust vests in him an equitable estate or beneficial interest independent of the legal estate. (Title Ins. & Trust Co. v. Duffill, 191 Cal. 629 , 647-649 [ 218 P. 14 ]; Lowenthal v. Kunz, 104 Cal.App.2d 181 , 183-184 [ 231 P.2d 62 ].)

Directing our attention to the Declaration, in the light of these principles, we note that it does not provide for any intervening life estates or other prior interests preventing either the legal or the beneficial interests from vesting within the time prescribed by the rule, but the respective ínter

ests became immediately effective upon the instrument’s inception. In sum, both the legal and equitable estates are vested estates.

Here it is clear that both the trustee Kelley and the other specifically named beneficiaries are ascertainable persons to whom their respective interests vested immediately upon the conveyance to the trustee by way of the Deed. As already pointed out, the “cognated relatives” of decedent “to the third degree” are persons who are members of a class who are ascertainable and who also took immediately subject to the defeasance provided in the Declaration.

We are not here concerned with persons who might be “cognated relations” at a time beyond the time allowed by the rule, but with such persons who are living and ascertainable at the time of the conveyance under the subject deed. (See Tiffany on Real Property, supra, § 394, at pp. 154-155; Thompson on Real Property, supra, § 2020, pp. 645, 646.)^[8]

Restraint of Alienation

Plaintiff asserts that the deed instrument is violative of the rule against restraint of alienation. Such rule is codified in section 711, which provides that conditions restraining alienation, when repugnant to the interest created, are void. Plaintiff’s assertion is based on the contention that Muller’s power of control could be exercised so as to prohibit alienation. We observe, initially, that there is no factual or legal merit to the contention since the subject instrument does not contain a condition or covenant restraining alienation. The suggestion that Muller, because of his authority in connection with the carrying out of the trust, might attempt to restrain alienation at some future time, is not only speculative but posits a situation which, if it did occur, would not be violative of the subject rule. “The suspension of the power of alienation which is prohibited by the statute is such as arises from the terms of the instrument by which the estate is created, and not such as exists outside of that instrument . . . .” (Estate of Pforr, 144 Cal. 121 , 127 [ 77 P. 825 ]; see Estate of Campbell, 149 Cal. 712 , 717-718 [ 87 P. 573 ].) Here the instrument places no limitation upon either Muller or the trustee to alienate the property. As observed in Campbell, “When property is vested, without valid limitation to the contrary, the power of alienation goes with it as a concomitant of ownership. [Citations.]” (At p. 717.)

Even assuming arguendo that it could be said that the conveyance