Opinion
No. 81-529
Decided February 24, 1982.
Probate — Wills — Special power of appointment — Attempted exercise by donee — Court to give effect to exercise, when — Will construction — Intent of testator to be carried out.
1. Where a donee of a special testamentary power of appointment expresses his intent to exercise his power by will, and designates various charitable institutions as beneficiaries, the Probate Court may exercise its inherent equitable powers to give effect to the attempted exercise of such power.
2. Where a term in a will is susceptible to various meanings, the Probate Court may consider the circumstances surrounding the drafting of the instrument, in order to arrive at a construction consistent with the overall intent of the testator so as to uphold all parts of the will.
APPEAL from the Court of Appeals for Trumbull County.
On March 1, 1979, Margaret Sampson Wills, Elizabeth M. Sampson, Judith R. Sampson and Virginia Ann Sampson filed a complaint for a declaratory judgment in the Probate Court seeking a declaration of the rights of the parties under the will of William J. Sampson, Jr. (hereinafter "Sampson"). Plaintiffs-appellees, the lineal descendants of the testator, claimed that an attempted exercise of a power of appointment over certain trust property was invalid, thereby entitling them, as takers in default of appointment, to distribution of the trust assets. Named as defendants were Union Savings Trust, the trustee of the property; The Choate School, Thiel College, Junior Achievement of Youngstown, Ohio, Inc., and Junior Achievement of Warren, Ohio, Inc., charities designated as residuary beneficiaries under the Sampson will, in whose favor testator sought to exercise his power of appointment. The Ohio Attorney General, William J. Brown, as protector and enforcer of charitable trusts and solicitations made for charitable purposes in the state of Ohio, was later added as a party defendant upon plaintiffs' motion.
The power of appointment, the attempted exercise of which forms the basis of this action, was created by Sampson's mother, Florence Wick Kirkpatrick, in Item V of her last will and testament. In that instrument, admitted to probate on May 31, 1957, Mrs. Kirkpatrick established a trust estate, its income payable to Sampson, and upon his death, to Sampson's wife. By the following language, the Kirkpatrick will granted Sampson a special testamentory power of appointment over the trust assets:
"[Item V(a)] 2. Upon the death of my said son but subject to the provisions herein made for his wife, Elizabeth C. Sampson, any balance remaining in the trust estate shall be paid over and distributed, in trust or otherwise, to such person, persons or institutions ( excluding, however, his estate and the creditors of his estate) as my said son shall designate. Such power of appointment in my said son may be exercised only by his duly executed Last Will and Testament, by a specific reference to this provision in my will. In the event my son fails to exercise said power of appointment, the corpus of the trust estate, or any part thereof not so appointed by him, shall vest in * * * [his lineal descendants]." (Emphasis added.)
William J. Sampson, Jr. died June 5, 1969, predeceasing his wife by eight years. In Item IV of his last will and testament, Sampson attempted to exercise his power of appointment over the Kirkpatrick trust assets:
"Under Item V(A) 2 of the Will of Florence Wick Kirkpatrick, I have been granted a power of appointment over property in a trust established therein.
"I hereby exercise such power by appointing said property in trust to be made a part of my estate and disposed of under the terms of this my Last Will and Testament." (Emphasis added.)
The next item of Sampson's will makes specific bequests to his lineal descendants from his residuary estate. "All the remainder left in my estate after the payment of these specific bequests to my daughters and my three grandchildren named in the preceding paragraph, I give, devise and bequeath to" the defendant charities. The will also contained a marital deduction clause, directing that a trust for Mrs. Sampson be established in an amount equivalent to one-half the adjusted gross estate. A representative of defendant Union Savings testified that the assets of the Kirkpatrick trust were not considered part of the adjusted gross estate when the amount of the marital deduction trust was calculated, nor for purposes of the estate tax. This is consistent with the view that the trust assets, subject to a special power of appointment, are not taxed to the estate of the person having the power of appointment.
The relevant portions of Item V of the Sampson will provide:
"[T]hen the balance left constitutes all the residue and remainder which shall be disposed of as follows:
"* * *
"I give, devise and bequeath to each of my grandchildren, Judith R. Sampson, Elizabeth M. Sampson and Virginia A. Sampson, Twenty-five Thousand Dollars ($25,000.00) each.
"All the remainder left in my estate after the payment of these specific requests to my daughters and my three grandchildren named in the preceding paragraph, I give, devise and bequeath to the following:
"1. One-half of the remainder to The Choate School, Wallingford, Connecticut.
"2. One-quarter of the remainder to Thiel College, Greenville, Pennsylvania.
"3. One Eighth of the remainder to Junior Achievement of Youngstown, Ohio, Inc.
"4. One-eighth to the remainder of Junior Achievement of Warren, Ohio, Inc."
Following Mrs. Sampson's death on November 18, 1977, more than three years after Mr. Sampson's estate was closed, the Kirkpatrick trust terminated, and the assets became distributable. Plaintiffs then filed the instant action, contending that Sampson's attempted exercise of his power of appointment was ineffective, entitling them to the trust assets, as takers in default under the Kirkpatrick will. The Probate Court held the attempted exercise ineffective, because Sampson had made the trust assets part of his estate, contrary to the terms of the Kirkpatrick will. The Probate Court ordered distribution of the assets to plaintiffs. Upon appeal, the Court of Appeals affirmed.
The cause is now before this court upon the allowance of a motion to certify the record.
Mr. Frederick H. Loomis, for appellees.
Messrs. Baker Hostetler and Mr. Oakley V. Andrews, for appellant The Choate School.
Mr. William J. Brown, attorney general, and Mr. Perry R. Silverman, for appellant Attorney General.
Messrs. Squire, Sanders Dempsey and Mr. Michael P. McCullough, for appellant Thiel College.
Messrs. Mitchell, Mitchell Reed and Mr. George B. Woodman, for appellant Junior Achievement of Youngstown.
Messrs. Hoppe, Frey, Hewitt Milligan and Mr. Robert S. McGeough, for appellant Junior Achievement of Warren.
In any action seeking construction of a will the court's sole purpose is to ascertain and carry out the intention of the testator. Such intention must be ascertained from the words contained in the will. Carr v. Stradley (1977), 52 Ohio St.2d 220, paragraph one of the syllabus; Townsend's Exrs. v. Townsend (1874), 25 Ohio St. 477, paragraphs one and two of the syllabus. In this case, there is no question Sampson intended to exercise the power of appointment in favor of defendant-appellant charities. The issue is whether he effectively carried out that intent by the language he employed.
Our duty to ascertain and carry out the intention of the testator requires us to consider the language used by the two testators in the two instruments under consideration. Mrs. Kirkpatrick, who created the testamentary trust, the assets of which are now in dispute, intended to create a special testamentary power of appointment in her son over the trust assets. A "special power" is one limited by excluding certain persons from taking under the power of disposition given the appointee. See 43A Ohio Jurisprudence 2d 408-409, Powers, Section 5, and cases cited therein. Here, Mrs. Kirkpatrick limited her son's power of appointment by excluding as beneficiaries of the trust both his estate and creditors of his estate. By creating a special power of appointment Mrs. Kirkpatrick intended to avoid inclusion of her trust property in her son's estate, thereby protecting the assets from depletion by creditors and avoiding imposition of an estate tax on the Kirkpatrick trust assets at the time of Sampson's death.
When Sampson attempted to exercise his limited power of appointment, he specified the source of the power and complied with the command that the power be exercised through his last will and testament. If the power is deemed not effectively exercised, it is due to his choice of language commanding the property "be made a part of my estate," in apparent contradiction of the donor's express limitation on permissible beneficiaries. However, neither creditors nor the taxing authorities reached the assets.
Precedent with considerable vintage establishes that a power must be strictly pursued, and must be executed according to the manifest intent of the testator. Taylor v. Galloway (1823), 1 Ohio 232, 234. The lower courts chose to take the narrowest view possible of the attempted exercise, and concluded that Sampson violated an express limitation on the power of appointment.
Appellant charities contend that the term "be made a part of my estate" referred not to Sampson's probate estate, but rather, the term was used to permit use of the trust funds to satisfy the specific bequests made by Sampson to his lineal descendants, should his probate estate be insufficient for such purposes. The remainder of the trust funds would then be available for disposition "under the terms" of the residuary clause to the named charities.
Under Ohio law, gifts for charitable purposes are favored, and are construed to give them effect, if possible. Gearhart v. Richardson (1924), 109 Ohio St. 418. It is apparent that the donee of the power of appointment intended the defendant charities to receive the assets of the Kirkpatrick trust. But for the ill-advised use of the term "be made a part of my estate" in Item IV of his will, such intent would clearly be effectuated.
Where a testator, by his will, expressly exercises a power of appointment, it is presumed that he intended to exercise it effectively and a court must construe the language used by the testator in exercising such power to give effect to the exercise if such a construction is possible. Holmes v. Hrobon (1953), 158 Ohio St. 508, 518; McMerriman v. Schiel (1923), 108 Ohio St. 334; Banning v. Banning (1861), 12 Ohio St. 437; Pruden v. Pruden (1862), 14 Ohio St. 251; 56 Ohio Jurisprudence 2d Wills, Sections 510, 523, 524, 535 and 583. See 4 Page on Wills, Sections 30.10 and 32.2.
The reasonable meaning that should be given to the words "my estate" as used in Item IV, consistent with Sampson's overall dispositive plan, is the total property over which the decedent had a power of testamentary disposition, both probate and non-probate. The words "and disposed of under the terms of this my Last Will and Testament" in Item IV incorporate by reference the dispositive "terms" of Item V of Sampson's will.
The relevant portions of Item V of the Sampson will provide:
"[T]hen the balance left constitutes all the residue and remainder which shall be disposed of as follows:
"* * *
"I give, devise and bequeath to each of my grandchildren, Judith R. Sampson, Elizabeth M. Sampson and Virginia A. Sampson, Twenty-five Thousand Dollars ($25,000.00) each.
"All the remainder left in my estate after the payment of these specific requests to my daughters and my three grandchildren named in the preceding paragraph, I give, devise and bequeath to the following:
"1. One-half of the remainder to The Choate School, Wallingford, Connecticut.
"2. One-quarter of the remainder to Thiel College, Greenville, Pennsylvania.
"3. One Eighth of the remainder to Junior Achievement of Youngstown, Ohio, Inc.
"4. One-eighth to the remainder of Junior Achievement of Warren, Ohio, Inc."
We find that the term "estate", as used in Sampson's will, is susceptible to various meanings. Although the words used in a will are to be taken in their primary or ordinary sense, there are situations when it is manifest from the context of the entire will or the subject matter that the testator intended to use them in a different sense. Holmes v. Hrobon, supra at 518. In such a case, it is incumbent on the courts to arrive at a construction consistent with the overall intent of the testator, so as to uphold all parts of the will. Such a construction requires the courts to consider the circumstances surrounding the drafting of the will.
Sampson referred variously to "the principal of my estate," "my residuary estate," and "the adjusted gross estate" in Item I of his will, while in Item III, he referred not only to "my estate" and "my adjusted gross estate," but also to "my estate for purposes of Federal Estate Tax." All these uses of "estate" may have different meanings in their various contexts.
As Judge Ranney observed many years ago:
"But language, at best and when used with propriety, is a very imperfect vehicle of thought, and we seldom appreciate correctly its nicer shades of meaning, without an accurate knowledge of the persons and things to which it is applied. It is in view of this fact, that the law not only allows but requires the instrument to be read in the light of the surrounding circumstances, and permits the introduction of such extrinsic evidence as will enable the court to place itself in his situation, to see things as he saw them, and to apply his language as he understood and intended it." Pruden v. Pruden, supra, at 256-257.
Evidence introduced at the trial indicates the testator's fear that his estate was insufficient to satisfy the specific bequest made to his children. For this reason, the language requiring the trust "be made a part of my estate" was included. Given this circumstance, the reasonable meaning of the phrase is that the trust assets would become part of the estate only in the event of a shortfall in the property available for the specific bequests. No such shortfall occurred. Therefore, the trust property need not have passed into Sampson's probate estate, but was used entirely as a charitable bequest, under his residuary clause. This is the reasonable meaning we attach to the phrase, thereby upholding all parts of the will.
The Probate Court, as a court of equity, had the power to supply any defect in the execution of a power granted a donee. Barr v. Hatch (1829), 3 Ohio 527, 529. "* * * But if by reason of mistake, accident or ignorance the power was defectively executed, it is within the power of the court in this case to make it effectual. `Whenever a man, having power over an estate, whether of ownership or not, in discharge of his moral or natural obligations, shows an intention to execute such power, the court will operate upon the conscience of the heir or other person benefited by the default to make him perfect this intention.' Chapman v. Gibson, 3 Brown Ch., 229; Barr v. Hatch, 3 Ohio 527; Bispham, Eq., Secs. 193, 195." Thomas v. Trustees of Ohio State University (1904), 70 Ohio St. 92, 110. See 43A Ohio Jurisprudence 2d, 438-439 Powers, Section 45.
Given the expressed intent of the donee to exercise his power of appointment, and his designation of various charitable institutions as recipients of this bounty, this court finds and determines that the Probate Court should have exercised its inherent equitable powers to give effect to the attempted exercise at issue.
Accordingly, the judgment of the Court of Appeals is reversed. The power of appointment was clearly expressed and exercised by Sampson in Item IV of his will to the named beneficiaries in Item V thereof, and this cause is remanded to the Probate Court for disposition consistent with this judgment.
Judgment reversed.
SWEENEY, LOCHER, HOLMES and KRUPANSKY, JJ., concur.
CELEBREZZE, C.J., and W. BROWN, J., dissent.