Childrens Hospital & Research Center Foundation v. Knowles

Filed 6/11/10 Childrens Hospital & Research Center Foundation v. Knowles CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

Defendant Jessica Knowles, on behalf of herself and her brother Jeremy Anderson, appeals from the probate courts ruling that the antilapse statute (Prob. Code,  21110) does not apply to the share of decedent Ron Morellis trust that had been allocated to his mother Tillie P. Severa, who predeceased him. Knowles, the granddaughter of Severa, claims the trial court erred in directing that Severas share be distributed to plaintiff and residuary beneficiary Childrens Hospital & Research Center Foundation (CH). We agree and reverse.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On December 28, 2001, decedent executed a declaration of trust, establishing the Ron Morelli Revocable Living Trust (the Trust).[1] Part 10 of the Trust, pertaining to beneficiaries, provides as follows:

At the death of the grantor, the trustee shall distribute the trust property as follows, subject to provisions in this Declaration of Trust that create childrens subtrusts or create custodianships under the Uniform Transfers to Minors Act:

1. James V. Morelli, Tillie P. Severa, Rory Penticost and Leah Meagher shall be given all the grantors interest in the trust property in equal shares.

2. Childrens Hospital, Oakland, California shall be given all trust property not otherwise specifically and validly disposed of by this Part.

James V. Morelli is decedents father and Tillie P. Severa was decedents mother. Rory Penticost and Leah Meagher were friends of decedent. Severa had two children, decedent and Cynthia Ironside. Ironside, who died on September 18, 1986, was the mother of Knowles and Anderson. Decedent died on June 26, 2006, leaving no issue. Severa predeceased decedent on January 29, 2005.

On July 6, 2009, CH filed a petition pursuant to Probate Code section 11702, subdivision (a),[2] seeking to claim the share designated for Severa in its capacity as the residual beneficiary. Knowles and Anderson contested the petition, contending that under the antilapse statute, Severas share had passed to them as her sole living heirs.

On August 7, 2009, the probate court filed its order finding that section 21110 does not apply because [decedent] expressed a contrary intention in his trust. This appeal followed.

DISCUSSION

I. Standard of Review

We interpret the language of the Trust de novo because this case involves no extrinsic evidence. (Estate of Russell (1968) 69 Cal.2d 200, 213.) In interpreting a trust, we seek first to discern the intention of the transferor as expressed in the instrument . . . . ( 21102, subd. (a).) A trust should be interpreted so as to effectuate, where possible, the decedents general scheme and dominant purpose . . . . (Estate of OConnell (1972) 29 Cal.App.3d 526, 531.) Once the testamentary scheme or general intention is discovered, the meaning of particular words and phrases is to be subordinated to this scheme, plan or dominant purpose . . . . (Id. at pp. 531532.) In addition, separate parts of a will should be harmonized, with all parts construed in relation to each other . . . to form a consistent whole. ( 21121.) The words of an instrument are to receive an interpretation that will give every expression some effect . . . . ( 21120.) The words are to be given their ordinary and grammatical meaning . . . . ( 21122.)

II. The Antilapse Statute

Generally, when a transferee fails to survive the transferor of an at-death transfer, the gift lapses. ( 21109, subd. (a).) But under the antilapse statute, when the deceased transferee is kindred of the transferor, the transferees lineal descendants take the gift in the transferees place . . . . ( 21110, subd. (a); id. at subd. (c).)[3]  Antilapse statutes serve an extremely important function in the law, for they give effect to strong human impulses in some cases and, in others, to what are perceived as highly probable intentions. They prevent unintended disinheritance of one or more lines of descent, by presumptively creating an alternative or substitute gift in favor of the descendants of certain of the decedents predeceased relatives. [Citation.] (Estate of Mooney (2008) 169 Cal.App.4th 654, 658659.) If, however, the instrument expresses a contrary intention or a substitute disposition, the gift to a kindred transferee lapses. ( 21110, subd. (b).) For example, a survivorship requirement constitutes a contrary intention. (Ibid.)

To avoid the application of the antilapse statute, an exception must be clearly stated: It is well settled that the California antilapse statute will not be applied where the testator has expressed, with sufficient clarity, a contrary intention. . . . While that portion of the section dealing with legatees predeceasing the testator and leaving lineal descendants says nothing about the testators intention it is universally held that antilapse statutes are not automatically applied, but the testators intention must, if possible, be ascertained. Since a testator is presumed to know the law at the time of making the will, section 92 of the Probate Code [now section 21110] must be read into the will unless a contrary intent appears.^[[4]] [Citation.] The paramount question is whether such intent is plainly indicated [citation] or is shown with a reasonable degree of certainty. (Estate of Salisbury (1978) 76 Cal.App.3d 635, 639 (Salisbury), quoting Estate of Carroll (1956) 138 Cal.App.2d 363, 365; see also Cal. Law Revision Com. com., Deerings Ann. Prob. Code (2010) foll. 21110, p. 763 [regarding substitute gifts, care must be taken not to ascribe to the transferor too readily or too broadly an intention to override the antilapse statute, the purpose of which is to lessen the risk of serious oversight by the transferor].)

CH contends decedent expressed a contrary intention to application of the antilapse statute, such that the gift to Severa lapsed and devolved to it by operation of the second numbered clause in Part 10 of the declaration of trust. It argues that its entitlement to all trust property not otherwise specifically and validly disposed of by this Part expresses decedents intention that the anti-lapse statute should not apply to his trust. We disagree.

The lone case relied on by CH in support of its position is Salisbury, supra, but that case is readily distinguishable. In Salisbury, the appellants were the decedents two grandchildren and her residual beneficiaries. They contended that the decedents will clearly expressed her intent that the antilapse statute not apply to a devise of real property given to her brother. (Salisbury, supra, 76 Cal.Ap.3d 635, 639.) The will contained only two dispositive provisions: one that devised the real property to decedents brother, and one that left the entire residue of her real and personal property,  including all failed and lapsed gifts,  to the appellants. (Id. at p. 638, italics omitted.) They argued that, since the devise of real property to the decedents brother was the only other gift that she made, the language in the clause regarding  failed and lapsed gifts  could only have referred to that devise. (Id. at p. 639.) The appellate court found the document clearly expressed the decedents intent that the antilapse statute should not apply to the gift and that the real property in question should go to appellants in the event that her brother predeceased her. (Id. at pp. 643644.)

Here, the phrase all trust property not otherwise specifically and validly disposed of does not state a reasonably clear contrary intention to the application of the antilapse statute. Rather, it provides for the disposition of the trust assets, if any, not included in the disposition or deemed to be invalidly disposed. In particular, unlike the clause at issue in Salisbury, it does not reference lapsed gifts. Nor can it properly be read to pertain only to a specific beneficiarys disposition. Its reference to gifts not specifically and validly disposed of can readily be harmonized with the antilapse statute. Simply put, a gift to a predeceased beneficiary is specifically and validly disposed of by the operation of section 21110. Thus, the trust document does not plainly indicate that decedent intended to avoid the operation of this statute.

As Knowles notes, the Trust can best be read as having granted CH a residuary interest in the Trusts proceeds.[5] Had either of decedents two friends predeceased him, their shares would not have been subject to the antilapse statute, because they are not kindred of decedent. Therefore, the clause pertaining to CH served an important purpose within the Trust as it provided for the alternative disposition of their shares in the event they predeceased decedent. We thus disagree with CHs contention that the clause in question is not a residual clause. To read it as operating to defeat the antilapse statute as it pertains to Severas share is, in our view, contradictory to the purpose and spirit of section 21110. As appellate courts have stated, the simple existence of a residual clause adequate to avoid intestacy is not sufficient to avoid the operation of the [antilapse] statute. (Estate of Casey (1982) 128 Cal.App.3d 867, 873.) The failure of the Trust to mention Knowles and her brother does not alter this result, as it is established that exclusion of unmentioned heirs or relatives from [testamentary] dispositions . . . does not sufficiently express or manifest an intent to arrest the operation of the antilapse law following a [beneficiarys] death. (Estate of Tolman (2010) 181 Cal.App.4th 1433, 1438.) In sum, Since the statute provides a pattern of distribution in the case of a lapsed gift which is to be preferred over use of a residual clause or intestacy, some formality, in the nature of a clearly expressed intent, is necessary to avoid its operation. (Estate of Casey, supra, at p.874.) The provision of the trust pertaining to CH does not contain any such clearly expressed intent.[6]

DISPOSITION

The order is reversed.

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[1] By our own motion, we have augmented the record on appeal to include this document. (Cal. Rules of Court, rule 8.155(a)(1)(A).) While Knowles attached a copy of the trust document as an exhibit to her opening brief, this is not the proper vehicle for introducing documents into the record.

[2] Probate Code section 11702, subdivision (a), provides, in part: Any interested person may appear and, at or before the time of the hearing, file a written statement of the persons interest in the estate. All further statutory references are to the Probate Code.

[3] Section 21110 provides:

(a) Subject to subdivision (b), if a transferee is dead when the instrument is executed, or fails or is treated as failing to survive the transferor or until a future time required by the instrument, the issue of the deceased transferee take in the transferees place in the manner provided in Section 240. A transferee under a class gift shall be a transferee for the purpose of this subdivision unless the transferees death occurred before the execution of the instrument and that fact was known to the transferor when the instrument was executed.

(b) The issue of a deceased transferee do not take in the transferees place if the instrument expresses a contrary intention or a substitute disposition. A requirement that the initial transferee survive the transferor or survive for a specified period of time after the death of the transferor constitutes a contrary intention. A requirement that the initial transferee survive until a future time that is related to the probate of the transferors will or administration of the estate of the transferor constitutes a contrary intention.

(c) As used in this section, transferee means a person who is kindred of the transferor or kindred of a surviving, deceased, or former spouse of the transferor.

[4] The same rules of construction apply to a trust as to a will. ( 21101.)

[5] A residuary gift is a transfer of property that remains after all specific and general gifts have been satisfied. ( 21117, subd. (f).)

[6] We note that treatises dealing with drafting wills and trusts command that lawyers be explicit on the desire of the transferor to avoid the antilapse consequences of the law. (See, e.g., Drafting California Revocable Trusts (Cont.Ed.Bar 4th ed. 2003) 8.20, p. 425.)