1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-17-1995

Schreiber v Kellogg

Precedential or Non-Precedential:

Docket 94-1551

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Recommended Citation

"Schreiber v Kellogg" (1995). 1995 Decisions. Paper 78.

http://digitalcommons.law.villanova.edu/thirdcircuit_1995/78
 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 ___________ 

 No. 94-1551 

 ___________ 

 PALMER K. SCHREIBER, 

 Appellant 

v. 

 CHRISTOPHER G. KELLOGG 

 _______________________________________________ 

 On Appeal from the United States District Court 

 for the Eastern District of Pennsylvania 

 (D.C. Civil Action No. 90-cv-05806) 

 ___________________ 

 Argued October 31, 1994 

 Before: SCIRICA, LEWIS and RONEY*, Circuit Judges

 (Filed March 17, l995) 

 GREGORY G. ALEXANDER, ESQUIRE (ARGUED) 

 Alexander & Pelli 

 One Penn Center, Suite 1110 

 Philadelphia, Pennsylvania 19103 

 STANLEY R. WOLFE, ESQUIRE 

 STUART J. GUBER, ESQUIRE 

 Berger & Montague 

 1622 Locust Street 

 Philadelphia, Pennsylvania 19103 

 Attorneys for Appellant 
 

*The Honorable Paul H. Roney, United States Circuit Judge for the 

Eleventh Judicial Circuit, sitting by designation. 
 GAVIN P. LENTZ, ESQUIRE (ARGUED) 

 Bochetto & Lentz 

 1500 Market Street 

 East Tower, Centre Square, 14th Floor 

 Philadelphia, Pennsylvania 19102 

 Attorney for Appellee, 

 Christopher G. Kellogg 

 JOHN E. CARUSO, ESQUIRE (ARGUED) 

 Montgomery, McCracken, Walker & Rhoads 

 Three Parkway, 20th Floor 

 Philadelphia, Pennsylvania 19102 

 Attorney for Appellee, 

 Trustees of the Stock Trust 

 Under Item Third of the Will 

 of Rodman Wanamaker, Deceased 

 __________________ 

 OPINION OF THE COURT 

 __________________ 

SCIRICA, Circuit Judge. 

 This diversity case requires us to interpret the scope 

of a purported spendthrift provision in a trust created in the 

early part of the century. In so doing, we face an issue of 

first impression under the laws of Pennsylvania and most other 

states: the applicability of section 157(c) of the Restatement 

(Second) of Trusts, which allows creditors to reach a spendthrift 

trust interest in limited circumstances. The district court 

found the trust contained a spendthrift provision protecting the 

interest of the beneficiary and that Pennsylvania courts would 

not apply the Restatement exception under the circumstances of 
this case. Schreiber v. Kellogg, 849 F. Supp. 382, 389, 394 

(E.D. Pa. 1994). We will affirm in part and reverse in part. 

I. 

 In 1928, Rodman Wanamaker died, leaving a will and 

codicils1 that established trusts for his children and their 

descendants. At issue in this case is a $120 million trust 

created in Paragraph Third of his will. 

 For half a century, the trust consisted of the stock in 

the John Wanamaker department store. In March 1978, Carter, 

Hawley, Hale, Inc. offered the trust $40 million for the 

Wanamaker stock. Christopher G. Kellogg, one of Wanamaker's 

great-grandchildren and a contingent income beneficiary of the 

trust,2 engaged attorney Palmer K. Schreiber to increase the 

 

1. The Wanamaker will and its codicils have provided much 

material for judicial opinion, including at least three decisions 

by the Pennsylvania Supreme Court and a number by the Montgomery 

County Orphans' Court. See, e.g., In re Estate of Wanamaker, 159 

A.2d 201 (Pa. 1960); In re Wanamaker's Estate, 6 A.2d 852 (Pa. 

1939); In re Wanamaker's Estate, 167 A. 592 (Pa. 1933); In re 

Wanamaker Estate, 105 Montgomery County L. Rep. 372 (Montgomery 

County Orphans' Ct. 1979); In re Wanamaker Estate, No. 38,456 

(Montgomery County Orphans' Ct. Feb. 27, 1975). 

2. Although the will did not expressly provide that Wanamaker's 

great-grandchildren would succeed to their parents' interests in 

the trust, Judge Alfred L. Taxis, Jr., of the Montgomery County 

Orphans' Court ruled two decades ago that the failure to include 

such specific language was an oversight of the drafter. In re 

Wanamaker Estate, No. 38,456 (Montgomery County Orphans' Ct. Feb. 

27, 1975). Thus, Kellogg became a contingent beneficiary as a 

result of this 1975 decision; he became an income beneficiary 

upon the death of his mother in August 1989. Cf. Schreiber v. 

Kellogg, 849 F. Supp. 382, 384 nn.1-2 (E.D. Pa. 1994) (decision 

on execution of judgment). He receives $31,500 per month in 

income from the trust. Schreiber v. Kellogg, 839 F. Supp. 1157, 

1160 (E.D. Pa. 1993) (decision on motion to stay judgment). 
purchase price of the stock. Partially as a result of those 

efforts, the stock was sold for $60 million, about $20 million 

more than the original offer. For his services, the Montgomery 

County Orphans' Court awarded Schreiber $117,000 in counsel fees 

and interest from the corpus of the trust, and he later received 

a judgment of nearly $88,000, plus counsel fees and interest, 

against another attorney involved in the stock sale for breach of 

a fee-sharing agreement. 

 In October 1978, after the stock was sold, Schreiber 

filed a surcharge action on behalf of Kellogg against the 

trustees of the Wanamaker trust, alleging negligence, 

mismanagement, and breach of fiduciary duty. In May 1981, the 

parties settled the suit. The trustees agreed to hold regular 

meetings, make certain information available to beneficiaries, 

and file a plan for the creation of a retirement age for 

trustees. For his part, Kellogg agreed to pay his own counsel 

fees and to obtain a release of any claims against the trust from 

his counsel. Schreiber and Kellogg then signed a fee agreement 

that provided for Kellogg to pay Schreiber $80,000, plus interest 

at a "commercially competitive" rate. 

 When Kellogg failed to pay the amount due, Schreiber 

filed this suit for breach of contract. The district court 

awarded him $512,864 for counsel fees and interest, and we 

affirmed. Schreiber v. Kellogg, 37 F.3d 1488 (3d Cir. 1994). 

 During the pendency of the appeal, Schreiber asked the 

district court to execute on Kellogg's interest in the trust to 

satisfy the judgment. The court denied the motion, holding that 
Wanamaker had intended to provide spendthrift protection for his 

great-grandchildren and Kellogg's interest in the trust was 

protected. Schreiber v. Kellogg, 849 F. Supp. 382, 389 (E.D. Pa. 

1994). The court also ruled that Pennsylvania courts would not 

apply, under the circumstances of this case, section 157(c) of 

the Restatement (Second) of Trusts (1959), which permits judgment 

creditors that preserve or benefit an interest in a spendthrift 

trust to reach that interest to enforce valid claims. Id. at 

394. Schreiber appealed. 

 The district court had diversity jurisdiction pursuant 

to 28 U.S.C. § 1332 (1988). We have jurisdiction under 28 U.S.C. 

§ 1291 (1988). Our review of the district court's construction 

of Pennsylvania law is de novo. Salve Regina College v. Russell, 

499 U.S. 225, 231 (1991) ("We conclude that a court of appeals 

should review de novo a district court's determination of state 

law."); Grimes v. Vitalink Communications Corp., 17 F.3d 1553, 

1557 (3d Cir.) ("The determinations regarding state law, where 

appropriate, will be reviewed de novo."), cert. denied, 115 S. 

Ct. 480 (1994). Our standard of review of the district court's 

interpretation of the Wanamaker will depends on whether 

Pennsylvania law treats such an interpretation as a question of 

law or of fact.3

 

3. Because this is a diversity case, we look to state law to 

determine whether a trial court's interpretation of a will is a 

question of law subject to de novo review or one of fact under a 

clearly erroneous standard. See United States v. Tabor Court 

Realty Corp., 803 F.2d 1288, 1304 (3d Cir. 1986) (citation 

omitted) ("In Pennsylvania, the existence of actual intent [for a 

fraud action] is a question of fact; therefore, the court's 

determination is reviewed on the clearly erroneous standard."), 
 Under Pennsylvania law, interpretation of a will 

generally is a question of law, as long as the court determines 

the meaning of the document solely from its language and not from 

any surrounding circumstances. Cf. In re Estate of Livingston, 

612 A.2d 976, 981 n.2 (Pa. 1992) ("In this case, the courts were 

called upon to interpret the legal effect of a writing. This 

entails reaching a conclusion of law."); Miller v. Bower, 103 A. 

727, 728 (Pa. 1918) ("[T]he question dividing the parties was 

resolved into a pure question of law arising out of the 

construction of the will . . . ."). Because the district court 

here apparently did not consider any evidence beyond the four 

corners of the will,4 our review is a question of Pennsylvania 

law subject to de novo review. 

(..continued) 

cert. denied, 483 U.S. 1005 (1987); De Oliveira v. United States, 

767 F.2d 1344, 1347 (9th Cir. 1985) (citations omitted) ("Because 

the testator lived in California, California law governs the 

construction of his will. Under California law, the construction 

of a will is a question of law unless the construction turns on 

the credibility of extrinsic evidence."). 

4. Although the district court noted that it had conducted an 

evidentiary hearing on the motion to execute on the trust 

interest, Schreiber, 849 F. Supp. at 384, the parties agree that 

the "primary purpose" of the hearing involved the applicability 

of section 157(c) of the Restatement (Second) of Trusts (1959) -- 

not interpretation of the will itself. The trustees of the 

Wanamaker trust contend that the district court also received 

evidence relating to Wanamaker's intent at that hearing, but they 

failed to point out any evidence or testimony on intent. The 

only evidence allegedly heard consisted of testimony and an 

affidavit noting that no one had ever before questioned the 

applicability of the spendthrift provision to Wanamaker's greatgrandchildren, but this evidence does not bear directly on the 

question of Wanamaker's intent. Furthermore, the district court 

does not cite any factor other than the language of the will and 

case law to support its holding on the issue of Wanamaker's 

intent. 
II. 

 Under Rule 69(a) of the Federal Rules of Civil 

Procedure, a federal court must follow relevant state law in a 

proceeding to execute on a judgment, unless a federal statute 

dictates otherwise. See United States v. Yazell, 382 U.S. 341, 

354-58 (1966). Because no applicable federal statute exists 

here, we look to Pennsylvania law to determine whether Schreiber 

may execute on Kellogg's interest in the Wanamaker trust. 

A. 

 In general, "[t]rusts in which the interest of a 

beneficiary cannot be assigned by him or reached by his creditors 

have come to be known as 'spendthrift trusts.'" 2A Austin W. 

Scott & William F. Fratcher, The Law of Trusts § 151, at 83 (4th 

ed. 1987).5 No specific wording is required under Pennsylvania 

law to create a spendthrift trust.6 If a spendthrift trust is 

 

5. Spendthrift trusts originated as a means to provide for 

people known as "spendthrifts," such as "infants, mental 

incompetents, [and] married women." See Case Comment, 

Spendthrift Trusts -- The Public Policy Exception, 45 Mo. L. Rev. 

369, 372 (1980). The beneficiary of a spendthrift trust, 

however, need not be a spendthrift. See id. ("[I]t is no longer 

necessary that the beneficiary be a spendthrift."); Restatement 

(Second) of Trusts § 152 cmt. g ("A spendthrift trust may be 

created in favor of a beneficiary although he is competent to 

manage his own affairs."); 2A Austin W. Scott & William F. 

Fratcher, The Law of Trusts § 151, at 83 (4th ed. 1987) ("[I]t is 

quite immaterial whether or not the beneficiary is in fact a 

spendthrift."). 

6. See Riverside Trust Co. v. Twitchell, 20 A.2d 768, 770 (Pa. 

1941) ("The intent to create a spendthrift trust is not to be set 

aside merely because it is not clearly expressed by the 

scrivener."); J. Brooke Aker, Pennsylvania Estate Planning and 

Drafting § 113.3, at 3 (1978) (noting that "no particular words 

are required" to create a spendthrift trust). But see In re 

Benson, 615 A.2d 792, 795 (Pa. Super. Ct. 1992) (stating that 
created, courts will sustain its validity,7 except in a few 

limited circumstances.8

 Because the purported spendthrift trust here was 

created in a will, we must consider the intent of the testator, 

which under Pennsylvania law controls interpretation of a will's 

provisions. In construing the same will at issue here, the 

Pennsylvania Supreme Court explained: 

 The intention of the testator is the pole 

star in the interpretation of every will and 

that intention must be ascertained from a 

consideration of the entire will, including 

its scheme of distribution, as well as its 

language, together with all the surrounding 

and attendant circumstances. 

In re Estate of Wanamaker, 159 A.2d 201, 204 (Pa. 1960) 

(citations omitted); see also In re Estate of Patrick, 409 A.2d 

388, 390 (Pa. 1979) ("[I]n construing a will, the intent of the 

testator, if it can be ascertained, must prevail."). 

 Similarly, the intent of the creator of a trust 

controls the interpretation of the trust document. See In re 

Benson, 615 A.2d 792, 794-95 (Pa. Super. Ct. 1992) ("The polestar 

(..continued) 

courts cannot "rewrite" or "distort" the language of a document 

creating a trust "in order to attain what is believed to be 

beneficial or wise or even what it is believed that the settlor 

would or should have provided if he possessed a knowledge of all 

presently existing circumstances"). 

7. See, e.g., In re Benson, 615 A.2d at 794 ("[W]here a 

spendthrift trust is in issue, the courts will uphold the 

spendthrift provisions as a means to enforce the settlor's right 

to dispose of his property as he chooses . . . ."). 

8. For a discussion of exceptions to the spendthrift trust rule, 

see infra part III. 
in every trust is the settlor's intent and that intent must 

prevail"). Pennsylvania courts agree the writing establishing a 

trust "'must be considered to be the best and controlling 

evidence of the settlor's intent.'" Id. at 795 (quoting In re 

Girard Trust Corn Exch. Bank, 208 A.2d 857, 859 (Pa. 1965)). 

Because the trust here was created in the Wanamaker will, we look 

to the language of that will to determine the validity of the 

purported spendthrift provision. 

B. 

 The relevant provisions of the will are Paragraphs 

Third and Eighth. Paragraph Third9 established the stock trust 

 

9. Although Paragraph Third continued for six pages, the most 

relevant part for our discussion appeared primarily on the first 

page. It provided: 

 I own all the shares of the Capital 

Stock of John Wanamaker Philadelphia. I 

order and direct they shall be held, In 

Trust, . . . for the following uses and 

purposes, to wit: 

 To receive all dividends, income or 

money derived therefrom, as same shall be 

declared and made payable by the Corporation 

of John Wanamaker Philadelphia, it being my 

wish, and direction, a Sinking Fund shall be 

created into which there shall be annually 

paid, from the net profits of John Wanamaker 

Philadelphia, . . . an amount equal to not 

less than fifty (50) per cent. of the annual 

profits, to be used in payment, and 

liquidation, on account of any indebtedness 

due by the above Corporation . . . and the 

difference between the amount of said net 

annual profits, and the amount paid into said 

Sinking Fund, shall then annually be divided 

equally between my three (3) children, 

Fernanda W. Heeren, John Wanamaker, Jr., 

Marie Louise Munn, during their life, for 
and divided certain proceeds between Wanamaker's children "for 

their sole and separate use, not to be anticipated, or assigned 

by them, in any manner whatever, nor subject to any attachment, 

alienation or sequestration for their debts, contracts or 

engagements." There is no dispute that this language established 

a spendthrift trust protecting Wanamaker's children. 

(..continued) 

their sole and separate use, not to be 

anticipated, or assigned by them, in any 

matter whatever, nor subject to any 

attachment, alienation or sequestration for 

their debts, contracts or engagements. 
 Paragraph Eighth10 stipulated that the trust 

established in Paragraph Third also shall provide for descendants 

of the Wanamaker children "subject to the provisions herein 

previously contained." The fundamental disagreement in this case 

is whether this language extends the spendthrift protection from 

Paragraph Third to cover the bequest to Wanamaker's grandchildren 

and great-grandchildren in Paragraph Eighth. The district court 

held that it did, thereby providing spendthrift protection to 

Kellogg's interest. Schreiber, 849 F. Supp. at 388-89. But 

Schreiber contends the phrase merely means that a gift made in a 

 

10. Paragraph Eighth provided: 

 In further Trust, on the part of my said 

Trustees, to hold said Capital Stock, and all 

dividends, income or money derived therefrom, 

subject to the provisions herein previously 

contained, for the benefit of all the child, 

or children, of all the children of my three 

(3) children, for and during the term of 

their natural life, or lives, of such of my 

said grandchildren, and for the period of 

twenty-one (21) years after the date of the 

decease of the last surviving grandchild. In 

further Trust, at the expiration of the 

period of twenty-one (21) years, after the 

date of the decease of the last surviving 

grandchild, of my children, then said stock, 

or the proceeds which may be derived 

therefrom, to be equally divided, share and 

share alike, into as many parts as there may 

then be great-grandchildren of mine, 

surviving, and the descendant of any greatgrandchild, then surviving, the latter to 

receive and enjoy, subject to the provisions 

heretofore stated such share as their parent, 

or parents, would have enjoyed, had they then 

not been deceased. 

(emphasis added). 
preceding paragraph takes precedence over a gift stated later in 

the will. 

 To resolve this dispute, we must look to the language 

and structure of the entire will. See, e.g., Riverside Trust Co. 

v. Twitchell, 20 A.2d 768, 770 (Pa. 1941); Ball v. Weightman, 116 

A. 653, 654 (Pa. 1922). After the first two paragraphs made 

unrelated bequests, Paragraph Third created the stock trust and 

divided the proceeds into three general categories. First, 

between one-half and two-thirds of the income from the trust was 

to pay outstanding debts of the John Wanamaker corporate 

entities. Second, the remainder of the stock income was to be 

shared by Rodman Wanamaker's three children, subject to the 

spendthrift provisions noted earlier. Upon the death of the 

Wanamaker children, their children were to split one-half of 

their parent's share. Third, the other half share would be 

accumulated to fund various charities. 

 Paragraph Seventh noted that if, under Paragraph Third, 

the first category of money was not needed to pay Wanamaker 

corporate debts, then the entire income of the trust should be 

divided among the Wanamaker children. "[B]ut the provisions as 

to the amount which shall go to my children's children, in the 

event of the decease of the former, shall remain as provided for 

in the paragraph heretofore." The final relevant section, 

Paragraph Eighth, directed the trust income to the Wanamaker 

children's descendants "subject to the provisions herein 

previously contained." 
 Although Schreiber contends the limiting phrase in 

Paragraph Eighth merely prioritizes among gifts made in the will, 

we believe it means something more. Paragraph Third created a 

detailed scheme of distribution to different categories of 

beneficiaries subject to certain conditions and restrictions, and 

the paragraphs following made bequests according to that scheme. 

We believe the restrictive phrase in Paragraph Eighth was meant 

to subject the bequests made therein to all applicable provisions 

of the previous paragraphs; the phrase was meant to state that 

the descendants of Rodman Wanamaker would receive the trust 

income under the scheme as established in Paragraph Third and 

followed in the other relevant paragraphs. That scheme included 

a spendthrift provision for the individual beneficiaries. We see 

no reason why that provision should not be among those to which 

the bequests in Paragraph Eighth were explicitly made "subject." 

 Other provisions of the will support this 

interpretation. For example, Paragraph Fifth mandated the 

creation of an artisans school and adopted "[t]he same method of 

creating a principal sum" as used to fund a children's home 

established in Paragraph Third. Paragraph Sixth provided for a 

sanitarium with funding "[a]s provided under the last paragraph, 

and fully set forth in the third paragraph." Thus, it appears 

Rodman Wanamaker created a detailed funding mechanism from stock 

income in Paragraph Third of his will and envisioned that 

bequests made in the paragraphs following would conform to the 

rules applicable to that category of income. 
 Pennsylvania case law also supports this result. In 

Ball v. Weightman, 116 A. 653 (Pa. 1922), the Pennsylvania 

Supreme Court upheld spendthrift protection for a testator's 

great-grandchildren, even though the will specifically included 

such protection only for the testator's grandchildren. 

Repeatedly noting that it examined the "entire will" for an 

indication of the testator's intent, the court stated it saw: 

 nothing to indicate an intent to discriminate 

between beneficiaries, or to require the 

trustees to distribute the income direct to 

some, and not so to others. Testator's 

manifest purpose was to secure the income of 

his estate for the personal use of his 

descendants during the life of the trust, and 

such protection is no more essential to a 

child or grandchild than to a greatgrandchild . . . . 

Id. at 654.11 Similarly, the Supreme Court in Riverside Trust 

Co. v. Twitchell, 20 A.2d 768 (Pa. 1941), decided that a deed of 

trust explicitly granting spendthrift protection over the 

principal of the trust, but not to the income, was meant to cover 

both. 

 Plaintiff argues that the expression 

contained in the trust agreement . . . 

signifies an intent to protect merely the 

principal. Yet when the instrument is 

examined as a whole, it readily appears that 

 

11. It is true that Ball partially relied on the fact that 

"throughout the will, testator seems to use the words 

'grandchildren,' 'issue,' and 'descendants' indiscriminately, 

when referring to those who might become lineal descendants of 

his children." 116 A. at 654. We acknowledge that this is not 

the situation with the Wanamaker will. But the Pennsylvania 

Supreme Court in Ball also relied on its examination of the 

entire will and the lack of any indication that the testator 

intended to discriminate between beneficiaries, id., a form of 

analysis that proves useful in this case. 
the grantor definitely intended an equal 

protection of the income. The intent to 

create a spendthrift trust is not to be set 

aside merely because it is not clearly 

expressed by the scrivener.12

Id. at 770. From these cases, it appears the Pennsylvania 

Supreme Court broadly construes spendthrift provisions when the 

testator has indicated a desire to incorporate such protection 

into a trust, but has failed to clearly define the scope of 

coverage. 

 Nevertheless, Schreiber notes that a separate trust 

created in the Wanamaker will explicitly made spendthrift 

protection applicable to the interests of all beneficiaries, the 

 

12. In fact, the Pennsylvania Supreme Court has interpreted a 

trust created in a will to have spendthrift protection even when 

the will contained no such express language: 

 Is this a spendthrift trust? It may be 

admitted that it lacks some of the usual 

provisions of such a paper, notably the 

absence of any clause protecting the income 

from attachment, etc. If, however, we can 

gather from the will itself, and from the 

light of the circumstances surrounding the 

testator at the time he made it, that his 

intent was to create a spendthrift trust, 

such intent ought not to be defeated because 

his conveyancer blundered. 

Appeal of Grothe, 19 A. 1058, 1059 (Pa. 1890); see also Aker, 

supra, § 113.3, at 3 (noting that "no particular words are 

required" to create a spendthrift trust and that "a spendthrift 

clause may be implied"); 6 The Hon. David G. Hunter et al., 

Pennsylvania Orphans' Court Commonplace Book § 6(b), at 48 (2d 

ed. 1959) (citing numerous cases) ("Where such appears in the 

will to be the manifest intention of the testator, a spendthrift 

trust will be sustained, although the testator has not provided 

in terms that the estate of the beneficiary shall not be liable 

for his debts."). 
Wanamaker children and their descendants alike. Paragraph Second 

created a trust from life insurance proceeds and directed the 

money be dispersed to Wanamaker's children "without power on 

their part to anticipate or assign the same, in any manner 

whatever, or be subject to any attachment, alienation or 

sequestration for their debts, contracts or engagements." It 

further provided that, upon a child's death, the child's income 

be paid to the child's issue "in accordance with the same terms 

and conditions under which the parent, or parents enjoyed the 

same during their lifetime." Thus, Schreiber contends Wanamaker 

knew how to make spendthrift protection applicable to all 

beneficiaries, his children and their descendants alike, but he 

chose not to do so with the beneficiaries of the Paragraph Third 

stock trust. 

 We agree with the district court that, in the context 

of this will, there is no meaningful difference between the 

phrases "in accordance with the same terms and conditions" and 

"subject to the provisions herein previously contained." The 

different terminology instead appears merely to be a result of 

the structure of the will. In just over one page, Paragraph 

Second established a relatively simple insurance trust, 

designated the Wanamaker children as beneficiaries protected by a 

spendthrift provision, and provided that the children's 

descendants would benefit "in accordance with the same terms and 

conditions under which the parent, or parents enjoyed the same 

during their lifetime." By contrast, Paragraph Third established 

the stock trust, created categories of funding, and made bequests 
to the Wanamaker children subject to the spendthrift clause. 

Eight pages later, after further elaboration on the stock trust 

and its beneficiaries, Paragraph Eighth then named the Wanamaker 

children's descendants as beneficiaries "subject to the 

provisions herein previously contained." Thus, Paragraph Eighth 

made the Wanamaker children's descendants subject to the entire 

scheme of distribution created for the stock trust -- not just a 

few limiting provisos as under the Paragraph Second insurance 

trust.13 

 

13. The language of Paragraph Second supports the proposition 

that Wanamaker intended spendthrift protection to cover his 

great-grandchildren under the Paragraph Third stock trust. In In 

re Wanamaker Estate, No. 38,456 (Montgomery County Orphans' Ct. 

Feb. 27, 1975), which interpreted this same trust, the issue was 

whether Wanamaker's great-grandchildren succeeded to their 

parents' income interests in the Paragraph Third stock trust. 

Although Paragraphs Third and Eighth did not resolve the issue, 

Paragraph Twenty-Second of the will addressed similar 

distribution rights under a residuary trust. Based largely upon 

the wording of this other trust, Judge Taxis concluded that 

Wanamaker's great-grandchildren were beneficiaries of the 

Paragraph Third stock trust: 

 [T]he language [of the Paragraph TwentySecond trust] clearly evidences a general per 

stirpital plan of distribution by the 

testator. Almost certainly the testator's 

intention concerning "Stock Trust" income 

would have been equally explicit but the 

scrivener failed to provide for the gap in 

time from the death of a grandchild until 

termination of the trust. There is no 

indication anywhere in the will that the 

testator intended to establish a pattern of 

income distribution in the "Stock Trust" 

distinct from that of the Residuary Trust. 

Id., slip op. at 5-6. Similarly, there is no indication in the 

will that Wanamaker intended to establish a level of spendthrift 

protection for the stock trust distinct from that created for the 

Paragraph Second insurance trust. 
 Furthermore, we are reluctant to impose artificial 

distinctions between these similar phrases in a will that has 

been criticized repeatedly for its careless drafting. See, e.g., 

In re Estate of Wanamaker, 159 A.2d 201, 203 (Pa. 1960) ("A 

number of provisions of Mr. Wanamaker's will (a) were ambiguous, 

and others (b) would have violated the Rule against Perpetuities 

. . . ."); In re Wanamaker's Estate, 6 A.2d 852, 854 (Pa. 1939) 

(noting the wording of Paragraph Eighth of the will was 

"characteristic of the slovenly method of the scrivener" and 

referring to "confused language used by the testator"). 

 Therefore, given the language and structure of the 

will, the acknowledged imprecision in its terminology, and the 

broadness with which Pennsylvania courts have treated spendthrift 

provisions, we agree with the district court and hold that the 

spendthrift provision here encompasses Kellogg's interest in the 

trust. 

III. 

 Because a spendthrift provision is involved, we must 

decide whether Pennsylvania would adopt section 157(c) of the 

Restatement (Second) of Trusts, which permits creditors to reach 

spendthrift trust interests to satisfy claims for services or 

materials that preserved or benefitted the beneficiary's interest 

in the trust. No Pennsylvania court has resolved this question. 

Indeed, neither the parties nor this court could locate more than 

one reported decision from any jurisdiction addressing this 

issue. Accordingly, we must determine whether the Pennsylvania 

Supreme Court would adopt section 157(c) and, if so, whether it 
is applicable under the facts of this case. See Commissioner v. 

Estate of Bosch, 387 U.S. 456, 465 (1967); Bohus v. Beloff, 950 

F.2d 919, 924 (3d Cir. 1991). 

A. 

 Section 157 of the Restatement (Second) of Trusts 

provides: 

 Although a trust is a spendthrift trust or a 

trust for support, the interest of the 

beneficiary can be reached in satisfaction of 

an enforceable claim against the beneficiary, 

 (a) by the wife or child of the 

beneficiary for support, or by the wife for 

alimony; 

 (b) for necessary services rendered to 

the beneficiary or necessary supplies 

furnished to him; 

 (c) for services rendered and materials 

furnished which preserve or benefit the 

interest of the beneficiary;

 (d) by the United States or a State to 

satisfy a claim against the beneficiary. 

(emphasis added). 

 Section 157(c) has two fundamental purposes. First, it 

was intended to prevent unjust enrichment of a beneficiary,14 and 

 

14. Restatement (Second) of Trusts § 157(c) cmt. d ("In such a 

case the beneficiary would be unjustly enriched if such a claim 

were not allowed"); Scott & Fratcher, supra, § 157.3, at 208 

("The purpose of the settlor in imposing restrictions on the 

alienation of the beneficiary's interest is to prevent him from 

losing his interest by his own improvidence. There is no reason, 

however, why his interest under the trust should be exempt from 

the claims of those who have by their services conferred a 

benefit on his interest. He should not be permitted to profit at 

their expense."). 
second, to ensure that beneficiaries were able to obtain 

necessary resources to protect their interests.15 

B. 

 As the state credited with first recognizing the 

validity of spendthrift trusts,16 Pennsylvania has more than 150 

 

15. See Erwin N. Griswold, Spendthrift Trusts § 346, at 410 (2d 

ed. 1947) ("Without such a remedy, needy beneficiaries may be 

wholly unable to enforce their interests or to obtain protection 

in case the trust is not properly administered."); see also Anne 

S. Emanuel, Spendthrift Trusts: It's Time to Codify the 

Compromise, 72 Neb. L. Rev. 179, 196 (1993) (Section 157(c) 

"assures that the beneficiary's interest in the trust will not be 

diminished or lost because the person in a position to protect it 

declines to do so for fear her efforts would be uncompensated."). 

16. See, e.g., John L. Bigelow, Support Claims of the Wife and 

the Spendthrift Trust Interest of the Husband-Beneficiary, 51 

Dick. L. Rev. 1, 3 (1946) ("the doctrine of the spendthrift trust 

is said to have originated" in Pennsylvania); Griswold, supra, § 

26, at 22 (footnote omitted) ("These early Pennsylvania cases not 

only were the foundation of spendthrift trusts in that state, but 

they were also frequently cited and relied on in other 

jurisdictions. They formed the principal basis of the dictum in 

Nichols v. Eaton [91 U.S. 716 (1875)] which was the greatest 

single factor in the establishment of spendthrift trusts in the 

United States."); Wills - Spendthrift Clause - Legacies -

Assignment, Fiduciary Rev., June 1941, at 1 ("Pennsylvania was 

the first jurisdiction to recognize spendthrift trusts."). 

Griswold explained that the development of spendthrift trusts 

occurred in Pennsylvania because the state had no equity courts 

and the law courts had no equity powers: 

 The result was that if a man had what 

elsewhere would have been regarded as an 

equitable right, there was little or no means 

of dealing with it in Pennsylvania. 

Creditors were therefore unable to reach the 

interest of a beneficiary, since there was no 

procedure at law for that purpose. . . . 

When, in later years, the Pennsylvania courts 

gradually acquired equity powers, spendthrift 

trusts had become firmly established, and an 

accepted part of the law. 

Griswold, supra, § 26, at 21-22. 
years' worth of jurisprudence on the issue.17 Originally, 

"spendthrift trusts were upheld in their entirety by Pennsylvania 

courts on the theory that property rights include the right to 

place any type of restriction on . . . disposition." Wills -

Spendthrift Clause - Legacies - Assignment, Fiduciary Rev., June 

1941, at 1. Yet, as time passed, Pennsylvania courts began 

recognizing exceptions to the spendthrift trust rule, see id. at 

1-4, even when that meant overruling prior case law. See, e.g., 

John L. Bigelow, Support Claims of the Wife and the Spendthrift 

Trust Interest of the Husband-Beneficiary, 51 Dick. L. Rev. 1, 2 

(1946) (noting Pennsylvania courts' "change of position from one 

extreme to the other" with regard to a woman's ability to attach 

the spendthrift interest of her husband). 

 This evolution of spendthrift trust law in Pennsylvania 

is consistent with the law's development in the majority of 

American jurisdictions. As one treatise explained: 

 [T]he trend of the last twenty-five 

years has been to limit and qualify 

spendthrift trusts, either by statute or by 

judicial decisions which create exceptions of 

the types described at a later point. The 

spirit of nineteenth century individualism 

which originally validated these trusts is 

meeting opposition of a socially-minded 

character. 

George G. Bogert & George T. Bogert, Handbook of the Law of 

Trusts § 40, at 154 (5th ed. 1973) (footnote omitted); see also

 

17. The Pennsylvania doctrine on spendthrift trusts apparently 

originated in the 1829 case of Fisher v. Taylor, 2 Rawle 33 (Pa. 

1829) (Smith, J.). See Wills - Spendthrift Clause - Legacies -

Assignment, supra, at 1. 
Jacob Mertens, Jr., Mertens Law of Federal Income Taxation § 

49E.35 (1993) ("Inroads have been made upon the effectiveness of 

spendthrift trusts by permitting certain classes of claims to be 

satisfied from the income of such trusts . . . ."). 

C. 

 As we have noted, no Pennsylvania court has considered 

whether section 157(c) should be adopted.18 In fact, only one 

state's court apparently has decided the issue. Evans & Luptak 

v. Obolensky, 487 N.W.2d 521 (Mich. Ct. App.), appeal denied, 496 

N.W.2d 289 (Mich. 1992), involved a situation similar to this 

case. In Evans, the trust beneficiary hired a law firm to secure 

the best price for the primary assets of the trust, but failed to 

pay the firm after the sale occurred. The firm obtained a 

judgment against the beneficiary, and a lower court denied 

execution on the trust proceeds. The Michigan Court of Appeals, 

in adopting section 157(c), reversed and remanded. The court 

 

18. Kellogg claims the Pennsylvania Supreme Court rejected the 

application of section 157(c) in In re Heyl's Estate, 43 A.2d 130 

(Pa. 1945), which involved a trust established for two sisters by 

their father. One sister made an agreement with the trustee by 

which the trustee would build her a house and she would pay for 

it out of future trust income. When the beneficiary revoked the 

agreement, the court held that she had been without right to 

assign her interest and thus the original agreement with the 

trustee was void. Because the burden of maintaining the house 

fell back to the corpus of the trust, it impaired the other 

beneficiary's interest, but that factor was not deemed sufficient 

to justify violating the spendthrift provisions. Id. at 131-32. 

Although this case demonstrates the reluctance of state courts to 

intrude upon spendthrift provisions, it does not reject the 

Restatement position. The case certainly does not fall under 

157(c), because the trustee's action did not "preserve or 

benefit" the beneficiary's interest in the trust. 
noted that Michigan courts already had approved the other 

sections of the Restatement: "From the preceding analysis it is 

clear that the Restatement has been approved by every applicable 

appellate decision in Michigan since 1983 and that all the 

subsections of § 157 of the Restatement that were in issue in the 

cases were adopted with approval by either the Court of Appeals 

or the Supreme Court." Id. at 523. 

 Schreiber contends that, as in Evans, the state courts 

in Pennsylvania have adopted all the other subsections of section 

157. Subsection (a), which permits trust assets to be reached to 

satisfy alimony or support claims, has been substantially -- if 

not entirely -- adopted in Pennsylvania. For more than sixty 

years, the Pennsylvania Supreme Court has permitted wives to 

reach the assets of spendthrift trusts to satisfy claims for 

support. See In re Moorehead's Estate, 137 A. 802 (Pa. 1927); 

see also In re Stewart's Estate, 5 A.2d 910 (Pa. 1939). 

 The district court noted, however, that the 

Pennsylvania Supreme Court refused to permit an out-of-state 

alimony judgment to reach assets of a spendthrift trust in 

Lippincott v. Lippincott, 37 A.2d 741 (Pa. 1944); thus, the 

district court said the Supreme Court implicitly rejected part of 

Restatement section 157(a). Schreiber, 849 F. Supp. at 391. 

Yet, at the time of Lippincott, Pennsylvania had no provision for 

alimony in an absolute divorce;19 therefore, the Supreme Court's 

 

19. Pennsylvania had no provision for alimony in an absolute 

divorce until the General Assembly enacted the Divorce Code of 

1980. See 23 Pa. Cons. Stat. Ann. §§ 3101-05, 3701-07 (1991) 
refusal to create a public policy exception for alimony payments 

should not be seen as a rejection of section 157 because the 

state at the time did not even recognize such payments.20 

Furthermore, the state now has a broad statute that provides: 

 Income of a trust subject to spendthrift or 

similar provisions shall nevertheless be 

liable for the support of anyone whom the 

income beneficiary shall be under a legal 

duty to support. 

20 Pa. Cons. Stat. Ann. § 6112 (1975). This statute apparently 

encompasses claims for alimony, as required by section 157(a). 

See 23 Pa. Cons. Stat. Ann. § 3103 (1991) (defining alimony as 

"[a]n order for support granted by this Commonwealth or any other 

state to a spouse or former spouse in conjunction with a decree 

granting a divorce or annulment"); Karen A. Fahrner et al., Bregy 

on Selected Sections of the Pennsylvania Probate, Estates and 

Fiduciaries Code § 6112, at 170 (Supp. 1993) ("[T]his part of the 

Lippincott decision would be different under the wording of 

present §6112 which makes spendthrift income liable to 'anyone 

whom the income beneficiary shall be under a legal duty to 

(..continued) 

(containing part of the Divorce Code of 1990, which replaced the 

1980 version). 

20. A law review article noted at the time of the Lippincott

decision that its result was required because the state had no 

public policy in favor of support for former spouses: "With the 

termination of the marriage the husband's duty of support, and 

the State's interest as a third party, ceases. Thus the reason 

for denying a spendthrift trust ascendancy in such a situation 

ceases when public policy no longer exists." Bigelow, supra, at 

10. 
support.'"). In fact, the language of the statute appears to go 

beyond even that required by the Restatement.21

 As for Restatement section 157(b), the Pennsylvania 

Supreme Court cited the subsection with approval in Lang v. 

Commonwealth of Pa., Dep't of Public Welfare, 528 A.2d 1335, 

1341-42 (Pa. 1987). In Lang, the Supreme Court noted that "[a] 

support trust, though containing an implied spendthrift 

provision, can generally be reached to satisfy claims for 

necessary services rendered to the beneficiary. See Restatement 

(Second) of Trusts, § 157 (1959)." Because Lang involved a 

 

21. We consider it significant that the Pennsylvania courts 

repeatedly have expanded this exception to the spendthrift trust 

rule. In the late 1800s and early 1900s, the Pennsylvania 

Supreme Court refused to permit a wife to attach her husband's 

interest in a spendthrift trust. See, e.g., Board of Charities 

v. Lockard, 48 A. 496, 496 (Pa. 1901) ("We agree entirely with 

all that has been said about the duty of the beneficiary to 

support his wife and child; but that does not authorize 

interference with the right of another individual to dispose of 

his own property as he may see fit."); see also Thackara v. 

Mintzer, 100 Pa. 151, 154-55 (Pa. 1882). Yet, over the next 

several decades, the Pennsylvania courts did an "obvious aboutface in the law" and began to permit attachments of spendthrift 

interests. See Bigelow, supra, at 2. 

 Furthermore, commentators have stated that nationwide 

"[a] division of authorities exists on questions concerning 

whether the beneficiary's interest in a spendthrift trust can be 

reached by his wife and children to enforce claims for support, 

or by a former wife for an alimony claim." William H. Wicker, 

Spendthrift Trusts, 10 Gonz. L. Rev. 1, 5 (1974). We find it 

noteworthy that, unlike some jurisdictions which continue to 

reject claims for invasion of a spouse's spendthrift trust 

interest, Pennsylvania courts appear to be in accord with the 

Restatement position. In fact, instead of Pennsylvania adopting 

the Restatement, one commentator suggested that the Restatement 

"adopted this Pennsylvania common law view." Bigelow, supra, at 

7. 
support trust, however, the district court held the case did not 

stand for the proposition that interests in a spendthrift trust 

could be reached under section 157(b). We disagree. Section 

157, by its terms, encompasses both spendthrift and support 

trusts. The Lang court did not express any intention to 

distinguish between those types of trusts in determining the 

applicability of the Restatement; it simply cited section 157 

with approval. 

 Furthermore, in Quigley Estate, 22 D. & C.2d 598 

(Montgomery County Orphans' Ct. 1960), Judge Alfred L. Taxis, 

Jr., approved a beneficiary's assignment of her interest in a 

spendthrift trust to the Pennsylvania Department of Welfare. The 

court, in upholding the "right of the Commonwealth to recover for 

furnishing the legatee with such fundamental necessities of 

life," expressly cited section 157 as support for its decision. 

Id. at 599; see also Wills - Spendthrift Clause - Legacies -

Assignment, supra, at 2 (citing numerous Pennsylvania cases) 

("The state may reach spendthrift trusts in reimbursement for the 

care of an income cestui who has become a public charge."). 

 Quigley Estate and similar cases adopt the reasoning 

not only of section 157(b), but also of section 157(d), which 

allows spendthrift trust interests to be reached in satisfaction 

of government claims. Another Pennsylvania case upholding the 

application of section 157(d) is Scott Estate, 11 Pa. D. & C.2d 

589 (Montgomery County Orphans' Ct. 1957), in which the Treasury 

Department served a writ of attachment on the executors of a 

trust to recover unpaid taxes of the beneficiary. Judge Taxis 
noted the applicability of section 157(d), but stated he did "not 

assume to decide the effectiveness of this attachment." Id. at 

592. Nevertheless, relying in part on section 157(d), the court 

permitted the amount of the unpaid taxes to be retained, pending 

a resolution of the attachment. Id. at 592-93.22

 The district court stated that these cases demonstrated 

that Pennsylvania courts had not adopted the other subsections of 

section 157 in their entirety. Yet, we believe this overlooks a 

crucial point. The Michigan court, in adopting section 157(c), 

commented that "the Restatement has been approved by every 

applicable appellate decision in Michigan since 1983." Evans, 

487 N.W.2d at 523. In Pennsylvania, the courts have approved the 

relevant Restatement subsections in every applicable case for a 

much longer period, with an understandable exception in 

Lippincott, 37 A.2d at 743-44. We have found no Pennsylvania 

 

22. For decades, commentators have cited Scott Estate for the 

proposition that Pennsylvania permits the United States to attach 

spendthrift trust interests to recover unpaid taxes. See, e.g., 

Aker, supra, § 113.3, at 4 ("Despite existence of a spendthrift 

clause, the legatee's interest may be attached by the United 

States for delinquent income taxes . . . ."); Hunter et al., 

supra, § 6(k), at 52 ("attachment by U.S. for income taxes of 

legatee is valid"). Furthermore, it is doubtful whether 

Pennsylvania even has the power to shield interests in a 

spendthrift trust from federal tax liens. See First Northwestern 

Trust Co. v. Internal Revenue Serv., 622 F.2d 387, 390 (8th Cir. 

1980) (noting the "well established legal principle that the 

income from a spendthrift trust is not immune from federal tax 

liens, notwithstanding any state laws or recognized exemptions to 

the contrary"); United States v. Rye, 550 F.2d 682, 685 (1st Cir. 

1977) ("In the area of spendthrift trusts, the courts have 

consistently held that a restraint on transferability, whether 

arising from the trust instrument or from state law, does not 

immunize the beneficiary's interest from a federal tax lien."). 
case that has expressly declined to follow Restatement section 

157 or even criticized it. In fact, Pennsylvania courts 

routinely cite as authority for their decisions the Restatement 

of Trusts, including sections of the Restatement governing 

spendthrift trusts.23 Given the rationale underlying section 

157(c), and the favorable treatment Pennsylvania courts have 

afforded other subsections of section 157 and the Restatement 

overall,24 we believe the Pennsylvania Supreme Court would adopt 

section 157(c).25

 

23. In fact, a few years after publication of the original 

Restatement of Trusts in 1935, the Pennsylvania Supreme Court 

handed down In re Keeler's Estate, 3 A.2d 413 (Pa. 1939), a 

decision that "relie[d] principally" on the Restatement 

provisions on spendthrift trusts and on Erwin N. Griswold's book, 

Spendthrift Trusts. See Trusts - Spendthrift - For Support -

Assignment - Unrevoked, Fiduciary Rev., Mar. 1939, at 1. For 

other examples of the Pennsylvania Supreme Court's citation to 

the Restatement on spendthrift trust issues, see Lang v. 

Commonwealth of Pa., Dep't of Public Welfare, 528 A.2d 1335, 

1341-42 (Pa. 1987); Morton v. Morton, 147 A.2d 150, 152 (Pa. 

1959); Murphey v. C.I.T. Corp., 33 A.2d 16, 18 (Pa. 1943); see 

also Hunter et al., supra, § 6(a)-(b), at 47-49; Robert Levin et 

al., Summary of Pennsylvania Jurisprudence: Trusts and Gifts 

Inter Vivos §§ 183-186, at 153-159 (1962). 

24. Counsel for Kellogg suggested at oral argument that, even if 

we hold that Pennsylvania would adopt Restatement section 157(c), 

our decision might not apply retroactively to testamentary 

trusts, such as the one here, established before publication of 

the first Restatement of Trusts in 1935. We disagree. Section 

157 appears to have been a distillation of existing law on the 

subject, not a radical change. In fact, the most fundamental 

development in this area of Pennsylvania law on spendthrift 

trusts may well have been In re Moorehead's Estate, 137 A. 802 

(Pa. 1927), which first permitted the invasion of a spendthrift 

trust interest on public policy grounds. As noted, this case 

appeared almost a decade before the publication of the first 

Restatement and may even have influenced the adoption of section 

157. See supra note 21. The decision in Moorehead's Estate, 

like most cases in this area, applied retroactively to the trust 

involved. As the United States Supreme Court has noted, "As a 
IV. 

 Although we hold that the Pennsylvania Supreme Court 

would adopt Restatement section 157(c), we still must determine 

whether the district court properly ruled that Pennsylvania 

courts would not apply the Restatement "under the circumstances 

of this case." Schreiber, 849 F. Supp. at 394. 

A. 

 As an initial matter, we consider whether this type of 

case, involving an attorney seeking reimbursement for services 

rendered in connection with a trust interest, generally fits 

within section 157(c). We believe it does. In fact, as we have 

noted, the only case heretofore adopting section 157(c) involved 

a beneficiary who hired a law firm to secure the best price for 

the primary assets of a trust, but failed to pay the firm after 

(..continued) 

rule, judicial decisions apply 'retroactively.' Indeed, a legal 

system based on precedent has a built-in presumption of 

retroactivity." Solem v. Stumes, 465 U.S. 638, 642 (1984) 

(citation omitted). 

25. The district court noted the Pennsylvania Supreme Court's 

admonition that the invasion of spendthrift trust assets should 

be an "extraordinary" remedy employed only when truly vital 

interests were at stake. Schreiber, 849 F. Supp. at 392 (quoting 

Lippincott v. Lippincott, 37 A.2d 741, 743 (Pa. 1944)). Although 

we have noted that the result of Lippincott would no longer be 

valid because of changes in the laws regarding alimony and 

invasion of spendthrift trust interests for support payments, see

supra notes 19-21 and accompanying text, Pennsylvania courts have 

not backed away from the reasoning of Lippincott, i.e., that only 

"extraordinary" circumstances warrant invasion of spendthrift 

trusts. Endorsement of section 157(c), however, will not alter 

the extraordinary nature of the remedy, given the relatively few 

exceptions allowed by the Restatement and the limited number of 

cases that have cited to them. 
the sale occurred. Evans & Luptak v. Obolensky, 487 N.W.2d 521 

(Mich. Ct. App.), appeal denied, 496 N.W.2d 289 (Mich. 1992). 

 Furthermore, one commentator cited this situation as an 

example of the proper application of the principles underlying 

section 157(c): 

 Although an attorney, so far as payment 

for his general services is concerned, stands 

no better than an ordinary creditor in 

reaching the interest in a spendthrift trust, 

he is, nevertheless, entitled in New York to 

recover from his client's income for services 

rendered in connection with the client's 

interest in the trust. These cases seem to 

be a proper application of the principle that 

the beneficiary's interest in a spendthrift 

trust may be alienated for the purpose of 

preserving or improving its value. 

Erwin N. Griswold, Spendthrift Trusts § 346, at 409-10 (2d ed. 

1947) (footnotes omitted); see also Scott & Fratcher, supra, § 

157.3, at 209. But see Griswold, supra, § 346, at 410 (noting 

that "attorneys have not been so successful" in some states in 

recovering under this theory). 

B. 

 In considering the applicability of section 157(c), the 

district court conducted an evidentiary hearing and held that 

Pennsylvania courts would not apply Restatement section 157(c) to 

this case. Schreiber, 849 F. Supp. at 384, 394. Specifically, 

the court determined that, because Rodman Wanamaker had expressly 

indicated he wished the trustees to remain free from interference 

by the beneficiaries,26 invasion of the spendthrift trust 

 

26. See Schreiber, 849 F. Supp. at 393 (quoting provisions of 

the will). 
interest here would "negate the wishes of Rodman Wanamaker." Id.

at 394.27

 The district court received evidence on this issue, and 

we consider its decision to be a factual finding. Yet, we 

believe the court applied an incorrect legal standard to decide 

this aspect of the case. There is nothing in the Restatement 

providing that, in applying the section 157 exceptions to the 

spendthrift rule, the testator's intent should be considered. 

 If a testator's intent controlled whether an exception 

to spendthrift protection was allowed, then none of the 

Restatement section 157 exceptions could ever apply. This is so 

because if a testator had intended the result mandated by the 

 

27. The district court divided Schreiber's representation of 

Kellogg into two time periods: representation during the sale of 

the Wanamaker stock and representation during the subsequent 

surcharge action against the trustees. As for the representation 

during the sale of the stock, the district court held that 

Schreiber had discharged Kellogg for all liability for that 

period. Id. Because Schreiber did not appeal this portion of 

the district court's ruling, the only representation at issue is 

Schreiber's work for Kellogg during the surcharge action against 

the trustees. 

 Kellogg contends that the entire fee issue is barred by 

the doctrine of res judicata, because the Montgomery County 

Orphans' Court already awarded Schreiber fees in connection with 

his representation of Kellogg. See supra part I. As the 

district court indicated, however, the Orphans' Court fee award 

involved Schreiber's representation during the sale of the stock 

only, not his later work on the surcharge action. See Schreiber, 

849 F. Supp. at 384-85. As we have noted, Schreiber received 

more than $200,000 for his representation involving the sale of 

the stock: $117,000 in counsel fees and interest awarded by the 

Montgomery County Orphans' Court and $88,000, plus counsel fees 

and interest, from a judgment obtained against another attorney 

involved in the stock sale for breach of a fee-sharing agreement. 

See supra part I. 
section 157 exceptions, then presumably he would have said so in 

the will, and there would be no need to look beyond the will for 

policy reasons that warrant invasion of the trust. Despite the 

usual importance of a testator's intent in construing the terms 

of a will or trust,28 Pennsylvania courts have not hesitated to 

disregard such intent when public policy requires. See, e.g., In 

re Moorehead's Estate, 137 A. 802, 806 (Pa. 1927) ("A testator 

has a right . . . to dispose of his own property with such 

restrictions and limitations not repugnant to law, as he sees 

fit, and his intentions ought to be carried out, unless they 

contravene some positive rule of law or are against public 

policy.").29

 Thus, we believe the district court must determine 

whether Schreiber's work for Kellogg did "preserve or benefit the 

 

28. See supra part II.A. 

29. See also Morton v. Morton, 147 A.2d 150, 151 (Pa. 1959) ("It 

has long been our public policy that the spendthrift provisions 

of a trust cannot defeat the claims of the wife of a beneficiary 

for maintenance and support."); In re Stewart's Estate, 5 A.2d 

910, 914 (Pa. 1939) (citation omitted) ("Since we have declared 

that spendthrift trusts are against public policy in this State 

as to claims of wives for maintenance and support, they are 

entitled to recover against the beneficial interest of their 

husbands as though no spendthrift clause was contained in the 

will or deed creating them."); Thomas v. Thomas, 172 A. 36, 41 

(Pa. Super. Ct. 1934) ("To the extent that the cases prior to the 

decision in Moorehead's Estate differ therefrom, the former must 

be considered as overruled. It is a step in the right direction 

and consonant with public policy and good morals."); Levin et 

al., supra, § 183, at 155 ("A spendthrift or other protective 

trust cannot be established in contravention of statute or public 

policy."). 
interest of the beneficiary."30 Schreiber contends that this 

analysis does not require the court to decide whether an actual 

preservation or benefit to the beneficiary's interest occurred, 

but instead whether a good-faith attempt to preserve or benefit 

the interest was made.31

 We disagree. By its terms, section 157(c) does not 

require merely an action that might preserve or benefit the 

beneficiary's interest, but instead mandates that the action 

achieve the result of preserving or benefitting the interest in 

the trust. See § 157(c) ("the interest of the beneficiary can be 

reached . . . for services rendered and materials furnished which 

preserve or benefit the interest of the beneficiary"); see also

Griswold, supra, § 366, at 445 ("[T]he creditor should be allowed 

to recover at least to the extent that his labor and materials 

have improved the value of the beneficiary's interest."). 

 The purposes behind section 157(c) support this 

interpretation. Section 157(c) permits the attachment of 

spendthrift interests because a beneficiary "should not be 

permitted to profit at [his creditor's] expense." Scott & 

Fratcher, supra, § 157.3, at 208. Similarly, the Restatement 

notes that section 157(c) is necessary because "the beneficiary 

 

30. The parties dispute whether the district court made a 

finding whether Schreiber did "preserve or benefit" Kellogg's 

interest. We do not believe the district court made such a 

determination. 

31. Evans & Luptak v. Obolensky, 487 N.W.2d 521, 523 (Mich. Ct. 

App.), appeal denied, 496 N.W.2d 289 (Mich. 1992), raised this 

issue but left it undecided. 
would be unjustly enriched if such a claim were not allowed." 

Restatement § 157(c) cmt. d. In cases in which the beneficiary's 

interest is not actually preserved or benefitted, however, the 

beneficiary has received no "profit" at all; thus, he cannot have 

been "unjustly enriched." We believe this interpretation is 

consistent with the Pennsylvania Supreme Court's admonition that 

the invasion of spendthrift trust interests should be an 

"extraordinary and drastic remedy." Lippincott v. Lippincott, 37 

A.2d 741, 743 (Pa. 1944). 

 Nevertheless, Schreiber contends this interpretation 

would emasculate one of the policies underlying section 157(c), 

namely, ensuring that needy beneficiaries obtain the necessary 

resources to protect their interests in a trust. Without a 

standard allowing recovery for "good-faith" attempts, Schreiber 

argues, few attorneys or other creditors would ever agree to help 

beneficiaries in these circumstances. Schreiber cites no legal 

authority for this proposition.32 We believe his argument is 

answered by the widespread acceptance of the most common practice 

designed to ensure that those in need obtain proper 

representation: contingency fee agreements, which require a 

favorable result to generate fees. As one treatise noted, 

 

32. In fact, the district court's August 3, 1993 findings appear 

to contradict the basis for Schreiber's argument. The court 

noted that Schreiber advised Kellogg not to sue the trustees 

because "it would be a long hard fight to prevail in any 

surcharge action." Tr. at 6. The court also stated that none of 

the other members of the Wanamaker family supported Kellogg's 

surcharge action against the trustees. Id. at 8. Yet, Schreiber 

still agreed to represent Kellogg in the surcharge action. 
"Contingency arrangements ideally have the advantages of 

encouraging quality work and discouraging excessive work, because 

the attorney's compensation is directly tied to the quality of 

the outcome . . . ." Robert E. Litan & Steven C. Salop, 

Reforming the Lawyer-Client Relationship Through Alternative 

Billing Methods, 77 Judicature 191, 195 (1994). This approach is 

also similar to that embodied in the various federal fee-shifting 

statutes: Attorneys can recover their fees in certain cases, but 

only when they represent the "prevailing party." See, e.g., 28 

U.S.C. § 2412 (1988 & Supp. V 1993) (permitting award of 

attorneys' fees to "prevailing party" under Equal Access to 

Justice Act); 42 U.S.C. § 1988 (Supp. V 1993) (allowing award of 

attorneys' fees to "prevailing party" in civil rights cases). 

Like Restatement section 157(c), these statutes reward only those 

efforts that actually succeed in benefitting a plaintiff, not 

those that are well-intentioned but fail. See Baumgartner v. 

Harrisburg Hous. Auth., 21 F.3d 541, 548 (3d Cir. 1994) (noting 

the Supreme Court has adopted "a result-oriented approach" to fee 

awards). Accordingly, we do not believe it unfair to require 

Schreiber to demonstrate that the surcharge action actually 

"preserve[d] or benefit[ted]" Kellogg's interest in the trust.33 

 This construction of section 157(c) does not mean that 

 

33. Whether creditors may recover for a non-pecuniary 

preservation or benefit to a trust interest is a more difficult 

question. We note that in other contexts we have not always 

required attorneys to prove a pecuniary benefit in order to 

recover fees. But we have required that the benefit must be 

real. See, e.g., Bell Atlantic Corp. v. Bolger, 2 F.3d 1304, 

1310-13 (3d Cir. 1993). 
those who unsuccessfully attempt to benefit an interest in a 

spendthrift trust should not be paid for their services. It 

merely means that the equities of the situation are not so far in 

their favor as to warrant the "extraordinary and drastic remedy" 

of an invasion of a spendthrift trust interest. Such creditors 

still may pursue alternative measures to collect debts. 

V. 

 Based upon the foregoing, we will reverse and remand 

this case to the district court for a determination of whether 

Schreiber's work for Kellogg did "preserve or benefit the 

interest of the beneficiary," within the meaning of Restatement § 

157(c). In all other respects, we will affirm the judgment of 

the district court. 

 

Palmer K. Schreiber v. Christopher G. Kellogg

No. 94-1551 

LEWIS, Circuit Judge, concurring. 

 I would have found that the Wanamaker will's 

spendthrift protection did not protect from attachment Kellogg's 

interest in the Wanamaker trust. Furthermore, I am somewhat 

skeptical about whether the courts of Pennsylvania would adopt 

section 157(c) of the Restatement (Second) of Trusts. However, 

the majority provides a well-reasoned and defensible rationale 
with respect to both of its conclusions, and the issues being far 

from clear, I concur. On remand Schreiber may receive at least a 

portion of the money Kellogg owes him, and I am sure that if we 

are wrong about section 157(c), the courts of Pennsylvania will 

let us know in due course.