Case Name: Lewis' Estate
Court: Philadelphia County Orphans' Court
Jurisdiction: Pennsylvania
Decision Date: 1943-12-12
Citations: 49 Pa. D. & C. 173
Docket Number: no. 566
Parties: Lewis’ Estate
Judges: Before Van Dusen, P. J., Sinkler, Klein, Bolger, Ladner, and Hunter, JJ.
Reporter: Pennsylvania District and County Reports
Volume: 49
Pages: 173–199

Head Matter:
Lewis’ Estate
Before Van Dusen, P. J., Sinkler, Klein, Bolger, Ladner, and Hunter, JJ.
Walter B. Gibbons, John Russell, Jr., C. E. Morgan, John R. K. Scott, William T. Connor, and Hardie Scott, for exceptants.
Boyd Lee Spahr, contra.
December 12, 1943.

Opinion:
Hunter, J.,
Exceptions of Francis H. Lewis estate
The first set of exceptions are those filed on behalf of The Pennsylvania Company, executor and trustee under the will of Francis H. Lewis, deceased (one. of the testator's children), and D. Cardinal Dougherty, remainderman under said will. These exceptions raise the single question and charge error on the part of the learned auditing judge in failing to rule that the remainders created by the will of Charles S. Lewis violated the rule against perpetuities and that one third of the trust estate thereby became vested in Francis H. Lewis (now also deceased) under the intestate laws.
We are unanimous in our opinion that the learned auditing judge has correctly disposed of this question and his clear and satisfactory discussion of the reason for his decision leaves nothing to be added. These exceptions are therefore dismissed.
Exceptions of Newton children
Charles S. Lewis by the fifth item of his will conferred upon each of his children a special power "by last will to direct a distribution among its descendants in trust or absolutely, equally or unequally, amongst all or to the exclusion of one or more".
Mary E. L. Newton by her will appointed a life estate to her husband, Richard Heber Newton. She died December 9,1913. He survived her one year and died December 19, 1914. The husband was a stranger to the power, and the appointment to him of a life estate was void.
She directed, after the death of her husband and until the death of her last surviving child, that income be distributed to her children and their descendants living at each quarterly or other convenient period of distribution.
She conferred upon her husband power by his last will to modify the foregoing trusts for her children in such way and manner that the shares of those who are less advantageously situated may be equalized with the shares of those who are from other sources otherwise provided for.
She gave to her trustees power to pay sums out of principal, should the income of a child he inadequate for its proper maintenance and support, to acquire a permanent home, or if an emergency should arise such as illness.
The children of testatrix to whom the above benefits were appointed were proper objects of the power.
She conferred upon her last surviving child, should all die without descendants, a power to appoint to charity. This was a violation of the power which was restricted to descendants.
She included among her appointees unborn descendants of her children, and in this respect also exceeded the power, which was confined to descendants living at the termination of the Lewis trust: Horwitz v. Norris, 49 Pa. 213; Wickersham v. Savage, 58 Pa. 365; Pepper's Appeal, 120 Pa. 235; Fotterall's Estate, 2 Dist. R. 146. No child of Mrs. Newton has had or now has issue, the youngest child being now 67 years of age.
The auditing judge sustained the life estates of the children as an authorized appointment under the power, and expressed no opinion as to the disposition of the principal at the death of the last surviving child.
Elizabeth N. Bosworth, one of the Newton children, died February 18, 1943, without issue. The auditing judge awarded her share of income by right of survivorship to the three remaining children.
Ordinarily, where life estates are separable and valid, questions as to the validity of remainders will not be determined until the death of the life tenants. However, because of the contentions of exceptants we will assume that the appointment in remainder is void, and that principal is vested in the Newton children under the provisions of their grandfather's will made in default of appointment, and reserve the question whether the trust appointed for their lives is separable and is to be sustained as an active trust.
The Newton children contend:
(а) The exercise of the power of appointment by exceptants' mother, Mary E. L. Newton, was totally void and did not divest the exceptants of the absolute estates given to them under the testator's will.
(б) If the learned auditing judge was correct in holding that Mary E. L. Newton appointed valid life estates to these exceptants, nevertheless, she having made no valid disposition of principal under her power, the exceptants have life estates with vested remainders, and these estates merge into absolute ownership, quired to appoint absolute estates, legal or equitable, appointment. All of her children were born in the lifetime of fheir grandfather, and the trust set up by her will terminates upon the death of her last surviving child. She having selected lives in being, all limitations made by her would be sustained under Warren's Estate, 320 Pa. 112.
In our opinion Mrs. Newton had full authority under the will of her father to appoint life estates to her children and to protect them by a trust. She was not required to appoint absolute estates, legal or equitable. In the words of the power she was authorized "to direct a distribution amongst its [the child's] descendants in trust or absolutely, equally or unequally, amongst all or to the exclusion of one or more".
The donee of a special power has implied authority to appoint life estates: McClellan's Estate, 221 Pa. 261; an exception to this rule being where there is but one member in the permitted class, in which case there can be but one distribution: Pepper's Appeal, supra; Johnson's Estate, 276 Pa. 291.
An appointment "in trust" was expressly authorized by the power, and an attack cannot be made upon the exercise of the power for that reason alone: Hays' Estate, 288 Pa. 348; Penrose's Estate, 317 Pa. 444. We believe that the appointment, insofar as it was for the benefit of the children, who were the objects of the power, was fully authorized.
Forrest's Estate, 8 D. & C. 461, cited by exceptants, is to be distinguished. There an appointment upon spendthrift trust was struck down because there was no authority to appoint in trust. Here, as in Hays' Estate and Penrose's Estate, supra, there is an express authority to appoint "in trust".
Nor was the power limited to the duration of the trust under the Lewis will, because the power was conferred using the words of the Lewis will, "anything hereinbefore or hereafter contained to the contrary notwithstanding". The power to appoint principal "in trust" negatives any idea of an immediate distribution, and supports the appointment of continuing life estates in trust for the benefit of the objects of the power.
The important question is whether the valid parts of the appointment are possible of separation from those which transgress the power and are void.
Where a power is exercised in violation of the rule against perpetuities, an active trust created to pay income for life will not be defeated because of the failure or invalidity of the gift over of the corpus of the estate: Ewalt v. Davenhill et al., 257 Pa. 385; McCreary's Trust Estate, 328 Pa. 513.
The same rule applies in the case of a special power where part of the appointment is good and part bad.
In Hays' Estate, 288 Pa. 348, supra, testatrix gave her estate to her husband, for life, and upon his death directed that the estate be "distributed" among her children and issue, living at the death of her husband, "in such shares and upon such trusts as my said husband may by his last will and testament direct", with a gift in default of appointment to the children and issue. The husband exercised the power by appointing the estate upon spendthrift trust to pay the income to the children and issue for their respective lives, with cross-remainders of life estates among them should any child or grandchild die childless, and with further limitations which were in excess of the power. Testatrix left four children in whom corpus vested subject to such of the provisions regarding income as were found to be valid. Mr. Justice Simpson said (p. 353) :
"Appellant's final contention, citing Johnston's Est., 185 Pa. 179, and kindred cases, is that the donee's paramount purpose was the illegal one regarding the principal of the estate, and, the distribution of the income being inseparably connected therewith, the whole plan must be declared invalid. Here, however, there is no connection whatever between the distribution of the income and that of the principal, except, as must always be the case, that the latter is postponed until the trust as to the former is ended. It is clear, however, that the provision as to distribution of the income can readily stand alone, undisturbed and unaffected by the striking down of the invalid provision as to the principal; hence it must be sustained: Lawrence's Est., 136 Pa. 354; Whitman's Est., 248 Pa. 285; Jones's Trust Est., 284 Pa. 90; Ledwith v. Hurst, 284 Pa. 94. The suggestion that the spendthrift trust should be declared invalid, because, notwithstanding it, creditors could sell the distributees' estate in remainder, has no weight. If they did the spendthrift trust provision would continue to insure to the children the income during their lives, and this is exactly the purpose for which such a trust is created."
The rule in favor of separating and sustaining the effective part of an appointment under a special power is also supported in Carter's Estate, 254 Pa. 565, McClellan's Estate, supra, A. L. I. Restatement of Property 1995, §362, and 49 C. J. 1300, §135.
We are fortified in our conclusion as to the effect of the primary life estate which testatrix appointed in excess of the power to her husband by what is said in Farwell on Powers (p. 354) :
"An appointment by will of a particular estate to a stranger, with remainder to an object, is a good appointment in remainder; but the particular estate fails, and the subject of the power, during its continuance, goes to the persons entitled in default of appointment."
As we read the provisions of the will of Mrs. Newton we are convinced her dominant intent was to protect the children by a trust for their lives, and importantly to provide for payments of principal in the discretion of the trustees to the children for their maintenance and support, to purchase a home, and in case of emergency, such as illness. If this discretion is exercised in full then the estate will have been wholly paid to proper objects. We believe that all other provisions of the appointment are subsidiary to these purposes for the benefit of the children, and that the good and bad parts of the appointment are quite distinct and can readily be separated.
A trust with discretionary powers in the trustee as to payments of principal for support and maintenance is an active trust and may not be terminated by agreement of the parties: Henderson's Estate, 258 Pa. 510; Falconer's Estate, 303 Pa. 492.
There can be no objection to the authority delegated to the trustees to make discretionary payments of principal. Such authority is frequently found in trust instruments and is justified by the power given Mrs. Newton to appoint "in trust". The donee of the special power may delegate to another a further power of appointment, subject to the restrictions of the original power: McClellan's Estate, supra; Lewis' Estate, 269 Pa. 379.
In reply to the other contentions made at the argument, it should be stated that the invalidity of the limitations of the Newton will as to her individual estate under the laws of New York, the place of her domicile, is without effect upon her appointment of the Lewis estate. The latter is a Pennsylvania estate, and its disposition is governed by Pennsylvania laws: Bingham's Appeal, 64 Pa. 345; Aubert's Appeal, 109 Pa. 447. See also opinion filed by this court in Barton's Estate, 49 D. & C. 273.
It should be stated also that Mrs. Newton's will, in which she gave the residue of her estate, "including any and all property over which I have any control or power of appointment", is an execution of the Lewis power without express mention of it. Blanket appointments are valid, and include both general and special powers: A. L. I. Restatement of Property 1906, §341.
We wish to commend counsel for their research and oral and written arguments in a complicated case. The court has been greatly aided in arriving at its decision.
All exceptions are dismissed and the adjudication is confirmed absolutely.