Case Name: Heyl Estate
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1945-06-29
Citations: 352 Pa. 407
Docket Number: Appeal, No. 142
Parties: Heyl Estate.
Judges: Before Maxey, C. J., Drew, Linn, Stern, Patterson, Stearns and Jones, JJ.
Reporter: Pennsylvania State Reports
Volume: 352
Pages: 407–411

Head Matter:
Heyl Estate.
Argued May 23, 1945.
Before Maxey, C. J., Drew, Linn, Stern, Patterson, Stearns and Jones, JJ.
Robert T. McCracken, for appellant.
William N. Trinkle, with him Frank F. Truscott, of Truscott, Trinkle & Wright, for appellee.
June 29, 1945:

Opinion:
Opinion by
Mr. Justice Drew,
By his last will and testament, as amended by two codicils, George A. Heyl, who died in 1926, created a spendthrift trust of the income of his residuary estate for the benefit of his two daughters, Kate Heyl Peace and Matilda Heyl Jackson; each to receive one-half of the income during her lifetime. On December 29,1930, Mrs. Peace, one of the beneficiaries, wrote to tbe surviving trustee, G-irard Trust Company, that if if would use a portion of tbe corpus of tbe trust to build a borne for ber, sbe would agree that ber share of tbe income should be charged with interest on tbe total amount paid for tbe property, together with tbe taxes, insurance and repairs. Sbe also said in this letter that if sbe should vacate tbe house, this arrangement should continue "so that tbe income of this Estate shall not suffer by reason of this investment." Upon tbe faith of this promise, tbe trustee accepted ber proposition and purchased two and one-half acres of land in Haverford and bad erected thereon a dwelling bouse at a total cost of $36,518.36 which amount it carries on its books as an investment of tbe trust in real estate, which is permitted by tbe will.
Mrs. Peace moved into tbe property and faithfully kept tbe agreement during ber occupancy of nearly twelve years. Then because sbe could not afford to live there longer, because ber income was reduced by a shrinkage in tbe trust earnings, in September 1942, she vacated and surrendered tbe premises to tbe trustee. On December 3, 1942, sbe wrote tbe trustee that inasmuch as tbe trust created by ber father was a spendthrift one, sbe bad tbe right to repudiate her agreement of December 29, 1930, and that she did so, and would expect in tbe future to receive a full one-half share of tbe trust income, without any deduction whatever. Tbe trustee having refused to recognize her asserted right, sbe filed a petition for a citation on the trustee to show cause why it should not be compelled to do so. After tbe trustee bad filed an answer, tbe learned orphans' court referred tbe matter to tbe auditing judge for decision, in conjunction with tbe audit of tbe second account of the trustee. Tbe auditing judge sustained tbe contention of Mrs. Peace, and tbe court en banc, after argument, dismissed exceptions filed by ber sister, Mrs. Jackson, tbe other beneficiary. On appeal by Mrs. Jackson tbe Superior Court affirmed tbe action of tbe court below Avbereupon sbe took this appeal.
Neither beneficiary questions the propriety of the purchase of the real estate as an investment of the trust, nor do they claim a surcharge against the trustee because of the deductions made from the income of Mrs.
Peace prior to her vacation and surrender of the property. Mrs. Jackson is the sole appellant and her effort is to compel her sister to bear the whole of the loss resulting from her failure to keep her agreement. If such cannot be done Mrs. Jackson must bear half of any such loss sustained. The question before us is whether Mrs. Peace was within her legal rights in terminating her agreement. With the moral question of fair dealing we have nothing to do.
This clearly is a spendthrift trust. The will specifically provides: "I direct that all payments of income to each and every of the beneficiaries hereinbefore named, shall be made to them directly, without the power of anticipation or assignment by them and so that the same shall not be subject to any judgment, decree, attachment, execution, or other process of any court, but the same shall only become and be the property of the beneficiary when actually received by him or her and the trustees shall only be discharged of the same upon the own proper receipt of the beneficiary."
The testator clearly provided that all payments of income to the beneficiaries shall be made to them "without the power of anticipation or assignment." The arrangement made by the trustee with Mrs. Peace, as to the payment of interest and other charges on this real estate investment, clearly was an attempt to presently assign her future income under the trust to the trustee. Such transaction was in manifest breach of the trust provisions, and, therefore, was illegal, void and unenforceable ab initio. It required no repudiation of the agreement by Mrs. Peace, for she had no control over the income until it was actually paid to her. Testator most explicitly provided not only that the net income shall be paid to the beneficiary directly and personally and upon Ms or her own personal receipt, but also that sucb income "shall only become and be the property of the beneficiary when actually received by Mm or her, and the trustees shall only be discharged of the same, upon the own proper receipt of the beneficiary." Under such circumstances, the trust income remains the property of the testator until it is actually paid to the beneficiary: Fox's Estate, 264 Pa. 478, 107 A. 863.
It is well settled in this Commonwealth, as was said by this Court in Morgan's Estate (No. 1), 223 Pa. 228, 230, 72 A. 498: "The law rests its protection of what is known as a spendthrift trust fundamentally on the principle of cujus est dare, ejus est disponere. It allows the donor to condition his bounty as suits himself, so long as he violates no law in so doing. When a trust of this kind has been created, the law holds that the donor has an individual right of property in the execution of the trust; and to deprive him of it would be a fraud on his generosity. For the law to appropriate a gift to a person not intended would be an invasion of the donor's private dominion: Holdship v. Patterson, 7 Watts, 547 . . . We repeat, spendthrift trusts are allowed not because the law concerns itself for the donee; he may conserve or dissipate as he pleases; the law's only concern is to give effect to the will of the donor as he has expressed it." See Riverside Tr. Co. v. Twitchell, 342 Pa. 558, 561, 20 A. 2d 768. The law will see to it that his wishes and directions are observed. Furthermore, a beneficiary of such a trust is without power to terminate it, or to modify or ameliorate its restrictions by agreement with the trustee: Miller's Estate, 333 Pa. 116, 3 A. 2d 370.
The fact the income of appellant, co-beneficiary of the trust, is reduced because the arrangement of the trustee with Mrs. Peace is unenforceable, cannot in any way justify the trustee in violating the terms of the spendthrift trust. She definitely refused to ask for a surcharge.
Judgment affirmed at the costs of the trust estate.