Title: Asche v. Asche
Citation: 210 A.2d 306
Docket Number: N/A
State: Delaware
Issuer: Delaware Supreme Court
Date: April 1, 1965

210 A.2d 306 (1965)
Elizabeth Ann ASCHE, Frederic B. Asche, III, Edward C. Asche, Franz M. Asche, Elizabeth V. Asche and Asche Ackerman, Appellants,
v.
Grace Vale ASCHE et al., Appellees.

Supreme Court of Delaware.
April 1, 1965.
*307 E. Dickinson Griffenberg, Jr., of Killoran &amp; VanBrunt, Wilmington, pro se as Guardian ad litem for certain appellants.
Andrew B. Kirkpatrick, Jr., and Richard L. Sutton, of Morris, Nichols, Arsht &amp; Tunnell, Wilmington, for Andrew B. Kirkpatrick, Jr., Guardian ad litem for certain appellants.
Richard J. Abrams, of Richards, Layton &amp; Finger, Wilmington, for the Executors of the Estate of Elizabeth W. Vale.
Thomas Herlihy, III, Deputy Atty. Gen.
Blaine T. Phillips, of Berl, Potter &amp; Anderson, Wilmington, for certain appellees.
WOLCOTT, Chief Justice, CAREY, Justice, and CHRISTIE, Judge, sitting.
CAREY, Justice (for the majority of the Court).
This is an appeal from a decision of the Court of Chancery for New Castle County upon a bill for instructions filed by certain Trustees appointed in a Will.
Ruby R. Vale, an attorney, died on January 2, 1961, leaving a last Will and Testament, dated November 30, 1960, with a codicil dated December 21, 1960. His wife survived him but died on August 28th, 1961. At the time of the testator's death one child, Grace Vale Asche, was living. There were also living three grandchildren and six great grandchildren, all still alive. By his will, after making certain bequests to individuals, the testator divided his residuary estate into a marital and a non-marital trust. The marital trust is of no concern in the case now before us.
The provisions of the will concerning the non-marital trust are complicated and the Trustees filed a declaratory judgment action in the Court of Chancery seeking instructions as to the meaning and validity of certain provisions. The specific questions which the Court was asked to determine are set forth later herein. From the decision and order of the Court some of the parties have filed this appeal. That decision was based upon applications of all parties for summary judgment. No evidence of any nature was before the Court other than the will and codicil, a statement of the identity of the survivors, some information concerning the size of the trust estate, and a copy of the grandson's renunciation of any rights under clause Fifth of the will. We find it necessary to quote at length several provisions of the will.
In the Third clause of the will, after giving unto his trustees his residuary estate, the testator included a paragraph designated "II" which was intended to constitute a duration clause for the trust, the material language of which is as follows:
*308 Paragraph III C (b) contains certain directions for the disposal of income, as follows:
Paragraph III disposes of the remainder in the following language:
The Fourth clause of the Will lists a number of trusts which the testator had previously created and concludes with the following two paragraphs:
The Fifth clause of the will contains an alternative disposition of income and remainder in the following language:
The complaint filed in the Court below by the Trustees prayed for a decree directing the administration and distribution of the trust property and specific answers to the following questions:
After reviewing briefs and hearing arguments from counsel for the executors, the trustees, executors of the estate of Elizabeth W. Vale, the various life beneficiaries, and guardians ad litem for the minor living beneficiaries and for the unborn issue, the Vice-Chancellor held that the direction for accumulation constituted a present vested gift to charity, with postponement of enjoyment, and that the expected period of accumulation is not unreasonable. He also held that this period could exceed the time *311 permitted by the rule against perpetuities; that all subsequent gifts might not, therefore, vest within the period of that rule and were accordingly void; that after the accumulation and payment of two million dollars to the charitable foundation, the trust must cease and all remaining assets to be distributed under the intestate law.
Before us, the contentions made by the various appellants are, in summary: (1) the gift to the charity is contingent and may not vest within the period of the rule against perpetuities and is accordingly void; (2) regardless of whether the charitable gift is valid or invalid, the subsequent gifts are vested or must vest within the period of the rule and are accordingly valid.
In approaching the problem, we have in mind certain basic principles applicable to all will construction cases. We must try to determine the testator's intent from the language of the will as a whole. If the intent so found creates a gift which violates the rule against perpetuities, the gift must fail. The Court will, however, prefer that construction which does not offend the rule, if such a construction is reasonably justified by the language used. The Court will also prefer a construction that the gift is vested rather than contingent. Cann v. Van Sant, 24 Del.Ch. 300, 11 A.2d 388, Affd. Frame v. Cann, 24 Del. Ch. 353, 16 A.2d 248; Myers v. Bank of Delaware, et al., 38 Del.Ch. 228, 149 A.2d 745, 79 A.L.R.2d 1433; Girard Trust Co. v. Rector, Wardens and Vestrymen, etc., 30 Del.Ch. 1, 52 A.2d 591.
What was the testator's intent with respect to the charitable gift? The Court below was of the opinion that he intended the trust to continue at least until the income accumulations amounted to two million dollars, when they are to be paid over to the perpetual foundation; in other words, he felt that this gift to charity in its full amount was the testator's paramount wish to which every succeeding object or interest is subordinated. It is true that this gift is created in positive terms, which state, "after the accumulation of the said two million dollars as artificial principal" * * * the Trustees shall pay over the income and ultimately the principal of the trust to the other beneficiaries. We must, however, read the will as a whole to find the correct intent. Paragraph IIb purports to define the duration of the trust in positive language. Subject to clause Fifth, the trust is to terminate at the expiration of time valid under the law of the State of Delaware "for lawful issue born after my death". Somewhat similar language is used for the duration period in the event clause Fifth comes into play. We think the testator was here attempting to set a period of duration within the rule against perpetuities; while he wanted to benefit his descendants as long as possible, he was eager to do so without violating that rule. In other words, Mr. Vale was trying to use the longest period permissible under that rule as the yardstick for the duration of this trust. Cf. Stellings v. Autry, 257 N.C. 303, 126 S.E.2d 140; Fitchie v. Brown, 211 U.S. 321, 29 S. Ct. 106, 53 L. Ed. 202. We do not say that he was necessarily successful in his attempt to keep within the rule as a matter of law; all we mean is that such was his apparent intent.
If we assume the validity of the duration clause, we see that a conflict could arise between it and the charitable provision; this would occur if the trust should terminate under paragraph IIB before the two million dollars shall have been completely accumulated. The likelihood of this situation actually arising is extremely remote, for we are told that at the present rate of return the accumulation will be completed in about seventeen years. Moreover, some of the living beneficiaries are very young. Nevertheless, the possibility exists and, should it occur, one part of the will must give way to the other part; that is, either the duration of the trust must be extended until the two million dollars is accumulated, or the accumulation must stop *312 short of that amount. Under the view of the Vice-Chancellor, the first alternative would prevail but, under our view, the duration clause would take precedence. To say that Mr. Vale intended that the duration be extended in order to bring the accumulations up to the exact sum of two million dollars is to say that he intended to stretch the trust further than the rule permits, notwithstanding his positive language showing that he intended to stay within that rule.
Several considerations support our view of Mr. Vale's intent. He did not designate a specific use to be made of the charitable gift, such as the erection of a building which would require a minimum or certain number of dollars, nor did he give any other indication of a reason why the figure had to be exactly two million. Apparently this figure was simply his idea of the amount appropriate to form the capital basis for the foundation he wanted to create. On the other hand, his disposition of subsequent income and all the capital of his trust among his descendants was a matter he discussed in great detail in the will, devoting several pages to that purpose. We may assume he was familiar with his property and that he realized the great probability of the accumulations reaching that figure long before the duration clause would terminate the trust. Although the charitable gift is given preference over the family donations, we do not think this preference was intended to go to the extent of upsetting the rest of his testamentary scheme. We think, in short, that he intended a gift of two million dollars to the charity if that amount should be accumulated prior to the trust termination as defined by him, otherwise the charitable gift should be reduced to the amount then accumulated.
Under the foregoing interpretation of the will, it follows that the accumulation is not a condition precedent to the vesting of the charitable gift. If we apply the test adopted by Restatement of Property § 370, the gift is not contingent because it is not "subject to an unfulfilled condition precedent". If we apply the test which had generally been followed in prior Delaware cases, the same result is reached. That test is the one set forth in Conwell's Admr. v. Heavilo's Admr., 5 Harr. 296, in which Chief Justice Booth said:
In the present case, it is our opinion that the "time or event is annexed to the payment of the legacy rather than to the substance or gift". The will orders the trustees to "assign, transfer and pay over" all the accumulations when the designated time arrives. This gift is therefore vested but is subject to be divested pro tanto if the trust duration should ultimately be found to be valid and that period should end before the two million dollars is accumulated. If the trust duration should be found invalid, it may be that the vesting would be absolute under the theory, set forth in VI Amer. Law of Prop. § 24.47, that if the *313 divesting interest is void, the interest subject to divesting becomes absolute.
In our opinion, vesting is not prevented by the fact that the will does not require the perpetual foundation to be established until some future time; the real gift is to those who will benefit from the application of the gift to educational purposes and the foundation itself will simply be the agency by which the gift is to be administered. Even had Mr. Vale failed to designate such an agency, equity would not have allowed the gift to fail but would have appointed a trustee to carry it into effect. We also think that the immediate vesting of the gift is not prevented by the fact that it consists solely of accumulated income. Being vested, the gift does not violate the rule against perpetuities. We of course concur in the Vice-Chancellor's view that the period of accumulations is not unreasonable.
In support of the foregoing holdings, we cite the following authorities: VI American Law of Property, § 24.42 etc.; Restatement of Property, § 442; Gray, Rule against Perpetuities, § 673; Girard Trust Co. v. Rector Wardens and Vestrymen, supra; Wilmington Trust Co. v. Bronxville Trust Co., 24 Del.Ch. 64, 5 A.2d 248; Odell v. Odell, 10 Allen 1, 92 Mass. 1; In re Galland's Estate, 103 Wash. 106, 173 P. 740; Perkins v. Citizens &amp; Southern Nat. Bank, 190 Ga. 29, 8 S.E.2d 28; Equitable Trust Co. v. Ward, 29 Del.Ch. 206, 48 A.2d 519; Simes &amp; Smith on Future Interests, § 1284; IV Scott on Trusts § 401.9.
Because of the Vice-Chancellor's belief that the charitable gift is vested subject to no defeasance and that the accumulations might require longer than the permissible period, he held that all succeeding interests violated the rule, presumably upon the theory that they are contingent. Of course, under our modification of his holding, this result is not necessarily correct. We venture to suggest that the life estate to the daughter is either vested or must vest, if at all, within the period of the rule. Beyond this suggestion, however, we express no views upon the meaning or validity of those testamentary provisions. Our ruling makes necessary a determination as to which of the succeeding gifts, if any violate the rule. This determination involves many problems which have not been ruled upon in the Court below. Even assuming that we have the power to decide these matters initially, we prefer in this case to have the benefit of the Vice-Chancellor's views. For this reason, the record will be remanded with directions to amend the judgment in accordance with the opinion herein expressed as to the charitable gift and to determine the remaining questions after such further proceedings as may be necessary.
WOLCOTT, Chief Justice (dissenting).
I do not concur in the conclusion of the majority that Paragraph II of the Will, the so-called "duration clause", acts as a time limitation upon the provisions of Paragraph III C directing the accumulation of income to provide "artificial capital" for a charitable trust. I set forth briefly the reasons for my disagreement with the majority in this respect.
The majority has held that the gift to the charity under Paragraph III C of the Will is a vested gift. With this holding I agree because the gift is an immediate gift with enjoyment of the proceeds merely postponed to a later date. This conclusion flows from the obvious intent of Paragraph III C to provide immediately on the death of the testator the inception of a fund to be used ultimately for charitable purposes. The gift to charity is not, therefore, a gift to charity subject to a condition precedent which may be void for remoteness. Gray on Perpetuities (4th Ed.), § 605; Restatement of Property, § 370; Conwell's Adm. v. Heavick's Adm., 5 Harr. 296.
The effect of Paragraph III C is, therefore, to make a vested gift to a charity but to provide for an accumulation of income over a period which might possibly extend *314 beyond the permissive period of the rule against perpetuities. When such is the case, the period of accumulation for the charity is not measured by the test of the rule against perpetuities but by the test of reasonableness. IV Scott on Trusts, § 401.9; Restatement of Trusts 2nd, § 401; Restatement of Property, § 442; Girard Trust Company v. Rector, Wardens and Vestrymen of St. Anne's Protestant Episcopal Church, 30 Del.Ch. 1, 52 A.2d 591. This being so, Paragraph III C standing alone is a valid gift of income for a period of accumulation which by stipulation, might well extend beyond the permissive period of the rule against perpetuities.
The majority, I believe, would agree with the foregoing but find, by reason of a general intent of the testator expressed in Paragraph II of the Will, that he could not have intended this to take place. In my opinion, however, this may not be, for its effect is to construe the clear provisions of Paragraph III C in a fashion not intended by the testator. Its effect is to rewrite his Will. Under the circumstances, this may be a desirable result but I conceive that it is not the function of a court.
Paragraph III C is quite clear in its provisions and needs no construction to determine its meaning. The testamentary trustees are directed to accumulate income until $2,000,000.00 has been accumulated "as artificial principal", at which time the trustees are directed to pay over "the said sum of Two Million Dollars" to the charity. In the light of this express reference to a definite sum, how can it be said that the testator had a general intent that, under some circumstances, the sum would be less? It is, of course obvious that he did not foresee the possibility that the accumulation might not be completed within the limits of the so-called duration clause, but recognition of that lapse on his part demonstrates that to change the amount of the gift by construction is to supply for the testator a testamentary disposition he could not have intended because he did not think of the possibility.
If anything further is needed to demonstrate that the testator intended to benefit the charity in the precise amount of $2,000,000.00, it is found in the later provision of Paragraph III C making the subsequent gifts of income and principal to his family. These gifts are made expressly "after the accumulation of the said Two Million Dollars as artificial principal."
In my mind, the meaning of Paragraph III C is clear. Once the gift to the charity is found to be vested, it follows that the accumulation must continue until the full sum of $2,000,000.00 has been achieved. To hold otherwise is to rewrite the Will under the guise of construction. In my opinion, the Vice Chancellor's ruling on the point should be affirmed.