Opinion ID: 1704012
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Heading Rank: 1

Heading: Accumulations

Text: Section 146, Title 47, Code, provides under a title of Accumulation merely that no trust of estate for the purpose of accumulation only can have any force or effect for a longer term than ten years (except for the benefit of minors). On former appeal we gave a complete history of this statute and its setting. Of course significance must be accorded the words only and merely meaning in substance the same idea. Under that statute a trust accumulating income for a longer period than ten years is permissible if it is either partly or wholly for some other purpose than mere accumulation. We have given consideration to this statute in some of our cases as pointed out on former appeal. Henderson v. Henderson, 210 Ala. 73, 97 So. 353; Ramage v. First Farmers & Merchants Nat. Bank, 249 Ala. 240, 30 So.2d 706; Goodwyn v. Cassels, 207 Ala. 482, 93 So. 405; Watters v. First National Bank, 233 Ala. 227, 171 So. 280; Thurlow v. Berry, supra. We have said that accumulation means the addition of the interest or income from a fund to the principal or corpus so as to prevent expenditures of such interest or income. Ramage v. First Farmers & Merchants Nat. Bank, supra; Henderson v. Henderson, supra; 41 Am.Jur. page 92. In their brief appellants' counsel say we attack that requirement of the will which commands that this excess be made a permanent addition to the permanent corpus. This requirement has no other purpose than accumulation. Our cases and the history of this statute support what we held on former appeal, and consider the proper construction of the statute, that the trust shall not be set up with the intention to impound all the income to accumulate for no other purpose than as an accumulation to be added to the principal for a period longer than ten years, except as provided in it or having that effect. If there is provision for substantial expenditures of income or substantial legacies payable out of income, then the income is not to be used for accumulation only while such expenditures or legacies remain unpaid, provided they are not colorable to hide the real intent of the testator to set up a trust for accumulation only. We think that when a trust provides for large amounts to be paid out of annual income with an accumulation of the balance added to the corpus, it is not while that status exists a trust for accumulation only. Henderson v. Henderson, 210 Ala. 73, 97 So. 353; Ramage v. First Farmers & Merchants Nat. Bank, 249 Ala. 240, 30 So.2d 706. On former appeal we gave what we then and now consider good and sufficient reasons for the conclusion that the trust here in question was not for the purpose of accumulation only and had no such present effect and was not, therefore, controlled by section 146, Title 47, Code. So that the income not being for accumulation only, the principle applicable to accumulations as it existed at the common law prevails. Ramage v. First Farmers and Merchants Nat. Bank, supra; Henderson v. Henderson, supra. That principle under no aspect makes accumulations illegal for a period of twenty-one years after testator's death, whether or not the estate had vested. It is the rule against perpetuities at common law which also applies to accumulations. This requires a trust whether private or charitable to vest within said period. If the trust is charitable and vests in the trustee at death of testator and payable according to directions in the will for the benefit of charities then or thereafter ascertainable, it vests within the meaning of the common law so as not to be affected by the principle of remoteness, as we have fully here discussed the subject. When a chraitable trust has vested, accumulations not inhibited by the statute are not invalid. St. Paul's Church v. Attorney General, 164 Mass. 188, 203, 41 N.E. 231; 10 Am.Jur. section 21, page 600, notes 17, 18 and 19; 2 Sims on Law of Future Interests, page 508, section 591; Codman v. Brigham, supra. Of course the vital factor in a perpetuity is that the date of its vesting is postponed beyond the period prescribed. Within that period before vesting an accumulation is not a perpetuity. It is not an unlawful perpetuity at any time after the estate becomes vested. City of Philadelphia v. Girard's Heirs, 45 Pa. 9, 9 Wright, Pa., 9, 84 Am.Dec. 470. It is said in Reasoner v. Herman, 191 Ind. 642, 653, 654, 134 N.E. 276, 280: Where a charitable gift vests, a direction for accumulation, being for the management of the fund and not of the essence of the gift, will not, even if invalid, affect the validity of the gift, citing many cases. And on page 654 of 191 Ind., on page 280 of 134 N.E.: Appellees talk of    accumulation as going through the ages until it becomes a public menace. There is no occasion for alarm; for this may be limited by a court of equity, so that it will not be a public menace, and so that it will best subserve the main purpose, charity. It is also said in the Herman case, 191 Ind. page 652, 134 N.E. page 280, that this is controlled by the cy pres doctrine of liberal construction which will cause courts to be keen to discover whether the main purpose is charity and, if it is, to treat the testator's machinery of administration not as conditions precedent to vesting, but as suggestions regarding the management. It also states that it is applying the cy pres rule of liberal construction as observed in this Country, not the prerogative cy pres as applied in England, and that this distinction has been made to the point of satiety in all the states. 191 Ind. page 653, 134 N.E. page 280. It is apparent that the power of a court of equity with respect to the machinery of administration, sometimes called judicial cy pres, is sufficient to enable such a court to take care of any menace that may arise from accumulations, if any should occur after the death of testator, when the estate then vested. St. Paul's Church v. Attorney General, 164 Mass. 188, at page 204, 41 N.E. 231; 2 Bogert, Trust and Trustees, § 353, pages 1082, 1083; 3 Scott on Trusts, section 401.9 (page 2142); Perry on Trusts, section 399; 3 Page on Wills, page 678; 2 Sims on Law of Future Interests, page 508, section 591. The will of Gov. Henderson provides that after twenty years from his death all the income for twenty years thereafter shall be used annually for the first charity provided, and it is only if any of such income should not be so used in any year that it must be added to the corpus. This merely provides for a contingency occurring contrary to his direction during a period of twenty years beginning at the expiration of twenty years after his death, and after the vesting of the estate, and is in no sense an accumulation such as will probably be a public menace through the ages. But if it should be so administered as to be such a public menace a court of equity, under its powers of approximation or deviation sometimes called judicial cy pres, could then correct the evil in some manner not necessary to be here declared, to promote the charity specified dependent upon the situation then existing, but not by distributing it among the heirs. The authorities agree that a court of equity has such power whether it is called equitable deviation or judicial cy pres. 2 Perry on Trusts, section 728, page 1242. It is not prerogative cy pres. They do not support the theory that such income is subject to distribution among the heirs of the testator, but to the beneficiaries of the charity. St. Paul's Church v. Attorney General, supra, 164 Mass. page 205, 41 N.E. page 237; Brigham v. Peter Bent Brigham Hospital, supra (7), see 134 F. pages 524 and 525. The same principle has application to the provision for the maintenance of crippled children in a hospital directed to be constructed and maintained beginning twenty years after the organization of the educational association. We think the trust estate vested at the death of Gov. Henderson both as to the legal and beneficial interests, and that the accumulations are not controlled by our statute and are not violative of the common law rule in that respect. There is nothing before us in respect to the guardian ad litem fee. The court dismissed the cause after sustaining the demurrer and taxed the complainants with the costs. In doing so the court expressed the view that it was by authority of section 65, Title 11, Code, which provides for the court to use his discretion in so doing. Nothing has been done in respect to the guardian ad litem fee. There has been no proceeding to have it fixed. The trial court must first act on it in a direct proceeding for that purpose. That action may then be reviewed. It is not necessary to remand the case for that purpose. It is supplementary to the final decree. Affirmed. STAKELY, J., concurs. LIVINGSTON, J., concurs in the result. LAWSON, J., concurs specially as noted by him below. BROWN and SIMPSON, JJ., dissent.