Court Opinion

ID: 6375306
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:54:31.645913+00
Date Added: 2024-06-11T15:50:09.176486
License: Public Domain

Gest, J.,
We are of opinion that the direction in the will to pay, from the income of the residuary estate, the dues upon the testator’s building and loan association stock constitutes an accumulation of income which is forbidden by the Act of April 18,1853, § 9, P. L. 503, 507,4 Purd. 4036. Assuming that the dues are debts of the testator, an accumulation of income could not lawfully be directed for their payment, our statute differing in this respect from the Thellusson Act in England: Lutz’s Estate, 18 Phila. 114; 20 Phila. 89. These payments from income obviously enhance the principal, and would represent an investment of income, the payment to the beneficiaries being postponed until the stock should be full paid, or perhaps for eleven years, and although, in some cases, perhaps in the present, this course might be deemed beneficial, it is, nevertheless, the very thing which the act was intended to prevent. There are cases, indeed, which justify a temporary withdrawal of a reasonable amount of income, in the interests of prudent management, to provide for possible losses and to maintain the regular payment of an annuity, such as in Eberly’s Appeal, 110 Pa. 95, and, in the most recent case, Dunn’s Estate, 26 Dist. R. 656; but in none of these cases was there involved any ultimate accumulation or any permanent addition to the corpus.
As we conclude that the direction to capitalize the income is invalid, the further question arises, what is its effect upon the trust of the entire residuary estate? As to this, it is clear that the manifest intention of the testator was to give his residuary estate to his four sons, but to postpone the payment of the gift until the stock should mature, or perhaps for eleven years, when the stocks would, if not matured, approach maturity by the accumulation of income. Contemplating that, in the interim, one or more of his sons might die, he provided a substitutionary gift to their issue, and also provided that the income and principal should be paid to his sons without liability for their debts, etc.
It is axiomatic that a trust in equity continues so long, but only so long, as its purpose remains unfilfilled, and, as was aptly said by Thayer, P. J.: “A trust created for a special purpose, and evincing no clear intent to continue it for any other purpose, terminates when the purpose has been accomplished and nothing remains for the trust to act upon:” Rea v. Girard Life Ins. Co., 17 Phila. 357; to which may be added Jack’s Estate, 17 Dist. R. 491, and Harrar’s Estate, 244 Pa. 542. A fortiori, is this true when the special purpose of the trust is forbidden by statute. This is not the ease where the failure or accomplishment of the trust is only partial, as in Forney’s Estate, *749161 Pa. 209; Denis’s Estate, 201 Pa. 616; Cozens’s Estate, 13 Dist. R. 49, and like cases; for here the manifest purpose of the testator was to enhance the value of the corpus by the addition of income for a series of years. The sub-stitutionary gift to issue, in case of the death of any of his sons, is not sufficient to keep the trust alive, the point being similar to that decided in Wyll-ner’s Estate, 24 Dist. R. 780, 65 Pa. Superior Ct. 396, and Disston’s Estate, 25 Dist. R. 1061, 257 Pa. 537.
As, therefore, the direction to accumulate is invalid, the framework of the entire trust of the residuary estate is gone and the trust collapses. It is immaterial whether the four children take the estate as legatees free of the trust or as next of kin under the intestate laws, for they are both; and it seems clear that the final provision for payment to the sons free from liability for their debts falls with the trust itself: Hays v. Viehmeier, 265 Pa. 268. The residue of the estate, therefore, both principal and interest, should have been awarded to the four sons.
The exceptions are sustained, and counsel will prepare a schedule of distribution in accordance with this opinion and submit it to the auditing judge for approval.
Hendeeson, J., did not sit.