Court Opinion

ID: 6390393
Source: CourtListenerOpinion
Date Created: 2022-06-25 00:18:13.988543+00
Date Added: 2024-06-11T15:50:41.645676
License: Public Domain

Dissenting Opinion

Rahauser, J.
. . . The executor of the will of the life tenant, Edwin V. D. Paul, claims that the $6,216.93 should be distributed to him on the theory that increments accruing by reason of gains arising from the liquidation of investments should be awarded to the life beneficiary. He claims that the said amount represents income to which the life tenant is entitled. In support of this contention counsel cites Nirdlinger’s Estate, 290 Pa. 457, at page 470, where the court said:
“The testator gave the income of his estate to the life tenants. ‘Income’ may be defined as a gain which proceeds from labor, business or property of any kind, the profits of commerce or business. It includes the return earned by capital stock. It has a broader meaning than the term ‘dividend’; it includes profits. We said in Quay’s Est., 253 Pa. 80, that profits included not only the accumulations of earnings, but the advances or increment in value. It is not necessary to include the latter in the definition. What the testator did was to give to the life tenant all this income.”
*360Counsel for the estate of the life tenant further contends that the precedent has already been established for decreeing the said increment to the life tenant for the reason that at the second and partial account by the decree of April 25, 1947, the increment of $12,-013.85 was awarded to the life tenant.
The decree of April 25, 1947, was a distribution of the particular funds then before the court, the remainder interests made no claim to the funds distributed to the life tenant, and in no way was this decree a final determination of the rights of the parties. See Edwards Estate, 360 Pa. 504 at 509.
The life tenant is not entitled to share in this fund. The account clearly shows that the liquidation of the interest in the trust fund accrued after the death of the life tenant. There is no question but that the sale of the trust units occurred in the ordinary management of the fund. There was no abuse of the discretionary power of the trustee in the liquidation of the trust units. The life tenant’s interest in this trust terminated on his death. Any increase in value of the trust res and any income accruing after that time could not inure to the benefit of the life tenant. See Neafie’s Estate, 325 Pa. 561 at 571.
In addition, there is a presumption that the proceeds from the sale of the units of Common Trust Fund No. 2 as well as the profits on the sale of U. S. Treasury bonds belong to the trust res and are a part of the profits of the trust. The burden of proving otherwise is on the person asserting the claim. See Lewis Estate, 351 Pa. 576, and Nirdlinger’s Estate, 290 Pa. 457 at 475. No such proof was offered here.
The remainder interests under paragraph ninth of the will contend that the said $6,216.93 is principal; that the principal of the trust fund was vested in the said remainder interests and that the said amount should be prorated among them.
*361The auditing judge does not believe that the remainder interests under paragraph ninth of the will share in this fund. We agree with the late Judge Ryan who, in considering a similar question under another trust created by paragraph fifth of the will of Jacob W. Paul, No. 1659 of 1941, said:
“The question presents itself as to whether the designated charities may be entitled to the enhancement of corpus. A reading of the will convinces that testator intended each to receive only the precise sum of $2,-500.00. Apparently he did not envision an increase of principal. Nothing on the face of his will permits us to supply that oversight. Butler Estate, 364 Pa. 279.”
Similarly, in the ninth paragraph of his will, Jacob Paul gave the remainder interests certain precise sums. Nothing in that paragraph permits us to decree a larger amount. See Johnson Trust, 3 Fiduc. Rep. 209.
An effort was made by counsel for the estate to discover the whereabouts of all the heirs of Jacob Paul, deceased. His efforts were not successful. In view of these facts the court appointed a trustee and guardian ad litem to represent the heirs not discovered and those not on the record or present at the audit.
The court agrees with the contention of the guardian ad litem that this is a fund similar to that referred to in Scott on Trusts, §430, which reads as follows:
“. . .In this topic we are concerned with the similar problem which arises where property is transferred upon a trust which does not fail but which on the contrary is fully performed without exhausting the trust estate. In such a case there is a resulting trust of so much of the property as is not required for the accomplishment of the purposes of the trust, unless the settlor manifested a different intention. ... If the property is devised or bequeathed, there is a resulting trust of the surplus in favor of the testator’s estate . . . and where personal property is bequeathed, the resulting *362trust is in favor of the next of kin or residuary legatee...."
However, the court is of the opinion that this fund falls within and is governed by the eighteenth paragraph of the will which reads as follows:
“EIGHTEENTH. Of the residue of my estate, real, personal and mixed, sufficient money shall be retained by the trustee hereinbefore named to pay the annuities hereinbefore provided for, the balance shall be divided into ten (10) equal parts and distributed as follows:
“One-tenth (1/10) to the Salvation Army.
“One-tenth (1/10) to the American Red Cross.
“Two-tenths (2/10) to the Central Branch of the Y.M.C.A. of Pittsburgh.
“Two-tenths (2/10) to the Clergy Relief and Pension Fund of the Protestant Episcopal Church.
“Three-tenths (3/10) to the Domestic and Foreign Missionary Society of the Protestant Episcopal Church.
“One-tenth (1/10) to the Central Branch of the Y.W.C.A. of Pittsburgh.”
Here Jacob Paul, in speaking of his estate, real, personal and mixed, directs the balance of his estate to be divided into 10 equal parts. In Bricker’s Estate, 335 Pa. 300, at 303, the Supreme Court said:
“. . . ‘Balance’ is the vernacular for the legal phrase ‘rest, residue and remainder’: see Thompson’s Estate, 237 Pa. 165, 169; Taylor’s Estate, 239 Pa. 153, 163. The word ‘balance’ in the fifth paragraph of this will must be interpreted as meaning ‘balance of the estate,’ there being no reason why it should be restricted to the balance of the fund derived from the items mentioned in the third paragraph: see In re Hayes’ Will, 263 N. Y. 219, 188 N. E. 716. Whatever ambiguity exists must be resolved in accordance with the principle that a broad rather than a narrow construction of a residuary clause is favored in order to avoid intestacy, it *363being presumed that a testator intends to dispose of his whole estate: Fuller’s Estate, 225 Pa. 626, 629; Carson’s Estate, 130 Pa. Superior Ct. 133, 138.”
The auditing judge is of the opinion that the fund in dispute falls into the residue of the estate and is distributable under paragraph eighteenth of the will. See Zoller Estate, 373 Pa. 451.