Court Opinion

ID: 6376421
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:55:38.873787+00
Date Added: 2024-06-11T15:50:11.471477
License: Public Domain

Thompson, J.,
The testatrix by her will gave her estate to her husband as trustee to dispose of the income by way of annuities, etc., during life; and directed that upon his death her estate “shall be distributed among such of my children as may then be living and the issue of such of them as may then be dead, in such shares and upon such trusts as my said husband may by his last will and testament direct. But if my said husband die without having made such testamentary disposition, then I direct that my said residuary estate shall be distributed in equal shares among such of my children as may then be living and the issue of such of them as may then be dead,” etc.
Testatrix left surviving her husband and four children, and the latter are still living, so that no question of issue of deceased children at present arises. The husband is deceased; and by his will appointed the income from his wife’s estate “in precise conformity to the plan of distribution of income” from his own estate, which latter he gave in equal shares, under spendthrift provisions, to the children living at his death, issue of deceased children taking the parent’s share, during the respective lives of such children and their issue, the share of income of any child or grandchild dying childless to go to and be divided among the survivors of the class until the death of the last survivor; made certain provisions with respect'to the occupancy of the joint residence of himself and his wife, which, however, was the Wife’s property; and appointed the principal, upon the extinction of his inheritable blood, to such person, persons or other beneficiaries as his daughter Sarah Minis Goodrich should by will appoint,, and in default of appointment then according to the will of his oldest surviving child, and so on in order of seniority.
*572At the audit the four children asked that the trust estates' be terminated and the fund be awarded absolutely to them. This was on the ground that, so far as the remainders were appointed at all, the appointment was in excess of the power and was void, and the remainders were vested in them in default of appointment. It was argued that the Whole plan of the testator was destroyed with the failure of the appointment in remainder, that the life estates fell as an incident to the plan and that the children, therefore, took a fee in the whole as in default of appointment.
The Auditing Judge held that the remainders were vested in fee in the children, but that the good part of the appointment, if any, could be separated from the bad; and that the trusts of income were good and must be preserved to protect the spenthrift features. If the trusts of income are good, we think that the rest of the conclusion follows for the reasons given by the Auditing Judge: Lawrence’s Estate, 136 Pa. 354; Whitman’s Estate, 248 Pa. 285; Johnson’s Estate, 276 Pa. 291; Ledwith v. Hurst, 284 Pa. 94, and Jones’s Trust, 284 Pa. 90.
The question whether the trusts of income are within the power requires further consideration.
It was argued that by her will the testatrix parted with her right of dominion over her estate in favor of her children; but, is this broad .statement an accurate interpretation of the will? True, death ends the dominion of a decedent over his estate; in intestacy, to those appointed by the intestate laws, and in cases of testacy, to those upon whom the testator confers that dominion.
The testatrix does not in terms give her estate ultimately to any one; the gift is implied merely from the direction—not to the donee of the power, but—to the trustee to distribute. Until the time of distribution arrives the testatrix reserved her dominion, except to the extent that that dominion is to be exercised by the donee of the power in directing shares and trusts among children then living and issue of deceased children. The very fact that not all of testatrix’s children, or all of their issue, living at her death are, at all events, to take at the time of distribution, viz., the death of the husband, but only those then living, shows that, even under the gift over, the remainders are contingent during the lifetime of the donee of the power (Groninger’s Estate, 268 Pa. 184) ; and the fee is in the trustee. It shows further that the dominion of testatrix over her estate is meanwhile delegated to the donee of the power. And what is there in the language of the will, that confers the power to create trusts, to indicate that that dominion is not intended to be co-extensive with the dominion of the donor? True, as said in Horwitz v. Norris, 49 Pa. 213, 217, the donee “could not appoint estates or uses which the donor of the power could not have created by his will;” but, what is there in our law that prevents a testator from declaring spendthrift ■trusts?
Sugden on Powers (3rd American Ed.), LL. 252, states: “He (the donee) cannot annex any condition for his own benefit; nor can the property appointed be exempted by the donee of the power from the debts of the appointee.” But neither, under English law, can the donor. In Norris v. Johnston, 5 Pa. 287, it is said that “in England the power of alienation is considered an inseparable incident to the right of property in anything. . . . An individual disposed to provide for an improvident son or relation limits the interest intended to be granted him for his sole use during his life, and provides that his interest shall be forfeited if he transfers or assigns, or if it should be taken for his debts; in either event, it is limited over, or reverts. By this means *573the creditor, the alienee, and the object of the bounty, lose the benefit of the devise or gift. Here, however, the donation is preserved to the recipient, upon the conditions and limitations on which it is given.”
And in Moore’s Estate, 198 Pa. 611, 612, it is .said by Judge Penrose, upon whose opinion the decision of this court in sustaining a spendthrift trust was affirmed: “The right of alienation, whether by voluntary act or by adverse proceeding, is an inseparable incident of ownership in fee, and, in consequence, where the beneficiary is entitled to the absolute interest, such a trust cannot be created (Keyser’s Appeal, 57 Pa. 236); but it is not an inseparable incident of a life estate (4 Kent, 131); and, hence, the manifest distinction.”
And in line with this principle is Morgan’s Estate (No. 1), 223 Pa. 228, where it was not the exercise of the powter by the donee, but the attempted creation of a spendthrift trust for the donee by the testatrix herself that was stricken down, on the ground that “the right of alienation in the present case was given the donee in unmistakable and unrestricted terms; and this of itself defeats the attempted trust.” Having granted her husband, who was the donee of the power, an absolute estate, the will of the testatrix was executed, and the donee could not revive it so as to save his estate from the grasp of creditors.
In Wickersham v. Savage, 58 Pa. 365, the testator gave a legal life estate to his son, and at his death to and among the son’s children and issue “in such .shares and proportions and for such estates as he by will or other appointment in writing should direct.” The donee had but one child, a son, and appointed the estate to that son for life, and after his death for such uses and purposes as he by will might appoint. This was held not to be a good execution of the power. The Supreme Court said: “Beyond the children and issue of John, no estate vested or was to be appointed. That it vested in them on the death of the testator will not admit of a doubt. It could not be in abeyance, and it was not given to John the second in trust.” In Smith’s Estate, 4 W. N. C. 265, Appeal of Fidelity Trust Company, there was again a legal life estate with power to the life-tenant to make any division or distribution; and it was held that this did not confer power to create trusts.
In Boyles’s Estate, 5 W. N. C. 363, Penrose J., for this court, said: “The cases of Horwitz v. Norris, 49 Pa. 213; Wickersham v. Savage, 58 Pa. 365; and Smith’s Estate, 4 W. N. C. 265, will be found upon examination to differ from the present one in some very essential points.
“In Smith’s Estate there was no power to create or limit estates, but simply to divide and distribute; while in the other cases the attempt of the donee of the power was to appoint to persons not of the class in favor of whom it was conferred. The decisions were on these grounds.
“Here the power is very ample: ‘To such of my children, or their issue, in such way or manner, and in such proportions and for such estate and estates as she, my said wife, by her last will and testament . .. . shall order, direct, limit and appoint.’ ... Of course, where the trust is to accomplish that which is not within the terms of the power, as in Horwitz v. Norris and Wickersham v. Savage, it is on that ground invalid; not simply because it is a trust. There is nothing in these cases which asserts a contrary doctrine. Horwitz v. Norris impliedly, if not expressly, admits it.
“In Alexander v. Alexander, 2 Vesey, Sr., 642, it was said by Sir Thomas Clark that an appointment under a power to the separate use of a daughter, so far from being an objection, was more .strictly carrying into execution the will of the donor.”
*574And the separate-use trust created by the will of the wife was sustained.
It is thought, however, that Pepper’s Estate, 120 Pa. 235, holds that where the power, although to appoint estates, is confined to a class, and there is but one member of that class, a spendthrift trust cannot be created by the donee of the power. It is true that what the donee did in that case was attempted to be sustained as a spendthrift trust; but Mr. Justice Paxson pointed out that the will of the donee contained no trust of any kind; that, at most, it attempted to give “a conditional fee subject to forfeiture for breach of the condition against alienation.” That was something which the testator himself could not do, and the power was stricken down. In the course of the opinion it is stated that the donee could not, and the court could not, write a spendthrift trust into the will of the donor. But the real ground of the decision was that the extent or scope of the power of appointment depended upon the will of the testator.
“The donee of a power is simply a trustee for the donor to carry into effect the authority conferred by the power. In exercising the power, he must observe .strictly its provisions and limitations. The estate appointed is that of the donor and not of the donee, and, in making the appointment, the inters tion of the donor and not that of the donee must prevail. In case of a restricted power, the donee’s discretion in exercising the power is defined by the will, and the limit there placed upon it must be observed.” Rogers’s Estate, 218 Pa. 431, 433.
And the subsequent cases show that the donee of a power of appointment, exercised by the instrument and in the manner designated by the testator, has within the limits of the power the same dominion over the appointive estate that the donor had. Under a general power, the donee becomes practically the owner of the fee, and this is so even if the power is to be exercised by will only. And, under a limited power, whether as to quantity merely or as to quality of the gift, and within the objects of testator’s bounty, the donee’s authority is co-extensive with that of the testator, and as absolute.
In Ewalt v. Davenhill, 257 Pa. 385, the validity of a spendthrift trust created by the third successive donee of the power conferred by the original testator was upheld. William Swain, the testator, created trusts, and gave his son James power to revoke those trusts and create new ones; and thus, says Mr. Justice Walling, “so far as making a testamentary disposition of the property, James Swain was practically owner in fee.” But it was not the spendthrift trust created by James that was sustained. James by his will gave his son William, Jr., an equitable life estate, free from the control of his creditors, and provided that after the latter’s death the property should be held “in trust for the children of the said William Swain and the issue of such as may be deceased, in such partsi, shares and proportions and for such estates as they would be entitled to if the said William Swain had died intestate;” and afterwards gave power to William, Jr., by will to appoint the shares of his children or their issue to trustees, “in trust for the sole and separate use of said child or issue of said deceased child, under such limitations and restrictions as in his discretion he may deem best, so as to secure the same to the said child or issue of deceased child, for his, her, or their sole and separate use, maintenance and enjoyment.” William, Jr., by his will directed that the share of each of his children or their issue be held in trust for them during minority, and after that time to pay a child’s part of rents and income to the child directly, whether covert or sole, during life, for her separate use and benefit, free from control of husband, and from liabilities from any debts or engagements, the receipts of the children, whether *575covert or sole, to be sufficient acquittance. The words of James’s will are not the words usually employed to create spendthrift trusts, but Mr. Justice Walling said that “no set form of words is necessary to the creation of a spendthrift trust;” and the spendthrift trust created by William, Jr., under his power given only by “practically the owner in fee” was sustained. In the present case the power to create trusts is given by the original and actual owner of the fee, without the slightest hint by her of qualification or restriction as to the kind or character of the trusts to be created.
In Lewis’s Estate, 269 Pa. 379, 381, Mr. Justice Kephart says: “In determining whether a power of appointment is validly exercised, consideration must first be directed to the intention of the donor, as found in the instrument creating the power. The applicability of the rules of law, relating to the exercise of the power of appointment, is not to be measured solely by the particular class in which the power may be conveniently placed or wherein it may operate, but from a consideration of the intent and purpose for which the power was created, and whether its exercise expressly or impliedly violates the conditions laid down by the donor. It must be remembered that a certain confidence, trust and discretion has been lodged in him who enjoys the power, and, as Judge Penrose observes, ‘the principles relating to the execution of powers are simple and logical, and only such as are suggested by reason and the plainest dictates of common sense.’ ... It (the power in that case) was restricted to a class only; but, operating within the class, it was not only general but absolute. Therefore, a use and trust, .so imposed, being within the limits of the authority and in the exercise of an absolute right within the class, was not in violation of the original founder’s intention.” See, also, McClellan’s Estate, 221 Pa. 261.
And in Rafferty’s Estate, 281 Pa. 325, 330, Mr. Justice Sadler says: “The scope of the power conferred is to be determined from the words used, and the intention of the testator as evidenced by his whole will: Bailey’s Estate, 276 Pa. 147. If an examination leads to the conclusion that the disposition made by the donee does not violate in any way conditions imposed by the donor, the directions given by the donee will be upheld.”
In the case in hand the testatrix directs the distribution of her estate upon the death of her husband “among 'such of my children as may then be living and the issue of such of them as may then be dead, in such shares and upon such trusts as my said husband may by his last will and testament direct;” and the husband by his will directed the income to be paid monthly for life to and among his children and the .survivor and survivors of them, “free and discharged from all claims of creditors, and without any right of assignment or anticipation whatever.”
In Spring’s Estate, 216 Pa. 529, where, after an absolute estate to the children of a deceased daughter, the testator directed that the share be held in trust for them, and the trust was sustained, Mr. Justice Elkin said: “It is not for him who receives the gift to fix the quantum of the estate devised, the time when it is to vest absolutely, the method by which it is to be controlled or managed, or the conditions to which it is subjected.” True, that immunity from debts of the beneficiary is not even considered in upholding spendthrift trusts, and that such trusts are upheld only because they are for the benefit of the donor, who in this way is assured that his bounty will, beyond all hazards, reach those whom he intends to benefit. But does1 the testator waive such benefit when he gives power as broad as is his own to create trusts, and does he prohibit his donee from imposing such restrictions as will assure the enjoyment of his estate beyond peradventure by those to whom through the *576donee he gives it? And is it the law that when a testator confers power in express terms to create trusts, he means or can mean only trusts whose benefit may be destroyed at any time by creditors of the cestui que trust, or separate-use trusts that can endure only during coverture, but cannot and never does mean any trust that he himself might have created? Cujus est dare, ejus est disponere; and it seems to us that when a testator uses language like that in this will he himself disposes of his estate upon such trusts as in the judgment of the donee best effectuate his intention. At any rate, until there is a positive ruling by the appellate courts against the validity of a spendthrift trust declared by the donee of a power to create trusts so general as in the present, we cannot consent to the termination of this trust: Minnich’s Estate, 206 Pa. 405; Fox’s Estate, 264 Pa. 478.
The exceptions are dismissed, and the adjudication confirmed absolutely.
Lamorelle, P. J., did not sit.