King v. York Trust Co. , 278 Pa. 141 ( 1923 )

Opinion by

Me. Justice Walling,

This is a proceeding in equity to set aside a trust. In 1903 Charles A. King and Rosie A. King, his wife, of York County, executed a trust deed of all the former’s property, real and personal, to Henry A. Ebert. The deed is one of general warranty, with the following recital: “Whereas, said Charles A. King is desirous of vesting all his estate, real, personal and mixed, voluntarily into the absolute control of a trustee feeling that he is not able to manage said estate and save it from loss, and to place his estate so that it shall be as free as the law can make it from creditors, both as to principal and as to income.” At the same time and as part of the same transaction Mr. Ebert executed a formal declaration of trust reserving to himself complete powers of management, sale, investment, reinvestment, etc., and further providing that “the [net] income thereof be held for the reasonable support of the said Charles A. King, his wife, Rosie A., and their children during the life of the said Charles A. King, said principal and said income both to be as free as the law can make them from attachment by creditors or in any wise liable to the debts of the said Charles A. King, the purpose of this trust being to provide an assured living for the said Charles A. King and wife and children, free from any interference by any creditor for any debt contracted subsequent to the creation of this trust. If there be any income above what is needed for the reasonable support of the said Charles A. King and wife and children, such excess shall be invested to the best advantage of the said Charles A. King and his estate, and to possess the same freedom from interference by creditors as the original corpus of this trust. After the decease of the said Charles A. King the whole of said residue so to be invested as aforesaid, being the principal or corpus of said fund, is to be distributed among the said Rosie A. King, wife of said Charles A. King, and their children, in accordance with the intestate laws of the State of Pennsylvania, and if none of them survive him the same to descend to the collateral heirs of the said Charles A. King under the intestate laws of the State of Pennsylvania.” The trust declaration was acknowledged by King and wife as well as by Ebert, and the trust so created was executed in all respects by the trustee until his death in 1918. Prior thereto, in 1910, King and his wife, to correct certain errors of description in the former deed, executed another deed to Ebert subject to the same trust. After Ebert’s death, Mr. and Mrs. King presented their petition to the Court of Common Pleas of York County setting forth the creation, execution, etc., of the trust, and ■ — further, “That, by reason of the death of the said Henry A. Ebert, trustee as aforesaid, and of the nature of the trust, it is imperative that a new trustee for said trust be appointed forthwith.” Thereupon the court appointed the York Trust Company, of York, Penna., the defendant, as trustee in place of Ebert. In 1921 Mr. and Mrs. King and their only children, two adult sons, filed this bill praying for a revocation of the trust; later, by amendment, a half sister of Mr. King was joined as a plaintiff. From bill, answer and testimony, the chancellor made findings of facts and legal conclusions, upon which, in due course, a final decree was entered granting the relief prayed for; thereupon defendant brought this appeal.

The decree cannot be sustained. The deed and declaration of thrust, being parts of the same transaction, must be considered together (Greenfield’s Est., 14 Pa. 489) and prima facie constitute an irrevocable active trust. Among the cases supporting this conclusion are Greenfield’s Est., supra; Potter v. Fid. Ins. Trust, etc., Co. (No. 1), 199 Pa. 360; Rynd v. Baker, 193 Pa. 486; Knowlson et ux. v. Fleming, 165 Pa. 10; Merriman v. Munson, 134 Pa. 114; Jones v. Jones, 252 Pa. 553; Wilson v. Anderson, 186 Pa. 531. The opinion by Mr. Justice Dean in the last case reviews many of the earlier decisions and sustains the irrevocability of such a trust. One reason for the rule is that the object, to place the property beyond the reach of future creditors of the settlor, can be accomplished only by complete divestiture of his ownership therein and a vesting of the equitable interest in the beneficiaries: see Benedict v. Benedict, 261 Pa. 117; Rienzi v. Goodin, 249 Pa. 546; Nolan v. Nolan, 218 Pa. 135. It was within King’s power as absolute owner to create such a trust (Russell’s App., 75 Pa. 269) and the presumption is the deed and declaration were intended to accomplish their avowed purpose. The beneficiaries thereunder take as purchasers, not as legatees, the instruments not being testamentary: see Brown v. Mattocks, 103 Pa. 16; Cable v. Cable, 146 Pa. 451.

Plaintiffs invoke the rule, applicable in many cases (see Stafford’s Est., 258 Pa. 595; Harrar’s Est., 244 Pa. 542; Wood’s Est., 261 Pa. 480), that a trust may be terminated by consent of all the beneficiaries, but here it is impossible to determine until the settlor’s death who the ultimate beneficiaries will be. Mr. and Mrs. King may have other children, or Mr. King may survive his wife, all of his children and the sister, in which case his other collateral relatives would be the beneficiaries; so it cannot be now determined that all the parties in interest are before the court: see Lewis’s Est., 231 Pa. 60; Shirk’s Est., 242 Pa. 95.

The only ground upon which the revocation is asked, as stated in the bill, is that the settlor has become competent to care for his own property, which fact is found by the chancellor. This might sustain the decree if the deed contained a power of revocation, but it does not, and, being in equity, the relief granted must be confined to the pleadings as well as to the proofs: Barnard et al. v. Kell et ux., 271 Pa. 80; Modern Baking Co. v. Orringer, 271 Pa. 152, 157. Here the chancellor and lower court fell into error, for the decree is based upon findings outside of the pleadings. For example, the chancellor finds the settlor did not know the nature of the transaction by which the trust was created, that he was without independent advice and, in effect, that a constructive fraud was perpetrated upon him; while the bill makes no such complaint. Moreover, in the face of the deed and declaration of trust, executed by the settlor and his wife in 1903, their deed of confirmation in 1910, their petition to the court for a new trustee in 1919, reciting the entire transaction, together with their receipt of the rents, income, etc., from the trustee for eighteen years, a finding that they did not know the nature of the transaction is untenable. Again, there is no suggestion anywhere of a confidential relation between King and the York Trust Company, yet at Ms instance it was appointed trustee on the identical terms named in the original deed and declaration. True, equity will often grant relief against a trust improvidently or mistakenly created, but none of the cases so holding is parallel to the present, and no relief is here asked upon such ground; furthermore, this is not the case of an estate given to strangers.

The absence of a power of revocation does not tend to invalidate the trust, where as here the insertion of such power would defeat the object intended: Willard v. Integrity Tr. Co., 273 Pa. 24, 29; Neal v. Black, 177 Pa. 83; Reidy v. Small, 154 Pa. 505; and see Reese v. Ruth, 13 S. & R. 434, 435. There is some evidence that after the trust was created the trustee told the settlor when his sons came of age the property could be returned to him; but, if so, it was a mere expression of opinion and could not change the legal effect of the prior transaction, and there is nothing in the record to cause doubt as to the good faith of either trustee.

The decree is reversed and plaintiff’s bill is dismissed, the costs here and in the court below to be paid by defendant out of the funds of the trust estate.