Rehr v. Fidelity-Philadelphia Trust Co.

Argued January 10, 1933. Plaintiff filed a bill in equity to have decreed null and void a declaration of trust regarding a large sum of money, the declaration having been acknowledged and delivered by her to defendant, as trustee. Her sole reason for asking that relief is, as she alleges, that there never was a legal reason for its existence or continuance, and hence she had at all times and now has the right to revoke it whenever she chooses so to do, though it truthfully states that she "hereby declares she has fully considered the matter of whether the trust hereby created shall be revocable or irrevocable; and that upon such full consideration she has determined, so declares, and it is therefore agreed, that the trust hereby created shall be irrevocable." The trustee, the only defendant named, filed preliminary objections to the bill, denying, as a matter of law, that plaintiff had a right to revoke the trust; the court below sustained the objections and dismissed the bill, whereupon plaintiff prosecuted the present appeal. The decree of dismissal must be sustained.

By the declaration of trust, the fund is to be held upon an active trust "to invest the same and keep it invested, for and during the term of the grantor's natural life, and to pay the net income unto the grantor in quarter annual payments" and in further "trust upon the death of the grantor to pay and distribute the principal to such persons, in such amounts, and upon such trusts as the grantor shall by any last will and testament, or instrument in the nature thereof, limit and appoint; and in default of such appointment, or should such appointment for any reason fall or be void, to pay and distribute said principal upon the death of the grantor to and amongst the next of kin of the grantor in accordance with the intestate laws of the Commonwealth of Pennsylvania, as if the grantor had died seized of the principal;" and in further "trust to make all payments, whether of principal or income, unto the beneficiaries of the trust, including the grantor, upon their respective personal receipts, free, clear and discharged of and from the control of any husband which the grantor or any beneficiary hereunder may have or take; and free and discharged of the debts, contracts and engagements of the grantor or any other beneficiary hereunder, and without the right on the part of the grantor or any other beneficiary hereunder to alienate or anticipate any payments to be made hereunder to the grantor or any such beneficiary, and free, clear and discharged from the claims, levies, executions or attachments of any creditor of the grantor or any other beneficiary hereunder." The declaration of trust also gave to the trustee the power "to invest and reinvest [the moneys in the trust] from time to time and to change investments at discretion," such investments not to be confined "to what are known as legal securities for trustees under the laws of the Commonwealth of Pennsylvania," and empowered it generally to deal with the trust estate as any person sui juris might do, except that no investment should be made in common stocks, without "the consent of the grantor first thereto had . . . . . . always endeavoring, so far as practicable, to keep approximately one-third of the trust estate invested in first mortgages on real estate in the Commonwealth of Pennsylvania." Then follows the paragraph regarding irrevocability, hereinbefore quoted, and one relating to the commissions on principal and income which the trustee should receive for its services.

Plaintiff's counsel frankly admits that he cannot succeed unless all who are or may at any future time be interested in the trust are now before the court, so that their interests may be foreclosed by our decree. He alleges, however, that the language of the deed regarding the gift in remainder, operates to enlarge her life estate to an absolute one, and hence (1) all the possible interests "are before the court in the person of plaintiff" herself; and (2) that the trust has no existing purpose to support it. She has to establish both of these contentions in order to sustain the bill. We probably would hold that she has not established either, but, for brevity's sake, will herein consider the second only, which she certainly has not proved.

It will be noticed that even plaintiff's life estate is subject to a spendthrift trust, and this we have always held to be sufficient of itself to sustain the trust. Dodson v. Ball,60 Pa. 492, apparently the sole reliance of plaintiff on this point, itself says at page 496: "And where the trust is not active the legal estate will remain in the trustee so long as it is necessary to preserve the estate itself, as in the case of a trust for a married woman to protect the estate from her husband; or a trust for a spendthrift son to protect it from his creditors." A fortiori this is so where, as here, the trust is an active one.

In Baughman's Est., 281 Pa. 23, 38-40, we reviewed many of our previous decisions, including Dodson v. Ball, and treated of the question now under review at considerable length. We there said (page 39) that such a "trust cannot be terminated unless there is 'no ultimate purpose of any kind requiring the continuance of the trust' expressed in it, or which 'can be implied from its terms, except the mere payment of the income to the cestui que trust'. . . . . . Thus, on a gift of a property to A, upon an active trust for B for life, with remainder to C, B cannot end the trust, without the consent of C, and not even then unless no other legal reason appears for keeping it alive; as, for instance, where the life estate in B is upon a spendthrift trust." No case has been cited to us, and we know of none, in antagonism to that principle, and we know of a number which support it. In Minnich's Est., 206 Pa. 405, we decided that a will creating an active trust will be sustained, if the income payable to the life tenant is subject to a spendthrift trust, although there is no gift over of the corpus after the death of the life tenant. This was cited in Shower's Est., 211 Pa. 297, 304, and Rockhill's Est., 29 Pa. Super. 28,34, and, so far as we are aware, has never been overruled or even qualified. See also Moser's Est., 270 Pa. 217, and King v. York Trust Co., 278 Pa. 141.

The decree of the court below is affirmed and the appeal is dismissed, the costs thereof to be paid out of the income of the trust estate.