161 A. 721 | Pa. | 1932
Lead Opinion
Argued April 27, 1932. On February 4, 1929, Thomas L. Beirne, named therein as the settlor, executed and delivered to defendant a deed of trust covering a life insurance policy and certain shares of corporate stock, the trustee being "expressly authorized and empowered to retain and hold as investments of the trust estate any or all of the securities and property hereby or which may hereafter be assigned to it to be held under the terms hereof, or the trustee may sell or dispose of the same with full power as to all securities and property at any time included in the trust estate [and] to make all necessary assignments and transfers thereof," with the authority and duty "to manage, invest and reinvest the same and collect the income and profits thereof and after paying all proper costs and expenses [including its commission as trustee] *573 to pay over the net income arising therefrom unto the said settlor for and during all the term of his natural life," and, after his death, to pay, out of the principal, specified sums to named individuals and charities; to "invest and reinvest" the remainder, to pay out, of its income, $75 a month to a designated individual for life, the balance thereof to a named charity, and, after the individual's death, to pay all the income to the charity, together with so much of the principal as it may from time to time demand. The stocks and policy were delivered to defendant at the time of the execution of the deed of trust, and, by virtue of powers of attorney also then duly executed by the settlor, they were forthwith transferred to the defendant as trustee.
The settlor also reserved the right to revoke the trust, "by an instrument in writing signed by him and delivered to the trustee during his lifetime, or by such instrument the settlor may alter this trust and the estates, uses or beneficiaries herein declared." Some ten months later, he exercised this reserved power, and made a somewhat different distribution of the income and principal of the trust after his death; but the trust, in all other respects, was expressly confirmed, and the changes thus made in no way affect the questions to be decided by us.
The bill in equity in this case, which was filed by the widow of the settlor, after reciting the provisions of the deed of trust and the supplement thereto as above set forth, and attaching copies thereof to the bill, stated that the settlor subsequently died, leaving a will and certain codicils, none of which is of any moment here, except, perhaps, paragraph four of the will which states: "Inasmuch as my wife deserted me and has thereby forfeited all rights to share in my estate, I am not making any provision in my will for her beyond that which I felt was a moral duty in my lifetime and having paid her $40 per month in life, I am directing my executors to set aside a sum sufficient to continue paying to her $40 a month for and during the full term of her natural life," *574 with a proviso revoking the legacy if she should contest the will or elect to take against it. The bill further averred that the trusts attempted to be established were passive or dry trusts, testamentary in character, and hence the assets named therein continued to be the property of the settlor; that plaintiff did not desert him but that he deserted her; that, in April, 1930, he ceased paying the $40 a month named in his will; and that the deeds of trust were created by him "for the manifest purpose of depriving plaintiff of her rights under the law __________ as his wife, and that the said trust was not created in good faith and was not a valid distribution of property, but was done under the guise of charity in order to prevent the plaintiff from establishing her rights as his wife under the law of the State of Pennsylvania."
The bill prayed that the original deed of trust and the supplement thereto be decreed to be null and void as against plaintiff; that defendant account for all moneys, whether of principal or interest, received by it under the deeds; that it be restrained from selling any of the assets so received by it, and from making any distribution of the principal or income of the trust; and for such other and further relief as plaintiff may be entitled to.
The answer denied that the deeds of trust were testamentary in character, or that the trusts were dry or passive, and averred, on the contrary, that active trusts were created thereby. It alleged that the settlor's intention in creating the trusts was immaterial, since he had the right to do as he pleased with his property, and plaintiff had no interest in it at that time; that the deeds were executed in good faith and for a valuable consideration; that possession of the assets named was forthwith delivered to defendant, which has continued in "the sole and exclusive control, management and distribution" thereof since the creation of the trust; and that it was immaterial, so far as concerned the trust estate, whether the settlor deserted plaintiff or she him, *575 but averred, on information and belief, that she deserted him on or about August, 1923, five and a half years before the execution of the deed of trust.
At the trial it could not be shown which deserted the other, he being dead and she, for that reason, being incompetent to testify in regard thereto, though the fact that they lived separate and apart, and he regularly paid her $40 per month, would seem to imply that the separation, however it arose, was at least continued by agreement. The evidence showed that the will was executed the day after the deed of trust, that in talking it over with the scrivener, before execution, the settlor asked the scrivener, who was a lawyer, whether he could eliminate plaintiff from any interest in the trust assets, and the scrivener told him he could, "that a settlor could give away his property, could make any disposition he liked of his personal property and that he was not defrauding his wife of any rights. And I followed the Windolph Case [Windolph v. Girard Trust Co.,
The trial judge held that the deed of trust and its supplement created only dry or passive trusts, were testamentary in character, and did not vest in the trustee title to the assets attempted to be conveyed; that they and also the will "were fraudulent in their origin" and were all created by [the settlor] for the purpose of depriving plaintiff, as his wife, of her portion of his estate *576 under the laws of Pennsylvania," and hence were null and void.
Defendant's exceptions to the adjudication were dismissed by the court in banc, and a final decree entered, declaring that the deed of trust and its supplement were null and void as against plaintiff, that defendant account for any and all sums of money received by it under the deeds of trust, and that it be perpetually restrained from selling or disposing of any of the trust property. From that decree this appeal is taken.
It is clear beyond reasonable question that the deeds are not testamentary in character and that the trusts created thereby are active, and not dry or passive. Under them, the trustee has active duties to perform and does not merely hold the legal title to the assets named; hence the trust is an active and not a passive one: Stambaugh's Est.,
The other point involved is far more interesting and important. There are many early decisions which hold that, so far as concerns his personal estate, a husband may do what he pleases with it, and the wife cannot be heard to complain. See Killinger v. Reindenhauer, 6 S. R. 531; Pringle v. Pringle,
In the cases first above cited, and the others in their train, the question of the husband's or wife's intent to commit an actual fraud on the other spouse was not considered, perhaps was not attempted to be shown. In the later authorities, now to be reviewed, however, it is treated as the vital factor, and if actual fraud upon the other spouse is shown to have been the real cause of the *578
transfer of the assets, the general rule is applied, as in other cases of actual fraud, and the conveyance is held void. Thus in Hummel's Est.,
It is clear that the bill in equity in this case was based on the one in Windolph v. Girard Trust Co., supra. The facts there and here and the averments in the two bills are exactly the same, and every point made here was unsuccessfully made there, though then argued on the line now contended for by appellee (of course with consummate ability) by the late John G. Johnson, Esq. The only difference between that case and this, is that there the master and this court refused to find an intent to commit a fraud from the fact that the grantor, after consulting her lawyer as to the method of doing it, made the conveyance for the purpose of preventing her husband from having any interest in the assets conveyed, while here the chancellor found the intent to commit a fraud from that fact alone. This settlor also took legal advice *579
and was told that he "could make any disposition he liked of his personal property, and that he was not defrauding his wife of any rights." He then executed the deed of trust now being attacked, which we are now told by the chancellor and the court below was a fraud on her rights. Of course that finding must be set aside, since, as stated by the present Chief Justice for the court, in Potter Title Trust Co. v. Braum,
The decree of the court below is reversed and plaintiff's bill in equity is dismissed at her cost.
Dissenting Opinion
I disagree with the decision of the majority by which it is held that by the simple expedient of a deed of trust a husband may accomplish that which he cannot do by his will, and may deprive his wife of any right or claim to his personal property after his death. During the early years of married life, she may have helped him to acquire this very property. Indeed, it is the joint efforts of husband and wife which are usually responsible for the prosperous condition of the husband. The ultimate goal of the two is to accumulate sufficient property, real and personal, not only that their children may, in a measure, be properly cared for; but, more especially, that in old age each may be provided for, notwithstanding the death of the other. The common practice has invariably been to place property thus acquired in the name of the husband. Indeed, placing it otherwise is looked upon, at times, with suspicion.
Recognizing the great justice of the wife's claim, the law long ago took steps to safeguard it. Blackstone speaks of it, "The reason which our law gives for adopting it, is a very plain and sensible one; for the sustenance of the wife, and the nurture and education of the younger children." Kent, in his Commentaries, states, *580 "This humane provision of the common law was intended for the sure and competent sustenance of the widow, and the better nurture and education of her children." Our legislature too has recognized this "moral" claim; its latest expression, the Act of 1917, placing the husband and wife on a parity, and providing that either spouse is entitled absolutely to the same share in the estate of the other as if that spouse had died intestate. The earlier acts likewise gave to either the right to claim against the other's will if an effort was made to deprive one spouse of these rights. Indeed, so high is the regard for these marital rights that it may be safely stated that they occupy an important place in the contract of marriage. The acquisition of them has been regarded as such a substantive part of the marriage contract, that certain dispositions of personal or real property by either party before the fact of marriage in an effort made to cut out these "marital rights" have been declared to be a constructive fraud on the marital rights of the injured party. While deeds and other instruments disposing of property in anticipation of marriage are declared void as against the other party to the marriage contract, it is now possible, under the decision in the instant case, to entirely set aside such rights without fear after the fact of marriage.
The decision of the majority in this case, in my opinion, goes far beyond anything that has been decided in our former opinions; under the rule now laid down, a husband may easily defeat the claim of his wife after his death even to the extent of making her a pauper, and she has no redress no matter how just or meritorious her claim. It is no answer to say that a fair minded husband would not do this; it should not be possible for any husband to do it.
I cannot go along with the court to this extent. I believe that to permit such an invasion of the wife's marital rights by making it possible for her husband to deprive her of them at his pleasure is against the best interests *581 of society, and that such decision may be fruitful of consequences that will become exceedingly harmful. It is my opinion that an adherence to our former decisions, as I view them, will produce far better results, prevent grievious injustice, and work for the general betterment of the marital state. It must be understood that what has been done to deprive the wife of this right, has not been done by an act of the legislature, but by the decision of this court in sustaining the husband's act. I frankly concede that there must be a certain liberality with respect to the alienation of personal property; it cannot be burdened with postmortem or contingent claims that would cause titles to be in turmoil whenever property is thus transferred. In transferring such interests they should be freed from such claims. But that is far different from upholding the deliberate attempt that is here made by the husband to deprive his wife of her postmortem rights and still retain for himself all the benefits of the property until his death.
What the husband did in this case was to transfer to a third party, as trustee, personal property. He was to receive the entire income and all the benefits from this trust for his life. He had the right to control and manage it in the hands of the trustee. He could change the beneficiaries even to the day of his death. He had the right to revoke the trust and retake physical possession of the property at any time. In other words, his hand never left the property nor its benefits until his death severed the connection. He placed the property in the name of this third party as trustee solely to prevent his wife from having any share whatever in it after his death. It would seem to me that the mere statement of such facts ought to be sufficient in themselves to require a court of law to defeat the husband's purpose.
The majority opinion states that "A man can never be said to commit a fraud on the contingent rights of others, where it depends on his own act whether they shall ever exist. The rights of [the wife], other than to her common *582 law dower, he could defeat in the same manner as he could the succession of his heirs," citing Killinger v. Reidenhauer, 6 S. R. 531, 536. This conclusion is based on a false premise; her rights do not depend on his act, they exist through legislation, and they are not on the same, but on a much higher plane than those "of his heirs." Her claim, being statutory, is superior to that of the heirs. Heirs as such have no ground for claiming fraud as against a testator, but the right of the wife has always been regarded as protected until the decision in this case. It is based on the contract of marriage reinforced by legislative enactment, and she cannot be deprived of it by will. Moreover, when the opinion in Killinger v. Reidenhauer, supra, was written, no statute existed fixing marital rights by permitting the wife to take against her husband's will, as is now the case.
In order to bring out my thought it will be necessary to review, to some extent, the authorities. The majority opinion quotes the statement from Lines v. Lines,
In Dickerson's App.,
In Bouslough v. Bouslough,
There is another class of cases where the gifts even though absolute were without consideration, and the court has upheld the marital rights of the widow. In Hummel's Est.,
In Young's Est.,
In Waterhouse v. Waterhouse,
A case having a more intimate relation to the case at hand is Lines v. Lines, supra. There a part of the trust property was in New York, where a married woman had no claim to a husband's personal property. By the trust deed for the other part, the settlor retained the right of revocation and a certain amount of control; but in that case the possibility of the disposition of the corpus was the controlling factor. Chief Justice PAXSON said the trustee "could have distributed the corpus of the estate to the beneficiaries the next day __________. The transaction was complete, and the donor was absolutely denudedof his property." No question was there raised about the intention to deprive the wife of her marital rights, but, in our case, we have such intention, and a trust with control reserved and retained by the husband, the right of revocation, the right to all the income and to change of beneficiaries; this makes the case before us widely different from Lines v. Lines, supra. Moreover, Lines v. Lines was later virtually nullified by the decisions in Line's Est.,
This brings us to Windolph v. Girard Trust Co.,
A careful study of the Windolph Case also impresses one with the fact that the court was there dealing with "the separate property" of a married woman owned by her, property that was not the outgrowth of the very familiar situation we have noted above where property is accumulated through the joint efforts of both parties. Both this court and the referee were impressed with the idea that the wife was entitled to certain protection in disposing of this separate property, and rendered a decision to meet those facts. I see no difference between that class of property and other property, but if I am *587 correct on this point and the facts as stated above are so different from those in the Windolp Case, then the latter case is not squarely in point; and in a question of such importance as that here presented, any reason should be seized upon to avoid carrying the rule of the Windolph Case any further; and if none can be found it should be promptly overruled. My opinion is that it does not cover a situation such as we have before us today, nor should it be held to have overruled our previous rulings on this question.
Potter Title Trust Co. v. Braum,
We have had this situation respecting trust deeds, income, revocatory control and reservation of the right to change beneficiaries before us with regard to taxation in other cases, and the same questions were involved. In Dolan's Est.,
Potter Title Trust Co. v. Braum, supra, states: "It is true __________ a fraudulent intent will defeat the gift. Good faith is essential." The majority opinion concedes this. What act ismore fraudulent than a deliberate and acknowledged intent onthe part of the husband to evade and frustrate the operation ofan act of assembly, and to breach the contract of marriage andviolate the rights that are part of it? As stated in Duncan's App.,
In Evans v. Dravo,
In Lonsdale's Est.,
In Hummel's Est., supra, the mere giving of the notes without consideration was held sufficient to raise the question of fraud. In that case it is apparent that the giving of the bond for the purpose of defeating the wife's rights, was sufficient to show fraud. In Young's Est., supra, the gift standing alone was sufficient to raise the question of fraud. In all the cases we have recited, it seems the mere act of disposing of the property without consideration was held to show prima facie an intention to deprive the wife of her marital rights and was sufficient, in the absence of a showing of good faith, to prove the fraudulent intent.
There is another line of cases, apart from these gifts but analogous thereto, which hold that a voluntary disposition of property real or personal by a woman about to be married, is fraudulent as regards her intended husband, if the disposition is kept secret from him; and the husband after marriage or death of the wife may avoid the conveyance. A voluntary disposition in contemplation of marriage, without the knowledge of the other party, is void at the instance of the party affected, where the beneficial use of the gift is retained bythe donor, (Duncan's App., supra) and even if it is not (Robinson v. Buck,
The doctrine of fraud on marital rights should not be confined to people about to be married, and have no efficacy after they are married; a woman may be defrauded just as easily after the marriage as before. The marriage relation is based on "contract and confidence," and *592 persons in that relation owe to one another the strictest good faith in their mutual dealings. The rights of each are exceedingly high and if one right is higher than the other, it should be that of the wife. While the law cannot concern itself with disappointments in hopes, expectations, sentiment or romance, it does concern itself with those hopes and expectations that have materialized in the form of property owned before or acquired after marriage. To say that property does not have any substantial place in the rights of both parties (no matter in whose name it is held) is to deny to the married state one of its chief attributes. To hold that this right cannot be protected from abuse is virtually to deny its existence. Of what avail is it if either party can destroy the right of the other or treat it as has been done in this case? What the law has always undertaken in this State and what it should seek to protect for the wife's benefit is an interest in property "to be enjoyed at the time when the death of her husband would impose on her circumstances of dependency and need, when the customary support and protection of her husband are removed."
The decision of the majority places too great a power in the husband or wife. I doubt very much whether even the legislature can cure the situation. It has done all it can.
I would affirm the judgment of the court below.
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