Benedict v. Benedict, 261 Pa. 117

Benedict v. Benedict

261 Pa. 117 | Pa. | 1918

Opinion

Mr. Justice Moschzisker

Fj. L. Benedict, in consideration of “natural love and affection toward his wife and children” and the sum of one dollar, executed and delivered to the trust company here named as garnishee, a sealed written instrument, whereby he placed $11,000 in the latter’s custody, for and upon the following uses and trusts: “To invest and keep the same invested,......and pay the [net]...... income......to the said J. L. Benedict during the term of his natural life; and, at his death, to pay the principal of said trust fund......to such person or persons or objects as the party of the first part [the settlor] may ap*119point by any last will and testament which he may leave at the time of his death. In case he shall leave no snch will, then one-third thereof to his widow, and the remaining two-thirds, or, in case he shall leave no widow, the whole, in equal shares, to such children of the party of the first part as may be living at the time of his death. In case any child or children shall die during the lifetime of the said J. L. Benedict, leaving children to survive who shall be living at the death of the said J. L. Benedict, such children of such deceased child or children shall take their parent’s share. In case the said J. L. Benedict shall leave no- children or issue of such children living to survive him, then the share or part of said trust fund that would go as aforesaid to such children shall be paid to the next of kin.”

The deed in question stipulates that the trust shall be irrevocable, and that no part of the fund, either principal or income, shall be transferred or assigned by the settlor ; further, that it shall not be liable for his future debts, contracts or engagements, nor subject to attachment or other legal process at the suit of his creditors.

On the date of the deed, March 24,1915, Mr. Benedict had a wife and three children. June 15, 1917, he executed and delivered to plaintiff a judgment note for $2,500, the debt for which this was given having been contracted after March 24,1915. August 14,1917, judgment was entered on the note, and, on the same day, execution issued against the trust company, as garnishee, attaching any property in its hands belonging to the settlor. In due course, the court below held that the so-called “trust fund” was liable for plaintiff’s claim, and defendants have appealed.

Under our decisions, the court below was clearly right in its disposition of this case. Had Mr. Benedict not retained absolute power to dispose by will of the corpus of the fund here in question, the .present case would fall within the principle of Egbert v. DeSolms, 218 Pa. 207, where the trust was held unassailable by an attaching *120creditor; but, in the deed before us, the settlor first ex-, pressly reserves unrestricted power to control by will the disposition of the entire fund after his death, his widow and children or next of kin taking only in the event of his failure to exercise this absolute right. Egbert v. DeSolms is sufficiently distinguished in Rienzi v. Goodin, 249 Pa. 546, 551, where it is correctly stated that the decision in the former case in no way modified “the established law”; and this law, as laid down in Nolan v. Nolan, 218 Pa. 135, cited by the court below, clearly sustains the judgment at bar.

It may be noted that Egbert v. DeSolms, supra, is reported in the same volume as Nolan v. Nolan, and that the facts in the latter are strikingly like those in the case before us. There, as here, the deed, by its terms, is irrevocable, and, at the time of the execution thereof, the indebtedness in controversy had not arisen, nor was it in contemplation; finally; in both instances, at the creation of the trust, the settlor had several children living. In the present case, after reserving an absolute and unrestricted power of appointment in himself, the settlor provides that, upon default of its exercise, the fund in question shall go to his widow and children, or the latter’s issue, in certain proportions, these being in accordance with the shares they would take under the intestate laws, or, if no widow, children or issue, then to his' next of kin.. In Nolan v. Nolan, after reserving a like power of appointment, the settlor provided that, upon default in its exercise, the fund should go to her next of kin. While the phraseology is different, it will be observed that, so far as the question here involved is concerned, both of these provisions are, in effect, the same.

In the Noían case (at pp. 139-40) we thus state the law: “In order to make it [the trust] valid as to subsequent creditors, it must appear that the settlor has divested himself of all rights of. ownership in, and control over, the property thus conveyed, reserving only to himself the right to receive the income during life; and...... *121it is against public policy......that a settlor should be permitted to play fast and loose with his property in such a manner as to have the use of the income during life and the right to dispose of the principal by will at any subsequent time he chooses to exercise the power......A person sui juris cannot, as against creditors, either prior or subsequent, settle his property in trust for his own use for life, and over to his appointees by will, and, in default of such appointment, to the use of his lawful heirs in fee: Mackason’s App., 42 Pa. 330.”~7"

The fact that, by the deed in NolarTvNN olan, supra, the trustee was authorized to reconvey the property to the settlor, if the former deemed it expedient so to do, is not of controlling significance; for no such provision appears in Rienzi v. Goodin, supra, where the terms of the deed are almost precisely like those in the instrument at bar, and where Nolan v. Nolan was treated as a binding authority. We conclude that there are no substantial points of distinction between the present case and the two just cited.

|fhe assignments of error are overruled, and the judgment is affirmedTj