In re Estate of Watson

189 Pa. 150 | Pa. | 1899

Opinion by

Mb. Justice Mitchell,

Appellant’s argument as to the unpaid balance of principal of the legacy cannot be sustained. The legacy was to a trustee who was entitled to its possession and control. It is true that it was for the use of a class of cestuis que trust presumably not complete at the testator’s death. But there was a representative living in whom the use immediately vested, subject to open and let in an after born participant, and who was entitled to the benefit of the whole income until such event should happen. In April, 1896, the appellant paid the trustee one half the then existing balance, and received an acquittance in full. Why this was done does not clearly appear, but as it is admitted that only one half was paid, the other half remained due, and appellant was rightly charged with it.

But the interest presents a different question. Appellant was the executrix of Andrew Watson, not primarily charged with any duty to invest the legacy, but to pay it over to the trustee named by the testator. She is not shown to have refused to pay, but on the contrary it is said without contradiction that she desired to pay. the balance into court, but was prevented by the trustee’s objection. Nor is she shown to have made any profit out of the retention of the money. The loan of a part of the principal to Andrew Alexander Watson must be regarded as an investment at her own risk, and hence, as already said, she was rightly charged with the unpaid balance. But the interest was payable to the trustee for expenditure by her in behalf of the children. Payment to her would have been a full acquittance to appellant, without reference to the subsequent expenditure of the money by the trustee. If appellant had from time to time sent her checks to the trustee for the amount of the interest and the trustee had turned them over to her husband the appellant would nevertheless have been discharged, though his indorsements on the cheeks might have put her on notice of the use the trustee was making of the interest. As the discretion of the trustee in expending the income was not within appellant’s control, she was not concerned with notice of the manner of its exercise. In substance this was just what was done. The trustee regularly sent to appellant her receipt for interest on the balance of unpaid principal, and in return the appellant sent her receipt for the interest on the loan to Andrew Alexander Watson. No money passed, but the effect was exactly the same as if it had. There was no difference whatever in substance, and it is to the substance of transactions that equity looks. The trustee and her husband were living together on a property purchased with the greater part of this legacy, on the order of the orphans’ court, as must be assumed for the support of the children. The father was the head of the family, and his wife was the trustee with the discretion to expend the income of this legacy for the maintenance of the children. This condition of things continued for nineteen years, until the death of Andrew Alexander Watson in 1896. The whole transaction was conducted as a sort of family arrangement, and it lasted while the parties lived, although Frank F. Watson, one of the cestuis que trust was then thirty years of age and had been for nine years entitled to demand his half of the income free of the trust. So much did the arrangement bear that character that the last place to which Andrew Alexander Watson’s note to appellant for the loan was traced was the possession of his wife, the trustee. Family arrangements are not lightly to be disturbed even when they do not follow the strict law. If there was any default or breach of duty in this case it was by the trustee. It was not initiated by the appellant or continued by her for her own purposes, or to her profit, and it would be highly inequitable now to put the burden of the result on her.

So much of the decree as relates to interest on $893.70 from December 9, 1881, is reversed, and the decree directed to be amended accordingly. Costs to be paid one half by the appellant and one half out of the fund.