19 A.2d 380 | Pa. | 1941
In 1922, at the audit of the account of his guardian, appellant became entitled to receive $21,406.99, then composed of seven first mortgages aggregating $20,500 and cash for the balance. By an agreement dated June *225 6, 1922, he assigned and transferred the property to the appellee, Potter Title Trust Company, in trust to invest and reinvest and pay the net income as stated in the deed quoted in the margin.1 The fifteen-year period elapsed. The trustee filed its account. The parties differed on the meaning of the deed, particularly of paragraph 4: "At the end of fifteen years to pay to me the principal sum in its hands, either in cash or securities, *226 as I may elect." The appellant contended that the deed required the payment of $21,406.99, the face value of the mortgages and cash at the time the deed was made. The trustee2 contended that the deed meant the present value in cash or securities as appellant might elect, and not the face value of the property originally received. The learned court adopted the trustee's view.
The agreement is a simple trust deed transferring certain property in trust to invest and reinvest "in first lien mortgages," and to pay the net income to the beneficiaries. The trustee was expressly authorized to retain the mortgages originally delivered. The duties of a trustee in such circumstances are well understood; he will not be surcharged for loss if he has exercised common skill, prudence and caution: Drueding v. Tradesmens Bank Trust Co.,
It appears that in consequence of the general decline in property values, the trust property cannot, at the present time, be converted into cash in amount equal to the face value of the property in 1922. In effect, therefore, appellant's claim is one of surcharge. There is no evidence that the shrinkage in market value resulted from any failure by the trustee to perform its duty according to the recognized standard. Appellant refers to cases as suggesting support for his contention. There have been cases dealing with trust agreements, of this general character, in which the trustee expressly guaranteed repayment of "the principal sum" and containing other words from which the court found an obligation to repay the face amount of the property originally transferred: Tophan v. Potter Title Trust *227 Co.,
In this deed there is no guarantee that, in all circumstances, the trustee shall repay the original value of the property; paragraph 4 does not enlarge the obligation to exercise the measure of care imposed on a trustee by the law. The paragraph gave the beneficiary a privilege he would not otherwise have had, that is, the right, instead of taking the corpus in kind, to have the trustee convert it into cash. See Restatement, Trusts, section 347, comment d. If the agreement of the parties had been that in addition to the ordinary obligation the trustee must so administer the trust as to insure repayment of the value of the corpus at the time of its original transfer to the trustee, the agreement should have made specific provision for that additional obligation. CompareCrick's Estate,
Decree affirmed at appellant's costs.
Mr. Chief Justice SCHAFFER did not participate in the decision of this case.
"To have and to hold unto the Potter Title Trust Company, its successors and assigns, for and during the term of fifteen years, from the date hereof, in trust nevertheless, for the following uses and purposes, to wit:
"First: To invest and re-invest all cash that may come into the hands of said Potter Title Trust Company under the provisions of this trust agreement, in first lien mortgages, whether said cash be from the balance shown by account of the said W. W. Stoner, Trustee, or result in the payment from time to time of any mortgages turned over as part of said trust estate; to collect the income from said estate in trust and the investments thereof, and to pay said net income quarterly, unto my wife, Viola Lacy, for the support of herself and our child, Evelyn Lacy, for and during the period of fifteen years from the date hereof.
"Second: For the purposes of this trust, to collect the money secured by said bonds and mortgages when the same become due, or at their option continue or extend the same, to the end that the money coming into the hands of said Potter Title Trust Company under the terms of this trust agreement may be kept invested in first mortgages.
"Third: To render an account both to me and to my said wife, Viola Lacy, at the end of each three years following the date hereof.
"Fourth: At the end of fifteen years to pay to me the principal sum in its hands, either in cash or securities, as I may elect.
"The trust created by this instrument shall be irrevocable by me, . . ."
