151 A. 577 | Pa. | 1930
These two appeals, No. 232, by Addie L. Maris, widow of John M. Maris, the testator, and life tenant of his residuary estate, and No. 233, by the guardian of a minor residuary legatee, will be disposed of together. The second appellant complains because the court below held that a certain provision of the will now before us violated the act against accumulations, and the first, because the accumulations in question were awarded to the heirs of testator under the intestate laws, instead of to the widow, who was the life beneficiary.
Marls, after directing payment of debts and devising personal and household effects to his wife, provided as follows: "All the rest, residue and remainder of my estate *23 . . . . . I give . . . . . . unto . . . . . ., in trust, to hold and invest . . . . . ., and after deduction of all proper charges and expenses of the trust, to pay over the net income thereof to [the wife of testator] for and during the term of her natural life." He then provided for the division of his residuary estate into three equal parts, which, at the death of the life tenant are to be paid over to others, one of the beneficiaries to take absolutely and the remaining two shares to be held in trust for the benefit of those entitled thereto. The residuary clause of the will also provides that "all stock dividends consisting of shares of stock of the corporations issuing them shall be considered as principal." This last provision gave rise to the present case.
The executors of decedent filed an account, containing, for distribution, certain stock dividends of the kind above described; in each instance, the dividend was paid out of current earnings, which accrued after the death of John M. Maris, and in no instance did the payment decrease the intact value of the stock involved as it stood at testator's death. Under Nirdlinger's Est.,
In Harkness's Est.,
The next question is, To whom does this distributable income legally belong? The court below decided that, because the direction which gave rise to the unlawful accumulation was contained in the residuary clause of the will, every provision in that part of the testament was affected, and no beneficiary there named could take the accumulated dividends. The fund in question was accordingly awarded to testator's heirs at law.
In making its distribution, the court below relied on the rule in White's Est., 8 Pa. Dist. R. 33, 35, enunciated as follows: "Accumulation is forbidden by the act no lesswhere it results by indirection than where it is expressly ordered [the italics are ours]; striking down of the illegal accumulation leaves the will as if it had been silent on the subject, and future gifts are not accelerated. If the accumulation relates to a vested interest, taking effect in possession, the released income goes at once to the beneficiary [of that interest; but] if [the accumulation relates] to an interest not vested in possession, the income goes to the residuary legatee or devisee, unless the residuary estate itself is the subject of the provision, in which case the income goes under the intestate laws to the next of kin, or heirs." The court also cited Edwards's Est.,
The above quoted rule, though originally announced by the late Judge PENROSE of the Philadelphia Orphans' Court, has been adopted by us in terms (see Weinman's Est.,
On this appeal, we are dealing solely with accumulated income earned after the death of the testator, and, deleting the provision for unlawful accumulation, his will gives all such income to the widow, during her life. *26 Section 9 of the Act of 1853, P. L. 503, 507, provides that, where a direction for accumulation is contrary to the terms of that statute, "such direction shall be null and void in so far as it shall exceed the limits of this act and the [income] so directed to be accumulated . . . . . . shall go to and be received by such person or persons as would have been entitled thereto if such accumulation had not been directed." Here, on the face of it, the widow is the person thus described; but, as previously stated, the court below thought that, because she derived her interest through the residuary clause, which part of testator's will also contains the direction for illegal accumulation, our decisions required it to distribute the accumulations now before us to testator's heirs at law. In reaching its conclusion, however, the court failed to recognize the distinction between this case and the decisions relied on by it, where, for reasons shown by our several opinions, we ruled that legatees named in the residuary clause containing the direction for illegal accumulations could not take the income there involved.
On the death of testator, the legal title to all of the assets in his residuary estate vested in the trustee named by him, his widow taking a vested equitable life estate. We have said that, to imply a legal estate from a devise of income, there must, ordinarily, be a gift of the gross income: Schuldt v. Reading Trust Co.,
On the other hand, in all of the cases relied on by the court below, the persons laying claim to the unlawful accumulations either lacked a vested interest to which the accumulation related, or their interests had not taken immediate effect in possession, in the sense that the person claiming, or for whom the accumulations were claimed, had the enjoyment of his interest during the course of such accumulations. Thus their cases, unlike the present one, were not within the first part of the governing rule, laid down in White's Est., supra; they fell within the second part of that rule, which deals with accumulations relating to interests "not vested in possession," dictating that such income shall go to subsequent residuary legatees or devisees, unless the residuary estate itself is the subject of the provision which brought about the unlawful accumulation of the income in question and that, when it is, such income shall go to the next of kin under intestate laws.
This prohibition against those named in the residuary clause of a will taking released unlawful accumulations of income, and the direction, coupled therewith, that such funds shall go to the heirs at law of testator, have reference only to cases falling within the second part of the rule under consideration, which, as already pointed out, does not include the one now before us. In the present case the provision for the widow of testator is contained in the residuary clause of the will, but it gives her a vested interest to take effect in immediate possession, and the accumulations relate to that interest, therefore the case falls within the first part of the rule which the court below accepted as its guide, not within the *28 second, and the accumulations go at once to the widow, who is the beneficiary, just as they would go had the will named her as beneficiary prior to, instead of in, its residuary clause.
In Thistle's Est.,
Before closing, it may be well briefly to review the cases cited by the court below, showing that in none of them did the claimants to the unlawful accumulations meet the above stated test, and that in all of them the claimants came within the second part of the rule in White's Estate rather than the first. Moreover, in each of these cases and in others where the life tenant was refused an award of the unlawful accumulations, as, for instance, in Weinman's Est.,
In Edwards's Est.,
In Neel's Est.,
The next of our cases relied on by the court below is Billings's Est. (No. 2),
In White's Est., 8 Pa. Dist. R. 33 (whose leading part in the branch of the law with which we are here dealing has already been explained), the equitable life beneficiary (named prior to the residuary clause of the will) was not given the whole of the net income, but only so much thereof as the executors might deem necessary for his maintenance, the balance to accumulate till the beneficiary in question attained the age of 25 years. On the death of this life tenant, the accumulations were to go to his issue, if he left lawful issue (see White's Est., 2 Pa. Dist. R. 207, 209). This created an unlawful accumulation of income, which, it was held (page 34), belonged to the "residuary legatees," because the life beneficiary was entitled to only so much of income as he had already received and (page 35) "the contingent character of the gift to [his] issue," — "such issue as he may leave," — prevented them from taking the accumulations.
It may be seen from this review of the cases relied on by the court below that in none of them did the accumulations in controversy relate, as here, to a vested interest in immediate possession, or enjoyment, of a life beneficiary to whom testator had in terms given the entire net income from his residuary estate, the gift itself containing no express or implied limitation on the right to take such income, or, in other words, of a beneficiary *31 entitled, by the terms of the will (deleting the direction for accumulations), to the whole net income of the trust fund out of which the accumulations arose. Further, it may be seen from our opinion in Thistle's Est., supra, that, had the facts in any of our prior cases, relied on by the court below, been as just outlined, the unlawful accumulations there disposed of could not have been awarded to either the heirs at law or the ultimate residuary legatees, but the award would have been under the first part of the rule in White's Estate, to the beneficiary with a vested interest in possession entitled generally to the income, albeit he or she was named in the residuary clause of the will; and that is the award which should have been made in the present case.
In Appeal No. 233, the decree is affirmed as far as it finds an illegal accumulation; and in No. 232, the decree is reversed so far as it awards the illegal accumulations to the heirs of testator under the intestate laws; and the accumulations in question are now awarded to testator's widow, as life beneficiary. Costs to be paid out of the estate.