88 Pa. 276 | Pa. | 1878
delivered the opinion of the court, June 24th 1878.
We must take the facts of this case as found by the auditor. They exhibit a devastavit by George J. Richardson, one of the executors and trustees, of a gross kind. Want of harmony in the execution of the trust, loose and careless management, failure to keep proper accounts of their doings, great delay, absence from the trust, improvident loans of very large sums of money, and gross mismanagement, seem to have characterized their transactions. It is upon such a case, the question arises, whether under the will of William Richardson, his father, George J. Richardson, one of the trustees, guilty of this gross mismanagement, is entitled, as a legatee, to his portion of the income set apart to himself and the other children
That a trust for a spendthrift, as it is termed, will be upheld in equity, is a settled doctrine of this state, and rests on the donor’s right of dominion over his own property for a reasonable time. But it is exceptionable in its very nature, because it contravenes that general policy, which forbids restraints on alienation and the nonpayment of honest debts. In order to support it, resort is had to a trust, which equity will enforce, and equity necessarily regards its reasonableness and the clearly-defined intent of the donor. Without such a trust upheld in equity, title in the devisee or legatee claims to itself control and liability to creditors. As this is a trust resting in equity, it is clear that equity will support it only so long as it rests on the well-defined intention of the donor. When that is gone, the trust falls with the loss of this, the only true basis. A trust to pay income for life may last for the longest period of human existence, and may run for seventy or eighty years. While the law’ simply tolerates such a trust, it cannot approve of it as contributing to the general public interest. Property tied up for half a century contributes nothing to the general wealth, while it is a great stretch of liberality to the ownership of it to suffer it to remain in this anomalous state for so many years after its owner has left it behind him. Clearly it is against public interest that the property of an after generation shall be controlled by the deed of a former period, or that the non-payment of debts should be encouraged.
The argument of the appellee attributes to a spendthrift trust an inviolability, which transcends all proper notions of equity, in holding that a trustee, because he is also a legatee of a single share, shall be exempt from that valuable rule of equity, which requires a strict performance of duty as essential to the interest of his trust. Indeed, it is a rule of morality as well. Besides, it elevates a single special intent of the testator above the general interests of his estate, and subordinates the welfare of others, equal objects of his bounty to that of the faithless trustee, the object of the single intent. On ■what principle of equity, which guards this trust for others as well as for him, shall the control of the fund by the defaulting trustee enable him to enjoy his own portion at their expense without accountability ? Shall five others go a-begging to enable him to enjoy that which the testator gave him, free from creditors only when it accrues to him, as we shall see was the special intent of the testator ? There is neither good law nor sound morals in such a proposition.
The court, on motion, ordered a re-argument before a full bench.
On the re-argument at Philadelphia on January 8th 1879, before a full bench, 8. Dickson submitted the following additional brief:—
The limitation in the opinion of the Chief Justice of the scope of a spendthrift-trust would destroy such trusts altogether, and neither the ninth nor tenth item expresses a general intent with sufficient clearness to override the special intent of the other. The will, like any other writing, must, if possible, be so construed as to give effect to every part. The ninth section makes no distinction in terms between, debts to the estate and to third persons, and the tenth section relates to all five executors, of whom only one was a beneficiary, and clearly they were intended to respond out of their own estates. To infer that the fifth was to be held answerable in the same way and in that only, satisfies the language used and harmonizes both clauses.
The tenth section is intended to limit and restrict responsibility and not to enlarge it; and confessedly, had it not been inserted, the share could not have been withheld. ' Why should a clause inserted for his exoneration from liability for the acts of his co-trustee, be taken to import an intention to destroy a provision for his maintenance which otherwise would have been loft secure ? It does not create any other liability than such as the law would create without it. It does not even impose a responsibility in terms. It only confines that of each to his own acts.
Under the facts as found in this case, Gleorgo J. Richardson is not responsible because of the tenth section. Had it been omitted, his liability to the estate would have been what it is now — neither more nor less. If the ninth section, therefore, is to be nullified, it cannot be done but by the help of the tenth section, because that not only does not give rise to any now or peculiar liability, but it cannot be made tlie foundation of any liability whatever except by implication. All contracts, debts, liabilities or engagements are embraced in the ninth section ; a surcharge under tlie tenth section is still only a debt or liability; therefore it is included in the ninth section.
Though the rule as to the general intent overruling the particular intent is still recognised (Sheetz’s Appeal, 1 Norris 213 ; Jenkins
On May 5th 1879, Mr. Justice Woodward delivered the following opinion
Notwithstanding the fact stated by the auditor in his first report that one hundred and thirty-three meetings were held before him, and the fact that in the final decree surcharges were made against the trustees under Mr. Richardson’s will, amounting to the sum of $579,000, only a single point is in issue in this appeal. That is raised by the assignments of error in which the appellant complains that her exceptions to the report were overruled by the Orphans’ Court. The first of these exceptions covers the whole field of this controversy. It was in these words : “ She excepts because said auditor has reported in effect that George J. Richardson is entitled to receive from time to time, equally or rateably with the other children of said William Richardson, deceased, a full share of the income of said estate from the said trustees.”
By the ninth section of the will of Mr. Richardson, the residue1 of his estate was vested in his executors in trust, to collect and pay over the income to his wife, children, and a grandchild, during their lives. This provision was made in the concluding clause of the section : “ The said income so directed to be paid by my executors shall be paid to my said children and grandchild in such way and manner that the same shall be free from the control, contracts, liabilities or engagements of either or any of my said children or grandchild, or debts, liabilities or engagements of either of the husbands of my said daughters.” Five gentlemen, including George J. Richardson, his son and two of his sons-in-law, were appointed executors and trustees, no one of whom, it was directed by the tenth section of the will, should be liable for any moneys received or any acts done by either or any of his co-executors or co-trustees, but only for moneys received or acts done by himself. After the first account was confirmed, Mr. Sparks, one of the trustees, resigned, and Mr.
Mr. Richardson died on the 24th of January 1866, and soon afterwards the trustees undertook the development and improvement of the coal lands belonging to the estate in the county of Schuylkill. A lease was made to John Lucas & Co., and the advances made to the lessees by the trustees began about the 25th of March 1867, and were continued until they amounted to $271,759.40, with which sum the trustees were surcharged by the auditor. The enterprise was ruinous from the outset. Lucas & Co. finally failed. The report found that the trustees “ had no power under the will to make such loans,” and that no law existed “ to sustain such use of trust funds.” It found also that “ after Lucas & Co. became embarrassed and loans were made to them, the business of the estate was loosely and carelessly managed by the accountants; that sometimes two acted for the three, and at other times the money affairs were largely under the control of George J. Richardson,” and that it was “ impossible to say how far the moneys of the estate were mixed with his own, as there wore no regular books of the estate or his own to enable any one to decide that question.”
Under these facts, it has been strongly urged on behalf of the appellant, that the right of George J. Richardson to receive his share of the current and prospective income of the estate has become forfeit. The allegation was that he joined with the other trustees in a negligent or fraudulent waste of a sum, the interest on which would largely exceed the income of what remained.
The argument was pressed with some feeling and much force. Analogies that were more or less apt were suggested. But analogies are as likely to misguide as to guide safely. Just the facts as they stand in this record are to be fairly met. The auditor said that while there had been carelessness, mismanagement and mistake on the part of the trustees, he did “ not mean to charge any of them with taking and using the funds of the estate,” and he assumed in the absence of evidence that they acted honestly in this respect, and disastrous as the results of the effort to develop the Schuylkill lands proved to be, the general powers conferred by the will on the trustees were very large. By the eleventh section they were authorized to make partition of lands in Schuylkill or other counties, to purchase the moieties or interest of co-tenants, and to raise the means of purchase by mortgage or otherwise on the lands. They were authorized also, if expedient in their opinion, to create a joint-stock company to manage the lands, “ or in any way or manner to take action with regard to them” which they should “ deem to be manifestly to the interest” of the estate. Under a charter so broad as this they entered into the Lucas lease and made advance after advance, upon assurances of certain and near success that are always given, and with the glowing hopes and firm faith which often unhinge or cloud
Nothing is better settled than the rule which sustains such trusts as this: It has produced beneficent and just results. And it ought not to be evaded or infringed in any case that is fairly within its scope.
Decree affirmed at the cost of the appellants, and appeal dismissed.