Wood v. Paul

250 Pa. 508 | Pa. | 1915

Opinion by

Mr. Justice Elkin,

This is a controversy between the executors and widow of William O. Wood, deceased, on one side, and his brother and nephew on the other, in which is involved the ownership of 253 shares of the capital stock of a manufacturing corporation. The decedent, who held a controlling interest therein, desiring to be relieved from business cares and at the same time procure an income sufficient to meet his wants, executed a declaration of trust in favor of his brother and nephew, setting aside his stock to be held and enjoyed upon the uses and trusts therein set forth. The following are the purposes for which the trust was declared to be created:

“To hold said stock; to collect and pay over all dividends, income and profits issuing out of, collectable upon or derived from said stock when and as collectable,- derived or received, unto the said John E. Wood for and during the full term of his natural life; that in the event of the death of the said John E. Wood, should he predecease me, then to pay over the said dividends, incomes. and profits issuing out of, collectable upon or derived from said stock when and as collectable, derived or received, unto Oliver G. Wood, son of the said John E. Wood, providing he shall have reached and attained his majority, or in the event of his not having reached or attained his majority then to his guardian duly and legally appointed. Should the said Oliver G. Wood predecease the said John E. Wood and me, the said William O. Wood, then upon my death the right, title and property in said capital stock shall at once vest in and belong to the said John E. Wood absolutely. In the event of the death of the said John E. Wood before me, the said William O. Wood, then all the right, title and property in said capital stock shall at once vest in and belong to the said Oliver G. Wood at or upon the death of me, the said William O. Wood.

“I do hereby further declare and say that the equitable ownership of said capital stock is now in the said John E. Wood and Oliver G. Wood subject to the conditions above set forth, and that I only have the legal title therein; that I will not sell or make sale of any of said capital stock, without the written consent of the said John E. Wood first had and obtained. In the event of the sale of said stock by mutual consent, it is hereby agreed that the proceeds of such sale shall be placed in trust to enforce the provisions hereinafter set forth.

“I do hereby further declare and say that the consideration for the making of this declaration of trust is the promise and agreement on the part of the said John E. Wood to devote his entire time, services, skill, labor and attention to the business of the said W. O. Wood Manufacturing Company, and the further agreement on the part of the said John E. Wood, binding himself and the said Oliver G. Wood, signified by the said John E. Wood accepting in writing this declaration of trust, that he, or in the event of his death the said Oliver G. Wood, shall and will pay to me the sum of three thousand dollars, ($3,000) in cash per annum, payable semi-annually, for and during the full term of my natural life, the first payment to be made on the first day of February, A. D. 1905.

“I do hereby further declare that this trust and the stock or property held thereunder is irrevocable, except in the event of a breach of the performance of the same on the part of the said John E. Wood in regard to the care and management of said business, or in the payment of said annual sum of money by either the said John E. Wood, or the said Oliver G. Wood, or' in the event of my being obliged, for any reason whatever, to assume the active and actual care, management and conduct of said business, in which event I- do declare that this declaration of trust is and shall be void and of none effect, and that said stock shall revert to my absolute and exclusive ownership.”

John E. Wood accepted the trust and fully performed his part of the agreement up to the death of William O. Wood, November 3,1913; and at all times devoted his time, skill, services and attention to the business of the W. O. Wood Manufacturing Company, and having also made the semi-annual payments as and when they became due. William O. Wood by his will, devised his estate to his widow. John E. Wood and Oliver G. Wood, his son, made demand upon the executors of the estate of William O. Wood for a transfer of the stock referred to in the trust agreement; but the executors, having received notice of the widow’s claim to the stock as part of the estate of her husband refused to make the transfer, whereupon the father and son filed this bill to obtain relief. The court below dismissed the bill as to Oliver G. Wood, because his father was still living, and as to John E. Wood on the ground that the stock became his absolutely only in case his son died before William O. Wood, and as this contingency had not happened, he had no interest in the principal and only a life estate in the income from the stock, after which it belonged to the estate of William O. Wood.

It will be seen from an examination of the agreement above recited, that the primary purpose of the settlor was to secure payment to him of the sum of three thousand dollars ($3,000) annually for life. The direction as to the title to the principal of the stock was evidently made with the idea of vesting it in the person who would survive and carry out the provisions of the agreement; thus, the provision in favor of the son was no doubt made to guard against the probability that the settlor would live, longer than his brother, and it was apparently only in that event that the son had any interest either in income or principal. The father was bound for the principal consideration; in fact, the whole of it, unless he died before the settlor. , He was to pay the income and also give his time and attention to the business. In view of these facts, it seems highly improbable to say the least that the parties meant to make his right to the principal, that is ..the stock itself, depend upon the circumstance of his son dying before both father and uncle.

To hold that the title to the stock only vested in John E. Wood on, condition that his son died before William O. Wood, the decedent, would not only disregard the intention of the parties as gathered from the instrument as a whole, but would have the effect of reading out of the last paragraph the provision that the trust was irrevocable, except in the event of a breach in the performance of the covenants thereof in regard to the care and management of the business, or in the payment of the annual sum of money by either father or son. John E. Wood faithfully performed his duties in the care and management of the business, and made the annual payments as required until the death of William O. Wood. It would seem most unjust to deprive him of the fruits of his labor and investment by a technical construction of the agreement between the parties. In our opinion a., reasonable interpretation of the language of the instrument as a whole sustains the contention of appellants. A careful reading of the last paragraph shows the provisions were not made with the view to restrict the absolute property given in another part of the instrument as between the settlor and the beneficiaries; but, rather that it was intended to govern the rights existing under the agreement between the beneficiaries themselves, and in addition secure to the settlor performance of the conditions of the trust. So loug as the son was alive there was a- probability, of his outliving ¡his father, and therefore some part of the condition might be performed by him. On the other hand so long as the father was alive he was bound to carry out all the terms of the trust. The settlor, therefore, found it expedient in order to safeguard his own interest to provide that the stock should go to the survivor, the one who must finally complete the performance up to the time of . the settlor’s death. Viewed from this standpoint the provision “if the said Oliver G. Wood predecease the said John E. Wood and me, the said William O. Wood, then upon my death the right, title and property in said capital stock shall at once vest in and belong to the said John E. Wood absolutely,” does not mean that whether it should ever vest in the father was conditional upon Oliver Gr. Wood dying before both John E. Wood and William O. Wood, but merely that if the son should die first there was no longer any reason for withholding the entire ownership from the father after the settlor’s death.

He who created the trust received the full consideration from him who accepted it. The rule governing the construction of deeds should apply here, which is that since the settlor had it in his power to define exactly what was to be given and what reserved, he shall be held to have intended to give everything not expressly reserved and the writing will be construed most strongly against him, every inference of law being drawn in favor of his grantee: Grubb v. Grubb, 101 Pa. 11; Sheffield Water Co. v. Elk Tanning Co., 225 Pa. 614. To say that the settlor intended to create an absolute estate in those who accepted it only in case one of them died before him, and not in case both should survive him, leads to a result which cannot be sustained in view of these rules of construction and of the particular circumstances and purposes of the execution of this writing. Such construction would also be contrary to the last paragraph of the writing itself and render the whole inconsistent. The purpose of William O. Wood was to secure to himself an annuity during life and relief from participation in the business of the corporation, and if he received these things, he was apparently satisfied that full value would be given him for his property. Any further provision as to the vesting in the two beneficiaries wás for the evident purpose of securing his own interest in case one of the other should die and cannot be construed as an additional condition upon breach of which the trust should terminate.

The question as to the respective rights of father and son in the stock is not before the court at this time, consequently need not be considered.

Decree reversed, bill reinstated and executors ordered to make transfer of the stock in accordance with the prayers in the bill. Costs to be paid by appellees.