Beirne v. Continental-Equitable Title & Trust Co.
| Decision Date | 26 May 1932 |
| Docket Number | 250 |
| Citation | 307 Pa. 570,161 A. 721 |
| Parties | Beirne v. Continental-Equitable Title & Trust Co., Appellant |
| Court | Pennsylvania Supreme Court |
Argued April 27, 1932
Appeal, No. 250, Jan. T., 1932, by defendant, from decree of C.P. No. 1, Phila. Co., June T., 1931, No. 13394, declaring void deed of trust, in case of Regina C. Beirne v Continental-Equitable Title & Trust Co., trustee under deed of trust of Thomas L. Beirne. Reversed.
Bill to declare deed of trust null and void and for injunction and accounting. Before McDEVITT, P.J.
Decree entered declaring trust null and void and for injunction and accounting by the trustee. Defendant appealed.
Error assigned, inter alia, was decree, quoting record.
The decree of the court below is reversed and plaintiff's bill in equity is dismissed at her cost.
Daniel C. Donoghue, for appellant. -- The trusts were not dry nor passive trusts: Hemphill's Est., 180 Pa. 95; Still v Spear, 45 Pa. 168; Ash's App., 80 Pa. 497; Smith's Est., 16 Dist. 241; Moorshead's App., 180 Pa. 119; Eshbach's Est., 197 Pa. 153; Mooney's Est., 205 Pa. 418; Simonin's Est., 260 Pa. 395.
The decision of the learned chancellor is contrary to the adjudicated causes: Dickerson's App., 115 Pa. 198; Lines v. Lines, 142 Pa. 149; Windolph v. Trust Co., 245 Pa. 349; Dolan's Est., 279 Pa. 582.
It was early held in this State that a husband could dispose of his chattels during coverture without his wife's consent, and freed of every postmortem claim by her: Ellmaker v. Ellmaker, 4 Watts 89; Pringle v. Pringle, 59 Pa. 281; Dickerson's App., 115 Pa. 198; Young's Est., 202 Pa. 431; Benkart v. Trust Co., 269 Pa. 257; Armstrong v. Connelly, 299 Pa. 51.
John P. Connelly, for appellee. -- It is the contention of the appellee that this was a dry trust.
The learned chancellor found as a fact and as a conclusion of law that the creation of the trusts by the settlor was fraudulent and done for the purpose of depriving his wife of her portion of his estate under the laws of the State of Pennsylvania.
Before FRAZER, C.J., SIMPSON, KEPHART, SCHAFFER, MAXEY, DREW and LINN, JJ.
On February 4, 1929, Thomas L. Beirne, named therein as the settlor, executed and delivered to defendant a deed of trust covering a life insurance policy and certain shares of corporate stock, the trustee being "expressly authorized and empowered to retain and hold as investments of the trust estate any or all of the securities and property hereby or which may hereafter be assigned to it to be held under the terms hereof, or the trustee may sell or dispose of the same with full power as to all securities and property at any time included in the trust estate [and] to make all necessary assignments and transfers thereof," with the authority and duty "to manage, invest and reinvest the same and collect the income and profits thereof and after paying all proper costs and expenses [including its commission as trustee] to pay over the net income arising therefrom unto the said settlor for and during all the term of his natural life," and, after his death, to pay, out of the principal, specified sums to named individuals and charities; to "invest and reinvest" the remainder, to pay out, of its income, $75 a month to a designated individual for life, the balance thereof to a named charity, and, after the individual's death, to pay all the income to the charity, together with so much of the principal as it may from time to time demand. The stocks and policy were delivered to defendant at the time of the execution of the deed of trust, and, by virtue of powers of attorney also then duly executed by the settlor, they were forthwith transferred to the defendant as trustee.
The settlor also reserved the right to revoke the trust, "by an instrument in writing signed by him and delivered to the trustee during his lifetime, or by such instrument the settlor may alter this trust and the estates, uses or beneficiaries herein declared." Some ten months later, he exercised this reserved power, and made a somewhat different distribution of the income and principal of the trust after his death; but the trust, in all other respects, was expressly confirmed, and the changes thus made in no way affect the questions to be decided by us.
The bill in equity in this case, which was filed by the widow of the settlor, after reciting the provisions of the deed of trust and the supplement thereto as above set forth, and attaching copies thereof to the bill, stated that the settlor subsequently died, leaving a will and certain codicils, none of which is of any moment here, except, perhaps, paragraph four of the will which states: "Inasmuch as my wife deserted me and has thereby forfeited all rights to share in my estate, I am not making any provision in my will for her beyond that which I felt was a moral duty in my lifetime and having paid her $40 per month in life, I am directing my executors to set aside a sum sufficient to continue paying to her $40 a month for and during the full term of her natural life," with a proviso revoking the legacy if she should contest the will or elect to take against it. The bill further averred that the trusts attempted to be established were passive or dry trusts, testamentary in character, and hence the assets named therein continued to be the property of the settlor; that plaintiff did not desert him but that he deserted her; that, in April, 1930, he ceased paying the $40 a month named in his will; and that the deeds of trust were created by him "for the manifest purpose of depriving plaintiff of her rights under the law . . . as his wife, and that the said trust was not created in good faith and was not a valid distribution of property, but was done under the guise of charity in order to prevent the plaintiff from establishing her rights as his wife under the law of the State of Pennsylvania."
The bill prayed that the original deed of trust and the supplement thereto be decreed to be null and void as against plaintiff; that defendant account for all moneys, whether of principal or interest, received by it under the deeds; that it be restrained from selling any of the assets so received by it, and from making any distribution of the principal or income of the trust; and for such other and further relief as plaintiff may be entitled to.
The answer denied that the deeds of trust were testamentary in character, or that the trusts were dry or passive, and averred, on the contrary, that active trusts were created thereby. It alleged that the settlor's intention in creating the trusts was immaterial, since he had the right to do as he pleased with his property, and plaintiff had no interest in it at that time; that the deeds were executed in good faith and for a valuable consideration; that possession of the assets named was forthwith delivered to defendant, which has continued in "the sole and exclusive control, management and distribution" thereof since the creation of the trust; and that it was immaterial, so far as concerned the trust estate, whether the settlor deserted plaintiff or she him, but averred, on information and belief, that she deserted him on or about August, 1923, five and a half years before the execution of the deed of trust.
At the trial it could not be shown which deserted the other, he being dead and she, for that reason, being incompetent to testify in regard thereto, though the fact that they lived separate and apart, and he regularly paid her $40 per month, would seem to imply that the separation, however it arose, was at least continued by agreement. The evidence showed that the will was executed the day after the deed of trust, that in talking it over with the scrivener, before execution, the settlor asked the scrivener, who was a lawyer, whether he could eliminate plaintiff from any interest in the trust assets, and the scrivener told him he could, On the faith of this advice the settlor executed the deed of trust, with the "declared purpose to eliminate his wife" from any interest in the assets conveyed thereby, leaving to her only the $40 a month given by the will, which, as stated, was also being prepared at that time. There was no other evidence in any way antagonizing the validity of the trust, but the testimony showed also that, from the day the deed was executed, defendant had exclusive control of the assets specified in it.
The trial judge held that the deed of trust and its supplement created only dry or passive trusts, were testamentary in character, and did not vest in the trustee title to the assets attempted to be conveyed; that they and also the will "were fraudulent in their origin" and "were all created by [the settlor] for the purpose of depriving plaintiff, as his wife, of her portion of his estate under the laws of Pennsylvania," and hence were null and void.
Defendant's exceptions to the adjudication were dismissed by the court in banc, and a final decree entered, declaring that the deed of trust and its supplement were null and void as against plaintiff, that defendant account for any and all sums of money received by it under the deeds of trust, and that it be perpetually restrained from selling or disposing of any of the trust property. From that decree this appeal is taken.
It is clear beyond reasonable question that the deeds are not testamentary in character and that the trusts created thereby are active, and not dry...
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