Henry's Estate, In re

• Decision Date: 17 March 1964
• Citation: Henry's Estate, In re, 198 A.2d 585, 413 Pa. 478 (Pa. 1964)
• Parties: In re ESTATE of W. Barklie HENRY, Deceased. (Sur Trust for Alice E. Henry von Briesen et al.) Appeal of Albert BLUMBERG, Guardian and Trustee ad Litem.
• Court: Pennsylvania Supreme Court

Page 585

198 A.2d 585

413 Pa. 478

In re ESTATE of W. Barklie HENRY, Deceased. (Sur Trust for Alice E. Henry von Briesen et al.) Appeal of Albert BLUMBERG, Guardian and Trusteead Litem.

Supreme Court of Pennsylvania.

March 17, 1964.

Albert Blumberg, Chester, guardian and trustee ad litem, appellant; McClenachan, Blumberg & Levy, Chester, of counsel.

Maurice Heckscher, Robert W. Denious, Duane, Morris & Heckscher, Philadelphia, for appellee Girard Trust Corn Exchange Bank, trustee.

Before BELL, C. J., and MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.

BELL, Chief Justice.

Appellant seeks a surcharge against testamentary trustees for losses incurred by them on sales of three securities.The narrow question thus raised involves a construction of the investment powers conferred by the Will of W. Barklie Henry.

Mr. Henry died December 24, 1930, leaving a Will dated January 13, 1913.In his Will and codicils, Henry created a trust for the benefit of his wife and his surviving children, including his daughter, Alice E. Henry von Briesen¹ and her issue.That trust still subsists.

On February 26, 1963, the trustees, Barklie McKee Henry and Girard Trust Corn Exchange Bank, filed a Partial Account.The Orphans' Court appointed appellantAlbert Blumberg, Esq. as guardian ad litem for minors, and trustee ad litem for unascertained persons, who presently were or who might thereafter be interested in the trust.Blumberg filed exceptions to small losses claimed in the Account on securities which the trustees purchased and thereafter sold, namely, a $1,000 Pennsylvania Turnpike Bond due 2000-1993; a $1,000 U. S. Treasury Bond due 1966; and 10 shares of General Motors Corporation common stock.All of these were legal investments under the Fiduciaries Investment Act of May 26, 1949, P.L.1828, 20 P.S. § 821.1 et seq., but were not specifically authorized by the Will.²

Blumberg's exceptions to the three aforesaid losses were dismissed by the Orphans' Court; hence this appeal.

The success or failure of the appeal depends, we repeat, on a proper construction of the investment powers given by the Will.Testator in his Will pertinently provided as follows:

'Item (4): All the rest, residue and remainder of my estate, real and personal, I give, devise and bequeath unto the Girard Trust Company, ³ * * * In Trust to invest and keep the same invested, not limiting my said Trustee to the investments limited by law as legal investments for such Trustee, but granting unto it a broader discretion as is hereinafter more particularly set forth ⁴ * * * and relieving it from any liability by reason of any loss or depreciation in any such investments made in its discretion, * * *

'Item (5): * * *

'My Trustee above named, or its successors, may invest my said estate in first mortgages on real estate, such mortgages not to be in excess of sixty per cent (60%) of the assessed valuation of the property loaned upon, and at a rate of interest not lower than four and four-tenths (4 4/10%); in first mortgage, general mortgage, and consolidated mortgage bonds of Standard Railroad Companies; in car trusts of private Coal Companies operating over the Pennsylvania Railroad lines in which latter case twenty-five per cent (25%) shall have been paid in in cash, in first mortgage bonds of Coal Companies where the aggregate bonded issue is not at excessive figures per acre in the judgment of my Trustee, and where there is a sinking fund provision of ten cents ($.10) per ton; in bonds of the United States Steel Corporation or Pennsylvania Steel Company; in stocks of Standard Railroad Companies, paying five per cent (5%) or more dividends on their par value; in first mortgage trolley bonds, or underlying general and consolidated mortgage bonds of trolley companies; in short time notes of Standard Railroad Companies well secured by bonds (and) or stocks or mortgages.

'My Trustee also may retain any such securities which I may own at the time of my death, or may invest further in the same securities, in its discretion, my intent being not to limit the investment of the funds held under this trust to strictly legal investments but to enable my Trustee to invest in safe bonds yielding an income of at least four per cent. (4%) on such investment, and in such investments as I may have myself made.'

It is crystal clear that the testator did not intend to limit his trustees to so-called legal investments.Whether he intended to limit his trustees to the securities or classes of securities specifically enumerated by him, or whether he intended to authorize, inter alia, the purchase of securities which were legal investments at the time of purchase, or exactly what was the scope of investment powers granted, are more difficult questions.

Appellant contends that because the three investments he challenges were not within any of the classifications of investment specifically enumerated by the testator, investment therein was not authorized and the trustees should be surcharged.On the other hand, trustees argue (a) that the Will, considered as a whole, discloses that the enumeration of particular types of investment was intended to be suggestive or permissive, but not mandatory or exclusive; and (b) that as the challenged investments were legal investments at the time they were made, they were permissible investments; and (c) in any event they(the trustees) are protected by Section 18 of the Fiduciaries Investment Act of 1949, supra.Section 18 of the Act of 1949 pertinently provides:

'The testator or settlor in the instrument establishing a trust may prescribe the powers, duties and liabilities of the fiduciary regarding the investment or noninvestment of principal and income and the acquisition, by purchase or otherwise, retention, and disposition, by sale or otherwise, of any property which, at any time or by reason of any circumstance, shall come into his control; and whenever any such provision shall conflict with this act, such provision shall control notwithstanding this act.In the absence, however, of an express restriction to the contrary in the trust instrument, the fiduciary may invest in any investment authorized by this act.'

Before discussing the contentions of the parties or the meaning and application of the Act of 1949, we deem it advisable to restate the basic and applicable legal principles which were recently set forth in Brown Estate, 408 Pa. 214, 183 A.2d 307;Saunders Estate, 393 Pa. 527, 529, 143 A.2d 367, and in Kelsey Estate, 393 Pa. 513, 143 A.2d 42.

This Court said, in Saunders Estate:

'The testator's intention is the pole star in the construction of every will and that intention must be ascertained from the language and scheme of his will; it is not what the Court thinks he might or would or should have said in the existing circumstances, or even what the Court thinks he meant to say, but what is the meaning of his words.In re Kelsey's Estate , 143 A.2d 42;In re Britt's Estate, 369 Pa. 450, 87 A.2d 243;In re Sowers' Estate, 383 Pa. 566, 119 A.2d 60;In re Cannistra's Estate, 384 Pa. 605, 121 A.2d 157.'

In Kelsey Estate, 393 Pa. pages 518-519, 143 A.2d page 45, the Court said:

'A testator or settlor may 'condition his bounty as suits himself so long as he violates no law in so doing.When a trust of this kind has been created, the law holds that the donor has an individual right of property in the execution of the trust; and to deprive him of it would be a fraud on his generosity.* * * Cujus est dare, jus est disponere'.In re Borsch's Estate, 362 Pa. 581, 587, 588, 67 A.2d 119, 122.This principle has been firmly imbedded in our law for over 100 years: Holdship v. Patterson, 7 Watts 547;In re Heyl's Estate, 352 Pa. 407, 43 A.2d 130;Riverside Trust Co. v. Twitchell, 342 Pa. 558, 20 A.2d 768;In re Harrison's Estate, 322 Pa. 532, 185 A. 766;In re Morgan's Estate, 223 Pa. 228, 72 A. 498, 25 L.R.A., N.S., 236.See alsoIn re Grote's Estate, 390 Pa. 261, 135 A.2d 383.

'Courts cannot, even when aided by hindsight and the ingenuity of counsel, rewrite a settlor's deed or a testator's will, or distort or torture his language or the language of a statute relating thereto, in order to attain what we believe is beneficial and wise, or even what we believe settlor would or should have provided if he had possessed a knowledge of all presently existing circumstances.'See alsoJeffries Estate, 393 Pa. 523, 143 A.2d 391.

Furthermore, in Brown Estate, 408 Pa. 214, 183 A.2d 307, supra, the Court--without deciding whether it would be legally or constitutionally possible for the legislature to enact in 1949 a statutory rule of construction which could or should be applied to the Will of a testator who died several decades earlier, and who absent the gift of prophesy could not possibly have known about Section 18 of the Fiduciaries Investment Act of 1949--interpreted the testator's investment powers as prohibiting investments in common stock which were legal investments at the time made.

The Court said (pp. 227, 228, 229 of 408 Pa., 183 A.2d p. 314):

'* * * '* * * 'One possessed of testamentary capacity, who makes a will in Pennsylvania, may die with the justifiable conviction that the courts will see to it that his dispositions, legally made, are not departed from * * * or improperly defeated * * *.The law will not permit that to be accomplished by indirection which cannot be done directly * * *.'''

'* * * It would not only be unreasonable, it would be absurd to rule that the Legislature intended to require a testator who had died 30 years before, to use the identical express language used in the Act of 1949.'See also to the same effect, Pew Trust Estate, 411 Pa. 96, 108, 191 A.2d 399.

It is clear as crystal, we repeat, that testator did not intend to limit his trustees to legal investments--he not only said so twice, ⁵ but the classes of investments which he specifically authorized included only one...