Mason's Estate, In re

• Decision Date: 20 April 1959
• Citation: 150 A.2d 542,395 Pa. 485
• Parties: In re ESTATE of Ira C. MASON, Deceased. Appeal of George MOORE.
• Court: Pennsylvania Supreme Court

Page 542

150 A.2d 542

395 Pa. 485

In re ESTATE of Ira C. MASON, Deceased Appeal of George MOORE.

Supreme Court of Pennsylvania.

April 20, 1959.

Benjamin Jacobson, Morris B. Greenberg, Pittsburgh, for appellant.

Prichard, Lawler & Geltz, James Lawler, Pittsburgh, for appellee.

Byrd R. Brown, Pittsburgh, trustee ad litem for contingent interests.

Before CHARLES ALVIN JONES, C. J., and BELL, MUSMANNO, BENJAMIN R. JONES, COHEN, BOK and McBRIDE, JJ.

BELL, Justice.

Ira C. Mason, in the Fifth paragraph of his last will dated October 27, 1953, gave and devised his real estate, 2130 Wylie Avenue, Pittsburgh, and the liquor business thereon conducted, to his brother Arnold, his daughter Vivian, and his employee George Moore, equally. Moore, in his petition to the Orphans' Court, prayed to have a deed of trust (hereinafter reviewed) made by Mason to Potter Bank and Trust Company, declared testamentary and void as to him and as to creditors of Mason's estate. From a Decree which dismissed his petition, Moore took this appeal.

Mason, as donor, and Potter Title and Trust Company, as trustee, executed a deed or agreement of trust dated September 7, 1950. The relevant provisions of this trust agreement are as follows:

The donor granted and conveyed to the trustee four specific parcels of real estate--the deed to each of which was duly recorded in the Office of the Recorder of Deeds of Allegheny County--upon the following terms and conditions: The trustee was to manage all the real estate, pay the taxes, and make all necessary repairs, collect the income and distribute the net income from the trust to the donor during his life. Upon the death of the donor the trustee's active duties were to continue, but it was to invest and reinvest the trust fund only in legal investments. It was then to pay the net income in specified proportions to Mason's wife, his daughter Mary, his daughter Vivian, and his sister Juanita Winston, until donor's youngest child attained the age of 35 years, or if said child shall not attain the age of 35 years, then 'in the year 1962, the Trustee shall pay over four-twelfths (4/12) of the principal of the Trust Fund to the Donor's wife, * * *; three-twelfths (3/12) of the principal * * * to the Donor's daughter, Mary * * *; three-twelfths (3/12) of the principal * * * to the Donor's daughter; Vivian * * *; and two- twelfths (2/12) of the principal * * * to the Donor's sister, Juanita Winston, * * *.' All of these gifts in remainder were absolute and freed and discharged of all trusts. The turst contained one of the usual spendthrift trust provisions, including a prohibition against sale or assignment.

By trust agreement dated December 31, 1951, Mason and the Trust Company executed another trust agreement by the terms of which donor added his farm property to the original 1950 trust, to be held for the same persons, uses and trusts as were set forth in the 1950 trust. On October 27, 1953, Mason and the Trust Company executed another trust agreement under the terms of which donor added an additional property to the original 1950 trust to be held for the same persons, uses and trusts as therein set forth. On July 15, 1955 Mason executed a deed with the joinder of his wife, conveying premises 2130 Wylie Avenue, Pittsburgh, to the Potter Bank and Trust Company. This deed, as well as all the other deeds, was duly recorded.

All of the remaindermen survived testator and are still living; the record is silent as to the age of donor's youngest child. No consideration was paid for said trust agreements, or for the conveyance of any property included therein.

Appellant contends that these deeds or trust agreements were testamentary and null and void because the 1950 trust (and likewise the 1951 and 1953 trusts) included the following provisions: The donor reserved the right during his lifetime to withdraw a part or all of the principal of the trust and to revoke, alter or amend the trust in whole or in part. The donor reserved the right to add additional real estate or personalty to the trust fund. The trustee was given the right to mortgage or sell any real estate, but could do so during the lifetime of the donor only with the express authorization of the donor In the event that all of the beneficiaries of the trust predeceased the donor, or died prior to the termination of the trust, their shares were to be paid to donor's then living heirs at law.

Mason mortgaged two of the properties and in order to do so, the Trust Company conveyed the properties to him, he made the mortgage and reconveyed the properties to the Trust Company trustee under the provisions of the 1950 trust agreement.

On February 10, 1956, Mason assigned his income from the trust to certain named judgment creditors until the expiration of a certain lease. On January 15, 1957, Mason assigned his income to the Trust Company as collateral security for the payment of a $5,000 loan.

Appellant contends, we repeat, that the aforesaid agreements of trust were testamentary, that the remaindermen named therein had only a contingent interest, and that as to devisees in the testator's will and subsequent creditors, the said trust agreements or deeds of trust were null and void. We find no merit in these contentions.

The law of Pennsylvania is well and clearly settled that a deed of trust or trust agreement made by a solvent settlor, which creates a present interest in the beneficiaries of the trust and gives to the trustee active duties, is a valid inter vivos trust ¹ and is not testamentary in character even though the donor reserved a life estate to himself, together with a power to alter, revoke or amend the trust in whole or in part. Moreover, the fact that the interest of the remaindermen does not take effect in possession or enjoyment until the death of the settlor will not make the trust testamentary in character or null and void. Windolph v. Girard Trust Company, ^{2 2} 245 Pa. 349, 91 A. 634; In re Henderson's Estate, 395 Pa. 215, 149 A.2d 892; In re McKean's Trust Estate, 366 Pa. 192, 77 A.2d 447; Lines v. Lines, 142 Pa. 149, 21 A. 809; Beirne v. Continental-Equitable Title & Trust Co., 307 Pa. 570, 161 A. 721; Dickerson's Appeal, 115 Pa. 198, 8 A. 64; In re Shapley's Deed of Trust, 353 Pa. 499, 46 A.2d 227, 164 A.L.R. 877; In re Reese's Estate, 317 Pa. 473, 177 A. 792; In re Pengelly's Estate, 374 Pa. 358, 97 A.2d 844; Curry Appeal, 390 Pa. 105, 134 A.2d 497; Murphey v. C.I.T. Corp., 347 Pa. 591, 594, 33 A.2d 16; Restatement, Trusts, § 57.1; Scott on Trusts, § 57.1.

In the leading case of Windolph v. Girard Trust Company, 245 Pa. 349, 91 A. 634, supra, a wife gave to her mother as trustee a large part of her personal estate, in trust, to collect the income and pay it (a) to the settlor for life, and (b) after her death to pay an annuity to her husband so long as he remained unmarried, and (c) the balance of the income to the trustee herself, and (d) after her death the balance of the income to settlor's two brothers, and (e) on their death the principal to their issue and (f) if no minor issue of the brothers shall survive them, then the entire estate to charity. The settlor reserved the right to change or amend or revoke the trust in whole or in part. After settlor's death the husband sought to set the trust aside and have it declared null and void, because (1) it was executed in fraud of his marital rights and (2) was testamentary in character. The Court sustained the trust and said (245 Pa. at page 363, 91 A. at page 638,): 'If the gift is absolute and accompanied by a transfer of possession with intent to divest the donor of his ownership, ³ although the obvious...