Peiter v. Degenring

• Decision Date: 15 December 1949
• Citation: 136 Conn. 331,71 A.2d 87
• Court: Connecticut Supreme Court
• Parties: PEITER et al. v. DEGENRING. Supreme Court of Errors of Connecticut

Page 87

71 A.2d 87

136 Conn. 331

PEITER et al. v. DEGENRING.

Supreme Court of Errors of Connecticut.

Dec. 15, 1949.

Richard I. Steiber, Bridgeport, for appellants.

Maurice J. Magilnick, Bridgeport, for appellee.

Before MALTBIE, C. J., and BROWN, JENNINGS, ELLS and DICKENSON, JJ.

MALTBIE, Chief Justice.

In this action the plaintiffs are seeking to secure a judgment terminating a trust established in the will of Hermine Peiter. The trial court refused that relief and from its judgment for the defendant the plaintiffs have appealed.

In the will, the residue of the testatrix' estate was given in trustee to pay to provision: 'I direct my trustee to pay to my brother, Frederick Peiter * * * during his life to him or his conservator, so much of the income and principal of my estate as may be necessary for his support and confort, using the income first.' Upon the death of Frederick Peiter, all the residue of the estate was given to five cousins of the testatrix, all women, with a provision that if any of them predeceased the testatrix her share should be divided equally among the survivors.

Frederick Peiter and the five cousins joined as plaintiffs in the action and the trustee was the sole defendant. No answer was filed, but the attorneys for all the parties stipulated that the allegations of the complaint were true and that a judgment terminating the trust should be rendered. The allegations which are the basis of the relief sought are: The will was dated October 2, 1947. The testatrix died April 25, 1948. The trust fund was distributed to the trustee on or about January 1, 1949. It consisted of personal property of the value of $52,268.19. Peiter was seventy-eight years old in May, 1949, when this action was brought. He owns personal estate the annual income of which is greatly in excess of his needs for comfort and support. He has not been entitled to receive and has received any money from the trust. All the plaintiffs, having in mind that there is no possibility that he will be entitled to receive any money from it at any time, desire the trust to be terminated forthwith upon these terms: The trustee is to pay Peiter $10,000 in consideration of a full release of any present or future interest in the trust; the balance of the fund is to be immediately distributed among the cousins; and the trustee is to be discharged upon presentation of his account to and its acceptance by the proper probate court. It is further alleged that such a distribution of the fund will effect all the purposes intended by the testatrix to be accomplished by the trust.

As the trial court pointed out, the application to the court is not one merely to terminate the trust but necessarily involves an agreement by the beneficiaries under it for the disposition of the fund not in accordance with the terms of the will. Very largely, however, the same considerations control both the validity of an agreement among those interested under a will to dispose of the estate in a way at variance with its terms and the termination of a trust by the court upon an agreement that this be done, and we shall not separate the two situations in our consideration, except in one respect. The situation presented is not one where in settlement of a controversy over the admission of a will to probate the parties have entered into a compromise agreement. See Warner v. Warner, 124 Conn. 625, 630, 1 A.2d 911, 118 A.L.R. 1348. Apart from such a situation, agreements among the beneficiaries under a will for a disposition of the property not in accordance with its terms have frequently been approved by courts in other jurisdictions. Note, 97 A.L.R. 468. We never have had occasion to consider the matter. In Hotchkiss' Appeal, 89 Conn. 420, 432, 95 A. 26, we held that the purposes entitled to receive an intestate estate may make an agreement for its disposition which is different from that provided in the statutes of distribution, and we stated as the basis upon which such an agreement rests that the heirs and distributees might by transfers immediately after a formal distribution divide the property as they wish, and hence an agreement preceding the distribution merely accomplished directly what they could do indirectly. See also Stempel v. Middletown Trust Co., 127 Conn. 206, 221, 15 A.2d 305, 157 A.L.R. 657. An agreement of beneficiaries under a will for the disposition of the property at variance with its has a like justification. It does not violate the provisions of the will because it is made in the exercise of rights created by the will. In re Estate of North, 242 Wis. 72, 76, 7 N.W.2d 705; Schaefer v. Thoeny, 199 Minn. 610, 615, 273 N.W. 190; note, 97 A.L.R. 470.

A testator may impose such conditions as he pleases upon the vesting or enjoyment of the estate he leaves, provided they are certain, lawful and not opposed to public policy. Colonial Trust Co. v. Brown, 105 Conn. 261, 284, 135 A. 555. An agreement amount the beneficiaries as to the disposition of the property which does not violate those restrictions may be sustained; Myers v. Noble, 141 Kan. 432, 435, 41 P.2d 1021, 97 A.L.R. 463; but if it is contrary to them, it cannot ordinarily be effective. Mason v. Rhode Island Hospital Trust Co., 78 Conn. 81, 85, 61 A. 57, 3 Ann.Cas. 586; South Norwalk Trust Co. v. St. John, 92 Conn. 168, 179, 101 A. 961, Ann.Cas.1918E, 1090; Bristol Baptist Church v. Connecticut Baptist Convention, 98 Conn. 677, 682, 120 A. 497; In re Stafford's Estate, 258 Pa. 595, 599, 102 A. 222; Adair v. Sharp, 49 Ohio App. 507, 513, 197 N.E. 399; Baer v. Fidelity Union Trust Co., 133 N.J.Eq. 264, 31 A.2d 823; In re Estate of Mowinkel, 130 Neb. 10, 12, 263 N.W. 488. For that reason it is generally held that where an estate is given upon an active trust an agreement among those interested cannot have the effect of varying its terms. 3 Scott, Trusts, § 337.4.

We have summed up the law in this way: 'The function of the court with reference to trusts is not to remake the trust instrument, reduce or increase the size of the gifts made therein or accord the beneficiary more advantage than the donor directed that he should enjoy, but rather to ascertain what the donor directed that the donee should receive and to secure to him the enjoyment of that interest only. 4 Bogert [on] Trusts and Trustees p. 2936; Claflin v. Calflin, 149 Mass. 19, 20 N.E. 454, 3 L.R.A. 370, 14 Am.St.Rep. 393. Conditions precedent which should concur in order to warrant termination of a trust by judicial decree include 'that all the parties in interest unite in seeking the termination, that every reasonable purpose of the trust's creation and existence has been accomplished, and that no fair and lawful restriction imposed by the [settlor] will be nullified or disturbed by such a result." Hills v. Travelers Bank & Trust Co., 125 Conn. 640, 648, 7 A.2d 652, 655, 123 A.L.R. 1419. There are, however, cases where the provisions of a trust taken by themselves would under the principles just stated not be subject to variation by the interested parties, but where, nevertheless, the courts may properly terminate the trust. In re Wood's Estate, 261 Pa. 480, 482, 104 A. 673. It is the policy of the law not to uphold restrictions upon the free and unrestricted alienation of property unless they serve a legal and useful purpose. It has been said that a trust should be continued no longer than the thing sought to be secured demands; In re Stafford's Estate, supra, 258 Pa. at page 598, 102 A. at page 222, and a trust may properly be terminated where there is no good reason why it should continue. Claflin v. Claflin, supra, 149 Mass....