Appeal of Pepper

13 A. 929, 120 Pa. 235, 21 W.N.C. 388, 1888 Pa. LEXIS 477

• Court: Supreme Court of Pennsylvania
• Decided: April 30, 1888
• Docket: No. 319
• Status: Published

Opinion

Ashman, J.,

delivered the following opinion.

The question in this case does not turn upon whether the power was exclusive, perhaps a better word would be selective, or whether it was non-exclusive; because, under it, the appointment has been to one object, and whether the donee intended it or not, an absolute interest has vested in that object and the power has thereby determined. The opinion, to which this is in the shape of a reply, treats the power as exclusive, and covering, as the classes from which the selection may be made, not only the children of the donee, but their issue in a lineal descent, which is bounded only by the rule against perpetuities.

The words of the power, if they stood alone, would undoubtedly uphold this theory; they were “to such children and issue ” as the donee should appoint, and words even less expressive were held in Veale’s Trusts, 4 Ch. Div. 61, to give a power of selection among both classes. But they are immediately followed, in default of appointment, by a gift over to the children and issue of deceased children, living at the donee’s death; and, if the reasoning of Thompson, C. J., in Wickersham v. Savage, 58 Pa. 365, is valid, they show that the original testator meant by “issue,” not what the word technically means, but living issue of children who should be alive at the death of the donee. Of course, the power was exclusive as to living children and such issue as have been described, hut as there was only one child and no issue, the donee was restricted to that child, and his power of appointment ended with his power of selection. In Veale’s Trusts, the power was to appoint to children or issue, and in default the estate was to pass into the residue. Sir George Jessel said the word “ issue ” meant issue forever, because the testator had fixed no limit. The reverse seems to be true here.

But, conceding that Wickersliam v. Savage has nothing to do with this case, and that this power embraces children and issue in an unbroken line, the question is, can its exercise be sustained ? And first, the power has been imperfectly executed. With an absolute estate to dispose of, the donee has directly appointed only a term for years. Beyond the gift of an estate for twenty-one years after the death of a certain survivor, he has given nothing. But he has appointed indirectly an estate, which amounts to an absolute interest, and has clogged it with conditions, which he could not do by any direct gift whatever. He gives and bequeaths to his son “ until the expiration of twenty-one years after the death of the survivor” of six cestuis que vient, upon condition that he shall not convey or assign, etc., in the meanwhile. It will not he pretended that if the appointee shall survive this period and commit no act of forfeiture, he will not take the entire estate. It is true that his death within the designated time, leaving issue, is provided for. But that will not cut down the estate, previously given, to a life estate ; he will still take an absolute interest, subject to divestiture. The estate is neither an estate at will, nor for life, nor for years, and the appointee cannot be compelled to give security. It is not an estate at will, nor for life, because it is given only for years; and it has no effect as an estate for years, because the appointee is already in of an absolute estate under the will of the donor. This is recognized by the donee, who therefore makes no provision in case the appointee shall die without issue.

In whatever light it is viewed, the intent to vest the donee with an absolute estate, and at the same time take from him all power to alienate it, is more than apparent. He is now forty years old, and if both of the two survivors shall die immediately, he will still be debarred from controlling his property until he shall have reached the age of sixty-one, a period during which, by the accompanying opinion, he will be presumably liable to the follies of youth and inexperience. To outlive the survivor he may be compelled to last a century. During that time, although he will have all the insignia of ownership, with the corresponding ability to mislead creditors, he will have no power of self-protection; he may not sell to reap the benefit of an exceptional offer, nor to save himself from a falling market. It is said that the trustees, under the will of the donor, will hold the legal title. But the gift was not to them, it was directly to the appointee ; and it is doubtful whether the power authorized the creation of a trust. See, as to this point, Fidelity Co.’s Appeal, 4 W. N. 266. The question then recurs to the condition imposed by the donee. The text law is thus stated by Mr. Sugden : “ He (the donee) cannot annex any condition for his own benefit; nor can the property appointed be exempted by the donee of the power from the debts of the appointee, but it must be left to take the fate of being his property, and subject to be come at, as his creditors shall see fit. * Sugd. on Powers, 1st Am. ed., 547. He quotes in this the language of the Master of the Rolls in Alexander v. Alexander, 2 Ves. Sr. 645. See also Pawlet v. Pawlet, 1 Wils. 224. If this reasoning is correct, the fund should be awarded to the grandson.

Feeguson, J., concurred with this opinion and in the adjudication filed.

The exceptions falling, the exceptant thereupon took this appeal, specifying that the court erred :

Mr. John Gr. Johnson (with him Mr. Wm. JB. Robins'), for the appellant:

1. If the will of George Pepper be interpreted by the aid of common sense, untrammeled by authority, we will find difficulty in arriving at any other conclusion than that he meant his son Charles to have the power of selecting his beneficiaries amongst any of his issue, subject, of course, to the restraint imposed by the law that such issue must be born within the time fixed by the law against perpetuities. There is no decided case which obliges us to interpret the testator’s words otherwise than in accordance with the suggestions of common sense. On the contrary, the authorities, notably Veale’s Trusts, L. R. 4 Ch. D. 61, and 5 Ch. D. 622, sustain and enforce such interpretation.

2. It is objected that “The power has been imperfectly executed. With an absolute estate to dispose of, the donee has directly appointed only a term of years.” This objection is well taken only if it were necessary to the validity of the son’s exercise of the power that he should dispose of the whole fee. Was there such a necessity? The greater includes the less. A power to sell was held in Lancaster v. Dolan, 1 R. 231, and repeatedly since, to include a power to mortgage. The exercise of powers has often been set aside because of excess, but memory fails to recall an instance of such exercise being held bad because the power had been only partially executed. The power discussed did not require the whole “ rem ” to go to one person. The testator permitted it to be carved up into different estates, and permitted each estate to go to one, or to more. The bequest and devise to Charles R. was not bad because he took only an estate for years; and the bequest and devise of a remainder to his issue was not bad because contingent. The lack of provision for the contingency of the possible death of Charles R. within the prescribed period, did not avoid the provisions in case of other contingencies which might happen. To the extent that within its limits the power to split up estates was executed, it was good, —none the less because the estate, under certain contingencies, might go to those who-were to take in default of its exercise: Sadler v. Pratt, 6 Sim. 632; Farncombe’s Trusts, L. R. 9 Ch. D. 652; 2 Sugden, Powers, § 249.

1. In holding that the power of appointment in Charles Pepper was not validly exercised.

2. In awarding one half of the fund to Charles Rockland Pepper and the other half to George S. Pepper as trustee under the deed of Charles Rockland Pepper.

3. In not directing the whole fund to be held by the trustees of George Pepper for the uses declared by the will of Charles Rockland Pepper.

3. It is further objected: “ He has appointed indirectly an estate which amounts to an absolute interest, and has clogged it with conditions which he could not do by any direct gift whatever.....The intent to vest the donee with an absolute estate, and at the same time to take from him all power to donate it, is more than apparent.” Certainly, if it was competent for the donee of the power to give a remainder to the issue of Charles R., the provision which required the vesting within the period allowed by law was perfectly legal. Would this appointment in remainder be avoided even if the testator had sought to impose, upon another limitation, an illegal condition against alienation ? There is a recognized distinction between an appointment, bad because to persons not properly beneficiaries or of an estate larger than can be given, and one where the donees are within the class and the estate given is not too large, but there is an illegal condition superadded. In the latter case the appointment is allowed to stand and the condition is disregarded: Webb v. Sadler, L. R. 14 Eq. 533; 8 Ch. D. 419; Meredith’s Trusts, L. R. 3 Ch. D. 757.

4. And it is said that during the prescribed period “ although he will have all insignia of ownership, with the corresponding ability to mislead creditors, he will have no power of self-protection ; he may not sell to reap the benefit of an exceptional offer, nor to save himself from a falling market.” How will Charles R. be invested with the insignia of ownership ? The title to the real estate will mislead no one; it will be traced through the wills of his father and his grandfather. The personal estate will be vested in the trustee. If it be not, the assignment, if Charles gives the requisite security, will state the limitations of his estate upon its face.

5. Why shall the law be strained to strike down this spendthrift trust? Presumably, what was done was done for a good reason, by a father who knew what was best.

Mr. J. B. Townsend, for the appellee:

1. The limitations of the will of George Pepper, deceased, carried this property to Charles R. Pepper in fee, he being the only child and issue of Charles Pepper, living at his death. This was a vested remainder in fee, and only liable to be affected by any testamentary appointment which might be made by said Charles Pepper in the contingency that he might leave other children, or issue of deceased children, living at his death in addition to said Charles R. Pepper. He could prefer one or more of such living issue above the other or others, and partially or wholly exclude others of such living issue, and that was the exact extent of any choice or power he could exercise by his testamentary appointment. He could create or declare no new trusts, for that power was not given to him: Wiekersham v. Savage, 58 Pa. -365; Horwitz v. Norris, 49 Pa. 213; Fidelity Co.’s App., 4 W. N. 265.

2. There is a long list of cases which establish the rule that if a life estate is limited, and the remainder to children and issue of the life tenant, with a further limitation over to living persons, if no such issue exist, the word “ issue,” in that connection, is restricted in its construction to such issue as shall be living at the death of the life tenant, and it is the failure of that class of issue and not issue generally and indefinitely that the testator has always been held to mean: Myers’s App., 49 Pa. 111; Powell v. Board of Missions, 49 Pa. 46; Umstead’s App., 60 Pa. 365; Findlay v. Riddle, 3 Binn. 139; Sheets’s Estate, 52 Pa. 257; Ingersoll’s App., 86 Pa. 241; Taylor v. Taylor, 63 Pa. 481; Seibert v. Butz, 9 W. 490; Pennock’s Est., 11 Phila. 623.

3. We may fairly claim that the appointment is an attempt to fasten upon the property the characteristics of inalienability and exemption from debts on the sole remainderman, who must take the fee-simple ownership and can take no less. A condition or conditional limitation restricting an owner from alienation is bad and not enforceable at law or in equity: Naglee’s App., 33 Pa. 89; Doebler’s App., 64 Pa. 9; Harker’s App., 60 Pa. 141; 2 Jarman, 15, 19; Aman v. Vanordan, 1 McCarter 135.

4. The law leans powerfully in favor of remainders being held vested whenever they can possibly be so construed: Chess’s App., 87 Pa. 362; McClure’s App., 72 Pa. 414; Letchworth’s App., 30 Pa. 145; Provenchere’s App., 67 Pa. 468; Peterson’s App., 88 Pa. 397; McCall’s App., 86 Pa. 254. It is also a rule, in all cases of doubtful construction of wills, that the law of this state favors an appropriation of the property which shall be nearest to our law of descent and statutes of distribution. So in England: Clark v. Turner, 2 Freem. 198; Longmore v. Broom, 7 Ves. 124; Jones v. Torran, 6 Sim. 255; Thornton v. Bright, 2 My. & Cr. 230. To reverse the decree below, would be to overrule three well considered judgments of this court.

Opinion,

Me. Justice Paxson :

This is a close case and not free from difficulty. It was heard in the court below upon exceptions to the rulings of the auditing judge. The court were divided and the exceptions fell. Two opinions have come up with the record, one of them sustaining the adjudication, the other sustaining the exceptions. They are both able and carefully prepared opinions. It is a pleasure to consider cases where the court below has done so much to aid us in our deliberations.

The single question presented by the record is, whether there has been a valid execution of the power of appointment under the will of George Pepper. The testator devised the share of his son Charles to trustees in trust for his use for life, “ And from and after his death, then to the use of such of his children and issue, and in such shares and for such estates as he shall by last will appoint, and in default of such appointment, then to the use of all his children that may be living at his death, and the issue of any deceased child or children, their heirs, executors, or administrators, as tenants in common, in equal shares; the issue of any deceased child to stand in the place of their parent, and to take only the share their parent would have taken if living; and in default of such issue, then as to the one equal fourth part of the share appertaining to my son, to the use of such person or persons, and for such estates and in such proportions as he shall in any way appoint; and as to the remaining three fourths parts, and also as to the said one fourth part, so far as the same shall not have been appointed otherwise by my said son, to the use of my then surviving children, and the issue of any of my children, then deceased, in the shares and proportions, and for the estates which they would have taken under the intestate law of Pennsylvania, if my said son had died seized in fee simple of such estate, without any wife surviving him.”

Charles Pepper left surviving him one child, Charles Rock-land Pepper, and no other issue. His said son was born after the death of George Pepper. He is now about forty years of age, and has never been married. It is very clear that under the will of George Pepper his son Charles took an estate for life, with remainder in fee to his son, Charles Rockland Pepper. This estate is indefeasible, unless it has been abridged by the donee of the power in the valid execution thereof.

It is well to bear in mind that whatever Charles Rockland Pepper takes, he takes it under the will of his grandfather. The donee of the power, Charles Pepper, had no estate to give him. Nor can ne take anything from him. The estate was limited by the will of George Pepper to a class to which Charles Rockland Popper belongs, and he is moreover the only member of that class. Had there been other children, brothers and sisters of Charles Rockland Pepper, the donee of the power could have appointed the estate among them in such shares as he might have seen proper. He might, perhaps, have excluded this one child from all participation in his grandfather’s estate. As the case stands the donee of the power can neither exclude him nor diminish his interest or estate, because, as was before observed, the estate was given by George Pepper to a class of which Charles Rockland Pepper is the only representative or member. Charles Pepper cannot give it to any one else because it is not his to give; he is the mere donee of a power; that power has its source in the will of George Pepper; it is a special limited power, and it can only carry the estate to such persons as George Pepper directed it to go. The object of conferring this power was to enable Charles Pepper to distribute the estate to and among a certain class, or to such members of the class as he might think best for their interests. With but one member of the class in existence there can be but one distribution, and. under such circumstances it is difficult to see the utility of any appointment whatever.

Charles Pepper, however, attempted to exercise the power of appointment given by the will of George Pepper. That the paper was carefully drawn is shown by the skill with which a perpetuity is avoided while approaching dangerously near the border. The material part of .the execution of the power by Charles Pepper is in the following words: — ■

“ Until the expiration of twenty-one years after the death of the survivor of my brothers, George S., Edward, Lawrence S., and Fredrick Pepper, of my sister, Mrs. Catharine Gardette, and of myself, all of whom were living at the death of my said father I devise, bequeath and appoint my said share in my father’s estate to my said son Charles Rockland Pepper, upon the express condition, that he shall not in any manner convey, assign or transfer the same or the rents, issues and profits thereof to any person whomsoever, or do or suffer any act, matter or thing whereby the same shall be attached, seized or taken in execution or be made subject to or be affected by the insolvent or bankrupt laws of the United States, or of any other state thereof, or of any foreign country, and in case any of these events shall happen contrary to the true intent and meaning of the foregoing condition within the said term of twenty-one years after the death of the survivor of my said brothers, sister and myself, and also in case my said son shall die before the expiration of the said term of twenty-one years leaving issue, then, and in any such case, I devise, bequeath and appoint my said share in my father’s estate to such issue, their heirs, executors and administrators, and if more than one, in such shares and proportions as if my said son had died seized and possessed thereof intestate.”

It is not easy to describe the estate which the donee of this power has given to the appointee. It is perhaps a conditional fee, subject to forfeiture for breach of the condition against alienation. The thought naturally suggests itself, where did Charles Pepper get the power to annex a forfeiture to the estate he was attempting to appoint ? It was not inherent in him by virtue of his dominion over the estate, for, as before observed, it was not his estate. It was urged, however, that it created a spendthrift trust and as such may be sustained under the authorities in this state. But the appointment contains no trust of any kind, and to sustain this assumption we would have to write a spendthrift trust into the will of George Pepper. This cannot be done either by the donee of the power, or by this court. We look in vain through the will of George Pepper for one word which authorizes the donee of the power to appoint a forfeitable estate to Charles Rockland Pepper, or create a spendthrift trust. It is true it authorizes the donee to appoint the share referred to “in such shares and for such estates ” as he shall deem proper. But the testator, when he used this language was contemplating the distribution of the share among a class consisting of several persons, certainly of more than one. And had there been several of the class the donee of the power could have appointed an estate for years to one, an estate for life to another, with remainders to the third in fee, or he could have made any other division which would have given the whole share to some one or more of the class. This is what the testator evidently meant when he used the words “for such estates.” They have no meaning as applied to Charles Rockland Pepper as the only member of bis class, unless we hold that they were intended to authorize the donee of the power to cut down the estate which he took under his grandfather’s will, from an estate in fee to an estate upon condition and forfeitable for alienation. This wo are not prepared to do.

A careful reading of the will of George Pepper leaves us in no doubt as to the testator’s meaning. The share of his son Charles was to go in the line of inheritance. In default of appointment by the latter, the share is limited to the class who would take by descent from Charles, and we are of opinion that that class was to be determined upon the death of Charles. When George Pepper died, Charles had no children. He could not possibly know how many children Charles would leave. He therefore gave his share “ to the use of such of his (Charles’s) children and issue .... as he shall by last will appoint,” and upon failure to appoint, “then to the use of all his (Charles’s) children that may be living at his (Charles’s) death.” We think it is plain that the testator intended the share of Charles to go to such of the children of Charles as might be living at the death of the latter, and to the issue of any deceased child. This was the class who were to take, and the power was given merely to enable Charles to make distinctions between the different members of the class, in case some should prove more worthy or more needy than others, or possibly to exclude some altogether. We see nothing to justify the donee of the power in giving to Charles Rockland Pepper a forfeitable estate, with remainder to another class not contemplated by the testator, which was not then, is not now, and may never come into existence. We think the foregoing vietvs are fully sustained by Wickersham v. Savage, 58 Pa. 365; Horwitz v. Norris, 49 Pa. 213; Fidelity Company’s Appeal, 4 W. N. 266.

The decree is affirmed, and the appeal dismissed at the costs of the appellants.