Estate of Williamson

22 A. 836, 143 Pa. 150, 1891 Pa. LEXIS 913

• Court: Supreme Court of Pennsylvania
• Decided: October 5, 1891
• Docket: No. 198
• Status: Published

Opinion

Opinion,

Mr. Justice Green:

The practical and only question in this case is, whether the residuary clause of the testator’s will is in conflict with the provision against accumulations of the act of April 18, 1853, § 9, P. L. 503, so far as the income of the estate for the first year after the testator’s death is concerned. As to the remaining nine years of the period of ten years, during which the residuary income is to be accumulated, there is no question before us, and probably never will be, in view of the very direct provision for accumulation contained in the residuary clause of the will.

If the will does not direct an accumulation which may, or must be operative upon the income of the first year, it does not transgress the statute. In order to determine this question, we must first regard the residuary clause of the will by itself. It is the fourteenth item of the will. It first directs as follows:

“ The rest, residue, and remainder of my estate, real, personal and mixed, wherever situated, vested, contingent or future, after satisfying the foregoing bequests, as such remainder shall be realized and converted into proper securities by my executors, as provided in item Seventeenth of this will, shall be by them transferred and delivered to the Pennsylvania Company for Insurances on Lives and Granting Annuities, of this city, which company shall hold the same as a trustee and in special trust as follows: ”.....

It will be observed that there is no direct gift of the general residue of the estate to the trustee. The testamentary direction is that the executors shall transfer and deliver to the trustee the residue of the estate left after satisfying all the previously mentioned bequests, and after the “ remainder shall be realized and converted into proper securities, as provided in item Seventeenth of this will.” Turning to item seventeenth, we find that it is an absolute bequest of the entire personal estate of the testator to the executors, “ to enable them freely and fully to execute the various provisions of this will.” Next, it provides that the executors may pay the special bequests given by items fourth to eleventh, both inclusive, either by assigning any of the personal property (excepting the St. Louis investments) to the legatee at its fair value, “or they may pay the same in money.” Next, the executors are directed to make up the fund provided for by the second item, by selecting real-estate loans in St. Louis, to be valued by the executors at par, and for any deficiency of the same they shall select any good securities out of the estate, and at their own valuation. The clause next directs the executors to make up the fund required by the third item, by either selecting any good securities of which the testator died possessed, “ or by purchasing or investing in new ones,” and they “shall settle and fix the value of the securities which they turn over to the trustees.” Next, the executors are directed to select and hand over to the institutions named in the twelfth item the several amounts therein specified, “ out of the good stocks, bonds, or other securities which I may die possessed of, or which may come to the hands of the executors .thereafter by purchase,” with power to make Up any deficiency of good securities by selling such as are not deemed good, and replacing them by others which are good. This item disposes of seven hundred thousand dollars, and the executors alone are required to pay it all. The fund required by the thirteenth item is directed to be made up by the executors, by handing over such securities as they think best, or they may convey to the trustee named in the thirteenth item, any of the testator’s real estate upon the trust mentioned in the item. This item carries three hundred thousand dollars, all of which is to be paid by the executors. In the next place, the entire residue of the testator’s whole estate, real and personal, and of whatever character, is given absolutely to the executors, with positive direction to sell it all and convert it into money, (excepting only such personal investments as may enter into the trust provided in the fourteenth item), and then reinvest the same in bonds, loans or other investments, at their discretion, for the benefit of the residuary trust in the fourteenth item; and the executors are directed, as such residuary portions of the estate are converted and reinvested, to hand '.them over to the trustee of the residue, to he held according to the fourteenth item. Full power is given to the executors to , carry out this portion of the will by making any kind of sales and upon any kind of terms of “ all and every part of my estate in this will in any way mentioned,” with no restriction of [any kind. And then this item of the will (seventeenth) proceeds thus:

“ And the net proceeds of all such sales, as well as all rents and income derived from any part of said property, shall constitute a part of my residuary estate, and be invested as hereinbefore expressed. And until the sale of my real estate my executors shall have full control over the same and are authorized to lease or rent it, and to make such repairs, alterations and changes therein as they may deem proper, and to pay all taxes and other proper charges against the same, and make all insurances thereon deemed proper by them, and generally they may do and perform all acts touching such property as they may deem to the advantage of my estate, in as full and ample a manner as I can do.”

We think it manifest from the provisions of this section, that the executors were to have the fullest and most absolute power, control, management and disposition of every fragment of the estate, including its income and its rents, issues and profits, until the time of its being handed over to the residuary trustee, to as great an extent as the testator himself had in his lifetime. All rents, and all income derived from any part of the property of the testator, are expressly and absolutely given to the executors, under this clause of the will, by way of a residuary bequest, and everything that is to be done to or with the estate or its proceeds, prior to the taking effect of the residuary trust, is to be done by the executors. All the debts, all the costs and expenses of the administration, all repairs, taxes, insurance and other charges upon real estate, all legacies, gifts, and bequests, of every description, are to be paid by the executors before the residuary trust-estate under the fourteenth item arises. And the rents and income received by the executors before the residuary trust comes into being, are explicitly directed “ to constitute a part of my residuary estate.” We think it cannot be doubted that under this provision not only the estate of which the testator died seised or possessed, but all rents and income, “ derived from any part of said property,” after his death, entered into and formed part of the general residuary estate in the hands of the executors, prior to the existence of the residuary trust-estate. More than this, although this was residuary estate in terms, it was given to the executors with express directions to apply it to the payment of all bequests and legacies, by a further clause of the seventeenth item of the will in these words: “And I direct that my executors shall apply the proceeds of sales of real estate equally, and in like manner with the proceeds of sales of personal estate, in payment of all or any of the bequests and legacies given by me.”

The will is peculiar. It gives the whole estate to the executors in the first clause of the seventeenth item, for the express purpose of executing the various provisions of the will, and further on, in the same item, it gives them the absolute and entire residue of the estate, no matter how, or in what manner, or from what source derived, expressly including rents and income, also with express instructions to pay all kinds of expenses and charges, and in addition all bequests and legacies. It may be that there is redundancy in these provisions, but it is entirely true that the testator fully intended to place every kind of asset, including rents and income, received after his death, in the hands of his executors, to be by them applied to the full settlement of his estate, before the residuary trust created by the fourteenth item came into existence.

If there were no other provision in the will applicable to the subject of the present contention, we would be clearly of opinion that income which accrued in the hands of the executors prior to the commencement of the residuary trust-estate under the fourteenth item, would constitute part of the general estate of the testator in the hands of the executors, applicable to any of the purposes of its administration. But there are additional provisions of the will which are strongly confirmatory of this view. In the latter part of the seventeenth item there is this provision: “ And all income given by this will shall begin to accrue to the beneficiaries after one year from my decease, and not before then, excepting the annuity in item Third, which shall accrue from the date of my decease, and which the executors shall pay during the first year, in order to prevent any delay in paying that.” This provision is a positive prohibition against the payment of any income to any beneficiary except the one mentioned in the third item. It is all income, and not merely the income upon the several legacies specifically bequeathed, that begins to accrue at the end of the first year. By necessary consequence, all the income that does accrue during that year goes into the general estate and becomes part of its corpus, with only the one exception otherwise directed. A positive direction to the contrary in the bequest of the residuary trust might overcome the force and meaning of the language we are now considering; but there is no such direction, as appears by the further language of the fourteenth item, to which we will now recur.

After the first portion of that item which we have already considered, immediately follows the provision as to what is to be done by the trustee with the securities transferred by the executors, in these words:

“ That is, to keep the same invested in productive securities, in manner provided in items Sixteenth and Seventeenth, and, after deducting the proper charges and expenses incident to the management of said investments and securities, to add the interest and income thereof to the capital, and thus accumulate and increase the fund until the expiration of ten years after my decease, at which time it shall be divided amongst sneh of my grand-nephews and grand-nieces, who shall then be living, as are the issue of my brothers and sisters named in the second item of this will,” etc.

It will be observed at once that there is no provision for the accumulation of interest for each one of the ten years next following the testator’s death. The expiration of ten years after the testator’s death is simply the period at which the accumulation shall cease, and there is no provision as to when that period shall commence. It could not commence immediately at the testator’s death, because the trust fund did not, and could not, then come into the hands of the trustee of the residuary trust-estate. On the contrary, the settlement of the estate by the executors must proceed and be completed before the residuary trust fund could reach the trustee, or the amount of it be known. It is the residuary trustee who is to accumulate the interest, but nothing of that kind could be done until the trust fund came into the possession of the trustee. The executors had very large sums to pay before the estate could be settled and the residue ascertained. The legacies alone far exceeded one million dollars. The payment of the collateral inheritance tax consumed nearly four hundred fifty thousand dollars, and the executors’ commissions were over two hundred thousand dollars. There was nothing in the will to prevent the executors from using any assets o£ the estate, whether principal or income, to pay these legacies, taxes and expenses. The will made no distinction between principal and income as assets, and required no interest to be paid during the first year to any legatee but the one mentioned in the third item. It prohibited the payment of all other income as such, until after the expiration of the first year. How, then, can it be said that the will directed the accumulation of the income for the first year, when there is not only no such provision in the will, but an express direction to the contrary ? There is neither a necessary implication, nor any implication, either that the testator intended such an accumulation, or that such an accumulation is possible under the will. The residuary trustee did not have the fund from the death of the testator, and consequently could not accumulate it by income from that time. In point of fact there was no accumulation of the first year’s income even by the executors. The payments made by them of legacies, expenses and charges, were very much greater than the first year’s income, and the total estate at the end of the first year was much less than at the death of the testator. Where, then, is the accumulation pf the first year’s income ? It does not exist in fact, it is not directed by the will, it is not within the power of the executors to produce it, and the residuary trustee is prohibited from doing so, because no income can begin to accrue to any beneficiary until after the end of the first year, and it would be only from that time that any increase of the principal of the trust fund from accumulating income could commence. This money has not been paid to the residuary trustee, nor can that trustee ever have it under the terms of the will. It has all been needed for use in the settlement of the estate by the executors, and it has been so used. By the positive provision of the seventeenth item of the will, all rents and income derived by the executors from property which the testator thus describes, “ all and every part of my estate in this will in any way mentioned, including all my lands and tenements,” shall constitute a part of the residuary estate. As such, it entered into the general estate of the. testator in the hands of the executors, and was applicable by them to the payment of debts, legacies and expenses, and only the remainder, after all these deductions were made, was payable to the residuaiy trustee. That trustee never did, and never could, accumulate that portion of the income which accrued during the first year, and hence the statute of 1853 has not been, and cannot be transgressed, so far as that year’s income is concerned.

The decree of the Orphans’ Court is reversed at the cost of the appellees; and the record is remitted, with instruction to re-state and correct the account in accordance with this opinion.