Opinion by
Me. Justice Linn,
This appeal by the liquidator of a building association is from a decree entered at the audit of a trustee’s account and involves a dispute between claimants for the proceeds of life insurance. The learned court held that the liquidator of the building association had abandoned his interest in the policies and was therefore not entitled to participate in the fund before the court. He has appealed.
October 1, 1930, Martin M. Pearlman and his wife transferred certain assets to J. William Hardt, trustee “for the actual and ratable benefit of” certain creditors. The William B. Hackenburg Building & Loan Association, a creditor, became a party to the trust agreement. Among the trust assets were policies of insurance issued by the Equitable Life Assurance Society on Pearlman’s life. Pearlman defaulted in the payment of the insurance premiums, thus threatening the value of the interests of all the creditors in the security.
The building association went into liquidation under the direction of the Department of Banking and in November, 1937, Albert H. Lieberman was appointed liquidator. In 1940 he was unable to pay the association’s proportion (8.88792%) of the premiums payable to keep the security in force. On April 18,1940, he wrote to the trustee, in part as follows: “We note that our participation would mean a contribution from us of about $600, but the association is not in. a position to incur the outlay, and we must therefore regretfully request you to omit us from the contribution list permanently, although we should be glad to be kept in touch with the situation from time to time as we still retain our interest in the $100,000 policy of the Sun Life Assurance Company of Canada, as well as in the assets other than life insurance, covered by the trust agreement of October 1,1930.
“We took no part in paying the premium due February 5, 1940, on Policy #3628124 of the Equitable Life
Assurance Society of the United States,- and as that policy at that time had no cash surrender value and the' same is true now of the other three Equitable policies from which we aré withdrawing, we specifically waive any possible participation, after the respective premium dates mentioned, in any distribution under any of the policies of the Equitable Life Assurance Society of "the United States on the life of Martin M. Pearlman referred to in this letter.” ' '
Thereafter, the other creditors contributed the premiums. Pearlman died March 11, 1941, whereupon the-trustee received the insurance with which he charged himself in the account. ■ ■ ' ' -
The argument on behalf of the appellant liquidator, variously stated in the brief, comes to this: although unable to contribute to the premium fund and' although he abandoned his interést in the trust property, lie is nevertheless entitled to share in the proceeds on thé: theory that he had no power to abandon. ■
The general rule is “. . . that the trustee must exercise common prudence, common shill and common caution in the performance of his duties, or, shortly stated, due care in the circumstances:”
Casani’s Estate,
342 Pa. 468, 470, 21 A.2d 59, 60. Accordingly, it is held that a fiduciary, acting with reasonable prudence, may abandon assets:
Provident L. & T. Co. v. Fidelity, etc., Co.,
203 Pa. 82, 88 et seq., 52 A. 34 (in which an assignee for creditors abandoned ah insurance policy )
; Reynolds v. Cridge,
131 Pa. 189, 18 A. 1010 (in which an executor abandoned an interest in a bond) and cases cited in' those opinions; compare
Hartje’s Estate,
320 Pa. 76, 81, 181 A. 497;
Coates’s Estate,
273 Pa. 201, 116 A. 821. Restatement, Trusts, section 192; Scott, Trusts, (1936) section 192.
The plan of liquidation adopted by the association November 3,1937, at a meeting in which Mr. Lieberman was elected liquidating trustee, authorized him, inter
alia, “C. To sell, rent, lease, exchange, transfer, release or abandon any assets of the association, including any real estate, mortgage, leasehold, note receivable, or any other asset, at such price, for such consideration, and under such circumstances as may seem advisable in the opinion of the liquidating trustee.”
In the notice dated October 13, 1937, calling for the November meeting, the officers advised the stockholders .that: “The liquidation has now been so far completed by the Directors that only two assets remain outstanding, and these are contingent in nature. As a result of this liquidation there has now been made possible an additional dividend of 3%, a check for which is enclosed herewith.
“The two contingent assets
still remaining are a possible interest in insurance policies on the life of one of our borrowers which are paid up to 1940 and 1941, and a claim against another borrower which has a possible equity in it, depending upon his survival of his mother. As you can see, neither one of these has any present recovery value.”
In these circumstances the liquidator concluded to abandon the association’s interest in the policies; they had no “present recovery value”; he had nothing with which to pay premiums during such period as Pearlman might live, and nothing on which he could borrow money to use for that purpose. The association’s last assets, except about flOO, had been distributed as “. . . an additional dividend of 3%” in November, 1937. He may also have concluded that in any view it was undesirable to keep open the liquidation of the association during Pearl-man’s life expectancy. The association had authorized him to “abandon any assets” in “. . . such circum
stances as may seem advisable in the opinion of the liquidating trustee.” In deciding that he must abandon, he did nothing improper in advising the trustee that he “waived” participation in the policies which then had no cash surrender value. As he had no funds he could not be surcharged by shareholders or creditors of the association:
Hobday v. Peters,
28 Beav. 603, 54 Eng. Rep. 498, 2 Scott, Trusts (1939) sec. 177, p. 938. His use of the word “waive” in his letter is not important; the important element in the transaction is the fact that he gave notice that he relinquished his interest in an asset which he could not carry. At the trial he appeared as a witness but said nothing to suggest that he did not know what he was doing when he wrote the letter or that he made any mistake. The word “abandon” has many meanings, the context and circumstances determining which is intended. If a fiduciary abandons an interest in personal property, he relinquishes it with the intention of terminating his interest in it and without intending to vest ownership in another. (See Abandonment, 1 C. J. S. p. 4 et seq.) Abandonment is therefore inconsistent with sale or gift which involve intention to transfer title to the buyer or the donee. We of course agree with appellant’s argument that the liquidator could not make a gift of assets; he merely withdrew from a relationship he could no longer support.
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Opinion by
Me. Justice Linn,
This appeal by the liquidator of a building association is from a decree entered at the audit of a trustee’s account and involves a dispute between claimants for the proceeds of life insurance. The learned court held that the liquidator of the building association had abandoned his interest in the policies and was therefore not entitled to participate in the fund before the court. He has appealed.
October 1, 1930, Martin M. Pearlman and his wife transferred certain assets to J. William Hardt, trustee “for the actual and ratable benefit of” certain creditors. The William B. Hackenburg Building & Loan Association, a creditor, became a party to the trust agreement. Among the trust assets were policies of insurance issued by the Equitable Life Assurance Society on Pearlman’s life. Pearlman defaulted in the payment of the insurance premiums, thus threatening the value of the interests of all the creditors in the security.
The building association went into liquidation under the direction of the Department of Banking and in November, 1937, Albert H. Lieberman was appointed liquidator. In 1940 he was unable to pay the association’s proportion (8.88792%) of the premiums payable to keep the security in force. On April 18,1940, he wrote to the trustee, in part as follows: “We note that our participation would mean a contribution from us of about $600, but the association is not in. a position to incur the outlay, and we must therefore regretfully request you to omit us from the contribution list permanently, although we should be glad to be kept in touch with the situation from time to time as we still retain our interest in the $100,000 policy of the Sun Life Assurance Company of Canada, as well as in the assets other than life insurance, covered by the trust agreement of October 1,1930.
“We took no part in paying the premium due February 5, 1940, on Policy #3628124 of the Equitable Life
Assurance Society of the United States,- and as that policy at that time had no cash surrender value and the' same is true now of the other three Equitable policies from which we aré withdrawing, we specifically waive any possible participation, after the respective premium dates mentioned, in any distribution under any of the policies of the Equitable Life Assurance Society of "the United States on the life of Martin M. Pearlman referred to in this letter.” ' '
Thereafter, the other creditors contributed the premiums. Pearlman died March 11, 1941, whereupon the-trustee received the insurance with which he charged himself in the account. ■ ■ ' ' -
The argument on behalf of the appellant liquidator, variously stated in the brief, comes to this: although unable to contribute to the premium fund and' although he abandoned his interést in the trust property, lie is nevertheless entitled to share in the proceeds on thé: theory that he had no power to abandon. ■
The general rule is “. . . that the trustee must exercise common prudence, common shill and common caution in the performance of his duties, or, shortly stated, due care in the circumstances:”
Casani’s Estate,
342 Pa. 468, 470, 21 A.2d 59, 60. Accordingly, it is held that a fiduciary, acting with reasonable prudence, may abandon assets:
Provident L. & T. Co. v. Fidelity, etc., Co.,
203 Pa. 82, 88 et seq., 52 A. 34 (in which an assignee for creditors abandoned ah insurance policy )
; Reynolds v. Cridge,
131 Pa. 189, 18 A. 1010 (in which an executor abandoned an interest in a bond) and cases cited in' those opinions; compare
Hartje’s Estate,
320 Pa. 76, 81, 181 A. 497;
Coates’s Estate,
273 Pa. 201, 116 A. 821. Restatement, Trusts, section 192; Scott, Trusts, (1936) section 192.
The plan of liquidation adopted by the association November 3,1937, at a meeting in which Mr. Lieberman was elected liquidating trustee, authorized him, inter
alia, “C. To sell, rent, lease, exchange, transfer, release or abandon any assets of the association, including any real estate, mortgage, leasehold, note receivable, or any other asset, at such price, for such consideration, and under such circumstances as may seem advisable in the opinion of the liquidating trustee.”
In the notice dated October 13, 1937, calling for the November meeting, the officers advised the stockholders .that: “The liquidation has now been so far completed by the Directors that only two assets remain outstanding, and these are contingent in nature. As a result of this liquidation there has now been made possible an additional dividend of 3%, a check for which is enclosed herewith.
“The two contingent assets
still remaining are a possible interest in insurance policies on the life of one of our borrowers which are paid up to 1940 and 1941, and a claim against another borrower which has a possible equity in it, depending upon his survival of his mother. As you can see, neither one of these has any present recovery value.”
In these circumstances the liquidator concluded to abandon the association’s interest in the policies; they had no “present recovery value”; he had nothing with which to pay premiums during such period as Pearlman might live, and nothing on which he could borrow money to use for that purpose. The association’s last assets, except about flOO, had been distributed as “. . . an additional dividend of 3%” in November, 1937. He may also have concluded that in any view it was undesirable to keep open the liquidation of the association during Pearl-man’s life expectancy. The association had authorized him to “abandon any assets” in “. . . such circum
stances as may seem advisable in the opinion of the liquidating trustee.” In deciding that he must abandon, he did nothing improper in advising the trustee that he “waived” participation in the policies which then had no cash surrender value. As he had no funds he could not be surcharged by shareholders or creditors of the association:
Hobday v. Peters,
28 Beav. 603, 54 Eng. Rep. 498, 2 Scott, Trusts (1939) sec. 177, p. 938. His use of the word “waive” in his letter is not important; the important element in the transaction is the fact that he gave notice that he relinquished his interest in an asset which he could not carry. At the trial he appeared as a witness but said nothing to suggest that he did not know what he was doing when he wrote the letter or that he made any mistake. The word “abandon” has many meanings, the context and circumstances determining which is intended. If a fiduciary abandons an interest in personal property, he relinquishes it with the intention of terminating his interest in it and without intending to vest ownership in another. (See Abandonment, 1 C. J. S. p. 4 et seq.) Abandonment is therefore inconsistent with sale or gift which involve intention to transfer title to the buyer or the donee. We of course agree with appellant’s argument that the liquidator could not make a gift of assets; he merely withdrew from a relationship he could no longer support.
The learned judge who tried the case was entirely right in concluding that “the liquidating trustee decided that he would not contribute the pro rata share required of the Building Association, thereupon he abandoned the policies to the remaining creditors. . . .”
It is suggested in appellant’s argument that Lieberman was not obligated by the trust agreement to make any contribution to support the security. It is true that the agreement contained no express provision requiring it, but the relations of all the parties as well as the audit of the account are controlled by equitable principles.
The trustee had power to sell the security or any part of it and thus foreclose the right of any noncontributing member. He was authorized to buy the security sold in such circumstances and to hold it for the benefit of the contributing members. When, therefore, he was advised by the liquidator of the abandonment of the association’s interest in the security, he was not required to subject the trust to the unnecessary expense of foreclosing the association’s right to participate; he could rely on the liquidator’s election to abandon because the association expressly authorized abandonment. It would be inequitable in such circumstances to sustain the liquidator’s claim now to share in the proceeds because it is now impossible to restore the parties to the positions occupied by them in 1940 when the liquidator announced his election: cf.
Appeal of Yeager & Grim,
100 Pa. 88, 91:
Appeals of Fidelity Ins. Co. & Lennig,
106 Pa. 144.
The elements of equitable estoppel are present
(Fried v. Fisher,
328 Pa. 497, 502, 196 A. 39; see also
Com. v. Moltz,
10 Pa. 527, particularly pages 530 et seq.;
Antone v. N. Amsterdam Cas. Co.,
335 Pa. 134, 140, 6 A.2d 566;
Stewart v. Parnell,
147 Pa. 523, 525, 23 A. 838) and exclude the appellant.
In view of what has been said we need not refer to the differences in fact and controlling principles between this case and
Reed, Receiver, v. Hardt, Trustee,
137 Fed. 2d 705 (C. C. A. 3d, 1943).
The decree is affirmed; each party to pay its own costs.