Rebmann's Estate

35 Pa. D. & C. 33, 1939 Pa. Dist. & Cnty. Dec. LEXIS 60
Pennsylvania Orphans' Court, Philadelphia County·Decided March 3, 1939·No. no. 322·Published

Opinion

Van Dusen, P. J.,

The will contains a power to retain investments of the testator, but not to make noniegal investments.

The testamentary trustees filed an interim account, which was audited, and a surcharge was imposed which was paid, but the securities remained in the trust. One of the two trustees retired, and two substituted trustees were appointed. The three trustees now find themselves in possession of these securities; also of certain stocks which were taken by the prior trustees in exchange for stocks owned by testator; and also of certain investments which were legal when they were made but are so no longer, some by reason of changes in the law, and others by reason of changes in the facts. These items were all “awarded” to the new trustees upon the adjudication of the account of the former trustees.

Now the trustees are in doubt as to their duty toward these securities. If they have no duty to sell them as promptly as reasonably can be done, they think that all of them should be retained for the present. If they have [35] such a duty, they think that some can be sold now without sacrificing intrinsic values, and that better prices ban be obtained for others if they are kept. They therefore apply to this court for authority and direction to retain or sell these items under the provisions of section 49 (e) 2 of the Fiduciaries Act of June 7, 1917, P. L. 447, as amended by the Act of May 28, 1937, P. L. 1037, 20 PS §866, which reads as follows:

“Where stocks, bonds, or other securities have been distributed in kind, as above provided, to any fiduciary, if such fiduciary be doubtful as to the propriety of retaining or making sale of such securities, he may apply to the orphans’ court having jurisdiction of his accounts, by petition, for authority and direction to retain or sell the same; whereupon, after due notice to all parties interested, the said court shall make such order in the premises as to it may appear proper.” ^

The prayer of the petition is for a citation directed to the adult parties in interest to show cause why a decree should not be entered which is given in full. The adult respondents have filed no answers. A guardian ad litem for minors and trustee ad litem for unascertained interests has been appointed, and he contests the statement of the duty of the trustees which is set forth in the proposed decree.

The first paragraph of this decree declares that the securities in question have been received by the trustees pursuant to “decree of court” within the meaning of section 41 (a) 19(c) of the Fiduciaries Act, as amended by the Act of May 28, 1937, P. L. 1037, 20 PS §801. However, the petition is professedly presented under section 49 (c) 2, as amended in 1937. That section applies to securities which have been “distributed in kind” under the terms of section 49 (e) 1; and the argument assumes that the latter section is in pari materia with section 41(a) 19(c), that is to say, that securities distributed under “decree of court” within section 41 (a) 19(c) are securities which may have been “distributed in kind” under [36] section 49(e)l, and that therefore the duty and procedure of section 49(c) 2 (quoted above) is applicable to securities of either or both descriptions.

The second paragraph of the proposed decree declares that it is not the duty of the trustee to dispose of the investments as promptly as reasonably can be done, but merely to exercise the care and prudence which would be required if they were legal investments. That which makes the doubt as to this paragraph — even if the securities are within the descriptions already quoted — is the amendment of 1937 to section 49 (e) 2. Prior thereto this section of the Fiduciaries Act read as follows:

“Where stocks, bonds, or other securities have been distributed in kind, as above provided, [Section 49(e) 1] to any fiduciary, it shall be the duty of such fiduciary to use reasonable diligence in converting such securities as shall not be investments now or hereafter authorized by law; and, if such fiduciary be doubtful as to the propriety of making sale of such securities, he may apply to the orphans’ court”.

The words in italics were stricken out by the Act of 1937, and the words “retaining or” were inserted before the words “making sale.” The result is supposed to be that securities received under “decree of court” or “distributed in kind” have the status of legal investments.

These proposed declarations the guardian and trustee ad litem contests. An interesting and important question is presented, which we commend to the attention of the profession. Unfortunately we are not able to give a judicial answer to it in this proceeding.

Section 49(c) 2 was not intended to authorize general directions, but specific directions. To come within it, petitioners should deal with each security separately, and should explain the considerations pro and con which make sale or retention desirable. Whether such a proceeding can be entertained can only be determined when it comes before us. In its present form the petition clearly seeks an advisory opinion; and it may be that a proceeding actually falling within section 49(c) 2 would still be ad[37] visory — particularly if it sought a general negative decree for retention of a security.

Petitioners make no claim and seek no relief against anyone. Nobody with any interest of his own resists them. There is no controversy except the artificial controversy created by the appointment of a guardian and trustee ad litem. (We do not mean to impugn the good faith of the guardian, who has ably and zealously presented his views.) The trustees have doubts as to the law on a question of considerable difficulty, and they come to the court for a commentary on and exposition of the law which will guide them, and which will be binding on the parties. Such an advisory opinion is not within the judicial power. See the cases cited below which deal with the Declaratory Judgments Act. Mr. Justice Mitchell explained the reason why advisory opinions should not be given in a classic passage in Tyson’s Estate, 191 Pa. 218, 224:

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Rebmann's Estate, 35 Pa. D. & C. 33, 1939 Pa. Dist. & Cnty. Dec. LEXIS 60 (Pa. Super. Ct. 1939).

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