Opinion
November 12, 1948.
January 3, 1949.
Wills — Construction — Direction to pay not less than specified income to wife for life — Acceptance of lesser amount by cestui que trust — Right of personal representative to difference.
Where testator gave his residuary estate in trust to pay the income to his wife, and provided that she should receive $200 a month, even though principal was required to make up any income deficiency; and it appeared that the wife had not demanded that amount and had received less because she wanted to conserve the principal for her own benefit; it was Held that the deceased's wife's estate was entitled to receive the difference between the amount specified and the amount actually paid to her.
Argued November 12, 1948.
Before MAXEY, C. J., DREW, LINN, STERN, PATTERSON, STEARNE, and JONES, JJ.
Appeal, No. 221, Jan. T., 1948, from decree of Orphans' Court, Philadelphia Co., April T., 1926, No. 1208, in Estate of William B. Moyer, Deceased. Decree affirmed.
Audit of account of trustees.
The facts are stated in the adjudication by VAN DUSEN, P. J., of the court below, as follows:
The testator, who died January 20, 1926, by his will, gave his residuary estate to the Northern Trust Company and Mary E. Moyer in trust to pay the income therefrom to his wife for life, and he further provided as follows:
"In the event that the net income from my residuary estate should not amount to a sum sufficient to pay my wife at the rate of Two hundred dollars ($200.) per month, then I direct my said Trustees to use and consume so much of the principal of my residuary estate as will make up any deficiency thereof. It is my intention and I hereby expressly direct that my said wife shall be paid out of my estate at least Two Hundred Dollars per month, so long as she lives."
Upon the death of his wife he directed "that the entire balance of my residuary estate then remaining in the hands of my Trustees be distributed" in the manner recited in the statement of proposed distribution.
By a subsequent item he provided that his wife should have the privilege to occupy his residence No. 1219 Seltzer Street as long as she desired, all taxes, insurance and other charges to be paid out of the income.
The reason for the filing of the account is the death of said Mary E. Moyer on November 27, 1947.
The accounting is of the fund awarded by adjudication of LAMORELLE, P. J., filed December 8, 1926, sur account of the executors.
It is recited in the statement of proposed distribution that the widow did not receive the entire amount of income to which she was entitled; and that the difference between what she was entitled to and the amount paid exceeds the balance shown by the account and the value of the unconverted real estate, the market value of which was believed to be $5,500, and the question presented for determination is whether the personal representative of the estate of the deceased widow is entitled thereto or those designated in remainder after her death.
All parties in interest have received due notice of the question presented for determination.
It appears from the record that there was awarded to the accountants securities appraised at $9,702.40, and that the decedent also died seised of premises 2519 and 2521 Bouvier Street which were sold on December 26, 1945, for $3800.00, premises 1707 N. Bambrey Street which were sold on June 11, 1947, for $2400.00, and premises 1219 Seltzer Street which the cestui que trust had the right to occupy. These premises have not been sold and are appraised at $6,000.
The net income received from personalty was $4,283.07, and from realty, $3,376.06.
The aggregate amount of principal and income is $23,561.53, together with premises 1219 Seltzer Street.
The amount the cestui que trust would have been entitled to during the administration of the trust at the rate of $200 per month was $50,200, and the amount she was paid was $18,576.30, or a difference of $31,623.70.
Kenneth B. Crawford, Vice-President and Trust Officer of the Northern Trust Company and in charge of this trust, testified that if the cestui que trust had insisted upon being paid $200 per month both principal and income would have been exhausted long before 1940; that the cestui que trust was seventy years of age when her husband died; that the monthly sum of $200 was all she had to live on; that she understood the terms of the will; that the matter was discussed with him and other men in the bank; that she never asked to be paid $200 per month; that she would ask for $100 or $200 or $300; and that it was usually round numbers like $100 or $200, but not every month.
At pages 33 and 34 the witness was asked to state what was said by the cestui que trust to the witness. An objection was entered on the ground that it was hearsay. I reserved ruling then, but I stated I deemed the evidence was admissible to explain why instead of paying her $200 a month as directed a lesser sum was paid, and I permitted the witness to state the conversation. He answered as follows: "She said to us that she would request from time to time certain payments out of principal, that she would want to use and live on the income as much as she could, in order to conserve the estate. That was from the inception of the trust."
I now overrule the objection and grant counsel an exception.
Independently of this testimony it is obvious that the cestui que trust refrained from demanding at least $200 a month because she wanted to conserve the principal of the estate for her own benefit.
It is conceded that if the cestui que trust had demanded before her death that the unconsumed principal be turned over to her to satisfy the difference between the amount due her and the amount paid, that the trustees would have been obliged to comply with the demand, but it is contended that the personal representative of the deceased cestui que trust has no right to make such demand and that those designated in remainder are entitled to the unconsumed principal of personalty and the unconverted real estate.
In Longenecker's Estate (No. 1), 226 Pa. 1, testatrix gave a portion of her estate to one of her daughters in trust to apply the "income, or so much thereof as may be deemed necessary," for the comfortable maintenance and support of another daughter who was weak-minded, and upon the death of the latter to pay over the principal to the trustee's children. It was proved that the testatrix knew her daughter had an independent estate sufficient for her every want.
In the account credit was taken for about $4,000 for the expenditure out of income for the support and maintenance of the weak-minded daughter.
It was contended that the trust estate was not required to contribute anything for the support of the weak-minded daughter, and this contention was sustained by the court below. The Supreme Court reversed.
In Anspach's Estate, 16 Pa. D. C. 291, the direction was to pay a fixed sum, or so much thereof as might be necessary for the maintenance and support of the cestui que trust. A lesser sum was paid in compliance with the specific instructions of the guardian of the annuitant's estate to pay a lesser sum and in some cases not to make any payment at all. The court held that the personal representatives of the deceased annuitant was entitled to recover the difference between the amount directed to be paid and that which was actually paid.
In Keiper's Estate, 21 Pa. D. C. 639, the testator directed the payment of a certain monthly sum to his widow and that a sufficient amount of principal be set aside to provide for the payment of said sum. No separate fund was ever established and the annuity was not paid for fourteen months prior to the widow's death. Failure to set aside a specific sum was with the widow's consent. It was held that the personal representative of the widow was entitled to the deficiency.
The cases cited by counsel for the remaindermen are cases where the income was directed to be paid to a cestui que trust for life with power to consume the principal. There was no direction to pay a fixed or certain sum. In order to obtain title to any portion of the principal it was necessary for the cestui que trust to make a demand therefor. No demand was required in the instant case, for the decedent specifically provided that his wife should be paid at least $200 per month and it was the duty of the trustees to comply with the demand without any request on the part of the cestui que trust.
There is nothing on the record to show that the widow in her lifetime had done anything to estop her from demanding payment of the deficiency.
The real estate is not included in the balance for distribution. Title to it is in the accountant as trustee, and for that reason, together with the direction to consume which is in the will, the real estate is within the competency of this court, and an award thereof may be made.
The account shows a balance of principal, personalty, $7,940.90, composed as indicated, and proceeds of sales of real estate, $4,583.74, and income from realty, $3,376.06, together with additional income to date of distribution, which, together with premises No. 1219 Seltzer Street, Philadelphia, is awarded to Anna M. Ford, executrix of the will of Mary E. Moyer, deceased, less whatever transfer inheritance tax may be due and payable to the Commonwealth, and subject to distribution heretofore properly made.
Exceptions to adjudication dismissed, before VAN DUSEN, P. J., KLEIN, BOLGER, LADNER and HUNTER, JJ., opinion per curiam.
Exceptant appealed.
John M. Smith, Jr., for appellant.
David B. James, Jr., with him Hale Pratt, Harry Howard Bent and Moore, Panfil James, for appellee.
The decree of the court below is affirmed on the opinion of President Judge VAN DUSEN.