absolute discretion in the trustee as to income. But few cases have been found in which the effect of the discretion on the interest of the cestui que trust has been passed on. These cases will now be noticed." Donohue v. McNichol 8 542. In Donohue v. McNichol there was a gift in trust to pay a son, John, for life "such sum or sums of money as my said executor may deem proper, always allowing, however, my said son John a sufficient sum to support him respectably; and if my said son John becomes a sober, industrious man, it is my will and desire that he should receive the rents, issues and profits of all my real estate during his natural life," with limitations over at the death of John. John being dead and no question as to the life estate being before them, the court said, by way of dictum, in an opinion by Williams, J.," that "It is clear that under the clause making provision for his support, the son took no interest or estate whatever in the real and personal property devised and bequeathed to the executor; and the amount he was to receive out of the personal property and net income of the real estate for his support was left to the discretion of the executor, subject to the restriction that it should be ‘a sum sufficient to support him respectably.' This is a case of a legal discretion. The dictum should perhaps be referred to as showing the origin of the notion that the life cestui que trust has no interest when there is an absolute discretion in the trustee. This notion has arisen from a failure to observe the difficulty which is present in all these cases. There is a contradiction in the terms of the trust. There is, first, a gift of the life estate, and then a discretion which may defeat the life estate. Since no one else is interested, the contradictory terms of settlement must be reconciled or one or the other must give way. It is apprehended that it is far better and more consistent with the design of the testator to enforce the life estate and ignore the discretion. The attempt to give effect to both is like an effort to blow hot and cold with the same breath. 6 E. g., Still v. Spear, 45 Pa. 168 (1863). 7 Discretion as to income while the cestui que trust is a minor stands on a somewhat different footing and is valid. 8 61 Pa. 73 (1869). Keyser v. Mitchell 543. In Keyser v. income or so much thereof as the trustees may think proper and expedient, under all the circumstances of the case, to and for the maintenance and support of my son Charles during all the term of his natural life, with the intent and purpose that the said trustees may either pay the said income or such portion thereof as he may think proper into the hands of my said son, or disburse the same in such way as, to the said trustees, may seem best, for his comfortable support and maintenance, such payments and disbursements to be at all times at the sole and absolute discretion of the trustees." It seems, although the report is obscure on this point, that Charles had only a life estate, and the principal went over. A judgment creditor of Charles sought to attach the income in the hands of the trustee. The court below held that the income was not liable to attachment, which, on appeal, was affirmed. Thompson, C. J.," in delivering the opinion of the court, said: "It was no doubt intended by the testator that a comfortable maintenance should be provided from the trust estate for her son, but that was to be in both amount and mode 'at the sole and absolute discretion of the trustee.' This is an express condition of a trust, and until that discretion has been exercised the cestui que trust has nothing. Hill on Trustees, 494495. In such case chancery will not interfere to control the trustees' discretion." The passages quoted, however, hardly sustain the learned Chief Justice's remarks. So long as there is no direction to pay to anyone else the discretion seems to be void as against the cestui que trust. The learned judge also said: "We cannot but regard this form of trust to be as effectual in guarding a trust and its income against the prodigality of its beneficiary as would be a positive exclusion of creditors in the will of the donor." This is a strong decision against the right of the cestui que trust to compel the exercise of the discretion in his favor.2 Mitchell 10 the trust was "to pay the 10 67 Pa. 473 (1871). 11 At p. 477. 1 At p. 477. 2 The case has been approved by Hawkins, P. J., in Krebs's Est., 184 Pa. 222 at 225 (1898); stated $519, ante; Paxson, J., in Millard's App., 87 Pa. 457 at 459 (1878); referred to by Woodward, J., in Huber's App., 80 Pa., 348 at 358 (1876), where the learned judge said:"The extent and character of a devisee's estate depend on the qualities stamped on it and the powers conferred over it by the testator, and not alone in the parties in whom Hay v. Price 3 544. In Hay v. Price Price Henry H. Price conveyed all his property in trust, and inserted in the trust deed a provision that the trustee "will apply so much of said property, including the rents, issues and profits and the interest arising from said investments, according to his best judgment, for the proper care, comfortable support, maintenance and reasonable happiness of him, the said Henry Hamilton Price, during the whole period of natural life of him," etc., followed by a clause prohibiting voluntary and involuntary alienation. The discretion applied both to the income and the principal, and there was a gift over of the principal remaining at the death of the grantor to the persons entitled after the death of Henry under the intestate laws. The trustee was garnisheed under a judgment against Henry. It did not appear whether the judgment was recovered on a debt contracted before or after the date of the deed. The court, in an opinion by Willson, P. J., held that the creditor could recover. The learned judge based the decision on Mackason's Appeal,' and the provisions of the Statute of 13 Elizabeth. Of course, if the Statute of 13 Elizabeth applied, the whole settlement was void, and no question as to the discretion arose. If the Statute of 13 Elizabeth did not apply, the creditor could recover only on the ground that the discretion was void as against the cestui que trust and could be compelled by him, and, therefore, the creditor could, if the cestui que trust refused to act himself, compel the exercise of the discretion and recover the amount of his judgment. Statement of the Law as to Absolute Discretion as to Income 545. No statement can be ventured as to how far the ces the title is formally vested." While the exact connection of the last phrase with what goes before is not clear, it is conceived that if the learned judge has been rightly understood, he has misapprehended the point. The extent of the qualities of and power to be exercised with reference to an estate are established by law, and the estate which may be created is further limited and specified. The question as to which one of the estates the donee is to take is answered by the words of the gift. The question as to what he may do with that estate is answered by the law, and that law further says that any attempt by the donor to interfere with those legal incidents is void. See also remarks of Penrose, J., in Barker's Est., 159 Pa. 518 at 525 (1894). 3 32 Pa. C. C., 197 (1906), s. c. 15 D. R. 144. 442 Pa. 330 (1862). See §278, n. 7, ante. absolute discre tui que trust can compel the exercise of the tion in his favor, in those cases where there is an absolute discretion as to the income, with no gift over to anyone else in the event of the exercise of the discretion. No Pennsylvania case has been found raising the question between the trustee and the cestui que trust. Where the rights of creditors are involved the court seems inclined to sustain the discretion. The doctrine that the discretion is valid against the cestui que trust cannot be accepted as thoroughly established until the court has sustained the exercise of the discretion against the cestui que trust and decided what disposition is to be made of the income retained by the trustee. |