cumulate has been contained in a will, and the period marked out by the life of the settlor is not available. When the settlement is by deed inter vivos, the law is different, and the total period of accumulation is the life of the settlor plus twenty-one years after his death. The accumulation, therefore, will extend over a greater period than the minority of a minor, and it, therefore, seems that the Supreme Court will have to recede from the position taken in Washington's Estate,2 that the accumulation can be directed only of the income of a minor and that the accumulations must be paid to him on reaching twenty-one. The question has not yet presented itself for decision, and when it does arise, it will be of no small difficulty.3 275 Pa. 102 (1874), stated §632, ante; see $639, ante, for summary of the law. 3 There was a direction to accumulate by deed inter vivos in the case of Carson's App., 99 Pa. 325 (1882), s. c. Carson v. Rutter, 12 W. N. C. 161, which turned on a question of construction arising on a bill in equity to reform the deed. In that case Matthew Baird, by deed dated 1866, transferred certain securities in trust to apply the income to the maintenance of his three minor daughters until they attained the age of twenty-one years or married, and so much of the income as should not be necessary for that purpose, to invest and accumulate; and, upon the marriage of the daughters or their arrival at the age of twenty-one, to pay the income thereafter accruing, together with the accumulations of income which might have been invested, to the said daughters as therein provided. The testator maintained the daughters himself, so that nearly the whole income of the estate accumulated in the hands of the trustees. After his death in 1877 one daughter, who had arrived at the age of twenty-one years, filed a bill in equity praying for a decree directing the trustees to pay to her her share of the accumulations. The trustees filed a plea, averring that it was the intention of Matthew that the accumulated income should be added to the capital on the daughter's arriving at twenty-one. The court below directed the payment of the accumulated income to the daughter as prayed for. On appeal the Supreme Court affirmed. No other point seems to be involved in the case. The trust deed provided what should be done with the accumulations and the averment by the trustees that the intention was otherwise was not allowed to prevail against the deed. Penrose, J., in Grim's Est., 12 W. N. C. 354 at 356 (1880), said that this case followed the decision in Washington's Est., which was never regarded with favor, solely on the ground of stare decisis. The learned judge did not point out that the remarks of the court were dicta, the deed not having been reformed, as prayed for. Ashman, J., in the court below in Howell's Est., 180 Pa. 515 at 516 and 517 (1897), said that there existed in this case the evil of capitalization of income, which the statute sought to avoid. As the direction to accumulate was plainly valid and so held, the propriety of the citation is open to doubt; cited by Rhone, P. J., in Sharp's Est., 155 Pa. 289 at 294 (1893), as authority for the proposition that a direction to accumulate during the life of R. and the life of his widow, is void in toto. Clause Against Involuntary Alienation-Spendthrift Trusts 649. The clause against alienation, voluntary or involuntary, obviously can have no effect on the validity of a direction to accumulate. Where there is a direction to accumulate, the cestui que trust, in the absence of anything to the contrary, can freely alienate his right, such as it is, and it can be taken in execution for the payment of his debts. The question, however, has not been decided.5 Preliminary Discussion of Accumulations For the Members of a Class 650. There is a nice question in this connection which does not seem to have attracted any attention. Suppose there is a direction to accumulate the income of the members of a class during their minority. They will not all, except in the unusual case of twins, triplets, etc., reach twenty-one at the same time. Two cases may arise: first, where there is a direct vested gift to the members of a class, and, second, where there is a contingent gift to the members of a class. Accumulations for Members of a Class Where the Gift is Vested 651. Suppose there is a vested gift to the members of a class which closes in time, with a superadded direction to accumulate the income until the time of distribution. If an elder member of the class reaches twenty-one, say two years after the testator's death, he is entitled to have the accumulations of his share of the income paid to him, and to thereafter receive his share as it accrues. The class may be subsequently increased by the accession of a new member. So much of the accumulation during the minority of the new member as falls beyond the twenty-one year period, will take See §626, ante. In Eberly's App., 110 Pa. 95 at 97 (1885), the court did not find it necessary to decide the question although it had been argued by counsel. The cases cited in §678, post, containing dicta in favor of allowing an accumulation under an express discretion, in some of which there was a clause against involuntary alienation, may lend support to the view that a direction to accumulate where there is a clause against alienation would be an exception to the statute. 6 For a discussion of the distinction between the two, and of the principles relating to the closing of the class, see §§440-444, ante. 7 For the principles relating to the application of the rule against perpetuities, see §§445-447, ante. 8 place under the policy of the law. The share in the principal and income of the one who has reached twenty-one will be proportionately diminished. The new member is not entitled to income until he is born, and consequently is not entitled to any of the income which has been previously paid over. The trustee must make a new division of the income to correspond to the different number of shares, and he may retain and accumulate the income of the new member until he also reaches twenty-one." Accumulations Where Gift is Contingent 652. Suppose, however, there is a contingent gift of the residue for a class of minors, with a direction to accumulate the income. In Mellon's Estate,10 where there was a direction to accumulate for the members of a class who probably took contingent interests, Penrose, J., in the court below,' said: "but while they (that is, the shares of the residuary estate), were held by the trustee, the accumulation of income accruing after they (the sons) successively attained their majority, but before the time for absolute vesting, was transgressive of the Act of 1853, and the question arises, who are entitled to such illegal accumulations?" The income was distributed under the intestate law. The report is not clear as to whether the accumulation was of income accruing during the whole period or of income accruing between the time when one member reached twenty-one and the period of vesting. The language of the learned judge leads to the inference that it was the latter. Where the gift is contingent the elder member of the class is not entitled to any income until the time of vesting, and the circumstance of his reaching twenty-one prior to that time, would not give him any greater right. It is difficult, therefore, to see how the accumulations can be distributed before the time of vesting. The survivor of the members of the class who might become entitled to the whole fund may have reached twenty-one before the testator's death; he would then be entitled to all the ac See §641, ante. Such circumstances were present in McBride's Est., 152 Pa. 192 (1893); as, however, that case did not come before the court until the youngest member of the class had reached twenty-one, the point did not arise. 10 16 Phila. 323 (1884), in the Supreme Court sub-nom., Gowen's App., 106 Pa. 288 (1884). Some of the material facts of this case do not appear in the opinion of the auditing judge, and have to be picked out from the Supreme Court report. 116 Phila. at 324. cumulations if the direction were valid, and there would ensue a plain violation of the statute. It is apprehended that in this case there is no way to separate the gifts, and that, therefore, the entire direction to accumulate is void.2 General Discussion of the Proviso as to Charities 5 6 653. The act excepts from its operation "any donation, bequest or devise for any literary, scientific, charitable or religious purpose." Thus, a direction to pay annuities out of the income on a residue, and accumulate the balance thereof and pay the accumulations, with the residue, to a charity at the death of the annuitant, is valid, so also a direction to accumulate a sum for a for a monument, or to accumulate a certain sum to establish a house of refuge. A contingent gift is not within the proviso, as a charity must be the sole and exclusive purpose of the accumulation; but the fact that noncharitable beneficiaries participate in the income on the accumulations until the time of distribution is immaterial. The same question of construction will arise in the case of a gift to a charity as in the other cases, that is, whether the direction is to pay the accumulated fund on a contingency or whether there is a direction to accumulate the income of a vested interest." Since a charitable trust may be and gener 2 Confer, Martin's Est., 185 Pa. 51 (1898). 3 See §623, ante. Biddle's App., 99 Pa. 525 (1882), reversing Derbyshire's Est., 11 W. N. C. 22 (1881). The court below decided that a fund should be set aside to pay the annuities and the balance distributed immediately to the charity. The Supreme Court reversed on the question of construction, and directed the whole estate to be kept together and the income accumulated until the death of the annuitant. 5 In Reimer's Est., 159 Pa. 212 (1893), there was a direction to accumulate to build a monument, as to which no question was raised. As a gift for a monument is a valid charitable use, under the Act of May 26, 1891, P. L. 119, see §§787, 788, post, there seems to be no objection to the direction to accumulate. Stevens's Est., 164 Pa. 209 (1894). 7 8 7 De Renne's Est., 12 W. N. C. 94 (1882), semble; dictum, Penrose, J., in McBride's Est., 152 Pa. 192 at 196 (1893); in this case the contingency on which the gift was to take effect did not happen. 8 Lennig's Est., 154 Pa. 209 (1893). 9 For a case involving such a question of construction, see Biddle's App., 99 Pa. 525 (1882), s. c. 12 W. N. C. 231, reversing Derbyshire's Est., 11 W. N. C. 22 (1881). In Franklin's Est., 150 Pa. 437 (1892), the personal representatives of the decedent sought to enforce a resulting trust in their favor arising from an alleged void direction to accumulate contained in the will of Benjamin Franklin. It was decided in the court below, 27 W. N. C. 545 (1891), that the personal representatives could not recover, Penrose, J., placing the decision on the ground that there was a vested gift for a charitable purpose, with a superadded direction to accumulate, in ally is of indefinite duration and the interest is generally vested absolutely in the charity, most cases of direction to accumulate will be of the latter class. Contingent Gift of an Accumulated Fund to a Charity 654. If there was a contingent gift of the accumulated fund to a charity which violated the rule against perpetuities, it was void before the act,10 and is still void notwithstanding the proviso. Where there is a direction to accumulate a certain sum, the court will take judicial notice of the fact that the income is sufficient to produce the required sum within the period prescribed by the rule against perpetuities.2 Young v. The Church 3 655. In Young v. The Church the testator gave certain bonds in trust to pay certain annuities out of the interest, some of them for charities, with direction to invest the surplus income, if any, for the benefit of the trust, with the further proviso that if the income should be insufficient to pay all of the annuities, they should be reduced proportion which case the next of kin had no standing to the income, even if the direction were void. This was affirmed by the Supreme Court on appeal, although the decision was placed on other grounds. The next of kin then brought a bill in the Common Pleas, The Apprentices' Fund Case, 13 Pa. C. C. 241 (1893), to enforce the resulting trust, and the court in an opinion by Arnold, J., dismissed the bill. It is not clear from his opinion whether he considered the gift vested or contingent. 10 In Hillyard v. Miller, 10 Pa. 326 (1849), there was a direction to loan out the income to deserving young farmers and if it so happened that the income should accumulate beyond the applications for loans, then to apply the same toward building an asylum. It was held that the direction to accumulate was void; that the first gift was not a charity, and the expenditure of income for that purpose was therefore void, and that the second gift failed because it violated the rule against perpetuities and there was therefore a resulting trust. 1 Rogers's Est., 18 Phila. 99 (1886). The true bearing of the proviso, it is submitted, was overlooked by Stewart, J., in the court below, in Young v. The Church, 200 Pa. 332 at 334 (1901), stated §655, post, where he said, "Were it not for the Act of May 9, 1889, P. L. 173, and the first proviso of the Act of April 15, 1853, P. L. 503, §9, I should unhesitatingly say that the trust created (in the case at bar) violated both the rule against perpetuities and the statute against accumulations. But this act and this proviso stand in the way." 2 Penrose, J., in Lennig's Est., 154 Pa. 209 at 215 (1893). In Curran's App., 4 Penny. 331 (1884) s. c. 15 Phila. 84, it would have required a period longer than that prescribed by the rule against perpetuities to have accumulated the sum specified. No notice was taken of this point, and the case was decided on other grounds. 3 200 Pa. 332 (1901). |