Clause Against Alienation-Spendthrift Trust 5 131. The clause against alienation, if valid at all, can affect a legal title as well as an equitable title. There is nothing, therefore, in the clause itself when attached to a bare use to prevent the application of the statute. Since, however, the clause is perhaps valid in equity, when it would be void at law, the Supreme Court has said that the clause prevents the operation of the statute, as it is necessary to support the use as a trust in order to keep the title of the beneficiary in equity where the restraint imposed will be upheld, and as this cannot be done without the legal title remaining in the trustee, it is necessary for him to retain it, and consequently the clause creates an active trust when attached to a life estate.® It is not very clear, therefore, what the law in Pennsylvania is, and the statement may perhaps be ventured that the clause, when attached to a life estate, will prevent the operation of the statute. There is, it is apprehended, a fallacy in this view of the case. The upholding of the clause in equity when it would be void at law, is a case where equity does not follow the law. There must, therefore, be an equitable limitation first present before the court can say that the clause is valid. The question whether there is an equitable limitation where the subject matter is real estate, depends on the nonapplication of the statute of uses. statute does not apply where a a use for a county, the court seemed to think that the county had the equitable estate: Seebold v. Shitler, 34 Pa. 133 (1859). 5 It is the general practice in Pennsylvania, in drawing settlements and wills, to engraft the restraint against alienation on trusts which would be valid for some other reason. The case, therefore, where the clause stands alone, rarely arises. Rife v. Geyer, 59 Pa. 393 (1868), stated $314, post, semble, Gray, Restraints on Alien., 2 ed. (1895), §231, observes that the remarks in this case as to spendthrift trusts were dicta, as there was an equitable life estate and legal remainder which could not unite under the rule in Shelly's case. The question whether To say, therefore, that the clause is present, is to defeat there was an equitable life estate, how- the provision of a positive act of the legislature by the interposition of an equitable doctrine which, strictly speaking, cannot prevail except where the statute does not apply. This view of the question does not seem to have been called to the attention of the Supreme Court. Where, however, the interest was in fee, the court held, as under the law as it stood at that time, the clause was invalid in equity, that it did not prevent the operation of the statute. The Modern Use 7 132. A use may be created as well today as before the passage of the statute of uses, and is called a passive or a dry trust. It only remains to collect a few instances of a use or dry trust.10 A trust to permit and suffer the cestui que use to take the rents and profits, is unquestionably a dry trust. This was the form in which the ancient use was gen 7 These remarks would also apply to the sole and separate use except that there is an absolute necessity for the trust to be active, as the chief benefit to the woman is in the interposition of the trustee between herself and the importunities of her husband. The chancellor, therefore, laid down the doctrine that the sole and separate use was an active trust. The doctrine as to the clause against alienation has grown up in the last century, and the sine qua non of its validity is the existence of a trust. 8 As to the present state of the law on this point, see $251, post. 9 Keyser's App., 57 Pa., 236 (1868), stated §246, post, where the court held that all the active duties imposed by the will had been accomplished, and the only question remaining was whether the clause prevented the operation of the statute, and it was held that it did not, the interest of the cestui que trust being in fee. The reasoning of the court was that as the intention to tie up the equitable fee was against the law, and that there was a dry trust, no other reason remained to oppose the statute and the use was executed. It is believed erally worded. The phrase is utterly out of place in any case where it is desired to create an active trust, and if inserted in such a settlement, would, it is conceived, have no legal significance whatever.1 Trusts 133. The statute of uses does not apply to a trust. A trust is a use with active duties. The activity of a trust, accurately speaking, is only of importance in an inquiry as to the application of the statute of uses, where the subject matter is real estate and is of no importance or relevancy for any other purpose. The usual words of activity are, "to collect the rents" or "collect and pay over the income."3 There are a few dicta that the words do not prevent the application of the statute. It is submitted that the weight of authority and reason is with the former view, and that the words are sufficient to prevent the application of the statute. A devise to trustees in trust to pay debts and legacies is generally 1 See Rife v. Geyer, 59 Pa. 393 (1868), stated §314, post; Dodson v. Ball, 60 Pa. 492 (1869); Phila. Trust Co. v. Guillou, 100 Pa. 254 (1882), stated §315, post. 2 For definition of an active trust, see §110, ante. 3 In these cases the court has held that such a clause made the trust active and the statute did not apply. Rush v. Lewis, 21 Pa. 72 (1835), semble, Black, C. J.; Vaux v. Parke, 7 W. & S. 19 (1844), dictum; Pratt v. McCawley, 20 Pa. 264 (1853); Barnett's App., 46 Pa. 392 (1864), doubtful whether real estate was involved here; Shankland's App., 47 Pa. 113 (1864); Sheets' Est., 52 Pa. 257 (1866); Bacon's App., 57 Pa. 504 (1868); Earp's App., 75 Pa. 119 (1874); Ashhurst's App., 77 Pa. 464 (1875); McIntosh's Est., 158 Pa. 528 (1893); Boyd's Est., 199 Pa., 487 (1901). * Gray, Restraints on Alien., 2 ed. (1895), $216, citing the case of Rife v. Geyer, 59 Pa. 393 (1868). In that case, however, the court ignored the words "recover and receive the rents and income," and placed the case on the ground of the presence of the clause against aliena- 1 considered as active in Pennsylvania, although no case deciding the point has been found. It frequently happens that there is a power in trust or a power in an executor, and a question arises as to whether the legal title is in the trustee, in the executor or in the heir or devisee. The answer to this question depends on the terms of the will and the law of powers. The statute of uses obviously has no bearing on the case at all. General Principle as to Necessity for a Conveyance 135. It seems plain that in all cases which are within the statute, there is no necessity for a conveyance, since the statute of itself passes the title into the cestui que trust. To say that a conveyance is necessary, is to deny the effect of the statute. Law in Pennsylvania as to Necessity for a Conveyance The 136. The law in Pennsylvania is far from clear. remarks of the judges on the point are in conflict. In Bacon's Appeal, Strong, J., said, speaking of a contingent use: "It is true that we have in some cases decreed conveyances from a trustee to a cestui que trust, when the purpose of a trust has been fulfilled; but this is not because the equitable and legal titles remained apart. It was to dissipate a useless cloud upon the title, and make the property more marketable." In this remark, the learned judge is involved in a contradiction of terms, for if the legal and equitable titles did not remain properly describe him as a mere conduit." The learned judge overlooked the practical aspect of the case. The receiving and paying of income can never be automatic. An automatic action is one which proceeds of itself without any intelligence or outside agency. The question before the court in that case was evidently as to real estate, and the collection of income of real estate certainly requires discretion as to making leases, repairs, collecting rents and attending to taxes and water rent, all of which duties the trustee has to perform, see §§154, 155, post, because of his ownership of the legal title. The description of a mere conduit applied to a trustee, applies to those cases where the statute of uses operates. Furthermore, a mere direction to pay over the rents and income does not imply a direction to pay the gross income, which must be the case if the dictum of the learned judge is correct. In Wolfinger v. Fell, 195 Pa. 12 (1900), there was a direction to pay the income. The court, McCollum, J., under a misapprehension as to the terms of the will, thought there was a direction to pay the net income, and said the trust was active on the authority of Hemphill's Est. 5 See Hill, Trustees, Bispham's ed. (1867), p. 358. 657 Pa. 504 at 513 (1868). 7 apart, how could there possibly be anything for the trustee to convey? In Westcott v. Edmunds, Agnew, J., said, by way of dictum: "It is very clear that the active duties of the trust under this will ceased at the death of Catharine Hance, the life tenant under the trust; and after that there remained no further duty to be executed by the trustee, but to convey the estate to the persons in remainder. But this, it has been decided, does not continue the trust, the law, in this state, executing the legal title in the remaindermen without the formality of a conveyance. It is true that decrees have been made in such cases, compelling trustees to convey to the person in remainder or to married women after coverture had ceased; but it is said that this is merely to remove the cloud arising from the apparent trust. Whatever might have been the impression as to the necessity of such a decree, it is now clearly settled by authoritive decision that the legal estate vests without a conveyance. In many cases the court has said that the trust was executed but nevertheless directed a conveyance. In some cases, the court has dismissed the bill for a conveyance on the ground that the cestui que use already had the legal title under the statute.10 In other cases where the statute applied, the cestui que use was held to have the legal title without a conveyance, and permitted to deal with 9 768 Pa. 34 at 36 (1871). 8 See also remarks of Rice, P. J., in Rockhill's Est., 29 Pa. Super. Ct. 28 at 35, (1905). In the case of Carson v. Fuhs, 131 Pa. 256 at 266 (1889), Mr. Chief Justice Paxson said, after stating that the trust was dry: "The trustee, in this case, had no active duties to perform; it is a passive dry trust, with no interest to guard, no rights to protect. In such case, the cestui que trust is entitled to a reconveyance of the legal title; equity will consider that done which ought to be done, and declare the legal title in Mrs. Hamilton." This is a new ground on which to put the operation of the statute of uses, and somewhat inconsistent with the established construction of the act. See Nice's App., 50 Pa. 143 (1865); 198 Keyser's App., 57 Pa. 236 (1868); Dodson v. Ball, 60 Pa. 492 (1869); Megargee v. Naglee, 64 Pa. 216 (1870); Ogden's App., 70 Pa. 501 (1872); Rodrigue's App., 22 W. N. C. 358 (1888). See Gray, Restraints on Alien., 2 ed. (1895), §§124 g, 194, n. 10 See Kuhn v. Newman, 26 Pa. 227 (1856). This case has been considered revolutionary in the law of trusts. There were no active duties imposed in the trustee. The sole and separate use fell, and the beneficiaries, therefore, became vested with the legal title; see §§131, ante, 137, post. The remarks of the court as to the case before it were correct. The decree for a conveyance was refused, because if they had the title, the decree in partition embraced it, and, of course, no conveyance was necessary. See Rush v. Lewis, 21 Pa. 72 (1853). |