Appeal, No. 118, March T., 1950, from decree of Orphans' Court of Venango County, April T., 1948, No. 1, in re Trust, inter vivos, established by Jacob Sheasley, Sr., for the benefit of Charles H. Sheasley et al. Decree affirmed.
J. V. Frampton, with him John F. Budke, John L. Cecil, and Frampton & Courtney, for appellant.
Robert M. Dale, with him H. Carl Wasson and Nesbit & Wasson, for appellees.
Before Drew, C.j., Stern, Stearne, Jones, Ladner and Chidsey, JJ.
OPINION BY MR. JUSTICE HORACE STERN
Jocob Sheasley was the owner of certain real estate in Franklin, Venango County. In 1918, for a stated consideration of $20,100, he executed and delivered a deed for this, together with certain personal property, to his sons Charles H. Sheasley and Jocob J. Sheasley. Contemporaneously therewith the grantees executed a Declaration of Trust in which, after reciting their father's deed to the, they acknowledged and declared that the property so conveyed was to be held by them in trust: first, to pay to Jacob Sheasley during his lifetime all the income from the property as well as the proceeds of any sale of all or any part of it, reserving to him the right to manage, lease, sell or otherwise dispose of any or all of it and receive the entire income or proceeds; second, after the death of Jacob Sheasley (a) to hold the property for the use and benefit of all of his children, share and share alike, with the right, authority and power to sell all or any part of it at their discretion; (b) to pay to Jacob Sheasley's children, share and share alike, the entire net income or profits derived from the property, semiannually;
(c) to pay to his children, share and share alike, the proceeds received from the sale of any or all of the property immediately following such sale or sales; (d) should any of the children die, leaving issue, such surviving issue to receive the share the parent or parents would have received if living, share and share alike.
Jacob Sheasley died in 1928, leaving six children, five of whom have since died -- Thomas B. Sheasley, Charles H. Sheasley, Emma L. Burns, George R. Sheasley, and Margaret S. Janion; all of them left issue surviving. After the death of Jacob Sheasley, the settlor of the trust, the two sons who were his trustees distributed the income to his children or their surviving issue. In 1934 C. G. Neely was appointed successor trustee and thereafter he continued to distribute the income to the children or their surviving issue but he did not file any account of his administration of the trust after his first triennial account filed and confirmed in 1937. Virginia Sheasley, daughter of Charles H. Sheasley, filed a petition in the orphans' court for the grant of a citation to Neely to show cause why he should not account for his administration of the trust and distribution of the income after 1937 and distribute to the petitioner her proper share thereof. Neely thereupon filed a second administration account and a distribution account for the period from 1937 to the end of 1947, and explained that he had not made any distribution of income since 1941 because he desired first to obtain the entry of a decree of the court that would protect him as to the identity of the persons entitled to participate in such distribution and the share to which each beneficiary was entitled. A hearing was held at which it appeared that in 1933 Charles H. Sheasley had conveyed to the Franklin Trust Company, as collateral security for a loan, all his right, title and
interest to or under Jacob Sheasley's will and in or to any property of which Jacob Sheasley died seized, whether such right, title and interest was acquired by Charles H. Sheasley as legatee under the will or as an heir of Jacob Sheasley. It also appeared that in 1932 Alexander C. Sheasley, son of George R. Sheasley, deceased, had made a similar conveyance to the Franklin Trust Company. The Franklin Trust Company assigned to the Federal Deposit Insurance Corporation the interests acquired by virtue of these conveyances. The Federal Deposit Insurance Corporation thereupon claimed that the deed from Jacob Sheasley to his two sons and their contemporaneous Declaration of Trust did not constitute a valid trust inter vivos and that the property which was the subject thereof therefore remained in the ownership of Jacob Sheasley and was disposed of by his last will and testament wherein he devised and bequeathed one-sixth of his residuary estate to Charles H. Sheasley and one-sixth in trust for George R. Sheasley for life and at his death to his children, one of whom was Alexander C. Sheasley. If it were true that the shares of Charles H. Sheasley and Alexander C. Sheasley were acquired by them under the will of Jacob Sheasley and not under the allegedly invalid deed of trust those shares would have passed under their conveyances to the Franklin Trust Company and from it to the Federal Deposit Insurance Corporation; accordingly the latter claimed that it should be awarded the income which would otherwise have been distributable to Charles H. Sheasley and Alexander C. Sheasley.
This contention of the Federal Deposit Insurance Corporation raises the only question at issue in this case, namely, whether the deed from Jacob Sheasley to Charles H. Sheasley and Jacob J. Sheasley and ...