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DWIGHT ESTATE. (06/28/57)

June 28, 1957


Appeal, No. 236, Jan. T., 1957, from judgment of Orphans' Court of Philadelphia County, 1934, No. 3384, in re Estate of E. Waterman Dwight, deceased. Judgment affirmed.


Charles Morris Hamilton, with him William H. Rivoir, Jr., for appellant.

J. Montgomery Forster, with him Clarence L. Walker, for appellees.

Before, Jones, C.j., Bell, Chidsey, Musmanno, Arnold, Jones and Cohen, JJ.

Author: Jones

[ 389 Pa. Page 522]


On November 18, 1926 E. Waterman Dwight, then a person of substantial means, executed a will. Under this will he created a primary trust of $300,000 for two relatives and their descendants and then created a secondary trust of which his residuary estate was the corpus and two grandnieces were the principal beneficiaries. Under the latter trust the income was payable to the two grandnieces for life, with succeeding life estates in their issue; the principal was to the distributed to such of their issue as should be living twenty-one years after the death of the survivor of the two grandnieces and/or such of their children as might be living at the time the testator died; in default of lineal descendants, the testator provided for cross remainders and gifts over to the primary trust. Any principal or income which remained undisposed of was given to the University of Pennsylvania.

On October 25, 1928, the testator, by a codicil (hereinafter termed first codicil), modified that paragraph of his will which created the secondary trust (Third Paragraph). In that codicil the testator directed his

[ 389 Pa. Page 523]

    trustees to "first pay out of the income of my residuary estate the sum of Five Hundred Dollars ( $500.) each month after my decease the Helen Elizabeth Barck for and during her natural life and the balance of said income as therein directed".

On the same day the testator by another codicil (hereinafter termed second codicil) further modified the same paragraph of the will. Therein the testator directed that "in addition to the payment out of income of my residuary estate directed in said Codicil, [the first codicil] there shall also be paid to Ethel Heberton Harris the sum of One thousand Dollars ($1,000.) each month after my death, for and during the term of her natural life, and the balance of income only as directed in the Third clause of my said Will."

By two later codicils the testator increased Miss Barck's bequest to $1,000 monthly, revoked the original primary trust and created a new primary trust of $200,000 for the benefit of a niece.

With the exception of the University of Pennsylvania, Miss Barck and Mrs. Harris,*fn1 every beneficiary under the will and various codicils was a relative of testator.

The testator died March 7, 1934. His net estate - after payment of debts, taxes and administration expenses - was less than $200,000.*fn2 The primary trust could not be set up due to the lack of funds until almost four years subsequent to testator's death. Further, as the result of a lack of funds, no substantial payments toward the monthly bequests to Miss Barck and Mrs. Harris could be made until long after the primary trust was established. Miss Barck died on September 20,

[ 389 Pa. Page 5241951]

and at the time of her death she had not received in full the monthly payments directed in the first and third codicils. After Miss Barck's death, the entire net income from the residuary estate was paid to Mrs. Harris until her death on September 8, 1955.

When the trustee filed its fourth account the entire balance in the secondary trust consisted of personalty valued at $88,785.15. At the audit of this account Mrs. Harris' personal representative (hereinafter called appellant) presented a claim in excess of $200,00, representing arrearages in monthly payments due Mrs. Harris under the second codicil. This claim was based upon two contentions: first, that the bequest to Mrs. Harris was a legal "annuity" and, as such, was entitled to be paid, since the income was insufficient to meet the payments under the bequest, out of the corpus of the trust; second, that, in any event, the arrearages must be paid out of income realized and to be realized after Mrs. Harris' death until all of the arrearages have been paid.

Judge BOLGER, the auditing judge, dismissed both these contentions and awarded the principal of the trust to the trustee to pay the income therefrom to decedent's grandniece in accordance with the Third Paragraph of the will as modified. Exceptions having been filed to this adjudication, the exceptions were dismissed*fn3 and the adjudication was confirmed by Judge SAYLOR, speaking for the court en banc of the Orphan's Court of Philadelphia County. From the final judgment entered by that court this appeal was taken.

Appellant's first position is that Mrs. Harris' bequest was an "annuity" for the payment of which, since the income from the trust was insufficient, ...

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