Appeal, No. 165, Jan. T., 1961, from decree of Orphans' Court of Montgomery County, No. 58038, in re estate of Alfred K. Althouse, deceased. Decree reversed.
George Scott Stewart, III, WITH HIM John Morgan Davis, Paul A. Davis, 4th, and Davis, Bellis & Kolsby, and Smillie, Bean, Davis & Tredinnick, for appellant.
M. Paul Smith, with him Walter Y. Howson, Richard L. Grossman, and Truscott, Kline, O'Neill & Howson, and Smith, Cahall & Aker, for appellees.
Before Jones, C.j., Bell, Musmanno, Jones, Cohen, Bok and Eagen, JJ.
OPINION BY MR. JUSTICE BELL.
The net assets of Althouse's Estate increased in value approximately $200,000 between the time when the maximum marital deduction was determined and the date of distribution of assets to the marital deduction trust. The principal question involved is whether the testator made a gift in a dollar amount in the nature of a pecuniary gift equal to his maximum marital deduction, in which case it would not share in the increased value of the assets of the estate during its administration, or whether he made a fractional share gift, in which case it would share in such increased value. This is a case of first impression in our Court. A subsidiary question concerns the proper disposition of the testator's non-residential real estate.
Alfred K. Althouse died on November 5, 1955, leaving a will dated May 16, 1955. He was survived by his widow, who has since remarried, by his son, Alfred K. Althouse, Jr., the appellant, and by two daughters. Letters Testamentary were granted to Fidelity-Philadelphia Trust Company and his widow. The executors were also named as trustees of the trusts created by the will.
The Fifth paragraph of testator's will reads, in part, as follows: "Fifth: So much of my estate,*fn1 of whatever nature and wherever situate, together with other property included in my adjusted gross estate qualifying for the marital deduction which passes or has
passed from me to my wife,... shall equal the maximum marital deduction as provided in Section 2056 of the Internal Revenue Code, or such other corresponding provision as may be in effect at the time of my death, I give, devise and bequeath to my trustees hereinafter named, in a separate trust known as Trust A.... [Subparagraphs a and b of the Fifth paragraph, although not contained in the record as they should have been, provide that the income from Trust A is to be paid to testator's wife for life and she is given a general power to appoint the principal by will, and in default of such appointment the principal is to be added to and become a part of the trust for testator's children known as Trust B, which is set up in the Sixth paragraph of his will.]
"(c) It is my intention that this Trust A shall qualify under the marital deduction provisions of Section 2056 of the Internal Revenue Code, or such corresponding provision as may be in effect at the time of my death, and any provisions in this Trust A which might prevent the attainment of that objective shall be reconciled or ignored."
Paragraph Sixth reads, in part, as follows: "Sixth: All the rest, residue and remainder of my estate not hereinbefore provided for, I give, devise and bequeath to my trustees hereinafter named, in a separate trust to be known as Trust B*fn2...."
The matter came before the lower Court on exceptions to the Executor's schedule of distribution which construed the fifth paragraph as creating a fractional share gift and distributed to the marital trust approximately 5/9 of the appreciation in assets of the estate and also an undivided 5/9 interest in testator's non-residential real estate. Appellant, who is testator's
son, contended that the entire appreciation of assets and all the non-residential real estate should be distributed to the residuary estate. From the decree of the lower Court which dismissed his exceptions and confirmed the schedule of distribution, Alfred K. Althouse, Jr. took this appeal.
Before analyzing the aforesaid paragraphs of the will, it is well to consider the test which must be applied. We said in Cannistra Estate, 384 Pa. 605, 121 A.2d 157: "No rule regarding wills is more settled than the great General Rule that the testator's intent, if it is not unlawful, must prevail.... Moreover, 'The testator's intention must be ascertained from the language and scheme of his will [and the attendant circumstances]: "it is not what the Court thinks he might or would have said in the existing circumstances, or even what the Court thinks he ...