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CASTNER ESTATE. (10/11/63)

October 11, 1963

IN RE CASTNER ESTATE.


Appeal, No. 195, Jan. T., 1963, from decree of Orphans' Court of Lycoming County, Dec. T., 1931, No. 78, in re estate of Lewis M. Castner, deceased. Decree affirmed.

COUNSEL

Nathan W. Stuart, with him Wood, Stuart and Murphy, for appellant.

Don L. Larrabee, with him Clinton W. Smith, for appellees.

Before Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'brien and Roberts, JJ.

Author: Jones

[ 412 Pa. Page 233]

OPINION BY MR. JUSTICE BENJAMIN R. JONES

[ 412 Pa. Page 234]

The issue on this appeal is whether income, unlawfully accumulated under the Act of 1853 (Act),*fn1 is distributable to the residuary legatees under the instant will (grandchildren et al.) or to testator's next-of-kin under the intestate laws (testator's three children and the personal representatives of his two deceased children).

Lewis M. Castner (testator) died January 1, 1932, survived by his wife and five children. Under his will, he gave the "rest, residue and remainder" of his estate to the First National Bank of Williamsport (trustee) in trust for the following purposes: (1) to distribute from the "net income" of the "residuary estate" certain specific sums of money, annually, to his wife, three of his children and his sister during their lives; (2) on the wife's death or remarriage, her share of the income was to be proportionately divided among the other three named life beneficiaries, excluding his sister; (3) on the death of "any other" beneficiary, the share of the income of such beneficiary was to go to his or her issue, and, in default of such issue, to the testator's remaining children in proportion to the specific amounts of income given such children under the trust; (4) if the residuary estate should yield "more income than necessary to pay the amounts allowed [his] beneficiaries under [the] trust," the "excess" was to be reinvested and "held to make up any prior or subsequent shortage in such payments, and if not required for that purpose shall be distributed at the termination of the trust in the same manner as the corpus of the trust funds"; (5) the trust was to continue "during the lives of [testator's] wife and [his] children above named, and thereafter until [his] youngest grandchild living at the time of [his] death, arrives at the age of twenty-one (21) years"; (6) upon

[ 412 Pa. Page 235]

    the termination of the trust, the trustee was to distribute the "whole of [his] residuary estate, including undistributed income thereof, among all [his] grand-children, in equal shares, the share of any deceased grandchild to be paid to his or her issue, if any, otherwise to lapse."

On October 28, 1960, the trustee filed its first and partial account in the Orphans' Court of Lycoming County and requested a determination of the question of the distribution of the balance of accumulated income in its hands, then amounting to $59,677.27. The matter was referred to an auditor. Being of the opinion that the residuary legatees had "an immediate right of possession of the remainder interest if the prior estates were presently terminated", that the "unlawful accumulations [represented] a part of the estate that is no longer affected by the life estates" and that, as to the accumulated income, the trust had terminated, the auditor concluded that the balance of the accumulated income should be distributed to the residuary legatees.

The Orphans' Court of Lycoming County held that the residuary legatees did not have such a vested interest as took effect in immediate possession, that, as to the accumulated income, the testator died intestate and that the testator's next of kin*fn2 under the intestate laws were entitled to distribution of the accumulated income. From that decree this appeal was taken.

All parties agree that the accumulation of income under the provisions of this will violates Section 9 of the Act and our sole inquiry is to whom such illegally accumulated income should now be distributed. Section 9 provides that income unlawfully ...


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