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ERNY TRUST. (07/01/64)

July 1, 1964

ERNY TRUST.


Appeal, No. 192, Jan. T., 1964, from decree of Orphans' Court of Philadelphia County, No. 648 of 1963, in re trust of Charles G. Erny, settlor. Decree reversed; reargument refused July 24, 1964.

COUNSEL

Cuthbert H. Latta, with him Robert S. Ryan, J. Peter Williams, and Drinker, Biddle & Reath, for appellant.

Ernest Scott, with him Louis C. Washburn, and Pepper, Hamilton & Scheetz, for appellee.

Before Jones, Cohen, Eagen, O'brien and Roberts, JJ.

Author: Jones

[ 415 Pa. Page 10]

OPINION BY MR. JUSTICE JONES

The very narrow issue which this appeal presents is whether the "settlor [of this irrevocable inter vivos trust] in creating joint life estates for his wife and foster daughter, Thelma, [referred] to his time-of-deed wife or his time-of-death wife?"*fn1

Charles Erny (Erny), in 1907 married Agnes Erny (Agnes); of this marriage no children were born but Erny and Agnes took into their own home in 1922 and treated in all respects as their own daughter, one Thelma Lawry (Thelma), a niece of Agnes, to whom they gave the name Thelma Erny.

On January 12, 1928, Erny executed an irrevocable inter vivos deed of trust wherein the North Philadelphia Trust Company (now Girard Trust Corn Exchange Bank) was named trustee and to which trust Erny transferred assets having a then value of $250,000. The presently pertinent provisions of that trust are:

A. "Upon the death of [Erny], the Trustee shall pay the net income, one-half thereof unto the wife of [Erny], living at the time of his death, as long as she

[ 415 Pa. Page 11]

    the one-half share of the trust income given to Erny's "wife" should be paid to Mary and so decreed. Exceptions to that decree were dismissed by a four-judge court en banc, with SHOYER, J. dissenting.*fn4 From that decree, this appeal has been taken.

The majority of the court en banc believed that the issue was "squarely ruled" by Buzby Estate, 386 Pa. 1, 123 A.2d 723, and Stewart Estate, 390 Pa. 451, 135 A.2d 759. While we intend to consider in more detail both decisions, infra, yet at the outset we state our agreement with appellant [Thelma] that both Buzby and Stewart "teach": (1) that "the word 'wife' can be used either to designate a specific beneficiary, or in a generic sense"; (2) that "the intent of the [particular] settlor governs"; (3) that "[such] intent is to be determined without the benefit, or hindrance, of a presumption either way", i.e., that the word "wife" does not inflexibly and immutably refer to the wife who survives, when another was wife at the time the will or trust was made, or to the wife at the time the will or trust was made.

Our determination of the present issue must arise from a consideration of the language and scheme of distribution of this particular trust instrument considered in the light of all the circumstances under which this trust instrument was made: Burleigh Estate, 405 Pa. 373, 376, 175 A.2d 838; Turner Estate, 408 Pa. 530, 534, 184 A.2d 896.

As we examine the pertinent provisions of this trust instrument, we must bear in mind the circumstantial background which existed at the time this instrument was executed. At that time Erny and Agnes had been husband and wife for upwards of twenty years and, insofar as the instant record reveals, their marriage was then harmonious and there was neither intimation nor suggestion that the marriage

[ 415 Pa. Page 13]

    would not so remain in the future. Two persons would then, naturally, be the principal objects of Erny's bounty, Agnes and Thelma. By this trust agreement, Erny was irrevocably and irreversibly setting aside in a trust fund one-quarter million dollars; by so doing, he was placing beyond any possibility of his future control and dominion this very substantial portion of his assets.*fn5

In paragraph A, supra, the one-half share of the net income of the trust is to be paid to "the wife of [Erny], living at the time of his death, as long as she shall live". Counsel for Mary contends that such language "points only to the wife of [Erny] living at the time of his death [Mary]." In support of such contention, it is argued that: (a) Erny's failure to designate Agnes by name, although continuously designating his foster daughter, Thelma, by name, reveals an intent to benefit the wife who would be his wife when he died; (b) that, having been childless in his 20 year marriage with Agnes and Agnes, then being 42 years of age, it is unlikely that Erny was then thinking of any possible children by Agnes, hence, in the use of the phrase "issue of their joint bodies", ...


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