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LA ROCCA TRUST (09/29/65)

decided: September 29, 1965.

LA ROCCA TRUST


Appeal from decree of Orphans' Court of Montgomery County, No. 61,872, in re trust estate of Joe La Rocca, settlor.

COUNSEL

Richard H. Knox, for appellant.

Samuel H. High, Jr., with him High, Swartz, Roberts & Seidel, for appellee.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Eagen.

Author: Eagen

[ 419 Pa. Page 177]

Joe La Rocca is the trustee of certain real estate for the benefit of his grandson.*fn1 This is an appeal from a decree below confirming his first account (to which the beneficiary filed multiple objections) and refusing to remove the trustee.

Primarily, the contest involves moneys allegedly expended by the trustee in improving real property

[ 419 Pa. Page 178]

(the trust res) by the construction of a new building thereon.

Appellant first asserts that the payments for the cost of construction were presumptively gratuitous additions to the trust corpus, on the grounds that there was a prior written declaration of trust establishing a donative intent ab initio, a prior oral declaration of intent to construct this building, and no indication, oral or written, to establish that the trustee intended these expenditures as "advances". None of the cases,*fn2 cited in support of this position, is here applicable. Each of those cases deals with a banking (savings) account, held in trust for another, and to which additions were held to be presumptively in trust also. We note the separate body of law which has grown around such trusts since the decision of the New York court in Matter of Totten, 179 N.Y. 112, 71 N.E. 748 (1904), and note the differences which abound in the situation here present. Bank accounts of this nature are purely within the power of the settlor to augment or decrease, according to the daily exigencies of his life. Improved real estate, on the other hand, is substantially incapable of sudden and variable liquidation. Joe La Rocca stated his benevolent purpose in 1954 when he took title to the real estate in trust for his grandson. He should not be financially punished because he also saw fit to cause the trust to increase its earning power by advancing additional capital for improvements. Also, we have the testimony of the settlor as to what his intention was when he made these expenditures. The same would have been available to all the settlors in the cases cited by appellant (supra note 2) had the

[ 419 Pa. Page 179]

    court in each of them not been dealing with the intent of decedents.

The court below was amply justified in determining that these expenditures were considered by the trustee as advances, and for which repayment was expected and justified. The record and the nature and character of the settlor-trustee justify this conclusion, and that the trustee was permitted to look to the increased rentals for recompense.

Appellant's second contention is that the costs of construction were paid by the La Rocca Supply Co., Inc.*fn3 (Company), not by the trustee. We conclude, with the exception of those items where payment was made by means of credits upon the various accounts of the subcontractors with the Company for the work performed, that the record supports the auditing judge's conclusion that these improvements were made at the personal expense of the trustee.

Finally, appellant claims that the auditing judge erred in granting unproved claims, or in allowing too much credit for certain of the items. While recognizing the difficult task which faced the auditing judge and the admirable manner in which the knotty questions were unraveled, we conclude that ...


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