Appeal from decree of Orphans' Court of Delaware County, No. 553 of 1963, in re estate of Theodore K. Gramm, deceased.
Max W. Gibbs, with him Morton J. Sablosky, for appellants.
George S. Saulnier, with him Symington P. Landreth, for appellee.
Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Jones. Mr. Justice Musmanno dissents.
Under the terms of an inter vivos trust created by his mother on May 31, 1946, Theodore K. Gramm (testator), was given a general power of appointment of certain property of his mother.
Testator died January 15, 1961, and, by his will, he exercised this power of appointment in the following manner: "Sixth: All the rest, residue and remainder of my estate, real, personal and mixed, including any estate over which I have power of appointment, having in mind particularly the power of appointment [herein specific reference is made to the inter vivos trust created by testator's mother], I give, devise and bequeath absolutely for life to my wife, Elizabeth M. Gramm, with full power of consumption of the entire principal estate if, in her judgment, her needs require the consumption of the principal. In this connection I direct that any transfers or sales of securities which might be a part of my estate, may be made by her as though she were the sole and absolute owner without the interference of or consent of anyone else mentioned in this Will, or without any liability on the part of any transfer agent for making such transfer at her sole request. If any principal should remain at the time of the death of my wife, . . ., then I give, devise and bequeath any remaining principal to my sister, Ida
G. Betelle, absolutely. [A gift over followed in the event the sister predeceased the wife and a statement was made of the testator's "desire" that the wife create an agency account with a named bank to handle the investments of this portion of the estate]". (Emphasis supplied).
At the time of testator's death, the appointive property consisted of various securities carried at $34,846.93 by the Provident Tradesmen's Bank and Trust Co. (Provident), trustee under the inter vivos trust. In December, 1962 -- at which time the securities had a market value of approximately $51,000 -- Elizabeth Gramm (testator's widow) requested and Provident turned over to her these securities. The widow then sold the securities and invested the proceeds in shares of Institutional Foundation Fund, a mutual fund.
On December 27, 1962, the widow executed a declaration of trust the principal of which trust consisted of the shares of the mutual fund purchased from the proceeds of the sales of the securities received under testator's will. Under this revocable trust, the widow, as trustee, held the mutual fund shares for the benefit of her two nieces and she was to use the income, in the exercise of her discretion, for the benefit of her two nieces during her life and, upon her death, the principal of the trust was to go to the two nieces.
On March 16, 1963, the widow died. After her death, the two nieces -- who were not only the beneficiaries under the trust but also the personal representatives and beneficiaries under their aunt's will -- distributed to themselves the principal of the trust fund which at the time consisted of 5,381.619 shares of the mutual fund.
Testator's sister, Ida Betelle, the remainderman named under the Sixth paragraph of testator's will, petitioned the Orphans' Court of Delaware County for a citation ...