decided: March 25, 1974.
Appeal from decree of Court of Common Pleas, Orphans' Court Division, of Lancaster County, Aug. T., 1930, No. 48, in re estate of George E. Day, deceased.
John Milton Ranck, with him Charles Foltz Herr, Appel, Herr & Appel, and Ruppin, Ranck, Troback and Ranck, for appellant.
No oral argument was made nor brief submitted for appellee.
Jones, C. J., Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Opinion by Mr. Justice Roberts.
[ 455 Pa. Page 611]
Marjorie C. Day, the last surviving child of George E. and Ella R. Day, petitioned the Orphans' Court Division of the Court of Common Pleas of Lancaster County for termination of a trust created by her father's will. Marjorie alleged the purpose for which the trust, which now has corpus of only $8,783.52, was established has become impractical. The orphans' court refused to terminate the trust and Marjorie appealed.*fn1 We vacate and remand.
In his will, executed January 31, 1930, George E. Day provided that the residue of his estate be held in
[ 455 Pa. Page 612]
trust by his daughter Marion and the Lancaster Trust Company. He directed that the income from the fund be used to "provide for the comfortable maintenance and support" of Marjorie.*fn2 George E. Day died July 9, 1930.
In 1926 Marjorie contracted encephalitis lethargicia (sleeping sickness). When her father executed his will she was still suffering from the disease. At that time sleeping sickness was considered incurable, and testator apparently believed that Marjorie would never recover.
In 1943 Marjorie suddenly and completely recovered; she suffered no residual brain damage. After her recovery appellant became a college professor and is now retired. During this time she has managed her own affairs. Testator's wife Ella died in 1959. Testator's only other child, Marion L. Day, died ten years later without issue.
Appellant's petition for termination of the trust requested the orphans' court to award her both the income and the corpus of the trust free of any restrictions.*fn3 The court concluded that although Marjorie was the sole income beneficiary, one half the corpus was the subject of a remainder in the intestate heirs of Ella.*fn4
[ 455 Pa. Page 613]
The opinion of the orphans' court indicates that the court considered only the applicability of the commonlaw doctrine of termination by consent of the parties. See Restatement (Second) of Trusts § 337 (1959); Musser's Estate, 341 Pa. 1, 17 A.2d 411 (1941). Because the orphans' court believed that, before it could terminate the trust, the consent of all parties in interest was required, it refused termination. The court reasoned that the requisite consent of all interested parties could not be obtained because potential remaindermen could not be ascertained until the class closed at Marjorie's death.*fn5 We conclude that the orphans' court erred in deciding that it could not terminate without the consent of the unascertained parties in interest.
In Pennsylvania the Legislature has considered the effect of unascertained heirs on trust termination. Section 6102(a) of the Probate, Estates and Fiduciaries Code,*fn6 provides that a court having jurisdiction of a
[ 455 Pa. Page 614]
trust may terminate the trust*fn7 in whole or in part if the settlor's original purpose has become impractical and termination would more nearly approximate the intent of the settlor.*fn8 Before the court may order termination, notice of the proposed termination must be given to all parties in interest or their fiduciaries*fn9 and
[ 455 Pa. Page 615]
a hearing must be held to ascertain whether the settlor's original purpose has become impractical.*fn10
Consent of all parties in interest is not a prerequisite to section 6102 termination. That section requires only that all such parties be provided notice of the proposed termination. Moreover, creation of a procedure for termination of impractical trusts without the consent of all parties in interest was the specific goal of the Legislature in enacting what is now section 6102. The original Commission's Comment to that section states: "Termination of trusts, which have failed in their purpose and which have become oppressive or otherwise undesirable, has been impossible in numerous instances due to inability to secure the consent of persons unborn, unascertained, or not sui juris. The purpose of this section is to give relief in such cases."*fn11 The Day trust appears to be a paradigmatic case for the application of section 6102.
Because the record does not indicate that the orphans' court held the hearing required by section 6102(a),
[ 455 Pa. Page 616]
we must remand. At the hearing, the court must determine whether the trust's purpose has become impractical and whether termination more nearly approximates the testator's intent. If the court decides both questions in the affirmative, it should terminate the trust and direct distribution in accordance with section 6102(b).*fn12
Decree vacated. The case is remanded to the Orphans' Court Division of the Court of Common Pleas of Lancaster County for proceedings consistent with this opinion and entry of an appropriate decree. Costs to be paid by the trust.
Decree vacated and case remanded.