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MATTER INTER VIVOS TRUST ALLEN Z. RITZMAN. APPEAL DAUPHIN DEPOSIT TRUST COMPANY (NOW DAUPHIN DEPOSIT BANK & TRUST COMPANY) (07/14/78)

decided: July 14, 1978.

IN THE MATTER OF THE INTER VIVOS TRUST OF ALLEN Z. RITZMAN. APPEAL OF DAUPHIN DEPOSIT TRUST COMPANY (NOW DAUPHIN DEPOSIT BANK & TRUST COMPANY), TRUSTEE


No. 91 May Term, 1977, Appeal from the Decree of the Court of Common Pleas of Dauphin County Orphans' Court Division, dated May 13, 1977 at No. 112 of 1953

COUNSEL

William J. Madden, Jr., Harrisburg, for appellant.

Patricia M. Jasper, Harrisburg, for appellee.

Eagen, C. J., and O'Brien, Roberts, Pomeroy, Nix, Manderino and Larsen, JJ. Roberts, J., filed a concurring opinion in which Pomeroy and Nix, JJ., joined. Eagen, C. J., concurred in the result.

Author: Manderino

[ 479 Pa. Page 476]

OPINION

Appellant, Dauphin Deposit Bank & Trust Company, serves as trustee of a perpetual charitable trust pursuant to an inter vivos trust agreement entered into by a predecessor of appellant and Allen Z. Ritzman, who was the settlor of the trust. The trust agreement provided life estates for the settlor's wife and daughter. The agreement further provided that after the death of both life tenants the net income of the trust was to be paid annually in specified percentages to various charities. The agreement contained the following clause concerning the trustee's compensation:

"The Trustee shall be compensated for its services under this Agreement by receiving or retaining five (5%) per centum of the gross income from the investments in this Trust Fund."

One life beneficiary died in 1959, and the other in 1963. In 1976 appellant filed its second and partial account. The account showed payment to the appellant of commissions out of income of $3,368.44, representing 5% of the trust's gross income of $67,901.82. This compensation, paid pursuant to the trust agreement, was not contested and no issue is before us concerning this payment.

[ 479 Pa. Page 477]

In addition to the 5% commission, however, the account reserved for payment from principal the sum of $2,412.50 as additional trustee's fees and $750.00 for attorney's fees. This additional fee represented 2 1/2% of the trust principal of $96,500.00.

A copy of the account was submitted to the Attorney General of the Commonwealth of Pennsylvania, who filed objections. The trial court sustained the attorney general's objections to payment of the additional 2 1/2% trustee's commission from principal. As to the attorney's fees the trial court, although allowing the fees, ordered that the fees be paid from the income of the trust and not from principal. This appeal followed.

The appellant contends that (1) the trial court erred in holding that in the absence of unusual circumstances the trustee was not entitled to any commission above that provided for in the trust agreement which in this case is 5% of the gross income; (2) the trial court erred in holding that Pennsylvania law precludes payment of interim trustee's commissions from the principal of a perpetual charitable trust except in unusual circumstances; and (3) the trial court erred in holding that ...


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