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C. D. HARADER TRUST FOR BENEFIT RICHARD S. HARADER (08/06/82)

filed: August 6, 1982.

IN RE C. D. HARADER TRUST FOR THE BENEFIT OF RICHARD S. HARADER, JR. APPEAL OF GALLATIN NATIONAL BANK


No. 395 Pittsburgh, 1981, Appeal from Order of the Court of Common Pleas, Orphans' Court Division, of Fayette County, No. 71 December Term, 1970.

COUNSEL

E. David Margolis, Uniontown, for appellant.

Ira B. Coldren, Jr., Connellsville, for Fayette Bank, participating party.

Charles W. Watson, Uniontown, for Edgar, participating party.

Wieand, Johnson and Montemuro, JJ. Johnson, J., files a dissenting statement.

Author: Wieand

[ 303 Pa. Super. Page 11]

Can the settlor of an irrevocable trust amend a declaration of trust to name a contingent trustee to serve in the event that the named trustees die prior to termination of the trust. The Orphans' Court of Fayette County held that there could be no such amendment and named Fayette Bank and Trust Company as successor trustee. Gallatin National Bank (hereinafter "Gallatin") petitioned the court to vacate such appointment and give effect to the settlor's supplement to the declaration of trust in which he named Gallatin as successor trustee. The court dismissed the petition, and Gallatin appealed. We reverse.

On January 15, 1964, an irrevocable trust was created by C. D. Harader for the benefit of his son, Richard S. Harader. The declaration of trust provided that if the settlor's son died before age 35, the trust should continue for the benefit of the son's then living children until the youngest child reached the age of 21. The named trustees were Allen C. Spurgeon and Richard S. Harader. The deed of trust, in paragraph 7, provided further:

[ 303 Pa. Super. Page 12]

If the said Allen C. Spurgeon shall resign or die or become unable to act as Trustee for any reason, JOHN L. SPURGEON, of the City of Uniontown, Fayette County, Pennsylvania, is hereby appointed as a Trustee to serve in his place or stead. If the said Richard S. Harader shall resign or die or become unable to act as Trustee for any reason, the remaining or surviving Trustee shall act as sole surviving Trustee.

Richard S. Harader died on October 12, 1968 at the age of 28. He was survived by a son, Richard S. Harader, Jr., born March 20, 1968. He is now the sole trust beneficiary. On April 14, 1969, the settlor executed a "Supplement" to the declaration of trust which recited the death of Richard S. Harader and provided:

NOW, THEREFORE, in order to avoid the necessity of any appointment by Court, the parties have agreed and do hereby agree that Gallatin National Bank, Uniontown, Pennsylvania, be, and the said bank is hereby, appointed to act as trustee of the above mentioned Trust in the event of the absence of any person designated by the Declaration of Trust to act as such trustee.

The settlor died on October 23, 1969; John L. Spurgeon died on June 11, 1971; and lastly, Allen C. Spurgeon died on March 24, 1979. The issue, as the parties agree, is the effectiveness of the settlor's "Supplement" to the ...


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