Estate of Hibbs

Supreme Court of Pennsylvania
Estate of Hibbs, 143 Pa. 217 (Pa. 1891)
22 A. 882; 1891 Pa. LEXIS 918
Clark, Green, Paxson, Sterrett, Williams

Estate of Hibbs

Opinion of the Court

Opinion,

Mr. Justice Sterrett:

There are two classes of cases in which the question of accumulations has been raised in this court since the passage of the act of 1853; (a) that in which the manifest purpose of the testator was to add such accumulations permanently to, and make them take the destination of the original trust-estate: Washington’s Est., 75 Pa. 102; McKee’s App., 96 Pa. 277; Carson’s App., 99 Pa. 325; Grim’s App., 109 Pa. 391; and (5), that in which the accumulations were intended to be temporary, and in the interest of judicious management: Eberly’s App., 110 Pa. 95. The first came plainly within the prohibition of the statute; the second did not. The purpose of the statute was to prevent permanent accumulations; not to interfere with judicious management.

*225The present case falls within the second class. The whole income is given in trust, and must be used for the benefit of Spencer B. Hibbs; but, as the “testator appears to have foreboded the thriftless ” character of the beneficiary, he substituted the discretion of a trustee as to the manner of its use. The power vested in this trustee, to withhold and invest part of the income, must be so construed, if possible, as to make it operative. It does not in terms nor by necessary implication require permanent accumulations. As already seen, the whole income arising during the trust must be used for Spencer’s benefit. In common prudence a contingent fund should be provided in anticipation of decrease of income, sickness and the like; and the natural inference is that the discretion was vested in tire trustee with this view. The accumulation was to be temporary, and in the interest of judicious management. The record does not show that the amount, already set apart, is unreasonable in the circumstances, and we cannot assume that the trustee has abused his discretion.

Decree reversed, with costs to be paid out of the trust fund ; and record remitted for further proceedings in accordance with the foregoing opinion.

Reference

Full Case Name
ESTATE OF SPENCER B. HIBBS, IN TRUST
Cited By
11 cases
Status
Published
Syllabus
[To be reported.] 1. When, by a testamentary direction for the accumulation of income arising from property bequeathed in trust, it is the manifest purpose of the testator to add such accumulations permanently to the original trust-estate, and make them take its destination, it is plainly within the prohibition of § 9, act of April 18, 1853, P. L. 503. 2. The statute is not transgressed, however, by those cases in which'the accumulations .are intended by the testamentary direction to be but temporary, and in the interest of judicious management of the estate; the purpose of the statute being, not to interfere with a judioious management, but to prevent permanent accumulations: Eberly’s App., 110 Pa. 95. (a) A testator created a spendthrift trust for the benefit of Ms son, Spencer, during life, empowering the trustee to pay to Spencer such part of the income as he thought necessary, and to invest the balance if any, for Spencer’s benefit; bequeathing the corpus of the fund, at Spencer’s death, to such persons as the trustee should appoint by will: 3. As the power to withhold and invest part of the income did not in terms or by necessary implication require permanent accumulations, the whole income being directed to be used for Spencer’s benefit, it might be construed as authorizing the creation of a contingent fund, in anticipation of a decrease of income, sickness and the like. 4. So construed, it fell within the class of cases in which the accumulations, being intended to be temporary and in the interest of judicious management, did not transgress the statute, if reasonable in amount: an accumulation of $2,666.76 sustained in this instance, in the absence of evidence that its amount was unreasonable.