Frank Trust
Frank Trust
Opinion of the Court
Opinion by
These twelve appeals
There are three inter vivos trust deeds herein involved: (a) an inter vivos trust deed dated January 3,1927 wherein the settlor was Isaac W. Frank and the original trustees were the said Isaac W. Frank and the Bank of Pittsburgh, National Association (herein termed Pittsburgh Bank); (b) two inter vivos trust deeds dated May 21, 1930 in one of which Isaac Frank was the settlor and in the other of which his wife, Tinnie K. Frank, was the settlor and the original trustees in both deeds were William K. Frank, Robert J. Frank and S. J. Anathan (sons and son-in-law, respectively of the settlors) and the Pittsburgh Bank. When the three trusts were created the settlors and individual trustees all lived in Pittsburgh.
Isaac W. Frank died on December 1, 1930 and he was succeeded in the 1927 trust by the same individual trustees named in the 1930 trust deeds. The Pittsburgh Bank became insolvent and, on December 1, 1931, its Receiver notified the individual trustees in all three estates that the Pittsburgh Bank was resigning as corporate trustee in all three trusts. Eventually Bessie F. Anathan (settlors’ daughter) succeeded to the position of trustee originally held by her husband, S. J. Anathan. The management of the trusts since December 1931 has been in the hands of the individual trustees, particularly William K. Frank,
At the present time William K. Frank is a New York resident, Robert J. Frank a California resident and Mrs. Anathan a Pennsylvania resident living in Pittsburgh. Mrs. Anathan’s two children and five grandchildren live in Pittsburgh; one of William K. Frank’s four children and four of his nine grandchildren live in Pittsburgh; Robert J. Frank’s two children and four grandchildren live in Pittsburgh. All these children and grandchildren are parties in interest under all three trusts.
On February 1, 1957 a second and partial account was filed in all three trusts in the Orphans’ Court of Allegheny County and that court appointed Abe R. Cohen as trustee ad litem . . of all interests in posse in the . . . trust and of all persons who may be under a disability having an interest therein.” On March 21, 1957 the individual trustees petitioned the court to appoint Fiduciary, an out-of-state fiduciary, as the successor corporate trustee in all three trusts and all parties in interest who were sui juris joined in that petition. In a report to the court the trustee ad litem recommended the appointment of a corporate trustee but opposed the appointment of Fiduciary.
At a hearing
We initially must consider whether, under the 1930 trust deeds, the individual trustees had the power to appoint Fiduciary as the successor corporate trustee. Such power, if it exists, must be found in the language of identical paragraphs 6(e) in both trust deeds: “Said three individual Trustees, or the survivors or survivor of them or their successors, may at any time demand the resignation of the [Pittsburgh Bank], as Trustee, and in that event shall appoint a bank or trust company as successor to serve as Trustee. The said William K. Frank, Robert J. Frank and S. J. Anathan, co-trustees herein, or the survivors or survivor of them, if they so desire, shall have the right to appoint a successor or successors to those of their number who •may die or resign or for any reason be unable to act, who, in turn, may appoint successors so that there may be an individual Trustee or individual Trustees, not to exceed three in number, to act with the [Pittsburgh Bank], or its successor. In case of any vacancy or vacancies among the Trustees as hereinbefore constituted, the others or other shall in each and every respect have all the power and authority conferred on all.” (Emphasis added).
Both the trustee ad litem and the court below emphasize the rules of construction set forth in Boning’s Estate, 214 Pa. 19, 63 A. 296 and Trimble Estate, 383 Pa. 443, 119 A. 2d 51. In Boning we stated that the authority to appoint a successor executor could only-arise from “clear, unequivocal and unambiguous terms”; in Trimble we said that the power in a trust instrument to name successor trustees must be “strictly construed”. Mindful of both Boning and Trimble, we still must not lose sight of the fact that in the construction of language in a written instrument we must avoid a construction which will constitute a highly improbable intent: Walker Estate, 376 Pa. 16, 22, 23, 101 A. 2d 652.
That Mr. and Mrs. Prank, settlors, had the right to select the manner in which a corporate successor trustee should be chosen is clear: Zerbey Estate, 356 Pa. 2, 6, 50 A. 2d 681; Rowland v. Moore, 239 Pa. 513, 518, 86 A. 1064. The court below took the position that under the 1930 trust deeds “the power to appoint” was limited to the event that the individual trustees demand the resignation of the original corporate trustee . . .”, and since the Pittsburgh Bank resigned without any demand by the individual trustees, the trustees lack the
Has such power of appointment been forfeited by the conduct of the trustees? The conduct which the trustee ad litem urges acted as forfeiture of the power to appoint was the trustees’ failure to exercise this power of appointment for 27 years and the trustees’ invocation of the aid of the Orphans’ Court in 1957 to
Of much greater difficulty is the resolution of the question whether the trustees, possessing the power to appoint a successor trustee, can appoint a foreign or out-of-state fiduciary. The Banking Code of Pennsylvania, supra, Section 1506B provides: “B. A corporation, organized under the laws of any state of the
For many years a foreign trust company, even when expressly named in a will or deed of trust, could not act as a fiduciary in Pennsylvania: Act of May 20, 1921, P. L. 991, §1.
The power of appointment of a successor corporate trustee under the 1927 deed of trust is in the Orphans’ Court of Allegheny County, and, in the exercise of that power, that court has seen fit to refuse to appoint Fiduciary for the reasons stated in its opinion. In passing upon the propriety of its action in that respect we review the record to ascertain whether that court has manifestly abused its discretion; absent such abuse of discretion, we will not reverse its action: Ranck Estate, 381 Pa. 332, 337, 112 A. 2d 105; Garrison Estate, 391 Pa. 234, 237, 137 A. 2d 321.
A successor trustee is usually appointed by the Orphans’ Court upon the application of a party in interest after notice to all parties in interest (McCaskey’s Estate, 293 Pa. 497, 503, 143 A. 209) and the court usually selects the successor trustee from the nominees submitted by the parties in interest unless the nominee is not fit to serve: Zerbey Estate, supra; Anderton v. Patterson, 363 Pa. 121, 127, 69 A. 2d 87; McCaskey’s Estate, supra. Our review of the record, including the opinions of President Judge Boyle and the court en banc, indicates that full and complete consideration was given to all the factors which indicated or contraindicated the suitability of Fiduciary for appointment. The court concluded that, under the circumstances, the appointment of any foreign fiduciary as successor corporate trustee would not be for the best interests of this estate. Within the scope of our permissible review we find no abusé of discretion on the part of the court below and must affirm its refusal to appoint Fiduciary under the 1927 trust.
Decree in No. 854 of 1949 is affirmed. The decrees in Nos. 855 and 856 of 1949 are reversed. Costs to be paid by the three trust estates, pro rata.
Each trustee had taken a separate appeal in both his individual and fiduciary capacity from the decision as to each of the three deeds of trust.
William K. Prank, without compensation, has been largely instrumental in the management of the trusts. Mr. Prank, a New York resident, strongly urges the appointment of a New York fiduciary as a matter of convenience in the management of the trusts.
At this hearing William K. Frank, Jacob Lustig (a New York stock brokerage firm counsel) and John Fiske (Fiduciary’s president) testified.
The court was requested to appoint Fiduciary as the successor trustee under the 1927 trust
Act of May 15, 1933, P. L. 624, art. XV, §1506B; Act of Jan. 2, 1934, Sp. Sess., P. L. 128, §1, as amended by Act of May 20, 1949, P. L. 1539, §1, 7 PS §819-1506B.
Federal Reserve Regulation F. Series of 1930, Section XIII.
It is urged, with good reason, that the trustees’ claim of the power -to appoint arose only after the trustees learned of the opposition to the Fiduciary’s appointment both by the trustee ad litem’s report and some remarks made by the court in open court.
Cf: amendment by Act of May 23, 1923, P. L. 356, in cases of reciprocity between states.
Dissenting Opinion
Dissenting Opinion by
In my judgment, Section 1506 B of the Banking-Code of Pennsylvania — which authorizes a foreign corporation to act as trustee in this Commonwealth when it shall be appointed such fiduciary “by deed of trust inter vivos or by any Court or Register of Wills of this Commonwealth” — is too narrowly construed and unwisely restricted by the majority Opinion. In these days of reciprocal banking laws, when America is “flying”, when residents of every state often have multiple dwellings and businessmen multiple plants, and when people are frequently moving their homes and their businesses, when New York is “just around the corner,” when banks are doing an interstate business and are thoroughly examined and strictly supervised, the Bank
With respect to the successor corporate trustee-bank to be appointed by the Orphans’ Court of Allegheny County under the deed of trust of 1927, that Court would retain complete control of these trust funds and of a New York bank-trustee. In my judgment there is no justification, except natural local pride, for refusal to appoint at the request of all the parties in interest a highly reputable New York bank as co-trustee.
For these reasons I would reverse, in each case, the decree of the lower Court.
and reciprocally.
Under a thinly disguised feeling of reciprocity, New York will reciprocate and Pennsylvania banks and trust companies will be the sufferers.
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