SMITH ESTATE, 435 Pa. 258 (1969)

256 A.2d 130

Supreme Court of Pennsylvania.May 6, 1969.
June 27, 1969.

Wills — Charitable gifts — New will executed within thirty days of death of decedent — Prior will containing identical provisions for charitable gifts — Trust providing for charitable gifts upon death of settlor — Dispositive scheme of trust incorporated into will — Carbon copy of will — Acts of April 24, 1947, P. L. 89, and May 16, 1939, P. L. 141.

1. In this case, in which it appeared that decedent executed a will by which she left one-half of her residuary estate to her nephew outright and one-half to certain enumerated charities; that later decedent entered into an agency agreement with a bank, and delivered assets to the bank; that, subsequently, decedent executed, on the same day, a revocable trust agreement, naming the bank as trustee, and a new will which poured over the residue into the new trust, and further provided that if the trust agreement was not in effect at her death, her residuary estate was to be held by the trustee subject to terms and conditions exactly the same as those set forth in her trust agreement, the provisions of which were incorporated by reference; that the trust gave decedent income during her life, and at her death distributed the trust estate according to the same scheme utilized in her first will (one-half to the nephew and one-half to the named charities); and that decedent died within thirty days of the execution of her new will and the trust agreement; it was Held that, even if the trust as a whole was validly constituted, making the charitable gifts in it subject to, and unenforceable under the Act of May 16, 1939, P. L. 141, § 1, the charitable gifts nonetheless pass to the charities by the will and were saved under the Act of April 24, 1947, P. L. 89, § 7.

2. It was Held that these trust assets would not pass by intestacy or to the other trust beneficiaries, but a resulting trust would be created, as to the charitable gift assets, the trustee holding these assets for the benefit of decedent-donor’s estate, and thus the charitable gifts would pass under her will.

3. Restatement 2d, Trusts, §§ 411, 413, and 422, cited. [262-3]

4. It was Held that a conformed carbon copy of her old will, admitted into evidence, along with testimony of the due execution and attestation of the ribbon copy, was adequate to invoke the protection of the Act of 1947 as to the charitable gifts.

Before BELL, C. J., JONES, EAGEN, O’BRIEN, ROBERTS and POMEROY, JJ.

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Appeals, Nos. 138 and 139, March T., 1969, from decree of Orphans’ Court of Allegheny County, Nos. 5333 of 1965 and 3540 of 1967, in re estate of Laura Floyd Smith, deceased; and inter vivos trust created by Laura Floyd Smith. Decree affirmed.

Audit of accounts of executor and of trustee under deed inter vivos. Before BOYLE, P. J.

Adjudication filed dismissing objections and exceptions to accounts by residuary legatee and sustaining objections by charitable organizations, and decree nisi entered. Exceptions by residuary legatee dismissed, before BOYLE, P. J., and decree per curiam, KRAMER, J., concurring. Residuary legatee appealed.

James C. Larrimer, with him Dougherty, Larrimer, Lee Hickton, for appellant.

Harold R. Schmidt, with him Evans Rose, Jr., Henry McC. Ingram, and Rose, Schmidt and Dixon, for appellees.

George R. Craig, with him George Wilson McKeag and William McC. Houston, for appellees.

OPINION BY MR. JUSTICE ROBERTS, June 27, 1969:

Samuel H. Smith, the brother of decedent (Laura Floyd Smith) died in 1962, leaving one-half of his estate to decedent and the other half in trust, the Union National Bank of Pittsburgh to act as trustee. The trust gave income to decedent for life, then income to Verner S. Purnell, the nephew of decedent and Samuel, for life, with the principal in equal shares to four named charities at the death of the survivor.

Decedent subsequently had her attorney draw a will for her following the same basic distributive pattern as did the will of her brother. On July 13, 1962,

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decedent executed the will, leaving her tangible personal property to her nephew, Verner S. Purnell, $500.00 to one Andrew J. McCune, and the residuary one-half to Verner outright and one-half to the same four charities named in her brother’s will.

On July 11, 1964, decedent entered into an agency agreement with the Union Bank, the bank to hold assets which she delivered to it, keep records, submit statements, remit income and principal to her at her request, review her investments and make recommendations, and submit income tax information to her. The agency agreement was terminable by either party upon thirty days written notice.

On November 1, 1965, decedent executed a new will and a revocable trust agreement, Union Bank to act as trustee. The new will gave personal effects to the nephew, $500.00 to Andrew J. McCune, and poured over the residue into the new trust. The trust gave decedent as much income or principal as she desired during her life, and at her death distributed the trust estate according to the same scheme utilized in the 1962 will — one-half to the nephew and one-half to the four named charities. The new will further provided that “In the event that the trust agreement is not in effect at my death . . . I nevertheless give and devise my residuary estate to the Trustee, to be held under and subject to the terms and conditions of a trust exactly the same as those set forth in the Trust Agreement of November 1, 1965 as it exists at the execution of this, my Will, and for this purpose it is incorporated here by reference as though set forth in its entirety.”

Decedent died on November 17, 1965. Her attorney had previously mailed her the signed ribbon copy of her 1962 will and had suggested that it be destroyed. It was not found after her death, but a conformed copy of her 1962 will, concededly made at the same time, by the same typewriter, and with the same strokes

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as the signed ribbon copy, was admitted into evidence, along with testimony of the due execution and attestation of the ribbon copy.

The issue before us is whether the charitable gifts are invalid because decedent’s final will and trust were executed within thirty days of her death. If the charitable gifts pass under the will, they can be saved under the Act of April 24, 1947, P. L. 89, § 7, 20 Pa.C.S.A. § 180.7.[1] See, e.g., Baum Estate, 418 Pa. 404, 211 A.2d 521 (1965). But since the parallel statute applicable to trusts, Act of May 16, 1939, P. L. 141, § 1, 10 P. S. § 17[2] contains no such saving provision, if the charitable

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gifts pass under the trust, that portion of the trust is unenforceable. The court below held that the trust was invalid because although the Union Bank held the trust assets under the Agency Agreement of 1964, formal delivery of the assets to the bank as trustee was never made. Cf. Schlaich’s Will, 142 N.Y.S.2d 823 (Surr. Queens Cty. 1955), aff’d per curiam, 148 N.Y.S.2d 454 (App.Div. 1955). The court below then held that the charitable gifts passed under the will, into which the trust provisions were incorporated by reference, and were valid under the saving provision of 20 Pa.C.S.A. § 180.7. The court en banc dismissed exceptions and appellant Verner S. Purnell has taken this appeal.

We need not decide whether the court below properly held the entire trust to be invalid on the grounds that the trust res was not properly delivered to the trustee, because even if the trust as a whole was validly constituted, making the charitable gifts in it subject to 10 P. S. § 17, we hold that th charitable gifts nonetheless passed to the charities by the will and were saved under 20 Pa.C.S.A. § 180.7. Assuming the delivery of the trust assets to be sufficient, it is clear that 10 P. S. § 17 would bar the distribution of the charitable gifts under the trust. At that point, however, those assets would not pass by intestacy or to the other trust beneficiary, but a resulting trust would be created, as to the charitable gift assets the trustee holding those assets for the benefit of decedent-donor’s estate. “Where the owner of property gratuitously transfers it upon trust for a charitable purpose and the purpose cannot be accomplished, the transferee holds the trust estate upon a resulting trust for the transferor or his estate, unless (a) the doctrine of cy pres is applicable, or (b) the transferor properly manifested an intention that no resulting trust should arise.” Restatement 2d, Trusts, § 413 (1959); see Scott, Trusts § 413 (3d ed. 1967).

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Since neither of the excepting provisions apply, a resulting trust is created[3] as to that part of the trust that is invalid, see Restatement 2d, Trusts, § 411, comment h. The charitable gifts in question then are held in trust for the estate of decedent and pass under her will. The will of course provides that if the trust is ineffective,[4] its dispositive scheme is incorporated into the will, so that the identical charitable gifts are passed by the will.

The only question remaining then is whether the charitable gifts under the will are within the saving provision of 20 Pa.C.S.A. § 180.7. Clearly there was a prior will passing identical charitable gifts as 20 Pa.C.S.A. § 180.7 requires. Appellant argues only that the carbon copy of the will was inadequate, since the statute requires the production of the “original” prior will. We faced and rejected appellant’s argument in Baum Estate, supra, and we see no reason to retreat from our decision in that case.

The decree of the Orphans’ Court of Allegheny County is affirmed. Each party to pay own costs.

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