Hous. Estate - 414 Pa. 579, 201 A.2d 592 (1964)

Rule:

The law leans to vested rather than to contingent estates, and the presumption is that a legacy is vested, and the presumption that a legacy was intended to be vested, applies, with far greater force, where a testator is making provision for a child or a grandchild, than where the gift is to a stranger or to a collateral relative. The intention of a testator or settlor to create a contingent interest must appear clearly and plainly, otherwise the interest will be construed to be vested, or vested subject to be divested.

Facts:

Testator Henry H. Houston died a resident of Philadelphia County on June 21, 1895. His will was executed on February 2, 1892. At that time he had a wife, Sallie S. Houston; a married son, Samuel F. Houston; a married daughter, Sallie Houston Henry; and an unmarried daughter, Gertrude Houston, who married and became Gertrude Houston Woodward on October 9, 1894. All of these children survived the testator. At the time of testator's death he had six living grandchildren; six other grandchildren were born after his death. Testator executed a lengthy will, including a lengthy trust. The will contains 64 items and covers 25 printed pages. Testator provided in "Item Fiftyninth: All the rest residue and remainder of my estate real and personal wheresoever the same may be I give devise and bequeath to the Executors hereinafter named in trust to pay over the net income arising therefrom in the manner following." There then follow five separate gifts of a specified amount to be paid annually to five of testator's cousins "during her [or his] life." These are followed by 11 directions to pay out of the said income the sum of specified dollar amounts annually to named individuals during their respective lives, and at the death of each, he provided: "I direct to be paid out of the principal of the residuary estate the sum of [specified] Dollars in equal shares to each of his children who may be living at the time of his decease, the children of any deceased child taking however their deceased parents share." There then followed three additional gifts to a Church, and an annual gift to a sister-in-law during her life upon certain conditions. 

The Orphans' Court unanimously held (in scholarly opinions) that testator gave a vested interest in the principal of his residuary trust estate in equal portions to his grandchildren who (a) survived him, or (b) were born after his death, the children of any deceased grandchild taking their deceased parent's share and consequently divided (and awarded) the principal into 12 equal parts.

Issue:

Did the lower court err in interpreting the will of Henry Houston to have made a vested gift of principal to his grandchildren?

Answer:

No.

Conclusion:

In Gray, The Rule Against Perpetuities, 4th Ed., the law is well stated:

§ 101. Vested and Contingent Remainders. Since contingent remainders have been recognized, the line between them and vested remainders is drawn as follows: A remainder is vested in A., when, throughout its continuance, A., or A. and his heirs, have the right to the immediate possession, whenever and however the preceding freehold estates may determine. A remainder is contingent if, in order for it to come into possession, the fulfilment of some condition precedent other than the determination of the preceding freehold estates is necessary.

§ 102. A remainder is none the less vested because it may terminate before the remainder-man comes into possession; thus if land be given to A. for life, remainder to B. for life, B. may die before A., yet the remainder is vested, for during its continuance, namely the life of B., it is ready to come into possession whenever and however A.'s estate determines. This result is not affected by the fact that the termination of the remainder is contingent; that is, that it is subject to a condition subsequent. For instance, if land is devised to A. for life, remainder to B. and his heirs, but if B. dies unmarried then to C. and his heirs, B.'s remainder is vested, although it is possible that he may die unmarried in A.'s lifetime.

§ 108. Common Law Rule. Whether a remainder is vested or contingent depends upon the language employed. If the conditional element is incorporated into the description of, or into the gift to, the remainderman, then the remainder is contingent; but if, after words giving a vested interest, a clause is added divesting it, the remainder is vested. Thus on a devise to A. for life, remainder to his children, but if any child dies in the lifetime of A. his share to go to those who survive, the share of each child is vested, subject to be divested by its death. But on a devise to A. for life, remainder to such of his children as survive him, the remainder is contingent."

In Newlin Estate, 367 Pa. 527, 80 A.2d 819, the Court stated at length the pertinent principles which previously had been severally iterated: "If a bequest is to a class who take at the death of a life tenant, the fact that the members of the class are unknown or even not in being at the death of the testator, or that their interest is subject to be increased creased or decreased or divested by subsequent events, will not render the gift contingent or violate the rule against perpetuities. In Edwards’ Estate,  the Court held that where an estate is given to a life tenant, with remainder to the children of the life tenant, the estate vests at once upon the birth of each child, subject to open and let in after-born children, without regard to the question of whether or not a child survives the life tenant. Finally, in McCauley’s Estate and Reed’s Estate, the Court held that where a bequest is to a class, the vesting is not postponed because of uncertainty as to who, if any, may be the constituents of the class at the time fixed for the enjoyment of it. If there is a present right to a future possession, though that right may be defeated by some future event, contingent or certain, there is nevertheless a vested estate’. The intention of a testator or settlor to create a contingent interest must appear clearly and plainly, otherwise the interest will be construed to be vested, or vested subject to be divested.

A myriad cases state that a Court is to place itself in the armchair of a testator and determine his intent from his language and the circumstances surrounding him at the time he made his will. However, where a testator uses words which have a legal or technical meaning, '"they are to be so interpreted according to the law in effect at the testator's death unless the will contains a clearly expressed intention to the contrary". Here, there could be no doubt that when Mr. Houston's will was written and at the time of his death, and for a century prior thereto, his gifts of the principal or remainder of his trust estate created a vested interest in his grandchildren, and since the will itself evidences the hand of an expert will-draftsman it was persuasive that testator intended this gift to be vested rather than contingent.