Summary
affirming distribution of income share granted to hospital equally between remaining beneficiaries where hospital ceased to have "separate corporate existence" required by trust language
Summary of this case from In re Tr. Created Under Will of CohenOpinion
April 22, 1954.
May 24, 1954.
Trusts — Construction — Gift to hospital association and institutes — Condition of separate corporate existence — Consolidation of hospital association and others.
Where the settlor provided that the income of a trust should be paid in three equal shares to the Jewish Hospital Association of Philadelphia and two other charities, and further provided that should either of the charities "not have a separate corporate existence" at the time of the death of the survivor of himself and his wife "or if their corporate existence should cease thereafter", the share or shares of income of such charity should be paid to and divided equally "between such of them as have or continue to have a separate corporate existence"; and it appeared that the Jewish Hospital Association and two other hospitals were consolidated and became a new corporation, the Albert Einstein Medical Center; it was Held that the Jewish Hospital Association of Philadelphia had no corporate existence after the consolidation and the income should be divided equally between the two other charities named by settlor.
Before STERN, C. J., STEARNE, JONES, BELL, CHIDSEY, MUSMANNO and ARNOLD, JJ.
Appeal, No. 71, Jan. T., 1954, from order of Court of Common Pleas No. 5 of Philadelphia County, Sept. T., 1922, No. 8897, in re Trust of Henry Leffmann. Order affirmed.
Audit of account of trustee.
The facts are stated in the opinion, by SMITH, P. J., of the court below, as follows:
This matter comes before the court on the memorandum presented by the Franklin Institute of the State of Pennsylvania, objecting to the distribution of one-third of the income of the Estate of Henry Leffmann to the Jewish Hospital Association of Philadelphia and recommending a decree of the court that said income be paid equally to the Franklin Institute of the State of Pennsylvania and the Wagner Free Institute of Science of Philadelphia.
The settlor, Henry Leffmann, under date of July 2, 1915, executed a voluntary Deed of Trust in which he appointed the Provident Life and Trust Company trustee, and provided that the income of trust property be paid to him for life, then to his wife, Fannie Frank Leffmann for her life, and after their deaths in three equal shares to: Wagner Free Institute of Science of Philadelphia, The Franklin Institute of the State of Pennsylvania, Jewish Hospital Association of Philadelphia.
Fannie Frank Leffmann died October 5, 1929, and Henry Leffmann died December 15, 1930. The Provident Trust Company, successor of the Provident Life and Trust Company, filed its second account of this estate on January 22, 1953, with this court and a petition for distribution. The reason for, or purpose of, the filing of the Second Account is to adjudicate the question of the right of the Albert Einstein Medical Center, successor by consolidation of the Jewish Hospital Association, Mt. Sinai Hospital Association, and Northern Liberties Hospital Association, to share in the income of the said trust.
The provision of the Trust Agreement of July 2, 1915, that is pertinent to the question here involved is: "Should either of the Institutes or the Association mentioned in clause Three of this Trust Deed not have a separate corporate existence at the time of the death of my said wife, Fannie Frank Leffmann, or, in case of her prior decease, then at the time of my death, or if their separate corporate existence should cease thereafter, I direct that the share or shares of the net income which such Institute or Association shall or may be entitled to receive under this Trust Deed shall be paid to and divided equally between such of them as may have or continue to have a separate corporate existence."
Under date of February 5, 1952, after a hearing before Bok, P. J., of C. P. No. 6, as of December Term, 1951, No. 2918, calling for the consolidation of the Jewish Hospital Association, Mount Sinai Hospital Association, and Northern Liberties Hospital Association, under the "Nonprofit Corporation Law" (approved May 5, 1933, as amended) at which time a Joint Plan of Consolidation was considered; and it appearing that the said consolidation was lawful, the said consolidation was approved by the Court, and the said consolidated hospitals became a new corporate existence under the corporation name of Albert Einstein Medical Center.
The question is: Since the said consolidation, did the Jewish Hospital Association of Philadelphia so lose its separate corporate existence as to deny it its right to one-third of the said income from the said Trust Estate? In the Act of May 5, 1933, P. L. 289, Article VII, Sec. 809, 15 P.S. p. 976, it is provided: "Upon the merger or consolidation becoming effective, the several corporations parties to the plan of merger or consolidation shall be a single corporation, which, in the case of a merger, shall be that corporation designated in the plan of merger as the surviving corporation, and in the case of a consolidation, shall be the new corporation provided for in the plan of consolidation. The separate existence of the corporations parties to the plan of merger or consolidation shall cease, except that of the surviving corporation in the case of a merger."
It is apparent that the Jewish Hospital Association of Philadelphia has ceased to exist as a corporate entity. The Albert Einstein Medical Center is a new and separate corporation since the consolidation. The Act of 1933, as amended, supra, provides: "Any devise, bequest, gift or grant contained in any will or other instrument, in trust or otherwise, made before or after such merger or consolidation, to or for any of the constituent corporations, shall inure to the surviving or new consolidated corporation, as the case may be." This Act of Assembly was passed after the Trust Deed was executed in 1915, and after the death of the settlor and in construing the provision of the Trust Deed it is immaterial to this case. Where one has definitely indicated a beneficiary, it may have been because of a respect, admiration or affection he had for it. If he had intended a gift to the successor of the institution named by him, he could easily have so stated that intention in the Deed of Trust. He may not have approved of a gift to the non-sectarian Einstein Medical Center or its consolidated group of hospitals. He used the expression "separate corporate existence" on two occasions in paragraph 3 of the Trust Deed. That is what he meant, and the Jewish Hospital Association of Philadelphia has no separate corporate existence at this time. If the term consolidation is correctly used, there never can be a consolidation of corporations except where all the constituent companies cease to exist as separate corporations and a new corporation, the consolidated corporation, comes into being: 11 L.R.A. (NS) 1120, and is a new separate entity.
The intention of a settlor of a deed of trust must prevail if consistent with rules of law. As was said in Hirsh's Trust Estate, 334 Pa. 172, 178, by Mr. Justice MAXEY, later Chief Justice: "We are not at liberty to ignore the words he used merely because he might have used others if he could have divined the provisions of his widow's will [made at a later date]. 'The language employed had a well recognized meaning; if he did not anticipate and provide for a contingency possibly arising in the ultimate distribution of his widow's estate, the court may not make another will for him.' " In Scott's Trust, 322 Pa. 1, 16, Mr. Justice BARNES held: "Where the meaning of a trust deed stands out with clearness, as in the present case, the application of technical rules is unnecessary." In Riverside Trust Co. v. Twitchell, 342 Pa. 558, 561, Mr. Justice DREW held: " '. . . When a trust of this kind has been created, the law holds that the donor has an individual right of property in the execution of the trust; and to deprive him of it would be a fraud on his generosity. For the law to appropriate a gift to a person not intended would be an invasion of the donor's private dominion: Holdship v. Patterson, 7 Watts, 547.' See also Harrison's Estate, 322 Pa. 532, 533."
The Albert Einstein Medical Center argues that the court should not construe the word "separate" strictly, as referring to corporate existence. We do not believe this is the controlling question. The Jewish Hospital Association of Philadelphia not only has not a separate corporate existence; it has no corporate existence at all.
Albert Einstein Medical Center appealed.
Israel Packel, for appellant.
Samuel W. Morris, with him John Russell, Jr., and Morgan, Lewis Bockius, for appellee.
The order of the court below is affirmed on the opinion of President Judge FRANK SMITH.