Opinion
March 26, 1947.
April 14, 1947.
Trusts — Tentative — Deposit as trustee for another — Revocability — Evidence.
In an interpleader proceeding to determine the ownership of a savings share account in a federal savings and loan association, it was Held that the evidence established as a matter of law that (1) decedent by making a deposit in the name of another, followed by his own name as trustee, had created a tentative trust, revocable at will; (2) decedent had not, by word or act, made the trust irrevocable, and (3) decedent had revoked the trust and caused the fund to be transferred to himself individually.
Argued March 26, 1947.
Before MAXEY, C. J., DREW, LINN, STERN, PATTERSON, STEARNE and JONES, JJ.
Appeal, No. 18, March T., 1947, from judgment of C. P., Beaver Co., June T., 1945, No. 64, in case of Mamie E. Vierling, Admrx., Estate of Madison Main, deceased v. Ellwood City Federal Savings Loan Association et al. Judgment affirmed.
Interpleader proceeding.
The facts are stated in the opinion, by SOHN, J., of the court below as follows:
On or about October 9th, 1939, Madison R. Main, who was then seventy-five years of age, deposited money in a savings share account in the Ellwood City Federal Savings and Loan Association. The deposit was entered in the name of "Madison Main, Jr., Madison Main, Sr. Trustee." Madison Main, Jr., was a grandson of Madison Main, Sr., and at that time he was three years of age. On January 14, 1941, Madison Main, Sr., went to the office of the Ellwood City Federal Savings and Loan Association and requested that the account be transferred back to his name only. At the direction of Madison Main, Sr., the Secretary of the Building and Loan Association struck out the name "Madison Main, Jr." and the word "Trustee" on the cover of the passbook. The same change was made on the inside cover of the passbook, on which was printed a membership certificate. This certificate, as changed, certified that Madison Main, Sr., was a member of the Ellwood City Federal Savings and Loan Association, and that he held a savings share account, subject to the charter and by-laws and the laws of the United States of America. On the following page is a record of deposits, withdrawals and balances and the date of each. At the top of this page originally appeared "Main, Madison, Jr. Madison Main, Sr. Trustee." On this page the words "Madison Main, Sr. Trustee" were stricken out. The Secretary said he made the changes on this page, and through an error, struck out the wrong name. On the same date, the Secretary changed the ledger sheet of the association by striking out the name "Madison Main, Jr." and the words "Trustee" and "Uncle" leaving the account in the name of "Madison Main, Sr." On another page appears the heading "Transfer of Share Account and Membership." The assignment is printed in the book and blanks for the name of the assignee and the date are not filled in. This assignment was signed "Madison Main, Jr. Madison Main, Sr." by Madison Main, Sr., in the presence of the Secretary on January 14th, 1941. On the same page, at the same time, Madison Main, Sr., affixed his signature, certifying that he was the transferee of the account, and that he had executed an application for membership and signature card. On the original application for Savings Share Account there appears the words "Transferred to Madison Main, Sr. Jan. 14, '41." On January 14th, 1941, Madison Main, Sr., signed an application for membership and for a savings share account. On the bottom of this application appears the words "Transferred from Madison Main, Jr. M. Main, Trustee." On January 9th, 1943, Madison Main, Sr., withdrew dividends amounting to seventy-nine dollars and eighty-one cents, and on July 6th, 1943, he withdrew dividends amounting to sixty-seven dollars and fifty-eight cents. On November 23rd, 1944, Madison Main, Sr., died intestate. At the time of his death there remained in the savings share account, five thousand five hundred forty-two dollars and seventy-two cents. This amount has since been increased by dividends and at the time of trial, amounted to five thousand seven hundred twenty-four dollars and eighty cents.
The Beaver County Trust Company was appointed Guardian of Madison Carl Main, also known as Madison Main, Jr. Suit was instituted by the Guardian against the Ellwood City Federal Savings and Loan Association, and it, in turn, filed a petition for interpleader whereby Mamie E. Vierling, Administratrix of the Estate of Madison R. Main, deceased, was interpleaded as a party claimant. The action was then Mamie E. Vierling, Administratrix, plaintiff vs. Beaver County Trust Company, Guardian of the Estate of Madison Carl Main, defendant. The case was tried before a jury. The plaintiff offered the records we have referred to and the testimony of the Secretary of the Building and Loan Association and rested her case. The defendant offered testimony of declarations made by Madison Main, Sr., from 1939 to 1944, relative to this account, for the purpose of establishing that Madison Main, Sr., had created an irrevocable trust in favor of Madison Main, Jr. Several witnesses called by defendant, said they saw the passbook after January 14th, 1941, and no names or words were stricken out when they saw the book. The latter testimony is the only contradiction of any of plaintiff's testimony. There is no testimony to contradict the records of the Building and Loan Association, nor to contradict the Secretary, who testified that Madison Main, Sr., told him he wanted to transfer the account to his own name and that Madison Main, Sr., executed the necessary forms to carry out this intention, in his presence. At the close of the testimony we affirmed the plaintiff's motion for a directed verdict and gave binding instructions in favor of the plaintiff. The defendant filed a motion for a new trial and a motion for judgment n. o. v. We are of the opinion that both motions must be denied.
Defendant did not offer testimony to contradict what the record of the Building and Loan Association shows as to ownership of the share account, as evidenced on the ledger sheet and the application for membership and a savings share account. Both of these, after January 14th, 1941, were registered in the name "Madison Main, Sr." There is no contradiction of the testimony of the Secretary as to the changes. Until these records and statements are contradicted, there is no question of fact for a jury to pass upon. The ownership of the account is prima facie in Madison Main, Sr.
Counsel for defendant has submitted a very complete brief, in which it is contended (1) that subsequent to the creation of the trust, Madison Main, Sr., did not effectively transfer the account to his individual name; (2) that Madison Main, Sr., created an irrevocable trust; and (3) if a tentative trust was created, Madison Main, Sr., by oral declarations, made the trust irrevocable. We have concluded the first of these in favor of the plaintiff. We now discuss the latter two. Most of the cases relative to tentative trusts in Pennsylvania have dealt with deposits in savings accounts in banks. In principle, there is no difference between such accounts and a savings share account in a Building and Loan Association. A leading case in Pennsylvania is Scanlon's Estate, 313 Pa. 424, in which the Supreme Court recognized the doctrine of tentative trusts and said in part: "Starting with In re Totten, 179 N.Y. 112, 71 N.E. 748, decided in 1904, the theory of a tentative trust was enunciated in an effort to retain for the depositor the complete control of the fund during his life and yet secure to the beneficiary any balance standing in the account at the death of the depositor. The court says at page 125: 'After much reflection upon the subject, guided by the principles established by our former decisions, we announce the following as our conclusion: A deposit by one person of his own money, in his own name as trustee for another, standing alone, does not establish an irrevocable trust during the lifetime of the depositor. It is a tentative trust merely, revocable at will, until the depositor dies or completes the gift in his lifetime by some unequivocal act or declaration such as delivery of the pass book or notice to the beneficiary. In case the depositor dies before the beneficiary without revocation, or some decisive act or declaration of disaffirmance, the presumption arises that an absolute trust was created as to the balance on hand at the death of the depositor.' See 3 R. C. L. 716, 717; 43 Harvard Law Rev. 539. As in that case, so here, there is no evidence of an intention to create an irrevocable trust at the time of deposit. Neither is there evidence here of any further acts by Mrs. Scanlon which show an intention to make the trust irrevocable. If it had been made manifest that the husband had an interest in the redeposited fund, the situation might be different, but nothing of this kind appears."
In the instant case, there is evidence of statements by Madison Main, Sr., to the effect that he wanted to provide for his grandson. This testimony may be evidence to show that Madison Main, Sr., intended to do something for his grandson. The intent was not coupled with any act on his part which in any manner could be said to be a transfer of the account to the grandson, or the creation of an irrevocable trust. If, as we decide, the trust was a tentative trust, his declarations could not impair his right to revoke the trust. Many of the declarations were made after the account had been transferred to his own name, and after he had withdrawn dividends for his own use.
In Bearinger's Estate, 336 Pa. 253, the decedent had created an account "Jake Bearinger in trust for Annie F. Bearinger", on March 4th, 1932. He delivered the passbook to her and she retained it until 1937, when he died. Just before his death, he gave directions to said Annie F. Bearinger relative to the account. The court held the trust revocable: "The mere act of a person depositing his funds in his own name in trust for another does not establish an irrevocable trust, but rather a tentative one: Matter of Totten, 179 N.Y. 112. 'A tentative trust of a savings deposit in a bank can be revoked by the depositor at any time during his lifetime, by a manifestation of his intention to revoke the trust. No particular formalities are necessary to manifest such an intention': Restatement of the Law of Trusts, section 58, page 183, comment b. A careful examination of the testimony adduced in the instant case before the Auditing Judge clearly convinces us that the sole intent of Bearinger in changing his account in 1932 were merely to create a revocable or tentative trust for Annie F. Bearinger, the appellant, and that he exercised his reserved power of revocation by his letter of 1937. No sufficient evidence was produced to substantiate the contention of appellant that there was an intention on the part of Bearinger to create an irrevocable trust. There was, however, testimony offered that Bearinger changed his account to his own name in trust and turned over the pass book to the appellant. Nevertheless, the mere fact that an account in a savings bank is changed to the name of the depositor in 'trust' for another, is not sufficient to show an intention to create an irrevocable trust: Scanlon's Estate, 313 Pa. 424. Nor does the delivery of the pass book, under such circumstances in itself make the trust an irrevocable one. There must be a delivery, coupled with words of a gift or a declaration that the depositor is thereby giving to the cestui que trust the money to the credit of the depositor: In re Halligan's Estate, 143 N.Y. S. 676; Matthews v. Brooklyn Savings Bank, 208 N.Y. 508. No such words were used nor was any intention shown that Bearinger intended to transfer the ownership of the fund or dominion over it to appellant. On the contrary, she admitted that Bearinger after 1932 gave her money to deposit in the account and that she kept the book for that purpose, that he retained control over the account and made withdrawals therefrom. Thus the trust remained tentative and revocable, and Bearinger was, therefore, within his legal right in exercising his power of revocation by his letter of May 22, 1937."
The Supreme Court has recently refused to distinguish between the settlor's right to withdraw principal from the trust and his right to revoke the trust. In Shapley Trust, 353 Pa. 499, Mr. Justice STEARNE said: "We are not prepared to recognize a distinction between settlor's right to withdraw principal from the trust and his right to revoke the trust in whole or in part. Both cause an amendment or partial revocation, and with the same legal effect. For example: if a settlor placed $100,000 in an inter vivos trust, with all the reservations hereinbefore discussed, and subsequently concluded to reduce the trust to $50,000, there would seem to be no difference in principle if settlor by written instrument revoked or modified the trust by reducing it by one-half, or exercised his right to withdraw one-half from the operation of the trust. Furthermore, we have recognized the validity of tentative trusts: Scanlon's Estate, 313 Pa. 424, 169 A. 106; Bearinger's Estate, 336 Pa. 253, 9 A.2d 342; Pozzuto's Estate, 124 Pa. Super. 93, 188 A. 209; Section 58 Restatement, Trusts. Where a person makes a deposit in a savings account in a bank in his own name as trustee for another person intending to reserve a power to withdraw the whole or any part of the deposit at any time during his lifetime and to use as his own whatever he may withdraw, or otherwise to revoke the trust, the intended trust is enforceable by the beneficiary upon the death of the depositor as to any part remaining on deposit on his death if he has not revoked the trust."
In Downey v. Duquesne City Bank, 146 Pa. Super. 289, the Superior Court affirmed the doctrine of tentative trusts. In Banca D'Italia Trust Company v. Giordano, 154 Pa. Super. 452, the same rule is affirmed in the following language: "The evidence also is sufficient to justify the finding of the court that the trust was tentative. 'A deposit by one person of his own money, in his own name as trustee for another, standing alone, does not establish an irrevocable trust during the lifetime of the depositor. It is a tentative trust merely, revocable at will . . .' 'In the absence of a different intention of the depositor, ( i. e., to create an irrevocable trust or not to create any trust) the mere fact that a deposit was made in a savings bank in the name of a depositor "as trustee" for another person is sufficient to show an intention to create a revocable trust': Scanlon's Estate, 313 Pa. 424, 169 A. 106; Bearinger's Estate, 336 Pa. 253, 9 A.2d 342; Downey v. Duquesne City Bank, 146 Pa. Super. 289, 22 A.2d 124."
In the instant case, the testimony discloses that Madison Main, Sr., created a tentative trust which was later revoked and the fund transferred to him individually. We find no evidence from which we can conclude that he, by word or act, made the trust irrevocable.
Defendant in interpleader appealed.
Lee E. Whitmire, Jr., with him Swaney Lucas, for appellant.
Robert L. Orr, with him Reed Ewing, for appellee.
The judgment is affirmed upon the opinion of Judge SOHN.