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BURDICK v. BURDICK

June 27, 1940

BURDICK et al.
v.
BURDICK et al.



The opinion of the court was delivered by: PINE

Plaintiffs, as substituted and successor trustees under the last will and testament of Willard A. Lalor, deceased, have filed herein a supplemental complaint for the construction of said will and instructions as to their duties thereunder.

The testator was a resident of the District of Columbia. The will was dated November 19, 1930. There were two codicils dated November 12, 1932, and December 1, 1933, respectively. The testator died October 9, 1934.The will and codicils were admitted to probate and record by this Court holding a Probate Court on February 19, 1935, and thereafter letters testamentary were issued to the executors named therein. They were also named as trustees under a trust set up under the will. Thereafter the executors completed the administration of the estate and filed their first and final account, which was duly approved by this Court. Since the approval of the account of the executors, the plaintiff bank and plaintiff Burdick, or his predecessor trustee, have been acting as trustees under the will.

 The amount of the estate which the executors turned over to themselves as Trustees was approximately $2,000,000. After the payment of the annuities provided by the trust and the expenses of administration, the accumulated income from the estate has been averaging approximately $50,000 per annum and will increase in amount in the future. The trust will terminate in about 1996, based on the life expectancies of two nieces whose lives determine the duration of the trust. It is conservatively estimated that the accumulations will amount to about $10,000,000 at the end of the trust period and the total trust fund will then be approximately $12,000,000.

 The principal questions for determination grow out of Article Fifth of the will by which the testator gave his entire residuary estate to the trustees "to invest, re-invest and keep the same invested for the period of twenty-one (21) years after the death of both my nieces Esther Lalor and Ruth Lalor, and during such trust period to collect, recover and receive the issues, income, interest and profits thereof, and after deducting the commissions of the trustee and the proper and necessary expenses of the administration of the trust, to make payments from the same in quarterly installments" in the amounts and to the persons set forth in succeeding paragraphs A to H, inclusive, of Article Fifth, namely, certain stated yearly annuities to his sister, brother, two nephews, three nieces, including the two on whose lives the trust is determined, and certain friends, the maximum individual annuity provided being $6,000 per annum. These beneficiaries included his sole heirs at law and next of kin.

 In paragraph I of Article Fifth the testator directed that "the rest and remainder of the income * * * is to be reinvested by the trustee for the increase and benefit of this trust fund".

 And further in paragraph I of Article Fifth he directed -- "upon the expiration of the period of twenty-one (21) years after the date upon which the survivor of my said nieces Esther Lalor and Ruth Lalor shall have died, this trust shall terminate and my trustee shall forthwith assign, transfer and pay over the principal and accumulations of said trust fund, or the property into which the same may have been converted or the proceeds thereof" to the lawful issue per stirpes and not per capita of the two nieces on whose lives the trust is determined, one-fifth in each case, and to the other niece and two nephews one-fifth each and, if he or she be deceased, to his or her lawful issue per stirpes and not per capita.

 The first question is whether the future remainder interests violate the common law "rule against perpetuities". This rule, as it relates to the remote vesting of title, is distinct from the more ancient rule against the suspension of alienation hereinafter discussed and embodied in statutory form in this jurisdiction. This rule originated in the 17th Century and was a limitation on real property. Originally confined to a period of lives in being and a reasonable time thereafter, it became crystallized into the limitation of a life or lives in being and twenty-one years thereafter plus the period of gestation and has been defined by the Supreme Court in McArthur v. Scott, 113 U.S. 340, 5 S. Ct. 652, 663, 28 L. Ed. 1015, to be as follows: "* * * The rule of the common law, by which an estate devised must at all events vest within a life or lives in being and 21 years afterwards, has reference to time and not to persons. Even the 'life or lives in being' have no reference to the persons who are to take, for the testator is allowed to select, as the measure of time, the lives of any persons now in existence; and the 'twenty-one years afterwards' are not regulated by the birth or the coming of age of any person, for they begin, not with a birth, but with a death, and are 21 years in gross, without regard to the life or to the coming of age of any person soever."

 There appears to be no doubt that the future interests in this case vest within the period limited by the "rule against perpetuities" inasmuch as the estates vest within lives in being and twenty-one years afterwards.

 The second question is whether the future remainder interests contravene the District of Columbia statutes against the suspension of alienation.

 The D.C.Code 1901, D.C.Code 1929, T. 25, § 112, contains the following statutory limitation upon the suspension of alienation of future estates: "Sec. 1023. Perpetuities. -- Except in the case of gifts or devises to charitable uses, every future estate, whether of freehold or leasehold, whether by way of remainder or without a precedent estate, and whether vested or contingent, shall be void in its creation which shall suspend, or may by possibility suspend, the power of absolute alienation of the property, so that there shall be no person or persons in being by whom an absolute fee in the same, in possession, can be conveyed, for a longer period than during the continuance of not more than one or more lives in being and twenty-one years thereafter."

 The future interests in the instant case involve personal property, but Sec. 1023, supra, is made applicable to personalty as well as realty by Sec. 1036, D.C.Code 1901, D.C.Code 1929, T. 25, § 283, appearing at the end of the subchapter containing Sec. 1023, supra, reading as follows: "Sec. 1036. * * * All the provisions of this subchapter shall apply to personal property generally except where from the nature of the property they are inapplicable."

 In Shoemaker v. Newman, 62 App.D.C. 120, 65 F.2d 208, 89 A.L.R. 1034, the Court of Appeals held, in effect that the statute relating to restraints on alienation was not violated when the trustees had power at all times to alienate. They have such power in the present instance and this would seem to be sufficient answer to the question raised.


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