District. 45-Lackawanna Co. C. P.-Henry M. Edwards, P. J.; Edward C. Newcomb and George W. O. C.-M. F. Sando, P. J. 46 Clearfield Co. A. R. Chase, P. J. 47-Cambria Co. C. P. John E. Evans, P. J.; John H. McCann, J. O. C.-S. Lemmon Reed, P. J. 48—McKean Co. Joseph W. Bouton, P. J. 49-Centre Co. Henry C. Quigley, P. J. 50-Butler Co. John R. Henninger, P. J. 51-Adams and Fulton Counties. Donald P. McPherson, P. J. The Legal Intelligencer Staff. General Editor. HOWARD W. PAGE, 700 West End Trust Building, Philadelphia. State Editor. ALBERT B. WEIMER, West End Trust Building, Phila. Philadelphia Editor. THEO. B. STORK, West End Trust Building, Phila. Adams Co., Gettysburg. (See Fulton Co.) Allegheny Co., Pittsburgh, Edwin L. Mattern. Armstrong Co., Kittanning, Harry C. Golden. Beaver Co., Beaver, Frank H. Laird. Bedford Co., Bedford. (See Huntingdon Co.) Berks Co., Reading, Paul N. Schaeffer. Blair Co., Hollidaysburg, Robt. W. Smith. Bradford Co., Towanda, Rodney A. Mer cur. Bucks Co., Doylestown, Calvin S. Boyer. Butler Co., Butler, Thomas H. Greer. Cambria County, Johnstown, Henry W. Storey, Jr. Cameron Co., Emporium. (See Clinton Co.) Carbon Co., Mauch Chunk, Jacob C. Loose. Centre Co., Bellefonte, S. D. Gettig. Chester Co., West Chester, Truman D. Wade. Clarion Co., Clarion, S. K. Clarke. Clearfield Co., Clearfield, John M. Urey. Clinton Co., Lock Haven (with Cameron and Elk Counties), W. E. Shaffer. Columbia Co., Bloomsburg (with Montour Co.), R. S. Hemingway. Crawford Co., Meadville, Otto Kohler. Cumberland Co., Carlisle, Francis B. Sellers. Dauphin Co., Harrisburg, Sidney E. Delaware Co., Media, W. Roger Frone- Fayette Co., Uniontown, Luke H. Frasher. ander. Fulton Co., McConnellsburg (with Adams Co.), John P. Sipes. Greene Co., Waynesburg, S. M. William son. Huntingdon Co., Huntingdon (with Bedford and Mifflin Counties), R. W. Williamson. Indiana Co., Indiana, James L. Jack. Lancaster Co., Lancaster, George Ross Eshleman. Lawrence Co., New Castle, William McElwee, Jr. Lebanon Co., Lebanon, Dawson W. Light. Lehigh Co., Allentown. Luzerne Co., Wilkes-Barre, Frank P. Slattery. Lycoming Co., Williamsport, Don M. Larrabee. McKean Co., Smethport, E. G. Potter. Monroe Co., Stroudsburg (with Pike Co.), Montgomery Co., Norristown, Aaron S. Swartz, Jr. Montour Co., Danville. (See Columbia Co.) Northampton Co., Easton, Henry D. Maxwell. Northumberland Co., Sunbury, a M. Clement. Perry Co., New Bloomfield. (See Juniata Co.) Pike Co., Milford. (See Monroe Co.) Potter Co., Coudersport, Archibald F. Jones. Schuylkill Co., Shenandoah, M. M. Burke; Tamaqua, John O. Ulrich. Snyder Co., Selinsgrove (with Union Co.), Charles P. Ulrich. Somerset Co., Somerset, Mrs. Daryle P. Heckman. Sullivan Co., La Porte. (See Wyoming Co.) Susquehanna Co., Montrose, Gerritt E. Gardner. Tioga Co., Wellsboro, G. Mason Owlett. Union Co., Lewisburg. (See Snyder Co.) Venango Co., Franklin, George S. Criswell, Jr. Warren Co., Warren (with Forest Co.), W. S. Clark. Washington Co., Washington, Harry D. Hamilton. Jefferson Co., Brookville, Raymond E. Wayne Co., Honesdale, A. G. Rutherford. Brown. Juniata Co., Mifflintown (with Perry Co.), J. N. Keller. Lackawanna Co., Scranton, William A. Wilcox. Westmoreland Co., Greensburg, William S. Rial. Wyoming Co., Tunkhannock (with Sullivan Co.), Joseph F. Ogden. York Co., York, Richard E. Cochran. REPORTS OF CASES DECIDED IN ALL THE JUDICIAL DISTRICTS OF PENNSYLVANIA VOL. IV. Leech's Estate. Wills - Construction — Life-tenant and remainderman — Principal and income-Proceeds of sale of real estate purchased by executor upon foreclosure proceedings in excess of book value. ... By the third paragraph of his will, testator directed that his wife should have and enjoy "the rents and income" of any house which he might occupy at the time of his decease, or if she should prefer it, the possession thereof to be held and enjoyed by her during her natural life for her sole and separate use; and after providing for the sale of the house in case his wife should become dissatisfied with it, and the investment of the purchase money in a suitable residence for her, he directed the same to be "held and enjoyed by her, or the rents and profits thereof to be received by her in the manner aforesaid during her life, if she should remain my widow." By the eighth clause of the will, he bequeathed his residuary estate to his executors, in trust "to receive the income and profit thereof, to pay the taxes thereon... and to pay over one-third of the net income thereof in at least quarterly payments to my wife, for and during the term of her natural life.. the remainder of the net income and profits thereof" "to be paid in like manner to my three children, share and share alike, during their respective lives. . . ." with the further direction to pay such part of the income of his estate that any son would have been entitled to dispose of by appointment to such son's widow. The trustees, in the course of their administration, foreclosed two mortgages and bought the real estate in at sheriff's sale; one of the properties cost $26,550, the other $62,093.84. In the schedule of distribution approved by the court, these figures appeared as the book values, and were included as a part of the principal of the estate. The trustees subsequently sold the former of these properties for $125,500, the latter for $132,000. Petitions for review were filed by persons representing the interests of life-tenants, all of whom were deceased, on the ground that the enhanced value of the real estate above the book value should be awarded to them as income: Held, that such enhanced value was part of the principal and passed to the remaindermen. Petitions dismissed. Petitions for review and answers. O. C. Phila. Co., Jan. T., 1879, No. 448. W. W. Porter and Bell, Kendrick, Trinkle & Deeter, for petitioners. Francis Shunk Brown, Jr., Gunnison, Fish, Clifford & Chapin and Brown & Williams, contra. GEST, J., Nov. 16, 1923.-These petitions were filed to obtain a review of the final account of the trustee, the adjudication of which was confirmed by this VOL. 4-1 Leech's Estate. court in Leech's Estate, 1 D. & G. 352, the appeals from our decision being dismissed by the Supreme Court in 274 Pa. 369. After the record was remitted to this court, a schedule of distribution was approved and filed, which is also claimed to be erroneous, and while certain matters of practice and procedure are involved, we prefer to dispose of the case on the merits of the important question which was argued. As the reports of the case above mentioned, and the prior report of Leech's Estate, 18 Dist. R. 527, 228 Pa. 311, give the full history of the case, it does not seem necessary to recount it in extenso, and we need only quote those paragraphs of the will disposing of the income of the trust estate or portions thereof. In the third paragraph, the will of testator provides for his wife as follows: "It is also my will that she shall have and enjoy the rents and income of any house which I may occupy at the time of my decease, or, if she prefer it, the possession thereof, . . . to be held and enjoyed by her during her natural life, for her sole and separate use;" and, after providing for the sale of the house in case his wife should become dissatisfied therewith, and the investment of the purchase money in the purchase of a suitable residence for his wife, he directs that the same shall "be held and enjoyed by her, or the rents and profits thereof to be received by her, in the manner aforesaid during her life, if she should remain my widow." ... In the eighth clause of the will, the testator devised and bequeathed his residuary estate to his executors in trust "to receive the income and profit thereof, to pay the taxes thereon, to keep the real estate in repair, and to pay over one-third of the net income thereof in at least quarterly payments to my wife for and during the term of her natural life. . . . The remainder of the net income and profits thereof is to be paid in like manner to my three children, share and share alike, during their respective lives and to the issue of such of them as may die leaving issue (during the respective minorities of such issue), the said issue taking their deceased parent's share. ... After these trusts have been fully executed, then the said property shall descend and go as my estate according to the then existing laws of Pennsylvania, provided however that if either of my sons should die leaving a widow I direct the said trustees to pay to such widow during life, if she shall so long remain my son's widow, such part of the income of my estate which would have been coming to such son as he may by any last Will and Testament in writing direct and appoint." Now, it appears from the petitions for review that, prior to the death of S. Josephine Loftus, the daughter of the testator and the surviving life-tenant, on Aug. 17, 1921, the then trustees had foreclosed two mortgages held by the estate and had taken title to the real estate at sheriff's sale, which was carried in the account at the cost thereof, viz., the amounts of the mortgages and the expenses of the foreclosures. One, known as the Schuylkill River property, was thus taken in foreclosure June 6, 1896, the total cost being apparently $26,550, and the other, situated in Nicetown, was taken in foreclosure July 15, 1918, the total cost thereof being $62,093.84. In the schedule of distribution, approved Jan. 19, 1923, these book values appeared as part of the principal, which was awarded, in accordance with the decision of the Supreme Court, to the ten nephews and nieces of the testator. Prior to this schedule, viz., on Dec. 7, 1922, the Girard Trust Company, as substituted trustee, and also as attorney-in-fact for the nephews and nieces, agreed to sell the Nicetown property for $125,500, which was paid by the purchaser on April 7, 1923, and distributed by the trustee, and it appears that a similar agreement of sale of Leech's Estate. the Schuylkill River tract was made by the Girard Trust Company, as trustee, May 22, 1923, for the sum of $132,000, which has not yet been consummated. The petitioners, who represent the interests of the life-tenants, all of whom are deceased, claim that the enhanced value of the real estate above their book values should be awarded to them. We shall first mention the decisions of our Supreme Court on the subject. In Hubley's Estate, 16 Phila. 327, a trustee sold real estate, devised for life, with remainder over, and invested the proceeds in City of Philadelphia loan, which appreciated in value. The gain was claimed by the life-tenant, but this court decided that the remainderman was entitled to the securities in kind. Judge Ashman assigned as one reason "that the fund takes the place of the original real estate, as to which, if the life-tenants took more than the annual product, they would commit waste, and from whose enhancement in price they would derive no benefit beyond a possible increase of rental." And Judge Penrose said: "A rise in the value of trust investments, like a rise in the value of lands held in trust, has always been regarded as an accretion of the principal, and, therefore, belonging to the remainderman (see Scholefield v. Redfern, 32 L. J. Ch. 627); just as a depreciation would fall upon him and not upon the tenant for life. It is quite probable, had the lands not been sold to or taken by the city, that the increase of value would at least have equaled that which has taken place with the city sixes, in which the purchase money has been invested. In that case, as the auditing judge has said, it would not have been supposed that the tenant for life was entitled to share the increase. The right of the remaindermen to the securities in kind seems quite as clear as their right to the possession of the land at the death of the tenant for life, had no sale been made." This case was affirmed by the Supreme Court in January, 1884, but apparently the opinion of the court has not been reported. In Park's Estate, 173 Pa. 190, the testator gave his residuary estate in trust to receive and collect the rents of the real estate and the income and profits of the personal estate, and, after deducting taxes, expenses and certain annuities, to pay the residue of the net income arising from said real and personal estate to his daughter, Margaretta, during her life, with remainder to her children. The trustees invested moneys of the estate in two mortgages, the interest fell into arrears, the trustees foreclosed the mortgages, bought the property in at sheriff's sale, carried them at their cost, which was the amount of the mortgage plus costs, and then sold the real estate at a considerable gain, during the lifetime of Margaretta, who claimed the said gain as income, in addition to interest on the investment, but the auditing judge, Over, J., dismissed her claim. Hawkins, P. J., however, disagreed with him, and the court being equally divided, the decree of Over, J., stood as the final decree of the court. The Supreme Court reversed in a short opinion, adopting as theirs the dissenting opinion of Hawkins, P. J. In Graham's Estate, 198 Pa. 216, the residuary estate, real and personal, was given to trustees in trust to receive and collect the rents, profits and dividends and income and to use and apply the income for the support of testator's three sons and their wives and children, and on the death of the survivor of the children the trustees were directed to divide and distribute the residuary estate among the children and issue of the sons. Some of the residuary real estate was sold and a mortgage taken for part of the purchase money. This mortgage was exchanged for certain steel company bonds, and at the same time the trustee purchased other bonds of the same company with the proceeds of other residuary real estate. These bonds were sold at a considerable premium and the proceeds were reinvested in other securities. The life-tenant |