[Ed. Note. For other cases, see Perpetuities, Cent. Dig. §§ 4-44; Dec. Dig. § 4.*] 2. WILLS (§ 447*)-CONSTRUCTION-PERPETUI- I give

In 1876, by a codicil (No. 3), she provided: all the rest, residue and remainder of my es"I do now direct the whole net income from tate * * be divided in five equal parts, one equal fifth part thereof, I direct him (her executor) to pay to my daughter Mary A. Conover during all her natural life. One equal fifth part thereof, I direct him to pay to my daughter Anna N. James during her natural life, the other three-fifths part of said net income, I direct the aforesaid executor and trustee to pay to my three granddaughters, Ann N. Cooper, Mary Jacoby (formerly Cooper) and Henrietta Cooper and the survivor of them durMOSCHZISKER, J. [1] The question in- ing all of their and her natural life, then to my great-grandchildren as provided in the foregovolved is: Was error committed by the courting will, on the death of either of my aforesaid For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes

daughters or granddaughters without leaving issue, her or their share to be equally divided among the survivors, should either of the aforesaid daughters or granddaughters leave issue such issue to take the parent's share, share and share alike."

In 1886, by a final codicil (No. 5) she pro-living daughters and grandchildren. * vided:

cil so drawn is also the result of deliberation. Testatrix concludes, 'having disposed of my estate as I believe right and just, I desire my dear children and grandchildren to accept the same harmoniously. Though a will speaks from the time of one's death, it is impossible to infer that 'dear children' meant other than the two fifth and last codicil drawn ten years later, May "Should neither of my daughters or grand- 24, 1886, provides for a gift to five charities daughters leave surviving her a child or chil-***. in case the equitable life tenants die dren to survive to twenty-one years of age to inherit and possess the principal of my estate after the death of my last child and grandchild -In that event I give devise and bequeath the whole of my residuary and reversionary estate to ** (charities)."

In finally determining that the rule against perpetuities did not apply, the orphans' court in banc accepted the view expressed on a prior occasion in an opinion written by one of its members and adopted by the auditing judge in the present instance, which reads, in part, as follows:

*

without issue who should attain the age of twenty-one years. Little more need be said. The analysis is conclusive and compelling. ** The intent demonstrated by apt language is to give the three granddaughters, after the death of the two daughters, equitable and does vest not later than 21 years after a life estates and no more, and the corpus must life in being at the time of the creation of the trust. Gray (2d Ed.) § 201."

Thus it may be seen the court below held that the rule against perpetuities had not been infringed, because the will and codicils taken together (Shalters v. Ladd, 163 Pa. 509, "This residuary estate was also given * *30 Atl. 283) show the testatrix merely intendin trust for the survivor of her grandchildren's ed to provide life interests for the grandchillives and the life of the survivor, the net income to be paid to the grandchildren, and in dren specifically named by her, and not for the event of death of either, to their issue, the others who might subsequently be born. But income to be paid to 'my granddaughters, not the appellant contends that the disposition subject to the control of any husband either conflicts with the rule, in that a proper readmight have. On the death of the survivor of the grandchildren, the great-grandchildren were ing of the will and codicils shows a devise to receive the income until he or she, respec- for life to grandchildren generally, and not tively, attains the age of 21 years, at which exclusively to the particular grandchildren time they were to take their shares of the principal. It is apparent from a study of this re-actually designated by name; in other words, siduary clause that testatrix used grandchildren that a child born after the death of the tesand granddaughters interchangeably, and this is tatrix to either one of her two surviving accentuated by her speaking of her great-grandchildren as he or she,' yet her language is com- daughters, would be entitled to a share of prehensive enough to embrace all granddaugh- the income for life, and the ultimate distributers and is not necessarily limited to the chil- tion of principal would be postponed until dren of her then deceased daughter, Catharine, the death of the last grandchild, including though in all probability, judging from other gifts to them, they alone were in her mind. such after-born grandchildren, if any; hence, The codicil, that of May 28, 1872, materially that there was a possibility of the rule being changes the provisions of the will. Its purpose infringed, which is enough to avoid the is significant: 'Desiring to do equal justice to all my children has induced me to make this al- whole disposition. The point involved is not teration in my will. The net income of my re- free from difficulty; but, after consideration siduary estate is to be divided into five equal of the able argument of counsel for the apparts.' A division into fifths is in itself note- pellant and much thought upon the subject, worthy. There were then two living children and three living grandchildren, all women, and we are not convinced of error in the view two and three make five. One-fifth was to be taken by the court below. paid to the daughter Mary for life. * * ** In addition to what we have excerpted Another fifth was given to the daughter Anna from the opinion of the orphans' court, it is for life. * * The remaining three-fifths * were given to the 'three daughters of to be noted that in the second codicil, immemy deceased daughter Catharine H. Cooper, diately after the language already quoted, and the survivors and survivor of them' and the testatrix provides: the trustee was directed to pay them, 'my granddaughters survivors and survivor, the three-fifths of the income during all their and her natural life.' In all other respects the will as originally written was republished. limitation over to the great-grandchildren The She then proceeds to set aside articles for the death of the survivor of the cestui que each of her two daughters and three grandtrusts, as defined by this codicil, was not illegal. daughters, designating them by name. The Those who took equitable life interests were in significance of this is to show that, although terms defined; they were all living at the time in this particular instance the testatrix used of the execution of the codicil and of the decease of the testatrix. The third codicil the general phrase "granddaughters," never* * * directed * * *the whole net in- theless, she merely had in mind the then livcome *** to be divided into five different ing granddaughters, and not granddaughters parts; again, one is given to the daughter Mary for life, one to the daughter Anna for life, and generally; so the strong probability is that the other three-fifths are to be paid to 'my three in her other references to "grandchildren" granddaughters, Anna M. Cooper, Mary Jacoby she meant only those living and known to (formerly Cooper), and Henrietta Cooper, and her. To get at the intent of the testatrix, we the survivor of them, during all their and her natural life, then to my great-grandchildren may properly take into consideration the ciras provided in the foregoing will.' This codi- cumstance that the will and codicils indi

**

on

"It is my desire that my household goods be equally divided between my daughters and granddaughters absolutely."

[Ed. Note.-For other cases, see Receivers, Cent. Dig. §§ 387, 389-391; Dec. Dig. § 196.*1 5. RECEIVERS (§ 194*)-ALLOWANCE FOR ATTORNEY'S FEES.

Again, in Rhodes' Estate, 147 Pa. 227, 231, | fusal of the court to allow him any compensa23 Atl. 553, 554, it is said by Judge Penrose, tion was not an abuse of discretion. in an opinion adopted by this court, per curiam, that where the meaning of a will is not clear, and the construction contended for would lead to a perpetuity, this in itself is "a strong reason for supposing that it was not intended to be construed in that way." On the whole, as already suggested, we are not convinced that the learned court below erred in holding the rule had not been infringed in the present instance.

The assignments are overruled, and the decree is affirmed; the costs to be paid out of the estate.

(245 Pa. 73)

Where a receiver was concededly guilty of negligence resulting in loss, the auditor properly refused to allow him anything for services rendered by counsel for the benefit of the receiv the benefit of the creditors and stockholders of er personally distinct from services rendered for the corporation of whose assets he had charge.

[Ed. Note.-For other cases, see Receivers, Cent. Dig. §§ 385, 386; Dec. Dig. § 194.*]

Appeal from Court of Common Pleas, Philadelphia County.

Action by James C. Covington and others against the Hawes-La Anna Company. From

COVINGTON et al. v. HAWES-LA ANNA decree dismissing exceptions to auditor's re

CO.

(Supreme Court of Pennsylvania. April 20, 1914.)

1. APPEAL AND ERROR (§ 1022*)-FINDINGS AUDIT OF RECEIVER'S ACCOUNT.

Where a receiver, on the audit of his account, is surcharged with various sums in consequence of findings of fact which are affirmed by the court below, such findings will not be disturbed on appeal, unless clearly shown to be

erroneous.

[Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. 88 4015-4018; Dec. Dig. 8 1022.*]

2. RECEIVERS (§ 92*)-LOSS IN OPERATION— RIGHT TO SURCHARGE RECEIVER.

Where the bill seeking appointment of a receiver for a corporation stated that there were orders on hand for goods from which a handsome profit could be realized, and that the business, if undisturbed, would soon realize sufficient funds to pay creditors in full and save the property intact for stockholders, and where the receiver caused an appraisement of the property to be made by three appraisers selected by himself, and in his first account charged himself with the amount of the appraisement and claimed to have made a certain gain, and subsequently, in his answer to a petition to revoke his appointment, denied that the assets were growing less or that the business was conducted at a loss, and where his second and third accounts showed a profit, he was properly surcharged with a loss in the operation of the business, especially where the evidence showed that he was negligent and mismanaged the business.

[Ed. Note. For other cases, see Receivers, Cent. Dig. § 169; Dec. Dig. § 92.*]

port, W. Winfred Nuss, receiver of the defendant company, appeals. Affirmed.

The account of W. Winfred Nuss, receiver, was referred to Arthur G. Dickson, auditor, who surcharged the receiver in amounts aggregating $32,930.54, and refused to allow him compensation for his services, reduced the amount claimed as compensation for his counsel, and charged him with four-fifths of the expenses of the audit.

Argued before FELL, C. J., and BROWN, MESTREZAT, POTTER, and ELKIN, JJ.

Thos. Raeburn White and Howard W. Page, both of Philadelphia, for appellant. Hampton L. Carson, of Philadelphia, Wilton A. Erdman, of Stroudsburg, and Joseph Carson, of Philadelphia, for appellees.

POTTER, J. This appeal by W. Winfred Nuss, who was receiver of the Hawes-La Anna Company, is from the decree of the court below, affirming the report of an auditor who was appointed to pass upon the account of appellant as receiver. It appears that the Hawes-La Anna Company was a corporation formed under the laws of New York, and incorporated in that state on July 18, 1906, with an authorized capital stock of $150,000. Its business was the manufacture of wooden novelties, principally toys, and it had two factories, one at La Anna, Pa., and the other at Towanda, Pa., and a business office in Philadelphia. On August 16, 1907, James C. Covington, W. Winfred Nuss, and George W. Ford, who were stockholders, filed in the court below a bill in equity against the company, in which it was alleged that, while the corporation was solvent, it was unable to meet its liabilities; that a judgment had been obtained against it, and various creditors were threatening suit; and that a receivership was necessary to prevent sacrifice of its assets. Upon this bill and accompanying affidavits, the court appointed as receiver Where a receiver was admittedly guilty of W. Winfred Nuss, one of the complainants, negligence in his management of the estate, re- who was a director in the company, and its

3. RECEIVERS (§ 98*)-SHRINKAGE OF ASSETSRIGHT TO SURCHARGE RECEIVER.

Where a receiver caused the assets on hand to be appraised by ten men, who made affidavit that the valuation of $14.531.47 was correct, and shortly thereafter sold the assets for $530, he was properly surcharged, after being allowed $1,000 for expenses of the sale, with $13,000 for shrinkage of assets, in the absence of proof pointing out in detail where the fault lay. [Ed. Note.-For other cases, see Receivers, Cent. Dig. § 182; Dec. Dig. § 98.*]

4. RECEIVERS (§ 196*)-COMPENSATION-DIS

CRETION.

*For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes

president and treasurer, as well as its active! July 6, 1909, the court made an order directmanager. Under authority of the court, the receiver continued the business of the corporation until 1910, when all its property was sold under orders of the court. On January 9, 1911, the receiver's account, which was his second account, was filed and referred to an auditor. On July 15, 1912, a third account was filed, which was referred to the same auditor. This last account showed a balance in the hands of the accountant of $2,963.54 and a further debit, was admitted of $147, making a total admitted balance of $3,110. For various reasons fully set forth in his report, the auditor surcharged the accountant with a sum, stated by the court below to be $32,930.54. He also refused to allow the accountant compensation for his own services, and reduced the amount allowed as compensation for his counsel. He was also charged with four-fifths of the expense of the audit.

ing that the business be closed up by the receiver not later than January 1, 1910, and that the property of the corporation, both real and personal, should be sold under the instruction of the court. The property was finally sold in March and April, 1910, for very small prices, and the second and third accounts of the receiver showed a net balance of $2,963.54. The statement of the expert accountant employed by the auditor to go over the books and accounts shows that, taking the inventory and appraisement of August 16, 1907, as a basis, there was an apparent loss in the operation of the business of $11,698.50. Counsel for appellant argue that this was made to appear by the use of two inventories made for different purposes. But we do not find support for this suggestion in the evidence. As we understand it, both of the inventories were upon the same basis. Appellant testified that the same prices were used in fixing values in the later inventories as were used in the former one, and that this was purposely done, to avoid confusion. As we read the evidence, it sustains the conclusion of the auditor and of the court below upon this item. Furthermore, the testimony warrants the conclusion that the receiver did not give proper attention to the conduct of the business, and the auditor found, as a matter of fact, that the receiver neglected and mismanaged it.

[1] The findings of fact by the auditor, upon which these surcharges were based, were affirmed by the court below, and therefore they will not be here disturbed, unless it is clearly shown that they are erroneous. [2] In the first assignment it is alleged that there was error in surcharging the receiver with losses in the operation of the business amounting to $11,698.50. It appears that in the bill filed asking for the appointment of a receiver, appellant averred that a fair and reasonable valuation of the assets of the company as a going concern was $150,- [3] In the second assignment, it is alleged 074.91, and it was stated in the bill that that there was error in surcharging the rethere were orders on hand for goods to the ceiver with the sum of $13,000 for alleged amount of about $150,000, which, if filled, shrinkage of assets. In the order of the would net a handsome profit to the corpora- court of July 6, 1909, there was a direction tion. It was averred in the affidavit that that "the conduct of the business by the rethe business was conducted at a profit, and ceiver is to be finally closed up not later if undisturbed would soon realize sufficient than January 1, 1910, and immediately therefunds to pay creditors in full and save the after said receiver shall cause to be made a property intact for the stockholders. Shortly full inventory and appraisement of the asafter his appointment the receiver had an ap- sets on hand." The business was not, howpraisement of the property made by three ap- ever, finally closed up until after the date praisers selected by himself. They figured named, and the inventory and appraisement the total value of all the property at $135,- was not made until March 26, 1910. It in505.60. This inventory and appraisement cluded the stock, tools, and other personal was made August 16, 1907, but was not filed property at the factory at Towanda, which until July 28, 1908. On November 10, 1908, was appraised at $14,531.47. This appraisethe receiver filed his first account, in which ment was made by ten men, who all made an he charged himself with the amount of the affidavit that the inventory was true and corinventory and appraisement and claimed to rect. Yet within two weeks the receiver sold have made a gain of $1,680.01. After de- this property for the sum of $530 or at a ducting all credits claimed, this account loss of more than $14,000 as compared with showed property in the hands of the receiver the sworn appraisement. No wonder that the of the value of $128,353.19. On June 3, appellant himself characterized the transac1909, certain creditors and stockholders of tion as absurd. It could hardly be termed a the company filed a petition asking for the sale. It was essentially a giving away of the revocation of the appointment of the re- property. Surely a full explanation for such ceiver, to which he filed an answer, in which a sacrifice was called for. It is not enough he denied that the assets of the corporation to suggest that the values set forth in the were growing less, or that its business had inventory were inflated. An inspection does been conducted to the injury of the stockhold- not indicate anything of the kind. If the ers and creditors, and averred that the busi- inventory was not correct, the burden was ness had been conducted without loss. On upon the accountant to point out in detail