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White v. Fleet Bank
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	1999 ME 148
Docket:	Cum-99-124
Argued:	September 7, 1999
Decided:	October 25, 1999

Panel:WATHEN, C.J., and CLIFFORD,  ALEXANDER, and CALKINS, JJ.

APRIL L. WHITE et al.

v.

FLEET BANK OF MAINE

ALEXANDER, J.

	[¶1]  This matter is before the Court on report, pursuant to
M.R. Prob. P. 72{1} from the Cumberland County Probate Court (W. Childs, J.)
to review a decision of that Court (D. Childs, J.) regarding applicability of the
rule against perpetuities and the rule against accumulations to the Robert C.
Moore Testamentary Trust.
	[¶2]  A report pursuant to Rule 72 is an exception to the final
judgment rule{2} which we have said "should be used sparingly."  Luhr v.
Bickford, 661 A.2d 1141, 1142 (Me. 1995) (citations omitted).
	[¶3]  We recently reviewed the issues we consider in evaluating
whether to decide the merits of a case that comes before us under Rule
72(c) where the propriety of the report is contested.

	Although the trial court makes a preliminary
determination of the propriety of its report, we retain "the
power to make our own independent determination whether in
all circumstances of a given case our decision on a report would
be consistent with our basic function as an appellate court and
we would not be cast in the role of an advisory board."  In
making that determination, we assess whether the question of
law reported is "of sufficient importance and doubt to outweigh
the policy against piecemeal litigation."  We also consider
whether "a question raised on report might not have reached
the Law Court in the normal course of the appellate
process"-that is, whether the issue might not have to be
decided at all because of other possible dispositions.  Although
Rule 72(c) does not require us to do so, we may take into
account whether "our decision will in at least one alternative
dispose of the action. . . ."  Finally, in the interests of the judicial
economy and the preservation of our appellate function, we must
consider whether our involvement in a case prior to the entry of
a final judgment will encourage piecemeal litigation in cases
involving similar circumstances.

Morris v. Sloan, 1997 ME 179, ¶ 7, 698 A.2d 1038, 1041 (citations
omitted).
	[¶4]  We conclude that the report was appropriately granted.  The
issues presented are of critical importance in drafting estates and trusts. 
Our ruling, in either alternative, will likely resolve the litigation.  Finally, the
central issue on this appeal, the question of applicability of the rule against
accumulations, is a matter of significant uncertainty which has not been
addressed directly by this Court since 1865, before adoption of the
predecessor of 33 M.R.S.A. § 101 (1988), the so-called "wait and see"
statute applied to the rule against perpetuities.

I.  CASE HISTORY

	[¶5]  Robert C. Moore died October 3, 1970, leaving a handwritten
will{3} dated January 27, 1947.  The will was offered for probate on
October 23, 1970, and allowed to probate on November 25, 1970.  Moore's
will left the residuary portion of his estate to be placed in trust.  The section
of the will establishing the trust stated:

Fifth--All my stocks, bonds, securities, and monies, not covered
above; and any accruing to my estate:  I wish to be placed in
Trust, in the custody of a suitable Bank or Trust Company.

The income from the above Trust, I wish divided in four equal
parts:
Part One - to be reinvested annually for the increase of funds in
the Trust.
Part Two - to be paid quarterly to Elizabeth, my wife.
Part Three - to be paid quarterly to Rachel, my daughter.
Part Four - to be paid quarterly to the direct descendants of my
daughter Constance Parlin Tancredi:
	One half to Robert John Tancredi, my grandson, and
	One half to Nancy Rose Tancredi, my granddaughter.

Sixth--I wish that only the direct descendants of my wife
Elizabeth, and of myself, besides Elizabeth herself, shall share in
the bequests of my estate, or in the income from the Trust:
	A.  When my wife Elizabeth dies, her share of the income
of the trust is to be divided equally between Part Three and Part
Four, above.
	B.  When my daughter Rachel dies, her share in the
income of the trust goes to her direct descendants.
	C.  When one of the Tancredi children dies, that share of
Part Four passes either to his or her direct descendants or to
the other Tancredi child, if there are no direct descendants.
	D.  And so on, following the lines of direct descent, as long
as the Trust may be made to endure.

	[¶6]  Rather than taking pursuant to the will and receiving the benefit
of the trust income, Mr. Moore's widow, Elizabeth, elected to claim her
elective share as permitted by law.{4}  As a result of this election, Rachel and
the two children of Constance Tancredi succeeded to Elizabeth's twenty-five
percent interest in the trust income, with Rachel entitled to receive three-
eighths of the trust income, and the two children, Robert and Nancy, each
entitled to an equal share of a three-eighths interest in the trust income.
	[¶7]  In 1971, the Somerset County Probate Court (Davis, J.)
recognized the trust as valid and appointed the Federal Trust Company of
Waterville, Maine, to serve as trustee.  Through a series of mergers,{5} Fleet
Bank of Maine has become the trustee of the Robert C. Moore Testamentary
Trust.
	[¶8]  On April 21, 1998, alleging that the trust was invalid as violative
of both the rule against perpetuities and the rule against accumulations, the
petitioners-the living heirs to Mr. Moore's estate-filed a petition with the
Cumberland County Probate Court to order the distribution of the trust
corpus.  They argued that the construction of the trust provisions rendered
it void ab initio, and that they were entitled to the trust corpus in
accordance with the percentage of the income they had been receiving from
the trust, i.e., twenty-five percent to Robert J. Tancredi, twenty-five percent
to Nancy Tancredi, and fifty percent to the Estate of Rachel Lopez.  Although
the petitioners demonstrated that they had entered a contractual agreement
with all of the living heirs agreeing to support the petition for distribution,
the court appointed a guardian ad litem to protect the rights of any potential
unborn heirs.{6}  
	[¶9]  On December 31, 1998, the Cumberland County Probate Court
(D. Childs, J.) entered an order stating that the trust did not violate the rule
against perpetuities, but that the provision requiring twenty-five percent of
the income to be reinvested in the trust corpus violated the rule against
accumulations.  Accordingly, the court ordered Fleet Bank to render an
accounting of the income accumulated in the trust from its inception and
then, on approval of the court, to distribute the funds to the beneficiaries.  
In response to this order, Fleet requested report of the issue to this Court to
determine the necessity for and scope of the accounting, if any.  Following a
hearing, the court (W. Childs, J.){7} granted the motion and ordered the issue
reported on March 1, 1999.  On March 15, 1999, the court (W. Childs, J.)
issued a separate order making supplementary findings.

II.  RULE AGAINST PERPETUITIES

	[¶10]  Maine follows the traditional common law rule against
perpetuities that, "no interest is good unless it must vest, if at all, not later
than twenty-one years after some life in being at the creation of the
interest."  Newick v. Mason, 581 A.2d 1269, 1272 (1990).  We have stated
the proper rule of application, with respect to the rule against perpetuities, 
is as follows:

The rule against perpetuities is not a rule of construction, but a
peremptory command of the law.  It is not, like a rule of
construction, a test, more or less artificial, to determine
intention.  Therefore, every provision in a will or settlement is
to be construed as if the rule did not exist, and then to the
provision so construed the rule is to be remorselessly applied. 

 
Gray on Perpetuities § 629 (4th ed. 1942), (identical language from the first
edition was quoted in Andrews v. Lincoln, 95 Me. 541, 544, 50 A. 898, 899
(1901)).

	[¶11]  The common law rule is modified, however, by Maine's "wait
and see" statute, that provides:

In applying the Rule Against Perpetuities to an interest in real or
personal property limited to take effect at or after the
termination of one or more life estates in, or lives of, persons in
being when the period of said rule commences to run, the
validity of the interest shall be determined on the basis of facts
at the termination of such one or more life estates or lives.

33 M.R.S.A. § 101 (1988).{8}  
	[¶12]  While the common law rule remains intact, the consequence of
the application of the "wait and see" statute is that the interests created by
the trust are not tested based on what might have happened from the outset
of the trust, but rather on the facts as they have actually occurred on the
termination of one or more life estates or lives.  Thus, the court will look at
the facts as they are when the life or life estate terminates to determine
whether the succeeding estate will, in fact, vest within the appropriate
period.
	[¶13]  The first issue is whether the Moore Trust created interests
that violate the rule against perpetuities.  The parties debate the meaning of
the ambiguous language of the trust that states Mr. Moore's intent that the
trust shall last, "following the lines of direct descent, as long as the Trust
may be made to endure."  Petitioners argue that this clause indicates an
intent to extend the life of the trust until there are no more descendants to
whom the right to income may pass.  Fleet argues that this clause indicates
an intent that the trust shall endure only so long as interests in the trust
income are legal.  
	[¶14]  To determine the testator's intent, we must consider the
particular language used in light of the instrument taken as a whole.  See
Estate of Worthley, 535 A.2d 433, 435 (Me. 1988).  Where a will may be
subject to one construction that will violate the rule against perpetuities and
one that will not, we will adopt the construction that does not offend the
rule.  See Singhi v. Dean, 119 Me. 287, 289, 110 A. 865, 866 (1920); Towle
v. Doe, 97 Me. 427, 432, 54 A. 1072, 1075 (1903).
	[¶15]  Mr. Moore's requirement that twenty-five percent of the
income be used to fortify the trust corpus removes the likelihood that he
believed the trust would eventually fail for want of assets to support it.  The
will states that the right to income is to pass, "following the lines of direct
descent, as long as the Trust may be made to endure."  (Emphasis added.) 
This clause appears to refer to the legal endurance of the trust.  As such, it
serves to save the trust from violating the common law rule.  See Fitchie v.
Brown, 211 U.S. 321 (1908) (finding savings clause stating an intent that
the testamentary trust for "as long a period as is legally possible" sufficient).
	[¶16]  Alternatively, petitioners assert that when the construction of
the trust is such that it will ultimately fail at some point in the future, i.e.,
the right to a share in the income will eventually vest in a direct descendant
at a point beyond the perpetuities period, the trust is void ab initio. 
However, the rule against perpetuities voids only those interests vesting
beyond the perpetuities period.  The remaining valid interests take effect. 
See W. Barton Leach, Perpetuities In A Nutshell, 51 Harv. L. Rev. 638, 656
(1938).  The failure of the third in a series of interests, for example, does
not invalidate the second so long as the court does not determine that the
invalid interest is so central to the settlor's intent as to essentially defeat
the intended scheme.  See id.	
	[¶17]  Here, the language of the trust's savings clause demonstrates
awareness that the trust would eventually be incapable of validly passing to
the next lineal descendant.  Thus, the eventual vesting of an interest too
remote to satisfy the rule does not defeat settlor's intent with respect to the
valid intervening interests in the right to trust income.  In accordance with
Maine's "wait and see" statute, those interests could pass through several
generations before an invalid interest arises.
	[¶18]  The petitioners also assert that Maine's "wait and see" statute
does not save the Moore Trust because the trust will ultimately fail of its
purpose when it vests too remotely in one of Mr. Moore's direct
descendants.  To support this argument, they rely on Section 1.4, cmt. f, of
the Restatement (Second) of Property.{9}  This section of the Restatement,
states that the "wait and see" doctrine will be applied unless the interest
cannot, in any circumstance, vest within the appropriate period.{10}  
	[¶19]  The future interests contemplated by Mr. Moore do have the
ability to vest within 21 years of the death of the last life in being.  In fact, on
the death of the last life in being, the right to enjoyment of the income will
vest immediately in the next lineal descendant.{11}  This right to enjoy
income could pass to and vest in the next lineal descendant one or more
times during the twenty-one year period after the death of the last life in
being.{12}  Accordingly, the "wait and see" statute does apply to the Moore
Trust, and the validity of the future interests created therein must be
measured at that date in the future when the last life in being dies.{13}
	[¶20]  Petitioners suggest that the trust is void because Mr. Moore
failed to provide for the ultimate disbursement of the trust corpus. 
However, where an express trust fails, either at the outset or subsequently,
and the settlor has not indicated what the disposition of the trust corpus
should be, the trustee shall hold the property on a resulting trust for the
settlor.  See Austin Wakeman Scott, Scott on Trusts § 411 (4th ed. 1989).  In
Maine, on the failure of a trust, where the property cannot be returned to
the settlor because he is deceased, the trustee holds a resulting trust for the
residuary beneficiaries of the settlor's will or his next of kin.  See Haskell v.
Staples, 116 Me. 103, 106, 100 A. 148, 149 (1917).  As Mr. Moore made no
provisions for the residue of his estate, other than the creation of the trust
itself, the will is incapable of disposing of this property when the trust fails,
and the principal will pass according to the rules of intestacy.

III.  RULE AGAINST ACCUMULATIONS

	[¶21]  In Kimball v. Crocker, 53 Me. 263, 272-273 (1865), we last
addressed directly a trust accumulation clause that allowed accumulation of
annual income to the trust without specific limitation and thus for longer
than the twenty-one years of the then governing rule against perpetuities. 
There we held:  

	When the accumulation is for a gross number of years, the
rule against perpetuities prohibits more than twenty-one years. 
Whenever lives in being do not form part of the time of
suspension or postponement, the only period under the rule
against perpetuities is twenty-one years absolute. . . .  The trust
for accumulation is void.  No transgressive trust was ever
sustained for any part of the common law period.  We have no
such statute as that of 39 and 40 Geo. 3, c. 98, commonly
termed the Thelusson Act.  Under that, the excess of
accumulation beyond the period allowed by its provisions have
been held void, and those within its limitations sustained.  But
such is not the common law. 
 
	The annual receipts from the forty thousand dollar fund,
not being allowed to be retained by the trustees, for the purpose
of accumulation, fall into the residue as they accrue.  

Id.  (Citations omitted).  Thus, we declared an unlimited direction to
accumulate income to be void ab initio.
	[¶22]  The Moore Trust accumulation clause states, without reference
to any life in being, that twenty-five percent of the trust income is "to be
reinvested annually for the increase of the funds of the trust."  Thus, in
accordance with Kimball's recognition that the appropriate period is
twenty-one years absolute, the accumulation clause violates the rule against
accumulations.  
	[¶23]  Maine's "wait and see" statute is in derogation of the common
law, and as such, must be narrowly construed.  See Brand v. Seider, 1997
ME 176, ¶ 9, 697 A.2d 846, 849.  Fleet contends that Maine's "wait and
see" statute applies to both the rule against perpetuities and the rule against
accumulations.  However, although the two rules are related, they are
separate rules, as demonstrated by those state statutes that address the rule
against accumulations separately.{14}  Both Fleet and the guardian ad litem
assert that the Court should adopt the approach of the Restatement (Second)
of Property, Donative Transfers § 2.2 (1981), that states an accumulation of
income in a noncharitable trust is "valid until the period of the rule against
perpetuities expires with respect to such trust and any accumulation
thereafter is invalid." In Kimball, however, we expressly rejected this
approach, refusing to adopt the Thelusson Act, that, similar to the
Restatement, provided that accumulations beyond the perpetuities period
would be void, while those within the period would be allowed.  Kimball, 53
Me. at 273.
	[¶24]  Maine's "wait and see" statute was enacted in 1954.  See P.L.
1955, ch. 244.  By then 90 years of trust accumulation clause practice,
including the 1947 will in this case, had been governed by the Kimball
interpretation.  If the legislature intended to include accumulations clauses
within the scope of the "wait and see" statute, it could have so stated.  As
the legislature did not make such an intention clear within the language of
the statute, or in legislative history, we may not adopt such an inference.  To
rule otherwise and effectively add the "wait and see" law to the rule against
accumulations would significantly change more than a century of trusts and
estates practice.  That is an issue more appropriately left to the legislature
to decide.
	[¶25]  Mr. Moore made no provision in his will for the distribution of
the trust corpus or the accumulated income.  Accordingly, all property
contained in an ineffective portion of the trust must be deemed to be held in
a resulting trust on behalf of Mr. Moore's heirs.  See Fitzsimmons v. Harmon,
108 Me. 456, 460, 81 A. 667, 669 (1911).  Thus, that portion of the trust
corpus that the trustee holds as a result of the invalid accumulation must be
disbursed according to the rules of intestacy.
	The entry is:
Judgment of the Cumberland County Probate
Court on report affirmed.  Remanded for
further proceedings as ordered by that Court.
______________________________________