Schreiber v. Kellogg

Rodman Wanamaker died in 1928 leaving a $120 million spendthrift trust for his children. The trust said it would also provide for their descendants “subject to the provisions herein contained.” Other sections created a detailed distribution scheme and likewise referred back to and incorporated earlier provisions. In the 1970s, Rodman’s great-grandson and trust beneficiary Christopher Kellogg (defendant) hired attorney Palmer Schreiber (plaintiff) to negotiate a sale of trust stock. After completing the sale, Schreiber filed a surcharge action on Kellogg’s behalf against the trustees alleging negligence, mismanagement, and breach of fiduciary duties. The trustees settled by agreeing to hold regular meetings, make information available to the beneficiaries, and fix a retirement age for trustees. Kellogg agreed to pay Schreiber an $80,000 fee but failed to do so. Schreiber sued, obtained judgment for over $500,000 in fees and interest, and attempted to execute on Kellogg’s interest in the spendthrift trust to collect. The court refused, reasoning the spendthrift protection extended to great-grandchildren and that Pennsylvania courts would not apply a Restatement (Second) of Trusts exception for services that preserve or benefit a trust beneficiary’s interest. Schreiber appealed, arguing the exception should apply and that his services either benefited or were a good-faith effort to benefit Kellogg