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NEVIL ESTATE (03/28/51)

March 28, 1951

NEVIL ESTATE


Appeal No. 29, Jan. T., 1951, from decree of Orphans' Court of Delaware County, June T., 1931, No. 22, in Estate of George W. Nevil, Deceased. Decree affirmed; reargument refused April 16, 1951.

COUNSEL

Harry J. Alker, Jr., with him A. B. Geary, William F. X. Keoghan and Geary & Rankin, for appellant.

Robert W. Beatty and Butler, Beatty, Greer & Johnson, for Trustee, appellee.

Ralph L. Lindenmuth, with him George E. Kearns, Jr., and Lindenmuth & Class, for Trustee ad litem, appellee.

Before Drew, C.j., Stern, Stearne, Jones, Bell, Ladner and Chidsey, JJ.

Author: Stern

[ 367 Pa. Page 31]

OPINION BY MR. JUSTICE HORACE STERN

Decedent, George W. Nevil, a man of considerable means, died in 1930. By his will he bequeathed sums of money to various friends and charities, -- fourteen gifts in all. He then disposed of his residuary estate as follows: "I give and bequeath all the rest, residue and remainder of my estate... to my Executors and Trustees hereinafter named, In Trust Nevertheless, to invest the same and keep the same invested, and after deducting the proper charges against the said trust estate and a reasonable compensation for their services, to pay out of the net income thereof as follows: -- (1) To Mary A. Kelly the sum of Seven Thousand Dollars monthly so long as she shall live free and clear of any and all her debts, contracts or engagements, and after her death the principal of the said estate, upon which she has been receiving the said monthly sum, shall become a part of my residuary estate. (2) To establish and maintain an Asylum for the deaf, dumb or blind to be known as the 'Nevil Asylum for the Deaf, Dumb or Blind', the said net income to be allowed to accumulate until (it) reaches a sum sufficient, in the judgment of the Executors and Trustees, to establish and maintain such asylum and the support of the same thereafter to be paid out of the income."

[ 367 Pa. Page 32]

After appointing Dimner Beeber and the Girard Trust Company as executors and trustees and giving them authority to invest in non-legal securities, he provided as follows: -- "All the bequests, legacies and devises herein contained are to be free from any and all taxes lawfully imposed or to be imposed by the United States Government or any State Government or any Municipal authority thereof, which taxes are to be paid by my estate."

The question here involved arises under the last quoted provision. Mary Kelly, who subsequently married and became Mary K. Ellis and was later divorced, now contends that the bequest to her of $7,000 monthly so long as she should live was to be free, not only of the estate and transfer inheritance taxes ordinarily provided for in a will, but also of her annual income taxes during the entire period of her life. Decedent was a bachelor and 84 years old at the time of his death. His housekeeper had brought over from Ireland a niece, Mary Kelly, then but a young child, who continued to live in decedent's household for about 25 years before his death; during his lifetime he had deeded to her his two valuable residential properties, one in Haverford and one in Ventnor, New Jersey. At the time of decedent's death she was 31 years of age with a life expectancy of about 40 years. Dimner Beeber having died several months prior to the death of decedent the Girard Trust Company, as surviving executor and trustee, has regularly paid her the $84,000 a year out of the income of the trust; it filed its first account as trustee in 1935 and its second account in 1939, both of which were duly audited, but at neither time was any claim made by her that the estate was obliged to pay her income taxes. That claim was made for the first time when the third account of the trustee was filed and audited in 1946; she then demanded that

[ 367 Pa. Page 33]

    she be reimbursed by the trustee for the income taxes theretofore imposed upon her by reason of her receiving the monthly payments of $7,000, and that the estate should pay such income taxes thereafter. She explained that her delay in making this claim was due to the fact that during the first years of the trust the investments had been largely in municipal securities and her income taxes were therefore comparatively small, but later on the trustee invested in ...


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