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PRATT ESTATE (06/27/66)

decided: June 27, 1966.


Appeal from decree of Orphans' Court of Montgomery County, No. 63,893, in re estate of Leonard C. Pratt, deceased.


Samuel H. High, Jr., with him High, Swartz, Roberts & Seidel, for appellant.

Walter Schachtel, with him Kiefer N. Gerstley, and Einhorn & Schachtel, for appellee.

Lloyd A. Good, Jr., with him Donald A. Gallager, and Jacoby & Maxmin, for appellees.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Chief Justice Bell. Dissenting Opinion by Mr. Justice Cohen. Dissenting Opinion by Mr. Justice Eagen.

Author: Bell

[ 422 Pa. Page 448]

Elizabeth M. Pratt, testator's second wife, appeals from the final decree of the Orphans' Court, dismissing exceptions to an adjudication which confirmed the account of the executors of the will of Leonard C. Pratt.

Pratt died testate on March 30, 1963, leaving a will dated November 29, 1956. Three months prior to his will, Pratt and his first wife, Grace W. Pratt, entered into a property settlement agreement. In paragraph 3 of this agreement, Pratt, in discharge of his duty of maintenance and support, agreed that during his wife's life, or until she should remarry, he would pay her specified sums of money semi-monthly, plus additional amounts based upon his annual income.

[ 422 Pa. Page 449]

The parties further agreed in and by paragraph 5 of said agreement: "5. Husband further agrees that he will specifically provide in his Last Will and Testament effective upon the date of his death that the said Grace W. Pratt, herein referred to as Wife, shall receive one-third*fn1 (1/3) of his gross estate, including life insurance policies covering Husband's life, less the costs of administration debts and State and Federal Transfer Inheritance, Succession and Estate Taxes, or any other taxes in the nature thereof, all computed and paid on the entire estate and to be first deducted in computing the 1/3 interest of wife in the remainder. The acceptance of said share of Husband's estate by Wife shall be in complete release and acquittance of Page 449} any and all obligations on the part of Husband's estate to pay the sums stipulated in Paragraph 3 hereof."

After the execution of this property settlement agreement, Pratt was divorced by Grace W. Pratt and married the appellant. Pratt in the third paragraph of his will pertinently provided: "In fulfillment of the obligation I have assumed under Paragraph 5 of the Property Settlement between Grace W. Pratt and me, dated the 30th day of August A.D. 1956, I give, devise and bequeath*fn2 one third of my gross estate, as determined after deducting therefrom the costs of administration, debts due by me at the time of my death, State and Federal Transfer Inheritance, Succession and Estate Taxes, absolutely and in fee simple."

Pratt's second wife Elizabeth elected to take against his will, and at the audit of the account of his executors claimed her intestate share of her husband's estate. Elizabeth's intestate share would of course be ascertained after the deduction (inter alia) of the claims of Pratt's creditors from his testamentary estate.

The Orphans' Court decided that, under the provisions of the property settlement between Pratt and Grace, his first wife, and under the provisions of his will, (1) Grace was entitled to receive one-third of the testator's gross estate less enumerated deductions, as a creditor and not as a legatee, and (2) that the gross estate to which Grace was entitled was testator's " gross estate as determined for purposes of Federal Estate tax."

In this appeal, Elizabeth challenges each of the Court's aforesaid conclusions or rulings.

The decree of the Orphans' Court, for reasons hereinafter stated, must be affirmed.

[ 422 Pa. Page 450]

Grace was a Creditor

The law is well settled that where a testator in his will gives specified property or a share of his estate in exact or substantial compliance with the terms of his obligations under an inter vivos property settlement (or separation) agreement made with his wife, that wife is a creditor of his estate and not a legatee under his will. Mills Estate, 367 Pa. 504, 80 A.2d 809. Cf. also, Neller Estate, 356 Pa. 628, 53 A.2d 122; Brown's Estate, 340 Pa. 350, 17 A.2d 331; Mahoney Estate, 356 Pa. 358, 52 A.2d 328; Coane's Estate, 310 Pa. 138, 165 Atl. 2; Bowman v. Knorr (No. 1), 206 Pa. 270, 55 Atl. 976. These cases in principle control and rule this case and sustain the decision of the Orphans' Court that Grace is a creditor and not a legatee.

While few, if any, wills have a twin brother, Mills Estate, 367 Pa., supra, is factually close and in principle controlling.

In Mills Estate the husband and wife entered into a written separation agreement in which the husband agreed (a) to make specified monthly payments in recognition of his duty of support and (b) to leave her in and by his will all his estate. Thereafter the parties were divorced, but the testator continued making the specified monthly payments until his death. He left a will which pertinently provided: "Item 3: I give and bequeath my entire estate to Anna Irene Mills. This bequest is made in accordance with a certain agreement entered into between Anna Irene Mills and myself dated May 17, 1946."

The Commonwealth contended that this was a legacy which was subject to inheritance tax. We rejected this contention and held that if the debt was "contracted bona fide and for an adequate and full consideration in money or money's worth," Anna Irene ...

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