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SUMNEY ESTATE (05/02/67)

SUPREME COURT OF PENNSYLVANIA


decided: May 2, 1967.

SUMNEY ESTATE

Appeal from decree of Orphans' Court of Allegheny County, No. 3202 of 1964, in re estate of Bessie P. Sumney, also known as Besse P. Sumney, deceased.

COUNSEL

Edward A. Witt, with him Michael H. Kowallis, and Witt & DeCello, for appellants.

Lloyd H. Fuge, for appellee.

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

Author: Bell

[ 425 Pa. Page 225]

Dr. Frank F. Sumney died March 20, 1938, leaving a will dated June 20, 1936. He was survived by his widow, Bessie*fn1 and by Weir M. Sumney,*fn2 Janet S. McMullen and Ruth Hughes, three children by a former marriage.

[ 425 Pa. Page 226]

In President Judge Boyle's adjudication, he decided that (as to the stocks and assets in dispute) Bess bore the relationship of trustee to the remaindermen under Dr. Sumney's will. Judge Boyle rejected the contention that Bess's relationship to the remaindermen was that of a debtor-creditor relationship. Exceptions to this adjudication were dismissed by the Orphans' Court en banc. Bess's nephews and nieces who were legatees of two-thirds of her residuary estate have appealed.

The basic questions involved raise the issue (1) whether under Dr. Sumney's will his widow was a trustee of his residuary estate or occupied toward his three children who were his remaindermen the relationship of debtor-creditor, and (2) if the latter, did the widow and testator's three children agree that she held testator's residuary estate as trustee for all of them, and thus abandon whatever claim she had to the relationship of debtor-creditor?

The facts are so important and so unusual that we believe they should be recited at length. Moreover, the two issues are so interrelated in this case that we shall have to discuss all the facts in chronological order.

The dispositive clauses of Dr. Sumney's will are as follows:

"I. I leave to my wife, Bess Sumney, all my real estate and personal property of which I may die possessed or which may accrue to my estate in the future to have and to hold during her life or while she may remain my widow.

"II. At her death or remarriage, all of said property shall revert to my children*fn3 by marriage to my first wife with the sole exemption of one thousand $1,000 which shall be paid to my grandson, Frank F. Sumney, Jr., son of Weir M. Sumney."

[ 425 Pa. Page 227]

Bess qualified as administratrix c.t.a. She also elected timely to take under the will. The estate consisted of personalty appraised at $10,610.70, and realty appraised at $6,075. Several years later Bess filed her account (of personalty only) as such administratrix.*fn4 This account showed a balance for distribution of $7,202.98 consisting of stock appraised at $6,312 and other personal property.

On February 23, 1939, the account came on for audit before Judge Mitchell. All parties in interest had actual notice of the audit. The audit statement (Petition for Distribution) included the following averment: "(m) The balance for distribution is made of stock listed, numbered and appraised, fully set out in the Inventory and Appraisement herewith filed and made part hereof and being the original and identical shares left by the decedent, the income there from payable to Bess Sumney, widow, for life or widowhood."

At this audit, Bess's attorney informed the Court that the will gave Bess an estate for life or during widowhood and suggested to the Court that the stocks (which comprised almost all of the estate) "would be decreed back to her and a bond given."

On March 7, 1939, a Decree was entered confirming the account and including in the Schedule of Distribution this award: "To Mrs. Bess Sumney, widow, Trustee for purposes specified in the Will, balance viz; upon filing bond in the sum of $14,000 . . ." (Then follows a list of shares of stock and other personal property of a value of $7,147.77.)

[ 425 Pa. Page 228]

Family Agreements

On March 22, 1939, all of the parties in interest, namely, testator's widow and his three children, entered into a family agreement, by the terms of which (1) they divided between them certain shares of stock which they considered to be of no value, and (2) further agreed that J. M. Hughes and Weir Sumney should be released from liability on: (a) judgment note of J. M. Hughes ($660) and (b) promissory note of J. M. Hughes ($335) and (c) judgment note of Weir Sumney ($261).

On May 25, 1939, Bess and all the residuary legatees signed another agreement*fn5 waiving for a period of three years the requirement in the Court's Decree that Bess should file a bond in the amount of $14,000.

On July 17, 1947, Bess filed in her husband's estate an account styled "First Account of Mrs. Bess Sumney, Trustee."

The "Audit Statement" (Petition for Distribution) presented at the audit of this account on September 22, 1947, was signed by Bess Sumney, Trustee, and included and had attached thereto a copy of the aforesaid Family Agreement of May 25, 1939. Furthermore, at the audit Bess Sumney testified as follows: "Q. You are Mrs. Bess Sumney? A. I am. Q. And did you file

[ 425 Pa. Page 229]

    an account as administratrix d.b.n. in this estate eight or nine years ago? A. I did. Q. It was audited? A. Yes. Q. Now, you are filing your first account as trustee in the estate of Frank Sumney? A. I am."

On September 25, 1947 a decree was entered confirming the trustee's first account and distributing the balance shown by the account and audit, as follows:

"To Mrs. Bess Sumney, Trus-

     tee in trust for purposes

     specified in will, balance per

Account, viz: Stocks,*fn6 pres-

     ent value 5332.77

Cash, 10.80 5343.57"

Bess died on July 3, 1964, testate. She had never remarried. Letters testamentary were granted to the Western Pennsylvania National Bank. By her will dated April 29, 1960, after specific devises of her own real estate and a specific bequest of an automobile, she bequeathed the residue of her estate (a) two-thirds to her own nieces and nephews and (b) one-third to the three children of her husband by his first marriage.

On August 6, 1965, the Bank as executor of Bess's estate filed its first and final account showing a balance of personalty for distribution of $35,159.49. At the time of the audit of this account, two of Dr. Sumney's children were still alive, but one daughter, Mrs. Janet McMullen, had died January 31, 1964 (before the death of her stepmother). At the audit of this account divergent claims were presented by Dr. Sumney's two living children*fn7 on the one hand, and (on

[ 425 Pa. Page 230]

    the other hand) by Bess's nephews and nieces because of the inclusion by Bess's executor in its account in her estate of the same stocks which had been awarded to Bess as trustee in the Court's Decree of March 7, 1939 and its Decree of September 25, 1947 in her husband's estate. As a result of stock splits, stock dividends and increases in market value, these same stocks were worth far more in 1947 than their appraised value at the time of Dr. Sumney's death, at which values they had been awarded to Bess as trustee in her aforesaid accountings in 1939 and in 1947.

The parties stipulated that as of the audit of Bess's estate, these stocks had an aggregate market value of $20,958.22.*fn8

This Court has had occasion recently to consider the legal relationships which may arise out of a bequest of what is commonly known as a legal life estate in personalty. Purnell Estate, 424 Pa. 263, 226 A.2d 488; Moltrup Estate, 424 Pa. 161, 225 A.2d 676; Gramm Estate, 420 Pa. 510, 515, 218 A.2d 342. See also Lyman Estate, 366 Pa. 164, 76 A.2d 633.

Where a legal life estate was given to a life tenant (usually a widow) without power of consumption, the general rule was thus stated in Purnell Estate, 424 Pa., supra (page 266): ". . . where a legal life estate in personalty was bequeathed with remainder to others, and with no power of consumption given to the life tenant, a life tenant could receive absolutely and as her own, all [emphasis in original] the property of which the testator gave her a life estate, thereby creating merely a debtor-creditor relationship between herself and the remainderman for the value of the property she actually

[ 425 Pa. Page 231]

    received at the date of distribution. This amount, and only this amount, was payable to the remainderman upon the death of the life tenant. Kirkpatrick's Estate, 284 Pa. 583, 131 Atl. 361; Weir's Estate, 251 Pa. 499, 96 Atl. 1086; Letterle's Estate, 248 Pa. 95, 93 Atl. 935; Reiff's Appeal, 124 Pa. 145, 16 Atl. 636. We find no testamentary language in Ansby's [Ansby Purnell's] will which shows an intent to create a different relationship or result."

At the time Dr. Sumney signed his will and at the date of his death this was a well established although artificial rule of construction. However, this rule was subject to the paramount rule that the intent of the testator must prevail, unless it is unlawful. Schappell Estate, 424 Pa. 390, 227 A.2d 651; Moltrup Estate, 424 Pa., supra; Purnell Estate, 424 Pa., supra; Wachstetter Will, 420 Pa. 219, 216 A.2d 66; Hoover Estate, 417 Pa. 263, 207 A.2d 840; Houston Estate, 414 Pa. 579, 586, 201 A.2d 592; Lyman Estate, 366 Pa., supra. These cases reiterate the well established guidelines which enable a Court to ascertain and determine a testator's intent, and are so recent that quotations therefrom are unnecessary.

We believe that an examination of Dr. Sumney's will makes clear his intention that all his residuary estate shall "revert" to, i.e., go back to, his children by his first marriage. Thus by necessary implication Dr. Sumney (1) gave his wife, not an absolute estate or fee in the residuary estate which he left her for life or widowhood, but only, as he said, an estate for life or widowhood therein, and (2) gave all his aforesaid residuary estate with all its increases or decreases in value to his children by his first wife. Our interpretation of the gifts in Dr. Sumney's will and his intent as disclosed therein is exactly the interpretation and agreement which was twice made by Dr. Sumney's

[ 425 Pa. Page 232]

    belong to Dr. Sumney's children, and that Bess's gift to her nephews and nieces of two-thirds of these stocks (together with all their increments) was invalid.

We have considered all the contentions of the appellants and find no merit in any of them.

Decree affirmed, each party to pay own costs.

Disposition

Decree affirmed.


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