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DUNCAN TRUST (07/24/67)

decided: July 24, 1967.

DUNCAN TRUST


Appeals from decree of Orphans' Court of Washington County, No. 373 of 1963, in re trust estate of Anne A. Duncan, deceased.

COUNSEL

William C. O'Toole, with him Richard DiSalle, G. Ashton Brownlee, and Barley and O'Toole, for appellants.

Thomas L. Anderson, for appellee.

Bell, C. J., Musmanno, Jones, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Jones. Mr. Justice Cohen took no part in the consideration or decision of this case. Dissenting Opinion by Mr. Justice Roberts.

Author: Jones

[ 426 Pa. Page 284]

This is an appeal from a decree of the Orphans' Court of Washington County dismissing exceptions to its adjudication which allowed reformation of a deed of trust of Anne A. Duncan. The facts surrounding the present controversy are as follows:

Anne A. Duncan (Settlor), executed a revocable deed of trust on August 19, 1935 wherein her son-in-law, Walter H. Baker (Baker), and the Union National Bank of Pittsburgh (Union) were named trustees. This particular trust created by Mrs. Duncan was designated by her as the "Baker Trust" since its benefits ran primarily to her daughter -- Amy -- who had married Walter H. Baker.*fn1 Under the original terms of the "Baker Trust", Settlor provided for the following scheme of disposition: (a) during her lifetime, Settlor was to receive all of the income; (b) at her death, the income was payable to her daughter -- Amy Duncan Baker (Amy) -- for life; (c) at Amy's death,

[ 426 Pa. Page 285]

    the income was payable to Settlor's granddaughter -- Anne Baker Weimer (Anne) -- for life; (d) at Anne's death, the income was payable to her (Anne's) issue, with the further provision that as each issue reached age 35, the trust terminated as to such issue and he or she received an appropriate share of corpus outright; and (e) issue born to Anne after Settlor's death were to be placed on the same footing as issue born prior thereto.

Settlor amended the "Baker Trust" on two occasions. The purpose of the first amendment, executed on December 10, 1936, was to eliminate a disparity which had occurred in the value of the trust for her son and daughter; to eliminate this disparity, the amendment transferred funds from the "Baker Trust" to the "Duncan Trust". In addition, the first amendment to the trust gave Settlor the express power to revoke and/or amend the original instrument.

On January 4, 1941, Settlor executed a second amendment to the trust and it is this amendment which is the subject of the present litigation. Prior to January 4, 1941, Baker approached Smith W. Whitworth, a member of the Bar and a Trust Officer of Union, and informed him that the Settlor wished to amend the "Baker Trust". Baker informed Mr. Whitworth of Settlor's intentions and asked that Whitworth prepare an amendment to the trust to comply with Settlor's alleged wishes. At this point, it should be noted that Whitworth, although involved with the creation of the original trust, was not the scrivener of the original instrument but was the scrivener of both the first and second amendments; whether or not Baker or the Settlor submitted his drafts of either the first or second amendments to private counsel is unknown. After receiving instructions from Baker, Whitworth drafted an amendment and forwarded it to Baker, not to Settlor. On January 4, 1941, Baker returned the draft of the

[ 426 Pa. Page 286]

    second amendment -- which Mrs. Duncan had already executed -- to Whitworth who filed it with other trust papers. At no time did Whitworth ever talk to the Settlor about the second amendment. All of his discussions concerning the contents of the amendments and Settlor's intentions were with Baker, his co-trustee.

In the "Whereas" clause of the second amendment, there was a recital that the death of her son, James E. Duncan, Jr., was the reason for the amendment. Although the recital of the purpose of the amendment states such reason, Mr. Duncan's death was completely irrelevant and immaterial insofar as the subject matter of the amendment was concerned and the purpose of the amendment would be the same if he were living or dead. The amendment of January 4, 1941 dealt only with Article I of the "Baker Trust", and it departed drastically from the dispositive scheme set forth in the original trust agreement.

It will be recalled that the original instrument gave the remainder interest in the trust, after the death of the various life tenants, to the issue of Anne Baker Weimer, that the issue were to take free of trust when they attained age 35, and that the original contained a provision that issue born after the Settlor's death would share equally with those issue born before her death. The disposition of the remainder interest in the trust was changed by the second amendment as follows: (a) at the death of Anne Baker Weimer -- the last of the life tenants -- the trust was to be divided into two equal parts -- one for each of the Settlor's thenliving great granddaughters -- Amy Anne Weimer and Julia V. Weimer; (b) the two shares were to be held in trust with income ...


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