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MAURICE ESTATE (01/15/69)

decided: January 15, 1969.

MAURICE ESTATE


Appeal from decree of Orphans' Court of Bradford County, April T., 1964, No. 9, in re estate of Margaret Stewart Maurice, deceased.

COUNSEL

Donald Reuter, with him Duvall & Reuter, for appellants.

Robert J. Murphy, with him Bennett, Davis & Murphy, for appellee.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Jones. Mr. Justice Musmanno did not participate in the decision of this case.

Author: Jones

[ 433 Pa. Page 105]

Margaret Stewart Maurice (decedent), a Bradford County resident, died testate on December 25, 1958. Citizens National Bank and Trust Company, Towanda, was named as Executor under decedent's last will and testment. Decedent's estate was valued at approximately $900,000.00.

On March 22, 1960, the Executor filed the Federal Estate Tax return and paid the tax which it estimated. Approximately two years and four months later -- July 20, 1962 -- the United States Government assessed a tax deficiency against the estate and this deficiency was paid on September 5, 1962.

On May 21, 1964, a conference was held between counsel for the Executor and counsel for the present appellants, the testamentary residuary legatees, at which the latter outlined in detail for counsel for Executor an error made by the Executor in the Federal Estate Tax return. This error, it was claimed, was caused by the failure of the Executor to claim credit in said Estate Tax return for a tax previously paid on prior transfers from the Marion Maurice*fn1 Estate, Marion Maurice having predeceased decedent by approximately three and one-half years.

Thereafter, on July 9, 1964, the Executor claimed a Federal Estate Tax refund. The Executor was successful in recovering $6,934.14 of an overpayment of tax because the statute of limitations had not barred a recovery against the deficiency assessment which it had paid. However, the bulk of the Executor's claim

[ 433 Pa. Page 106]

    for a refund was denied because the statute of limitations had run.

When the Executor filed its Second and Final Account, later amended, the appellants filed exceptions thereto, only one of which was pressed before the court below and only one of which is now before us. The appellants excepted to the account claiming that, by reason of the Executor's failure to claim an allowance of credit for tax previously paid on the prior transfers in the Marion Maurice Estate, an overpayment of Federal Estate Tax in the amount of $17,215.28 was made. For this overpayment and resultant loss to the estate the appellants claimed the Executor should be surcharged.

When the matter came before the Orphans' Court of Bradford County, the parties entered into a stipulation, the salient portions of which are as follows: (1) that a loss to decedent's estate in the amount of $17,215.28, with interest from March 22, 1960, resulted from the Executor's overpayment of the federal estate tax; (2) that this error was called to the attention of counsel for the Executor on May 21, 1964; (3) that the Citizens National Bank and Trust Company and its counsel had acted as Executor and counsel respectively for both the estates of Marion Maurice and the present decedent; (4) that, during their lifetimes, Marion and Margaret Maurice had engaged the services of LaBarr, accountants and tax consultants, and that LaBarr and LaBarr acted not only for them during their lifetimes but were also retained by the Executor to act in connection with their estates; that, in connection with the instant decedent's estate, LaBarr and ...


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