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ESTATE IDA J. DULLES (07/02/81)

SUPREME COURT OF PENNSYLVANIA


decided: July 2, 1981.

ESTATE OF IDA J. DULLES, DECEASED. APPEAL OF FRANK WILLIAM HARRISON DULLES, ET AL., NO. 98. APPEAL OF GIRARD BANK, TRUSTEE, NO. 103. APPEAL OF GLORIA DEAN DULLES, NO. 104

Nos. 98, 103, 104 January Term, 1979, Appeal from Final Decree of the Court of Common Pleas of Philadelphia, Orphans' Court Division, dated February 13, 1979, at No. 1123 of 1951.

COUNSEL

John R. Suria, John F. Meigs, Maurice D. Lee, III, Martha R. Hurt, Philadelphia, for appellant in No. 98.

William C. Bullitt, David W. Maxey, Cuthbert H. Latta, Philadelphia, for Gloria Dean Dulles.

Minturn T. Wright, III, Robert L. Freedman, Louisa Smith Mygatt, Philadelphia, for Girard Bank.

Roberts, Justice. O'Brien, C. J., concurs in the result.

Author: Roberts

[ 494 Pa. Page 183]

OPINION OF THE COURT

This is a dispute among the three grandchildren of settlor Ida J. Dulles, as well as settlor's trustee, concerning the right of one of the grandchildren, born out of wedlock, to receive income from settlor's trust. The Orphans' Court Division of the Court of Common Pleas of Philadelphia held that the grandchild born out of wedlock has been entitled to share trust income equally with the other two grandchildren since December 25, 1971, when, under the terms of the trust, the exclusive right of settlor's "grandchildren" to trust income commenced. We hold that, although all three grandchildren are to share future trust income equally, on this record the grandchild born out of wedlock may recover only the amount of past trust income which settlor's trustee, by stipulation of the parties, has reserved pending final adjudication of the claims of the grandchild born out of wedlock. Accordingly, the decree is modified and, as modified, affirmed.

I. Background

Settlor died on November 7, 1949, leaving a will dated July 22, 1943, and several codicils, the last dated May 13, 1949. The will and codicils were drafted with the assistance of counsel. By paragraph SEVENTH of the will, settlor placed her residuary estate in trust. The trust is active, and is to remain so until twenty-one years after the death of the last of settlor's "descendants" born in settlor's lifetime.

Settlor directed her trustees to pay income from the paragraph SEVENTH residuary trust to her son, Harrison Dulles, for his life. Additionally, settlor directed that, during her son's life, trust income was to be paid to those grandchildren who had reached the age of twenty-one. For the period when the eldest of settlor's grandchildren was between the ages of twenty-one and twenty-five, those grandchildren who had reached the age of twenty-one were to share equally in ten percent of trust income. For the period when the eldest was between twenty-five and thirty-five, those grandchildren over twenty-one were to share

[ 494 Pa. Page 184]

    fifteen percent of the income. Settlor further provided that, upon the death of her son, "my grandchildren will share in the income under the next succeeding paragraph." That paragraph provides:

"(c) Upon the death of my said son, until the termination of the Trust, to pay over the balance of the net income, quarter-yearly, to and among my descendants living at such times of quarterly distribution, share and share alike, per stirpes, upon the principle of representation."

Harrison Dulles was the father of three children, Frank Dulles, Gloria Dulles, and Florence Dulles. Frank Dulles was born in 1940 of Gweneth Dulles, Harrison Dulles' first wife. Gloria Dulles was born in 1944, out of wedlock, of Marguerite Bonnarde. Florence Dulles was born in 1959, of Clelia Dulles, Harrison Dulles' second wife. (Harrison Dulles and his first wife had been divorced in 1949.)

A fourth child, Henry Dulles, was born in 1944 of Harrison Dulles' first wife. However, by codicil to her will, settlor limited participation of the first wife's children to Frank Dulles. Although settlor specified no reason for this limitation, it appears that settlor shared her son Harrison Dulles' belief, expressed by will, that he was not Henry Dulles' father.

In 1961, settlor's eldest grandchild, Frank Dulles, reached the age of twenty-one. Settlor's trustees filed an account in 1962 and, upon confirmation, Frank Dulles began to share trust income with his father. No similar allocation of trust income was made in 1965, when Gloria Dulles, settlor's grandchild born out of wedlock, reached twenty-one. Frank Dulles thus was the sole grandchild of settlor to share trust income with settlor's son.

Settlor's son Harrison Dulles died on December 25, 1971, leaving a will dated March 5, 1956. In his will, Harrison Dulles acknowledged that Gloria Dulles was his daughter. In May of 1972, trustees of settlor's trust filed an account covering the period since the 1962 accounting. The trustees proposed to distribute trust income exclusively to Frank

[ 494 Pa. Page 185]

Dulles and Florence Dulles, settlor's grandchildren born in wedlock. Although the trustees recognized the existence of Gloria Dulles, they maintained that she was barred from sharing in trust income by existing "canons of construction," then contained in Section 14(7) of the Wills Act of 1947, Act of April 24, 1947, P.L. 89, as amended, formerly 20 P.S. § 180.14(7). Section 14(7) provided that, absent an expression of intent to the contrary,

"in construing a will making a devise or bequest to a person or persons described by relationship to the testator or to another, a person born out of wedlock shall be considered the child of his mother and not of his father . . . ."*fn1

It appears that the trustees nevertheless began to reserve a portion of trust income against the possibility that Gloria Dulles might be entitled to share in the trust.

[ 494 Pa. Page 186]

Acting on the representation that Gloria Dulles had been given notice of the audit, and had failed to appear, the auditing judge (Saylor, J.) by nisi adjudication dated December 14, 1972, concluded that Gloria Dulles and her issue were "precluded by the Statute [(section 14(7))] as descendants of testatrix, and that they [had] no interest in either the income or principal of the trust." However, the parties agree that Gloria Dulles was not given notice of the audit and that the auditing judge was erroneously informed to the contrary.

Following the nisi adjudication, the trustees discontinued the practice of holding trust income on behalf of Gloria Dulles, and commenced to distribute trust income exclusively to Frank Dulles and Florence Dulles. Gloria Dulles did receive a share of the estate of her father Harrison Dulles, who had provided for her by his will. Harrison Dulles' will specifically excluded Frank Dulles, "because he has been amply provided for by the will of my mother . . . ."

In May of 1974, after learning of settlor's trust for the benefit of "grandchildren," Gloria Dulles advised surviving trustee Girard Bank that she believed she was entitled to trust income. Although the record does not reflect the precise scope of the claim asserted, it does indicate that in June of 1974 Girard Bank began to place one-third of trust income in reserve pending disposition of Gloria Dulles' claim. In November of 1974, Girard Bank filed an account for the two-year period since its previous account had been confirmed. Girard proposed to continue to exclude Gloria Dulles from trust income, on the basis of the same "canon of construction" relied upon in the previous accounting.*fn2 Gloria Dulles took the position that this canon was unconstitutional.*fn3 An evidentiary hearing followed, at which Gloria Dulles proved to the satisfaction of the auditing judge

[ 494 Pa. Page 187]

(Silverstein, J.) that she had not received notice of the previous audit.

In November of 1976, the auditing judge confirmed the account nisi and rejected Gloria Dulles' constitutional challenge. The auditing court also held that, even if the canon of construction were constitutionally infirm, the canon had no application. According to the auditing judge, settlor's exclusion of Henry Dulles, son of Harrison Dulles' first wife but apparently not the son of Harrison Dulles, established that settlor did not intend children born out of wedlock to share in trust income. Gloria Dulles filed timely exceptions alleging error in the "fail[ure] to award [her] one-third of the income . . . ."

On April 26, 1977, before Gloria Dulles' exceptions were decided, the Supreme Court of the United States decided Trimble v. Gordon, 430 U.S. 762, 97 S.Ct. 1459, 52 L.Ed.2d 31 (1977). Trimble held unconstitutional as violative of equal protection a state intestacy statute which excluded a child born out of wedlock from participation in the estate of the child's father, even though the father had acknowledged paternity. On September 12, 1977, in light of Trimble, the orphans' court en banc dismissed Gloria Dulles' exceptions without prejudice and referred the matter to the auditing judge for further consideration.

On December 29, 1977, while the matter was under further consideration, Gloria Dulles filed a petition pursuant to 20 Pa.C.S. § 3521, seeking review of the 1972 nisi adjudication entered on the accounting following Harrison Dulles' death. The petition alleges that, because Gloria Dulles was not given notice of the audit, the adjudication is not binding on her. Thus the petition claims that, under the terms of the trust in effect while settlor's son was still living, trustees should have paid Gloria Dulles a portion of trust income as early as 1965, when she had reached the age of twenty-one. The petition also restates Gloria Dulles' claim to a one-third share of trust income since her father's death. Although preliminary pleadings followed, no responsive pleadings were filed. The proceedings have been continued pending the outcome of this appeal.

[ 494 Pa. Page 188]

On July 27, 1978, the auditing judge entered a supplemental adjudication affirming the previously-entered nisi adjudication. Trimble was distinguished primarily on the ground that, by her will, settlor "did not intend any illegitimate offspring of her children or grandchildren to take a share in her estate." Exceptions of Gloria Dulles to this adjudication reiterated the claim of error in the failure to award her one-third of the trust income. The exceptions also included the contention presented in the intervening petition for review, that Gloria Dulles has been entitled to a portion of trust income since 1965, when she reached twenty-one.

On October 12, 1978, the parties entered into a stipulation concerning the allocation of trust income during the remainder of litigation. The parties agreed:

(1) Girard would continue to make provision for Gloria Dulles' original claim by holding a one-third share of trust income, as it had done since June of 1974, one month after the claim was asserted;

(2) Girard would hold an additional one-sixth share of trust income, a practice begun in February of 1978, to cover any trust income to which Gloria Dulles might be entitled between 1965 (when she reached twenty-one) and 1971 (her father's death), as well as between 1971 and June of 1974 (when Girard began to hold one-third of trust income); and

(3) The remaining income would be paid to Frank Dulles and Florence Dulles.

By final decree dated February 13, 1979, a majority of the Orphans' Court Division sustained Gloria Dulles' exceptions making claim to one-third of the income earned after December 25, 1971, the date of Harrison Dulles' death. Judge Klein, joined by Judges Gutowicz and Bruno, rejected the auditing judge's assessment of settlor's intent. Judges Klein, Gutowicz, and Bruno believed that settlor's exclusion of Henry Dulles indicates that settlor "was more interested in favoring her blood line than she was in any formal legal presumption of legitimacy." Turning to the canon of construction embodied in section 14(7) of the Wills Act of 1947,

[ 494 Pa. Page 189]

    later codified at 20 Pa.C.S. § 2514(8), Judge Klein relied on Trimble and concluded:

"It seems to follow logically that if the state cannot discriminate against a child born out of wedlock in a case of intestacy it is also barred from such discrimination if it seeks to control the method of distribution of the estate of a decedent who died testate, unless the statutory classification bears some rational relationship to a legitimate state purpose. In our opinion, Section 14(7) of the Wills Act of 1947 and Section 2514(8) of the Probate, Estates and Fiduciaries Code, mandating an interpretation of a will which discriminates against an illegitimate child by regarding him as the child of his mother and not of his father, do not bear any rational relationship to a legitimate state purpose and are therefore constitutionally infirm to the same degree as the statute dealing with intestate succession."

29 Fiduc.Rep. 141, 149-50 (1979) (footnote omitted). As to Gloria Dulles' exceptions seeking income from 1965 to 1971, the Orphans' Court Division dismissed without prejudice those of Gloria Dulles' exceptions seeking income from 1965 to 1971, permitting her to proceed by the pending petition for review.*fn4

All the parties have appealed from the final decree. Frank Dulles and Florence Dulles, appellants at No. 98 January Term, 1979, contend that Gloria Dulles is entitled to no trust income. Trustee Girard Bank, appellant at No. 103 January Term, 1979, contends that by permitting Gloria Dulles to recover income as early as December 25, 1971 the court en banc has unfairly subjected it to possible surcharge. Gloria Dulles, appellant at No. 104 January Term, 1979, contends that the court en banc should have sustained her exceptions seeking income from 1965 to 1971.

[ 494 Pa. Page 190]

II. Appeal of Frank Dulles and Florence Dulles

There can be little doubt that, under Trimble v. Gordon, supra, the canon of construction which would operate to exclude Gloria Dulles is constitutionally flawed. A State may not "attempt to influence the actions of men and women by imposing sanctions on the children born of their illegitimate relationships." Trimble, 430 U.S. at 769, 97 S.Ct. at 1464. And, because it is undisputed that Harrison Dulles is Gloria Dulles' father, "the State's interest in the accurate and efficient disposition of property at death would not be compromised in any way by allowing [the] claim . . . ." Id., 430 U.S. at 772, 97 S.Ct. at 1466.

Although Trimble involved a state intestacy statute, while here there is involved a "canon of construction," in both cases the judgment of the sovereign is interposed to effectuate distribution of the decedent's estate. As Judge Klein observed,

"[a] person has the right to write a will disposing of his property at death. If he fails to do so, the state steps in and writes a will for him by means of an intestate act and directs the manner in which his estate shall be distributed, designating the persons who shall receive the property and the proportions they are to receive. If a person writes a will but fails to express his intent clearly, or fails to make a complete distribution of his property, or otherwise runs counter to some rule of law, the state also steps into fill the gap through a statutorily enacted rule of construction which mandates the manner of distribution. In both cases the state and not the decedent dictates the method of distribution."

29 Fiduc.Rep. at 148. Under Trimble, the orphans' court en banc properly held unconstitutional the canon of construction which would exclude Gloria Dulles from the enjoyment of trust income.*fn5

[ 494 Pa. Page 191]

Like the auditing judge, settlor's grandchildren born in wedlock believe that "canons of construction" are inapposite, on the theory that settlor manifested an intent to exclude children born out of wedlock. According to these grandchildren, settlor's intent is manifested most strongly by settlor's deliberate exclusion of Henry Dulles, son of Harrison Dulles' first wife but apparently not the son of Harrison Dulles. Additionally, grandchildren born in wedlock believe that disputed provisions of settlor's will should be "interpreted according to the law in effect at testator's death," Collins Estate, 393 Pa. 195, 200, 142 A.2d 178, 181 (1958), thus imputing to settlor the intent to exclude a child born out of wedlock such as Gloria Dulles, who attempts to take through her father.*fn6 We are not persuaded by either contention.

A canon of construction is not avoided by the mere allegation of a particular intent, or even the existence of a remote inference. Rather, as our cases make clear, "[t]he intent of testator must appear with reasonable certainty, such that there can be little doubt of his intent." Sykes Estate, 477 Pa. 254, 257, 383 A.2d 920, 921 (1978). Accord, e.g., Kehler Estate, 488 Pa. 165, 167, 411 A.2d 748, 750 (1980). Here, although settlor's exclusion of Henry Dulles is consistent with a desire to exclude grandchildren born out of wedlock, settlor's exclusion of Henry Dulles is equally consistent with a desire to benefit only those grandchildren related to settlor by blood. If settlor had indeed intended to benefit those grandchildren related by blood, it would follow that settlor intended to favor Gloria Dulles, who was fathered by her son, even though out of wedlock. Because this latter possibility is incompatible with the view that settlor

[ 494 Pa. Page 192]

    intended to exclude all grandchildren born out of wedlock, settlor's exclusion of Henry Dulles can support no conclusion regarding her intent. The requisite certainty in favor of either view is lacking.*fn7

By attributing to settlor the intent to exclude those who would be excluded under canons of construction in effect when she executed her will, settlor's grandchildren born in wedlock have attempted to make substantially the same "presumed intent" contention as was advanced in Trimble in support of the state intestacy statute and discredited by the Supreme Court. There, where an intestacy statute excluding a child born out of wedlock from taking through a father was challenged, it was argued that the intestacy statute "mirrors the presumed intentions of the citizens of the State regarding the disposition of their property at death," and that the father's failure to make a will "shows his approval of that disposition." Trimble, 430 U.S. at 774, 97 S.Ct. at 1467. Although the contention had not been relied upon by the state courts, and therefore was not a matter for the Court to decide, Justice Powell, speaking for the majority, dismissed the contention:

"Even if one assumed that a majority of the citizens of the State preferred to discriminate against their illegitimate children, the sentiment hardly would be unanimous. With regard to any individual, the argument of knowledge and approval of the State law is sheer fiction. The issue therefore becomes where the burden of inertia in writing a will is to fall. At least when the disadvantaged group has been a frequent target of discrimination, as illegitimates have, we doubt that a State constitutionally may place the burden on that group by invoking the theory of

[ 494 Pa. Page 193]

'presumed intent.' See Eskra v. Morton [524 F.2d 9, 12-14 (7th Cir. 1975)] (Stevens, J.)."

Trimble, 430 U.S. at 775 n.16, 97 S.Ct. at 1467 n.16.

As in Trimble, it cannot be said that testators whose wills fail to contain specific provisions are unanimous in the sentiment to discriminate against children born out of wedlock. Because settlor has failed to write a specific provision governing Gloria Dulles' right to share in trust income, we are left with the decision made by the sovereign, in the form of a canon of construction, to place upon Gloria Dulles the "burden of inertia" and thereby exclude her. That canon is constitutionally infirm, and Gloria Dulles must prevail on this issue.

III. Appeal of Girard Bank and Appeal of Gloria Dulles

Our sole remaining task is to fashion an appropriate remedy. There is no dispute that if, as we conclude, Gloria Dulles should prevail, she should share trust income equally with those two grandchildren of settlor born in wedlock, as of this Court's decision until termination of the trust. See Biddle Estate, 487 Pa. 616, 410 A.2d 782 (1980) (adopted child previously excluded from trust income permitted to participate in distributions of income after decision in Tafel Estate, 449 Pa. 442, 296 A.2d 797 (1972), which changed presumption regarding bequests to "children"); DeRoy Estate, 481 Pa. 403, 392 A.2d 1355 (1978) (adopted child allowed after Tafel to claim principal of terminating trust despite earlier pre- Tafel adjudication excluding child from income of same trust). See also Sewell Estate, 487 Pa. 379, 409 A.2d 401 (1979) (surcharge imposed where, despite sufficient knowledge of existence of adopted child, trustees continued to exclude adopted child from enjoyment of trust income after Tafel decision). What is in dispute is whether Gloria Dulles is entitled to trust income earned before today's decision.*fn8

[ 494 Pa. Page 194]

Gloria Dulles has, of course, been impermissibly excluded from the benefits of the trust her grandmother established. However, there are countervailing considerations which must be taken into account so that the most equitable solution can be fashioned. First, there is not the slightest trace of bad faith conduct on the part of the present or any previous trustee, who made payments of trust income pursuant to court decree.*fn9 Second, it cannot be ignored that grandchildren of settlor born in wedlock have reasonably relied upon their status as beneficiaries in accepting trust income and in planning their affairs.

[ 494 Pa. Page 195]

There are several possible solutions. For example, at one end of the spectrum of possibilities is a determination that Gloria Dulles should share in trust income earned from 1965, when she reached the age of twenty-one, to her father's death in 1971, as well as trust income earned since her father's death. At the other end of the spectrum there is the possible determination that Gloria Dulles should receive only future trust income.

On this record, neither of these extreme solutions is appropriate. Although a ruling permitting Gloria Dulles to recover a share of trust income earned since 1965 would surely compensate Gloria Dulles, such a ruling would wholly ignore the countervailing interests of the present beneficiaries and the trustee. The record fails to disclose the existence of any reserve of funds sufficient to pay Gloria Dulles a sum reflecting the share of trust income she claims since 1965. Thus the burden of an adjudication providing Gloria Dulles with this sum would fall directly on either settlor's grandchildren born in wedlock or trustee Girard Bank, even though no element of bad faith would justify this allocation of the burden. So too, while an adjudication denying Gloria Dulles past income earned since 1965 would alleviate any burden imposed upon grandchildren born in wedlock or Girard, such an adjudication would, on this record, fall unreasonably short of effectuating our holding and the holding of the orphans' court -- Gloria Dulles has been excluded from the enjoyment of trust income on the basis of an unconstitutional canon of construction.

There are other possibilities within the range of these extremes. For instance, Gloria Dulles might be permitted to take trust income earned (a) since her father's death in 1971, (b) since confirmation of the account one year later, (c) since Gloria Dulles first asserted her claim in 1974, (d) since the decision in Trimble v. Gordon, supra, in 1977, or (e) since the decision of the orphans' court en banc, in 1979. However, each of these possibilities unreasonably, and somewhat arbitrarily, focuses upon a particular event, with little if any regard for the interests of the parties. In an effort to reach

[ 494 Pa. Page 196]

    the most equitable solution, we prefer to focus upon the interests of the parties.

In our view, the most appropriate balance is struck by awarding Gloria Dulles that amount of trust income which, pursuant to the parties' stipulation, Girard presently holds in reserve in the event that Gloria Dulles prevails. Surely such an adjudication imposes no hardship upon Girard. So too there is nothing on the record to indicate that settlor's grandchildren born in wedlock have found the stipulation into which they entered to be onerous at any time since its inception in October of 1978. And, although the award of only the reserved funds as of the date of this decision means that Gloria Dulles will not receive all of the trust income she claims, she receives a substantial sum which is just and fair in the circumstances. Pursuant to the "equitable powers" of the orphans' court and in the "interest of justice," 42 Pa.C.S. § 323, see Damario Estate, 488 Pa. 434, 412 A.2d 842 (1980), we modify the decree accordingly.

Decree modified and, as modified, affirmed. Costs on the trust.


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