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In re Estate of Plance

Supreme Court of Pennsylvania

December 19, 2017


          ARGUED: April 4, 2017

         Appeal from the Order of the Superior Court entered December 8, 2015, at No. 1379 WDA 2014, reversing the Order of the Court of Common Pleas of Beaver County entered July 22, 2014, at No. 04-13-00855 and remanding.



          WECHT JUSTICE.

         We granted allowance of appeal to determine rightful title to a parcel of real property claimed by competing grantees, each of whom invokes a real or purported conveyance from the property's owner. We granted review to consider as well the application of res judicata and collateral estoppel during estate administration proceedings with regard to an earlier order of the Orphans' Court determining the validity of a will.

         Relying upon a presumption that valid delivery of a deed occurs on the date of its execution and acknowledgment, the Superior Court held that title to the real estate vested in the grantee of the earlier, unrecorded instrument. The Superior Court further held that, where the Orphans' Court determined that a will was valid and permitted a photocopy of that will to be probated, a participating party's subsequent claim that the will was revoked is barred by the doctrines of res judicata and collateral estoppel. After review, we reverse the order of the Superior Court, and we remand for further proceedings consistent with this Opinion.

         I. Background[1]

         Alfred E. Plance, Jr. ("Alfred"), owned a 146-acre farm, which straddles the boundary between Beaver and Washington Counties. Following the death of his first wife in 1990, Alfred became the sole owner of the farm as a surviving tenant by the entireties. Alfred and his first wife had three sons, Timothy Plance ("Timothy"), Christopher Plance ("Christopher"), and Steven Plance ("Steven"). Alfred remarried in 1994, and his new wife, Joy Plance ("Joy"), began residing with him on his farm. Joy sold her former residence. She used $34, 000.00 of the proceeds, as well as $40, 000.00 borrowed from her father, to construct a horse boarding stable on the farm. Alfred and Joy operated the stable together until 2011 or 2012, when their declining health made its continued operation impractical.

         On August 20, 2004, Alfred executed two land trust agreements, creating two trusts for the purpose of holding title to the farm-one trust for the portion of the farm situated in Beaver County and the other for the portion situated in Washington County. Alfred named himself as trustee of the trusts, and designated himself and Timothy as the beneficiaries. On the same day, Alfred executed and acknowledged[2] two deeds ("2004 Deeds"), one corresponding to each trust, conveying the associated portions of the farm from himself as the grantor (in his personal capacity) to himself as the grantee (in his capacity as trustee). The trust documents and deeds were prepared and notarized by Lawrence Bolind, Esquire. Although it was Attorney Bolind's ordinary and customary practice to record deeds for his clients after their execution, he did not record the 2004 Deeds. See Notes of Testimony ("N.T."), 5/20/2014, at 15.[3] Alfred retained the 2004 Deeds, but never recorded them.

         On April 26, 2006, Alfred executed two deeds ("2006 Deeds") conveying the entirety of the farm to himself and Joy as tenants by the entireties. Alfred executed these deeds as the grantor in his individual capacity, not as the trustee of the land trusts that he had established nearly two years earlier. The 2006 Deeds were recorded promptly in both Beaver and Washington Counties.

         In early 2012, Alfred and Joy were approached by Range Resources-Appalachia LLC ("Range Resources"), which sought to obtain an oil, gas, and coalbed methane lease with respect to the farm. Alfred and Joy executed the lease and, in exchange, Range Resources issued a check in the amount of $439, 650.00, payable to both Alfred and Joy as tenants by the entireties and owners of the fee simple title.

         In the spring of 2012, Alfred was hospitalized for an autoimmune condition. Upon his release, Timothy and Timothy's wife, Shawnna, arranged for Alfred to meet their attorney, Michael Werner, Esquire, so that Alfred could review and revise his estate plan. Timothy and Shawnna accompanied Alfred to his appointment with Attorney Werner. Alfred provided Attorney Werner with the signed and notarized originals of the land trust agreements and the unrecorded 2004 Deeds, as well as the recorded 2006 Deeds. Alfred also told Attorney Werner that he was concerned about the disposition of the Range Resources check. The check had been mailed to the farm while Alfred was in the hospital, and, due to problems in his relationship with Joy, Alfred was concerned about his ability to access the funds. Attorney Werner, concluding that the 2004 Deeds had transferred title to the farm into the trusts, advised Alfred to contact Range Resources and to request a "stop payment" order on the check because the payees named on the check-Alfred and Joy as tenants by the entireties-were not the true owners of the farm. Attorney Werner further advised Alfred to record the 2004 Deeds, but cautioned that doing so "would open up a very large can of worms from which it would be very difficult to turn back." N.T., 5/19/2014, at 42. Despite Attorney Werner's advice, Alfred never recorded the 2004 Deeds.

         Based upon his discussion with Alfred, Attorney Werner prepared a new will and other estate planning documents for Alfred. Attorney Werner met with Alfred, again accompanied by Shawnna, to execute these documents on May 24, 2012. Alfred's new will included $1, 000.00 bequests to each of his sons and gave the residue to Timothy, or to Christopher in the event that Timothy predeceased Christopher. Although the will acknowledged Joy as Alfred's wife, it made no provision for Joy. Alfred named Timothy as his executor. After Alfred executed the will, he gave the original to Shawnna. Shawnna placed the will, along with other documents from the earlier meeting with Attorney Werner, into a plastic file box, which she kept in her home until early August 2012.

         After the execution of Alfred's estate planning documents, Attorney Werner received several telephone calls from Alfred and Shawnna, giving him conflicting instructions with regard to the Range Resources check and the 2004 Deeds. Shawnna called Attorney Werner in late June 2012 and told him not to record the 2004 Deeds and not to request a stop payment order on the check. Six days later, Shawnna called again and instructed Attorney Werner to proceed with the stop payment order. Alfred left Attorney Werner two messages, first asking him to contact Range Resources and then instructing him not to contact Range Resources. Finally, on July 9, 2012, Attorney Werner called Alfred, and Alfred told him not to proceed with either the stop payment order or the recordation of the 2004 Deeds. Alfred requested that Attorney Werner return all of the documents in his possession, both originals and copies. That same day, Attorney Werner complied with Alfred's request, mailed all of the documents in his possession to Alfred, and took no further action with regard to the Range Resources check or the 2004 Deeds.

         According to Timothy, Alfred and Shawnna had a "falling out" in early August 2012. N.T., 5/19/2014, at 106-07. At that time, Alfred asked Shawnna for all of the documents in her possession, and she provided him with the plastic box containing his will and other estate planning documents. Joy later explained that, one day in August or September 2012, Alfred entered their residence carrying a plastic box. He told Joy that he had a conflict with Timothy and Shawnna, and that he would not communicate with them in the future. Joy did not know what the plastic box contained, but she observed Alfred taking the box outside to a trash burner and burning its contents. Although Shawnna and Attorney Werner retained copies of Alfred's will, none of Alfred's original documents ever were discovered.

         Alfred died in March 2013. Unable to locate Alfred's original will, which was last seen in the plastic box, Timothy filed a petition to probate a photocopy of the will. Joy did not file a response, but she retained counsel, who appeared before the Orphans' Court to object to Timothy's petition. After a hearing, which was not transcribed, the Orphans' Court entered the following order:

AND NOW, this 27th day of August, 2013[, ] it appearing that the original of the testator's Last Will and Testament has been lost and misplaced and that the testator has not destroyed the original with the intention of revocation, it [is] hereby ORDERED, ADJUDGED AND DECREED that the probate is granted using the photocopy of the Last Will and Testament.

Order, 8/27/2013. Despite the Orphans' Court's determination that Alfred's will remained valid, the court apparently intended that its order would not preclude Joy from challenging the will at a later time. Although no transcript of the proceeding exists, the Orphans' Court later noted in its Pa.R.A.P. 1925(a) opinion that "the parties agreed that the court did indicate in motions court on August 27, 2013 when the photocopy was admitted, that the will itself could still be challenged or contested." Orph. Ct. Op., 10/28/2014, at 2. Joy did not appeal the Orphans' Court's order admitting the photocopy of Alfred's will to probate.

         Timothy was granted Letters Testamentary on October 2, 2013. On November 21, 2013, Timothy filed a petition with the Orphans' Court, alleging that Joy had dissipated property belonging to the estate, including gold coins with a value of approximately $100, 000.00 and a large portion of the funds from the Range Resources check. Timothy averred that Joy's actions had rendered him unable to administer Alfred's estate, and that Joy should be ordered to refrain from further dissipating any estate property, to account for any property previously dissipated, to return or reimburse the estate for any such property, and to allow Timothy to access and inventory any remaining estate property.

         Joy filed a response to Timothy's petition on December 12, 2013, denying that she had dissipated property belonging to the estate. In new matter, Joy asserted that Alfred had revoked his will by burning it and, as such, had died intestate. Joy further asserted ownership of the farm as a surviving tenant by the entireties pursuant to the 2006 Deeds. Timothy responded to Joy's new matter, averring that the issue of the validity of Alfred's will already had been litigated and decided when the Orphans' Court issued its order admitting the photocopy of Alfred's will to probate on August 27, 2013. Thus, Timothy argued, Joy's claim was barred by the doctrines of res judicata and collateral estoppel. With regard to the ownership of the farm, Timothy claimed that the 2004 Deeds effectively transferred title to the farm into the trusts, and that the 2006 Deeds were, therefore, void ab initio.

         Following discovery, the parties proceeded to trial before the Orphans' Court on May 19 and 20, 2014. On July 22, 2014, the Orphans' Court issued a memorandum and decree, holding that Joy "possesses the superior title" to the farm, that its August 27, 2013 order admitting the photocopy of Alfred's will to probate "was improvidently entered and is hereby revoked, " and that Alfred died intestate. Decree, 7/22/2014. The Orphans' Court reasoned that Alfred never intended the 2004 Deeds to be an effective conveyance and, thus, did not deliver the deeds.[4] The court concluded that Joy owned the farm as a surviving tenant by the entireties pursuant to the 2006 Deeds. With regard to res judicata and collateral estoppel, the Orphans' Court concluded that the doctrines did not preclude Joy's challenge to Alfred's will because, at the time of the August 27, 2013 order, the court intended to allow Joy to proceed with such a challenge at a later date. The court further noted that, before it entered the order authorizing probate of the photocopy of Alfred's will, "[t]here was not a hearing convened, no evidence was presented and [Joy] was not afforded due process." Orph. Ct. Op., 10/28/2014, at 2. Accordingly, the Orphans' Court opined that neither res judicata nor collateral estoppel prevented it from considering Joy's claim that Alfred revoked his will. Having credited Joy's evidence, the Orphans' Court concluded that it should not have authorized probate of the photocopy because Alfred revoked his will and, thus, died intestate. The court directed the Register of Wills to remove Timothy as the executor of Alfred's estate. Timothy appealed the Orphans' Court's decree to the Superior Court.

         On appeal, Timothy argued that Alfred's execution and acknowledgment of the 2004 Deeds was sufficient to constitute delivery of those deeds and to demonstrate his intent to convey the farm to the trusts, that the 2006 Deeds accordingly were void, and that the doctrines of res judicata and collateral estoppel precluded Joy from challenging the validity of Alfred's will. In response, Joy argued that Alfred never delivered the 2004 Deeds, that she possessed superior title to the farm as a surviving tenant by the entireties pursuant to the recorded 2006 Deeds, that she was a bona fide purchaser of the farm protected by Pennsylvania's recording statutes, [5] and that neither res judicata nor collateral estoppel applied to her challenge to the validity of Alfred's will because the Orphans' Court's earlier order was not final, but was part of the ongoing litigation.

         The Superior Court reversed the decree of the Orphans' Court. See In re Estate of Plance, 1379 WDA 2014 (Pa. Super. Dec. 8, 2015) (unpublished). Regarding the effectiveness of the 2004 Deeds, the Superior Court noted that, although the recording of a deed raises a presumption of its validity, recording is not essential to a conveyance; rather, title to real estate may be passed by valid delivery of a deed, which is a question of the grantor's intent. Id., slip op. at 9 (citing, inter alia, City Stores Co. v. Philadelphia, 103 A.2d 664, 666 (Pa. 1954), and Stiegelmann v. Ackman, 41 A.2d 679, 681 (Pa. 1945)). Thus, although the 2004 Deeds never were recorded, the Superior Court recognized that the 2004 Deeds nevertheless would have been effective to transfer title to the farm into the trusts if Alfred effectuated a valid delivery of those deeds. The Superior Court noted that it is a "general rule that there is a presumption, [in] the absence of proof to the contrary, that a deed was executed and delivered on the day it was acknowledged." Id. (alteration in original) (quoting Herr v. Bard, 50 A.2d 280, 281-82 (Pa. 1947)).

         The court reasoned that the Orphans' Court had placed undue weight upon Alfred's failure to record the 2004 Deeds, which was not dispositive. Rather, the Superior Court observed that Alfred, "as grantor, executed, acknowledged and delivered the deeds to himself, as trustee/grantee of the two trusts he executed that same day." Id. at 10. Pursuant to the rebuttable presumption identified in Herr, the Superior Court reasoned that Alfred's execution and acknowledgment of the 2004 Deeds, as well as his possession of the 2004 Deeds in his capacity as the grantee, was sufficient to constitute delivery and to convey the farm to the trusts. The court concluded that "Joy presented no evidence to rebut the presumption that, at the time [Alfred] executed and acknowledged the deeds and delivered them to himself as trustee, he intended to transfer ownership of the Farm to the trusts." Id.

         Importantly, the Superior Court noted that Alfred was both the grantor and the grantee of the 2004 Deeds, which distinguished this case from the precedents upon which Joy relied. Although a grantor generally must transfer control over a deed in order to effectuate delivery to the grantee, the Superior Court held that, due to Alfred's dual capacities, "indicia of delivery such as 'relinquishment of control, ' or delivery to a third party with instructions to pass on to the grantee, are not relevant to our analysis." Id. (citations omitted).

         The Superior Court further rejected Joy's assertion that, even if the 2004 Deeds were valid, her interest in the farm was protected under the recording statutes due to her status as a bona fide purchaser. To that end, Joy averred that she had paid valid consideration for the farm through her investment in the horse boarding stable, and that consideration also may be found in the "natural love and affection between spouses." Id. at 12 (quoting Superior Court Brief of Joy at 13). The Superior Court noted that, under its precedent, a grantee of land qualifies as a bona fide purchaser if she was "(1) without notice of an adverse interest and (2) gave value for the purchase of the land." Id. (citing Roberts v. Estate of Pursley, 718 A.2d 837, 841 (Pa. Super. 1998)). Joy was not a bona fide purchaser, the court reasoned, because there was no indication that she paid valid consideration to Alfred at the time of the 2006 deeds, and Joy had neither argued nor demonstrated that Alfred accepted her earlier investment in the property as past consideration. Rather, the deeds recited only nominal consideration in the amount of one dollar.[6] The Superior Court concluded that, at the time that Alfred executed the 2006 Deeds, he "simply attempted to make a gift of an undivided one-half interest [in] the property to Joy." Id. at 13. The court held that, as merely the intended recipient of a gift, and not a bona fide purchaser, Joy was not protected under the recording statutes, and could not establish superior title to the farm.

         Finally, the Superior Court addressed Timothy's arguments regarding res judicata and collateral estoppel. Timothy contended that, under both theories, Joy's claim that Alfred had revoked his will was precluded because the Orphans' Court previously had resolved that issue when it entered its August 27, 2013 order admitting the photocopy of Alfred's will to probate. The Superior Court agreed.

         First considering the doctrine of res judicata, the Superior Court noted that the doctrine bars litigation of "claims that were or could have been raised in a prior action which resulted in a final judgment on the merits, so long as the claims derive from the same cause of action." Id. at 14 (citing Balent v. City of Wilkes-Barre, 669 A.2d 309, 315 (Pa. 1955)). The Superior Court reasoned that the earlier action was Timothy's petition to admit the photocopy of Alfred's will to probate, which necessarily placed the validity of Alfred's will at issue. That action resulted in the Orphans' Court's August 27, 2013 order, which found that Alfred had not "destroyed the original [will] with the intention of revocation." Id. at 15-16 (alteration in original) (quoting Order, 8/27/2013). The Superior Court noted that Joy did not appeal that order, "and, thus, it became a final order." Id. at 16. The court concluded that Joy's claim met the four requirements of res judicata: "(1) an identity in the thing sued upon[;] (2) identity in the cause of action[;] (3) identity of persons and parties to the action[;] and (4) identity of the capacity of the parties suing or sued." Id. at 14 (citing In re Jones & Laughlin Steel Corp., 477 A.2d 527, 530-31 (Pa. Super. 1984)); see also Daley v. A.W. Chesterton, Inc., 37 A.3d 1175, 1189-90 (Pa. 2012). Because the claim revisited the issue of whether Alfred revoked his will, the thing sued upon and the cause of action were the same. The parties were the same, as were their capacities. The Superior Court observed that Joy had opportunities to raise the revocation issue, but failed to do so. Thus, the court held that "there was a final judgment entered on the merits by a court of competent jurisdiction and Joy was barred by the doctrine of res judicata from relitigating the same cause of action in a subsequent suit." Id. at 16.

         Although it concluded that the Orphans' Court erred based upon res judicata, the Superior Court proceeded to address Timothy's claim regarding collateral estoppel. The court related that the doctrine of collateral estoppel precludes the litigation of an issue where:

(1) the issue decided in the prior case is identical to one presented in the later case; (2) there was a final judgment on the merits; (3) the party against whom the plea is asserted was a party or in privity with a party in the prior case; (4) the party or person privy to the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding[;] and (5) the determination in the prior proceeding was essential to the judgment.

Id. at 17 (quoting Radakovich v. Radakovich, 846 A.2d 709, 715 (Pa. Super. 2004)); see also Taylor v. Extendicare Health Facilities, Inc., 147 A.3d 490, 511 n.30 (Pa. 2016) cert. denied, 137 S.Ct. 1375 (2017). Relying upon its previous discussion of res judicata, the Superior Court similarly concluded that the issue of the validity of Alfred's will was before the Orphans' Court in both actions, that the parties were identical, that each had a full and fair opportunity to litigate the issue, and that the earlier action resulted in a final judgment on the merits, which was essential to the judgment reflected in the Orphans' Court's August 27, 2013 order. Accordingly, the Superior Court concluded that Joy's assertion that Alfred revoked his will also was barred under the doctrine of collateral estoppel, and that the Orphans' Court "erred in revisiting the issue." Id.

         Having ruled in favor of Timothy in all respects, the Superior Court reversed the decree of the Orphans' Court and remanded the case to that court. Joy filed a petition for allowance of appeal with this Court, which we granted in order to review the Superior Court's determinations regarding the rightful ownership of the farm vis-à-vis the effectiveness of the 2004 Deeds and Joy's status under the recording statutes, as well as the Superior Court's application of the doctrines of res judicata and collateral estoppel.[7]

         II. Analysis

         Preliminarily, we set forth our well-settled standard of review. "In reviewing the decision of the orphans' court, this Court's responsibility is to assure that the record is free from legal error and to determine if the orphans' court's findings are supported by competent and adequate evidence." In re Klein's Estate, 378 A.2d 1182, 1187 (Pa. 1977). "In determining whether the findings of the orphans' court are supported by competent evidence, we must take as true all the evidence supporting the findings and all reasonable inferences therefrom." In re William L., 383 A.2d 1228, 1237 n.12 (Pa. 1978). "Further, all conflicts in testimony must be resolved by the hearing judge, who is the sole arbitrator of credibility." In re C. A. W., 409 A.2d 16, 18 (Pa. 1979). "Findings of the orphans' court supported by evidence of record are entitled to the same weight given a jury verdict and must be sustained unless the court abused its discretion or committed an error of law." William L., 383 A.2d at 1237.

         A. Delivery of the 2004 Deeds

         Before discussing and analyzing the parties' arguments, it is helpful to summarize the general precepts of law relating to the "delivery" of deeds. Delivery of a deed is "necessary to render it legally operative." Stiegelmann, 41 A.2d at 681. "The general principle of law is that the formal act of signing, sealing, and delivering is the consummation of the deed . . . ." In re Cragin's Estate, 117 A. 445, 446 (Pa. 1922). Delivery of a deed turns upon the grantor's intent to convey title to the grantee. Such delivery may be found where the grantor's words or actions reflect that essential intent. Stiegelmann, 41 A.2d at 681 ("Delivery is to be inferred from the words and acts of a grantor evidencing an intention on his part to surrender his title to the property (embraced by his conveyance) and to invest his grantee therewith. Such an intent, accompanied by actions or words sufficient to effectuate it, spells delivery."); Chambley v. Rumbaugh, 5 A.2d 171, 172 (Pa. 1939) ("Whether there was a delivery in fact in any given case depends upon the intention of the grantor as shown by his words and actions and by the circumstances surrounding the transaction, and constitutes a question to be determined from all the evidence by the [fact-finder]."); Lewis v. Merryman, 114 A. 655, 655 (Pa. 1921) ("Delivery is a matter of intention to pass title. It may be accomplished by words alone, by acts, or by words and acts. To be sufficient in law it must be found [that the] grantor has parted with the title."). So long as a grantor expresses the intention to convey the property, the grantor need not physically hand the deed to the grantee to complete the delivery. "While 'the crowning fact' in the execution of a deed is delivery, yet it is not necessary to prove 'actual manual investiture, ' since 'delivery may be inferred or presumed from circumstances.'" Kanawell v. Miller, 104 A. 861, 862 (Pa. 1918) (citation omitted). "[N]o particular form or ceremony is necessary to effect delivery; it is sufficient if the grantor evidences his intention in any manner to put the document into the ownership of the other party and thereby to relinquish all control of it thereafter." City Stores Co., 103 A.2d at 666.[8]

         We have prescribed various rebuttable evidentiary presumptions in order to aid courts in determining whether the requisite intent to deliver title was present in a given case. The applicability and effect of certain presumptions is a subject of dispute between the parties in the instant case. Chief among these presumptions is the one that arises from the recording of a deed, an act that we have described as the "strongest evidence of delivery." Lewis, 114 A. at 655. Recording of a deed, itself, "raise[s] a presumption of delivery." Stiegelmann, 41 A.2d at 681 (citing Chambley, 5 A.2d at 172). The 2004 Deeds never having been recorded, this presumption has no application to the instant case. Joy's preferred presumption arises from a grantor's retained possession or control of a deed: "so long as a deed is within the control of the grantor [presumptively] there is no delivery." Piper v. Queeney, 127 A. 474, 477 (Pa. 1925) (alteration in original) (quoting Sears v. Scranton Trust Co., 77 A. 423, 429 (Pa. 1910)); see Brief for Joy at 15. As a corollary, this Court has applied a contrary presumption where, along with the formalities of execution, a deed is physically possessed by the grantee. See Leiser v. Hartel, 174 A. 106, 107 (Pa. 1934) ("It is undoubtedly correct that when a deed is acknowledged before a proper officer as being signed, sealed, and delivered, and the manual possession of the grantee is established, a presumption arises that an absolute and unconditional delivery is intended, unless by act, expression, or writing an indication is made of an intention to qualify the formal act."). Timothy, like the Superior Court, stresses a presumption of delivery arising from a grantor's acknowledgment of a deed: "the general rule [is] that there is a presumption, in the absence of proof to the contrary, that a deed was executed and delivered on the day it was acknowledged." Herr, 50 A.2d at 281-82; see Brief for Timothy at 19-20.

         Independent of any presumption operating in her favor, Joy argues that, under this Court's precedent, Alfred's continued possession of the 2004 Deeds placed the burden of proof to establish delivery upon Timothy-a burden that she asserts Timothy failed to carry. Brief for Joy at 18-20. Joy analogizes the instant case to Leahey v. Leahey, 163 A. 677 (Pa. 1932), wherein this Court set forth the burdens of proof applicable to the delivery of an unrecorded, acknowledged deed that remains in the possession of the grantor. Due to ...

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