Case Name: In re ESTATE OF Kenneth C. HEWITT, Deceased. Appeal of the Commonwealth of Pennsylvania, Through its Attorney General, Thomas W. Corbett, Jr.
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1998-12-22
Citations: 554 Pa. 486
Docket Number: No. 046 W.D. Appeal Docket 1997
Parties: In re ESTATE OF Kenneth C. HEWITT, Deceased. Appeal of the Commonwealth of Pennsylvania, Through its Attorney General, Thomas W. Corbett, Jr.
Judges: Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, NEWMAN and SAYLOR, JJ.
Reporter: Pennsylvania State Reports
Volume: 554
Pages: 486–504

Head Matter:
721 A.2d 1082
In re ESTATE OF Kenneth C. HEWITT, Deceased. Appeal of the Commonwealth of Pennsylvania, Through its Attorney General, Thomas W. Corbett, Jr.
Supreme Court of Pennsylvania.
Argued March 9, 1998.
Decided Dec. 22, 1998.
Rita J. Cindrich, Office of Atty. Gen., for appellants.
G. Donald Gerlach, Pittsburgh, for Estate of Kenneth C. Hewitt.
Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, NEWMAN and SAYLOR, JJ.

Opinion:
OPINION OF THE COURT
FLAHERTY, Chief Justice.
When a testator devises a life interest in real estate to a beneficiary who is also the co-executrix of his will, with the remainder following the life estate to be paid outright to charities, may the executrix acting with the co-executor sell the fee interest in the real estate and be paid outright for the value of her life estate from the proceeds of the sale, or must the value of the life estate be placed in trust for the benefit of the charitable remaindermen?
Kenneth C. Hewitt was a retired senior vice-president of Mellon Bank's trust department. He devised to Mrs. Helen M. Colwell, his seventy-four year old friend and companion, a life estate in real property located at 302 Fox Chapel Road (the condominium):
(B) I give to HELEN M. COLWELL, if she survives me by 30 days, for her life, my interest in real property located at 302 Fox Chapel Road, Pittsburgh, Pennsylvania 15238, being Apartment No. 309 in Fox Chapel Mews II; provided, however, that Mrs. Colwell shall advise my Corporate Executor of her election to occupy my apartment within 120 days following my death. Mrs. Colwell may occupy my apartment without bond and without liability for waste; provided, however, that she shall keep such apartment adequately insured, maintained and repaired and shall pay all real estate taxes, water and sewer rents, assessments, carrying charges and similar charges thereon. Upon Mrs. Colwell's death, or if she should predecease me, upon my death (i) such apartment shall be sold and the net proceeds distributed as part of my residuary estate as set forth in Article III.
Thus, the will provides that upon Mrs. Colwell's death, the condominium shall be sold and the net proceeds distributed as part of the residuary estate. The residuary estate, in turn, was devised to Mellon Bank as trustee of Mr. Hewitt's intervivos trust, which was created November 17, 1961 and last amended and restated by him January 2,1991.
Mr. Hewitt's 1991 amendment to the trust provided that upon decedent's death, the trustee was to distribute $300,000 to Mrs. Colwell or, if she were not living, $100,000 to each of her three children, and the balance was to be distributed to the Colwell-Hewitt Unitrust. This unitrust is a separate charitable remainder trust to be created at the death of the settlor. It is funded by the balance remaining after satisfac tion of all amounts payable under other provisions of the trust, such as the provision mentioned earlier in which Mrs. Colwell is paid $800,000. In addition to the outright bequest of $300,000, Mrs. Colwell was to receive six percent of the market value of the unitrust for her life, and at her death, the charitable remainder unitrust was to terminate and any remaining money was to be paid outright to Princeton University, Harvard University, Mercersburg Academy, Allegheny General Hospital, and East Liberty Presbyterian Church.
Mr. Hewitt died on December 17, 1992. On January 28, 1993, pursuant to the requirement of the will set out above, Mrs. Colwell, acting as the beneficiary of the life estate, notified the corporate executor that she intended to occupy the condominium. Thereafter, on August 17, 1993, Mrs. Col-well, the co-executrix, and Mellon Bank, the corporate executor, sold the condominium in fee simple for $155,000. The co-executors then distributed $76,199.55 to Mrs. Colwell on the theory that this sum represented the value of her life estate. The remainder, less taxes and other expenses, was distributed to the unitrust.
After being served with the first and final account of the testator's estate, the Commonwealth filed objections to the co-executor's commutation of Mrs. Colwell's life estate interest. The Commonwealth also objected to the payment of estate and inheritance taxes on this distribution and the calculation of the life estate factor. The trial court stated:
The Attorney General argues that decedent did not intend to provide Helen M. Colwell with the option to commute and that, since she did not occupy the real estate, insure, or pay real estate taxes and other charges, she never "acceded to any interest in the Fox Chapel property and the proceeds of the sale should pass to the CRUT [charitable remainder trust] as part of the residue of the Hewitt estate, just as if she predeceased the decedent."
In short, the Commonwealth's position was that the will requires the entire net proceeds from the sale to be distributed to the testator's charitable remainder unitrust and prohibits any part of the net proceeds being distributed to Mrs. Colwell.
On October 2, 1995, the orphan's court entered an opinion and order finding that Mrs. Colwell was not entitled to an outright commutation and ordered her to place the proceeds of the sale which had been distributed her, i.e., $76,199.50, into a separate trust for her benefit during her lifetime, with herself as the trustee, pursuant to Section 6113 of the Probate, Estates and Fiduciaries Code, 20 Pa.C.S. § 6113. Upon her death, the remaining proceeds were to pass to the charities set out in Mr. Hewitt's will. The Commonwealth filed exceptions to this order, which were dismissed by the court en banc.
The Commonwealth then appealed to the Superior Court, which, with one judge dissenting, affirmed the order of the trial court. The majority of the Superior Court panel held that the distribution of funds from the sale, $76,199.55 into a separate trust for the use and benefit of Mrs. Colwell, with the remainder of the trust at her death to the charities, and $78,800.05 into the corpus of the unitrust was neither an abuse of discretion nor an error of law. The court found this disposition to be consistent with the testator's primary concern — to care for Mrs. Colwell and to safeguard the principal which will go to the charities at Mrs. Colwell's death. In support of this analysis, the majority cited 20 Pa.C.S. § 6113, supra. And finally, since the testator's general intent was satisfied, the majority of the Superior Court panel determined that the alleged negative tax consequences flowing from the sale of the condominium are of no legal significance.
The dissenter in the Superior Court argued that although the will gives Mrs. Colwell a life estate in the condominium, it does not give her any interest in the proceeds from the sale, and it was error to place the proceeds from the sale in a separate trust. Further, the dissenter thought that Mrs. Colwell's only interest in the proceeds from the sale of the property is in the income generated by these proceeds, payable through the Colwell-Hewitt unitrust. Finally, he agreed with the Commonwealth's allegation that the sale of the property and the distribution to Mrs. Colwell resulted in almost $40,000 in additional taxes on the estate, and he would require Mrs. Colwell to reimburse the estate in the amount of excess taxes paid due to the sale.
We granted allocatur to examine the lower courts' treatment of the life estate.
It is axiomatic that the testator's intent is the polestar which guides our interpretation of a will, and the intent is determined from a consideration of the language within the four corners of the document, and, in an appropriate case, the facts and circumstances surrounding the will's execution. Estate of Felice, 487 Pa. 342, 409 A.2d 382 (Pa.1979). citing In Re Houston's Estate, 414 Pa. 579, 201 A.2d 592, 595 (Pa.1965).
Considering the words of the will, the testator's intent in this case is abundantly clear. He intended for Mrs. Colwell to have a life estate in his condominium, and following her death, he intended that the property would be sold with the proceeds from its sale passing through the testator's residuary estate to the unitrust, then to be paid outright to the charitable residuary beneficiaries.
At issue in this case is whether the lower courts' disposition of the matter, placing the value of Mrs. Colwell's life estate in trust and the remainder in the unitrust, was error.
Preliminarily, we must address the Commonwealth's assertions that Mrs. Colwell did not have a life estate because she did not live in the condominium, and that even if she did have a life estate, she had no power to sell the condominium. As to the existence of her life estate, Mrs. Colwell notified the corporate executor of her election to occupy the condominium and thereafter, she occasionally stayed there. The will required no more, and thus, she met the precondition for receipt of the life estate.
As to her authority to sell the life estate and the condominium itself, she was the owner of the life estate in the condominium, and she was empowered to sell her life estate as she chose:
A life tenant is entitled to possession and enjoyment of the property as long as the estate endures. He may convey, lease or otherwise alienate his interest, but he may not disregard the rights of those who take when his life estate ends. Therefore, he is responsible for ordinary repairs and maintenance, but improvements of a permanent nature, without the acquiescence of the remaindermen, are at his own expense even though the property in thereby made more valuable.
Ladner on Conveyancing in Pennsylvania. §1.03 (4th ed.1979, Sup.1994). As to her authority to sell the condominium, she plainly had that authority in her role as coexecutrix of the estate, pursuant to Art. V(B), supra.
Next, we must consider whether Mrs. Colwell had a present interest in the proceeds from the sale of the condominium which would require, pursuant to the Decedents, Estates & Fiduciaries Code, 20 Pa.C.S. § 6113, that the proceeds be held in trust. Section 6113 provides, in pertinent part:
A person having a present interest in personal property, or in the proceeds of the conversion of real estate, which is not in trust, and which is subject to a future interest, shall be deemed to be a trustee of such property, and not a debtor to the remainderman, with the ordinary powers and duties of a trustee....
The fee simple interest in the condominium was sold by the executors, and from the proceeds of this sale Mrs. Colwell was paid the value of her life estate. The question, therefore, is whether Mrs. Colwell's interest in the proceeds of the sale of her life interest is a present interest, and if it is, whether it is subject to a future interest. The answer is straightforward. Mrs. Colwell has a present interest in the value of the life estate, but this present interest is not subject to any future interest. Section 6113, therefore, does not apply. The proceeds which are subject to the future interest are the value of the fee less the value of the life estate. The remaindermen have a future interest in the fee, or its value. The value of the fee, in turn, is the purchase price of the fee less the value of the life estate. The remaindermen have no interest at all in Mrs. Colwell's life estate. That estate belongs to Mrs. Col-well, and at her death it terminates; it does not pass to the remaindermen.
The Commonwealth argues, however, that because Mrs. Colwell joined and acquiesced in the sale of the fee interest in the condominium, the remainder interests accelerated and the unitrust is entitled to the immediate receipt of the entire proceeds of sale, just as if Mrs. Colwell had disclaimed her life estate interest. We disagree. Mrs. Colwell did not disclaim her interest; in fact, she asserted it. Moreover, the will provides that upon Mrs. Colwell's death, or upon the testator's death if she should predecease him, the condominium should be sold and the proceeds distributed as part of the residuary estate. Mrs. Colwell, who remains among the living, did not predecease the testator and there is no provision in the will which directs sale of the property under the circumstances of this case. The property was sold not because it was required by the will, but because it was within the discretion of the executors. Once the property was sold, the proceeds, less the value of the life estate, were properly placed in the residuary estate, not because the remainder interests accelerated, but because, in the absence of explicit direction in the will, there was no other place to deposit them.
Finally, the Commonwealth argues that Section 6113 does not apply because the proceeds of the sale were already in trust inasmuch as the testator directed that the sale proceeds be distributed to the unitrust. This claim is without merit. The will directs that the proceeds shall be distributed to the residuary estate upon the death of Mrs. Colwell, or of the testator if Mrs. Colwell should predecease him. Mrs. Colwell did not die, and so no such sale was conducted, and such distribution is not, therefore, required. But even if it were, the result would be no different, for the executors have already distributed to the residuary estate the proceeds from the sale of the fee interest in the condominium.
The order of the Superior Court is reversed. The value of the life estate as calculated by the executors is to be distributed outright to Mrs. Colwell.
Justice CAPPY files a concurring opinion.
Justice CASTILLE files a dissenting opinion.
Justice NIGRO files a dissenting opinion in which Justice NEWMAN joins.
. Hewitt's will provides:
I give to my Executors, in addition to the authority conferred by law and without the necessity to obtaining the order of any court, the following powers: to retain any property received in kind; to sell, pledge, mortgage, lease for any term whatsoever, exchange and dispose of, either publicly or privately, any or all property, real, personal or mixed, at such times and for such prices and upon such terms and conditions as my Executors may determine.
Art. V. (B) (Emphasis added).
. The value of Mrs. Colwell's life estate was calculated by multiplying the sales price of the condominium less expenses of the sale by .50839. The .50839 multiplier is not explained.
. 20 Pa.C.S. § 6113 provides:
A person having a present interest in personal property, or in the proceeds of the conversion of real estate, which is not in trust, and which is subject to a future interest, shall be deemed to be a trustee of such property, and not a debtor to the remainderman, with the ordinary powers and duties of a trustee....
. Whether the life estate is correctly valued is not before us.
. Mr. Justice Castille dissents, arguing that Estate of Felice, 487 Pa. 342, 409 A.2d 382 (Pa.1979) controls this case and compels a holding that Ms. Colwell is not entitled to any interest in the condominium after its sale. My colleague's reliance on Felice is misplaced. In Felice, the beneficiary had only an interest in the trust and was not a separate owner of the property. The trustees owned the whole property. In this case, on the other hand, the trustees had only a remainder interest and were required to purchase the life estate if they were to exercise their power to sell the fee interest in the property prior to Mrs. Colwell's death.
Mr. Justice Nigro's dissent is premised on the notion that the case would be clearer if the beneficiary and the executor had been two different persons because the "Beneficiary would not be entitled to go to the Executor and have the Executor sell the properly and give Beneficiary the monetary value of her 'life share.' Executor's instructions were at all times that when the condominium was sold, the proceeds would all fall to the residuary estate and then to the unitrust." Op. (dissent) at 1090. We disagree. If the executor agreed to merge its remainder interest with the beneficiary's life estate, sell the property, and pay the beneficiary the value of her life interest, no rule of law of which I am aware prevents that, and since the beneficiary would receive only the monetary value of what she was devised, receiving the value of the life estate does not violate the terms of the will. Further, the will does not require a different result, for the will does not instruct us as to what should happen to the proceeds of a sale on the facts of this case.