Opinion ID: 2001306
Heading Depth: 1
Heading Rank: 5

Heading: removal of custodians

Text: Having set forth the governing principles of law, we turn to the question of their application to the appeals before us. We shall first consider the orphans' court action. Wife's original petition sought an accounting, the removal of Husband and Collins as custodians and the appointment of a bank as successor custodian, and the reimbursement of the custodial accounts for monies improperly expended. Husbands' cross-appeal seeks to recover attorney's fees from Wife on the grounds that the orphans' court action was instituted in bad faith and in a vexatious manner. In her brief, Wife states that she is satisfied with the information furnished by the custodians in connection with this action and is therefore no longer pursuing her request for an accounting. We adopt the trial court's findings of fact, as there is little dispute concerning the controlling facts. However, we hold that the trial court misapplied the law to these facts when it concluded that the custodians had not acted improperly. Husband made three-fourths of the court-ordered support payments for Kimberly, Julia, and Laura from their custodial accounts at a time when he was earning a six-figure income and his net worth was nearly three million dollars. He also drew upon the children's funds to pay their clothing bills and such trivial items as children's books costing less than $10. Husband admitted at the hearing that he could have easily made the support payments and met the other expenses from his own resources (N.T. 25-26, Trial Court Opinion at 5). For the reasons amply explained above, we hold that this constitutes a breach of Husband's duty as custodian. It is beyond question that he was able to meet the support needs of his minor children from his own resources and was under a legal duty to do so. By using the custodial funds to evade his primary obligation to support his daughters, he used the custodial funds for his own benefit and thereby abused his discretion as custodian. Newman; Wolfert; Weisbaum; Gold; Erdmann. With respect to custodian Collins, we agree with the contention of Husband and Collins in their brief that the record does not support a finding, and the court made no finding, that Collins expended any sums for the support of the three daughters. At the time of the hearing in the orphans' court action, [4] the only expenditures made by custodian Collins were for college expenses for Gregory M. Sutliff, who was over age eighteen at the time the expenditures were made. Gregory M. Sutliff was not included in the support orders involved in these appeals and was not involved in any other support proceedings between the parties. No issues pertaining to Gregory M. Sutliff's support are before this court. Therefore, there is no competent evidence to support a finding that Collins acted improperly. Although we hold that Husband's actions breached his duties as custodian and supporting parent, we do not believe that the removal of Husband as custodian is appropriate at this time. Section 5308(e) of the UGMA, 20 Pa.C.S. § 5308(e), which provides for removal of the custodian for cause shown, does not define cause or otherwise suggest the nature or level of misconduct which is sufficient to warrant removal. Case law sheds little additional light on the question. See, e.g., In the Matter of Muller v. Muller, 18 App.Div.2d 1067, 1067, 239 N.Y.S.2d 519, 520 (1963) (court simply repeats statutory language for cause shown; holds that the conclusory allegation that the respondent has threatened to remove the custodial funds and convert them does not establish cause for removal). Prior to our decision today, there was no controlling legal precedent in Pennsylvania holding Husband's conduct improper. The statute grants broad discretion to the custodian in language containing ambiguities which could be construed as allowing Husband to act in the way he did. Husband's highly skilled counsel supports his position with a well-reasoned argument which we cannot dismiss as frivolous. Nothing in the record entitles us to conclude that Husband did not hold a good-faith belief that his conduct was permissible under the UGMA. [5] A distinguished judge of one of our trial courts agreed with him. We will not impose a requirement of clairvoyance on a custodian. Hence, the petition to remove Husband and Collins as custodians is denied, without prejudice to the right of any appropriate party to petition the court under section 5308(e) of the UGMA should the custodians engage in any improper conduct subsequent to the filing of this opinion. In other words, our holding as to the duty of a custodian under the UGMA is to be given prospective effect only.