Court Opinion

ID: 4016212
Source: CourtListenerOpinion
Date Created: 2016-07-15 19:13:59.483425+00
Date Added: 2024-06-11T09:20:52.797281
License: Public Domain

J-A14011-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

IN RE: ESTATE OF LOTTIE IVY DIXON              IN THE SUPERIOR COURT OF
                                                     PENNSYLVANIA

APPEAL OF: GEORGE F. DIXON, III AND
RICHARD E. DIXON

                                                    No. 1838 MDA 2015

            Appeal from the Order Entered September 28, 2015
           In the Court of Common Pleas of Cumberland County
           Orphans' Court at No(s): 21-07-0686 Orphans’ Court

BEFORE: BOWES, OTT AND PLATT,* JJ.

MEMORANDUM BY BOWES, J.:                              FILED JULY 15, 2016

      George F. Dixon, III, and Richard E. Dixon appeal from the September

28, 2015 order dismissing their objections to and confirming an account filed

by the trustee of a trust, Appellee M & T Bank. We affirm.

      Lottie Ivy Dixon, a widow, died testate on June 28, 2007. On July 25,

2007, the Register of Wills of Cumberland County admitted to probate her

November 16, 2005 last will and testament, and it granted letters

testamentary to the executor named therein, Marshall L. Dixon.        Each of

Lottie’s four children, Marshall, George, Richard, and Charlotte E. Dixon,

received specific bequests. Lottie left her residuary estate to the Lottie Ivy

Dixon Revocable Trust, which was created by an August 19, 1985 trust

* Retired Senior Judge assigned to the Superior Court.
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agreement between Lottie, as settlor, and Dauphin Deposit Bank and Trust

Company, which is the predecessor in interest to Appellee, as trustee (the

“Trust”). The Trust’s beneficiaries were Lottie’s four children.

      After the will was probated, Appellants filed a petition for appointment

of an administrator pro tem.     Appellants leveled allegations of misconduct

against Marshall, claiming that Lottie’s mental health deteriorated in 1999

and suggesting that Marshall defrauded Lottie of at least $1,500,000

between 1994 and her death.          Specifically, Appellants contended that

Marshall used Lottie’s money to buy expensive items and vacations for

himself. In their petition, Appellants asked that an administrator pro tem be

appointed to determine if Marshall acted wrongfully by taking assets from

Lottie without her consent and averred that Marshall, as executor, had a

conflict of interest for purposes of such an investigation.

      The court referred the petition to an auditor, who recommended that it

be denied. The court thereafter adopted that recommendation. Appellants

filed an appeal to this Court from the denial, and we quashed, concluding

that the order was interlocutory and unappealable. In re Estate of Dixon,

29 A.3d 824 (Pa.Super. 2011) (unpublished memorandum).

      On June 26, 2013, Appellee, in its capacity as trustee of the Trust,

filed a First and Partial Account that covered disbursements that it made to

Lottie during her lifetime. That account revealed $1,882,174.01 in principal

and $929,323.73 in income was distributed to Lottie from August 19, 1985

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to June 28, 2007. The Trust had remaining assets of $11,486.72. On July

26, 2013, Appellants filed seventeen objections to the account.

      On September 13, 2013, Appellee filed a motion to strike the

objections, maintaining that Appellants lacked standing to challenge any

distributions that it made from the Trust, which was fully revocable, to Lottie

while she was alive.   After oral argument, the orphans’ court determined

that Appellants had standing, denied fifteen objections, and asked Appellee

to more fully delineate the nature of two disbursements to Lottie since they

were not adequately explained in the account.       Appellants filed a second

appeal, which was quashed since the order on appeal was not final in that it

required Appellee to perform corrections to the account.        In re Estate

Dixon, 122 A.3d 459 (Pa.Super. 2015) (unpublished memorandum).

      The corrections were made, the remaining two objections were

dismissed, and the account was confirmed. This appeal followed. Appellants

raise these averments on appeal:

      A. Did The Orphans' Court Err By Overruling The Objections
      Relating To The Management of The Trust?

            1. Did the Orphans’ Court Err By Applying 20 Pa.C.S.
            § 7753(a) And Holding That The Duties of Corporate
            Trustee, M&T, Were Owed Only To The Settlor, Lottie
            Ivy Dixon, During Her Lifetime Despite The Language
            Of The Revocable Trust Instrument Imposing A Duty
            on the Corporate Trustee, M&T, To Exercise Its
            Powers In The Best Interests Of The Beneficiaries?

            2. Did the Orphans’ Court Err And Abuse Its
            Discretion By Holding That The Objections To M&T’s

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            Failing to Require Lottie Ivy Dixon To Request
            Distributions in Writing Are Irrelevant Because She
            Clearly Consented to M&T’s Behavior?

Appellant’s brief at 5.

      Initially, we outline the applicable standard of review:

         Our standard of review of the findings of an Orphans' Court is
      deferential.

            When reviewing a decree entered by the Orphans'
            Court, this Court must determine whether the record
            is free from legal error and the court's factual
            findings are supported by the evidence. Because the
            Orphans' Court sits as the fact-finder, it determines
            the credibility of the witnesses and, on review, we
            will not reverse its credibility determinations absent
            an abuse of that discretion.

            However, we are not constrained to give the same
            deference to any resulting legal conclusions.

      In re Estate of Harrison, 745 A.2d 676, 678–79 (Pa.Super.
      2000), appeal denied, 563 Pa. 646, 758 A.2d 1200 (2000)
      (internal citations and quotation marks omitted). “The Orphans'
      Court decision will not be reversed unless there has been an
      abuse of discretion or a fundamental error in applying the correct
      principles of law.” In re Estate of Luongo, 823 A.2d 942, 951
      (Pa.Super. 2003), appeal denied, 577 Pa. 722, 847 A.2d 1287
      (2003).

In re Fiedler, 132 A.3d 1010, 1018 (Pa.Super. 2016) (quoting In re

Estate of Whitley, 50 A.3d 203, 206–207 (Pa.Super. 2012)).

      Appellants first posit that the orphans’ court incorrectly ruled that,

under the revocable Trust, Appellee owed only Lottie a duty for purposes of

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the account, which covered distributions made during Lottie’s lifetime.       In

this respect, the orphans’ court applied 20 Pa.C.S. § 7753(a). 1 That section

articulates, “Regardless of the legal capacity of the settlor, the rights of the

beneficiaries are subject to the control of, and the duties of the trustee are

owed exclusively to, the settlor while a trust is revocable.” 20 Pa.C.S. §

7753(a).    The court correctly observed that this language plainly provides

the Appellee’s duty inured solely to the benefit of Lottie during her lifetime.

       Appellants also suggest that Appellee’s disbursements to Lottie were

improper since she requested them orally over the telephone rather than in

a written document.         In rejecting this position, the orphans’ court relied

upon 20 Pa.C.S. § 7789, which states, in pertinent part, “A trustee is not

liable to a beneficiary for breach of trust if the beneficiary consented to the

conduct constituting the breach . . . unless the consent . . . of the

beneficiary was induced by improper conduct of the trustee.” The orphans’

court further observed that, “An approval by the settlor of a revocable trust .

. . binds all the beneficiaries.” Id. The court concluded that, under these

precepts, Lottie consented to receiving the Trust’s funds by oral request and

that Appellants were bound by that consent.

____________________________________________

1
   Chapter 77 of the Probate, Estates, and Fiduciaries Code was enacted in
2005 and expressly applies, with two exceptions inapplicable herein, to all
trusts created before, on or after the effective date of Chapter 77’s
enactment.

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     After consideration of the facts, briefs, and applicable law, we conclude

that the rulings challenged on appeal are free from legal error and that the

court’s factual findings are supported by the record.       Based upon the

January 7, 2016 opinion of the Honorable Albert H. Masland, we affirm the

order dismissing Appellants’ objections and confirming the First and Partial

Account

     Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 7/15/2016

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                                                                                Circulated 06/22/2016 12:06 PM

IN RE:                                       IN THE COURT OF COMMON PLEAS OF
ESTATE OF LOTIIE IVY DIXON                   CUMBERLAND COUNTY, PENNSYLVANIA

                                           : 21-07-0686 ORPHANS' COURT

                  IN RE: OPINION PURSUANT TO PENNSYLVANIA RULE OF

                                APPELLATE PROCEDURE 1925

Masland, J., January 7, 2016:--
                                       I. Background                                                .......
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       The Lottie Ivy Dixon Revocable Trust (the Trust) was establishe~~985.                        ~or£             g
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                                                                                                              -i c:,
1985 to 2007, George F. Dixon Ill and Richard E. Dixon (the Brothers)~~                   ~aiQper~ ~
                                                                           =:     .-.,'? ~                    ,::,    0
beneficiaries and M&T (or iJs predecessor) was the sole trustee. The      B~t@:,8r~; b~me;                            ~
                                                                            • :;, <::::              1--'     -       (")
co-trustees in 2007 when their mother, Lottie Dixon, died.   On June 26, :20~~. M&1Nile~ ~
                                                                          ,          U,  C./)
                                                                          >          O')      .,,

a first and partial account of the Trust. The Brothers raised multiple objections to M&T's

account, generally objecting to the management of the trust and objecting to the format

of the account.

       M&T filed a motion to strike the objections. Following briefing and argument

thereon, the court determined, as a threshold matter, that the Brothers had standing to

object. and then addressing the merits, overruled all of the Brothers' objections save

two minor objections as to the form of the account, which we sustained.         Specifically,

the court referred the matter back to M&T for the purpose of providing an explanation

for two distributions that had been inadequately described in the accounting.                The court

stated, "[f]ollowing this minor correction, the accounting may be confirmed without the

appointment of an auditor." In re: Opinion and Order of Court, March 7, 2014 at 4.
21-07-0686 ORPHANS' COURT

       For reasons that are their own, the Brothers appealed that order immediately

without waiting for M&T to provide the minor corrections requested by the court. On

appeal, our Superior Court quashed, noting

              We are cognizant that the issues briefed and argued in this appeal will
      arise again as soon as the orphans' court enters a final order confirming the
      revised account. The expense of judicial resources and duplicative effort on the
      part of counsel is regrettable, but we lack discretion to overlook the jurisdictional
      flaw in Appellants' appeal. The record does not explain why Appellants failed to
      await an appealable final order.

      In re Estate of Dixon, 122 A.3d 459 n.2 (Pa. Super. Ct. 2015) (unpublished

memorandum).

      Subsequently, the case returned to the Orphans' Court, M&T made the

necessary corrections, and the accounting was confirmed.      Now, the matter is ripe for

appeal. The Brothers complain of the following matters on appeal:

      A. The Court erred by applying 20 Pa.C.S. §7753(a) and holding that the duties
      of the Trustee, M&T, were owed only to the Settlor, Lottie Ivy Dixon, during her
      lifetime.

       8. The Court erred by holding that the objection to M&T not requiring Lottie
       Dixon to request distributions in writing is irrelevant because she clearly
       consented to M&T's behavior.

Concise Statement of Matters Complained of on Appeal, filed November 12, 2015 at 1,

4.

                                      II. Discussion

       The Brothers first object to the court's conclusion that the duties of M&T were

owed only to the Settlor, Lottie Ivy Dixon, during her lifetime. The court disagrees.

       The PEF Code provides, "regardless of the legal capacity of the settlor, the rights

of the beneficiaries are subject to the control of, and the duties of the trustee are owed

exclusively to. the settlor while a trust is revocable." 20 Pa.C.S. § 7753(a) (emphasis

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21-07-0686 ORPHANS' COURT

added). Despite this clear statutory language, the Brothers insist that because this

portion of the PEF code was not yet enacted at the time of the challenged

disbursements, it cannot control. In support of this argument, they cite to an Official

Comment of the April 2005 Joint State Government Commission's Report of the

Advisory Committee on Decedents' Estates Laws relating to the applicability of

§7753(a). They quote:

        Sections 7780.3(1) and 7785(b) dictate when the rules of their respective
        sections become applicable. Under the common law, the past actions of
        trustees, beneficiaries and others regarding trusts are governed by the
        legal principle In effect when the actions occurred. Chapter 77 does not
        change those common law concepts.

Br. at 2 (emphasis supplied in brief).

        Thus, they argue that §7753(a) cannot apply to the past actions of the corporate

trustee, M&T. First, we note that the JSGCR was never made a part of the record and

though it is a publically available document, it was not without some effort that court was

able to locate a copy online.1 With the benefit of the entire document, it is clear the

Brothers have taken their quote out of context and implied that it was germane to

§7753(a). The full section of the Report reads as follows:

                                           APPLICABILITY
        (1) Except as provided in paragraph (2), the addition of 20 Pa.C.S. Ch. 77 shall
        apply to all trusts created before, on or after the effective date of this paragraph.

        (2) The following apply:

                 (i) The addition of 20 Pa.C.S. § 7737 shall not apply to oral trusts created
                 before the effective date of this paragraph.

                 (ii) The addition of 20 Pa.C.S. § 7752(a) shall not apply to trusts created
                 before the effective date of this paragraph.

1
 Available at: http://jsg.legls.state.pa.us/resources/    documents/ftp/publications/2005·41-
UTC%204%202005. pdf.

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21-07-0686 ORPHANS' COURT

       Comment: Sections 7780.3(/) and 7785(b) dictate when the rules of their
       respective sections become applicable. Under the common law, the past actions
       of trustees, beneficiaries and others regarding trusts are governed by the legal
       principle in effect when the actions occurred. Chapter 77 does not change those
       common law concepts.

JT. ST. GOVT. COMM. Report of the Advisory Committee on Decedent's Estates Laws

April 2005 at 133 (language quoted by Brothers italicized) (court's emphasis

underlined).

        Neither of the two limited carve out provisions who were to be applied only

prospectively is at issue here. The Brothers' argument would ignore the clear language

in section (1) quoted above that the overwhelming majority of the amendments to the

PEF Code were to apply to all trusts created before or after the effective date of those

changes. The Brothers' argument must fail.

       The Brothers' second objection, that it was error to deny that the Trustee bank

should have required Lottie Dixon to request distributions in writing, is also without

merit. The PEF Code provides:

       A trustee is not liable to a beneficiary· for breach of trust if the beneficiary
       consented to the conduct constituting the breach, released the trustee from
       liability for the breach or ratified the transaction constituting the breach, unless
       the consent, release or ratification of the beneficiary was induced by improper
       conduct of the trustee.

20 Pa.C.S.     § 7789 (emphasis added). Further, "[a]n approval by the settler of a

revocable trust ...   binds all the beneficiaries."   20 Pa.C.S. §7789, Uniform Law

Comment.

       Here, M&T has established that the Settlor, Lottie Ivy Dixon, requested

distributions of trust funds via telephone calls. These affirmative actions established her

consent to receive distributions without the formality of filing written requests. That

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consent binds all beneficiaries.    The Brothers'    claims regarding   M&T's failure   to require

a writing are immaterial where the Settlor clearly consented to the distributions.         The

Brothers' objection must fail.

                                        111. Conclusion

       For all these reasons. we respectfully submit that this court's orders should be

affirmed in all respects.

                                                      By the Court,

Kimberly M. Colonna, Esquire
100 Pine Street
P .0. Box 1166
Harrisburg, PA 17108-1166

Kevin J. Kehner, Esquire
Obermayer Rebmann Maxwell & Hippe! LLP
200 Locust Street, Suite 400
Harrisburg, PA 17101

Mark D. Bradshaw, Esquire
Stevens & Lee, P.C.
17 North Second Street
161h Floor
Harrisburg, PA 17101

Daniel L. Sullivan, Esquire
26 W. High Street
Carlisle, PA 17013

Charlotte Ivy Dixon
323 Bayview Street
Camden, ME 04843

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