Court Opinion

ID: 4197285
Source: CourtListenerOpinion
Date Created: 2017-08-18 18:12:17.486447+00
Date Added: 2024-06-11T14:39:45.950081
License: Public Domain

J. S42032/17

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37

IN RE: ESTATE OF                        :     IN THE SUPERIOR COURT OF
DONALD KEITH BIRCHARD                   :           PENNSYLVANIA
A/K/A KEITH BIRCHARD                    :
                                        :          No. 141 MDA 2017
APPEAL OF: JANET BIRCHARD               :

             Appeal from the Order Entered December 28, 2016,
           in the Court of Common Pleas of Susquehanna County
                 Orphans’ Court Division at No. OC048-2015

BEFORE: OLSON, J., MOULTON, J., AND FORD ELLIOTT, P.J.E.

MEMORANDUM BY FORD ELLIOTT, P.J.E.:                FILED AUGUST 18, 2017

     Janet Birchard appeals the order of the Court of Common Pleas of

Susquehanna    County   that   denied   her   counterclaim   that   sought   an

accounting from the estate of Donald Keith Birchard (“Decedent”) 1 for

personal property taken from the 116 High Street property (“Property”), and

the return of that personal property or reimbursement for any property sold

by the estate as the claim was barred by equitable estoppel; her

counterclaim that sought rental income for the use of the Property by

Decedent and her counterclaim that sought reimbursement for accounts

receivable collected by Diana Birchard (“appellee”) for work performed by

1
  Decedent was the son of Donald and Janet Birchard and the husband of
Diana Birchard.
J. S42032/17

B & D Plumbing, Heating, and Electrical (“B & D”).2 After careful review, we

affirm.

      The relevant facts and procedural history, as found by the trial court,

are as follows:

                   On October 27, 2014, Donald Keith Birchard
            a/k/a Keith Birchard (hereinafter referred to as
            [D]ecedent) died. On November 4, 2014, [appellee],
            [D]ecedent’s      widow,     was     granted    letters
            testamentary appointing her as the Executrix of
            [D]ecedent’s estate. On June 9, 2015, [appellee]
            filed a petition seeking access to a business property
            located at [the Property]. [Appellee] contended that
            some of [D]ecedent’s assets were stored at that
            premises and that the assets were necessary to
            conclude the administration of the Estate.         The
            person in control of the [Property] was [D]ecedent’s
            mother, [appellant].

                   On June 22, 2015, [appellant] filed an answer
            to the petition seeking access to the [Property].
            [Appellant] did not consent to [appellee] having
            access to the [Property] except “as part of a ‘global’
            resolution of issues between the parties.” In this
            answer, [appellant] included a “new matter” and a
            “counterclaim” through which she contended that
            assets     belonging     to  her    late    husband,
            Donald Birchard, had been misappropriated by
            [D]ecedent’s estate. [Appellant] claimed damages
            relating to (1) rental income for the period of time
            that [D]ecedent utilized the [Property] for his
            business operations; (2) reimbursements for any
            accounts receivable relating to the former business

2
  The trial court also denied Diana Birchard’s petition that sought to seize
personal property from the Property.          The trial court found that
Diana Birchard’s counterclaim that sought reimbursement for her work
collecting accounts receivable for B & D and her work resolving outstanding
accounts payable of B & D was moot. The trial court denied Diana Birchard’s
counterclaim that sought compensation for Decedent’s unpaid wages for
work performed for B & D. Diana Birchard did not appeal these rulings.

                                     -2-
J. S42032/17

          operated by [appellant’s] late husband, but which
          were collected by [D]ecedent’s estate; and (3) an
          accounting of any assets or inventory of her late
          husband’s business taken by [D]ecedent’s estate
          (and reimbursement for any of her late husband’s
          assets or inventory sold by [D]ecedent’s estate).

                On July 13, 2015, [appellee] filed an answer to
          [appellant’s]    new     matter    and    counterclaim.
          [Appellee] also filed her own new matter asserting
          the    affirmative    defenses    of   (1)    estoppel;
          (2) impossibility of performance; (3) justification;
          (4) statute of limitations; and (5) unclean hands.

          ....

               On February 23, 2016, [appellant’s] counsel
          wrote to the Court requesting a trial date on
          [appellant’s] counterclaim. On February 26, 2016,
          [appellant] filed a formal petition seeking a hearing
          on her counterclaim. On March 1, 2016, this Court
          scheduled a hearing date for May 23, 2016.

                 On May 11, 2016, [appellee] filed an amended
          answer to [appellee’s] counterclaim in which
          [appellee] then asserted additional claims against
          [appellant].     While [appellee] maintained the
          position that [D]ecedent had taken over the business
          operations in total in April 2014, [appellee] raised
          the following claims in the event that it was
          determined that no formal transfer of the family
          business occurred: (1) quantum meruit relating to
          work performed by [appellee] in collecting the
          accounts receivable; (2) quantum meruit relating
          to work performed by [D]ecedent for [appellee’s]
          business for which he was never compensated; and
          (3) quantum meruit for [appellee’s] work in
          resolving debt owed by respondent in connection
          with the former business entity.

                A hearing was held on May 23, 2016. Each
          party has submitted supporting briefs and the matter
          is now ripe for disposition.

                                   -3-
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          II.   Findings of Fact

          1.    [Appellant] and    Donald   I.   Birchard   were
                married in 1958.

          2.    During the parties’ marriage, Donald I.
                Birchard owned and operated a business
                known as [B & D] which had a business
                location and building at [the Property].

          3.    Donald I. Birchard initially owned and operated
                [B & D] with Charles C. Dietrich, Jr., as
                partners.

          4.    In 1974, Donald I. Birchard bought out
                Charles C. Dietrich, Jr.’s interest in the
                partnership and [B & D] became a sole
                proprietorship.

          5.    Decedent was born on April 1, 1959. Decedent
                is the son of Donald I. Birchard and
                [appellant]. Decedent spent most of his adult
                life as an employee of [B & D].        Decedent
                worked with his father at [B & D] for 30 years.

          6.    On October 9, 2010, Donald I. Birchard died
                testate leaving all of his estate to his wife,
                [appellant], which included [B & D].

          7.    Prior to his death in October 2010, Donald I.
                Birchard had been sick and [D]ecedent had
                been running the family business.

          8.    Aside from [D]ecedent, Gary Travis was the
                only other employee of the family business.

          9.    After the death of Donald I. Birchard,
                [D]ecedent continued to run the family
                business and [appellant] continued to assist
                with the bookwork, answering the phone,
                making deposits and writing out checks for
                payroll and other expenses. Decedent began
                sending out the bills and invoices for the work
                performed by [B & D].

                                   -4-
J. S42032/17

          10.   From 2010 through April 2014, [D]ecedent
                remained an employee of [B & D] and was paid
                an hourly wage of $23 per hour based upon a
                40 hour week.

          11.   [Appellant] continued to report the income
                from [B & D] on her income tax return.

          12.   On March 31, 2014, [appellant] closed [B & D].

          13.   On April 1, 2014, [D]ecedent formally took
                over his father’s business and began operating
                it as his own business under the name of
                Birchard Plumbing.

          14.   Terry Cooper, an employee at NBT Bank,
                testified that she assisted [D]ecedent in
                starting up his new business entity. Initially,
                [D]ecedent simply wanted to use the pre-
                existing business name of [B & D], but was
                unable to do so because he was not an owner
                of that business entity. Decedent discovered
                that he needed to start a separate business
                entity, Birchard Plumbing.

          15.   Decedent opened up a new business account
                and [appellant’s] name was placed on the new
                account. Decedent was the sole proprietor of
                Birchard Plumbing.

          16.   Decedent also purchased a new truck for
                Birchard Plumbing.

          17.   [Appellant] continued to assist in the transition
                of the business and transferred monies
                ($800.00) in April 2014 from the Birchard
                Plumbing business account into [B & D]
                account to cover expenses for unemployment
                compensation     fund   payments      and     tax
                payments.

          18.   At the time that [D]ecedent created the new
                business of Birchard Plumbing, there was still

                                   -5-
J. S42032/17

                outstanding work that had been contracted out
                through [B & D]. Gary Travis completed this
                prior work and the payments were received by
                Birchard Plumbing -- not [B & D] -- and placed
                in the Birchard Plumbing business account.

          19.   Decedent was making deposits into the
                Birchard Plumbing account of payments
                received from work performed by [B & D].
                [Appellant] never demanded that [D]ecedent
                remit any monies to her for the work
                performed by [B & D].

          20.   After March 31, 2014, when a payment was
                received for work previously performed by
                [B & D], [appellant] turned this money over to
                [D]ecedent for deposit into the account of
                Birchard Plumbing.

          21.   Birchard Plumbing operated out of the same
                address as [B & D], namely [the Property].

          22.   Decedent never paid respondent any rent for
                the [Property], and [D]ecedent and [appellant]
                never discussed any rental arrangement.

          23.   [Appellant]  admitted that she   allowed
                [D]ecedent to use [the Property] without
                paying any rent.

          24.   [Appellant] closed out all of the former
                business accounts and took no efforts
                whatsoever to collect on any accounts
                receivable relating to [B & D].

          25.   After the creation of Birchard Plumbing,
                [appellant] was turning over checks received
                for work performed by [B & D] to [D]ecedent
                for deposit into the Birchard Plumbing business
                account.      [Appellant] did not seek any
                reimbursement for these monies except to the
                extent necessary to pay any outstanding
                obligations of [B & D] debts and obligations.

                                  -6-
J. S42032/17

          26.   On October 27, 2014, [D]ecedent died.

          27.   On November 4, 2014, [appellee] probated
                [D]ecedent’s will and was appointed as the
                Executrix of [D]ecedent’s estate.

          28.   As part of her duties to the Estate, [appellee]
                attempted to obtain [D]ecedent’s assets,
                collect   outstanding    monies     owed     to
                [D]ecedent’s business, Birchard Plumbing, and
                pay the outstanding debts owed by Birchard
                Plumbing.

          29.   [Appellee] discovered that suppliers had
                continued to bill [B & D] even after Birchard
                Plumbing had been formally created.

          30.   [Appellee] made arrangements with some of
                the suppliers to return the inventory in order to
                pay off outstanding bills even where those bills
                were in the name of [B & D], not Birchard
                Plumbing.

          31.   [Appellee] sent out bills for unpaid work
                associated    with    [B & D] based  upon
                [D]ecedent’s records.

          32.   [Appellee] was able to identify $164,092.13 in
                outstanding accounts receivable for work
                performed by [D]ecedent (or Gary Travis)
                while they worked for [B & D] prior to April 1,
                2014. As of the date of the hearing in this
                matter, [appellee] had collected $95,691.40 in
                accounts receivable for work performed prior
                to April 1, 2014.

          33.   [Appellant] has never personally taken any
                steps whatsoever to collect on any outstanding
                accounts receivable associated with [B & D].

          34.   [Appellant] never made any claim to the
                revenues generated from collection of accounts
                receivable from [B & D] until [appellee] filed
                her request to gain access to [the Property] in

                                   -7-
J. S42032/17

                    order to seize personal Property she believed
                    belonged to [D]ecedent’s estate. [Appellant’s]
                    assertion that she was entitled to the former
                    accounts receivable associated with [B & D]
                    was made 8 months after [D]ecedent’s death,
                    and 14 months after [B & D] ceased operation
                    and Birchard Plumbing took over all of its work
                    and accounts.

            35.     [Appellee] has never paid [appellant] any
                    monies in connection with the collection efforts
                    that related to work (and materials) that
                    occurred prior to April 1, 2014 while
                    [D]ecedent was working for [B & D].

Trial court opinion, 12/27/16 at 1-8 (footnote and citations omitted).

      The trial court determined that appellant made a gift of B & D to

Decedent which became the property of Decedent’s estate under the

administration of appellee.     As a result, the trial court ruled that none of

appellant’s claims had merit. On January 16, 2017, appellant filed a timely

notice of appeal.

      On appeal, appellant raises the following issues for this court’s review:

            [1.]    Did the [trial court] err in determining that
                    [a]ppellant “gifted to [D]ecedent on April 1,
                    2014, the business entity known as [B & D]
                    together with its supplier accounts, accounts
                    receivable and use of [the Property]”?

            [2.]    Did the [trial court] misapply the law of “gift”
                    with respect to the creation of a “presumption”
                    with respect to an alleged gift of the business
                    entity known as [B & D] together with its
                    supplier accounts, accounts receivable and use
                    of [the Property]?

            [3.]    Did the [trial court] err in its application of the
                    law of “gift” to the facts of this case?

                                       -8-
J. S42032/17

            [4.]   Did the [trial court] err in failing to determine
                   that the amounts of “accounts receivable”
                   owned by [B & D] that were collected by
                   [a]ppellee actually belonged to [a]ppellant to
                   whom these amounts should have been paid?

            [5.]   Did the [trial court] err in its interpretation of
                   actions taken by [a]ppellant concerning
                   [D]ecedent’s business started April 1, 2014?

            [6.]   Did the [trial court] err in failing to recognize
                   that the [D]ecedent acted as an employee of
                   [a]ppellant at all times prior to April 1, 2014?

            [7.]   Did the [trial court] err in dismissing the
                   counterclaim of [a]ppellant seeking payment of
                   monies due from [a]ppellee to [a]ppellant as
                   owner of [B & D]?

Appellant’s brief at 2-3.

      Initially, appellant contends in the argument section of her brief that

until March 31, 2014, Decedent was an employee of B & D.3

      This court’s review of a decision of an Orphans’ Court is as follows:

                   Our standard of review of the findings of
                   an [O]rphans’ [C]ourt 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,

3
 Appellant has presented her issues in a different sequence in the argument
section of her brief than she did in her “Questions Raised on Appeal.”

                                      -9-
J. S42032/17

                     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, 678-679,
           appeal denied, 758 A.2d 1200 (Pa. 2000).
           (internal citations and quotation marks omitted).
           “[T]he Orphans’ [C]ourt 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, 847 A.2d
1287 (Pa. 2003).

In re Estate of Whitley, 50 A.3d 203, 206-207 (Pa.Super. 2012) (internal

citations and quotation marks omitted).

     Appellant agrees with the trial court’s findings that Decedent spent

most of his adult life as an employee of B & D and that from 2010 through

March 31, 2014 Decedent remained an employee at B & D.             It is not in

dispute that Decedent was an employee of B & D through March 31, 2014.

However, appellant raises this issue because the trial court referred to

Decedent as the “de facto” owner of B & D. While Decedent did perform a

wide variety of tasks for B & D after the death of his father and was in

charge of the day-to-day operations of the business, he was not the owner.

However, the resolution of this issue does little to resolve the central

question of whether the trial court erred or abused its discretion when it

determined that appellant made a gift of B & D to Decedent.

                                   - 10 -
J. S42032/17

      Appellant next contends that since the death of her husband in 2010,

she has been the owner of B & D and continued to report the income from

B & D until March 31, 2014, on her income tax return as the trial court found

in Finding of Fact No. 11. However, she questions the accuracy of Finding of

Fact No. 12 that she closed B & D because, according to her, she never

closed it. She just stopped operating a plumbing business. Again, it is not

clear whether this difference is significant.     B & D did not operate as a

plumbing business after April 1, 2014.       It is also not clear that the term

“closed” is different than “stopped doing plumbing business.”      (Appellant’s

brief at 10.)

      Appellant also asserts that Decedent was never the “real owner” of

B & D. Appellant takes issue with the trial court’s description of Decedent’s

role in B & D after the death of her husband, i.e., “there would have been no

[B & D] after October 9, 2010 but for [D]ecedent’s work, long hours and

efforts to keep the family business afloat.” (Trial court opinion, 12/27/16 at

9-10.)   Appellant asserts that there is no evidence that B & D would not

have survived without Decedent’s efforts as other plumbers could have been

employed. The record does not indicate that the business would not have

survived without Decedent.     The record does reflect that he worked very

long hours at a variety of tasks.

                                    - 11 -
J. S42032/17

      Appellant next contends that the concept of “gifts” was not pled or

argued before the trial court by appellee. However, other than stating this

point, appellant does not really raise an issue for this court’s review.

      Appellant next contends that the trial court erred when it found that

there was donative intent on the part of appellant to give the accounts

receivable of B & D to Decedent.

      In order to be considered a valid inter vivos gift, a gift:

            requires donative intent, delivery, and acceptance.
            There must be evidence of an intention to make a
            gift accompanied by delivery, actual or constructive,
            of a nature sufficient not only to divest the donor of
            all dominion over the property, but to invest the
            donee with complete control.              All of the
            circumstances must be considered in determining
            whether a gift was made. Donative intent can be
            inferred from the relationship between the donor and
            donee.

In re Estate of Moskowitz, 115 A.3d 372, 386 (Pa.Super. 2015), appeal

denied, 130 A.3d 1291 (Pa. 2015) (internal citations and quotation

omitted).

      Appellant asserts that with respect to the accounts receivable,

appellant possessed neither donative intent nor delivery. As of the date of

the hearing before the trial court, the trial court found that appellee had

collected $95,691.40 in accounts receivable for work performed prior to

April 1, 2014, or in other words, for work performed for or by B & D.

Appellant argues that it is very unlikely that appellant, who was 74 years old

at the time with no other means of support, would just give this money

                                     - 12 -
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away.     Appellant also adds that there is no evidence that she gave the

business (B & D) to Decedent either in 2014 or ever.

        With respect to this issue, the trial court determined:

              The record in this case clearly demonstrates that
              [appellant] made an inter vivos gift of the family
              business to [D]ecedent on April 1, 2014. Given the
              familial nature of the gratuitous transfer of this
              business, the evidentiary burden is slight and it has
              been overwhelmingly met. Decedent had worked for
              the family business for 30 years. Decedent had run
              the family business when his father became ill.
              Decedent continued to run the family business after
              his father died. Upon learning that [D]ecedent could
              not continue to operate under the business name of
              [B & D], [D]ecedent started his own business,
              Birchard Plumbing, on April 1, 2014. [Appellant] was
              involved in the creation of this business entity.
              [Appellant] closed out the business accounts of
              [B & D] and took no steps whatsoever to collect on
              any accounts receivable. When checks came in for
              work performed by [B & D], [appellant] personally
              turned them over to [D]ecedent for deposit into the
              new business account. [Appellant] never sought any
              reimbursement for these payments from Birchard
              Plumbing.     The new business also paid off the
              outstanding debt of the old business account. After
              April 1, 2014, [appellant] demonstrated no
              ownership interest whatsoever in any aspect of the
              family business now known as Birchard Plumbing.
              [Appellant] never even discussed any rent for the
              use of [the Property] by Birchard Plumbing. As of
              April 1, 2014, [D]ecedent had total control over the
              family business and [appellant] had withdrawn
              herself to simply being a signatory on the new
              business account.      Thus, there is overwhelming
              evidence that [appellant] intended to give her son
              the family business and that she delivered and
              transferred the family business over to him.

                    Given this evidence, there is a presumption
              that [appellant] gifted to [D]ecedent on April 1, 2014

                                      - 13 -
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            the business entity known as [B & D] together with
            its supplier accounts, accounts receivable and use of
            [the Property]. Not only was [D]ecedent that natural
            object of [appellant’s] bounty, but [D]ecedent ha[d]
            spent nearly his entire adult life working for the
            family business and it would have simply terminated
            but for his efforts to keep it up and running through
            his father’s illness and after his father’s [death]. In
            order to rebut the presumption that the family
            business was gifted to [D]ecedent, [appellant]
            needed to present clear and convincing evidence that
            she had a contrary intent. [Appellant] has failed to
            present any evidence that she had a contrary intent.
            [Appellant] has failed to present any evidence at all
            that would suggest a contrary intent. Rather, the
            evidence points to but one conclusion, [appellant]
            intended for [D]ecedent to take over the family
            business in its entirety as of April 1, 2014 and she
            actively assisted [D]ecedent in making the transition
            to Birchard Plumbing.

                  For this reason, [appellant] has failed to
            sustain her burden of proof as it relates to her claims
            for (1) rental income in connection with the use of
            [the Property] between April and October 2014, and
            (2) reimbursement for the collection of any accounts
            receivable recovered by the Estate for any work
            performed prior to April 1, 2014.

Trial court opinion, 12/27/16 at 14-15 (footnote omitted).

      Appellant argues that the factors cited by the trial court as evidence of

a gift of the accounts receivable are, instead, consistent with appellant

making it easier for Decedent, her son, to start his new business. While it is

true that these factors could indicate just that appellant was helping her son,

they also support the alternate determination made by the trial court that

appellant gave the business of B & D to her son.

                                    - 14 -
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      Appellant also argues that there was no delivery of the accounts

receivable because appellee removed the records containing the accounts

receivable from the Property. However, the trial court found that appellant

had given the use of the Property to the Decedent for the business, so it

would logically follow that the records of the business would be located at

the Property. This argument does not persuade this court.

      Appellant next contends that the trial court incorrectly applied the

burden of proof and presumptions in this case.

      “Initially, the burden is on the alleged donee to prove a gift inter vivos

by clear, precise and convincing evidence. Once prima facie evidence of a

gift is established, a presumption of validity arises and the burden shifts to

the contestant to rebut this presumption by clear, precise and convincing

evidence.”   Hera v. McCormick, 625 A.2d 682, 686 (Pa.Super. 1993)

(citations omitted). Further, where the transfer is from a parent to a child,

the action of the donor is viewed as natural and less evidence is needed to

establish the intent to give a gift. See Brightbill v. Boeshore, 122 A.2d
38, 41-42 (Pa. 1956).

      Appellant asserts that, even given the reduced burden of proof for a

parental transfer, that appellee did not establish that appellant made an

inter vivos gift.

      A review of the record reveals that appellee testified that appellant and

Decedent had a conversation after appellant’s husband’s death that it was

                                    - 15 -
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not fair for Decedent to resume all the responsibilities of the business and it

not be his. (Notes of testimony, 8/29/16 at 57.) Appellee also explained

that appellant took $800 from the Birchard Plumbing bank account to pay

taxes for the first quarter of 2014 for B & D.     (Id. at 60.)   Appellee also

testified that appellant was aware that appellee was collecting accounts

receivable for amounts owed to B & D.        (Id. at 61-65.)   In fact, appellee

reported that appellant filled out the deposit slips and did not demand any of

the money. (Id. at 66-67.) Appellee also handled the return of inventory

and payments to suppliers for goods that were purchased by B & D. (Id. at

71-72.)   Appellee further explained that, after the creation of Birchard

Plumbing, Decedent continued to purchase inventory under the B & D

account. (Id. at 74.)

      This testimony supports the findings and conclusions of the trial court

that appellant transferred the assets and liabilities of B & D to Birchard

Plumbing when Decedent commenced operating as Birchard Plumbing. This

court finds no abuse of discretion or error of law by the trial court in the

application of the burden of proof and that appellee met her burden of

proof.4

4
  Appellant concedes that there were gifts from her to Decedent but that the
whole business and the accounts receivable were not given to Decedent.
Appellant further argues that there was no evidence that she was aware that
work that had been contracted out through B & D was completed by Birchard
Plumbing and placed in the Birchard Plumbing account. Similarly, there was
no evidence that deposits were made into the Birchard Plumbing account
with appellant’s knowledge.      However, appellee entered into evidence

                                    - 16 -
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     Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/18/2017

deposit slips in appellant’s handwriting from this period. Appellant also
seeks rental payments of $1,000 per month for the six months that
Decedent operated Birchard Plumbing. There is no record of appellant ever
requesting rent from Decedent. Given that the trial court found that
appellant gave the business to Decedent, that presumably included the use
of the Property.

                                 - 17 -