Court Opinion

ID: 9747774
Source: CourtListenerOpinion
Date Created: 2023-08-27 15:33:49.934865+00
Date Added: 2024-06-11T07:25:27.018061
License: Public Domain

Dissenting Opinion by
Mr. Justice Bell:
Did the deposit of moneys by Mrs. Ingels in a savings account opened by her titled “Mrs. William M. In-gels in Trust for James M. Peck” plus her acts and declarations, create a revocable or irrevocable trust? Prior-to the dictum in Scanlon's Estate, 313 Pa. 424, 169 A. 106, which adopted “The Totten tentative trust doctrine” the law of Pennsylvania was clearly established that (1) the deposit of a sum of money in a bank in the name of the donor as trustee for the named beneficiary created a valid trust, and (2) such facts were sufficient to make out a prima facie case of an irrevocable trust for the beneficiary: Estate of Hugh Gaffney, 146 Pa. 49, 54, 23 A. 163; Merigan v. Mc-*181Gonigle, 205 Pa. 321, 54 A. 994. In the latter case, this Court reaffirmed the rule even though no notice of the trust was given to the beneficiary and said, inter alia (page 327) : “Retention of the pass book by the depositor is not, under the circumstances here, decisive against the validity of the trust: Martin v. Punk (N.Y.) 31 Am. Rep. 446; Atkinson’s Petition (R.I.), 27 Am. St. Rep. 745; Smith v. Bank (N.H.), 10 Am. St. Rep. 400; Connecticut River Savings Bank v. Albee, supra. Its possession was necessary, as in other cases of a deposit by a trustee, in order to enable the depositor to perform her duties as trustee of the fund deposited. Without anything disclosing a contrary intention, it will be presumed that she retained the book as trustee, and not in her individual capacity. ”
What was the Totten case? In Matter of Totten, 179 N.Y. 112, decedent created numerous deposit trusts, one of them a deposit in trust for Emile R. Lattan. The decedent always treated the account as her own, drawing against it repeatedly and making new deposits from time to time as she thought best. She never spoke to the beneficiary or to anyone about this account or stated what her intention was in opening it. She retained possession of the pass book and no one except the depositor and the officers of the bank knew of the existence of the account until after her death. The New York Court held that those facts and circumstances clearly demonstrated that the decedent had no intention of creating an irrevocable trust for Emile R. Lat-tan; but reversing many of their prior decisions laid down a new presumption, doctrine or rule: “A deposit by one person of his own money, in his own name as trustee for another, standing alone * does not establish an irrevocable trust during the lifetime of the deposi*182tor. It is a tentative trust merely, revocable at will, until the depositor dies or completes the gift in his lifetime by some unequivocal act or declaration, such as delivery of the pass book or notice to the beneficiary The reasons given for this new presumption or doctrine is that “It became a common practice for persons to make deposits in that form in order to evade restrictions upon the amount one could deposit in his own name . . . and [by evading such restrictions] obtain a higher rate of interest . . . .” In other words, the law of trusts was changed in order to enable a depositor to deceive a savings bank and to evade statutory or banking restrictions and thus obtain more interest. This doctrine or rule has also been justified subsequently on the ground that the trust is a poor man’s will, thus evading and nullifying the requirements of the Wills Act.**
It is clear from the opinion in Matter of Totten that the basis for the new presumption or doctrine (which was not called to the attention of this Court) is founded upon an intent and a device to deceive; it establishes a presumption contrary to the prima facie meaning of the depositor’s language; it is admittedly contrary to the general law of trusts; and for these reasons it is unjustifiable and should no longer be followed in Pennsylvania.
However, even if the Totten Trust Rule is reaffirmed, under no circumstances can the decision of the majority be legally or morally justified. Where, as here, the settlor deposits cash in a savings account in trust for the beneficiary and notifies the beneficiary that she has created a trust for him, the majority opin*183ion flies in the teeth of the Totten Eule and of the recent decisions of this Court which followed the Totten Eule, as well as in the teeth of all the leading text writers.
Authorities agree that two essential elements are requisite to constitute a valid gift inter vivos: (1) An intention to make the gift, and (2) an actual or constructive delivery which divests the donor of his dominion over the subject. Moreover, the burden of proof is upon a person claiming an inter vivos gift and the proof thereof must be clear and convincing: Sullivan v. Hess, 241 Pa. 407, 88 A. 544; Reese v. Trust Company, 218 Pa. 150, 67 A. 124; Smith’s Estate, 237 Pa. 115, 85 A. 76. All authorities are in accord that whether the deposit of cash in a savings bank in the name of the depositor in trust for another is a tentative or revocable trust or an irrevocable trust or no trust at all, depends upon the intention of the parties; hence evidence is admissible in all such cases to show what the actual intention of the depositor or donor was, and this intention can be shown by the statements, declarations, admissions, acts and conduct of the parties. Matter of Totten, 179 N. Y., supra, and the law of “Eestatement of Trusts”, and all the leading text authorities and even the recent leading Pennsylvania authorities upon which the majority rely — all hold that the presumption or rule that a revocable trust was intended by the deposit of cash in a savings bank account in trust for a named beneficiary may be overcome “by some unequivocal act or declaration such as . . . notice to the beneficiary”. Scanlon’s Estate, 313 Pa. 424, 427, 169 A. 106; Vierling v. Ellwood City F. S. & L. Assn., 356 Pa. 350, 354, 52 A. 2d 224; McGary Estate, 355 Pa. 232, 239, 49 A. 2d 350; Scott on Trusts, Sec. 58.1; Restatement, Trusts, Sec. 58, Comment a. In McGary Estate, 355 Pa. 232, 239, 49 A. 2d 350, this Court adopt*184ed Comment a of the Eestatement, Trusts, See. 58, as follows: “Although notice to the beneficiary is not essential to the creation of a trust, notification by the depositor to the beneficiary of the deposit is evidence of an intention that the trust should be irrevocable, whether such notification is given at the time of the deposit or subsequently . . . Professor Austin Wakeman Scott (author of the Law of Trusts) in 43 Harv. L. R. 521, 541, thus states the law: “Thus, if he [the depositor] notifies the beneficiary of the trust ... or if he makes statements showing his intention to create an irrevocable trust, the trust will be irrevocable at the outset or become irrevocable during the lifetime of the depositor . . . .”
In the light of all these authorities it is clear that Mrs. Ingels evidenced her intention to make these gifts absolute or irrevocable by notifying the beneficiary half a dozen times that she had placed these moneys in trust for him, as well as by the character of these gifts. Assuming that Peck, the beneficiary, had the burden of proof, the declarations, acts and conduct of the donor clearly showed her intention shortly after the original deposit and at the time of each subsequent Christmas, birthday and other gifts to create an absolute or irrevocable trust for Peck. For example seven weeks after Mrs. Ingels opened the account in the name of “Mrs. William M. Ingels in Trust for James M. Peck” she notified the claimant by letter of November 17, 1942, that she had made him a graduation gift by leaving money in the Peoples-Pittsburgh Bank in trust for him and his heirs. The pertinent provisions of this letter are as follows: “Dearest Jim: ... It shall not be much over a week, when you receive this, before you shall be graduated. When I heard about Officer’s Training Camp, etc., I began to wonder what little gift I could send you, but my doc*185tor bills and dentist bills have come to away over $300. and my dividends are not half, what they were even last year.
“So I went to the Peoples-Pittsburgh Bank about six or seven weeks ago and where I have had a small saving’s account there for ten or twelve years.
“It accumulated nicely for some years because they paid 3% and I had three bonds but they are all gone which were left there & the coupons put in; but now they only pay 1%. Any way, as a graduating gift, I have had that money left in the Peoples-Pittsburgh-Bank “The Oakland Branch’, but in trust for you and your heirs. [Could a layman use clearer language?]
“It is only a few thousand dollars, but when I die, it may come in handy, for you or Virginia Lee or children and you can feel that I only wish it were more, but that I love you—
“When the war is over & our debt is slowing down, it may again pay 2% — That seems better to me, than to draw it out for Christmas gifts. So we shall forget about it, except to say that I gave your address 727 Maine St. Vallejo, California .... [signed] Aunt Bess”.
It will be noted that Mrs. Ingels does not speak of a future gift or of her intention to make a gift but that she has already left the money in the bank in trust, not for herself, but “for you and your heirs” as a graduation gift; and she notified the bank of his address. Combined with the language of the deposit— “Mrs. William M. Ingels in Trust for James M. Peck” —that is clear, direct and convincing evidence that Mrs. In gels actually and intentionally created a gift for Peck as a graduation present.
Moreover, on June 20, 1945, Mrs. Ingels added a little more money to Peck’s trust fund and wrote him a confirming letter, the pertinent part of which is: “I *186have written the Peoples Pittsburgh Bank and you now have a little more money in the trust.” “You now have a little more money in the trust” means to me exactly what it says — it doesn’t mean, as the majority interpret it, to wit, I have put a little more money in the trust for myself.
Again, three and a half months later, on October 5, 1945, Mrs. Ingels wrote Peck: “Speaking of Christmas: — shall I send you some little gift or add a check to your trust fund as I did on your birthday?” Can one imagine interpreting this letter to mean: Shall I send you some little Christmas gift or shall I add a check to my trust fund for myself as I did on your birthday? Yet that is the interpretation which the majority necessarily place upon this letter and upon this birthday gift and Christmas gift.
Moreover, Mrs. Ingels on three different occasions made a gift of $10.00 to him which she deposited in his trust account. Isn’t it ridiculous to say that she made those $10.00 gifts — and a Christmas gift to him and a birthday gift to him — to herself, or that she tentatively made them to him but reserved the right to rescind them and take them back at any time she desired? These declarations and this conduct make it unmistakably clear that the donor, Aunt Bess, intended to make each of these gifts to “Dearest Jim” an absolute and unqualified one at the time of each of the above mentioned letters and deposits.
These facts, this conduct and these declarations of Aunt Bess are legally sufficient even under Scanlon’s Estate, 315 Pa. supra, and Matter of Totten, 179 N. Y. supra, and all the authorities hereinabove cited, to establish an absolute or irrevocable trust for the boy she called “dearest Jim” since they all hold that “A deposit by one person of his own money, in his own name as trustee for another, standing alone, ... is a tentative *187trust . . revocable at will, until the depositor . . . completes the gift in his lifetime by some unequivocal act or declaration such as ... notice to the beneficiary.”
Six days prior to her death Mrs. Ingels withdrew the money from Peck’s trust fund* and deposited it in a new account in her own name. This she was without legal power to do. If Mrs. Ingels had prior thereto created an absolute or irrevocable trust for Peck it is indisputably clear that (in the absence of fraud, mistake or exceptional circumstances not here present) she could not thereafter change her mind and revoke or rescind it: Cf. Potter v. Fidelity Ins. Trust Etc., Co., 199 Pa. 360, 49 A. 85; Rynd v. Baker, 193 Pa. 486, 44 A. 551; Miller Trust, 351 Pa. 144, 40 A. 2d 484. Appellee points out that in the original letter from decedent notifying Peck of the trust which she had created for him at the Peoples Pittsburgh Bank she evidenced an intention to reserve the income therefrom for herself and postpone the payment of the principal to him until her death. This is, of course, a perfectly valid and customary inter vivos trust (See Windolph v. Girard Trust Company, 245 Pa. 349, 91 A. 634); the reservation of the income to the settlor for life without more does not make the trust revocable or affect or refute the trust’s irrevocability.
The majority correctly state that appellant admits, as he must under Scanlon’s Estate, 313 Pa., supra, that the mere designation “trustee for James M. Peck” creates prima facie a revocable trust, but appellant of course contended, and I am convinced correctly so, that this was overcome by the donor’s subsequent declarations, letters, acts and conduct hereinabove set forth.
*188The majority point out that Mrs. Ingels had twice previously set up accounts in trust for a named beneficiary and subsequently had withdrawn those funds, thereby demonstrating that she had intended only a revocable trust. The majority failed to note that in the only prior trust account as to which there is detailed evidence, her signature card permitted her to withdraw moneys from the fund whenever she desired, thus demonstrating, contrary to the majority’s view, that she knew how to make a revocable trust when she so desired.
If the equivocal declarations made in Irvine’s Estate, 372 Pa. 110, 92 A. 2d 544, which were refuted by claimant’s own admissions, constituted clear, direct, precise and indubitable evidence to establish a claim against a decedent’s estate, a fortiori, the declarations, admissions, acts and conduct of this donor which were far, far stronger in favor of the claimant, indubitably constituted clear, positive and convincing evidence to establish an absolute or irrevocable trust for Peck.
Justice Musmanno joins in this dissenting opinion.

 Italics throughout, ours.

 Por a discussion of the pitfalls into which the Totten rule leads and the inconsistent decisions of the Courts in applying it, see Scott on Trusts, Vol. I, §58.4 et sect.

 Mrs. Ingels also withdrew $100. in July, 1943, representing “interest” and $100. in August, 1949, representing “interest”.