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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37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. J-A14011-16
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29 A.3d 824 (Pa.Super. 2011) (unpublished memorandum).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
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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. J-A14011-16
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
-3- J-A14011-16
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
-4- J-A14011-16
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
-6- 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 ....... = ;:::::, '- n c;;:; ::o ro The Lottie Ivy Dixon Revocable Trust (the Trust) was establishe~~985. ~or£ g ...... -0 ' . ' ::c '" , ....... z CJ)::::O -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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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.
-3- 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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