In Re: Jackson, J., Appeal of: Townsend, P.

CourtSuperior Court of Pennsylvania
DecidedApril 17, 2020
Docket70 WDA 2019
StatusUnpublished

This text of In Re: Jackson, J., Appeal of: Townsend, P. (In Re: Jackson, J., Appeal of: Townsend, P.) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re: Jackson, J., Appeal of: Townsend, P., (Pa. Ct. App. 2020).

Opinion

J-A29010-19

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

IN RE: JOHN E. JACKSON AND SUE : IN THE SUPERIOR COURT OF M. JACKSON, CHARITABLE TRUST : PENNSYLVANIA : : APPEAL OF: POLLY J. TOWNSEND : AND WILLIAM R. JACKSON, JR. : : : : No. 70 WDA 2019

Appeal from the Order Entered December 11, 2018 In the Court of Common Pleas of Allegheny County Orphans' Court at No(s): 3999 of 1988

BEFORE: BENDER, P.J.E., KUNSELMAN, J., and PELLEGRINI, J.*

MEMORANDUM BY BENDER, P.J.E.: FILED APRIL 17, 2020

Polly J. Townsend and William R. Jackson, Jr. (“Individual Trustees”),

appeal from the December 11, 2018 order, approving a mediation settlement

agreement they entered into with co-trustee, PNC Bank, N.A. (“PNC”), to

resolve a dispute regarding the John E. Jackson and Sue M. Jackson Charitable

Trust (“Trust”). After careful review, we affirm.

John E. Jackson and Sue M. Jackson (“Grantors”) established the Trust

on February 6, 1950.1 It was created “solely for charitable purposes, and the

income and principal of the [T]rust estate is to be used for the sole benefit of

public charities….” Trust at ¶ 4. The Trust originally named two trustees—

W.R. Jackson (John E. Jackson’s younger brother) and Commonwealth Trust ____________________________________________

* Retired Senior Judge assigned to the Superior Court.

1 John E. Jackson lived until April of 1971, and Sue M. Jackson lived until January of 1994. J-A29010-19

Company of Pittsburgh. In 1989, W.R. Jackson resigned and his daughter,

Polly J. Townsend, was appointed to replace him as a co-trustee. The Trust

was reformed in 1998 to provide that there shall always be two trustees—

National City Bank of Pennsylvania and its successors,2 and an individual

trustee who is a member of the Jackson family. In May of 2005, the orphans’

court entered an order reforming the Trust’s appointment provision again, and

stated, in part:

There shall always be three trustees acting hereunder, National City Bank of Pennsylvania and its successors, which shall possess at all times one-half of the voting power of the trustees, and two individual trustees who are members of the Jackson family, each of whom shall possess at all times one-fourth of the voting power of the trustees.

Order, 5/24/05. The court also approved the appointment of William R.

Jackson, Jr. (Polly’s brother) as the second individual co-trustee. PNC became

the successor corporate co-trustee in 2009, after it acquired National City

Bank.

Section 6 of the Trust provides the following regarding distributions:

The [t]rustees shall distribute the income of the [T]rust fund among such public charities created for religious, educational or other charitable purposes as they in their sole discretion may deem proper. The Grantors may from time to time suggest to the [t]rustees specific charitable institutions or charitable causes to which they would like contributions made by the [t]rustees but the [t]rustees are in no manner obligated to follow the requests of the Grantors but, on the contrary, may distribute the income and principal of the [T]rust fund for such charitable purposes as they in their sole discretion may determine. ____________________________________________

2 National City Bank of Pennsylvania was a successor in interest to Commonwealth Trust Company of Pittsburgh.

-2- J-A29010-19

Trust ¶ 6.

In 2016, PNC filed a petition to resolve a deadlock, which had formed

between PNC and Individual Trustees regarding the amounts and recipients of

the donations for 2016. According to PNC, it sought judicial intervention

because, in order to avoid a tax penalty under Section 4942 of the Internal

Revenue Code, the Trust needed to distribute at least 5% of its net assets

before the end of the year. PNC’s Petition, 11/28/16, at 6 ¶ 20 (citing 26

U.S.C. § 4942). PNC further indicated that “in keeping with the traditional

giving pattern of the … Trust during the lifetime of the [Grantors],” it has

strongly favored distributing the Trust’s funds “to civic organizations,

educational/arts organizations, health care facilities and children & youth

organizations, with at least one-half of such distributions being to charitable

organizations primarily situated in Western Pennsylvania.” Id. at 6 ¶ 21. PNC

contrasted its list of “worthwhile charities” with the organizations favored by

Individual Trustees, which PNC characterized as “political advocacy groups[,]”

and which it believed to be inconsistent with the past giving practices of the

Grantors. Id. at 8 ¶ 27. PNC provided the court with a list of 26 organizations

that it selected to receive one-half of the required distribution for 2016, along

with a list of 18 organizations it selected from the list submitted by Individual

Trustees to receive the other one-half of the distribution. See id. at 8-9 ¶¶

29-30. It asked the court to “resolve the current deadlock by casting a ‘third

vote[,’] either in favor of the list submitted by [PNC] … or the list submitted

by … [I]ndividual [T]rustees….” Id. at 9 ¶ 32.

-3- J-A29010-19

On December 1, 2016, Individual Trustees filed an answer and new

matter, in which they alleged that PNC “unilaterally imposed an artificial 5%

limit on the Trust’s annual charitable giving, forced the Trust to donate to local

causes supported by PNC, and refused to allow charitable contributions to

legitimate charities recommended by [Individual Trustees] (and supported by

the Trust for decades).” Answer and New Matter, 12/1/16, at 1. They also

averred that the Grantors intended for Individual Trustees to make donation

decisions, and that PNC’s “proper role” is to work with them to facilitate

donations to charities selected by Individual Trustees and to manage the

Trust’s assets. Id. at 3, 6.

After hearing oral argument on the petition on December 2, 2016, the

orphans’ court stated that it would cap donations at 5% of the Trust’s assets

to avoid a tax penalty and took the designation of charitable recipients under

advisement. On December 7, 2016, the orphans’ court entered an order

selecting the charities on PNC’s list for distributions in 2016. Individual

Trustees filed a motion for reconsideration, which was denied by the court on

December 19, 2016.

On January 5, 2017, Individual Trustees filed a timely appeal at 61 WDA

2017, in which they argued, inter alia, that the orphans’ court erred in limiting

the Trust’s 2016 distributions to 5% of the Trust’s assets and by selecting

PNC’s list of proposed donees without attempting to discern the Grantors’

intent. In response, the orphans’ court issued an opinion pursuant to

Pa.R.A.P. 1925(a), in which it explained that its decision was based on the

-4- J-A29010-19

time constraints placed upon the court and the lack of time needed to fully vet

all options. Orphans’ Court Opinion (“OCO I”), 5/2/17, at 2.

This Court concluded that the orphans’ court acted prudently in limiting

the amount of the 2016 distribution to avoid the imposition of a tax penalty

on the Trust. In re Jackson, 174 A.3d 14, 33 (Pa. Super. 2017). Going

forward, however, we deemed it necessary to develop a factual record for the

purpose of exploring the Grantors’ intent. Id. In regards to the orphans’

court decision to select PNC’s list of proposed donees, we concluded:

[T]he court abused its discretion by making a decision that was not based on any evidence.

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In Re: Jackson, J., Appeal of: Townsend, P., Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-jackson-j-appeal-of-townsend-p-pasuperct-2020.