Ingels Estate

92 A.2d 881, 372 Pa. 171, 1952 Pa. LEXIS 481

• Court: Supreme Court of Pennsylvania
• Decided: November 25, 1952
• Docket: Appeal, 123
• Status: Published

Opinions

Opinion by Me.

Justice Allen M. Steaene,

The question raised by this appeal is whether decedent by her letter to the beneficiary made irrevocable a tentative trust of a savings bank account of decedent titled “Mrs. William M. Ingels in trust for James M. Peck”.

James M. Peck, claiming as beneficiary of an irrevocable trust, filed exceptions to the account of the executor and has appealed from the decree of the Orphans’ Court of Allegheny County which dismissed those exceptions. The decree of distribution awarded the fund to the estate of the deceased depositor, on the theory that she had created a tentative trust which was revoked by her withdrawal of the money from the account a week before her death.

The account in question was created by Mrs. Ingels on October 1, 1942, with the proceeds of another “intrust” account which she closed on the same day. This account in turn had been started in 1941 with the amount withdrawn from an account which Mrs. Ingels had theretofore maintained in the name of “Mrs. William M. Ingels in trust for Lawrence C. Washington”. She closed the Peck account on February 27, 1950, six days before her death and redeposited the $6,-747.35 withdrawn therefrom in a checking account maintained in her own name in another bank. Adam Roscoe, assistant cashier of the savings bank, testified that the same money was involved in all these transactions.

The letter which, according to appellant’s argument, converted the tentative trust so established into an irrevocable trust was postmarked November 18, 1942, and reads in part as follows:

“When I heard about officer’s Training Camp etc. I began to wonder what little gift I could send you, but my doctor bills & dentist bills have come to away over 300.00 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 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’, put in trust for you and your heirs.

“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 — ”

Decedent addressed the appellant as “Dearest Jim” and signed the letter “Aunt Bess”. There was in fact no blood relationship, but appellant was the son of a lifelong friend of decedent and a deep affection had always existed between them. On three occasions subsequent to the establishment of the account, decedent notified appellant that she was making either a birthday or Christmas present by depositing ten dollars in the trust account. Several other small deposits appear on the record of the account, which represent interest payments on bonds owned by decedent. There are also two unexplained withdrawals, each in the amount of $100.00.

Appellant concedes that the trust was revocable at the time of its creation and places principal reliance on the letter notifying him of a graduation gift for imparting an irrevocable character. The learned court below properly stated the rule of law to be: “The intention of the donor, as expressed by his acts and declarations, is the factor which determines the status of the trust.”

Early eases in Pennsylvania dealing with savings account trusts recognized that a valid trust could be created by depositing money in the name of the depositor as trustee for another but made no distinction between tentative and irrevocable trusts. Thus in Estate of Hugh Gaffney, Deceased, 146 Pa. 49, 23 A. 163, Chief Justice Paxson said for the Court at p. 54: “We have, then, the case of a deposit on the books of the bank of a sum of money in the name of Hugh Gaffney, trustee for Polly McICim. This makes out at least a prima-facie case for the appellant. Upon the face of the bank book, the money belonged to Polly McKim, and there is not sufficient upon the record to rebut this presumption. This money should have been awarded to the appellant.”

In Merigan v. McGonigle, 205 Pa. 321, 54 A. 994, the Court sustained another such trust, saying through Justice Mestrezat, at p. 327: “Betention of the pass book by the depositor is not, under the circumstances here, decisive against the validity of the trust: Martin v. Funk (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 Biver 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.”

In Rambo v. Pile, 220 Pa. 235, 69 A. 807, a similar fund was awarded to a depositor’s estate because the evidence disclosed that he had always regarded and treated it as his own. In the opinion Justice Mestrezat restated this rule in these words (p. 237) : “The intention of Amos Burton in making the deposit must be ascertained and be permitted to determine the ownership of the fund in dispute. If he intended to constitute himself a trustee for Githens, and as such held the fund for her, the plaintiff, as her legal representative, would be entitled to have the fund awarded to him; if, on the other hand, Burton made the deposits in his name as a trustee for his own convenience or advantage intending to retain title to and the power of disposing of them, and carried out the intention and disposed of them as his own funds until his death, then the plaintiff can have no claim upon them, and the learned referee was right in awarding the fund in court to the defendants.”

In Scanlon’s Estate, 313 Pa. 424, 169 A. 106, we quoted with approval the case Matter of Totten, 179 N. Y. 112, 71 N. E. 748. This Court adopted for the first time the theory of tentative trust. We thus varied our earlier rule to the extent of saying that a deposit in a savings account in trust would make out a prima facie case of a revocable trust only. Mr. Justice (later Chief Justice) Schaefer said for the Court at p. 428: “. . . there is no evidence of an intention to create an irrevocable trust at the time of deposit. Neither is there evidence here of any further acts by Mrs. Scanlon which show an intention to make the trust irrevocable. . . . ‘In the absence of evidence of a different intention of the depositor, the mere fact that a deposit was made in a savings bank in the name of the depositor “as trustee” for another person is sufficient to show an intention to create a revocable trust.’ ”

Such rule is in accord with the analysis of Professor Austin Wakeman Scott (author of the Law of Trusts) in 43 Harv. L. R. 521, 540: “The most common situation involving such a trust [settlor declaring himself trustee] arises where a person deposits money in a savings bank in his own name as trustee for another person. The first question which arises is one of intention. The depositor’s intention may be to create an irrevocable trust to arise immediately. He may not intend to create a trust at all. He may intend to create a revocable trust. Evidence is admissible in all cases to show which was the intention of the depositor. The evidence may show that the depositor intended to create an irrevocable trust. Thus, if he notifies the beneficiary of the trust, and particularly if he delivers the bankbook to the beneficiary, 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 absence of any evidence other than the form of the deposit, it is generally held that a revocable trust is intended.”

See also: Bearinger’s Estate, 336 Pa. 253, 9 A. 2d 342; Vierling v. Ellwood City Federal Savings & Loam, Association, 356 Pa. 350, 52 A. 2d 224; Scott on Trusts (1939) sec. 58 et seq.

The presumption that a revocable trust is intended by such a deposit is an exception to the general rule that trusts are irrevocable unless a power of revocation is expressly reserved: Scott on Trusts (1939), secs. 329A, 330.2; Kraft v. Neuffer, 202 Pa. 558, 561, 52 A. 100; Fishblate v. Fishblate, 238 Pa. 450, 458, 86 A. 469. The opinions in the Totten and Scanlon cases, supra, make it clear that the reason for the exception is that the circumstances surrounding the establishment of such accounts indicate that the depositors usually have no intention of irrevocably divesting themselves of beneficial ownership of their money when they deposit it “in trust” for another. Because the exception depends on the peculiar circumstances of this type of transaction, we have never extended the doctrine of tentative trusts to any property other than a savings account. See: Tunnell's Estate, 325 Pa. 554, 560, 190 A. 906; Brown v. Monaca Federal Savings and Loan Association, 352 Pa. 1, 42 A. 2d 50; Scott on Trusts (1939) sec. 58.3: “It is clear that a similar trust of property other than savings bank deposits would be invalid.”

In the instant case we are faced with the problem of deciding the quantum of evidence necessary to establish that the depositor intended to make irrevocable a trust which was admittedly revocable at its inception. No reason appears why savings accounts should be treated differently from other property for this purpose, and we therefore apply the general rule that a trust does not arise unless the intent of the alleged settlor to create one clearly appears. Thus in Tunnell's Estate, 325 Pa. 554, 556, 190 A. 906, we said through Justice Linn: “The burden of proving their equitable title was on claimants. Such a trust ‘must be created by clear and unambiguous language or conduct, it cannot arise from loose statements admitting possible inferences consistent with other relationships’: Wallace’s Estate, 316 Pa. 148, 151, 174 A. 397; Brubaker v. Lauver, 322 Pa. 461, 185 A. 848.” A similar burden rested on appellant herein to produce evidence of “clear and unambiguous language or conduct” indicating that Mrs. Ingels intended to make the tentative trust irrevocable.

It is true that the letter above quoted and the later gifts by way of deposits into the trust account support an inference that such was her intention. However, many facts disclosed by the record tend to indicate a contrary intention, e.g.:

(a) in her letter of November, 1942, the decedent stated that “when I die, it may come in handy”. Here, in the very letter which is the basis of appellant’s claim, Mrs. Ingels clearly indicated that he was not to have the money until her death. There is not a word in the letter to indicate an intention to reserve a life interest to herself in income only; she reserved control over the whole fund until her death. If appellant’s contention that this letter made the trust irrevocable prevails, it may follow that the trust was a dry one, for Mrs. Ingels then held a sum of money in her name as trustee concerning which she had absolutely no duties to perform. In this event the beneficiary could have claimed the funds immediately, and it is clear that such a result would have done violence to the expressed intent of the depositor that he take it only after her death.

(b) that Mrs. Ingels always so regarded the fund is again made clear by her statement in a letter written in 1946 to the assistant cashier of the bank: “As I have had so many stocks called which paid good interest, & now the money lying idle in my checking account, that I do not feel it would be right to put this sum into James M. Peck’s hands now: — I might need it very badly.”

(c) Mrs. Ingels twice previously set up accounts in similar form and withdrew the funds at her own pleasure. There is nothing in the record to indicate that the conditions attached to the creation of these three accounts in identical form in the same bank differed in any respect. The force which would ordinarily attach to the use of the word “trust” is greatly weakened by this evidence that the settlor was accustomed to using it to describe a revocable transfer.

(d) on two occasions she withdrew $100.00 from the account in question and not a word of explanation of these withdrawals is provided by the present record. The only inference which can properly be drawn from them is that Mrs. Ingels continued to regard this fund as subject to her control and that she withdrew the money when need arose.

These and other factors which were carefully reviewed by the learned auditing judge in his comprehensive opinion impelled him to the following conclusion, with which we agree: “The modest size of her investment capital, the diminution of income therefrom, her widowhood, and her age all evidence that she did not intend to create an irrevocable trust, which would prevent her from using the money deposited in the ‘in trust’ account if she needed it during her lifetime. The inference to be drawn from these facts is that she intended that the money on deposit in the ‘in trust’ account should become the absolute property of James M. Peck only in the event that she died without revoking the trust.”

Appellant relies upon McCrary Estate, 355 Pa. 232, 49 A. 2d 350, but the circumstances which indicated that each of the six savings account trusts there involved was intended to be irrevocable were clear and unequivocal as contrasted to the conflicting inferences found in the present case. The bank books for five of the trusts were delivered to the beneficiaries by the depositor with the statement to each that the account was a gift. The creation of the sixth account was described as follows in the opinion of the learned court below, which we affirmed PER CURIAM (p. 238) : “(4) One of the accounts was in the name of the decedent ‘in trust for’ Eugene McGary. The evidence is that many years prior to the opening of this account the decedent had received a sum of money from her brother, Eugene McGary, and this account was the method adopted for paying the debt. In 1940 the decedent notified her brother that she had opened the account and would deliver the bank book to him whenever he wanted it. She wished to send it to him, but he told her to hold it for him until he should come from Chicago, where he lived, to Pittsburgh. He was in ill health and did not see the decedent before her death. The decedent told her niece, Mrs. Edmondson, where, in her apartment, the book was to be found so that it could be delivered to her brother when he came to Pittsburgh. The decedent deliberately refrained from placing the book in her safe deposit box.”

Appellant having failed to establish by sufficient evidence an intent to create an irrevocable trust, the presumption of revocability arising from the form of the deposit controls, and the learned court below properly awarded the fund to the decedent’s estate.

Deeree affirmed at appellant’s cost.