Nace's Estate

28 Pa. D. & C. 273, 1936 Pa. Dist. & Cnty. Dec. LEXIS 273
CourtPennsylvania Orphans' Court, Lehigh County
DecidedSeptember 3, 1936
Docketno. 24,584
StatusPublished

This text of 28 Pa. D. & C. 273 (Nace's Estate) is published on Counsel Stack Legal Research, covering Pennsylvania Orphans' Court, Lehigh County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nace's Estate, 28 Pa. D. & C. 273, 1936 Pa. Dist. & Cnty. Dec. LEXIS 273 (Pa. Super. Ct. 1936).

Opinion

Gearhart, P. J.,

— We have before us for audit the first and partial account of Lehigh Title Guarantee Company of Allentown, Pa., substituted trustee of Arthur Elmer Nace, Charles David Nace, and Marian Genevive Nace, under deed of trust of Ruth V. Nace, deceased, dated April 28,1931.

Ruth Y. Nace died April 26, 1932. The Penn Trust Company was named trustee in the trust agreement. The Penn Trust Company being defunct, this court on February 9, 1933, appointed the Lehigh Title Guarantee Company of Allentown, Pa., substituted trustee. When the case came on for audit accountant presented a petition stating that the three beneficiaries under the trust agreement were minors (the three children of the settlor, Arthur, Charles, and Marian Nace, respectively, 17, 15, and 10 years of age), and asking “that a guardian ad litem be appointed for the reason that certain claims made against the estate should be carefully investigated prior to said audit.” Thereupon the court appointed William B. Butz, Esq., guardian ad litem.

Sometime thereafter Mr. Butz filed his report, based on an investigation of the matters that were subsequently to be heard at the hearing. The two important questions raised by the guardian ad litem relate to the claim of Robert E. Haas, Esq., arising out of the trust agreement [275]*275dated April 28,1931, and the claim of Charles M. Bolich, Esq., for services rendered accountant. These and several other matters which will be hereinafter discussed, form the subject of this accounting. . . .

Claim of Robert E. Haas, Esq.

The claim of Mr. Haas is founded on the acknowledgment of indebtedness in the fourth “whereas” clause of the trust agreement dated April 28, 1931. The instrument, after reciting that settlor is the daughter of Minnie Conner Gross, niece of Robert B. Conner, who died leaving a last will and testament under which settlor is bequeathed a certain portion of his estate, proceeds as follows:

“Whereas, Ruth Y. Nace is indebted to Robert E. Haas, Esq., of Allentown, Pennsylvania, for professional services rendered in the sum of $10,000.00;

“Whereas, Ruth V. Nace desires to establish an irrevocable trust for the benefit of herself and children;

“Now, know all men by these presents, that the said Ruth V. Nace hereby sells, etcetera . . . et cetera, all her right and interest in the Estate of Robert B. Conner and in the Estate of her mother, Minnie Conner Gross, irrevocably in trust (a) to collect and obtain possession of all the property, funds and things of value passing under this assignment or deed of trust and (b) to pay out of the funds or property thus received, any expenses that may be incurred in obtaining the same (c) to pay and discharge all the indebtedness of the said Ruth V. Nace, to Penn Trust Company, of Allentown, Pa., (d) to pay to Robert E. Haas, Esq., his heirs, executors, administrators and assigns, the sum of $10,000.00 for legal services rendered, and (e) to hold the balance of residue irrevocably in trust nevertheless for the uses and purposes and subject to the powers and provisions hereinafter set forth.”

The testimony reveals that Mr. Haas served Mrs. Nace as attorney in a confidential capacity from sometime in 1929 until her death, April 26, 1932. He formerly repre[276]*276sented Mrs. Nace’s mother, and later her own interest in the litigation arising out of the estate of Robert B. Conner, deceased; he served as her attorney in the settlement of her mother’s estate, and was her lawyer in the divorce proceedings instituted by her husband, Elmer Nace. During this period of time she consulted with Mr. Haas about every conceivable personal affair. When in Allentown she visited his office as often as four times a week, taking as much as two hours of his time. Her demand on his time knew no bounds.

It was the case of a woman unaccustomed to affluence, suddenly having money thrust upon her. From the lavish manner in which she proceeded to spend the money, she apparently thought it without limit. The testimony discloses that in the course of two years preceding the execution of the trust agreement she had spent about $40,000. It should be stated that included in this amount was $10,-000 given to her husband, Elmer Nace, and the purchase of a home.

With the coming of money came also marital difficulties, and this after much bickering resulted in a divorce and a monetary settlement on the husband. Through all this Mr. Haas was her counsel and adviser, and Mr. Bolich then, as now, represented her husband, Elmer Nace.

After the divorce from her husband Mrs. Nace found new avenues of life. There came a time in the early part of 1931 when she told her counsel that she would sell her inheritance of $150,000 in the Conner estate for $15,000 ready cash. With the reiteration of this intention Mr. Haas, out of a desire to protect Mrs. Nace from her own improvidence, repeatedly discussed the matter of a trust agreement, and consequently drafts of several trust agreements were formulated, which eventuated in the execution of the one before us.

The guardian ad litem, in a well-written report based on an investigation of the facts, took the position that in view of the confidential relationship existing between Mr. [277]*277Haas and his client, Mrs. Nace, counsel had the burden of demonstrating that the trust agreement represented the unfettered judgment of his client, and that it was entered into freely, voluntarily, and with full intelligence of all the surrounding facts; that the transaction was beyond suspicion. We so ruled at the hearing.

The rule is stated in 6 C. J. 735, sec. 310(5) :

“Contracts Made after Relation Established-aa. In General. A contract between an attorney and client for the former’s compensation, entered into during the existence of the relation, is not void, although presumptively invalid, the burden of showing fairness resting on the attorney.”

See also 1 Perry on Trusts, chap. 6, sec. 202. Again, in A. L. I. Restatement of Trusts, vol. 1, sec. 2:

“A person in a fiduciary relation to another is under a duty to act for the benefit of the other as to matters within the scope of the relation. ... As to matters within the scope of the relation he is under a duty not to profit at the expense of the other. ... If the fiduciary enters into a transaction with the other and fails to make a full disclosure of all circumstances known to him affecting the transaction or if the transaction is unfair to the other, the transaction can be set aside by the other.”

Our research has not brought to light any case where the facts disclosed an acknowledgment of indebtedness to an attorney by a client of unquestioned mentality who had independent advice and seems to have understood the nature of her act, where, as here, the acknowledgment does not exceed eight percent of her estate. The heavy burden of compelling one in a fiduciary relationship to show expressly that the arrangement was fair and conscientious springs from the relationship of the parties and is founded upon a notion of general policy. Said the Supreme Court in Greenfield’s Estate, 14 Pa. 489, 505:

“In requiring this, courts of equity act irrespective of any admixture of deceit, imposition, overreaching, or [278]*278other positive fraud. As it has often been said, the principle stands independently of such elements of active mischief.”

See also Darlington’s Estate, 147 Pa. 624; Cook v. Donaldson et al., 296 Pa.

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Bluebook (online)
28 Pa. D. & C. 273, 1936 Pa. Dist. & Cnty. Dec. LEXIS 273, Counsel Stack Legal Research, https://law.counselstack.com/opinion/naces-estate-paorphctlehigh-1936.