Estate of McFadden, G. (dissenting memorandum)

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J-A21016-13 NON-PRECEDENTIAL DECISION SEE SUPERIOR COURT I.O.P 65.37 IN THE MATTER OF ESTATE OF GEORGE MCFADDEN, DECEASED IN THE SUPERIOR COURT OF PENNSYLVANIA APPEAL OF: RANDOLPH HARRISON, ROBERT C. HARRISON, CO-TRUSTEES AND BENEFICIARIES, AND RANDOLPH HARRISON, JR., BENEFICIARY OF THE TRUST UNDER WILL OF GEORGE MCFADDEN F/B/O THE DESCENDANTS OF EMILY B. STAEMPFLI Appellants No. 2872 EDA 2012 Appeal from the Decree of August 14, 2012 In the Court of Common Pleas of Delaware County at No.: 0028-1931 BEFORE: SHOGAN, J., WECHT, J., and COLVILLE, J.* DISSENTING MEMORANDUM BY WECHT, J.: FILED DECEMBER 31, 2013 about February 21, 2012, twentylast surviving child, Emily Staempfli. For the reasons that follow, I believe that the trial court erred in interpreting the 1930 Will. Appellants here raise only one overarching question, as to which there ar ____________________________________________ * Retired Senior Judge assigned to the Superior Court. J-A21016-13 determining who among three candidates constituted or constitutes the measuring life for purposes of the termination and distribution of the Trust principal. In articulating my reasons for analysis, which the majority adopts as its own, I proceed as follows: First, I perpetuities clause and specify the candidates for the measuring life. Our Supreme Court has defined perpetuities as follows: Perpetuities are grants of property, wherein the vesting of an estate or interest [is] unlawfully postponed; and they are called perpetuities not because the grant, as written, would actually make them perpetual, but because they transgress the limits which the law has set in restraint of grants that tend to a perpetual suspense of the title, or of its vesting. , 80 A.2d 819, 822 (Pa. 1951). The applicable rule which by possibility may not become vested within a life or lives in being at the death of the testator and twenty- In re , 159 A. 874, 876 (Pa. 1932). More recently, this Court discussed the three-stage evolution of the rule, only the first two of which inform my analysis of the instant case: The evolution of the rule against perpetuities in the area of class gifts has had three distinct developmental stages in Pennsylvania. The first stage began with the founding of -2- J-A21016-13 Pennsylvania and lasted until 1929. During this period, Pennsylvania followed the early common[-]law rule against perpetuities which then called for the remorseless application of interests. Under this rubric, a future interest, such as a remainder in a trust to all great-grandchildren, was void if there was even the slightest possibility that it might vest beyond the permissible period of a life or lives in being plus twenty-one years. The second stage of development was a transitional period which lasted from 1929 to 1947. During this time period, our Supreme Court attempted to eliminate some of the harsher results which occurred in the area of the class gifts under the common[-]law adopting the doctrine of vertical separability. The doctrine of vertical separability held that valid remainders would be separated from void ones and given effect if it would not alter the overall testamentary scheme of distribution. In re Estate of Weaver, 572 A.2d 1249, 1253 (Pa. Super. 1990) (citations omitted).1 It is important to note these two distinct stages of trust interpretation and application because, as discussed below at length, I 28 Will (the of the harsh results that might follow from providing in trust for beneficiaries defined as a class under the law in 1928. Decedent must be presumed to have been equally aware that, in 1930, the separability test would protect ____________________________________________ 1 The third stage, what we described in Weaver commenced in 1947 with the passage of the Intestate, Wills and Estates Act future interests. See 572 A.2d at 1253. -3- J-A21016-13 against the risk that a substantial portion of the Trust would be voided simply because one or more members of a specified class might be ineligible to serve as lives in being or otherwise take under the Trust. See In re , 137 A. 627, 629 (Pa. knew the condition of his estate, and he must be presumed to have known City of Philadelphia v. Davis, 1 Whart. 490, 502 (Pa. 1836) tor must be presumed to know how the law stood at the time of making his will . . . Having set forth the legal background against which the current case inform the question sub judice: ARTICLE FOURTH: I give, devise and bequeath all the rest, residue and remainder of my estate, and I also give, devise and bequeath all estates or interests over which I have power of appointment . . . IN TRUST, for the following uses, to wit: **** (3) . . . IN TRUST, as to all the rest, residue and remainder of my estate, . . . to pay and distribute the net income thereof as follows: [describing the first-priority distribution schedule of . . . during the lifetime of my wife, IN TRUST, to receive and apply the balance of the net income of my estate as follows: To pay monthly, as nearly as possible, in the proportion of two parts of the balance of the net income to each of my sons, and one part thereof to each of my daughters, living at the time of my death, or to the respective issue living at the time of my death of a deceased son or daughter, such issue being entitled to -4- J-A21016-13 each of such children or issue of a deceased child living at the time of my death. . . .[2] Upon the death of each child of mine living at the time of my death, and upon the death of each of the issue living at the time of my death of a deceased child of mine, to pay the income of such child or issue of a deceased child, in the proportions above provided, meaning thereby that whenever a descendant of mine shall die leaving male and female children, the income shall be divided in such a way that the males shall receive twice as much income as the females, to and among the child or children of such child or issue of a deceased child, per stirpes and not per capita, for the period of twenty-one years after the death of the last survivor of the children and issue of deceased children of mine living at the time of my death. **** And IN TRUST, upon the expiration of the period of twentyone years after the death of the last survivor of the children and issue of deceased children of mine living at my death, to pay over to my descendants, per stirpes, a proportion and division of the principle of my residuary estate equal to the proportion and division of income hereinbefore provided and directed for my children or issue of deceased children, namely, the proportion of two (2) shares for each male and one (1) share for each female.[3] ____________________________________________ 2 question at bar. See Maj. Mem. at 5. However, this language relates only expiration, termination, or the distribution of the Trust principal, the events that are triggered by the expiration of the measuring life. See infra n.3. 3 It is, in fact, this language that we must construe. This perpetuities language differs in one important particular from the income distribution language incorrectly cited by the majority as the language that governs the question presented: The provision identified by the majority as dispositive or perpetuities clause to which this (Footnote Continued Next Page) -5- J-A21016-13 It being my intention that the income from my residuary estate shall be paid in the proportions of two parts to my sons and their issue and descendants, and one part to my daughters and their issue and descendants, per stirpes; that the same plan shall be followed in the division of income among the male and female children of my children and their issue; and that the principle of my residuary estate shall be divided in the same proportions. 1930 Will at 2-7 (emphasis added to highlight language pertinent to our analysis). The most critical provisions are those that address the rule against perpetuities. In relevant part, that language provides for the distribution of period of twenty-one years after the death of the last survivor of the children and issue of deceased Id. at 6 (emphasis added). I agree 4 (Footnote Continued) _______________________ the expiration of the period of twenty-one years after the death of the last survivor of the children and issue of deceased children of mine living at my this distinction scheme. 4 court stated that the language is ambiguous, its ultimate resolution of the case is difficult to construe as having been based upon that proposition. See Brief for Appellants at 24. Compare O.C.O. at 12 (noting that it directed a hearing solely to resolve the ambiguity) with O.C.O. at 21 ly reasonable effectively ruled that the language alone compelled its ruling, rather than the suite of non-textual factors typically used to resolve ambiguities in will language. -6- J-A21016-13 Either of the following two interpretations of that language are reasonable: (1) That the life in being whose death would trigger the twentyone year perpetuities countchildren, all of whom were alive at the time of his death, survived his or her siblings; or (2) That the life in being whose death would trigger that count- who were alive at his death survived the other. The first interpretation st would become the measuring life only if the parent of the issue in question predeceased the Decedent. The second is based upon the contrary proposition that the issue of a child would become the measuring life simply the ruled that the Trust terminated on or about February 21, 2012, twenty-one years after the death of Emily Staempfl die, with the principal subject to immediate distribution amongst surviving beneficiaries as specified by the 1930 Will. If the latter interpretation were the case, however, termination would occur twenty-one years after the death of the survivor of the two grandchildren (each the issue of one of -7- J-A21016-13 ruling; if the survivor of those grandchildren is the measuring life, then the time of the termination of the Trust remains indefinite, set to occur twentyone years after the death of the survivor of those two grandchildren. the following standards: In Houston Estate, 201 A.2d 592, 595 (Pa. 1964), the Court, quoting from prior decisions, said: * * (1) and (2) that his intent must be gathered from a consideration of (a) all the language contained in the four corners of his will and (b) his scheme of distribution and (c) the circumstances surrounding him at the time he made his will and (d) the existing facts; and (3) that technical rules or canons of construction should be resorted to only if the language of the will is reason uncertain: Estate, 162 A.2d 626; , 159 A.2d 197. , 168 A.2d 337; , 159 A.2d 201; Estate of Moltrup, 225 A.2d 676, 678 (Pa. 1967) (citations modified). When a will is ambiguous on its face, a court may consider extrinsic Estate of McKenna, 489 A.2d 862, 867 (Pa. Super. 1985). In In re Estate of Rider, 711 A.2d 1018 (Pa. Super. 1998), we set forth the following standards applicable to the interpretation of wills. **** When interpreting a will, we must give effect to word and clause where reasonably possible so as not to render any provision nugatory or mere surplusage. Further, technical words must ordinarily be given their common legal effect -8- J-A21016-13 as it is presumed these words were intentionally and intelligently employed, especially where they are used by someone learned in probate law. **** Rider, 711 A.2d at 1021 (quoting In re Estate of Harrison, 689 A.2d 939, 943 (Pa. Super. 1997)). **** [e]xtrinsic evidence of surrounding facts must only relate to the meaning of ambiguous words of the will. It cannot be received as , 128 A.2d written words employed 52, 55 (Pa. 1956). In re Shultheis, 747 A.2d 918, 922-23 (Pa. Super. 2000) (citations modified; construction lead to a result that is highly improbable, the court will lean toward a construction that will carry out the natural intention of the In re Trust Estate of Pleet, 410 A.2d 1224, 1230 (Pa. 1980) (quoting , 160 A. 724, 725 (Pa. 1932)). Finally, the interpretation of a trust or a will presents a question of law. In re Barnes Foundation, 683 A.2d 894, 898 (Pa. Super. 1996). As such, our standard of review is de novo and our scope of review is plenary, In re Estate of Livingston, 612 A.2d 976, 981 n.2 (Pa. 1992); our review Barnes, 683 A.2d at 898. the shorter of the two available time limitations, appeared to rely heavily upon a small -9- J-A21016-13 subset of the available extrinsic evidence, principally the intervention of the 1930 Wills, and the differences between those wills. O.C.O. at 16-17, 2021. Notably, the extrinsic evidence in question was used by the court not so generally, an interpretive practice disfavored under the rule enunciated in Shultheis and Beisgen, supra appears to have relied more upon a review of the language of the 1930 Will and its overarching testamentary scheme than on the Great Depressionrelated factors the court nonetheless discussed at some length. distribution of the balance of net income after the distribution of specific ge allocating at the time of my death of a deceased son or daughter, such issue being see 1930 Will at 5, indicated that such a grandchild would not share in income unless his or her parent had predeceased Decedent, an interpretation that, by itself, seems obvious. O.C.O. at 15conclusion: [Decedent] wanted to provide for his wife and children, protect their inheritances by having the money held managed by a corporate trustee . . .; two (2) partners in firm in which he was a senior partner . . .; and his son . . . . reason for the need to protect and preserve the De - 10 - but and the The J-A21016-13 assets of his estate for the benefit of his family can be seen from the turbulent times affecting the Decedent in January of 1930, which is when he drafted his will. Id. at 16. ill followed and superseded the 1928 Will, and that the two wills straddled the stock market crash of October 29, 1929. Both wills provided similarly for the distribution of income, and ultimately principal, in the same two-to-one allocation between male and female issue, respectively. What the 1928 Will lacked that the 1930 Will included, however, was specific language concerning how long the Trust would last prior to its termination. To wit, only the 1930 Will included the life in being language at issue in this appeal; the 1928 Will did not. The intent of the Decedent becomes quite clear when the two (2) testamentary documents stand side by side. In the [1930 Will], the Decedent was expressly prescribing how long the [T]rust would operate to benefit his children and that would be for the child living at the time of th ing cannot be entitled to the same share. In the 1928 [W]ill, the termination provision . . . recites: And IN TRUST, on the death of each child or grandchild of mine living at the time of my death, to pay over to the - 11 - J-A21016-13 descendants per stirpes of such child or grandchild living at the time of my death a principal amount of my residuary estate, ascertained by and in the proportions and divisions of income hereinafter provided for each child or grandchild . . . . The above-stated provision calls for a staggered dissolution of the trust. The [T]rust is gradually reduced or dissolved as a share of the residuary estate is calculated and paid . . . . The termination provision contained in the [1930 Will] calls for a uniform date for the dissolution of the [T]rust and distribution of the [T]rust assets, thereby [e]nsuring that a share of the residuary estate is not subject to turbulent market conditions that may cause a reduction in value because of the uncertain economy. The uniform date for dissolution evens the risk of loss Furthermore, the termination between all beneficiaries.[5] the issue of deceased children living at the time of m If the Decedent intended that the survivor of his granddaughters would be the measuring life, he would not have uttered the word e time of my . . . .] A fortiori, the only reasonable interpretation is that the Decedent intended that the [T]rust established by [the 1930 Will] would terminate twenty-one (21) years after the death of his last surviving child if all of his children survived his death, which they did. The only reasonable interpretation, which would allow for the survivor [of the grandchildren alive at the daughters, predeceased Decedent]. ____________________________________________ 5 incongruously to opine without support in the text of the 1930 Will or its overall scheme that Decedent intended that all trust beneficiaries lose in the event that the Trust terminates during a bear market or under an inhospitable tax code rather than that only some subset of trust beneficiaries lose out during negative financial cycles. - 12 - J-A21016-13 O.C.O. at 19- concomitant distribution of the Trust principal was that of the survivor of 21, 2012, twentylast surviving child. App conclusion that he intended for the Trust to last for the maximum time then Appellants assert (without citation to supporting authority) that trust settlors typically craft perpetuities language to sustain the life of the trust as long as ren rather than the then-living grandchildren), interpreted the 1930 Will to provide for an intermediate duration of the Trust rather than the greatest duration permissible by law. The court did so, Appellants emphasize, without any textual or extrinsic indicia that Decedent intended such an outcome. Id. at 25-26. Appellants focus first on the language of the 1930 Will and the overarching scheme of distribution. Appellants emphasize that the scrivener took great care in the Will to specify precisely when certain provisions were - 13 - J-A21016-13 to apply. They invite this Court to examine the provision concerning the payment of income to beneficiaries found in the fourth article of the 1930 Will to e respective issue living at the time of my death of a deceased son or daughter, such issue being entitled to their Id. at initial beneficiary of income, he or she would have had to be issue of a son when the payments were to commence Id. (emphasis in original). Appellants also note that subparagraph (3), in providing secondary of each child of mine living at the time of my death, and upon the death of each of the endure as long as the law in 1930 allowed. See, e.g., 1930 Will at 7 ale and female children of my children and their issue Appellants next argue that this interpretation is consistent with the scheme of distribution, especially viewing the 1930 Will in tandem with the - 14 - J-A21016-13 1928 Will that it replaced. Appellants note that the 1928 Will provided for distribution and concomitant depletion of Trust assets over time. Brief for Appellants at 30-31. The 1930 Will, by contrast, provided for a single termination date upon which the entire principal would be distributed to those entitled to a share of it. To that end: [T]he [p]erpetuities [c]lause in the 1930 [W]ill greatly lengthened the duration of the [T]rust. Rather than having the [T]rust end at the death of a single individual, it selected multiple individuals as its potential measuring lives and said that the actual measuring life would be that of the person who lived the longest. And then, in accordance with what Pennsylvania duration, the [c]lause provided that the [T]rust would last for 21 years after that measuring life expired. Id. at 31. Thus, the overarching scheme of Trust distribution indicated that Decedent intended to give the Trust the longest duration then permissible under Pennsylvania law. Id. Appellants find further support for their interpretation in the fact that the Trust neither allowed the trustees to invade the principal in their discretion for the benefit of needy beneficiaries nor provided any power of appointment to any individual. Id. at 31-33. Appellants posit that he corpus of - 15 - J-A21016-13 than he had Id. at 33. Moving to the next Moltrup consideration, Appellants address the circumstances surrounding Decedent at the time of the preparation of his Will. They emphasize that Decedent was only fifty-six years old at that time, and had just witnessed the 1929 birth of his first grandchild. Thus, while the that the preparation of the two wills straddled in time, so too was the birth of his granddaughter. Shortly thereafter, in the 1930 Will, Decedent identified grandchildren as potential measuring lives; they had not been Id. at 34. As well, for investments that his trustees could make, in an effort to shield the [T]rust Id. Appellants continue: no evidence that [Decedent] intended that the secure source of income that [the Trust] provided to his descendants should last for any Id. at 35 (emphasis in original). Appellants also maintain that the prosperous endurance of his firm, George H. McFadden & Bro., was a priority for Decedent in the fashioning of the Trust. See Brief for Appellants at 32. For example, the 1930 Will ire that [his] sons shall each have - 16 - J-A21016-13 the opportunity of becoming partners in the firm of George H. McFadden & sons money against their share of the estate solely for use toward capitalizing any such partnership. However, that provision also called for the immediate maturity of the loan in the event the trustee determined that the partnership Id. at 8. Appellants further note that a statement of testimony to be given in prior litigation concerning ner, Edward Browning, Jr., -recent experience of the financial fall-out inconvenience of large withdrawals of capital belonging to the Estate of a deceased part Browning and another party to take out a $1 million life insurance policy on Decedent to hedge against precisely that See Exhibit H-2, Memorandum for Trial in McFadden v. United States, Memorandum of Testimony to be given by Mr. Edward Browning, Jr.6 As well, in another statement, the scrivener of the 1928 and ____________________________________________ 6 A federal district court opinion concerning the litigation in which these statements appeared as exhibits may be found at McFadden v. United States, 20 F.Supp. 625 (E.D.Pa. 1937). - 17 - J-A21016-13 Id., Memorandum of Testimony to be given by [John Hampton] B the firm, Appellants posit, effectively necessitated, in the long-term interests of his surviving and future partners, that the principal of the estate remain undisturbed for as long as possible. y concluded that, by indexing the perpetuities clause to the death of the surviving child or issue of a deceased child, Decedent indicated that any grandchild of his who was alive at the if that underscored the fact that Decedent, had he wanted to extend the death as a measuring life without regard t from the language of the clause. O.C.O. at 20-21. I agree that, taking the clause in isolation, this is a reasonable inference. Yet, I disagree that it is the only reasonable inference. Were we to base our determination strictly upon such conjectures, we would be bound to acknowledge that Decedent might just as readily (and perhaps more o - 18 - J-A21016-13 language might militate in favor of one or the other outcome, however, should not be dispositive, inasmuch as none of these observations emerges by itself as preferable to the others. Consequently, I disagree with the the question. I also find a textual nuance that neither the orphan the case. Specifically, in the income distribution-related provision, Decedent deceased grandchildren was in line for distributions only in the event that their with the perpetuities language, Decedent twice employed the conjunctive Compare 1930 . . . the net income to each of my sons, . . . and to each of my daughters, living at the time of my death, or to the respective issue living at the time of my death of a deceased son or daughter . . . with id. at 6 (describing expiration of -one years - 19 - J-A21016-13 after the death of the last survivor of the children and issue of deceased 7 I would not find this observation entirely dispositive either, but it unequivocally the case under clear aspects of the testamentary scheme that child, as it was with regard to the distribution of Trust income, Decedent trust income, or, in the event that the child in question had died leaving issue, said issue would per stirpes basis. Indeed, in addition to the earlier-mentioned linguistic variations that might have been employed to clarify that the last surviving child, rather than the last surviving grandchild, would be the measuring life under the circumstances of would have been yet another way to effectuate that result. This, for the of two classes of beneficiary appearing to be entitled to the same share of the estate simultaneously. This aspect of the broader testamentary scheme, ____________________________________________ 7 reliance on the income distribution limitation language rather than the different language pertaining to the expiration and distribution of the Trust. See supra at 5-6, nn.2-3. - 20 - J-A21016-13 and particularly the fact that the variations in question apply to aspects of the Trust itself, suggests that Decedent intended to extend the life of the Trust past the life of the survivor among any grandchildren living at the time Decedent. Because these observations, while suggestive, are not conclusive, I would reach outside the text of the surveyed. I would find two such factors sufficient, in tandem with the above analysis, to dispose of this case. As noted, supra sibilities then, if it was reasonable to anticipate under the language of a trust the addition of putative measuring lives who were not lives in being at the time all members of that class. See Weaver, 572 A.2d at 1253. However, in 1929, the rigor of that whereunder only the members of the class as to whom the Trust was rendered invalid would be excluded from a share of the Trust, but those class members as to whom the Trust remained legally enforceable would remain beneficiaries as per the terms of the Trust. Id. This more lenient would not be violated by voiding only the offending provisions as to the - 21 - J-A21016-13 issues arising from the presence of certain individuals in the problematic class or classes. class to determine perpetuities, and indeed carefully specified that distributions of principal be made piecemeal as such distributions were called for by the death of various beneficiaries. In so doing, the trust in the 1928 Will recognized the per stirpes distribution of trust income and principal across several specified classes while ensuring that no member of any class could run afoul of the then-applicable rule against perpetuities. It appears to me that this approach was designed to hedge against that eventuality, especially when viewed against the very different perpetuities language in the 1930 Will. assed muster under the severability test under either interpretation under consideration, it pushed further toward class-based distributions of interest and principal and, in extending its life twenty-one years past a measuring life (without regard to which is the measuring life), provided for a trust of longer duration than the all principal would remain in the Trust until its termination, rather than dissipating over time in various shares. This would maximize the duration of - 22 - J-A21016-13 McFadden & Bro., which comprised a substantial portion of Decede estate. These observations favor my conclusion that Decedent intended that the Trust endure as long as was permissible under the law, which, at the have been twenty-one years after the death of that grandchild or any other their issue as well, beneficiaries who were remote for him to contemplate at the time. but only unto the death of his last surviving child plus twenty one years, not to the end of the succeeding generation, are unconvincing. First, these considerations simply do not speak directly to the ambiguity of the language itself, as Schultheis and Beisgen, supra, prescribe. Moreover, they appear arbitrarily chosen among many competing intentions that might have arisen in the turbulent financial circumstances that existed in 1930. While Decedent obviously would have drafted his 1930 Will in the gloomy light cast by those circumstances upon his financial affairs, I discern no tangible evidence of what his responsive intent might have been beyond what can be gleaned from the testamentary scheme as reflected in the language of the 1930 Will. Ultimately, I believe that the case for using the surviving child of - 23 - J-A21016-13 Decedent as the measu ndum suggests otherwise. However, for the reasons set forth above, I find this approach unpersuasive. conform to his probable intention and be most agreeable to reason and McKenna, 489 A.2d at 865 (quoting Umberger Estate, 87 A.2d 290, 293 (Pa. 1952)). Any conclusion drawn by this Court necessarily is less certain than it might be because the text of the residuary Trust established in the 1930 Will is at best baroque and at worst byzantine. However, the testamentary scheme evident on the face of the 1930 Will and the abovecited extrinsic factors suggest to me that the most just, reasonable interpr that Decedent intended to sustain the Trust for as long as possible. Conversely, there is no clear reason to infer that Decedent intended the middle path extending the Trust for a significant duration, but not a duration as long as the law allowed especially in light of the fact that the changes made to the Trust between the 1928 Will and the 1930 Will signaled -born grandchild as a relevant life in being for perpetuities purposes and his intent to avail himself - 24 - J-A21016-13 of the perpetuities law of the day to extend the life of the Trust past the life of his children. For the foregoing reasons, I would conclude that Decedent intended that the measuring life for the residuary Trust in his 1930 Will be that of the surviving grandchild among those grandchildren who were alive at the time in concluding otherwise. Thus, I respectfully dissent. - 25 -

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