Duncan's Estate, In re

• Decision Date: 24 July 1967
• Parties: In re ESTATE of Anne A. DUNCAN, Deceased. Appeal of Amy Anne Weimer RITTER. Appeal of Richard DISALLE, Guardian and Trustee and litem for certain minors and Trustee ad litem for certain minors and
• Court: Pennsylvania Supreme Court

Page 717

232 A.2d 717

426 Pa. 283

In re ESTATE of Anne A. DUNCAN, Deceased Appeal of Amy Anne Weimer RITTER Appeal of Richard DISALLE, Guardian and Trustee and litem for certain minors and Trustee ad litem for certain minors and

Supreme Court of Pennsylvania.

July 24, 1967.

[426 Pa. 284] William C. O'Toole, Donald J. Barley, Barley & O'Toole, Pittsburgh, G. Ashton Brownlee, Washington, for appellant Ritter.

Richard DiSalle, Canonsburg, pro se.

Thomas L. Anderson, Washington, for Walter Baker Weimer.

Richard G. Miller, Jr., Washington, for Joseph D. Kniseley, Guardian for Joseph Duncan Kniseley, a minor.

Odel Parkinson, Washington, for The Union Nat. Bank and Anne Baker Weimer, trustee and accountants.

Before BELL, C.J., and MUSMANNO, JONES, EAGEN, O'BRIEN and ROBERTS, JJ.

OPINION

JONES, Justice.

This is an appeal from a decree of the Orphans' Court of Washington County dismissing exceptions to its adjudication which allowed reformation of a deed of trust of Anne A. Duncan. The facts surrounding the present controversy are as follows:

Anne A. Duncan, (Settlor), executed a revocable deed of trust on August 19, 1935 wherein her son-in-law, Walter H. Baker, (Baker), and the Union National Bank of Pittsburgh (Union) were named trustees. This particular trust created by Mrs. Duncan was designated by her as the 'Baker Trust' since its benefits ran primarily to her daughter--Amy--who had married Walter H. Baker. ¹ Under the original terms of the 'Baker Trust', Settlor provided for the following scheme of disposition: (a) during her lifetime, Settlor was to receive all of the income; (b) at her death, the income was payable to her daughter--Amy Duncan Baker (Amy)--for life; (c) at Amy's death, the income was payable to Settlor's granddaughter--Anne Baker Weimer (Anne)--for life; (d) at Anne's death, the income was payable to her (Anne's) issue, with the further provision that as each issue reached age 35, the trust terminated as to such issue and he or she received an appropriate share of corpus outright; and (e) issue born to Anne After Settlor's death were to be placed on the same footing as issue born Prior thereto.

Settlor amended the 'Baker Trust' on two occasions. The purpose of the first amendment, executed on December 10, 1936, was to eliminate a disparity which had occurred in the value of the trust for her son and daughter; to eliminate this disparity the amendment transferred funds from the 'Baker Trust' to the 'Duncan Trust'. In addition, the first amendment to the trust gave Settlor the express power to revoke and/or amend the original instrument.

On January 4, 1941, Settlor executed a second amendment to the trust and it is this amendment which is the subject of the present litigation. Prior to January 4, 1941, Baker approached Smith W. Whitworth, a member of the Bar, and a Trust Officer of Union, and informed him that the Settlor wished to amend the 'Baker Trust'. Baker informed Mr. Whitworth of Settlor's intentions and asked that Whitworth prepare an amendment to the trust to comply with Settlor's alleged wishes. At this point, it should be noted that Whitworth, although involved with the creation of the original trust, was not the scrivener of the original instrument but was the scrivener of both the first and second amendments; whether or not Baker or the Settlor submitted his drafts of either the first or second amendments to private counsel is unknown. After receiving instructions from Baker, Whitworth drafted an amendment and forwarded it to Baker, Not to Settlor. On January 4, 1941, Baker returned the draft of the second amendment--which Mrs. Duncan had already executed--to Whitworth who filed it with other papers. At no time did Whitworth ever talk to the Settlor about the second amendment. All of his discussions concerning the contents of the amendments and Settlor's intentions were with Baker, his co-trustee.

In the 'Whereas' clause of the second amendment, there was a recital that the death of her son, James E. Duncan, Jr., was the reason for the amendment. Although the recital of the purpose of the amendment states such reason, Mr. Duncan's death was completely irrelevant and immaterial insofar as the subject matter of the amendment was concerned and the purpose of the amendment would be the same if he were living or dead. The amendment of January 4, 1941 dealt only with Article I of the 'Baker Trust', and it departed drastically from the dispositive scheme set forth in the original trust agreement.

It will be recalled that the original instrument gave the remainder interest in the trust, after the death of the various life tenants, to the issue of Anne Baker Weimer, that the issue were to take free of trust when they attained age 35, and that the original contained a provision that issue born After the Settlor's death would share equally with those issue born Before her death. The disposition of the remainder interest in the trust was changed by the second amendment as follows: (a) at the death of Anne Baker Weimer--the last of the life tenants--the trust who to be divided into two equal parts--one for each of the Settlor's then-living great granddaughters--Amy Anne Weimer and Julia V. Weimer; (b) the two shares were to be held in trust with income payable to the two named great-grandchildren until each attained age 40, at which time they could petition the trustees for $10,000 annually from the principal of their shares while receiving the income from the balance; and (c) that any children born to Anne Baker Weimer After the death of the Settlor should be in the same posture as the two named great-grandchildren, with the exception that such after-born children were to receive their shares of the trust at the age of 21. ²

It can readily be seen that the effect of a literal reading of the language of the amendment--caused by naming the issue living at the time the second amendment was executed--was to bar any child of Anne born between January 4, 1941 (the date of the amendment) and the date of Settlor's death, February 16, 1943) from sharing in the corpus of the trust. The present problem arises since Anne did, indeed, give birth to a child during this period; Walter Baker Weimer (Walter) was born on December 16, 1942 and thus falls within the class of persons excluded from receiving any interest in the trust under the terms of the second amendment thereto.

On December 10, 1963, the trustees, Union and Anne (as substituted trustee) filed a second and partial account. At audit, the trustees advised the Court that their purpose in filing the account was to have the Court determine the identity of the beneficiaries who would take at the death of Anne--the then-living life tenant. Further, the trustees advised the Court that the question was being raised at that time, since: (a) there was only one living person--the scrivener, now quite elderly--who had knowledge of the facts; and since (b) Walter had just attained majority.

At a hearing held on January 24, 1964, counsel appeared on behalf of Walter and in his praecipe for appearance ³ stated that a scrivener's error had eliminated Walter as a remainderman under the 'Baker Trust'. Counsel's statement on the praecipe concluded with a prayer for reformation of the second amendment. ⁴ The lower court treated the praecipe for appearance as a formal petition for reformation. At the same hearing, counsel appeared on behalf of Amy Anne Weimer (now Ritter) and the legal guardian of the minor child of Julia V. Weimer Kniseley (now deceased)--the presumptive remainderman under the second amendment. On April 10, 1964, the Court appointed a guardian and trustee ad litem for the minors and unascertained beneficiaries.

After a hearing on April 16, 1964, at which time extensive testimony of the scrivener was received, the Orphans' Court of Washington County filed an adjudication reforming the second amendment so as to include Walter as a remainderman in the same posture with his living sister and the child of his deceased sister. Exceptions to the adjudication, filed by Amy Anne Weimer Ritter and the guardian ad litem, were dismissed by the auditing Judge, sitting as the Court en banc, and the adjudication was confirmed absolutely. This appeal, by Mrs. Ritter and the guardian ad litem (appellants), followed.

While appellants challenge the lower court's adjudication on several grounds, the main thrust of their attack is that the evidence presented is not as clear, precise and convincing as it necessary to support a decree of reformation of a trust. Since we agree with appellants that the evidence presented does not attain the quality required for reformation, it is unnecessary to address ourselves to any of appellants' other contentions.

We turn to an examination of the instant record with certain well-defined principles in mind: (1) the mistake of a scrivener in preparing a deed, will or other writing may be established by parol evidence and the instrument reformed accordingly: Huss v. Morris, 63 Pa. 367 (1870); Bugen v. New York Life Ins. Co., 408 Pa. 472, 184 A.2d 449 (1962); (2) while generally, the mistake must be mutual, the rule is otherwise where, as herein, the the Settlor receives no consideration for the creation of a trust. 'In such a case a unilateral mistake on the part of the settlor is sufficient, and it is immaterial that the beneficiary did not induce the mistake, or know of it or share in it.'; La Rocca's Trust, 441 Pa. 663, 639, 192 A.2d 409, 412 (1963); (3) whether the mistake be unilateral or bilateral, the quality of proof required to establish the existence of the mistake is the same; that proof of the mistake must be established by evidence that is 'clear, precise, convincing and of the most satisfactory character.' La Rocca, supra, at 640, 192 A.2d at 412; Easton v. Washington County Insurance Co., 391 Pa. 28, 37, 137 A.2d 332 (1957); and, finally, (4) while it is true that where the auditing judge...