Fuss v. Fuss, 2

• Citation: 373 Mass. 445,368 N.E.2d 276
• Decision Date: 27 September 1977
• Docket Number: No. 2,2
• Parties: James Sandor FUSS v. Marcia Pitcairn FUSS (). Supreme Judicial Court of Massachusetts, Barnstable
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 276

368 N.E.2d 276

373 Mass. 445

James Sandor FUSS v. Marcia Pitcairn FUSS (No. 2) Supreme Judicial Court of Massachusetts, Barnstable.

Argued May 4, 1977.

Decided Sept. 27, 1977.

Daniel F. Featherston, Jr., Boston, for defendant.

Joseph D. Steinfield, Boston (Mary W. Nelson, Cambridge, with him), for plaintiff.

Before HENNESSEY, C. J., and QUIRICO, BRAUCHER, KAPLAN and LIACOS, JJ.

LIACOS, Justice.

The parties to this case were previously before this court in Fuss v. Fuss, --- Mass. --- ^a, 368 N.E.2d 271 (1977), which dealt with matters pertaining to their putative marriage. The present controversy arises out of the same factual background. This litigation concerns the ownership of real and personal property in Oyster Harbors in the town of Barnstable which formerly belonged to the defendant's father, the Reverend Theodore Pitcairn. By deeds dated November 13, 1972, Reverend Pitcairn conveyed the property to Marcia and James as tenants by the entirety; at that time, the donees erroneously believed the gift was to Marcia alone. Since learning the nature of the deed, Marcia has refused to acknowledge James's ownership rights. James therefore brought this suit for declaratory judgment to establish his interest in the property.

The probate judge held that the parties are the owners, as tenants in common, of the real and personal property in dispute. The judge further held that the defendant, Marcia, has an equitable lien on the property in the amount of certain gift tax payments made by her, with interest thereon. Both parties took an appeal from this amended judgment of the Probate Court. The matter is before us on our allowance of the application of James for direct appellate review. Mass.R.A.P. 11, 365 Mass. 854 (1974). We affirm the judgment of the Probate Court.

We summarize the relevant facts as found by the probate judge. For many years prior to the disputed transfer, Reverend Pitcairn had spent his summers at the Oyster Harbors property which is the subject of this litigation. During the summer of 1970, Reverend Pitcairn then seventy-six years old discussed the disposition of the property with members of his family. Marcia indicated that she would like to have it.

In the fall of 1970, James spoke with a Mr. Brown, the associate general counsel of the Pennsylvania company which manages the Pitcairn family trusts, concerning plans for the Oyster Harbors property. Mr. Brown indicated that Reverend Pitcairn was unwilling to take any action at that time. There were no further discussions until 1972, when Reverend Pitcairn, Marcia and James visited the situs, paced the boundaries, and spoke about transferring title. Because Reverend Pitcairn was in a very high gift tax bracket, he would not make an inter vivos gift unless the donee agreed to pay the gift tax under the "net gift method." Mr. Brown advised James, Marcia and her father that the gift tax based on an appraiser's estimate of $215,000 would be approximately $80,000. The judge found that all persons realized that the tax would have to be paid by Marcia, as James did not have sufficient funds of his own.

Mr. Brown subsequently prepared the documents necessary to effect transfer of the property. In so doing, he represented all three parties to the transaction. Having received no instructions as to the form in which title was to be conveyed, he decided on his own initiative to list the grantees as tenants by the entirety. Neither James nor Marcia was aware of this decision at the time. Neither Mr. Brown nor Reverend Pitcairn knew that the parties were experiencing marital difficulties; indeed, Reverend Pitcairn was never aware (although Mr. Brown was) that Marcia's prior Mexican divorce and marriage to James were highly questionable. ¹

Mr. Brown engaged a Massachusetts attorney to prepare the deed passing title to James and Marcia as tenants by the entirety. Mr. Brown's letter of instructions to that lawyer related that "Reverend Pitcairn desires to transfer the property to his daughter and son-in-law. He will receive no consideration for the transfer, but the grantees have agreed to pay and discharge the Federal Gift Tax. . . . The grantees are Marcia Pitcairn Fuss and James Sandor Fuss." A copy of this letter was sent to Reverend Pitcairn, who made no objection to Mr. Brown. The judge found that Reverend Pitcairn, although then seventy-eight, was "alert for a man of his age, aware of the consequences of what he did, and of the effect of gifts to his children and their spouses. He paid close attention to his business affairs."

Mr. Brown subsequently spent a half hour with Reverend Pitcairn, just before the latter departed on a trip to Europe. Mr. Brown showed him various documents relating to the transfer of the Oyster Harbors property, and explained that "(t)his is the deed that conveys the property to Marcia and James and this is the document that conveys the personal property to Marcia and James. This is the agreement concerning the payment of the Gift Tax." Reverend Pitcairn then signed the papers. The judge found that he "had the opportunity to read the three documents . . . that he understood the contents therein, although he may not have read them line by line, and that he knew that the property was being conveyed to James and Marcia."

Mr. Brown thereafter brought James and Marcia a copy of the letter and asked them to countersign it so as to acknowledge their agreement to pay the gift tax. This letter did not disclose that the deed had been drawn so as to convey the property to them jointly. On two occasions, Marcia asked James why his name appeared on the tax letter; in reply, he expressed his belief that it was a mere formality for tax purposes, and not for the purpose of giving him a beneficial interest. Both parties later countersigned the letter and returned it to Mr. Brown.

In February, 1973, Reverend Pitcairn executed his United States quarterly gift tax return showing a gift of the Oyster Harbors property and its contents to Marcia and James as tenants by the entirety. In March of that year, Mr. Brown caused the gift taxes to be paid out of Marcia's funds held by the family company.

After the parties separated in June, 1973, James went to the offices of the Pitcairn family company to obtain copies of papers pertaining to him. He then saw a copy of the Oyster Harbors deed and learned for the first time that he had an apparent interest in the property. ² He also discovered that Reverend Pitcairn had given him gifts totaling about $13,000 in stock during the preceding two years. Although Reverend Pitcairn had learned of the separation in the summer of 1973, he never attempted to revoke the gifts. Marcia did not discover that James's name was on the deed until after her father's death in December, 1973.

1. The defendant Marcia urges that the transfer of property was a sale which should be reformed to accord with her understanding of the transaction. She claims that she was a purchaser for value of the property and that the deed should be reformed to give her sole title.

The judge found that "(t)he conveyance of the Oyster Harbors property was a gift without consideration, and not a sale, and was so understood by all the parties." This conclusion is supported by substantial evidence. From the outset, transfer of the property was discussed as a gift. The deed of the real estate recited "no financial...