In re Bach's Estate

• Court: Pennsylvania Supreme Court
• Writing for the Court: Author: Bell
• Citation: In re Bach's Estate, 231 A.2d 125, 426 Pa. 350 (Pa. 1967)
• Decision Date: 30 June 1967
• Parties: In re ESTATE of Charles T. BACH, Deceased. Appeal of Hazel Adams WEIDNER, Helen K. Gledhill and Elwood S. Kille, Residuary legatees under Decedent's Will.

231 A.2d 125

426 Pa. 350

In re ESTATE of Charles T. BACH, Deceased. Appeal of Hazel Adams WEIDNER, Helen K. Gledhill and Elwood S. Kille, Residuary legatees under Decedent's Will.

Supreme Court of Pennsylvania.

June 30, 1967.

Frederick D. Sarkis, Stassen, Kephart, Sarkis & Kostos Philadelphia, for appellants.

Cuthbert H. Latta, Philadelphia, O. Warren Higgins, Media, Morgan R Jones, Philadelphia, for appellees Drexel Institute of Technology, Charles J. Biddle and Ruth Matlack Bach; Drinker Biddle & Reath, Philadelphia, of counsel.

William H. S. Wells, Saul, Ewing, Remick & Saul, Philadelphia, for The First Pennsylvania Banking and Trust Co. appellee.

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

OPINION OF THE COURT

BELL, Chief Justice.

Charles T Bach died, testate, on May 3, 1955. On May 23, 1956, the Orphans' Court filed an Adjudication confirming the executors' account and approving the Steelement Agreement dated September 19, 1955 which was made by the appellants and the Drexel Institute and will be hereinafter referred to in detail. Shortly thereafter, the estate was distributed in accordance with the Adjudication and the Settlement Agreement.

Approximately 10 years later, four of Bach's testamentary beneficiaries (the appellants) petitioned the Orphans' Court to review its Adjudication and prior Decrees and (a) set them aside because of fraud, and (b) award to the petitioners that part of the residuary estate which the testatory had contingently bequeathed to them. The Orphans' Court sustained respondents' preliminary objections and dismissed the petition. From this Decree the four contingent beneficiaries took this appeal.

Bach first bequeathed a number of legacies, including a pecuniary legacy to each of the appellants. He then created a trust of his residuary estate, naming the pennsylvania Company for Banking and Trusts, his wife Mrs. Bach, and his friend Melvin C. Webb, as trustees. In this residuary trust, he gave his wife, Ruth, the income for life, and also directed the trustees to pay her annually the sum of $7,500 out of net income if the net income was sufficient, or if the net income in any year did not amount to $7,500, to pay her $7,500 out of income and principal. The trustees were also given power to appropriate and expend principal in their discretion for the benefit of his widow in the event of her illness. Bach then privided that, at Mrs. Bach's death--Mrs. Bach is still living and was named as a respondent in this proceeding--The remaining remainder of the trust was to be divided into three equal parts: One-third of the principal was to be paid to Bach's niece, Helen K. Gledhill if then living; one-third to his nephew Elwood S. Kille if then living, or if then deceased, to his wife if then living; and one-third to Bach's nephew Charles T. Weidner if then living, or if then deceased, to Mrs. Weidner if then living. Bach further provided that (a) if the beneficiaries of any one-third share should die before Mrs. Bach, that share should accrue to the other share or shares, and (b) if none of the five named beneficiaries survived Mrs. Bach, the entire principal should be paid to Drexel Institute of Technology.

Thereafter, Webb suggested To Mrs. Bach and to Charles J. Biddle, Esq.--a distinguished member of the Philadelphia Bar who was counsel for the Drexel Institute and later represented Mrs. Bach--that the will did not carry out Bach's ideas or wishes or intentions with respect to Drexel Institute, which Webb said Bach had told him he wished to substantially benefit after Mrs. Bach's death. Thereafter, Biddle, with the approval of Mrs. Bach, had conferences with Miss Gledhill and Mr. and Mrs. Kille concerning a possible settlement of the estate, and correspondence with Mr. and Mrs. Weidner concerning a proposed settlement under which Miss Gledhill, the Killes and the Weidners would each receive $30,000 and Drexel Institute would receive the balance of the principal of the residuary estate. Biddle told all the residuary beneficiaries as well as Mrs. Bach that if she (Mrs. Bach) took against the will, there was some doubt or uncertainty in the law as to whether the bequests to the present appellants would be accelerated or whether they could or could not receive their share of the principal until after Mrs. Bach's death. with all these facts well known, all the parties (except Mrs. Bach) entered into and executed a Settlement Agreement.

This Settlement Agreement, dated September 19, 1955, pertinently provided:

'WHEREAS, Ruth Matlack Bach, the wife of Charles T. Bach, has indicated that she may take against the Will of said Charles T. Bach.

'WHEREAS, in the event Ruth Matlack Bach takes against the Will of Charles T. Bach the parties hereto are in disagreement as to the proper distribution of the balance of the estate, it being the position of the individual parties hereto that they would take the entire remaining balance of the estate, whereas Drexel Institute of Technology takes the position that under the law of Pennsylvania Drexel Institute of Technology would be entitled to a substantial part or all of the balance of said principal.

'WHEREAS, the parties hereto desire to avoid any litigation and to settle any differences which might arise among them In the event Ruth Matlack Bach takes against the Will of her husband.

'NOW THEREFORE, THE PARTIES HERETO, * * * agree that If Ruth Matlack Bach effectively elects to take against the Will of her husband, ^[*] Charles T. Bach, deceased, then the balance of the estate of Charles T. Bach after paying the share of Ruth Matlack Bach shall be distributed in accordance with the following agreement: * * *'

This Agreement, which signed by Miss Gledhill, the Killes, the Weidners and the Drexel Institute, Was conditioned upon Mrs. Bach's election to take against her husband's will--a very important fact which appellants have ignored--which would result in giving Drexel Institute a large amount of money, none of which it might otherwise have received.

Because of Petitioners' allegations of fraud, it is necessary to recite additional facts.

At the time of testator's death, his wife Ruth was 52 years of age; Miss Gledhill was 65 years of age; the two Weidners were respectively 62 and 61 years of age; and the Killes were respectively 68 and 59 years of age. It was obvious to everyone That none of them might live to enjoy any of the income from the residuary estate which had a net value of $765,000 before taxes and expenses. It was likewise obvious that if any or all of them survived Mrs. Bach, they might be too old to enjoy the income even if they lived to get it.

One month after the aforesaid Settlement Agreement was signed, Mrs. Bach elected to take against her husband's will, thereby making the said Settlement agreement immediately effective.

The Orphans' Court sur the executors' account, approved this Settlement Agreement, and Distribution was made in accordance with the Adjudication and Decree of the Orphans' Court in 1956. Under the Court's Decree, Miss Gledhill Received in distribution $30,000, Mr. and Mrs. Kille received $30,000, and Mr. and Mrs. Weidner received $30,000; and Drexel Institute received the balance, viz., $186,199. This was 10 years before the present petition for review was filed in the Orphans' Court.

The petition for review named as respondents, testator's wife, Mrs Bach, who was then and still is alive, the Pennsylvania Company, Drexel Institute, and Biddle. The charges set forth in the petition are many; the really important ones are the oft repeated allegations of fraud on the part of Biddle. Mrs. Bach is accused of ignorance and failure as executrix and trustee to carry out her husband's will and thus protect the petitioners. The Pennsylvania Company is accused of negligence in failing to protect the interests of the petitioners and carry out the provisions of testator's will, under which, by virtue of Mrs. Bach's election to take against the will, they would have received a far larger sum of money. Drexel Institute is accused by petitioners of taking advantage of the 'naivety' and 'cupidity' of the petitioners themselves by securing for itself a very large amount of Bach's residuary estate without any right thereto under the will, together with a demand that the Institute give up its ill-gotten gains. Biddle's alleged fraud boils down in the last analysis, not to actual fraud, but to petitioners' conclusions of legal fraud (1) because of his alleged erroneous interpretation of the law governing the acceleration of the bequests to the petitioners if and when Bach's widow took against Bach's will, and (2) his (wellknown) dual and (alleged) conflicting position as counsel for Mrs. Bach and for the Drexel Institute. Finally, appellants attempt to excuse (a) their laches and (b) their failure to present a petition for review within five years after the Court's...