In re Dilworth's Estate

• Decision Date: 05 January 1914
• Docket Number: 165
• Parties: Dilworth's Estate
• Court: Pennsylvania Supreme Court

90 A. 356

243 Pa. 475

Dilworth's Estate

No. 165

Supreme Court of Pennsylvania

January 5, 1914

Argued November 3, 1913 [Copyrighted Material Omitted]

Appeal, No. 165, Oct. T., 1913, by Elizabeth Louise Dilworth from decree of O.C. Allegheny Co., March T., 1913, No. 156, dismissing exceptions to adjudication in the Estate of Charles R. Dilworth, deceased. Affirmed.

Exceptions to adjudication.

HAWKINS, P.J., filed the following opinion:

The questions raised in this case are whether or not,

1. This testator gave his brothers and sisters or their next of kin a legal option to purchase certain stocks; and if so,

2. That option has been exercised in a legal manner.

The material facts are these:

Mr. Dilworth died August 29, 1911, domiciled in New York, leaving a will dated June 22, 1907, which was duly probated there and here, and by which after the usual preliminaries he provided as follows:

"Third. All the rest, residue and remainder of my estate, both real and personal, of whatsoever it may consist, or wherever it may be situated, either now in my possession or hereafter to be acquired by me, or over which I have power of disposition by testamentary writing or otherwise, I give, devise and bequeath unto my beloved wife, Elizabeth Louise Dilworth, absolutely in fee, subject, nevertheless, to the terms and conditions hereinafter set forth.

"Fourth. It is my will and I hereby expressly direct that my brothers, Lawrence Dilworth, of Pittsburgh, Pennsylvania, and Joseph R. Dilworth, of New York, and my sisters, Elizabeth D. Beggs, of New York, and Louise D. Beggs, of Pittsburgh, Pennsylvania, shall have the option to purchase all the shares and interest in the copartnership of Dilworth, Porter & Company, Limited, of Pittsburgh, Pennsylvania, which I may own or to which I may be entitled at the time of my decease, for the sum of two hundred thousand dollars ($200,000), each of them to have a one-quarter share in said interest, and in case of the omission of either or any of said brothers, or sisters, to exercise said option to purchase, then the other of said brothers and sisters hereinbefore mentioned may exercise such option and acquire my share and interest in the said co-partnership of Dilworth, Porter & Company, Limited, said interest to be taken by such brothers and sisters exercising such option equally share and share alike. It is expressly provided, however, that in case either or any of my said brothers and sisters shall predecease me, his her or their next of kin may exercise the option above referred to in the same manner as though such deceased brother or sister or brothers or sisters were respectively living at the time of my death; but said option, however, in any event must be exercised within six months after the date of my death, and the election to exercise same must be expressed by notice in writing addressed to my said wife by the person or persons exercising the same. The said sum of two hundred thousand ($200,000) dollars, however, expressed as the consideration for my share and interest in said copartnership shall be paid at the expiration of five years from the date of my decease, and shall be evidenced by the promissory note or notes of the person or persons so exercising the option to purchase such share and interest as aforesaid, which note or notes shall be dated as of the day of my death, payable to my said wife five (5) years after the date thereof, bearing interest at the rate of five (5) per cent. per annum, payable semi-annually, the first payment of interest to be on a day six (6) months after the date of my decease, and the said payments of interest are to be continued every six (6) months thereafter until the said principal sum of two hundred thousand ($200,000) dollars is fully and completely paid. In the event, however, that none of my said brothers or sisters or their next of kin, as the case may be, shall exercise such option to purchase in the manner and form hereinbefore prescribed, then my said share and interest in the said copartnership of Dilworth, Porter & Company, Limited, shall at and after the expiration of said six (6) months from the date of my demise, be vested in my said wife, and become her absolute property, with the same force and effect as though such option had not been granted. In case said option be exercised by my said brothers and sisters, or any one or more of them, or their next of kin, as hereinbefore provided, then in that event I direct my executrix thereupon to deliver to the person or persons exercising such option any and all certificates of stock representing my said share and interest in said copartnership of Dilworth, Porter & Company, Limited, and to make, execute and deliver any and all instruments and documents which may be or become necessary to fully and completely vest my said share and interest in said copartnership in the person or persons who by reason of the exercise of the option as hereinbefore provided, shall thereupon be entitled thereto, upon the delivery to my said wife of the promissory note or notes as hereinbefore provided."

Mrs. Dilworth was made executrix of the will.

Lawrence Dilworth, a brother, and Louise D. Beggs, sister, died before Charles R. Dilworth, leaving issue, several of whom were minors and for whom the Fidelity Title & Trust Company and the Safe Deposit & Trust Company were respectively appointed guardians; and Joseph R. Dilworth, brother, and Elizabeth D. Beggs, sister, survived. On October 14, 1911, petitions were presented on behalf of the guardians above mentioned which after reciting the provisions of Mr. Dilworth's will quoted and the need of authority as ancillary guardians "in order to accept the option aforesaid" for the benefit of their wards, asked leave to apply to the surrogate of New York for such appointment, whereupon leave was granted and bond given in accordance with the law of New York; and the appointment made. By paper duly signed and dated December 9, 1911, all parties interested including the minors by their guardians respectively elected to accept Mr. Dilworth's stock in the partnership of Dilworth, Porter & Company, Limited, in accordance with the terms of his will; and this election was duly served on Mrs. Dilworth December 20, 1911. On the 26th day of February following eight notes signed by these parties including the guardians for their proportionate shares respectively of the consideration made payable to Mrs. Dilworth individually and successively eight similar notes made payable to her as executrix, were tendered and refused. In the meantime, December 1, 1911, a bill in equity was filed on behalf of Mrs. Dilworth in the Court of Common Pleas of this county against these claims in which among other things,

"16th. Your orator avers that under the will of Charles R. Dilworth, deceased, she takes said interest in Dilworth, Porter & Company, Limited, absolutely; that the condition under said will is in restraint of her right of alienation of said interest and is repugnant to the absolute devise to her of his interest in Dilworth, Porter & Company, Limited, and that the condition under said will and under the laws of the State of New York and State of Pennsylvania is absolutely void." and asks that they be restrained from interfering in any manner with her said ownership. This bill was afterwards "withdrawn" for lack of jurisdiction.

Assuming the legality of the option given by Mr. Dilworth, it is objected that the notes tendered by the guardians were without authority and consequently without value; and the guardians, while denying the soundness of this objection, expressed their willingness to pay their shares in cash.

If authority in the guardians to accept the stock as provided by the will was lacking, this court has now no hesitation in ratifying their action. Acceptance is clearly advantageous to their wards. The firm of Dilworth, Porter & Company, Limited, is in prosperous condition. The book value of its stock is $138.00 per share, being $87.22 in excess of testator's estimate. The appraisement of Mr. Dilworth's share made as a basis for the assessment of collateral inheritance tax was $499,110.00, less purchase price as per will, $200,000.

It is admitted that all decedent's debts have been paid, there is in the hands of the executrix upwards of $40,000 assets undistributed, and in the hands of the ancillary administrator as shown by the present account, a balance of $621,362.24.

The statement of collateral inheritance tax is as follows:

"Personal bequests to collaterals,

$499,110.00

Less purchase price as per will,

200,000.00

$299,110.00

Tax $14,955.50."

Pending determination of question of stock in issue.

Profits on the stock from Dilworth's death to Jan. 1, 1913, amounted to $58,950.00.

Mrs. Dilworth testified that she had been advised by her domicillary counsel that she would be liable for a transfer tax on the stock under a New York statute; but no other proof was offered at the audit, of the existence of such a statute, or of any claim made on behalf of that state for such a tax although this court called local counsel's attention to the need of his proof; and it was objected that even if such proof had been made the local claimants would not be liable and it was suggested the case fell within the principal of Small's Estate, 151 Pa. 1.

It is a mistake to say that Mr. Dilworth gave his wife an absolute estate in the third paragraph of his will. The gift was made expressly "subject to the terms and conditions hereinafter set forth"; and then immediately follow the "terms and conditions" of the fourth paragraph which are the only terms and conditions to which the testator could have had reference. It is conceded that the purpose plainly manifested in...