In re Schulz' Estate

• Decision Date: 26 June 1953
• Parties: In re SCHULZ' ESTATE. Appeal of FLORA.
• Court: Pennsylvania Supreme Court

98 A.2d 176

374 Pa. 459

In re SCHULZ' ESTATE. Appeal of FLORA.

Supreme Court of Pennsylvania.

June 26, 1953

Rehearing Denied July 22, 1953.

In the matter of a testator's estate. From an order of the Superior Court at No. 125 October Term, 1952, Dithrich, J. 172 Pa.Super. 594, 94 A.2d 785, affirming a decree of the Orphans' Court of Lancaster County at No. 46 June Term 1917, John L. Bowman, P. J., denying a petition to show cause why the register of wills should not grant letters d.b.n.c.t.a. over 21 years after testator's death, a child of testator's deceased son, to whom the will bequeathed a life estate in one-seventh of the estate, with remainder to his children, appealed. The Supreme Court, No 195 January Term, 1953, Allen M. Stearne, J., held that a deed and assignment of the one-seventh interests of five other children of testator under the will and the life tenant's interest to another son, named in the will as executor and trustee for the life tenant and beneficiary of the remaining share, without joinder of the life tenant's children, of whom five were minors, did not constitute a valid sale foreclosing such children from receiving their distributive shares of the trust property.

Decrees reversed, and Orphans' Court ordered to grant the petition.

Charles E. Workman, Daniel H. Shertzer, Lancaster, for appellant.

Robert Ruppin, Joseph R. Byars, Lancaster, for appellee.

Before STERN, C. J., and STEARNE, JONES, BELL, CHIDSEY and MUSMANNO, Jj.

ALLEN M. STEARNE, Justice.

The appeal is from an order of the Superior Court affirming a decree of the Orphans' Court of Lancaster County refusing to make an order on the register of wills authorizing the grant of letters of administration do bonis non cum testamento annexo after twenty-one years from the death of testator. See sec. 21 of the Act of March 15, 1832, P.L 135 (reenacted sec. 302, Fiduciaries Act of 1949, P.L. 512, 20 P.S. § 320.302.

Max Schulz, the testator, died May 30, 1917. He was possessed of a twenty-six acre farm and personal property estimated at $3,000. He was a widower survived by seven adult children. By his will the residuary estate, consisting of the above real and personal property, was devised and bequeathed to his executor with direction to convert the real estate into personalty within two years from his decease and to divide the fund into seven equal shares. He bequeathed an equal one-seventh share to each of six named children. The remaining one-seventh share (the subject of the present litigation) he directed to be retained by his executor in trust to ‘ invest so much thereof as he may deem necessary’ in the purchase of a home for the use of his son Frank and the son's wife Lena, and to invest the balance and to pay the net income to the son and wife for their successive lives. Upon the decease of the life tenants the testator further directed that the house should be sold, and the entire corpus of the trust equally divided among the children of such life tenants. Testator's son Edward was named as executor.

The record discloses that the executor filed neither an inventory nor an account and no home was ever purchased. Lena, the son's wife, predeceased her husband.

On March 24, 1920, six of testator's children including the son Frank, the life tenant of a one-seventh share, deeded their respective interests in the real estate, and released their interests in the personal estate to Edward Schulz who was the executor trustee of testator's estate. The deed and release were recorded. The pivotal fact is that none of the children of Frank and Lena-five of the seven of whom were then minors-were joined, either in person or by guardian in such transfer and release .

Despite the failure of such joinder of Frank's children, the deed erroneously recites:

‘ * * * all of the parties hereto are all of the heirs and legal representatives of the said Maximilian Schulz, deceased, and are all of the parties who now have or hereafter might or could have any interest in the said real estate and by arrangement among all of the parties hereto it has been agreed to execute this conveyance so that the said Edwin J. Schulz the grantee herein shall have an absolute fee simple title in the premises free and discharged of all claims whatsoever which any of the parties hereto might or could have in the said real estate, or in any personal property belonging to the said decedent.’

The consideration in the deed is named as $1.00. The revenue stamps affixed, however, were in the amount of $12, indicating a consideration of $12,000. In respondent's answer under new matter, it is stated that:

‘ * * * all the children of Maximillian Schulz, including his son Frank, who was entitled to the income for life of one-seventh (1/7) of the proceeds of the land, accepted the sum of Twelve Thousand ($12,000.00) Dollars as the price of the land and, intending that the full legal title should be vested in Edward Schulz individually. * * *’ (Italics supplied.)

It is also stated:

‘ * * * that one-seventh (1/7) of the purchase price should be held in trust for Frank Schulz and his children for the purposes specified in the Will of Maximillian Schulz, * * *.’ The answer further stated:

‘ * * * that Edward Schulz, the trustee, with the knowledge and consent of all the said children of Maximillian Schulz sold the one-seventh (1/7) interest which he held as trustee to himself and held, occupied, used and dealt with the land as his own, free of the said trust, from the time of said conveyance, treating the one-seventh (1/7) interest as being vested in him, togeter with the remaining six sevenths (6/7) interest, by the family settlement and the deed; * * *.’

Under such circumstances respondents contend that the deed and release by the seven children of testator (the son Frank possessing as stated but a life estate and without the joinder of his children, the remaindermen) were equivalent to and thereby constituted a conveyance of the entire title by the trustee to himself as an individual and hence was a conversion of the real estate into personalty; that thereafter the executor trustee held this one-seventh share of $12,000 in trust for Frank for life with remainder to Frank's seven children. It is further contended such ‘ sale ’ was merely voidable; also that since the sale was with full knowledge and acquiescence of testator's children the petitioner grandchildren (children of the son Frank) are barred by laches and the statute of limitations.

On February 24, 1921, John Schulz, a son of testator, petitioned the orphans' court for a citation upon the executor to file an account. On May 15, 1922, the court dismissed the petition on the ground that ‘ the estate has been settlea and it was done agreeably to all parties .’ (Italics supplied.)

On May 13, 1938, the trustee filed a triennial account as ‘ testamentary trustee for Frank Schulz.’ This triennial account, filed for information only, was neither advertised nor audited. See Fiduciaries Act of 1917, June 7, P.L. 447, sec. 46(h), 20 P.S. c. 3 Appendix, § 838. The answer, however, concedes that the trustee was then holding such one-seventh share in trust and was paying the income therefrom to Frank, the life tenant.

On January 6, 1941, Edward Schulz, the trustee, died. His widow was appointed his administratrix. Frank, testator's son and life tenant of one-seventh share, died August 5, 1943, intestate. He left the said seven children surviving and no issue of deceased children.

On July 6, 1951, Elvin T. Schulz, one of the seven children of Frank Schulz, the life tenant, petitioned the orphans' court for a citation on all parties to show cause why the register of wills should not grant letters de bonis non cum testamento annexo in the estate of testator after twenty-one years in accordance with Act of 1832, supra. An answer was filed to the amended petition.

On August 8, 1951, the administratrix of Edward J. Schulz, the testamentary trustee of Frank Schulz under the will of Max Schulz, deceased, filed an account of the administration of the trust by the fiduciary which has not been audited.

On February 13, 1952, the orphans' court denied the petition. In its opinion the court decided that because of laches and family agreement or settlement, petitioner was estopped from requiring the appointment of an administrator d. b. n. c. t. a. The petitioner appealed to the Superior Court. That court affirmed the decree of the court below. This Court allowed an allocatur.

We are unable to agree with the decree of the orphans' court so affirmed by the Superior Court. That a trust still subsists concerning the one-seventh share in controversy is conceded. The dispute is whether or not the action of the fiduciary in acquiring, by deed and assignment, the individual interests of his five brothers and sisters, and by the deed and assignment to him by his brother Frank, the life tenant, the remaining seventh share, constituted a sale of the real estate, and therefore a conversion of the realty into personalty. As stated, the court below and the Superior Court decided that it did; and that the remaindermen in the trust were thereafter interested only in the fund which the fiduciary set up as the trust res .

While all the seven adult children of testator assigned their respective interests to Edward (the executor trustee) the interest of Frank was only that of life tenant in a seventh share. At the date of such transfer; viz., March 24, 1920, five of the seven children of the life tenant, the remaindermen, were minors who had no guardians. They respectively attained their majorities as follows: Mary on September 14, 1921; Marjorie on May 30, 1923; Ella on May 27, 1924; Elvin on December 12 1927 and Dorothy...