In re Kaufmann's Estate

• Decision Date: 23 May 1961
• Citation: In re Kaufmann's Estate, 171 A.2d 48, 404 Pa. 131 (Pa. 1961)
• Court: Pennsylvania Supreme Court
• Parties: In re ESTATE of Edgar J. KAUFMANN, Deceased. Appeal of Grace A. KAUFMANN, Surviving Spouse.

Page 48

171 A.2d 48

404 Pa. 131

In re ESTATE of Edgar J. KAUFMANN, Deceased Appeal of Grace A. KAUFMANN, Surviving Spouse.

Supreme Court of Pennsylvania.

May 23, 1961.

Samuel Kaufman, Pittsburgh, David F. Maxwell, Obermayer, Rebmann, Maxwell & Hippel, Philadelphia, for appellant.

Robert L. Kirkpatrick, John G. Frazer, Jr., Kirkpatrick, Pomeroy, Lockhard & Johnson, John C. Bane, Jr., Richard A. Gray, Jr., John H. Scott, Jr., Reed, Smith, Shaw & McClay, Pittsburgh, Ralph S. Snyder, Deputy Atty. Gen., Anne X. Alpern, Atty. Gen., Harrisburg, for appellee.

Before CHARLES ALVIN JONES, C. J., and BELL, MUSMANNO, BENJAMIN R. JONES, COHEN BOK and EAGEN, JJ.

BENJAMIN R. JONES, Justice.

The primary issue herein is the validity of an antenuptial agreement entered into by Edgar Kaufmann [decedent] and Grace S. Kaufmann on September 3, 1954, the day prior to their marriage.

Edgar Kaufmann, a Pittsburgh resident, died on April 15, 1955--seven months subsequent to his marriage--survived by Grace Kaufmann, his wife, and Edgar Kaufmann, Jr., a son by a prior marriage. Decedent's estate approximated $10,500,000. ¹

Eleven months subsequent to decedent's death, Mrs. Kaufmann elected to take agaisnt both decedent's will--executed the day of their marriage--and a charitable purpose life insurance trust--created one and three-quarter years prior to the marriage. Thereupon, decedent's executors and trustees petitioned the Orphans' Court of Allegheny County to annul Mrs. Kaufmann's election; the basis of their petition was that Mrs. Kaufmann, by reason of the antenuptial agreement of September 3, 1954, was barred from making any such election. By answer to this petition, Mrs. Kaufmann took the position that, although she did execute the antenuptial agreement, the agreement was invalid and not binding upon her for various reasons: ² lack of mutuality, that the agreement was executed by her without an understanding on her part of its meaning and purport and without having been adequately and properly advised by counsel of her own choice, that, when the agreement was made, she was not aware of decedent's actual financial status or of the existence of the charitable purpose life insurance trust, that she was without knowledge of the impact on decedent's estate of taxation and the tax saving device of marital deduction, that decedent, although his will was already prepared and ready for execution, failed to disclose to her the manner in which he proposed to dispose of his estate and, lastly, the agreement failed to make adequate and suitable proportionate provision for her maintenance and support. Although Mrs. Kaufmann's challenge to the agreement's validity appears to be in the nature of a shotgun attack, the real thrust of her challenge is two-fold: (1) that the decedent fraudulently and falsely concealed and failed to disclose to her the actual manner in which he intended to make a charitable disposition of his estate and (2) that the agreement failed to provide an income adequate and sufficient to maintain her in a manner consistent with that in which she had lived during coverture.

After taking testimony, the Orphans' Court of Allegheny County set aside Mrs. Kaufmann's election, ruling that her evidence was insufficient to warrant the court to invalidate the antenuptial agreement. The court en banc dismissed exceptions to that ruling and upon entry of a final decree Mrs. Kaufmann appealed.

On September 3, 1954, Kaufmanns entered into this antenuptial agreement. Under the terms thereof, Mrs. Kaufmann waived and released any and all rights 'that she may acquire as Mr. Kaufmann's surviving spouse in his estate upon his death'. In exchange for Mrs. Kaufmann's waiver and release, decedent promised to give Mrs. Kaufmann, by will or inter vivos gift: (1) 2500 shares of the common stock of May Department Stores, Inc. [May]; ³ (2) his Palm Springs, California, residence; ⁴ (3) a life interest in the entire income of a trust, the corpus of which would be at least 20,000 shares of the common stock of May; ⁵ (4) a waiver of any interest in her estate.

After bequests of certain personalty to Mrs. Kaufmann and Edgar Kaufmann, Jr., ⁶ decedent's will--executed the day subsequent to the antenuptial agreement--provided for: (1) a devise of the Palm Springs residence to Mrs. Kaufmann and a devise of the realty in Pennsylvania and Canada to Edgar Kaufmann, Jr.; (2) bequests totalling $51,000 to certain employees; (3) the creation of a trust, the corpus consisting of $20,000 shares of May common stock, to pay the entire net income thereof to Mrs. Kaufmann for life and, at her death, to distribute the corpus to the Edgar Kaufmann Charitable Foundation; (4) the creation of a trust, the corpus consisting of $1,500,000, to pay the net income therefrom to Edgar Kaufmann, Jr. for life--with the right to invade corpus up to $500,00--and, at his death, to pay the balance of corpus to the Foundation; (5) distribution of all the residuary estate to the Foundation.

In our examination of the evidence presented by this voluminous record, certain principles, well established and long recognized in this area of the law, must be our guide: (1) an antenuptial agreement--even though the parties occupy toward each other a relationship of trust and confidence--is presumptively valid and binding upon the parties; while the law requires that each party to the agreement act with the utmost good faith and candor toward the other party, the law presumes that this requirement has been fulfilled and the burden of proving the invalidity of an antenuptial agreement rests upon the party who so charges (Robinson's Estate, 222 Pa. 113, 70 A. 966; Whitmer's Estate, 224 Pa. 413, 73 A. 551; McCready's Estate, 316 Pa. 246, 175 A. 554; Snyder Estate, 375 Pa. 185, 100 A.2d 67; Barnhart v. Barnhart, 376 Pa. 44, 101 A.2d 904); ⁷ (2) in essence, the validity of an antenuptial agreement depends 'upon the presence of one of two factors: A reasonable provision for the wife, or, in the absence of such provision, a full and fair disclosure to the wife of the husband's worth': ⁸ Flannery's Estate, 315 Pa. 576, 580, 173 A. 303. See also: Warner's Estate, 210 Pa. 431, 59 A. 113; Groff's Estate, 341 Pa. 105, 19 A.2d 107; Emery Estate, 362 Pa. 142, 66 A.2d 262; McClellan Estate, supra; Snyder Estate, supra; Zeigler Estate, 381 Pa. 436, 113 A.2d 271; (3) in evaluating the reasonableness of the provision for the wife, such reasonableness must be determined as of the date of the agreement and not by hindsight. Reasonableness may depend upon various factors: (a) the financial worth of the husband; ⁹ (b) the financial status of the wife; ¹⁰ (c) the age of the parties and number of children each has; ¹¹ (d) intelligence of the parties; ¹² (e) whether the wife aided in the accumulation of the wealth. ¹³

The instant record clearly and convincingly indicates that when Mrs. Kaufmann signed the antenuptial agreement a full and fair disclosure had been made to her and she knew the financial status of the decedent. We have the unrebutted testimony of Attorney Knox [who acted as Mrs. Kaufmann's counsel when the agreement was executed] 'that [Mrs. Kaufmann] was fully acquainted with Mr. Kaufmann's property and resources, financial position * * *:' the testimony of Mrs. Kaufmann's mother that in Mrs. Kaufmann's desk in the Palm Springs residence were kept 'all the business papers' of decedent; the uncontradicted testimony that Mrs. Kaufmann for at least three years prior to the agreement acted as decedent's secretary and companion, and knew, at first hand, the very lavish and extravagant manner in which decedent lived, a manner of living which only a very wealthy man could afford. More important than all this testimony, however, is the admitted and conceded fact that the agreement examined and executed by Mrs. Kaufmann contained the recital 'that she [Mrs. Kaufmann] has been informed by Mr. Kaufmann and is aware that his net worth is in excess of Ten Million Dollars'. ¹⁴ That this was a true and accurate statement of decedent's financial status is borne out by the undisputed fact that, seven months after the execution of the agreement, decedent died leaving an estate of approximately $10,500,000. Mrs. Kaufmann would have the court believe that, although the agreement recites otherwise, she had not seen nor was she familiar with certain statements setting forth decedent's assets and liabilities. Even though she had not seen and was not familiar with these statements, such facts would only tend to prove a lack of full disclosure of decedent's net worth. Assuming, arguendo, Mrs. Kaufmann had not seen these statements, the fact remains she knew decedent's financial worth. It is difficult, if not impossible, to conceive of a situation where there could be a more complete and honest disclosure of his net worth by a groom-to-be to his bride-to-be. ¹⁵

Mrs. Kaufmann further complains that the provisions of the agreement failed to adequately provide for her maintenance and support. In disposing of this complaint the court below well stated: 'The provision made for the widow in the antenuptial agreement, consisting of capital gifts amounting to $250,000 and a life income of $40,500 before taxes ($23,128.44 after taxes), is reasonable and adequate in the circumstances of this case.

'The provision for Grace Stoops Kaufmann under the terms of the antenuptial agreement is adequate to enable her to live as well as she lived before the marriage and is adequate to enable her to live most comfortably considering all the circumstances, including her life before her marriage to the decedent and her life with him as his wife for seven months and eleven days prior to his death.' We have scrutinized the record and find ourselves in complete agreement with the court below. The provisions made by decedent for Mrs. Kaufmann were adequate and appropriate. In fact, after a seven-month marriage, Mrs. Kaufmann finds...