Lux' Estate, In re

• Decision Date: 14 July 1978
• Citation: 480 Pa. 256,389 A.2d 1053
• Parties: In re ESTATE of Margaret E. LUX, Deceased. Appeal of June Alice MAHOLAGE, Executrix of the Estate of Margaret E. Lux, and June Alice Maholage, Individually.
• Court: Pennsylvania Supreme Court

Page 1053

389 A.2d 1053

480 Pa. 256

In re ESTATE of Margaret E. LUX, Deceased Appeal of June Alice MAHOLAGE, Executrix of the Estate of Margaret E. Lux, and June Alice Maholage, Individually.

Supreme Court of Pennsylvania.

July 14, 1978.

Norman M. Bartko, Duquesne, for June Alice Maholage.

Ronald M. Buick, McKeesport, for June Alice Maholage, individually.

Jeffrey J. Leech, Pittsburgh, for Marilyn Gannon.

Morris M. Berger, Berger, Kapetan & Malakof, Pittsburgh, for Gertrude M. Lux.

C. W. Berger, Pittsburgh, for appellee.

Before EAGEN, C. J., and O'BRIEN, ROBERTS, POMEROY, NIX, MANDERINO and LARSEN, JJ.

OPINION OF THE COURT

EAGEN, Chief Justice.

Margaret E. Lux died on December 7, 1975. On December 20, 1975, a holographic will dated July 12, 1975, was admitted to probate at the instance of June Alice Maholage (appellant), a daughter of the decedent. The will, after providing for debts and funeral expenses, directed that the remainder of the estate be divided equally among the decedent's three daughters, June Alice Maholage, Marilyn Margaret Gannon, and Gertrude Lux, and named June Alice Maholage executrix. Letters testamentary were issued to June Alice Maholage as executrix.

On March 4, 1976, the executrix filed an inventory listing estate assets in the amount of $27,734.93. Subsequently, on April 20, 1976, Marilyn Gannon and Gertrude Lux (appellees) filed a petition in the Orphans' Court Division of the Court of Common Pleas of Allegheny County seeking the removal of the executrix. The petition alleged inter alia that "wasteful mismanagement" by the executrix was jeopardizing the interests of the estate; that the executrix had failed to report all known assets of the estate, specifically at least $1306 in cash removed from the decedent's residence shortly after her death; that the executrix's personal interests were in conflict with that of the estate in that she claimed she was the sole owner of a savings account which had been in the joint names of herself and the decedent and which petitioners contended was part of the estate; and that the "actions and inactions of the executrix (had) generated unfriendly and antagonistic feelings between herself and petitioners." The executrix filed an answer disputing these allegations and raising as new matter the allegation that Marilyn Gannon and Gertrude Lux had conspired to fraudulently destroy a more recent will of the decedent which did not include Gertrude Lux as a beneficiary.

After an evidentiary hearing on this petition but before a decision was rendered, the petitioners sought and received permission to amend their petition to one seeking, in addition to removal of the executrix, that she file an account including as estate assets $1306 in cash, additional personalty including a fur coat, and the funds formerly contained in the disputed joint account, and that "petitioners' reasonable attorney's fees be paid from the assets of the estate." On August 17, 1976, the court entered a decree denying the petition for removal of the executrix but requiring her to file a supplemental inventory including $1306 in cash and other personalty as well as $10,508.95, the proceeds of the disputed joint account; the request by the executrix for probate of the alleged later will was denied. ¹ Both sides filed exceptions to this decree, but all parties stipulated that the adjudication of these exceptions should be deferred until audit of the account.

On October 1, 1976, the executrix filed her first and final account, which included a supplemental inventory filed "subject to the preservation of exception rights." Both sides filed objections to the account. After a further evidentiary hearing, the court on January 3, 1977, entered a decree of distribution which required the executrix to include interest on both the cash and the joint account, to have appraised and to include in another supplemental inventory certain watches and jewelry omitted from the account; and to change the inventory value of a cast iron bank from $1 to $125; this decree also awarded $1500 in counsel fees to the attorney for Marilyn Gannon and Gertrude Lux. When Mrs. Maholage filed two sets of exceptions to that decree, one as executrix and one in her own person, the court in a January 19, 1977, decree removed her as executrix. Exceptions to both the January 3 and the January 19 decrees were dismissed by the court en banc on April 12, 1977. From this final decree Mrs. Maholage here appeals both in her own person and in her capacity as executrix. ² Personally appellant argues the court erred in decreeing that the proceeds of the joint bank account belonged to the estate; as executrix she argues the court erred in decreeing that she be removed as executrix, that the attorney for her sisters be awarded counsel fees from the estate, and that she be required to account for $1306 in cash. ³

I. THE DISPUTED CASH

As to this issue, Gertrude Lux, who resided with the decedent, testified that her mother customarily kept large amounts of cash in her apartment. She testified that on the evening of her mother's death her sister June and June's husband and brother-in-law, Joe and Frank Maholage, arrived at the apartment and removed the decedent's cash and jewelry from her bedroom, that the men counted out the cash at the kitchen table, that Frank told Gertrude the cash and jewelry should be removed from the apartment for safekeeping, that he wrote out and gave her a receipt for $1306, and that the Maholages took the cash and jewelry away with them. She further testified that June later advised her not to report this cash to her welfare caseworker but that she did so, and that June also suggested to her that by not listing the cash on the inventory they could avoid paying inheritance tax on it. Marilyn Gannon testified that June was equivocal to her about the existence of this money but asked her whether, if it did exist, Marilyn would object to giving it to their nieces.

The alleged handwritten receipt was also admitted into evidence. It stated: $1306, cash Frank Maholage 12-7-75 Gertrude Lux. " Frank Maholage testified that the writing in question was his, but he stated he was on medication that evening and had no recollection of writing it. He denied seeing any paper money on the evening in question and stated that he did not presently have any such money and did not know who had it. Appellant testified that she saw no such money in her mother's apartment, but she acknowledged on cross-examination that her recollection of that evening was vague. Her position on appeal is that the money in question does not exist, and that she should not be required to supply an equivalent amount to balance her account. ⁴

Undoubtedly, the burden was on appellees to prove that the money existed and was in the possession of the decedent at the time of her death see Whitenight v. Whitenight, 444 Pa. 32, 278 A.2d 912 (1971) and that appellant's actions or inactions with respect to these assets were such as to subject her to surcharge for breach of her fiduciary duty see Estate of Stephenson, 469 Pa. 128, 364 A.2d 1301 (1976); Denlinger Estate, 449 Pa. 393, 297 A.2d 478 (1972). Appellees presented evidence tending to show that appellant knew of the existence of this money and was present when it was removed from her mother's apartment by her husband's brother, but that she had failed to disclose its existence or to take steps to make it available to the estate. The court found that the money had been received by appellant's brother-in-law and concluded that it was her duty to recover it for the estate.

Our standard of review with respect to the court's factual findings is clear: "The credibility of the witnesses and the weight to be given their testimony is in the first instance to be determined by the auditing judge. His findings of fact, affirmed by the court en banc, like those of a jury, are conclusive unless they are unsupportable by the record." Gelb Estate, 425 Pa. 117, 228 A.2d 367 (1967). Instantly, the court's factual findings with regard to the money are adequately supported by the record and will not be disturbed here. Appellant contends, however, that the court nonetheless erred in requiring her to list the $1306 on a supplemental inventory. She maintains, without citing any authority for her position, that the court should merely have directed her to issue a citation to Frank Maholage to show cause why the fund should not be returned to the estate.

In recently discussing the potential liability of an executor for losses incurred by an estate because of the executor's failure to collect monies due the estate, we observed:

"This Court has continuously held that 'The measure of diligence and care required of a trustee (or an executor) is precisely that which a man of ordinary prudence would practice in the care of his own estate . . .. A reasonable degree of vigilance and the exercise of good faith is the standard of the trustee's duty.' Fahnestock's Appeal, 104 Pa. 46, 52 (1883). Our cases make it clear that surcharge is the penalty imposed by the court for the failure of a fiduciary to meet his duty of care owed his estate. As we noted in Miller's Estate, 345 Pa. 91, 95, 26 A.2d 320, 321 (1942), 'Surcharge is the penalty for failure to exercise common prudence, common skill and common caution in the performance of the fiduciary's duty and is imposed to compensate beneficiaries for loss caused by the fiduciary's want of due care.' "

Estate of Stephenson, supra, 469 Pa. at 138, 364 A.2d at 1306. In the circumstances of the instant case, we find no error in the court in effect surcharging appellant for her failure to attempt to recover for the estate money found to have been removed from her mother's apartment by her brother-in-law. ⁵ Compare Webb's Estate, 165 Pa. 330, 30 A. 827 (1895); Milligan's Appeal, 97 Pa. 525 (1881).

II. THE BANK ACCOUNT

It was not disputed that the decedent created the...