McGee v. McGee, No. 78-128-A

• Court: United States State Supreme Court of Rhode Island
• Writing for the Court: WEISBERGER
• Citation: 413 A.2d 72,122 R.I. 837
• Docket Number: No. 78-128-A
• Decision Date: 31 March 1980
• Parties: Richard J. McGEE, Administrator c.t.a. v. Philip McGEE et al. ppeal.

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413 A.2d 72 122 R.I. 837 Richard J. McGEE, Administrator c.t.a.
v.
Philip McGEE et al. No. 78-128-Appeal. Supreme Court of Rhode Island. March 31, 1980.

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[122 R.I. 847] Joseph F. Penza, Jr., Providence, for petitioner.

John S. Brunero, John S. Brunero, Jr., West Warwick, Edward W. Day, Jr., Wickford, Breslin, Sweeney & Gordon, David F. Sweeney, Warwick, for respondents.

OPINION

[122 R.I. 838] WEISBERGER, Justice.

This is a complaint for declaratory judgment, in which the plaintiff administrator, Richard J. McGee (Richard), sought directions from the Superior Court in respect to the construction of certain provisions of the will of his mother, Claire E. McGee, and instructions relating to payment of debts and distribution of assets from the testatrix's estate. The sole issue presented by this appeal concerns the question of the ademption of an allegedly specific legacy to the grandchildren of the decedent and the consequent effect of such ademption upon payment of a bequest in the amount of $20,000 to Fedelma Hurd (Hurd), a friend of the testatrix. The provisions of the will pertinent to this appeal read as follows:

[122 R.I. 839] "CLAUSE ELEVENTH:

I give and bequeath to my good and faithful friend FEDELMA HURD, the sum of Twenty Thousand ($20,000.00) Dollars, as an expression to her of my appreciation for her many kindnesses.

"CLAUSE TWELFTH:

I give and bequeath all of my shares of stock in the Texaco Company, and any and all monies standing in my name on deposit in any banking institution as follows:

(a) My Executor shall divide the shares of stock, or the proceeds thereof from a sale of same, with all of my monies, standing on deposit in my name, in any bank, into three (3) equal parts and shall pay 1/3 over to the living children of my beloved son, PHILIP; 1/3 to the living children of my beloved son, RICHARD and 1/3 over to the living children of my beloved son, JOSEPH. Each of my grandchildren shall share equally the 1/3 portion given to them. " (Emphasis added.)

At the time of the execution of the will and up until a short time before the death of the testatrix, a substantial sum of money was on deposit in her name at the People's Savings Bank in Providence. About five weeks prior to his mother's death, Richard, proceeding pursuant to a written power of attorney as modified by an addendum executed the following month, withdrew approximately $50,000 from these savings accounts. Of this amount, he applied nearly $30,000 towards the purchase of four United States Treasury bonds, commonly denominated as "flower bonds," from the Federal Trust Company in Waterville, Maine (Richard then resided in that state). His objective in executing this transaction was to effect an advantageous method of satisfying potential federal estate tax liability.

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¹ The bonds, however, did not serve [122 R.I. 840] the intended purpose since at the time of Mrs. McGee's death her gross estate was such that apparently no federal estate tax liability was incurred. The remainder of the monies withdrawn from the savings accounts were deposited in Claire McGee's checking account to pay current bills and in a savings account in Richard's name to be transferred to his mother's account as the need might arise for the payment of her debts and future obligations. The sole sum that is now the subject of this appeal is the approximately $30,000 held in the form of United States Treasury bonds.

The complaint for declaratory judgment sought instructions concerning whether the administrator should first satisfy the specific legacy to the grandchildren from the proceeds of the sale of the flower bonds or whether he should first pay the $20,000 bequest to Fedelma Hurd, since the estate lacked assets sufficient to satisfy both bequests.

After hearing evidence and considering legal memoranda filed by the parties, the trial justice found that the bequest to the grandchildren contained in the twelfth clause of the will constituted a specific legacy. He held further, however, that Rhode Island regarded the concept of ademption with disfavor and he sought, therefore, to effectuate the intent of the testatrix. He proceeded to determine that since there is an assumption that one intends to leave his property to those who are the natural objects of his bounty, rather than to strangers, the administrator "should trace the funds used to purchase the Flower Bonds and should satisfy the specific legacy to the grandchildren" under the twelfth clause of the will. Consequently, the trial justice held that the legacy to Fedelma Hurd under the eleventh clause of the will must fail. This appeal ensued.

The McGee grandchildren suggest that the principal design of the testatrix's estate plan, ascertainable from a contemplation of the testamentary disposition of her property, was to benefit her family rather than "outsiders." They urge us to consider her intentions which they assure us were concerned, in part, with protecting the family interests from an [122 R.I. 841] anticipated reduction of the estate's value by taxes in determining whether the transfer of the funds in her accounts did in fact work an ademption. In addition, Richard points out that the decedent did not herself purchase these bonds. On the contrary, Richard acquired them in order to help discharge anticipated tax obligations of the estate and informed his mother of them only subsequently to the purchase. He argues, furthermore, not only that the funds with which he purchased the flower bonds originated in his mother's accounts, but also that since these bonds "are as liquid as cash" they are indeed monies standing in the decedent's name on deposit in a banking institution. He suggests that this description conforms in every respect to the formula drafted into the twelfth clause of her will. Merely the form of the legacy has changed, according to Richard, not its essential character, quality, or substance.

In response, appellant asserts that an ademption occurred by the voluntary act of the testatrix during her lifetime, since her son withdrew the funds as an authorized agent operating under a lawful power of attorney. There is evidence, moreover, that the testatrix subsequently ratified the purchase of the bonds when Richard afterwards told her of his actions and their intended effect upon estate taxes. ² As a consequence, Hurd asserts that there was no longer any money standing on deposit in the name of the testatrix in any bank with which to discharge the specific legacy to the

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grandchildren. These transactions resulted in an extinction of the...