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INRE: ESTATEOFCAMILLA
R.WESTCOTT,DECEASED
: IN THE COURT OF COMMON PLEAS
: OF CUMBERLAND COUNTY,
PENNSYLVANIA
ORPHANS' COURT DIVISION
: NO. 21-2005-0491
AUDITOR'S HEARING
BEFORE: STEPHEN D. TILEY. ESQUIRE. AUDITOR. appointed by the Court of
Common Pleas of Cumberland County, Pennsylvania, Orphan's Court Division, by
Order of Court dated August 18, 1007, to sit for the purpose of his appointment on
Friday, November 2, 1007, at 9;00 a.m., at the old courtroom (historic courtroom), on
the second floor of the Old Cumberland County Courthouse, One Courthouse Square,
Carlisle, Pennsylvania
HELD: FRIDAY, NOVEMBER 2,2007, AT 9:00 A.M.
OLD CUMBERLAND COUNTY COURTHOUSE
ONE COURTHOUSE SQUARE, CARLISLE, PA
APPEARANCES:
MARTSON LAW OFFICES
BY: IVO V. OTTO, III, ESQ.
10 EAST HIGH STREET
CARLISLE, P A 17013
FOR: OBJECTOR,
W. WESTCOTT
GOLDBERG, KATZMAN, P.C.
BY: NEIL E. HENDERSHOT, ESQ.
320 MARKET STREET
HARRISBURG, PA 17108
FOR: MELLON BANK
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LAW OFFICE OF ROGER M. MORGENTHAL
BY: ROGER M. MORGENTHAL, ESQ.
2515 NORTH FRONT STREET.
HARRISBURG, PA 17110
FOR: M & T BANK,
ADM,CTAOFC. WESCOTT ESTATE
ORIGINAL
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CHERYL FARNER DONOVAN
Registered professional Court Reporter
. 305 Bullshead Road
Newville, PA 17241
Phone (717) 776-3515
Courtroom & Free-lance Reporting .. Experience Since 1975
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1 INDEX
2
3 WITNESS: DIRECT EXAMINATION CROSS RD RC
4 William Warren Wescott Page 12 24 45 50
5 Jane F. Burke 60 77/101 102 106
6 Roger M. Morgenthal 113 119
7 David S. Rowe 128 142 147
8 Angela R. Thompson 148 163 164
9
10
11
12 EXHIBITS
13 EXHIBIT:
14 Objector Number I-Laurence
15 Objector Number 2-Camilla
16 Objector Number 3-7/9/07 letter
17 Mellon Number l-emails
18 Mellon Number 2-10/11/07 letter
19
20
21
22
23
24
25
MARKEDI ADMITTED
Page 109-109
109-109
116-127
120-170
160-170
2
1 (Convened at 9:08 a.m.)
2 MR. TILEY: This is the date and time for the Auditor's
3 Hearing in regard to the Estate of Camilla R. Westcott. We will
4 open the hearing.
5 I have read, previously, the two pre-hearing memorandums
6 that were submitted. I thank you for those. They will help me
7 understand what we're going to be doing today. I don't know if you
8 desire to make an opening statement. I don't know that. I'm not
9 requesting it
10 MR. OTTO: Just briefly, more in the way of outlining
11 where it is we're going
12 MR. TILEY: Okay.
13 MR. OTTO: I intend to call two witnesses: William
14 Westcott, the Objector, and Jane Burke from M&T Bank.
15 My assumption, with your permission, Mr. Hendershot,
16 my assumption is that we'll hear from the Mellon folk in due
17 course?
18 MR. HENDERSHOT: That's right.
19 MR. OTTO: I do have information I'll elicit from them.
20 I'm assuming they'll be presented as part of your case and I can
21 elicit that information at that time as to how they administer fees
22 and fee schedules.
23 MR. TILEY: Okay.
24 MR. HENDERSHOT: Fine. We will be presenting
25 David Rowe, Jane Burke, Les Brant and Angie Thompson
3
1 on behalf of Mellon, and we too would reserve the right to ask
2 questions of the principal witnesses.
3 MR. TILEY: Certainly.
4 MR. HENDERSHOT: By way of supplement, there are
5 a few things that I wanted to say.
6 MR. TILEY: Two things. First of all, at my advanced
7 age I'm a little hard of hearing. The acoustics in here are horrible
8 and remarkably it can even be hard at this distance. I normally sit at
9 that table on assessment appeal hearings, so I'm acutely familiar
10 with that. So try to bear with me on that. I think we'll be okay with
11 the witness sitting up here, but I apologize for that. That's by way
12 of introduction.
13 (Auditor requested the witness names again.)
14 MR. HENDERSHOT: I've got Angela R. Thompson,
15 David S. Rowe, Les W. Brant, Lesley W. Brant.
16 MR. TILEY: I'm confused. I see that I have three
17 names and two people over there.
18 MR. HENDERSHOT: I think Les went out to make a
19 call.
20 MR. TILEY: All right. And then we have Mr. Westcott
21 and we have Ms. Burke. Thank you.
22 Now, we have a supplement to your memo.
23 MR. HENDERSHOT: Yes. The complete case is not
24 easily obtainable other than by electronic research, so both Ivo and
25 myself brought copies, and that's for your benefit.
4
1 MR. OTTO: And I'm satisfied to rely on Mr.
2 Hendershot's copy formatted differently but say the same thing.
3 MR. TILEY: Great.
4 MR. HENDERSHOT: So we reserve the right to discuss
5 this in post hearing memo as to its relevancy since it's from another
6 jurisdiction that being Connecticut. But we certainly want you to
7 have the text of the case.
8 MR. TILEY: Is this case cited in your memorandum?
9 MR. OTTO: It is, Mr. Tiley.
10 MR. HENDERSHOT: The other case that Mr. Otto cited
11 was from New York. We provide you a copy of that.
12 MR. TILEY: Okay.
13 MR. HENDERSHOT: Now, to put particularly the
14 Connecticut case into perspective, I'm giving to you a copy of a law
15 review article that was printed in the Connecticut Law Review. I'm
16 going to spell it, K-u-i-n-n-i-p-i-a-c. It's the Connecticut Law
17 Review, and you can pull the name from it. And I would make a
18 comment or two about that.
19 MR. TILEY: Do you have a copy of it?
20 MR. OTTO: I have.
21 MR. HENDERSHOT: I don't believe he has read it, but
22 I think the overall import of the article is that the Connecticut was
23 an unusual state in the method of it's enacting a section for the
24 removal of a trustee.
25 MR. TILEY: You're trying to distinguish
5
1 the Connecticut case with this Connecticut Law Review?
2 MR. HENDERSHOT: Yes. And we're giving you
3 the entire text of it, so that you can read it on your own in a
4 different setting. But I think the salient point from the article is
5 that the Connecticut Legislature essentially amended the statute to
6 remove the issue that that case decided.
7 That case was decided January of 2004, and the Connecticut
8 Legislature amended the statute to change it in October 2004.
9 The other two that we wanted to give you in full length are, I
10 think, two relevant Pennsylvania Supreme Court decisions. The
11 McGillick Foundation Case issued in 1994 by the Pennsylvania
12 Supreme Court, and the White Case issued in 1984 by the
13 Pennsylvania Supreme Court.
14 And then, finally, I think a relevant case from Montgomery
15 County in 1975, Ulansey Estate.
16 MR. TILEY: And you've given copies of all those?
17 MR. HENDERSHOT: Yes.
18 MR. TILEY: Obviously have the same Pennsylvania
19 Resources we all do. I want to make sure he has exactly what you
20 gave me?
21 MR. OTTO: I do.
22 MR. TILEY: Okay.
23 MR. HENDERSHOT: I think the last procedural issue is
24 the transcription of the hearing. You had indicated in a letter that
25 you might reserve having it transcribed, at whatever expense
6
1 that might involve and rule on your notes or memory, and I thought
2 we ought to at least discuss that.
3 MR. TILEY: I anticipated we would discuss that at the
4 end of the hearing when I had my own sense of how well I had taken
5 notes. I'm happy to discuss it now if you know for sure you want a
6 transcript. I think anybody has a right to have that done.
7 If somebody is going to have a transcript, if it's going to be
8 prepared anyway, I might as well wait and have it to do my report.
9 In which case, I need to ask the Court for an extension, which will
10 be granted, I'm sure. So what I'm saying is that I'm willing to defer
11 that question to the end of the hearing, but I'm also willing to defer
12 to either of you, should you know right now that you desire a
13 transcript.
14 MR. HENDERSHOT: I think it would be our preference
15 to have the transcription produced. I don't think there is the
16 urgency that would require a hasty decision. And I think it's
17 important for the Auditor to be able to rely on the transcript.
18 MR. OTTO: That's certainly fine with me, and to the
19 extent it takes time to produce and I don't want to put undue
20 pressure on the stenographer. I'm sure the Court would extend your
21 time for a report accordingly.
22 MR. HENDERSHOT: We would join in that motion.
23 MR. TILEY: Okay. I guess what we'd say, we have an
24 agreement. And, Roger, I don't mean to ignore you. I know that
25 you understand that you have less at stake in this than counsel
7
I for the other parties.
2 MR. MORGENTHAL: Yes. I'm representing the
3 executor, M & T Bank, and our position right now is pretty much
4 neutral because of the matters between the other two parties. And
5 unless we have something we feel needs to be brought up, I'll
6 probably be fairly silent.
7 MR. TILEY: I think we then have a stipulation among
8 all three counsel that the transcript be prepared and that we agree to
9 an extension of the time for the Auditor's report to be filed.
10 MR. OTTO: As necessary.
11 MR. TILEY: As necessary.
12 MR. HENDERSHOT: I think the last issue would be
13 documents in the record. I had visited with you and retrieved all of
14 the documents that are in the docket and we had a discussion. I
15 think we would be willing to stipulate those without any proof, that
16 anything in that docket speaks for itself, and need not be verified or
17 authenticated.
18 MR. TILEY: You're stipulating that all the documents
19 filed of record in the estate file are admitted into evidence?
20 MR. HENDERSHOT: Yes.
21 MR. OTTO: Yes.
22 MR. HENDERSHOT: Just a point. That includes
23 documents that were filed subsequent to my review of the docket in
24 your office, which would include our filing a consent to serve.
25 MR. TILEY: Well, that's an interesting
8
1 question because I don't think I've received anything from the
2 Register Of Wills Office since they gave me the file, which I then
3 provided to Mr. Hendershot and he scanned it in my office, so he
4 would have a copy of it. I do remember consents but I think you
5 sent them to me directly. Did you send them to me?
6 MR. HENDERSHOT: Yes.
7 MR. TILEY: I apologize for not remembering.
8 MR. OTTO: In any event, I'm satisfied to stipulate this
9 into the record.
10 MR. TILEY: Okay. I have consent?
11 MR. HENDERSHOT: You do.
12 MR. TILEY: October 17, 2007. of Mellon Bank. I do
13 remember seeing that now.
14 MR. HENDERSHOT: Including its attachments
15 MR. TILEY: Including its attachments.
16 (Document admitted into the record.)
17 MR. TILEY: Which reminds me, I think I invited the
18 possibility of a stipulation as to successors, corporate successors. I
19 assume that we can stipulate that Mellon Bank is the successor to
20 Commonwealth National Bank?
21 MR. OTTO: Yes.
22 MR. HENDERSHOT: Certainly.
23 MR. MORGENTHAL: Yes.
24 MR. TILEY: I do not remember whether the will and
25 the trust mentioned Farmers or Financial or M & T. Is that an issue?
9
1 MR. OTTO: I am going to, through Ms. Burke, I think
2 produce the will of Laurence Wescott, which I've provided to Mr.
3 Hendershot. And, to answer your question, Financial Trust Service
4 Company, as identified in that will, and since we've agreed that
5 Mellon is the latest innervation of Commonwealth, I would hope that
6 we can agree that M & T is the more recent innervation of Financial
7 Trust Services Company.
8 MR. TILEY: In fact, and I'm not sure that I couldn't
9 take judicial notice of this, which would be a first in my life and
10 career. But I think we can stipulate that in case somebody
11 mentioned Farmers that the bank in Carlisle known as Farmers Trust
12 Company was succeeded by Financial Trust...
13 MR. OTTO: Services Company.
14 MR. TILEY: Services Company and thereafter
15 succeeded...
16 MR. OTTO: Keystone.
17 MR. TILEY: Into Keystone. That's correct.
18 MR. OTTO: And now M & T.
19 MR. TILEY: And now M & T Bank. Farmers,
20 Financial Trust, Keystone, M & T.
21 MR. OTTO: At One West.
22 MR. TILEY: Do you have an objection to that
23 stipulation?
24 MR. HENDERSHOT: I do because I don't know
25 anything about that line of successions.
10
1 MR. OTTO: We can have Ms. Burke testify to that.
2 MR. HENDERSHOT: I think that should be the subject
3 of testimony.
4 MR. MORGENTHAL: I question whether that's
5 really... I don't believe in Mrs. Wescott's will there was any
6 mention of Farmers Trust or anything else. The executor there had
7 been Mr. Wescott, as I recall, and Commonwealth National is the
8 only one that appeared.
9 MR. OTTO: There is in Mr. Westcott's.
10 MR. MORGENTHAL: Laurence.
11 MR. OTTO: Part of what I want to present and that's
12 for...
13 MR. MORGENTHAL: Okay.
14 MR. OTTO: In any event, it's easily handled with Ms.
15 Burke's testimony.
16 MR. TILEY: Okay. Mr. Hendershot, are you thinking
17 of something else, from looking through the memo?
18 MR. HENDERSHOT: I was thinking if there is any
19 other initial matter, and I think that's sufficient for now.
20 MR. OTTO: We're ready to proceed.
21 Would you prefer we refer to you as Mr. Tiley or Auditor?
22 MR. TILEY: If anybody says Steve out there, that
23 won't hurt me.
24 MR. OTTO: I'll go with Mr. Tiley.
25 MR. TILEY: I will attempt to maintain the
11
1 decorum. For the benefit of the witnesses, we all know each other
2 in terms of the attorneys in this room. So if we are overly familiar
3 that's because we've known each other for many years, it doesn't
4 really mean anything in terms of the outcome.
5 So, Mr. Otto, if you'll proceed.
6 MR. OTTO: I will call as my first witness,
7 William Westcott. Mr. Westcott, if you could make your way into
8 that chair to Mr. Tiley's left.
9 (Mr. Westcott complied with request.)
10
11 Whereupon,
12 WILLIAM WARREN WESCOTT
13 Having been first duly sworn, according to law, by Auditor Tiley,
14 testified as follows:
15 DIRECT EXAMINATION
16 MR. OTTO: Thank you. Mr. Westcott, would you give
17 us your full name and address?
18 MR. WESTCOTT: William Warren Westcott, 185
19 Gough Avenue, Toronto, Ontario, M4K3T1, Canada.
20 MR. OTTO: Thank you. Mr. Westcott, are you
21 married?
22 MR. WESTCOTT: I am.
23 MR. OTTO: And your wife is present?
24 MR. WESTCOTT: She is.
25 MR. OTTO: And her name is?
12
1 MR. WESTCOTT: Her name is Linda Marilyn Perkins.
2 MR. OTTO: And, Mr. Westcott, are you a U.S.
3 Citizen?
4 MR. WESTCOTT: I am.
5 MR. OTTO: And what is your employment?
6 MR. WESTCOTT: I am a professor of music at
7 York University.
8 MR. OTTO: And where is York University?
9 MR. WESTCOTT: It's in Toronto.
10 MR. OTTO: And how long have you been there?
11 MR. WESTCOTT: Off and on since 1979, as a tenured
12 professor since the Spring of 2005.
13 MR. OTTO: Would you give us a brief summary of
14 where you grew up, where you lived over the years, so on and so
15 forth?
16 MR. WESTCOTT: My parents were married in 1942,
17 and my father worked in several places as a chemist, during and
18 after the Second World War. They settled in Wood River, Illinois, I
19 believe, around 1947 or possibly' 46.
20 I was born in Aiton, Illinois, which is right next to the
21 Mississippi River, and we moved to Edwardsville, Illinois, probably
22 around 1951. Edwardsville is northeast of St. Louis, Missouri,
23 about 20 miles, up on the bluffs. I lived there with my parents until
24 1966, when I graduated from high school.
25 I, then, attended the University of Illinois, returning to
13
1 my parents' home in Illinois on Christmas and various vacations. I,
2 then, when I graduated from college in 1970, I spent about four
3 years freelancing as a musician in the southern Illinois area and
4 getting a masters' degree in piano at Southern Illinois University in
5 what, at that time, was my hometown.
6 My parents sold out, after they both retired, in the mid-'70s,
7 right around 1974 and moved back to Carlisle.
8 MR. OTTO: If I could stop you here, Mr. Wescott.
9 MR. WESTCOTT: Yes.
10 MR. OTTO: You say they moved back to Carlisle?
11 MR. WESTCOTT: Yes.
12 MR. OTTO: What did you mean by that?
13 MR. WESTCOTT: I mean my mother was born and
14 raised on a farm, on a family farm, between Newville and Carlisle,
15 very close to Plainfield. And she lived there and taught school here
16 until her early 20s, when she married my father and moved away.
17 Her mother continued to live there and that farm has, in fact, been in
18 the family since the 1830s.
19 MR. OTTO: Is that farm still in the family?
20 MR. WESTCOTT: It still is. I'm the end of the line.
21 MR. OTTO: You own the farm?
22 MR. WESTCOTT: Yes, jointly with my wife, Linda.
23 I always owned half of that farm, since my grandmother's death.
24 MR. OTTO: So continuing on with...
25 MR. WESTCOTT: I entered graduate school, I
14
1 entered the PhD program at the University of Illinois in Urbana in
2 1974. And it was about exactly that time that my parents moved
3 back - that my mother moved back with her husband, my father, to
4 this area to live on that farm.
5 From then on, I would visit my parents, obviously here, at
6 Christmas and breaks and whenever it was feasible. And after
7 the early 1980s, when I married my wife, I had no further
8 connection with Illinois, and Pennsylvania was essentially my
9 American home at that point, which was not news to me, because I
10 had spent summers and vacations with my grandmother here since I
11 was very young. So, essentially now, this is my American home.
12 Do you want the rest of it?
13 MR. OTTO: Sure. Keep going.
14 MR. WESTCOTT: I went on. I continued teaching. I
15 went to the University of Illinois until 1979, finished my
16 coursework, passed my prelims for a PhD, and got bogged down
17 writing my dissertation on blues piano players in the 1920s and 30s.
18 I taught at York University from 1979 through 1982, through
19 the Spring of '82, and married Linda Perkins a year later, moved to
20 Canada permanently, and became a permanent resident, began
21 working at York University once more in ' 85, I believe, and went
22 through a series of three year contracts and then one year contracts,
23 some of them part-time, some of them full-time. About 1991 I quit
24 working at York altogether, because I was dissatisfied with
25 temporary employment and free-lanced as a musician,
15
1 performer, composer, piano player and writer. And then returned to
2 the university, I believe, in 2000, where I, again worked part-time
3 for three years and full-time for three years, received tenure in
4 2005.
5 I took sabbatical beginning in July 2005. In the winter of that
6 year, I discovered I had chronic maloginus leukemia, which is
7 treatable with chemotherapy, and I'm doing very well at this
8 time and probably will continue to do so. The success rate is about
9 90%, but the studies are only five years deep. We have no idea what
10 the long term effects of this therapy is, but five years is better than
11 the one or two I would have had otherwise.
12 I've also had Crone's disease, which was diagnosed in 1998, I
13 believe, and glaucoma and arthritis. However, more than that, I
14 continue to teach at the university part-time. I teach composition
15 and analysis, music analysis and ragtime piano.
16 MR. OTTO: Mr. Westcott, you mentioned some of your
17 physical difficulties, medical difficulties. Do these difficulties
18 create restriction for you both professionally and personally?
19 MR. WESTCOTT: Yes. I believe so.
20 MR. OTTO: The nature of those restrictions would be?
21 MR. WESTCOTT: Well, I can't drive. So that has
22 inhibited my freedom of movement. I've had to live and work in
23 places that had either public transportation or live close to wherever
24 it is I work, one way or another.
25 I think that the Crone's disease has been exhausting. It
16
1 went undiagnosed for a long time. I think I might have been more
2 productive had I been in general better health. I was unaware of it
3 so, you know, it's really hard to deal. But I really think the eyesight
4 is the issue. I've had to, you know, grade papers, struggling
5 reading, has always been veryuit takes me a lot longer to do it than
6 most people and consequently I have to focus what I do and design
7 my activities in such a way that I get the most benefit out of what
8 I do. I think it's been a handicap, but in some ways, maybe it's
9 been a focusing thing too.
10 MR. OTTO: These limitations, did they cause you to
11 reduce your workload at York University?
12 MR. WESTCOTT: Absolutely, especially since the
13 diagnosis of the leukemia. I found in going back to school after my
14 sabbatical that I was increasingly exhausted.
15 Then the blood tests began to show a serious drop in iron
16 absorption. My hemoglobin was down to 80, which was just right at
17 the edge of requiring a transfusion. I take iron pills now, and that
18 situation has corrected itself. But many of my blood values are
19 abnormal and it's hard to anticipate what happens next.
20 I've decided on my own that stress is not a particularly good
21 thing, so I have deliberately reduced my workload and tried to make
22 my teaching, tried to adjust my teaching to the kind of work I do
23 most easily, and so far my employer has been willing to do that.
24 MR. OTTO: You mentioned your family being in
25 Carlisle and particularly your mother and her family. Let me
17
1 take you back to that and ask you about your personal ties to
2 Carlisle and the Carlisle Area?
3 MR. WESTCOTT: Well, I remember feeding my
4 grandfather's pigs when I was pretty small. And I remember my
5 mother telling me I should take a greater interest in the farm
6 because one day it was going to be mine. I took more interest in it
7 than I think she realized. But I have a lot of childhood
8 memories.
9 Now, gradually over the years, I became interested in the
10 history of my family, but also in the history of Carlisle, especially
11 in regard to the Civil War connection, and more importantly what we
12 call the French and Indian War connection. That's not surprising
13 because I'm a music historian and my specialty as a music historian
14 was North American Music History.
15 So I have, in later years, I've made a number of friends here,
16 with my cousin Jane especially, who lives in Newville, and the
17 Newville Historical Society and the local Carlisle Historical
18 Society.
19 My wife, Linda, has also come down. Ever since we've been
20 married, she would come down, drive me down to Carlisle, for all
21 these visits about twice a year with my parents and we've gradually
22 become very fond of the community. And when the farm came, after
23 my mother's death, when the farm came to me, even though my
24 mother had said sell it, I did not. And I loathe to do so now.
25 MR. OTTO: What are your plans for the short and
18
1 long term future with respect to the farm and Carlisle and your
2 career?
3 MR. WESTCOTT: Right now we're renting the fields to
4 two local farmers and renting the small house that my parents built
5 for themselves when they first moved back to renters, and generating
6 enough income off of that farm to pay the taxes, and maybe do some
7 of the maintenance. We have it organized, I think, so it will start
8 paying for itself once again.
9 I plan to continue working in Canada for three more years.
10 At that time, if all goes well, the reason, part of the reason is I don't
11 feel I'm done teaching yet. But another part of the reason is that the
12 medication I take costs about $120 a day. And the insurance I now
13 have with my employer covers that medication, covers the cost of
14 that medication. When I stop working for them, when I retire, some
15 of that will, I think they will continue to pay 80%. I'm not 100%
16 sure on that. As long as I remain in Canada for the required six
17 months and a day, which is necessary in order to stay, in order to
18 receive the benefits of the Canadian health plan.
19 Now I know I'm compounding the health plan, the government
20 plan, with the employers' plan. But the government plan is of
21 special importance to my wife, of course, not only to me. I could
22 probably afford to come down here now and live and expect the trust
23 to pay for my extravagant medical costs. At this time, I don't want
24 to do that, and I would rather not do it. However, I think there will
25 come a time when we do want to come down and split our
19
1 time between Pennsylvania and Toronto at about fifty percent.
2 MR. OTTO: So your expectation is that at some point,
3 you'll be here approximately six months a year?
4 MR. WESTCOTT: Yes.
5 MR. OTTO: And the other six months in Toronto?
6 MR. WESTCOTT: Yes.
7 MR. OTTO: And being in Toronto for six months is
8 largely driven off the Canadian healthcare system, both for your
9 benefit and for the potential benefit of your wife?
10 MR. WESTCOTT: Yes. To be truthful, I do have
11 friends in Toronto. It's not as if I would leave there tomorrow if I
12 could, but I think the older I get, especially when I stop teaching, I
13 doubt if my musical opportunities in Toronto, when my professional
14 opportunities start to decline, I think my interest in remaining there
15 will also decline. And when you leave, when you stop teaching, you
16 become disconnected, and at that point, I would be very, very much
17 inclined to come down here and spend time.
18 MR. OTTO: Would you tell us about your relationship
19 with M & T and the personnel there?
20 MR. WESTCOTT: When my parents, when my father
21 died, was the first time that I had a close connection with M & T
22 myself. I knew that my mother did a great deal of her banking there
23 but when my father died, M & T, well the strong box was there. I'm
24 trying to reconstruct now the exact order of events.
25 MR. OTTO: If I could interrupt you, Mr.
20
1 Westcott, could you tell us what year that would have been
2 approximately?
3 MR. WESTCOTT: That would have been the Spring of
4 2005.
5 MR. OTTO: This is your mother?
6 MR. WESTCOTT: My father died in March, 27th
7 I believe. While we're on the subject, my mother died about a
8 month and a half later, maybe two months later, May 14th of the same
9 year.
10 So when my father died was the first contact I had with M & T
11 Bank. It became very clear to me that administering, I'm
12 not sure of the order of events here, because the two deaths were so
13 close together. But I would say, to be perfectly exact would be
14 difficult, but I believe it is in connection with those deaths that I
15 renounced my executorship to Jane Burke and her staff at the M & T
16 Bank on the advice, or on the offer or suggestion, I should say, of
17 Roger Morgenthal. And once I realized how complex both estates
18 were, I did so happily.
19 This was after trying on my own to call, to notify the various
20 people in charge of my father's investment. When I realized what a
21 difficult job it was closing those things out and getting, especially
22 the Bank of New York, to respond successfully to my letters, I just
23 turned it over to M & T. And from that time on, Jane Burke has
24 made herself very available whenever we come to town. She's
25 always explained everything very clearly. And we had a long
21
1 and detailed email correspondence on anything that pertained to the
2 estate, settlement, the taxes.
3 Furthermore, Jane has been extremely helpful in
4 recommending craftsmen, workmen, real estate agents, people who
5 have helped us along the way, in the resolution not only of my
6 parents' estate, but in the continued management of the farm.
7 MR. OTTO: Mr. Westcott, you are the objector in these
8 proceedings and the objection that you've caused to be filed seeks to
9 preemptively remove the Bank of New York, Mellon, as the trustee
10 of the trust under your mother's will, and your preference is that M
11 & T would assume that position. Why is that?
12 MR. HENDERSHOT: Can I object to the form of the
13 question? Bank of New York is not yet the same as Mellon Bank.
14 MR. OTTO: I'll rephrase the question.
15 MR. HENDERSHOT: Mellon Bank has not yet merged
16 with the Bank of New York.
17 MR. OTTO: Rephrase, substitute Mellon. Is that
18 acceptable?
19 MR. HENDERSHOT: It is.
20 MR. TILEY: Why don't we restate the question.
21 MR. OTTO: Mr. Westcott, you are the objector in this
22 proceeding and in the objection you filed you seek to preemptively
23 remove Mellon Bank as the trustee of the trust under your mother's
24 will, and you prefer that M & T Bank act as that trustee. Is that
25 correct?
22
1 MR. WESTCOTT: That is correct.
2 MR. OTTO: Why is that?
3 MR. WESTCOTT: I have a very satisfactory
4 relationship with M & T Bank, going back in my family, to my
5 mother and my father both, I believe, but I'm certain about my
6 mother. When it was Farmers' Bank, Farmers' Trust, I had an
7 account there myself at one time in the mid-'70s. I like banking and
8 dealing with people who are in the community and people that I
9 know. I have found it very useful and convenient and reassuring. I
10 believe that my mother went to a local bank with the full expectation
11 that the estate would be handled by a local bank.
12 It is true that after Commonwealth disappeared, became other
13 things, and then vanished entirely that she did not change her will.
14 It's true that she didn't go back to it. People do that. I don't want
15 to psychologize my mother, but I do feel that once she wrote her
16 will, she was done with it, and didn't want to think about it
17 anymore. But that her original intent, nevertheless, was that it be
18 handled locally.
19 I don't like the idea of having to travel to Harrisburg or
20 Philadelphia, especially if I have to do so myself, if my wife
21 predeceased me or no longer is able to drive. I don't like that
22 commuting business, and I'm aware that it will be pointed out to me
23 that this is not really a problem. But I don't-perhaps I'll be
24 convinced of it, but I doubt it. I would rather have people I know.
25 I'm sorry.
23
1 MR. TILEY: That's all right.
2 MR. OTTO: When did you make the decision to pursue
3 this matter in the way that you remember?
4 MR. WESTCOTT: Very shortly after we discovered
5 that the administrator of my mother's estate was no longer local,
6 which would have been by June of 2005, within a month of her
7 death, perhaps even sooner, because I remember driving around town
8 with Linda trying to figure out where this bank used to be and what
9 it was. Because we were looking for papers relating to the estate
10 and to the trust, and it was in that process that we realized there was
11 no local representative here.
12 MR. OTTO: And what action, if any, did you take, at
13 that time?
14 MR. WESTCOTT: I believe that we consulted Roger
15 Morgenthal, who was already our lawyer, my lawyer, in connection
16 with...Roger had given me, had organized the power of attorney for
17 my, for both parents, as they declined and went into the nursing
18 home. They were no longer able to do their own business. So Roger
19 was already my lawyer in that regard, and I believe it was in
20 discussions with him that I inquired if since this bank no longer
21 existed, would it be possible to move it to M & T, and that's my
22 memory.
23 MR. OTTO: That's all I have for this witness. Thank
24 you. Mr. Henderson.
25 MR. TILEY: Mr. Henderson.
24
1 CROSS EXAMINATION
2 MR. HENDERSHOT: Do you mind if I call you
3 William?
4 MR. WESTCOTT: You can call me Bill.
5 MR. HENDERSHOT: I'll call you Bill and I'm Neil. I
6 just want to make a statement and that is it's a difficult matter to
7 cross-examine, because we do not want to have any hostility
8 between Mellon Bank and you.
9 MR. WESTCOTT: I understand that.
10 MR. HENDERSHOT: But, we are trying to apply the
11 terms of the document and reach the right result.
12 You mentioned some of your limitations and handicaps. Do
13 they limit your ability to communicate in any way?
14 MR. WESTCOTT: In which way?
15 MR. HENDERSHOT: Well, let me think about, written
16 correspondence?
17 MR. WESTCOTT: Yes.
18 MR. HENDERSHOT: Can you write letters and read
19 letters?
20 MR. WESTCOTT: Yes. With a telescope, at this time I
21 can and do.
22 MR. HENDERSHOT: For example, when you grade the
23 papers you would read written materials?
24 MR. WESTCOTT: Yes. I get out my magnifying glass
25 and I hunch over the table like that, and I interpret the
25
1 handwriting and I scribble corrections on the paper.
2 MR. HENDERSHOT: I hope your students appreciate
3 your dedication.
4 MR. WESTCOTT: I hope they do too.
5 MR. HENDERSHOT: Hope so. How about email? Are
6 you able to communicate by email?
7 MR. WESTCOTT: I am.
8 MR. HENDERSHOT: And do you do this regularly?
9 MR. WESTCOTT: Yes.
10 MR. HENDERSHOT: And you have done this in the
11 past?
12 MR. WESTCOTT: Yes.
13 MR. HENDERSHOT: How about on the phone? Do you
14 have any limitations with hearing?
15 MR. WESTCOTT: Not so far.
16 MR. HENDERSHOT: Good. You mentioned that you
17 rely very heavily on Roger for advice as a family counselor?
18 MR. WESTCOTT: Yes.
19 MR. HENDERSHOT: Does Roger use email?
20 MR. WESTCOTT: Yes.
21 MR. TILEY: I'm sorry, I didn't hear the question.
22 MR. HENDERSHOT: If Roger used email. I'll try to
23 keep my voice up.
24 (Off the record discussion.)
25 MR. HENDERSHOT: Did you communicate by
26
1 email to Ro ger?
2 MR. WESTCOTT: Yes.
3 MR. HENDERSHOT: And telephone calls?
4 MR. WESTCOTT: No. Vocally, yes.
5 MR. HENDERSHOT: And did he write you letters?
6 MR. WESTCOTT: Yes.
7 MR. HENDERSHOT: Did you feel that method of
8 communication was adequate for your purposes with you being in
9 Canada and Roger being in the Harrisburg Area?
10 MR. WESTCOTT: Yes. There were times when we
11 were here for a limited period of time, and Roger was in
12 Harrisburg and we had to juggle schedules in order to make that
13 happen, but we were always able to make it happen.
14 MR. HENDERSHOT: You just mentioned that you met
IS with Roger in Harrisburg?
16 MR. WESTCOTT: No.
17 MR. HENDERSHOT: I'm sorry.
18 MR. WESTCOTT: We always met with Roger in
19 Carlisle.
20 MR. HENDERSHOT: You're aware that Roger's office
21 is in Harrisburg?
22 MR. WESTCOTT: I'm aware that Roger has an office
23 in Harrisburg.
24 MR. HENDERSHOT: When you mentioned that you
25 first decided to oppose the appointment of Mellon Bank in
27
1 June 2005, do you know if that was communicated to Mellon Bank
2 by either you or Roger?
3 MR. WESTCOTT: Directly at that, absolutely at that
4 time?
5 MR. HENDERSHOT: Yes, sir.
6 MR. WESTCOTT: No. I'm not aware. I cannot recall
7 when the first letter would have been written. I'm certain that
8 discussions of the possibility took place in June.
9 MR. HENDERSHOT: Were those discussions
10 among state representatives and you, or did they involve Mellon, do
11 you think, if you know?
12 MR. WESTCOTT: I'm sorry, which discussions?
13 MR. HENDERSHOT: The discussions that Mellon Bank
14 should not serve as a trustee.
15 MR. WESTCOTT: Initially, no. But at a given point
16 Roger wrote to the Mellon Bank asking them to step aside. And it's
17 my understanding that they returned, that they eventually, and I'm
18 not sure of the chronologies here but that they declined to do so.
19 MR. HENDERSHOT: Do you have any sense of when
20 that was, Bill?
21 MR. WESTCOTT: I would have to ask Roger. I do not
22 know. I believe that there were a series of letters on Roger's part
23 that probably started in-- I'm guessing now. I know there was a
24 letter in June of '06 that I wrote, attempting to make this plan. And
25 I do know that Roger had written previously, and I think
28
1 it would be as much as six or nine months before that. So, I'm
2 saying approximately Autumn of '05, the beginning of it.
3 MR. TILEY: You say approximately when?
4 MR. WESTCOTT: I think it was the Autumn of 2005.
5 MR. TILEY: Thank you.
6 MR. HENDERSHOT: Did you agree with your mother's
7 disposition of her estate in the will?
8 MR. WESTCOTT: Yes. I did.
9 MR. HENDERSHOT: You did. You mentioned that you
10 rely very heavily on Roger's advice?
11 MR. WESTCOTT: I did? I don't remember saying I
12 rely very heavily on Roger's advice.
13 MR. HENDERSHOT: Do you rely heavily on Roger's
14 advice?
15 MR. WESTCOTT: As much as anyone who retains a
16 lawyer would naturally. I don't think excessively. I rely on Roger's
17 advice, sure, you know, but I don't like your use of the very heavily.
18 MR. HENDERSHOT: I understand.
19 MR. WESTCOTT: I don't want to commit to that.
20 MR. HENDERSHOT: Did Roger at some point, to your
21 knowledge, you knew about it, take the position that item fifth of
22 the will would apply to distribute the entire estate, and that the trust
23 created under item seven failed and would have created an intestacy
24 giving everything to you?
25 MR. WESTCOTT: Roger was investigating
29
1 the possibility of a doctrine called Cy pres by which the estate, by
2 which the trust would be broken, and the estate would evolve to me.
3 That didn't hold water apparently.
4 MR. HENDERSHOT: Okay. Now you've mentioned
5 two things there, the doctrine of Cy pres and the concept that the
6 entire estate would go to you?
7 MR. WESTCOTT: Yes.
8 MR. HENDERSHOT: Could you explain to me
9 your understanding of those?
10 MR. WESTCOTT: My understanding is now--it's
11 something I haven't thought about for sometime. Cy pres is a
12 doctrine whereby a broad will can be set aside in favor of the natural
13 heir. I am no doubt oversimplifying it. And your other question?
14 MR. HENDERSHOT: The one was your understanding
15 of the doctrine of Cy pres, and the other was the way in which the
16 entire estate would go to you instead rather than to charities under
17 item seven, if you understood?
18 MR. WESTCOTT: Yes. That was my understanding
19 that possibility existed and it was investigated.
20 MR. HENDERSHOT: Are you aware of exchanges of
21 email that began January 27th of 2006, and extended through May
22 19th, 2006, between Roger and various people at Mellon Bank,
23 regarding these issues that we just discussed?
24 MR. WESTCOTT: I never saw the emails. I am aware
25 that he was in correspondence.
30
1 MR. HENDERSHOT: Were you aware that he was
2 arguing the position to Mellon Bank, that there would be no legal or
3 practicable purpose in funding a trust at all where its ultimate
4 purpose could not be carried out and the estate would receive no tax
5 benefits as a charitable remainder trust?
6 MR. WESTCOTT: I have no idea of the import of what
7 you just said. I don't think I could have been aware of that, at least
8 not in those terms.
9 MR. HENDERSHOT: Were you aware that Roger
10 was arguing that if the trust were to fail, the remainder would have
11 to go somewhere. There would be a complete intestacy and it would
12 all go to you?
13 MR. WESTCOTT: If the trust were to fail?
14 MR. HENDERSHOT: Yes, sir.
15 MR. WESTCOTT: What does that mean? You
16 mean if--no, I don't. Are you saying that if my petition were to
17 fail?
18 MR. HENDERSHOT: No. No, I'm asking you if you
19 were aware that Roger--
20 MR. WESTCOTT: Yes.
21 MR. HENDERSHOT: --was writing to Mellon Bank,
22 arguing that if the trust would fail, by virtue of rules of intestacy,
23 you would get the entire remainder. Were you aware that he was
24 arguing that to Mellon Bank?
25 MR. WESTCOTT: Well if the trust, yes, --no, I
31
1 wasn't specifically aware of it. But it seems logical to me that if the
2 trust fails then the estate would naturally go--if there's no will, then
3 it should go to wherever it goes. And I understand that it would
4 become in testate, would it not, my mother's?
5 MR. HENDERSHOT: I'm asking about your
6 understanding.
7 MR. WESTCOTT: No, my understanding was not that
8 detailed.
9 MR. HENDERSHOT: Okay. Were you aware
10 that Mellon Bank disagreed with that interpretation in email
11 exchanges with Roger?
12 MR. WESTCOTT: I could not have been because I was
13 not aware of the argument in the first place.
14 MR. HENDERSHOT: Okay. Were you aware that
15 Mellon Bank had contacted the Attorney General's Office to inquire
16 into these issues we've been discussing?
17 MR. WESTCOTT: No.
18 MR. HENDERSHOT: Were you aware that the Attorney
19 General's Office said that the doctrine of Cy pres meant that
20 charities would take and the trust would be sustained?
21 MR. WESTCOTT: I was aware that the doctrine of
22 Cy pres would not be considered applicable.
23 MR. HENDERSHOT: Okay. Are you aware that-and
24 this is really for clarification, that the doctrine of Cy pres is one,
25 which applies to charities not to individuals?
32
1 MR. WESTCOTT: No.
2 MR. HENDERSHOT: Were you aware that Mellon
3 Bank was asked, in email exchanges, to consent to a petition that
4 would remove the effect of the trust? Were you aware of that
5 request being made to Mellon Bank?
6 MR. WESTCOTT: I was aware that Mellon Bank was
7 being asked to step down in lieu of M & T Bank.
8 MR. HENDERSHOT: That was your understanding?
9 MR. WESTCOTT: That was my understanding.
10 MR. HENDERSHOT: Were you aware at all that M &
11 T, I 'm sorry, excuse me, that Mellon Bank had taken the position
12 that the charities had to get an interest under your mother's will?
13 MR. WESTCOTT: No. Could you say that again,
14 please?
15 MR. HENDERSHOT: Were you aware that Mellon
16 Bank took the position that your trust created under your mother's
17 will, benefiting charities had to be honored?
18 MR. WESTCOTT: That the principal. Wait a minute.
19 You're making me very nervous here, because my understanding of
20 my mother's will is somewhat different than what you are talking
21 about now, and I would hope that Mellon Bank did not intend to
22 deprive me of the interest from the estate. Is that what you're
23 saying?
24 MR. HENDERSHOT: No. The question is, are you
25 aware that Mellon Bank's position defended the trust that
33
1 was created under item seven of your mother's will?
2 MR. WESTCOTT: Yes
3 MR. HENDERSHOT: When counsel for the estate was
4 suggesting that it should be ignored?
5 MR. WESTCOTT: No. I was not aware of that, but you
6 said something different just now. You were talking about the
7 interest and the interest is to go to me.
8 MR. HENDERSHOT: I did not mean...
9 MR. WESTCOTT: The principal upon my death goes
10 to the charities. The interest comes to me. That's what this is all
11 about. That's why I care about any of this. Are you
12 misunderstanding?
13 MR. HENDERSHOT: No. I'm asking if you
14 understood, over the past two years, that Mellon Bank was
15 attempting to defend the trust and step in as trustee?
16 MR. WESTCOTT: I think that's-- I'm not going to
17 answer that question, because it seems like a loaded one to me.
18 What you're describing is not what I understood, in general, to be
19 the case. The issue I understand, after the Cy pres discussions were
20 over, the only issue I understood was who was going to administer
21 the estate, and I'm not going to confirm.
22 MR. HENDERSHOT: I'm just trying to understand what
23 you knew.
24 MR. WESTCOTT: I'm not going to confirm what I
25 don't really believe was happening, no.
34
1 MR. HENDERSHOT: Okay. Have you ever
2 administered an estate or a trust?
3 MR. WESTCOTT: No, not for more than two months.
4 MR. HENDERSHOT: Who, generally, in your
5 household manages your finances, and I don't need detail? Is it you
6 or is it more your wife?
7 MR. WESTCOTT: It's more my wife.
8 MR. HENDERSHOT: You mentioned that you
9 attempted to contact the Bank of New York regarding some asset?
10 MR. WESTCOTT: Yes.
11 MR. HENDERSHOT: What was your objective in
12 contacting the Bank of New York?
13 MR. WESTCOTT: My father was accumulating medical
14 bills beyond his cash, beyond the cash available to him, and I
15 needed cash money. This is my memory of it.
16 MR. HENDERSHOT: Yes, sir.
17 MR. WESTCOTT: And that this looked like, at the
18 time, this looked like an asset that I ought to be able to cash or was
19 it after his death. I'm uncertain. It was either then or after his
20 death. But, in either case, whenever it was, they were refusing to
21 accept who I was. They weren't refusing my right to cash it, they
22 demanded more and more and more identification, after about three
23 correspondence and two telephone calls, a lot of correspondence and
24 telephone calls.
25 MR. HENDERSHOT: I think it is important for
35
1 us to understand whether your father was living or deceased at that
2 point?
3 MR. WESTCOTT: I'm sure it is, and I would have to
4 ask my wife or possibly Jane Burke could recreate it for me. It's
5 unclear in my mind now.
6 MR. HENDERSHOT: So you don't recall?
7 MR. WESTCOTT: No.
MR. HENDERSHOT: Were you ever given power of
8
9 attorney?
10
11
12
13
14
15
MR. WESTCOTT: Yes.
MR. HENDERSHOT: By your father?
MR. WESTCOTT: Yes. And by my mother.
MR. HENDERSHOT: And by your mother?
MR. WESTCOTT: Yes.
MR. HENDERSHOT: Was the power of attorney one of
16 the documents that the Bank of New York asked for?
17 MR. WESTCOTT: Probably, yes.
18 MR. HENDERSHOT: Did you have any troubles with
19 any other institution that held some of your father's assets?
20 MR. WESTCOTT: No.
21 MR. HENDERSHOT: Did you make inquiry to any
22 other institution?
23 MR. WESTCOTT: I think I might have. It's been a
24 long time ago.
25 MR. TILEY: Try to speak up.
36
1 MR. WESTCOTT: I'm sorry. It's been a long time, and
2 I cannot remember in detail which institutions I may have talked to.
3 MR. TILEY: Thank you. It's easy to trail off in here.
4 They have trouble hearing you over there.
5 MR. WESTCOTT: I know. I'm sorry.
6 MR. TILEY: It's okay.
7 MR. HENDERSHOT: You mentioned that you became
8 so frustrated with these challenges that you turned that over to Jane?
9 MR. WESTCOTT: Yes.
10 MR. HENDERSHOT: Did Angie Thompson, who is
11 sitting here, attempt to contact you recently?
12 MR. WESTCOTT: Yes.
13 MR. HENDERSHOT: Can you explain how she tried to
14 contact you?
15 MR. WESTCOTT: Through an email and a letter that
16 followed it up, both of which told me that she would be making a
17 telephone call shortly after, which she did.
18 MR. HENDERSHOT: Did you discuss your concerns
19 with Angie?
20 MR. WESTCOTT: As little as possible.
21 MR. HENDERSHOT: Why is that?
22 MR. WESTCOTT: I felt that we were about to engage
23 in, lamentably, an adversarial situation, and if during this hearing or
24 whatever, if this petition does not go my way, I would want to have
25 an amicable relationship with her in particular. And I felt,
37
1 therefore, that it would be best if we did not engage in a detailed
2 conversation until it was appropriate.
3 MR. HENDERSHOT: You had mentioned that you
4 made a decision in, did you say February of 2005, that you did not
5 wish Mellon Bank to-I'm sorry June 2005?
6 MR. WESTCOTT: Yes.
7 MR. HENDERSHOT: That you did not want Mellon
8 Bank to serve as trustee. Did you communicate that directly to
9 Mellon Bank representatives?
10 MR. WESTCOTT: No.
11 MR. HENDERSHOT: Never?
12 MR. WESTCOTT: No.
13 MR. HENDERSHOT: Was there a reason you would not
14 communicate with them?
15 MR. WESTCOTT: I assumed that this is the sort of
16 thing that lawyers do.
17 MR. HENDERSHOT: You mentioned you had some
18 plans to come back to Pennsylvania?
19 MR. WESTCOTT: Yes.
20 MR. HENDERSHOT: Have you made any firm
21 commitments in any way along that line?
22 MR. WESTCOTT: What would be an example?
23 MR. HENDERSHOT: Have you established any bank
24 accounts down here?
25 MR. WESTCOTT: Yes.
38
1 MR. HENDERSHOT: You have?
2 MR. WESTCOTT: Yes.
3 MR. HENDERSHOT: And where are those?
4 MR. WESTCOTT: M & T Bank.
5 MR. HENDERSHOT: Have you given your employer
6 notice of your retirement?
7 MR. WESTCOTT: No. The employer requires a nine-
8 month notice before, in other words, October before the July in
9 which you intend to retire is when they wish to have notice and it's
10 not to my advantage certainly to tell them anytime ahead of that nor
11 do I wish to.
12 MR. HENDERSHOT: Have you placed any date on
13 when you might move down?
14 MR. WESTCOTT: No.
15 MR. HENDERSHOT: What is your understanding about
16 the role of the charities now under item seven of the will, your
17 general understanding?
18 MR. WESTCOTT: The role of the charities?
19 MR. HENDERSHOT: Yes, sir.
20 MR. WESTCOTT: Is to receive the principal and is to
21 receive the principal of the estate upon my death.
22 MR. HENDERSHOT: Have the charities been selected
23 yet?
24 MR. WESTCOTT: Indeed they have.
25 MR. TILEY: Excuse me, I didn't hear.
39
1 MR. HENDERSHOT: Have the charities been selected
2 yet?
3 MR. WESTCOTT: Yes. They have.
4 MR. HENDERSHOT: Okay. How was that done?
5 MR. WESTCOTT: That was done by my wife and me,
6 upon the discovery that the list of charities as the will was supposed
7 to, that my mother was supposed to supply, could not be found.
8 MR. HENDERSHOT: When did you make that
9 selection, approximately?
10 MR. WESTCOTT: Well, you'd think I could remember
11 these things. I think it would be about a year ago, maybe more.
12 MR. HENDERSHOT: Is that written down anywhere?
13 MR. WESTCOTT: Yes. I'm certain that the M & T
14 Bank has a copy of it, and I'm sure Roger has a copy of it, and I
15 know the State of Pennsylvania has a copy of it. And that the
16 official office in charge of these things in Pennsylvania has said that
17 it is okay, that they approved it.
18 MR. HENDERSHOT: Do you think that there's a list of
19 charities that's in the docket, docketed to records of this estate that
20 would name the charities?
21 MR. WESTCOTT: You mean here today?
22 MR. HENDERSHOT: In the records that are before the
23 Court, is it your understanding that there is a list of those charities?
24 MR. WESTCOTT: I have no specific understanding.
25 MR. HENDERSHOT: Would it surprise you if I
40
1 told you there's not?
2 MR. WESTCOTT: Is my being surprised pertinent to
3 the question?
4 MR. HENDERSHOT: It tells me whether your
5 understanding is correct. You indicated that everyone told you that.
6 MR. WESTCOTT: My understanding was that that
7 document would be irrelevant to this proceeding.
8 MR. HENDERSHOT: What charities have been
9 designated?
10 MR. WESTCOTT: Humane Society, the Salvation Army
11 in Carlisle, the Senior Action Center, which I believe is one
12 of those.
13 MR. HENDERSHOT: Would you say that again, I
14 didn't hear?
15 MR. WESTCOTT: The Senior Action Center, which I
16 believe is a subsidiary of the Salvation Army in Carlisle. Then
17 there's a list of wilderness preservation, animal, various wilderness
18 preservation charities, and-what do you call them-be good to
19 animal's charities. And there may be several others. I think there
20 are some medical charities, possibly heart and stroke.
21 MR. TILEY: Possibly what?
22 MR. WESTCOTT: Possibly heart and stroke type
23 charities. I'm sorry. If I had known that this was even pertinent, I
24 would have prepared.
25 MR. HENDERSHOT: I understand.
41
1 MR. WESTCOTT: And I'm wondering...
2 MR. HENDERSHOT: So it does surprise you that it's
3 not in the record?
4 MR. WESTCOTT: It's surprises me that the subject
5 comes up.
6 MR. HENDERSHOT: Do you know if Mellon Bank was
7 provided with a copy of this list of charities?
8 MR. WESTCOTT: Absolutely. At Mellon Bank? I
9 have no idea.
10 MR. HENDERSHOT: In your objections, which you've
11 signed, you recited reasons for the replacement of Mellon Bank
12 being geographic availability. Is that correct?
13 MR. WESTCOTT: Yes.
14 MR. HENDERSHOT: Are you aware that Mellon Bank
15 has an office in Harrisburg?
16 MR. WESTCOTT: On the second floor of some
17 building, there's an office, not a bank branch. I have no idea if
18 you're there all the time, or normally if you only come in two or
19 three days a week. How would I know? It's not a branch of a bank,
20 which is what I'm used to dealing with. You can rent an office
21 anywhere, and say that's your office. Do you own the building in
22 Harrisburg? Is there a vault in Harrisburg? Do you have tellers?
23 Am I allowed to ask questions?
24 MR. TILEY: No, but you're making your point anyway,
25 but that's okay.
42
1 MR. WESTCOTT: Thank you.
2 MR. TILEY: You can ask rhetorical questions, which is
3 what you're doing.
4 MR. WESCOTT: Thank you.
5 MR. HENDERSHOT: I want to clarify for the record
6 that I don't work as a Mellon employee.
7 MR. WESTCOTT: Well, I assume not.
8 MR. HENDERSHOT: How do you anticipate the money
9 being delivered to you from the trust, which represents your
10 interest?
11 MR. WESTCOTT: In the same manner that it's
12 delivered to me now. That is, I receive quarterly payment of the
13 interest on the principal of the estate.
14 MR. HENDERSHOT: How does that come to you?
15 MR. WESTCOTT: It comes to me; it is deposited to a
16 bank account at the M & T Bank.
17 (Witness requested to repeat his answer by stenographer
18 due to outside noise interference.)
19 MR. WESTCOTT: A notice of the same is sent to me.
20 It comes to me as a deposit into the M & T Bank into a money
21 market savings account that we have there and a notice of that is
22 sent to me in the mail. And my wife sees it on the computer. She
23 goes and looks at it with online banking.
24 MR. TILEY: May I just interrupt and say, Mr.
25 Morgenthal and Ms. Burke, if you can't hear, get my
43
1 attention. Obviously my attention is obviously diverted to my left.
2 I cannot see you, so feel free to do that.
3 MR. OTTO: If we could only have that machine turned
4 off outside.
5 (Off record discussion.)
6 MR. WESTCOTT: You mentioned then that it comes in
7 as an electronic deposit, if I might characterize it that way?
8 MR. WESTCOTT: That is the way it appears to be.
9 MR. HENDERSHOT: Do you have to go to M & T
10 Bank to get that?
11 MR. WESTCOTT: No, I do not.
12 MR. HENDERSHOT: And you're receiving the benefit
13 and the notice of that deposit at your home in Canada. Is that
14 correct?
15 MR. WESTCOTT: That's correct.
16 MR. HENDERSHOT: Have you had any problems with
17 the administration of M & T's Trust or questions about it?
18 MR. WESTCOTT: If I have had questions, they've been
19 answered, and I have had no problems.
20 MR. HENDERSHOT: How do you communicate with M
21 & T Bank?
22 MR. WESTCOTT: I communicate with M & T Bank by
23 email and by personal visit.
24 MR. HENDERSHOT: How often do you come to visit
25 M & T Bank?
44
1 MR. WESTCOTT: Around four times a year.
2 MR. HENDERSHOT: And do you go to the branch in
3 Carlisle?
4 MR. WESTCOTT: I do.
5 MR. HENDERSHOT: Would you be able to go to
6 another branch in another locale other than Carlisle?
7 MR. WESTCOTT: Yes, but with considerably more
8 difficulty.
9 MR. HENDERSHOT: Have you ever met with Roger in
10 his office in Harrisburg?
11 MR. WESTCOTT: No.
12 MR. HENDERSHOT: Have you considered what M & T
13 would charge for your mother's trust versus what Mellon would
14 charge?
15 MR. WESTCOTT: No. I haven't.
16 MR. HENDERSHOT: You haven't. That's all the
17 questions I have.
18 MR TILEY: Mr. Morgenthal?
19 MR. MORGENTHAL: I have no questions for the
20 witness at this time.
21 MR. TILEY: Redirect?
22 REDIRECT EXAMINATION
23 MR. OTTO: Mr. Westcott, you mentioned that you're
24 able to communicate in written form, email and letters and so on?
25 MR. WESTCOTT: Yes.
45
1 MR. OTTO: Currently you're able to do that?
2 MR. WESTCOTT: Yes.
3 MR. OTTO: Is your condition with your eyes a
4 degenerative one?
5 MR. WESTCOTT: It is.
6 MR. OTTO: Is the expectation that your eyesight will
7 degrade over time?
8 MR. WESTCOTT: Yes.
9 MR. OTTO: Do you reasonably expect that it will
10 become more difficult to communicate in written form?
11 MR. WESTCOTT: I do. I can give you details about
12 that kind of communication if you want it.
13 MR. OTTO: Please.
14 MR. WESTCOTT: When I work with emails, I put the
15 font up to 200, sometimes 250, in order to read and
16 type comfortably. And that's really fine for letters, but when you
17 start dealing with figures and forms by email on the screen, and then
18 you get lost, when you're at that magnification. You can't follow
19 columns and rows. You don't know where they are and you end up
20 fishing around through the document. It takes a lot of time.
21 MR. OTTO: You need a really big screen, don't you?
22 MR. WESTCOTT: Yes. And even so, then, you know,
23 still there's a point at which it gets to be too far away regardless of
24 how big it is. Writing is fine. Filling out forms, doing online
25 banking, Linda does it all, and the reason why is very clear.
46
1 It's too- I can't do it. I can do it, but it takes hours, and it's not
2 worth the trouble.
3 MR. OTTO: Mr. Westcott, I think we've all made an
4 assumption here. I think we ought to clarify for the record. Do you
5 have siblings?
6 MR. WESTCOTT: No. I do not.
7 MR. OTTO: You're an only child?
8 MR. WESTCOTT: Yes.
9 MR. OTTO: In your understanding of the law, you're
10 the sole heir of your parents?
11 MR. WESTCOTT: Yes. I mean, my father's estate had
12 some bequests outside. My mother's estate I don't believe does.
13 MR. OTTO: There are other relatives, in other words?
14 MR. WESTCOTT: Yes. In my mother's family, there is
15 one relative that I thought; I was surprised that she didn't
16 leave anything to.
17 MR. OTTO: In response to a question that Mr.
18 Hendershot asked you, you hurriedly said absolutely and then
19 changed your answer. Do you recall what question you thought you
20 were answering when you said absolutely?
21 MR. WESTCOTT: No.
22 MR. OTTO: It was something about the list being
23 provided to someone.
24 MR. WESTCOTT: Oh.
25 MR. OTTO: I believe. Did you think the question
47
1 was, was the list provided to M & T?
2 MR. WESTCOTT: Yes. At first I thought it was that,
3 was the list provided to M & T, and it was actually to Mellon Bank.
4 That's correct.
5 MR. OTTO: And your answer was no with respect to
6 Mellon?
7 MR. WESTCOTT: Yes.
8 MR. OTTO: They had not yet become the trustee?
9 MR. WESTCOTT: That's right. It was none of their
10 business.
11 MR. OTTO: But M & T was the administrator
12 functionally of the estate?
13 MR. WESTCOTT: Yes.
14 MR. OTTO: And you're certain that they had the list of
15 charities?
16 MR. WESTCOTT: Well, Linda and I brought it to the
17 M & T Bank with Roger present, and gave them the list and it was
18 forwarded to the State of Pennsylvania to pass judgment on and
19 found to be satisfactory, as I understand it.
20 MR. OTTO: Let's talk a little bit about this list since it
21 came up.
22 MR. WESTCOTT: Okay.
23 MR. OTTO: Why did it need to be prepared, as far as
24 you know?
25 MR. WESTCOTT: Because if my mother ever
48
1 actually made the list that she should have made, and we have no
2 reason to believe she did or did not, then it was not to be found
3 anywhere in the residua of the Commonwealth Bank or in Mellon's
4 files anywhere.
5 MR. OTTO: And, to get this in context, I believe that
6 it's fair to say that you're referring to paragraph seven of your
7 mother's will, which provides generally for a trust for you for your
8 lifetime, with the remainder after your death to a list of charities
9 that she was to have prepared?
10 MR. WESTCOTT: Correct.
11 MR. OTTO: And that list could not be found?
12 MR. WESTCOTT: Correct.
13 MR. OTTO: And there was some discussion, on
14 examination with Mr. Hendershot, that thought was given to whether
15 the trust might fail as a result of the non-existence of the list.
16 MR. WESTCOTT: Okay. Perhaps that's true.
17 MR. OTTO: But, you don't know that, it's unsure?
18 MR. WESTCOTT: No.
19 MR. OTTO: But, in any event, there was no such list
20 that could be located?
21 MR. WESTCOTT: That's true.
22 MR. OTTO: And you, in cooperation with your spouse,
23 prepared such a list?
24 MR. WESTCOTT: Yes.
25 MR. OTTO: And that repaired whatever damage
49
1 there was to the trust, as far as you know, the trust will exist and the
2 residue will go to charity at your death?
3 MR. WESTCOTT: Yes.
4 MR. OTTO: You don't have any difficulty with that?
5 MR. WESTCOTT: I don't have any what?
6 MR. OTTO: Difficulty with that conceptually or
7 otherwise?
8 MR. WESTCOTT: No. It's exactly what my mother
9 wanted and it's fine with me.
10 MR. OTTO: That's all I have.
11 MR. TILEY: Mr. Hendershot?
12 RECROSS EXAMINATION
13 MR. HENDERSHOT: On the issue of providing of the
14 list. Is there a reason, to your knowledge, that the list was not filed
15 with the Court?
16 MR. WESTCOTT: That the list was not what?
17 MR. HENDERSHOT: Filed with the Court.
18 MR. WESTCOTT: Filed with the Court. Well, I don't
19 know about filing with Courts. It should have been filed with her
20 lawyer, and the will, wherever the will is, and if that's the Court, I
21 have no idea why, if my mother did it, and if she didn't do it, why
22 she didn't do it. I don't know. My mother and I didn't talk about
23 her plans for me.
24 MR. HENDERSHOT: Are you aware that as recently as
25 an hour ago we asked about the list of charities and were told
50
1 they had not yet been designated?
2 MR. WESTCOTT: I'm not aware of that, and I can tell
3 you that if you're under that impression, you must be wrong, or we
4 don't understand what you mean by designated. But I think that is
5 incorrect information. That list exists and has been taken care of
6 and I can probably dig up documentary evidence to show you that.
7 MR. HENDERSHOT: My first comment to the Master,
8 the Auditor, we have not been provided that list. We have
9 repeatedly requested it, and I think that it is...
10 MR. MORGENTHAL: I have to say something at this
11 point. I think we're talking about two different things. There was a
12 discussion and preparation of a tentative list, however, I just looked
13 at the tax returns that were filed; no list was in other than what
14 would be charitable beneficiaries. That is a matter of public record.
15 And it was my intention at least that, at some point, since this
16 would in effect be an application of the Cy pres doctrine that a
17 Court order would have to be obtained finalizing that list. But, my
18 intention also was to allow Mr. Wescott the greatest latitude in
19 choosing the beneficiaries to make sure there were no last minute
20 changes. The only requirement, and I'm not trying to testify, but the
21 only requirement, which is probably of record somewhere with the
22 Department of Revenue, is that they only had to be 501C3s.
23 MR. TILEY: I've got to say I'm a little confused or I'm
24 having one of those strange coincidences, but when I heard the list
25 testified to I recognized it. Now it wasn't new to me that it was
51
1 the Salvation Army and some animal beneficial kinds of thing. Now
2 I don't know how, but either that or it's a strange coincidence with
3 another estate I'm involved with. I don't know, but it wasn't a
4 surprise. My gut is that maybe it was in the objections itself or one
5 of the memorandums. I don't know. But this whole thing of that we
6 haven't seen the list is a little odd to me because it seemed familiar
7 to me.
8 MR. OTTO: With all due respect, we're not being
9 tremendously formal with the presentation, which I appreciate and
10 actually applaud. But I'm frankly at a loss to understand the
11 relevance of the list, at this point, and maybe I'm just missing
12 something. But as per what we're doing here with Mr. Wescott's
13 objection in respect of Mellon serving as opposed to another trustee,
14 the list doesn't seem tremendously relevant to me, at this point,
15 other than we've gone through some cash returns that have been
16 approved and estate settled and are ready to be turned over to the
17 trust.
18 MR. TILEY: I see the relevancy before, Mr.
19 Hendershot.
20 MR. OTTO: Very well.
21 MR. TILEY: I see the point he's trying to make in
22 terms of preservation of interest of the charitable remainder
23 beneficiaries and I'm not sure his point is valid or not, the facts are
24 valid, but I'm not finding that way.
25 MR. OTTO: I don't object.
52
1 MR. TILEY: I see where he's headed. And I don't
2 want to say a lot to guide that but I see that it's a relevant point. I
3 guess we can resolve it by saying, is there an objection on the part
4 of either counsel for the estate or counsel for the beneficiary to
5 providing what I now understand to be a tentative list to Mellon
6 Bank?
7 MR. MORGENTHAL: Shall we say unconfirmed list?
8 The Court has never formally adopted this as an amendment under
9 the Cy pres. If we could find one.
10 MR. OTTO: I wouldn't have any objection to it either
11 because if Mellon becomes the trustee, they will undoubtedly have
12 to consult their own counsel and make their own decision as to what
13 process, if any, needs to be engaged in to formalize this list. That
14 will then become their responsibility and certainly they will need
15 the list when they discharge those responsibilities.
16 MR. TILEY: That wouldn't happen before, wouldn't
17 that happen in the estate?
18 MR. OTTO: It did not. This was left open for dealing
19 with the contents of the trust apparently. I didn't handle the estate
20 and I don't mean to testify. I think it's a way of clarifying what the
21 stated record of facts are.
22 My understanding is that the list is not formally approved. It
23 was contemplated it would be at sometime, but that's Mr.
24 Morgenthal and M & T's point of view. Mellon may have an
25 entirely different process that they wish to engage in as long
53
1 as it doesn't do violence to Mr. Wescott's interest, it doesn't matter.
2 MR. MORGENTHAL: In Schedule 0 of the Federal
3 Estate Tax Return it simply refers to the charitable public and
4 similar gift bequests as being trust under Camilla R. Wescott,
5 beneficiary of William W. Wescott, the charitable remainder
6 beneficiaries as provided by Mr. Wescott-- No list per se was made
7 part of that. That was something we contemplated would be
8 finalized later.
9 MR. HENDERSHOT: Would like to respond to Mr.
10 Ott's question as to relevance. I think the first point is, we have the
II executor of the estate nominating a trustee in a petition for
12 adjudication, but failing to provide the nominated trustee with
13 essential information about the trust. Then that executor
14 participates in a hearing to remove the trustee.
15 The second point is, the Attorney General's Office is not here
16 today. They clearly have an understanding about this proceeding
17 that Mellon Bank is not aware of. We are not aware that charities
18 have been selected. And yet, Mellon Bank was the entity
19 initially that advocated for these charitable interests?
20 MR. OTTO: I'd object to that insertion. I don't think it
21 has been shown to be the case in any record anywhere yet...
22 MR. HENDERSHOT: We will provide testimony.
23 MR. OTTO: I think we're arguing.
24 MR. TILEY: When I say it's relevant testimony I don't
25 know that it's going to be determinative of the issue. I think
54
1 I understand where you're headed. I'm not sure you're going to be
2 able to prove the point I think is relevant or not. I don't know but I
3 don't want to get too bogged down in it.
4 MR. HENDERSHOT: One third reason I think is
5 essential.
6 MR. TILEY: Okay.
7 MR. HENDERSHOT: It was covered by our pre-hearing
8 memorandum. It is removal of trustee under statutory section cited
9 requires all beneficiaries' consent, not one, and certainly not one
10 who has a self-interest. Now, we have put that in our memorandum,
11 it's a point of law to be argued and this is a factual hearing. But the
12 point is if these charities had been nominated and the Attorney
13 General has acted in a certain way because of it, these parties have
14 not been given notice of this proceeding.
15 MR. OTTO: With all due respect and this is not the
16 time to argue, but since the issue has come up, I'll address it. The
17 Attorney General acts as benefactor for all charities. They have no
18 standing. The AG has no standing and they chose not to be present.
19 Could we please get on with the hearing?
20 MR. TILEY: Are you saying the beneficiaries have no
21 standing?
22 MR. OTTO: They don't as yet. The AG speaks for
23 them. The case law is absolutely clear on these issues.
24 MR. HENDERSHOT: I just want to remind the Auditor
25 that removal is a drastic, extraordinary...
55
1 MR. TILEY: We'll get to legal argument at another
2 time. You'll have opportunity for that. We've gotten, I think, a
3 little too sidetracked from the issue at bar. I think we were on
4 Redirect.
5 MR. HENDERSHOT: Yes.
6 MR. OTTO: I was done.
7 MR. TILEY: Recross.
8 (Recross examination continued.)
9 MR. HENDERSHOT: Mr. Otto brought up paragraph
10 seven and asked for interpretation. Bill, are you aware that your
11 mother specifically provided that you are "retrained from and is or
12 shall be without right, power and authority to effect the income or
13 principal of the trust estate during its term."?
14 MR. WESTCOTT: Yes.
15 MR. HENDERSHOT: No further questions.
16 MR. TILEY: Mr. Morgenthal?
17 MR. MORGENTHAL: No further questions.
18 MR. OTTO: No, thank you.
19 MR. TILEY: Now, I have a few questions. I am not
20 a judge that you need to worry about offending if you object to any
21 of my questions, okay. So I will ask questions and will not be
22 offended if there's an objection, although I certainly don't think any
23 of them are objectionable. I need to get my glasses organized so I
24 can see things more clearly. I use them for distances.
25 My first thing that I wanted to note was that the
56
1 Attorney General is not here because I had neglected to ask that at
2 the beginning.
3 Mr. Westcott, you have never lived in Cumberland County,
4 Pennsylvania, is that correct?
5 MR. WESTCOTT: For three months going once.
6 MR. TILEY: And when was that, which decade?
7 MR. WESTCOTT: I think it was right around 1980 or
8 '81.
9 MR. TILEY: Okay. That's more than close enough. I
10 was a little confused or couldn't hear at the beginning. Can you just
11 roughly give me what timeframe your parents lived in the Greater
12 Carlisle/Newville Area?
13 MR. WESTCOTT: From 1975 until their deaths in
14 2005, but my mother spent her childhood here and my father worked
15 for Masland for as much as maybe two years in the 40s during the
16 war.
17 MR. TILEY: Thank you. There is no real estate in the
18 trust to be set up in your mother's estate. Is that correct?
19 MR. WESTCOTT: No.
20 MR. TILEY: That is not correct or?
21 MR. WESTCOTT: Her half of the farm she willed to
22 me, otherwise there is no real estate.
23 MR. TILEY: So the farm of which you speak is owned
24 one-half by you individually?
25 MR. WESTCOTT: Yes.
57
1 MR. TILEY: And the other one-half is currently in the
2 estate to go to trust?
3 MR. WESTCOTT: No.
4 MR. MORGENTHAL: No, that's not correct. It's
5 solely vested in Mr. Westcott and I believe in his wife jointly. It is
6 not part of the trust or the proposed trust.
7 MR. TILEY: Okay. So the farm is owned by you and
8 your wife?
9 MR. WESTCOTT: Yes.
10 MR. TILEY: And I guess I'll ask this. Is there any real
11 estate in your mother's estate?
12 MR. WESTCOTT: No.
13 MR. TILEY: So there's no real estate to pass to the
14 trust to be created in your mother's estate?
15 MR. WESTCOTT: No.
16 MR. TILEY: You understood your mother to create a
17 trust in her will that gave you the income and at your death the
18 principal remaining would go to a list of charitable beneficiaries?
19 MR. WESTCOTT: Yes.
20 MR. TILEY: And evidently that list was not
21 given in the will but was to be found elsewhere?
22 MR. WESTCOTT: Yes.
23 MR. TILEY: But it could not be found?
24 MR. WESTCOTT: Yes.
25 MR. TILEY: Did you then seek to have the
58
1 trust terminated so that you would be able to inherit all of your
2 mother's estate?
3 MR. WESTCOTT: Yes.
4 MR. TILEY: And were you then told that that would
5 not work?
6 MR. WESTCOTT: Yes.
7 MR. TILEY: And at that point you created a list of
8 charitable beneficiaries, which is evidently still tentative?
9 MR. WESTCOTT: Yes.
10 MR. TILEY: I just have a very technical thing. You
11 said that on your email you increased the font to 200 to 250. I think
12 you meant the magnification?
13 MR. WESTCOTT: I do, yes, I meant percent, zoom.
14 MR. TILEY: Macintosh users would know that a 250
15 font would be very, very big.
16 MR. WESTCOTT: No, I meant the zoom.
17 MR. TILEY: Have my questions caused Mr. Otto to
18 have any further redirect?
19 MR. OTTO: No.
20 MR. TILEY: Mr. Hendershot?
21 MR. HENDERSHOT: No.
22 MR. MORGENTHAL: No.
23 MR. TILEY: None from Mr. Morgenthal.
24 You may step down.
25 MR. WESTCOTT: Thank you.
59
1 MR. TILEY: Now, do we want to take a fifteen-minute
2 break?
3 MR. OTTO: Certainly fine with me.
4 (Recessed at 10:45 a.m.)
5 (Reconvened at 11 :OOa.m.)
6 MR. TILEY: Ready?
7 MR. OTTO: Believe we are. Jane Burke.
8
9 Whereupon,
10 JANE F. BURKE
11 Having been first duly sworn, according to law, by Auditor Tiley,
12 testified as follows:
13 DIRECT EXAMINATION
14 MR. OTTO: Your name and address, Ms. Burke?
15 MS. BURKE: Jane F. Burke, B-u-r-k-e, M & T Bank,
16 One West High Street, Carlisle, PA 17013.
17 MR. OTTO: Your employment?
18 MS. BURKE: I am a vice-president and market manager
19 for M & T Bank private client services.
20 MR. OTTO: Would that commonly be known as a trust
21 officer?
22 MS. BURKE: Commonly known as a trust officer.
23 MR. OTTO: How long have you been with M & T and
24 its predecessors?
25 MS. BURKE: I've been with M & T and
60
1 its predecessors since June of 1965.
2 MR. OTTO: 1965. Given that timeframe, are you able
3 to walk us through the various iterations of the mergers and so on?
4 MS. BURKE: We were originally Farmers' Trust
5 Company. Farmers' Trust Company then formed a holding company,
6 Financial Trust Corp., and we were acquiring other banks. At
7 approximately the same time, we formed Financial Trust Services
8 Company, which was a trust company as a subsidiary of the bank.
9 Then we became part of Keystone Financial and ultimately M & T
10 Bank.
11 MR. OTTO: And M & T Bank is the bank that exists
12 today?
13 MS. BURKE: We exist today.
14 MR. OTTO: Have you had an office anywhere but One
15 West High Street in your career?
16 MS. BURKE: For two short years, I had an office in
17 our corporate headquarters at 1415 Ritner Highway and moved right
18 back downtown, so 40 of the years that I have been with the bank I
19 have been at One West High Street.
20 MR. OTTO: All the years you've been with the bank
21 you've been in Carlisle?
22 MS. BURKE: Absolutely, yes.
23 MR. OTTO: Who are the others in your department?
24 MS. BURKE: David C. Garrity. David has been with
25 the bank since 1972. And, Thomas Morgan, who was
61
1 with, originally, Dauphin Deposit, Allied Irish, and then ultimately
2 with M & T.
3 MR. OTTO: Mr. Morgan was with Dauphin Deposit
4 originally?
5 MS. BURKE: No. He came after Dauphin Deposit. But
6 he had in excess of 20 years of trust experience.
7 MR. OTTO: And how far did you move his office?
8 MS. BURKE: From Two West High Street to One West
9 High Street.
10 MR. OTTO: Across the street?
11 MS. BURKE: Across the street.
12 MR. OTTO: He's been in Carlisle for a while as well?
13 MS. BURKE: Yes. He has.
14 MR. OTTO: And Mr. Garrity?
15 MS. BURKE: Has been with the bank since 1972 in
16 Carlisle.
17 MR. OTTO: Were you acquainted with William
18 Westcott's parents?
19 MS. BURKE: Yes. I remember Mr. and Mrs. Westcott
20 very vividly, because they would be in the bank at least once a
21 week. They had their safe deposit box there and retail accounts.
22 MR. OTTO: When did you meet William Westcott?
23 MS. BURKE: It was in May of 2005.
24 MR. OTTO: And under what circumstances?
25 MS. BURKE: Roger had brought Mr. Westcott and
62
1 his wife to the bank because his father had passed away. We were
2 looking for a will, and I was introduced to the Westcotts at that
3 po into
4 MR. OTTO: When you say they were looking for a will,
5 can you tell me a little bit about that?
6 MS. BURKE: They were looking for the father's will,
7 Laurence Westcott's will.
8 MR. OTTO: And was it found?
9 MS. BURKE: Yes. It was.
10 MR. OTTO: Where was it found?
11 MS. BURKE: That was in the safe deposit box.
12 MR. OTTO: At M & T?
13 MS. BURKE: At M & T. That box had been there since
14 June of 1974.
15 MR. OTTO: I'm going to show you a document, which
16 I've provided to Mr. Hendershot and Mr. Tiley.
17 MR. TILEY: No objection if the parties take a look at
18 these before they're admitted?
19 MR. HENDERSHOT: Yes.
20 MR. OTTO: Ms. Burke, could you identify what I've
21 handed you, please?
22 MS. BURKE: It's the last will and testament
23 of Laurence C. Westcott and also the certificate of grant of letters.
24 MR. OTTO: And the letters are granted to whom?
25 MS. BURKE: To M & T Bank. They actually have
63
1 M & T Trust Company, but it's M & T Bank.
2 MR. OTTO: And did you personally participate in the
3 administration of this estate?
4 MS. BURKE: Yes. I did.
5 MR. OTTO: And are you familiar with the will?
6 MS. BURKE: I am familiar with the will.
7 MR. OTTO: Generally speaking, with respect to
8 William Westcott, what's your understanding of the provision of this
9 document?
10 MS. BURKE: This will set up a testamentary trust after
11 a series of specific bequests to individuals. And that trust benefited
12 Bill during his lifetime and then according to the terms of the will,
13 $500,000 of the balance remaining in the trust at Bill's passing
14 would go to the Rensler Polytechnic Institute. And that is where
15 Bill's father was very closely associated, which would set up a
16 scholarship fund.
17 Anything over and above that $500,000 was divided between
18 the Salvation Army, American Cancer Society, Cumberland-Perry
19 Association for Retarded Citizens, and the American Red Cross.
20 MR. OTTO: In summary, the trust under Mr. Wescott's
21 father's will provides for him during his lifetime income and then
22 the residue to a group of charities?
23 MS. BURKE: That is right.
24 MR. OTTO: And other than income for Mr. Westcott's
25 lifetime, is there any other provision made for William Westcott?
64
1 MS. BURKE: Yes. It also gives the trustee the
2 discretion to invade principal for his health, welfare and support,
3 but it does take into consideration other assets that he may have.
4 MR. OTTO: So the trustee is directed to invade
5 principal, if necessary, for maintenance and support, in general
6 terms, but requires the trustee to make investigation as to other
7 sources in making that determination?
8 MS. BURKE: That's correct.
9 MR. OTTO: And is M & T currently serving as trustee
10 of that trust?
11 MS. BURKE: Yes. We are.
12 MR. OTTO: And the approximate amount of money in
13 that trust?
14 MS. BURKE: Currently, it has a market value of about
15 $815,000.
16 MR. OTTO: And I'm going to show you another
17 document that I've also provided Mr. Hendershot.
18 (Document shown to Auditor.)
19 ] MR. OTTO: I'll ask that you identify that.
20 MS. BURKE: This is the last will and testament of
21 Camilla R. Westcott.
22 MR. OTTO: And is M & T involved in
23 the administration of the estate of Camilla R. Westcott?
24 MS. BURKE: Yes. We are. We are administrator,
25 CT A.
65
1 MR. OTTO: And, could you explain the circumstances
2 by which that occurred?
3 MS. BURKE: We were administrator of the estate of
4 Laurence Westcott, who passed away March 27, 2005. Camilla
5 passed away May 19, 2005, relatively close together with her
6 husband. We had been working with Mr. Westcott on his father's
7 estate, and he asked us if we would then be administrator for his
8 mother's estate.
9 MR. OTTO: Did he ask if you would do that, because
10 he renounced his right to be executor?
11 MS. BURKE: That's correct.
12 MR. OTTO: He was named and chose not to act? I
13 believe he testified to that earlier.
14 MS. BURKE: That's correct.
IS MR. OTTO: And he asked that M & T do that?
16 MS. BURKE: Yes.
17 MR. OTTO: There's been some discussion already
18 about the provisions of this will, but could you, at the risk of being
19 reiterative, just summarize your understanding of the provisions
20 made for William Westcott in his mother's will?
21 MS. BURKE: In his mother's will there is a trust set up
22 to benefit Mr. Westcott during his lifetime. He's entitled to
23 the income. Again it gives the trustee discretion to invade principal
24 with some restrictions, and at Mr. Westcott's passing, the trust
25 would be distributed to charities. That list was never found.
66
1 Bill did put together a written list, which was never formalized, but
2 we have a written list, but nothing was filed.
3 MR. OTTO: Have the various tax returns, incident to
4 this estate, been filed, approved and closed, for lack of a better
5 term?
6 MS. BURKE: Both the Pennsylvania Inheritance Tax
7 Return and the Federal 706 have been approved, and the first and
8 final accounting filed with the Orphans' Court of the administration
9 of the estate.
10 MR. OTTO: So, in general terms, the tax has been paid
11 and the taxing authorities seem to be comfortable with what has
12 occurred?
13 MS. BURKE: Yes.
14 MR. OTTO: And do you know, specifically, what the
15 status of the Commonwealth of Pennsylvania, both the Department
16 of Revenue and the Attorney General's Office's position is with
17 respect to this list of charities?
18 MS. BURKE: That a list of charities would be
19 prepared. They have to be 501c3s, and they accepted that on both of
20 the tax returns, saying that list would be provided.
21 MR. OTTO: And that would be in due course?
22 MS. BURKE: In due course.
23 MR. OTTO: And the only limitation was that they be
24 c3s, charitable organizations?
25 MS. BURKE: That is correct.
67
1 MR. OTTO: All of the remainder beneficiaries of the
2 Camilla Westcott trust need to be charities?
3 MS. BURKE: Correct.
4 MR. OTTO: Not yet named?
5 MS. BURKE: That is correct.
6 MR. OTTO: To be named by William Westcott?
7 MS. BURKE: That is correct.
8 MR. OTTO: And all of the remainder beneficiaries of
9 Laurence Westcott's trust are similarly c3 charities?
10 MS. BURKE: Yes. That's correct.
11 MR. OTTO: Who is the trustee named in Camilla
12 Westcott's will?
13 MS. BURKE: I want to be sure I have the right name
14 too. Commonwealth National Bank.
15 MR. OTTO: And this will was written, as best you can
16 tell, when?
17 MS. BURKE: It was written February 17, 1978.
18 MR. OTTO: And this is the only will?
19 MS. BURKE: The only one that we could locate.
20 MR. OTTO: Where was it located? Do you recall?
21 MS. BURKE: I'm trying to remember. I think Bill
22 found it at the house.
23 MR. OTTO: At the house.
24 MS. BURKE: After a diligent search.
25 MR. OTTO: And the will was the original will and
68
1 it was pro bated?
2 MS. BURKE: That is correct. Yes.
3 MR. OTTO: Would you turn to page three in Camilla
4 Westcott's will, please?
5 MS. BURKE: Yes, sir.
6 MR. OTTO: The first full paragraph on the page,
7 what's your understanding of the meaning of that paragraph?
8 MS. BURKE: Basically, it's a spend thrift clause.
9 MR. OTTO: And what is it?
10 MS. BURKE: That would restrict Mr. Westcott from
11 pledging this trust for creditors for any reason. He has no right to
12 use the funds for his own debts.
13 MR. OTTO: And does it also mean that the creditors
14 themselves can't come to the trustee and demand payment?
15 MS. BURKE: That's correct.
16 MR. OTTO: But notwithstanding that, Mr. Westcott has
17 access to principal under certain circumstances?
18 MS. BURKE: At the discretion of the trustee, based on
19 other assets that are available to him.
20 MR. OTTO: But it's been the course of your experience
21 as acting for an entity that serves as a trustee, the way this would be
22 administered would be a creditor could not seek to be paid
23 directly from the trust?
24 MS. BURKE: That is correct.
25 MR. OTTO: And the beneficiary could
69
1 not anticipatorily assign their interest in the trust?
2 MS. BURKE: That is correct.
3 MR. OTTO: When did you become aware of William
4 Westcott's desire that M & T act as trustee of his mother's trust?
5 MS. BURKE: That was as early as the end of May of
6 2005, when we were getting ready to probate both his father and his
7 mother's wills, and was aware of the contents of the wills, and then
8 that was reiterated again in January of '06.
9 MR. OTTO: And how was it reiterated?
10 MS. BURKE: It was with meetings that Roger
11 Morgenthal was in with us in the conference room at M & T Bank,
12 and also by conversation with Mr. Westcott and his wife, Linda.
13 MR. OTTO: Do you know, of your own knowledge, if
14 you know, whether that desire was communicated to Mellon?
15 MS. BURKE: I do not have a copy of a letter, but I
16 believe there was correspondence in January of '06.
17 MR. OTTO: Did you handle the correspondence or did
18 someone else?
19 MS. BURKE: I did not. Mr. Morgenthal did.
20 MR. OTTO: All right. Did you have any discussion
21 with Mellon about this issue of their stepping aside and permitting
22 M & T to serve?
23 MS. BURKE: No.
24 MR. OTTO: Is M & T willing to serve?
25 MS. BURKE: Yes. We are.
70
1 MR. OTTO: Is there any advantage, from your
2 perspective, for the income beneficiary and the remainder
3 beneficiaries to M & T serving as trustee of both Mr. Westcott's
4 trust for the benefit of Bill and Mrs. Westcott's trust for the benefit
5 of Bill?
6 MS. BURKE: We would feel that having the overall
7 picture of the investment portfolio would be in the best interest of
8 both the current income beneficiary and the remainder charitable
9 beneficiaries. It would be looked at as a whole for investment as
10 well as for fees.
11 MR. OTTO: Let's talk a little bit more about that from
12 the investment prospective. Your understanding of the duty of a
13 trustee, with respect to income beneficiaries and remainder
14 beneficiaries, is generally what?
15 MS. BURKE: You walk that narrow line between the
16 income beneficiary and meeting their needs and also preserving
17 principal for the ultimate remainder beneficiaries.
18 MR. OTTO: And unlike many charitable trusts, this one
19 doesn't have a specific directive with the amount of income, there's
20 no annuity or uni-trust, it's all income?
21 MS. BURKE: It's all income.
22 MR. OTTO: Contrasted with what I think most would
23 call a more traditional charitable remainder trust, does it make
24 the administration more challenging, in regard to balancing of the
25 remainder and the income?
71
1 MS. BURKE: It is always a challenge to balance those
2 duties, because an income beneficiary normally always wants a little
3 more, and you have that duty to also protect the charities. So you
4 would be gearing your portfolios to meet the needs of the current
5 income beneficiary, but not to the detriment of the remainder
6 beneficiaries.
7 MR. OTTO: And in the absence of a conversion of this
8 trust or these trusts to a model that pays out a percentage, a uni-trust
9 model, the way in which you invest would have rather a dramatic
10 impact on the amount of income, won't it?
11 MS. BURKE: It would because if this were a true uni-
12 trust, you would be more aggressive with equities for the long term
13 growth; because with long term growth, you ultimately end up with
14 a higher payout for your income beneficiary.
15 MR. OTTO: The ability to invade principal complicates
16 this further, does it not?
17 MS. BURKE: Somewhat. Yes. Because you would
18 need to have some documentation that there was a need, and what
19 other outside assets Mr. Westcott may have.
20 MR. OTTO: In looking to the other assets language is
21 only in one of these two trusts?
22 MS. BURKE: That's correct.
23 MR. OTTO: You mentioned you thought there would
24 be efficiency or perhaps an economy effect with respective fees.
25 Could you talk more about that?
72
1 MS. BURKE: Do you want specific numbers?
2 MR. OTTO: Please. Using assumptions with respect to
3 the amount of principal in both trusts and recognizing that's an
4 assumption.
5 MS. BURKE: Looking at some sample fees, Laurence
6 Westcott, with a market value of$815,534. That fee would be
7 somewhere in the neighborhood of $9,897.
8 With Camilla Westcott, with a market value of $3,027,610,
9 that fee would be $24,288 on an annual basis.
10 MR. OTTO: Now that's on a stand-alone basis?
11 MS. BURKE: Stand-alone basis.
12 MR. TILEY: I need to interrupt for a minute. That's
13 nine thousand what for Laurence?
14 MS. BURKE: $9,897.
15 MR. TILEY: Thank you. And, $24, --?
16 MS. BURKE: 288. If you combine those two accounts
17 to $3,843,000, the total fee would be $28,365.
18 MR.TILEY: Hold on a second. $3,843,000?
19 MS. BURKE: 144.
20 MR. TILEY: And that would produce an estimated fee
21 of what?
22 MS. BURKE: $28,365. And these are all based on
23 market values.
24 MR. OTTO: And your current fee schedule?
25 MS. BURKE: And our current fee schedule.
73
1 That's correct. So if the accounts were held separately, that would
2 be a total of $34,185. Combined $28,365 for a savings of $5,891.
3 MR. OTTO: And that savings accrues by virtue of the
4 fact that M & T would aggregate the trust for the purposes of fee
5 calculation, which is on a sliding scale?
6 MS. BURKE: That is correct Yes.
7 MR. OTTO: Now, let's talk about how fees are charged
8 to income and principal.
9 MS. BURKE: Okay. Sixty-six percent of our fees are
10 charged from principal and 34 percent from the income of the trust.
11 MR. OTTO: So that a reduction in fee impacts both the
12 income beneficiary and the remainder?
13 MS. BURKE: That is correct. Yes.
14 MR. OTTO: And you say that based on assumptions
15 about the values of the two trusts and the current fee schedule that
16 an economy is approximately $5,800?
17 MS. BURKE: Right.
18 MR. OTTO: Per year?
19 MS. BURKE: That is correct. According to our current
20 fee schedule, the investment management portion of our fees would
21 be reduced if any portion of either trust were in proprietary funds,
22 MPT managed funds. There would be no investment management
23 fee on any portion of that. I did not take any of that into
24 consideration here.
25 MR. OTTO: To explain that a bit more. Depending
74
1 on how the funds are invested, these fees could be even less?
2 MS. BURKE: That is correct.
3 MR. OTTO: Do you know whether a charitable
4 deduction was permitted by the Internal Revenue Service with
5 respect to this trust under Mrs. Westcott's estate?
6 MS. BURKE: The Internal Revenue Service did allow a
7 charitable deduction.
8 MR. OTTO: Was there any condition of any kind
9 attached to that that you're aware of?
10 MS. BURKE: Not from the Internal Revenue Service.
11 No.
12 MR. OTTO: So the Internal Revenue Service permitted
13 a charitable deduction for this trust to the estate without any
14 condition at all?
15 MS. BURKE: That's correct. What we were showing
16 was that the trust would be set up and that charities would be chosen
17 that were 501c3s.
18 MR. OTTO: In due course?
19 MS. BURKE: In due course.
20 MR. OTTO: What, if you know, was the situation with
21 the Pennsylvania Department of Revenue on this issue?
22 MS. BURKE: The Pennsylvania Department of
23 Revenue did not allow the charitable deduction, so we have paid the
24 full tax on the Pennsylvania portion.
25 MR. OTTO: So there was no charitable
75
1 deduction permitted at the state level?
2 MS. BURKE: That's correct.
3 MR. OTTO: But there was at the federal?
4 MS. BURKE: There was at the federal.
5 MR. OTTO: I think you testified earlier, but I wanted
6 to make sure we're clear on this, that the Office of the Attorney
7 General in Pennsylvania has attached a condition to this trust by
8 way of Mr. Wescott's designation of c3 charities as a remainder in
9 due course?
10 MS. BURKE: That is correct. That is the only
11 restriction that they provided to us.
12 MR. OTTO: How often have you met with Bill
13 Westcott, in general terms, over the last two years?
14 MS. BURKE: In the past two and a half years,
15 especially the first year, we met on a fairly regular basis. When he
16 was here for his father's passing, when he was here for his mother's
17 funeral. I'm just trying to think how often we really did meet. But
18 every time they were in the Carlisle area, we were together. And
19 also through emails and phone calls.
20 MR. OTTO: Other than the relationship with M & T, by
21 virtue of the estate, his mother and father's estates, are there any
22 other sorts of banking or financial relationship with M & T
23 that's formal?
24 MS. BURKE: They do have retail accounts, checking
25 accounts, and money market with us. And I know that I've worked
76
1 with them, because they're refurbishing the farm, providing them
2 with additional contractors, references, that sort of thing.
3 MR. OTTO: Are those normally the sorts of services
4 that M & T provides?
5 MS. BURKE: Absolutely.
6 MR. OTTO: That's all I have for Ms. Burke.
7 CROSS EXAMINATION
8 MR. HENDERSHOT: Do you mind if I call you Jane?
9 MS. BURKE: That's fine.
10 MR. HENDERSHOT: You can call me Neil. Jane, you
11 mentioned the changes in the corporate structure of your employers
12 over the years. Can you give dates on those, generally, years?
13 MS. BURKE: I'm trying to think. It was '96 that was
14 Keystone.
15 MR. HENDERSHOT: So it was Farmers Trust in 1965
16 until 1996?
17 MS. BURKE: Yes, about '96. I'm trying to think of the
18 actual years. Then it was 2000, I believe, with M & T. So we have
19 a short stint as Keystone.
20 MR. HENDERSHOT: When did the Keystone stint
21 occur?
22 MS. BURKE: Well that would have been'96
23 from Farmers to Keystone and then from Keystone to M & T.
24 MR. HENDERSHOT: So the changes to Financial Trust
25 Company and Financial Trust Services Company..
77
1 MS. BURKE: They were all really internal. We did not
2 change who we were.
3 MR. HENDERSHOT: In reference to the will of
4 Laurence C. Westcott. His will is dated December 22, 1998?
5 MS. BURKE: Yes.
6 MR. HENDERSHOT: And the name of Financial Trust
7 Services Company appears on item eight. Is that correct?
8 MS. BURKE: That is correct. Yes.
9 MR. TILEY: Which will was that again?
10 MR. HENDERSHOT: In item eight of Laurence's.
11 MR. TILEY: In Laurence's. Okay.
12 MR. HENDERSHOT: The name Financial Trust
13 Services Company appears in item eight. So that will would have
14 been right in the middle of this period when Keystone would have
15 been in place. Is that correct?
16 MS. BURKE: No. That is not correct. We were
17 Farmers Trust Company. We formed a holding company, Financial
18 Trust Corp. and also Financial Trust Services Company, which was a
19 trust company. It was all the same Farmers Trust Company group
20 that was renamed.
21 MR. HENDERSHOT: I'm trying to understand. In
22 1998 how long the Financial Trust Services Company had been
23 in existence as a name? Could you help me?
24 MS. BURKE: I'm sorry. I cannot give you very
25 specific dates.
78
1 MR. HENDERSHOT: It was sometime after 1998,
2 December 1998, that Financial Trust Services Company became
3 Keystone Financial? Is that correct?
4 MS. BURKE: I would have to say because of the date
5 here, but then there were lots of times that attorneys would still put
6 our name in even when we have changed our name. So without
7 having that chronological order here in front of me, I can't
8 specifically tell you all the dates that we changed. I have that
9 information in the office but not with me.
10 MR. HENDERSHOT: You're fairly clear in thinking
11 that M & T Bank became successor in the Year 2000?
12 MS. BURKE: I believe it was 2000.
13 MR. HENDERSHOT: Do you think Mr. Laurence
14 Westcott had a good relationship with M & T Bank towards the end
15 of his life?
16 MS. BURKE: I do, because I would see Mr. & Mrs.
17 Westcott in the bank. Mr. Westcott also had problems with his
18 sight, and so I usually would talk with him when they came by to go
19 to their safe deposit boxes.
20 MR. HENDERSHOT: When M & T Bank was
21 administering Laurence Westcott's trust, did you serve exclusively
22 as a trustee to make all the discretionary decisions?
23 MS. BURKE: No. We do have a committee that's
24 called the Pennsylvania Administrative Committee, so our
25 discretionary distributions go through that committee on a
79
1 monthly basis.
2 MR. HENDERSHOT: What else does that committee
3 do, other than discretionary distributions?
4 MS. BURKE: Reviewing estates, reviewing,
5 terminating trusts, new business. So it's a broad review of the trust
6 services within our central and western--all of Pennsylvania, really.
7 MR. HENDERSHOT: Can you accept a piece of new
8 business on your own without this trust committee?
9 MS. BURKE: We have a new business committee,
10 where new business is presented to them on a weekly basis. And it's
11 approved at that level and that does include management from
12 Buffalo as well as local.
13 MR. HENDERSHOT: You mentioned Buffalo. You
14 have a connection in administering this trust to Buffalo, New York?
15 MS. BURKE: Buffalo, New York is the corporate
16 headquarters of M & T Bank.
17 MR. HENDERSHOT: And they make the ultimate
18 decisions on trust matters up through the ladder?
19 MS. BURKE: Not necessarily. It depends on what the
20 issue is. On new business, it is a committee that looks at new
21 business and it incorporates not only people out of Buffalo, and
22 private client services, but also in Pennsylvania.
23 MR. HENDERSHOT: You mentioned the new business
24 committee would hear a presentation and then make a decision of
25 some nature?
80
1 MS. BURKE: What we do is we prepare a summary of
2 the new business, which is electronically submitted and then on a
3 Tuesday, every Tuesday morning, there is a new business committee
4 meeting and that information is submitted. Normally if it's clear-cut
5 good business it's just approved. If there are some questions about
6 the type of business it is, what the fees may be on it, that sort of
7 thing, then you may have to go back to them with additional
8 information. But if you prepare your new business requests
9 properly, I've never had anything turned down.
10 MR. HENDERSHOT: Has the Westcott Trust been the
11 subject of a presentation to the new business committee?
12 MS. BURKE: Yes. It has been.
13 MR. HENDERSHOT: When did that occur?
14 MS. BURKE: That occurred prior to our filing our first
15 and final account.
16 MR. HENDERSHOT: And that's in the minutes of
17 meetings?
18 MS. BURKE: Yes, it would be because that was on
19 pending.
20 MR. HENDERSHOT: On what basis was a presentation
21 made to the new business committee that M & T would serve as
22 trustee for the Westcott estate?
23 MS. BURKE: I'm sorry. I didn't get the beginning of
24 your question.
25 MR. HENDERSHOT: Okay. And I think in this
81
1 process we've shifted over from talking about Laurence's, which we
2 started with.
3 MS. BURKE: Okay.
4 MR. HENDERSHOT: But we shifted over to talk about
5 his wife's, Camilla's.
6 MS. BURKE: Okay. So we're now on Camilla?
7 MR. HENDERSHOT: My understanding is that your
8 answer to me was that you were-M & T was willing to serve as
9 trustee of, I'll say husband and wife?
10 MS. BURKE: That is correct.
11 MR. HENDERSHOT: Wife's trust?
12 MS. BURKE: Right.
13 MR. HENDERSHOT: You're saying this occurred
14 before you filed the accounting for wife's estate?
15 MS. BURKE: Yes.
16 MR. HENDERSHOT: Who presented that request?
17 MS. BURKE: I did.
18 MR. HENDERSHOT: You did. Did you set out a
19 schedule of fees and estimate of fees?
20 MS. BURKE: Yes. That's correct.
21 MR. HENDERSHOT: Is that the basis for what you've
22 testified earlier?
23 MS. BURKE: It is.
24 MR. HENDERSHOT: Did your bank approve in new
25 business?
82
1 MS. BURKE: Because they are aware of the issues that
2 were involved and who would be the ultimate trustee, the way that
3 was presented was information, so that they were aware of it, and
4 would be able to say, yes, we will accept this business. They are
5 also aware that I had Mellon Bank shown on the schedule of
6 distribution. They were also aware that Mr. Westcott was going to
7 take objection and file objections to that schedule of distribution, so
8 it was a tentative approval based on the outcome of the auditor's
9 hearing.
10 MR. HENDERSHOT: In your presentation to the bank,
11 did you ever consider the effect of Section 77 and 77 FTPAUTA,
12 which dealt with conflicts of interest and self interest?
13 MS. BURKE: I was at the direction of Mr. Westcott,
14 who expressed an interest in having M & T as trustee.
15 MR. HENDERSHOT: Well, I'm asking, did you ever
16 ask the new business committee whether accepting this in advance of
17 an appointment would constitute a violation of 77 -77?
18 MS. BURKE: This was pending. I wanted to present
19 the facts to them, so that if we were able to - so that I could come
20 here today and say, yes, we could accept this business, if we are
21 appointed as trustee.
22 MR. HENDERSHOT: Are you authorized to
23 accept this business?
24 MS. BURKE: Yes. I am.
25 MR. HENDERSHOT: Did that come from the
83
1 new business committee?
2 MS. BURKE: Yes. It did.
3 MR. HENDERSHOT: Is the work of the new business
4 committee approved by a broader group of M & T? Does it submit
5 its meetings to a regional committee or anyone else?
6 MS. BURKE: It is coming right back to the officers
7 that are the head of our private client services division. They are
8 part of that committee.
9 MR. HENDERSHOT: Why did M & T not file a consent
10 to serve as trustee in the record?
11 MS. BURKE: It was on the advice of our attorney.
12 MR. HENDERSHOT: Was it considered?
13 MS. BURKE: No. I don't believe it was. I can't
14 remember a specific conversation about doing that.
15 MR. HENDERSHOT: When you normally submit a
16 consent to serve as a trustee, who signs it?
17 MS. BURKE: I will sign it.
18 MR. HENDERSHOT: Is it attested?
19 MS. BURKE: Yes. It is.
20 MR. HENDERSHOT: Would you say that your
21 statement on the record here today would be a perfect substitute for
22 a written document, attested by a secretary, saying that the bank
23 is consenting to serve?
24 MS. BURKE: Yes.
25 MR. HENDERSHOT: That consent would have
84
1 been effective when?
2 MS. BURKE: I would have to go back and look at - I
3 don't have the file and date here. I know that it was at least a month
4 before we filed the first and final account.
5 MR. HENDERSHOT: Did you sign the account?
6 MS. BURKE: Yes. I did.
7 MR. HENDERSHOT: Did you disclose to the Court or
8 any beneficiary that M & T had already accepted, consented to
9 accept serving as a successor trustee?
10 MS. BURKE: That was pending the outcome of an
11 auditor's hearing.
12 MR. HENDERSHOT: Well, the question is, was it
13 disclosed, however disclosure would have been made, was it
14 disclosed in the accounting?
15 MS. BURKE: No. It was not.
16 MR. HENDERSHOT: Now, at the start of this line of
17 questioning I asked you about the will of Laurence and how you
18 administer his trust, and you began to talk about the bank's internal
19 structure. Is there any other unusual feature of the administration of
20 Laurence's trust that goes beyond normal bank procedures?
21 MS. BURKE: I'm not sure what you're asking, but I
22 work with an investment officer on the account.
23 MR. HENDERSHOT: I'm talking now about the
24 document that set up the trust. Is there any unusual consents or
25 cooperation that is required beyond the bank's sole
85
1 role?
2 MS. BURKE: Again, I'm not clear on what your
3 question is?
4 MR. HENDERSHOT: Well, I'll be more specific. You
5 referenced Laurence's will and you have it in front of you?
6 MRS. BURKE: Uh-hum. I do.
7 MR. HENDERSHOT: On the bottom of page three,
8 would you begin reading the phrase, in trust nevertheless, and this is
9 after the bequest of the residue to Financial Trust Services
10 Company?
11 MS. BURKE: " In trust, nevertheless, with the
12 stipulation that all sales and purchases of securities in the trust,
13 established hereby must first be approved by my wife, Camilla R.
14 Westcott, as long as she is able to do so, and thereafter by my son,
15 William W. Westcott, as long as he is able to do so."
16 MR. HENDERSHOT: And that's good. Has William
17 Westcott consented to all these sales and purchases of securities in
18 this trust?
19 MS. BURKE: Yes. They have been discussed and they
20 are very familiar with the portfolio and are in agreement with the
21 portfolio.
22 MR. HENDERSHOT: Is that a way of saying you have
23 honored this provision?
24 MS. BURKE: We have honored that provision. Yes sir.
25 MR. HENDERSHOT: Is it fair to say that Bill is
86
1 used to approving these, that he expects to approve any transactions
2 in this trust?
3 MS. BURKE: Right. We always have talked with them
4 before we made changes in that portfolio.
5 MR. HENDERSHOT: Were you here when I read the
6 central points of the restriction in the wife's will to William
7 regarding his involvement in her trust? Were you here when I asked
8 that question?
9 MS. BURKE: Yes.
10 MR. HENDERSHOT: If you could turn to page three of
11 Camilla's will.
12 MS. BURKE: Yes.
13 MR. HENDERSHOT: Would you read the first full
14 paragraph beginning with the words, my said son.
15 MS. BURKE: "My said son is hereby restrained from
16 and is or shall be without right, power and authority to sell, transfer,
17 pledge, mortgage, hypothecate, alienate, anticipate or in any other
18 manner effect or impair his beneficial and legal rights, titles,
19 interest, claims and estates in and to the income and principal of the
20 trust estate during the term hereof, nor shall his rights, titles,
21 interests, claims and estates hereunder be subject to the rights or
22 claims of his creditors nor subject nor liable to any process of law
23 or Court, and all of the income of principal of the trust estate shall
24 be transferable payable and deliverable only solely exclusively and
25 personably to or for my son as provided hereunder at the time
87
1 entitled to take the same under the terms of this trust."
2 MR. HENDERSHOT: What would be your
3 interpretation of that language as to William's involvement in
4 Camilla's estate?
5 MS. BURKE: He is not allowed to pledge this as
6 collateral. His creditors have no rights to this. That would be his
7 extent.
8 MR. HENDERSHOT: Would he be allowed to influence
9 an allocation of income and principal?
10 MS. BURKE: No.
11 MR. HENDERSHOT: So you're saying that your
12 mention of this trust would be different from the other trust?
13 MS. BURKE: To the extent that you're saying that he
14 has no right to pledge this and no input into the securities that
15 would be purchased.
16 MR. HENDERSHOT: Okay. When did you receive a
17 copy of this list of charities that was proposed?
18 MS. BURKE: I'm trying to think. We sat down in a
19 conference room and went down the list. Bill had indicated various
20 charities that both he felt his mother had an interest in and that he
21 did, and we were putting percentages beside that. But it was a list,
22 but it was not a finalized list, and the charities were, they were very
23 varied from preservation groups to humane society groups to
24 the historical society, but it was not a finalized list.
25 MR. HENDERSHOT: Was it signed in any way?
88
1 MS. BURKE: No. It was not.
2 MR. HENDERSHOT: Was it forwarded to anyone, as
3 you received it from Bill, was it forwarded to anyone else?
4 MS. BURKE: No.
5 MR. HENDERSHOT: Was it given to the Attorney
6 General?
7 MS. BURKE: It was not requested.
8 MR. HENDERSHOT: Well, I'm asking, was it given to
9 anyone else?
10 MS. BURKE: No.
11 MR. HENDERSHOT: Was it given to the IRS auditor?
12 MS. BURKE: We had no IRS auditor.
13 MR. HENDERSHOT: Was it submitted with either the
14 Pennsylvania Inheritance Tax or Federal State Tax Return?
15 MS. BURKE: As I stated before, both tax returns were
16 showing a list would be provided with 501c3 charities.
17 MR. HENDERSHOT: Why wasn't it attached to the
18 accounting?
19 MS. BURKE: It was not finalized and it's pertinent to
20 the trust.
21 MR. HENDERSHOT: Is that the same reason it was not
22 sent to Mellon Bank?
23 MS. BURKE: I did not send it to Mellon Bank. You're
24 right.
25 MR. HENDERSHOT: You made a calculation of fees?
89
1 MS. BURKE: Yes.
2 MR. HENDERSHOT: When your bank is making
3 investments, do you use proprietary or nonproprietary mutual funds?
4 MS. BURKE: We will use some proprietary funds if
5 they're appropriate for that particular account.
6 MR. HENDERSHOT: Can you explain for the auditor
7 the difference between proprietary and nonproprietary, in your
8 understanding?
9 MS. BURKE: Yes. Proprietary funds are managed
10 within M & T Bank. Nonproprietary would be outside funds such as
11 Fidelity and other retail type funds that are outside.
12 MR. HENDERSHOT: Does M & T Bank charge fees
13 within its proprietary funds?
14 MS. BURKE: As all mutual funds have internal
15 management fees, yes, there are. That is the reason we do not
16 charge an investment management fee on any assets that are in
17 proprietary funds.
18 MR. HENDERSHOT: So you're saying that your fee
19 schedule would be modified based on whether you picked a
20 proprietary or nonproprietary mutual fund?
21 MS. BURKE: That's correct.
22 MR. HENDERSHOT: And which is the assumption of
23 your fee calculation?
24 MS. BURKE: I did this as though there were no
25 proprietary funds. It is a gross fee.
90
1 MR. HENDERSHOT: When did you become involved
2 in Camilla's estate as administrator?
3 MS. BURKE: Our appointment was June 1, 2005. No.
4 It was June 2. Laurence's was June 1.
5 MR. HENDERSHOT: And when were the death tax
6 returns filed?
7 MS. BURKE: Within nine months of date of death.
8 MR. HENDERSHOT: Now, during those nine months,
9 did M & T Bank explore the option of converting this trust to a
10 charitable remainder uni-trust?
11 MS. BURKE: When you say explore, we did not move
12 forward with Camilla's.
13 MR. HENDERSHOT: Yes.
14 MS. BURKE: There was the question of who was
15 ultimately going to be the trustee involved in that too.
16 MR. HENDERSHOT: Why was that a question?
17 MS. BURKE: Because Commonwealth National was
18 named as trustee, and there was the possibility that M & T may be
19 the trustee.
20 MR. HENDERSHOT: During the nine month
21 period before the filing of the tax returns, you're saying that M & T
22 may very well have been the trustee?
23 MS. BURKE: There were discussions from almost day
24 one with Mr. Westcott, that he wanted M & T to be the trustee,
25 rather than Mellon Bank. I don't how I can make it any clearer.
91
1 MR. HENDERSHOT: What was M & T's response to
2 that?
3 MS. BURKE: That we would be willing to serve if that
4 was his desire.
5 MR. HENDERSHOT: You're saying that M & T Bank
6 did not explore the option of looking at a conversion to a charitable
7 remainder uni-trust because it didn't know who the trustee was
8 going to be?
9 MS. BURKE: We did not explore that. No, we did not.
10 MR. HENDERSHOT: Is there any other reason you did
11 not explore that?
12 MS. BURKE: No.
13 MR. HENDERSHOT: Had M & T Bank conducted with
14 counsel other conversions from a questionable charitable remainder
15 trust into a statutorily authorized charitable remainder uni-trust?
16 MS. BURKE: No, not a questionable issue of a trust, no.
17 MR. HENDERSHOT: Has M & T Bank done that?
18 MS. BURKE: Have we converted to a uni-trust?
19 MR. HENDERSHOT: Yes.
20 MS. BURKE: Yes, we have.
21 MR. HENDERSHOT: Could this one have been
22 converted?
23 MS. BURKE: I would refer to counsel.
24 MR. HENDERSHOT: Did M & T Bank, during those
25 years, consider inquiring into the power to adjust under
92
1 Sections 8104 and 8105 of the Pennsylvania Uniform Trust Act?
2 MS. BURKE: They both have discretionary powers in
3 them. It was reviewed but with discretionary powers you also have
4 leeway.
5 MR. HENDERSHOT: So you're saying that that was
6 reviewed?
7 MS. BURKE: Yes.
8 MR. HENDERSHOT: When this review was going on
9 inside the bank or with counsel, was this, to your knowledge,
10 discussed with Mellon Bank, the nominated trustee?
11 MS. BURKE: No, did not. We keep going back and
12 forth between these two estates, so I want to be sure which one
13 we're talking about. And I'm assuming it's Camilla?
14 MR. TILEY: I think that's correct. Is that correct,
15 we're talking about the Camilla trust and estate?
16 MR. HENDERSHOT: We're talking about Camilla.
17 And referring now to add to the confusion, referring now to
18 Laurence's will. How quickly was that residue funded?
19 MR. TILEY: I'm sorry?
20 MR. HENDERSHOT: How quickly was the residue of
21 Laurence's estate funded into the trust at M & T?
22 MS. BURKE: I'm trying to remember when the
23 administration was completed and that was funded. I have that.
24 Laurence Westcott's trust was established May 4 of '06.
25 MR. HENDERSHOT: And whom was it transferred
93
1 to as trustee?
2 MS. BURKE: M & T Bank.
3 MR. HENDERSHOT: Did you file a petition with the
4 Court to do that?
5 MS. BURKE: We filed a first and final account with
6 scheduled proposed distribution, which was approved by the Courts.
7 MR. HENDERSHOT: Tell me, if you recall, how you
8 styled that distribution clause to the residuary trust? How did it
9 read from memory?
10 MS. BURKE: You'll have to remember that this was
11 more than a year ago that we did this.
12 MR.HENDERSHOT: I understand.
13 MS. BURKE: It was picking up the language from the
14 will saying that it was established under the terms of the will of
15 Laurence E. Westcott for the benefit of William Westcott.
16 MR. HENDERSHOT: How did you get over the
17 problem that it named Financial Trust Services Company as
18 trustee?
19 MS. BURKE: Because the Orphans' Court here has a
20 resolution showing that succession of names, so even they put on
21 our letters that it was M & T Bank. So they acknowledged and
22 understand that we've changed.
23 MR. HENDERSHOT: You say it's a non-issue almost?
24 MS. BURKE: There's a resolution in the Orphans'
25 Court who we are through successions.
94
1 MR. HENDERSHOT: So it's your testimony that
2 there's not a legal issue there, that M & T is the successor to
3 Financial Trust Services Company?
4 MS. BURKE: That is correct.
5 MR. HENDERSHOT: And yet, iCs a legal issue in your
6 mind, when Mellon Bank is successor to Commonwealth National
7 Bank. Can you explain the discrepancy?
8 MS. BURKE: I don't know if it's the name that is the
9 issue.
10 MR. HENDERSHOT: In the accounting, which you
11 signed, you named Mellon Bank to receive this trust. Correct?
12 MS. BURKE: Because you are the successor to
13 Commonwealth National.
14 MR. HENDERSHOT: Did you disclose, in the
15 accounting, that M & T had already accepted as new business this
16 trust?
17 MS. BURKE: It was not accepted. It was discussed,
18 so that we knew that if there was an auditor's hearing, could I today
19 say, yes, we would accept it.
20 MR. HENDERSHOT: And you don't see that as a
21 conflict of interest?
22 MS. BURKE: I did not.
23 MR. HENDERSHOT: How do you communicate mainly
24 with Bill?
25 MS. BURKE: When they are in town we visit
95
1 with them, have meetings, bye-mail, and also by telephone.
2 MR. HENDERSHOT: Would you say mostly bye-mail
3 and mostly by telephone, that's effective?
4 MR. BURKE: In between their visits here in Carlisle,
5 yes.
6 MR. HENDERSHOT: Did Angie Thompson or anyone
7 else from Mellon attempt to contact you about Camilla's estate and
8 the trust?
9 MS. BURKE: No. Now we had correspondence.
10 MR. HENDERSHOT: Contact is generic, e-mail,
11 voicemail, conversations, and correspondence?
12 MS. BURKE: There was correspondence from a Mr.
13 Fields, I believe the name was.
14 MR. HENDERSHOT: Can you tell me about your
15 response to the correspondence?
16 MS. BURKE: That correspondence was handled by Mr.
17 Morgenthal. I'm backtracking. It was Mr. Bell.
18 MR. HENDERSHOT: Did you initiate any contact with
19 the folks at Mellon Bank?
20 MS. BURKE: At the very outset, I had talked with a
21 Mark Roda, R-o-d-a, in your Harrisburg office, and he received
22 notice when we advertised our letters, and he was also shown on the
23 certification of notice to the Orphans' Court.
24 MR. HENDERSHOT: And he was given notice why?
25 MS. BURKE: Because of Commonwealth
96
1 National's name being in the body of Camilla Westcott's will. So
2 we needed to give notice. Mark Roda then referred me to a Joseph
3 E. Bell in Philadelphia, and that's who Roger corresponded with
4 going forward, until he had us correspond with a Scott Small, who
5 tried to do the search, finding either a will or the list of charities,
6 and then on down. Mr. Bell turned that over to another individual
7 later. So I mean there was a sequence of communications that were
8 sent to various folks that we were directed to.
9 MR. HENDERSHOT: Does Mr. Morgenthal represent
10 Dauphin Deposit Bank on other matters?
11 MS. BURKE: I wouldn't know that.
12 MR. HENDERSHOT: Do you know if he represents Bill
13 individually?
14 MS. BURKE: He is representing the estates.
15 MR. HENDERSHOT: Does he represent Bill
16 individually, that you know of?
17 MS. BURKE: Mr. Westcott has retained Mr. Otto
18 to represent him.
19 MR. HENDERSHOT: So your understanding was that
20 Roger was representing the estate throughout this, not William?
21 MS. BURKE: Yes.
22 MR. HENDERSHOT: What is the present status of the
23 funds that are earmarked to go to the trust, Camilla's trust?
24 MS. BURKE: Current status?
25 MR. HENDERSHOT: Yes. Are they being invested?
97
1 MS. BURKE: Yes. They are invested.
2 MR. HENDERSHOT: And, generally, if you know,
3 how?
4 MS. BURKE: I did have a portfolio. There are common
5 stocks. You have the Court accounting, and basically you can see.
6 MR. HENDERSHOT: Maintaining status quo?
7 MS. BURKE: Right.
8 MR. HENDERSHOT: And how is Laurence' trust being
9 invested?
10 MS. BURKE: Is that pertinent to the question on
11 Camilla's estate?
12 MR. HENDERSHOT: My question is, you had indicated
13 a coordination of investment--
14 MS. BURKE: We don't have a trust. It's in an estate
15 not in a trust.
16 MR. HENDERSHOT: The estate is invested in status
17 quo, as indicated?
18 MS. BURKE: That's correct.
19 MR. HENDERSHOT: Laurence's trust is in what,
20 mainly in mutual funds?
21 MS. BURKE: Basically in mutual funds.
22 MR. MORGENTHAL: Mr. Auditor, I'm going to object
23 into going into the details of the administration of the trust. I
24 believe confidentiality is involved here and it is not relevant to this.
25 I think it's fine for Mr. Hendershot to question how
98
1 Camilla Westcott's funds might be invested, but I think what's being
2 done with Laurence's is private.
3 MR. HENDERSHOT: I would accept a stipulation that
4 the operation of Laurence's trust is irrelevant to the operation of
5 Camilla's trust including this issue.
6 MR. TILEY: I'm not sure what you're trying to
7 accomplish by suggesting a stipulation instead of answering.
8 MR. HENDERSHOT: It's being suggested that there is
9 coordinating, these two trusts.
10 MR. MORGENTHAL: There would be coordination.
11 MR. HENDERSHOT: Would be. And yet when we ask
12 about details, we're told we can't. And we are in a removal process
13 of a trustee, and I think what shows are that the nominated trustee of
14 the testatrix is placed at a significant disadvantage and has been
15 despite inquiries.
16 MR. OTTO: I would regard the stipulation as offered as
17 being facetious and if not I disagree with it.
18 MR. TILEY: I tend to think it's relevant. I am
19 concerned with the privacy issue. I think the issue has been raised.
20 MR. OTTO: If I might, Mr. Tiley. The issue was raised
21 in the context of the fact that these trusts would be well
22 administered if they were coordinated in the future. How Laurence
23 Wescott's trust is being invested today is not relevant to that. How
24 it will be invested is and Mr. Hendershot might profitably speak to
25 Ms. Burke about that, but its current investment assumes that it's
99
1 a stand-alone.
2 MR. TILEY: Well, I don't think it's a critical issue. I
3 will sustain the objection because of the privacy issue. I may
4 reconsider that.
5 MR. HENDERSHOT: Jane, what's your view of the
6 capability of Mellon Bank to administer a trust?
7 MS. BURKE: I have no personal contact or
8 understanding working with someone that has a trust at Mellon, so I
9 really don't think I'm in a position to answer that question.
10 MR. HENDERSHOT: Do you think they're incapable of
11 managing?
12 MS. BURKE: I did not say that.
13 MR. HENDERSHOT: I'm asking you, do you think
14 they're not capable of administering Camilla's trust?
15 MS. BURKE: I would say they're capable of
16 administering it. I would have no way to say, no, that they aren't.
17 MR. HENDERSHOT: Is it fair to say that M & T
18 would not have nominated Mellon Bank in a Court filed accounting,
19 if it believed that M & T would not perform? In other words, you
20 made the nomination in your Court pleading?
21 MS. BURKE: Based on?
22 MR. OTTO: I'm going object to that. That's a
23 mischaracterization of the document. The document names the
24 trustee; the bank, M & T, nominated no one.
25 MR. TILEY: I think he can ask the question. I think
100
1 he misspoke in asking the question.
2 MR. HENDERSHOT: I think I did too, confused
3 myself. What I'm saying is, in making the nomination of Mellon
4 Bank, did M & T have any reservations about doing that?
5 MS. BURKE: We put the name of Mellon Bank on the
6 schedule of distribution because that is what was indicated in
7 Camilla Westcott's will. That is the reason it was on the schedule
8 of distribution.
9 MR. HENDERSHOT: I think that's all.
10 MR. TILEY: Mr. Morgenthal?
11 MR. MORGENTHAL: Just one or two questions.
12 CROSS EXAMINATION
13 MR. MORGENTHAL: Ms. Burke, you, of course, were
14 aware at an early time in the administration of Camilla's estate that
15 Mr. Wescott desired that M & T be the trustee for that estate, when
16 it was completed?
17 MS. BURKE: He indicated that to us early on, when
18 we began working with him with his father's estate and his mother's
19 estate.
20 MR. MORGENTHAL: But being aware of that, was
21 there any hesitation or discussion or anything else at the time of
22 preparing the first and final account and the statement of proposed
23 distribution that M & T would substitute itself for Mellon?
24 MS. BURKE: There was that discussion and it was
25 decided to proceed and file the account in accordance with the
101
1 will and then it was up to Mr. Wescott if he wanted to object to that.
2 MR. MORGENTHAL: Thank you. That's all I have.
3 MR. TILEY: Redirect?
4 MR. OTTO: I need a minute, if I may.
5 MR. TILEY: Sure.
6 REDIRECT EXAMINATION
7 MR. OTTO: Ms. Burke, in response to several
8 questions Mr. Hendershot asked you, describe generally your contact
9 with Mellon throughout the process; how many individuals at
10 Mellon did you deal with personally, not through Mr. Morgenthal?
11 MS. BURKE: It was Mr. Roda at the very beginning.
12 MR. OTTO: Where was he?
13 MS. BURKE: He was in Harrisburg on North Second
14 Street.
15 MR. OTTO: How did you determine that he would be
16 the one you would endeavor to correspond with?
17 MS. BURKE: I made a phone call to an office
18 in Harrisburg trying to find the name of a person so we could give
19 notice.
20 MR. OTTO: Why Harrisburg? Why did you call there?
21 MS. BURKE: Well, I thought I would start as locally as
22 I could.
23 MR. OTTO: That's as close as you could get?
24 MS. BURKE: That's as close as I could get. And I
25 spoke with Mr. Roda. He was given-I actually sent
102
lout certification of notice under Rule 5.6 and he was also copied on
2 our notice to the Orphans' Court that we were appointed
3 administrator CT A of the estate.
4 MR. OTTO: Now Mr. Roda, in Harrisburg, referred you
5 somewhere else then?
6 MS. BURKE: Right. And he referred us to a Mr. Bell,
7 and Roger began corresponding with him in January of '06.
8 MR. OTTO: Why did Roger Morgenthal correspond
9 with Mr. Bell, why didn't you?
10 MS. BURKE: The correspondence was going back and
11 forth between Mr. Bell.
12 MR. OTTO: Was Mr. Bell a lawyer?
13 MS. BURKE: I believe he is. Yes.
14 MR. OTTO: Still with Mellon, do you know?
15 MS. BURKE: I do not believe so. I think we found out
16 just recently that Mr. Rowe had replaced him, so we were directed to
17 give additional information to Mr. Rowe.
18 MR. OTTO: And did Mr. Bell refer you to anybody you
19 know of personally, not Mr. Morgenthal?
20 MS. BURKE: Personally, no.
21 MR. OTTO: So your personal knowledge of the
22 communications ends with Mr. Bell?
23 MS. BURKE: That's correct.
24 MR. OTTO: Okay. Mr. Hendershot asked you a
25 question about a conversion, and I think we may have had
103
1 some confusion about what we were talking about.
2 MS. BURKE: Okay.
3 MR. OTTO: What do you understand a conversion to
4 be?
5 MS. BURKE: If we are trustee, we do have the right to
6 convert a testamentary trust into a charitable trust.
7 MR. OTTO: All right. Is there also another conversion
8 that allows you to convert a trust that's cashed in traditional income
9 terms into a uni-trust?
10 MS. BURKE: Right. The Principal and Income Act
11 would allow us also to ...
12 MR. OTTO: Also allows you to adjust, does it not?
13 MS. BURKE: It adjusts on an annual basis. That's
14 correct.
15 MR. OTTO: An adjustment is what process?
16 MS. BURKE: It is looked at each year by the trustee.
17 We look at past performance and try to project future performance,
18 basically, to come up with a payout that is fixed for the
19 upcoming year.
20 MR. OTTO: You're adjusting the payout rate being
21 presented as percentage of principal?
22 MS. BURKE: That's correct.
23 MR. OTTO: You can also reallocate principal and
24 income with adjustment?
25 MS. BURKE: That is correct.
104
1 MR. OTTO: The trust under both wills, Laurence's and
2 Camilla's. I'm not asking you for a legal opinion, but based on your
3 experience do they appear to you to be properly constructed
4 charitable remainder trusts that would be due a deduction for estate
5 tax purposes?
6 MS. BURKE: They are not.
7 MR. OTTO: Nevertheless, was an estate tax deduction
8 permitted by the Internal Revenue Service in Camilla's?
9 MS. BURKE: It was, yes.
10 MR. OTTO: Was Laurence's federal?
11 MS. BURKE: No.
12 MR. OTTO: It didn't matter there then, did it?
13 MS. BURKE: No.
14 MR. OTTO: Were you surprised the IRS permitted the
15 deduction?
16 MS. BURKE: Absolutely. We paid the tax in full.
17 MR. OTTO: And they gave it back?
18 MS. BURKE: We filed for a possible extension and we
19 received six hundred plus thousand back as a refund.
20 MR. OTTO: A refund?
21 MS. BURKE: Without an audit.
22 MR. OTTO: Without an audit. And the fact that the
23 IRS accepted it and gave you a deduction, did that influence your
24 thinking about whether wanting to try to recast it as a properly
25 constructed trust?
105
1 MS. BURKE: The thought was there, but we didn't
2 proceed with it.
3 MR. OTTO: Thought it might be better to let well
4 enough alone?
5 MS. BURKE: Yes.
6 MR. OTTO: Thank you.
7 RECROSS EXAMINATION
8 MR. HENDERSHOT: Do I understand that you viewed
9 this as a charitable remainder trust in Camilla's will?
10 MS. BURKE: When we filed the tax returns we did
11 calculate Mr. Wescott's life estate and we treated it as a charitable.
12 MR. HENDERSHOT: Could you explain to me your
13 comment that you sent some money to the IRS and they refunded it?
14 Did you not claim a charitable deduction?
15 MS. BURKE: We did, but we filed for an extension. I
16 have to go back and say we filed within nine months. It was a little
17 longer than that, but when we actually prepared the tax returns
18 that's when we put the charitable in.
19 MR. HENDERSHOT: Was there any discussion
20 about reaffirmation of the trust in anticipation of filing?
21 MS. BURKE: No.
22 MR. HENDERSHOT: And you're saying you're
23 surprised that they accepted it?
24 MS. BURKE: Especially when Pennsylvania did not.
25 MR. HENDERSHOT: During this whole process
106
1 did you communicate with Mellon Bank, the named trustee, of the
2 residuary trust?
3 MS. BURKE: No, we didn't. I did not.
4 MR. HENDERSHOT: Did you volunteer to appear here
5 today?
6 MS. BURKE: Yes.
MR. HENDERSHOT: Yes. You're not under any
7
8 subpoena?
9
10
11
12
13
14
15
16 the record.
MS. BURKE: No.
MR. HENDERSHOT: That's all the questions I have.
MR. TILEY: Mr. Morgenthal?
MR. MORGENTHAL: Nothing else.
MR. TILEY: Mr. Otto?
MR. OTTO: Nothing.
MR. TILEY: I have a couple questions just to clarify
17 You paid the tax in the Camilla trust when you filed for an
18 extension within nine months?
19 MS. BURKE: That is correct.
20 MR. TILEY: And you paid based on no charitable
21 remainder trust at that time?
22 MS. BURKE: At that time.
23 MR. TILEY: And then thereafter you decided to file as
24 a charitable remainder trust and did so?
25 MS. BURKE: That's correct.
107
1 MR. TILEY: And received?
2 MS. BURKE: Yes.
3 MR. TILEY: Have you filed any accounting in the
4 Laurence trust?
5 MS. BURKE: In the Laurence Wescott trust?
6 MR. TILEY: That's correct.
7 MS. BURKE: No.
8 MR. HENDERSHOT: Did you mean estate? \
9 MR. TILEY: I meant the trust. I was getting to the
10 privacy issue on that. You talked about the investment in the
11 different funds, and mutual funds in a trust, and you indicated that
12 there would be no investment management practice fees; I think is
13 what you called it. There would be no fees, if you had one trust, the
14 other trust, or both trusts, or does it make a difference if you have
15 both trusts?
16 MS. BURKE: Any proprietary funds that are used in a
17 trust, it doesn't matter if they're together or apart, the investment
18 management portion of our fee is not charged on anything that is
19 a proprietary fund.
20 MR. TILEY: To your knowledge, is the invasion of
21 principal, provision for the benefit of William Westcott, in only one
22 of the two trusts, or is it in both trusts?
23 MS. BURKE: It's in both trusts. In Camilla's it's at
24 the bottom of page two. And it states, "The trustee from time to
25 time, at its sole discretion, may use so much of principal as it
108
1 deems necessary for the health, support, maintenance and general
2 welfare of my said son, William W. Wescott, either by payment
3 directly to him or for his benefit."
4 MR. TILEY: Have there been any invasions of
5 principal in the Laurence trust for William?
6 MS. BURKE: Yes.
7 MR. TILEY: Do my questions give rise to anymore
8 from any of you, gentlemen?
9 MR. MORGENTHAL: No.
10 MR. OTTO: None from me. Thank you.
11 MR. HENDERSHOT: No.
12 MR. TILEY: There being none, you may step down.
13 Now, Mr. Otto, two exhibits, are they being marked?
14 MR. OTTO: Yes. I'm sorry, I neglected to do that. If
15 the stenographer will mark those.
16 (Whereupon, Objector Exhibits I-Laurence and 2-
17 Camilla were marked for identification.)
18 MR. TILEY: Any objection to the admission
19 of Objectants' 1 and 2?
20 MR. HENDERSHOT: No.
21 MR. MORGENTHAL: No objection.
22 MR. TILEY: They're admitted.
23 (Whereupon, Objector Exhibits 1 and 2 were admitted
24 into the record.)
25 MR. TILEY: Do you have anything further?
109
1 MR. OTTO : Well, I had not intended to do this but
2 given what has come up, I need Mr. Morgentha1 for a minute or two.
3 MR. TILEY: Okay. The time is 12:12. Mr.
4 Hendershot, do you have, I presume, witnesses?
5 MR. HENDERSHOT: We've lost one. We have two
6 remaining. One had to go to a business meeting so Les Brant will
7 not be testifying.
8 MR. TILEY: We would have taken him out of order.
9 I don't care. Do you want to break for lunch? I don't know what
10 timeframe. I gather yours is fairly short?
11 MR. OTTO: Yes.
12 MR. TILEY: I don't know what you're anticipating.
13 Do you want to keep going? Do you want to take a break?
14 MR. HENDERSHOT: I would take a ten-minute break.
15 I don't need to stop for lunch.
16 MR. OTTO: Neither do I.
17 MR. HENDERSHOT: Rather resolve it today.
18 MR. OTTO: How long do you think? I realize it's very
19 difficult.
20 (Off the record discussion.)
21 MR. TILEY: Back on the record. First of all, we'll
22 finish today. I don't care what time it is today or tonight, we're
23 going to finish this hearing today. And in that case, let's take-
24 MR. HENDERSHOT: Reconvene at one gives
25 everybody enough time.
no
1
2
3 p.m.)
4
5 witness.
6
MR. TILEY: Reconvene at one p.m.
(Recessed at 12:20 p.m. for lunch. Reconvened at 1 :00
MR. OTTO: I'm proposing to call Mr. Morgenthal as a
MR. HENDERSHOT: And I object. I object because
7 there was no pre-notice given. We filed what effectively was a pre-
8 trial memo listing our witnesses and I think it should have been
9 listed there. That would have been cause for a second objection,
10 which is he's been participating as counsel throughout this morning.
11 He has read all of the pre-hearing legal pleadings. He has looked at
12 the cases and now he's being called, after participating in all of that,
13 and being given the opportunity to file things, he is now being
14 called as a witness on a fact basis. I would object on that basis.
15 MR. OTTO: Shall I make an offer, would that help?
16 MR. TILEY: I don't have a problem with it,
17 two reasons. And I'm getting like a judge. I'm going to wax a little
18 bit here. First, I don't think there was any requirement in a pre-
19 hearing but I would have thrown it in too. That's fine. Ironically,
20 six months after I was out of law school in this very room, my very
21 first hearing was with my uncle, Bob Frey, and it was in regard to a
22 failed real estate transaction. And one of the research questions was
23 whether I could have my uncle testify and I represented him. And
24 when I researched that, some twenty some odd years ago, the
25 conflict was wavable by the client, and I doubt if that has changed
111
1 since then. I think if his client waves it, I think he can testify. I
2 think that's the technical answer. I wouldn't have known that but
3 for that experience.
4 MR. HENDERSHOT: I'm not focusing on the technical
5 responsibility. His client can do that. That's fine. I'm saying that
6 we have heard testimony from the trustee, which is the principle,
7 and I think testimony from counsel is not necessary. I think we
8 were not given fair notice of it, and I think that as active counsel all
9 the way through this proceeding it is far different than reflecting on
10 testimony that occurred in a transaction in the past. This is a
11 removal proceeding that should focus on Mellon, and I don't see
12 how this testimony would be helpful, but to the extent you want to
13 talk about specifics.
14 MR. OTTO: Let me make an offer and perhaps we can
15 move the ball forward. There has been testimony introduced, with
16 all due respect, to the impugning of M & T's failure to communicate
17 with Mellon. I've examined Ms. Burke with respect to her
18 communication with Mellon. I now propose to examine Mr.
19 Morgenthal, with respect to his communications with Mellon, on
20 behalf of M & T. That is the sole reason for my calling him.
21 MR. TILEY: And really I think you know you put that
22 In. That issue was raised by you and I think they have the right to
23 answer it. There have been a lot of questions here. I maybe saw the
24 copy of the letter Mr. Morgenthalu
25 MR. HENDERSHOT: You can make your ruling,
112
1 and I'll abide.
2 MR. TILEY: I think it's allowable testimony.
3 You do not need to be sworn in. You're an officer of the
4 court.
5 MR. MORGENTHAL: All right.
6 (Off the record discussion.)
7
8 Whereupon,
9 ROGER M. MORGENTHAL
10 Having been called to testify, being an officer of the court, testified
11 as follows:
12 DIRECT EXAMINATION
13 MR. OTTO: Mr. Morgenthal, would you state your
14 name and address for the record, please?
15 MR. MORGENTHAL: Yes. Roger M. Morgenthal, and
16 my office address in Harrisburg is 2515 North Front Street,
17 Harrisburg, 17110.
18 MR. OTTO: Mr. Morgenthal, in what connection
19 do you have some relationship to this matter?
20 MR. MORGENTHAL: My involvement here is as
21 attorney for M & T Bank in its capacity as administrator CT A of the
22 Camilla Westcott estate.
23 MR. OTTO: And during the course of your
24 representation of M & T, with respect to the Camilla Westcott
25 estate, did you have occasion to correspond, using the term
113
1 broadly, as has been suggested earlier with Mellon Bank?
2 MR. MORGENTHAL: Yes I did. Initially, and this is
3 right at the beginning of the estate; we needed to try to find that list
4 referred to in Mrs. Westcott's will. And I recalled from my prior
5 practice-I'd been in practice in Carlisle since 1974-that it was
6 customary for attorneys, including me and others in my office, to
7 take a signed document, a will or something else, to the
8 Commonwealth National Bank Office in Carlisle where they would
9 retain it until such time as it was needed. And I knew, of course,
10 that there was no longer a trust office here, in the sense that there
11 was one in 1978.
12 So the first thing I did was contact the former Commonwealth
13 employee, Robert Reitzel. He was the trust officer in residence, I
14 believe, at the time Mrs. Westcott made that will. And I wanted to
15 see if he knew where, in the Mellon organization, this might have
16 gone before he left. I wasn't able to learn anything from him. So
17 based on what Mrs. Burke had found out, from speaking with Mellon
18 employees, I contacted Joseph Bell, Jr., an in-house counsel
19 for Mellon in Philadelphia.
20 MR. OTTO: Let me stop you there, if I could, Mr.
21 Morgenthal. How is it that you came by Mr. Bell's name and
22 contact information?
23 MR. MORGENTHAL: Through Mrs. Burke.
24 MR. OTTO: All right.
25 MR. MORGENTHAL: First I wrote to him and
114
1 after that we had emails. I asked him to try to locate this will, if
2 they had any idea where files from Carlisle's office may have gone.
3 He referred it to a Mr. Small, Stuart Small. I think his last name
4 was Small. And eventually we heard back from him through Mr.
5 Bell that they were not able to locate the list.
6 Subsequent to that, I had numerous contacts with Mr. Bell,
7 particularly with regard to whether the lack of the list meant that the
8 trust would fail, or whether some part, some application of Cy pres
9 doctrine could be made.
10 MR. OTTO: Let's clarify something. Mr. Bell is in-
11 house counsel for Mellon?
12 MR. MORGENTHAL: For Mellon Bank. He is a
13 member of the Pennsylvania Bar. He is employed or was employed
14 at that time by Mellon.
15 MR. OTTO: And please continue the substance of your
16 conversations with him, among other things were?
17 MR. MORGENTHAL: Well, at that point, we went back
18 and forth about what the effect was of not having a list. And
19 there was some discussion initiated by me as to whether, if this was
20 a failed trust, whether Mellon would either join with us in a
21 declaratory judgment petition to the Court to have this clarified or,
22 in lieu of that, if Mellon Bank, at that point, would renounce the
23 trust, and let us just go ahead and settle things here.
24 I heard back from Mr. Bell. I have an email here I just
25 located, dated 5/18/2006, saying that he believes Mellon
115
1 should serve as trustee and indicated there had been a contact with
2 the Attorney General's Office leading to what we eventually came
3 up with, that there had to be a charitable provision.
4 And then, from that point on, there was mainly
5 communications from time to time as to the status of the
6 administration of the estate. And then finally in July of 2007, I
7 ended up preparing a letter to Mr. Bell conveying, first of all, that I
8 was representing M & T, but secondly that there was a request being
9 made by Bill Westcott that M & T and not Mellon become the
10 trustee. And I appended to that letter a copy of Bill's letter dated
11 June 1, 2006, in which he explained his reasons there had been some
12 reference to that today.
13 MR. OTTO: Let me just interrupt you there. Had you
14 discussed with Mr. Bell, prior to your letter of July 9, 2007, Mr.
15 Wescott's desire?
16 MR. MORGENTHAL: On numerous occasions.
17 Obviously I couldn't speak for Mr. Westcott, but I told him that we
18 understood that there was a strong desire that Mellon
19 resign, renounce in favor of M & T, which was the beneficiary of
20 choice.
21 (Document handed to Auditor.)
22 MR. OTTO: Your letter of July 9. And, I wonder if we
23 might have an extra copy or two of that? We can have you
24 authenticate it and have it marked as Objector 3. Mr. Hendershot
25 has the letter.
116
1 (Whereupon, Objector Exhibit 3 was marked for
2 identification.)
3 MR. MORGENTHAL: Yes. I examined this, and this is
4 an authentic copy, and with a letter from Mr . Wescott appended,
5 that's how it was sent to Mr. Bell.
6 MR. OTTO: This memorialized conversation you
7 believe you had with Mr. Bell prior to this time?
8 MR. MORGENTHAL: Yes. And each time we would
9 have a discussion, Mr. Bell would say, how much is going to be in
10 the trust? We want to know what the trust is, and of course, until
11 the accounting was really prepared that was something we couldn't
12 say.
13 MR. OTTO: Did you ever discuss, in general terms, the
14 size of the trust and its provision with him?
15 MR. MORGENTHAL: Yes. I think, at the time that the
16 inheritance and estate tax returns were filed. I don't know that he
17 requested a copy but one certainly would have been available had
18 hen And I told him what the amounts were, what the bottom lines
19 were after the closing letters were received in each case.
20 MR. OTTO: When were those letters received, if you
21 recall?
22 MR. MORGENTHAL: They went to M & T and I had
23 secondary notification from that. I don't have copies or personal
24 knowledge of the exact date that was.
25 MR. OTTO: Were the returns provided to Mellon?
117
1 MR. MORGENTHAL: I don't know if they were or not.
2 MR. OTTO: Not by you. You did not provide them?
3 MR. MORGENTHAL: I did not.
4 MR. OTTO: Did they ever ask you for them?
5 MR. MORGENTHAL: Never asked me.
6 MR. OTTO: Did they ever ask you for anything?
7 MR. MORGENTHAL: The only thing they asked for
8 was a statement as to the size of the trust, when it would be funded.
9 That request was made last spring.
10 MR. OTTO: When do you believe you first talked with
11 Mr. Bell?
12 MR. MORGENTHAL: One email I had, the earliest one
13 I happen to have in my file, goes back to May of 2000. No, excuse
14 me; I have an email here discussing this list and trying to find it,
15 going back to February 1, 2006. And there may have been
16 something earlier than that.
17 MR. OTTO: And did you inform them that they were
18 the trustee under this will?
19 MR. MORGENTHAL: Oh yes. They were notified, of
20 course, the M & T sent out the notice to them that they were the
21 trustee, and I communicated with them in that sense throughout.
22 MR. OTTO: Did you ever hear back from Mr. Bell on
23 the request for their preemptive resignation?
24 MR. MORGENTHAL: I did not hear back from him that
25 I recall, but I believe I heard from Mr. Rowe, a letter saying
118
1 or someone communicated to me that Mr. Bell had retired, and that
2 they wanted to be the trustee and they were not going to step aside.
3 MR. OTTO: Can you put that in a timeframe?
4 MR. MORGENTHAL: Sometime after July 9th, I'm
5 going to say probably August 2007.
6 MR. OTTO: Prior to filing the account?
7 MR. MORGENTHAL: Probably pretty close
8 contemporaneous with that, maybe shortly thereafter.
9 MR. OTTO: That's all I have.
10 CROSS EXAMINATION
11 MR. HENDERSHOT: Do I understand your testimony,
12 Roger, the first time you heard Mellon Bank say they're not going to
13 resign as trustee was August 2007?
14 MR. MORGENTHAL: No. Actually the first time was
15 in an email from Mr. Bell to me dating back in 5/18/2006, where he
16 said, Roger, we believe that we should serve as trustee. So that
17 would be the first, I'm sure.
18 MR. HENDERSHOT: Okay. I was going to introduce
19 these through Angie as a business record of Mellon, but I guess I'm
20 providing this to you both as counsel and a witness.
21 (Document handed to Auditor.)
22 MR. HENDERSHOT: Perhaps you can authenticate this
23 as well?
24 MR. TILEY: Mellon I?
25 MR. HENDERSHOT: This can be marked as
119
lour Exhibit 1.
2 (Whereupon, Mellon Exhibit 1 was marked for
3 identification.)
4 MR. HENDERSHOT: I'd like you to take a moment and
5 read from the back forward through this email exchange. It may
6 take a little while.
7 MR. MORGENTHAL: Do you want me to read aloud?
8 MR. HENDERSHOT: No. Review it on the stand. Take
9 your time reviewing it.
10 MR. MORGENTHAL: (Witness complied with request.)
11 Okay. I think I reviewed that.
12 MR. HENDERSHOT: Well first, would you agree that
13 this is an accurate depiction of email exchanges?
14 MR. MORGENTHAL: Yes. I would. It's not all of the
15 email, by any means, but it is an accurate depiction of what's
16 included.
17 MR. HENDERSHOT: And you're also confirming that
18 you wrote the responses attributable to you on behalf of the estate?
19 MR. MORGENTHAL: That's correct. Yes.
20 MR. HENDERSHOT: On February 1 st, this is the
21 second to the last page at the bottom, you were stating to
22 Mellon Bank, "In view of the fact that without the list of charities
23 the trust would fail because of the son's death, because after the
24 son's death there would be a complete intestacy, as he is the last of
25 kin to survive." Would you stand by that statement today?
120
1 MR. MORGENTHAL: Probably not, in view of the
2 discussions we had later with the Attorney General's Office. At the
3 time, I had found some old cases. There are really very few where
4 this kind of situation had existed. But the only cases that I had
5 found, to that point, indicated that the Cy pres doctrine would not be
6 broad enough without further indication of the testators' intentions
7 to just pick out charities in a vacuum. And I think Mr. Bell agreed
8 with me, at that point, for a while.
9 And then later, toward the front, first page, he indicates on
10 May 18th that he had spoken with the local Assistant Attorney
11 General. And, after that point, I got into serious discussions with the
12 Charitable Division of the AG's Office in Harrisburg and decided
13 that that would be the best course to pursue. In other words, letting
14 Mr. Westcott have the ability to suggest the beneficiaries after his
15 death.
16 MR. HENDERSHOT: Now skipping a sentence, at the
17 very last sentence on that same page. You said, "I believe it would
18 be appropriate for Mellon Bank to agree to renounce the
19 appointment as trustee, which would allow us to proceed without
20 having to inconvenience Mellon with pleadings and other paperwork
21 as part of our request that the Court declare that the fifth
22 paragraph in decedent's will, which does not require a trustee,
23 controls the residuary distribution." Why were you saying, I
24 believe? There's no reference here to Bill.
25 MR. MORGENTHAL: Well, if you look at the
121
1 very next email from Mr. Bell to me dated January 27th, he said,
2 "We may want to renounce as trustee. Thank you, Jeb." So I was
3 kind of echoing that. Not kind of, I was echoing that.
4 MR. HENDERSHOT: Now, as it finally stood in this
5 exchange of emails, why don't you count for me the number of
6 emails that were exchanged from the back forward.
7 MR. MORGENTHAL: One, two, three, four. I counted
8 six.
9 MR. HENDERSHOT: And after the exchange of those
10 six emails that began on January 27, 2006, and ended with you on
11 May thel9th, did you send any more emails to Jeb about these
12 issues?
13 MR. MORGENTHAL: Not about these issues. I'm sure
14 that I sent other ones or communicated in some way. We also used
15 the telephone just about where things were going and what the
16 progress of the estate was. I may have those still on my computer.
17 I'm not sure if I do or not.
18 MR. HENDERSHOT: Would you understand that
19 Mellon would be awaiting your response when you said on May 19th,
20 you saying to Mellon, "I'll discuss this with the executor and the
21 decedent's son. We may be able to come up with a plan using select
22 charities."?
23 MR. MORGENTHAL: Yes. That was communicated.
24 I'm sure Mr. Bell and I discussed the fact that we agreed with that,
25 with the AG's office, we reached a solution.
122
1 MR. HENDERSHOT: Did you also acknowledge on
2 May 19th, Jeb's words to you, "Look forward to talking with you."?
3 MR. MORGENTHAL: Yes, I think that's exactly what
4 we did.
5 MR. HENDERSHOT: On July 9, 2007, you wrote a
6 letter to Jeb?
7 MR. MORGENTHAL: Yes.
8 MR. HENDERSHOT: Why did you write this letter?
9 MR. MORGENTHAL: Because we were getting down
10 to the point that the accounting was about to be filed. Mr. Westcott
11 did not have separate counsel at that time, but I felt that it needed to
12 be communicated to Mellon so that as part of the accounting process
13 that any audit that followed, we would resolve this one way or the
14 other. And obviously that's what happened. He filed his objections.
15 Had Mellon elected to reject its appointment, likewise that could
16 have been concluded at that time also.
17 I just felt we had to get this out, and make sure everybody was
18 aware we were filing an accounting, and this needed to be resolved.
19 MR. HENDERSHOT: Have you done any work for Bill
20 and his wife individually?
21 MR. MORGENTHAL: No. The only thing close to
22 that was in a landlord tenant action on behalf of Bill. It really was
23 on behalf of Bill and his wife to eject a tenant from the farmhouse
24 on the property.
25 MR. HENDERSHOT: When did that occur?
123
1 MR. MORGENTHAL: Probably back in 2006 in the
2 summer. Also worked with the bank, because they were involved in
3 helping to manage the property too and actually more of my contacts
4 were with M & T's office in Harrisburg as far as communications
5 with the tenants, serving papers, that kind of thing.
6 MR. HENDERSHOT: At the time you wrote this letter,
7 did you perceive any conflict of interest where you represented
8 William and his wife personally, represented M & T as trustee of a
9 different trust, and at the same time represented the estate in making
10 a demand?
11 MR. MORGENTHAL: Well, in effect I wasn't making a
12 demand. I was relaying his demand, and I think I was very careful
13 to say that, that I was representing M & T, and just that I was
14 primarily speaking about the interest, and I anticipate they'll be
15 receiving separate counsel. I tried to separate that out as much as
16 possible, did not feel-- I was not working as Mr. Wescott's counsel.
17 MR. HENDERSHOT: Wouldn't it have been better to
18 refer Mr. Wescott to his own counsel to write this letter instead of
19 having it come from you?
20 MR. TILEY: Mr. Hendershot, assuming it was a
21 conflict of interest, how does it--which I'm not saying that it
22 was, and at all assuming it was. How does it affect my decision?
23 MR. HENDERSHOT: Well, I think what we have is we
24 have a letter written on letterhead of estate counsel, referencing the
25 estate. It's addressed to the trustee basically saying, you
124
1 should resign and if you don't resign there'll be a Court action.
2 MR. TILEY: Right.
3 MR. HENDERSHOT: And my point is that given the
4 conflict of interests that exist with two other clients, this letter
5 should never have been written on behalf of the estate.
6 MR OTTO: With all due respect, conflicts belong to
7 people other than Mellon Bank to the extent they exist.
8 MR. TILEY: If it exists. If a conflict existed. I don't
9 know how it makes Mellon's case any stronger to say that they
10 shouldn't, he shouldn't have written the letter. I don't really agree
11 with the substance of it either. He's conveying the beneficiary's
12 desire, which has been pretty well stated. And I think he, as counsel
13 for the estate, might have had not only the right to do that but also
14 the duty to do that. But even assuming that, I just don't know how
15 it's relevant. So I'll let you ask the first question you've asked that
16 question, but I don't know. I'm still not convinced that it matters.
17 MR. HENDERSHOT: Roger, in the list of emails.
18 MR. MORGENTHAL: Yes.
19 MR. HENDERSHOT: They terminate May 19th. Do you
20 recall sending any responsive email for the next couple of weeks?
21 MR. MORGENTHAL: Honestly I don't. I know
22 that when Mr. Bell and I communicated sometimes it was on the
23 telephone, sometimes it was email, and sometimes it was letter.
24 MR. HENDERSHOT: William has, I think already
25 entered an exhibit being his June 1 st, 2006, letter. Is that correct?
125
1 MR. OTTO: We did not separately do that. That's
2 being part of-
3 MR. TILEY: I don't think it's admitted for the truth of
4 the statements in that letter other than the fact that Mr. Morgenthal
5 attached it as-- I haven't read it and I don't think a foundation has
6 been laid for the statements in it, although they mayor may not be
7 the same.
8 MR. OTTO: Not offered for the truth of the matter
9 asserted therein, offered only as Mr. Morgenthal's communication
10 with the bank in an effort to rebut suggestions that M & T and his
11 counsel were in communication.
12 MR. HENDERSHOT: So I understand, it's not a piece
13 of evidence?
14 MR. TILEY: It's a question of what it is evident for. I
15 think its evidence that Attorney Morgenthal sent a letter of July 9,
16 2007, which accompanied a letter from the beneficiary asking that M
17 & T be the trustee instead of Mellon.
18 MR. HENDERSHOT: For that limited purpose.
19 MR. TILEY: I think for that purpose, it's there. But,
20 whether it talks about the reasons, I think the reasons are in
21 his testimony not in this letter.
22 MR. HENDERSHOT: I agree.
23 MR. OTTO: The letter simply reiterates his testimony.
24 If you want me to lay a foundation to get it in, I'll be happy to do it.
25 I don't think we need to take the time.
126
1 MR. TILEY: Okay.
2 MR. MORGENTHAL: The only thing I have to say, as
3 far as a further answer, at the time I wrote this letter, I had
4 suggested that Mr. Westcott a need for additional counsel, and had
5 given him several names, I believe, including Mr. Otto.
6 MR. HENDERSHOT: I understand he's being offered
7 for the limited purpose of communication with Mellon Bank.
8 MR. TILEY: Correct.
9 MR. HENDERSHOT: With that I have no further
10 questions.
11 MR. TILEY: Redirect?
12 MR. OTTO: Thank you. Subject only to the possibility
13 of examining Mr. Hendershot's witnesses, I'm done.
14 MR. TILEY: You rest. Okay. Objectants' 3, did we
15 move for admission? I don't know.
16 MR. OTTO: I will if we have it.
17 MR. HENDERSHOT: This letter?
18 MR. TILEY: Yes.
19 MR. HENDERSHOT: No objection for the purpose
20 stated.
21 MR. TILEY: Admitted.
22 (Whereupon, Objector's Exhibit 3 was admitted
23 into evidence.)
24 MR. TILEY: I guess you'll do Mellon 1 maybe later? I
25 assume you're going to go next?
127
1 MR. HENDERSHOT: If this were a Court we would
2 move for a non-suit because we don't believe in the setting of a
3 removal petition that sufficient facts have been developed. And in
4 the normal course of such a motion, I would expect the Court to say
5 move on.
6 MR. TILEY: And that's what we will do. I understand.
7 MR. HENDERSHOT: Nevertheless, we offer.
8 MR. TILEY: Understand the need and desire, and
9 noted. Motion denied.
10 MR. HENDERSHOT: Call David S. Rowe, who will be
11 the first one.
12
13 Whereupon,
14 DAVID S. ROWE
15 Having been first duly sworn, according to law by the Auditor,
16 testified as follows:
17 DIRECT EXAMINATION
18 MR. HENDERSHOT: Please state your name and
19 address.
20 MR. ROWE: David S. Rowe, business address
21 1735 Market Street, Philadelphia, 19103.
22 MR. HENDERSHOT: Could you provide a bit of your
23 personal history, including some reference to your education?
24 MR. ROWE: Not going back to kindergarten, I
25 graduated from the University of Pennsylvania in 1973 with a
128
1 degree in history. I graduated from Temple Law School in 1979.
2 I've always been in business rather than in practice. I started at the
3 Old First Pennsylvania Bank in 1985, survived a merger with
4 CoreStates and several other institutions along the way, and left
5 them in 1997. Went to PNC Bank in Delaware where I was the head
6 of the Trust Administrative Group, and after leaving them in 2000, I
7 started with Mellon in 2001 and have been there ever since.
8 MR. HENDERSHOT: What is your present position
9 with Mellon Bank?
10 MR. ROWE: I'm Vice President of Mellon Bank, and
11 I'm also senior fiduciary officer for the mid-Atlantic region. I think
12 somebody suggested earlier that I had succeeded Jeb Bell. That's
13 not the case. I'm not in the Mellon legal department. I'm in the
14 private wealth group.
15 MR. HENDERSHOT: What are you general duties in
16 that role?
17 MR. ROWE: In addition to dealing with clients in
18 accounts and relationships, I also have broader duties as senior
19 fiduciary officer as a resource to the entire mid-Atlantic region.
20 I also get involved in successor fiduciary reviews, which is how I
21 came to be involved here. When there's been a prior executor or
22 administrator CT A, as in this case, or a prior trustee, and the trust is
23 then coming to us, I would review the papers coming in to assure
24 that everything was in form, and there were no objections that we
25 had to make to that, in order to take over the trust and administer
129
1 it properly.
2 MR. HENDERSHOT: Are you authorized by your
3 employer to testify today?
4 MR. ROWE: I am.
5 MR. HENDERSHOT: Have you reviewed the filings in
6 the docket as I obtained them from the Auditor?
7 MR. ROWE: I don't know that I reviewed them as the
8 docket. I've reviewed a number of 706, the state tax return,
9 reviewed the Pennsylvania inheritance tax return. I reviewed the
10 accounting, some correspondence, but I'm not sure that that's
11 everything the docket comprises.
12 MR. HENDERSHOT: Would you say you're generally
13 familiar with the matter being here today?
14 MR. ROWE: I'm generally familiar with the matter.
15 MR. HENDERSHOT: Are you familiar with the terms
16 of Camilla's will?
17 MR. ROWE: Yes.
18 MR. HENDERSHOT: Specifically, could you comment
19 on Mellon Bank's role under item seven of her will?
20 MR. ROWE: Right, after some specific devises of the
21 real estate and some other things, the paragraph seven provides for a
22 trust, the income of which is to go to William Westcott, provision
23 for use of principal under certain conditions, if the trustee deems it
24 necessary. And then at his death the remainder to charities, a list of
25 which was suggested would have been provided but which was
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1 never found.
2 MR. HENDERSHOT: Has Mellon Bank succeeded to
3 Commonwealth National Bank? And if so, explain why.
4 MR. ROWE: Yes. Mellon Bank took over
5 Commonwealth by merger. I don't know the exact year. It's in with
6 the consent to serve that we filed. We filed the secretary's
7 certificate as to that. It was sometime in the early '90s, I think.
8 MR. HENDERSHOT: And I just wanted to confirm that
9 is a part of the stipulated record.
10 Early on in the hearing it was referenced to the Bank of New
11 York.
12 MR. ROWE: Yes.
13 MR. HENDERSHOT: And its relationship to Mellon
14 Bank. Could you explore that briefly?
15 MR. ROWE: Sure. Late last year a merger was
16 announced between the Bank of New York and Mellon Bank, which
17 were consummated on July 1 st of this year. Mellon Bank as a legal
18 entity continues for trust purposes. The merger was at the holding
19 company level, if you will. The effect on our area has been
20 virtually negligible.
21 The two banks, in fact, had complementary qualities. The
22 Bank of New York was historically an asset manager custodian at
23 the institutional level. Mellon's historic business has been in the
24 private wealth area, so Mellon's private wealth area, in fact,
25 continues to manage the private wealth area, going forward. That
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1 is the head of the private wealth group nationally is the former
2 Mellon head of the private wealth, various people including Mr.
3 Small. His name was mentioned. The national director of the estate
4 settlement group, former Mellon national head of estate settlement,
5 etc.
6 MR. HENDERSHOT: What are the general services that
7 Mellon Bank renders as an estate fiduciary?
8 MR. ROWE: As a fiduciary we offer all of those
9 services required to administer and invest accounts, trust accounts,
10 the investment management services, the administrative services, so
11 far as preparation of statements, preparation of taxes, all of the
12 things attendant thereto, the support service. It's not relevant here.
13 Real estate support, those sorts of things. If we have those sorts of
14 assets in a trust account, and of course the discretionary decision
15 making bodies to be able to carry out the discretionary power in
16 trust documents.
17 MR. HENDERSHOT: From what locations does Mellon
18 offer these services, and in particular, in your answer, if you could
19 focus on the Central Pennsylvania Region?
20 MR. ROWE: Right. The mid-Atlantic region, of
21 which we're a part, covers Wilkes-Barre, Philadelphia and
22 Delaware. But, more importantly here, we have offices in
23 Lancaster, Harrisburg, and York, with a wealth office in Camp Hill.
24 MR. HENDERSHOT: Do those local offices have some
25 autonomy or are they fairly rigidly controlled from
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1 distant locations?
2 MR. ROWE: In the management of trust accounts, the
3 officers in those locations have authority within discretionary
4 levels. If there are issues that rise above those levels we do, for
5 example, on the exercise of discretionary powers, have a trust
6 administrative committee. However, officers from this area are on
7 that committee and participate in it. Angie Thompson is vice-chair
8 of the committee.
9 MR. HENDERSHOT: Are you familiar with the passage
10 enactment and applicability of the Pennsylvania Uniform Trust Act?
11 MR. ROWE: I've gotten involved in the passage and
12 enactment and applicability of the Pennsylvania Uniform Trust Act.
13 Yes.
14 MR. HENDERSHOT: Can you make some comment as
15 to how that act will govern Mellon in the future, and perhaps also
16 how it protects beneficiaries?
17 MR. ROWE: I don't want to be qualified as an expert
18 on the Uniform Trust Act. At this point there's enough people
19 giving lectures on that all over the place. Mellon, of course, in
20 administering trusts looks first to the document, and then to the law
21 covering trusts. And, at this point, the Uniform Trust Act, which
22 at least according to most commentators, sought to codify a number
23 of the cases involving trusts is the overlay under which we manage.
24 In a situation like this, we would be bound by the notice provision
25 in the trust. Excuse me, in the act. Any restrictions on trustees
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1 or duties of trustees to beneficiaries, both income beneficiary and
2 remainder beneficiary, were noted.
3 MR. HENDERSHOT: In particular, under the Trust
4 Act, are there provisions that require a response to beneficiaries if
5 inquiry is made?
6 MR. ROWE: There are. I'm not sure of the exact
7 sections. There are provisions that require a response to settlers
8 and/or beneficiaries depending on particular trusts.
9 MR. HENDERSHOT: You've heard testimony today
10 about the charitable remainder trust that was written into Camilla's
11 will. Has Mellon dealt in other situations with charitable remainder
12 trusts?
13 MR. ROWE: All the time. A significant part of our
14 business is charitable remainder trusts.
15 MR. HENDERSHOT: In your view, after looking at
16 some of these documents, would Mellon have addressed these
17 situations in a somewhat different way, as to face the unclarity
18 created by the will?
19 MR. ROWE: I think one of the things we would have
20 explored early on was whether the Court could have been asked to
21 reform the document to create a charitable remainder uni-trust
22 under the more standard provision. I'm not sure. I haven't gone
23 back to the statutes on that. I know the law changed on it in 1969.
24 Whether the Court would look at a document from 1978 and allow
25 that, I don't know. But it would be something we would
134
1 have explored at that time, if there were a way to qualify it so that
2 the estate inheritance tax deduction as well could have been taken.
3 We would have pursued that.
4 MR. HENDERSHOT: Was anybody at Mellon aware of
5 what now is identified as a tentative nomination of charitable
6 beneficiary before today?
7 MR. ROWE: Not to my knowledge.
8 MR. HENDERSHOT: Does Mellon have any conflicts
9 of interest, after your hearing of the testimony and review of the
10 pleadings, in accepting a trusteeship?
11 MR. ROWE: Not that I can determine.
12 MR. HENDERSHOT: Of Camilla's trust?
13 MR. ROWE: Not that I can determine.
14 MR. HENDERSHOT: Do you see there to be any issues
15 between the principal and income beneficiaries of this trust that
16 might merit some additional attention?
17 MR. ROWE: Well, I think mention was made earlier on
18 this morning of the possibility of conversion or exercise of
19 discretion under the power to adjust statutes. I'm not really sure
20 how they would play out, and certainly I don't know that it would
21 happen without a petition to the Court.
22 There is explicit prohibition in each of those sections, which I
23 think are 8104 and 8105 of the statutes against adjusting or
24 converting, and it's interesting language. It says an amount for
25 which a charitable deduction has been allowed on a federal,
135
1 state or gift tax return.
2 So whether we would be allowed on either part of the trust or
3 all of the trusts, it's not clear. If it is what it says it is, and it's an
4 amount, perhaps an argument could be made to qualify the portion of
5 the trust that doesn't represent the amount, but I think that's for
6 further discussion. Certainly there hasn't been a lot of case law on
7 Uniform Principal and Income Act power to adjust and convert at
8 this point to give much guidance.
9 MR. HENDERSHOT: Does Mellon have the capability
10 and business resources within your organization to address those
11 issues?
12 MR. ROWE: Absolutely.
13 MR. HENDERSHOT: How would you do that?
14 MR. ROWE: Personally, one of my duties in addition to
15 my internal work is that I'm involved in the Pennsylvania Bankers
16 Association Trust Committee, which explores a number of these
17 issues. And we have access, therefore, to the joint state committee,
18 who actually creates the law, so we have some interaction with
19 them, and informal discussions with some of the drafters of the law
20 would definitely be part of the conversation.
21 A review of it from our own terms, perhaps the engagement
22 of counsel to get further review, and if we thought it was warranted
23 and especially if we thought it was a way we would administer this
24 to provide an equitable benefit and do it in a way that benefited both
25 the income beneficiary, and remainder beneficiary, we would
136
1 pursue it with petition to the Court probably.
2 MR. HENDERSHOT: From your position, within
3 Mellon, can you indicate what the level of satisfaction with
4 customers/clients is with your trust fiduciary services?
5 MR. ROWE: I know everybody does client satisfaction
6 services. We're pleased to say of those people who can remove us,
7 97% stay with us.
8 MR. HENDERSHOT: Would you say that a different
9 way, please?
10 MR. ROWE: Ninety-seven percent of people.
11 MR. HENDERSHOT: Without the facetious comment.
12 MR. ROWE: Ninety-seven percent of people that have
13 the ability to remove us, stay with us, they're pleased with our
14 services, very pleased.
15 MR. HENDERSHOT: Speaking of the ability to remove
16 and understanding you have some exposure to the Pennsylvania
17 Uniform Trust Act, is it your understanding that a life tenant income
18 beneficiary can unilaterally remove a trustee?
19 MR. OTTO: Objection. I think he's being asked for a
20 legal opinion. I think the witness disclaimed at the outset he's not
21 going to be qualified as an expert on the UTA.
22 MR. TILEY: Probably have to sustain that. Have
23 argument over that.
24 MR. HENDERSHOT: Has Mellon Bank had a situation
25 where an income beneficiary alone petitioned to remove
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1 Mellon Bank as trustee?
2 MR. ROWE: Not since the passage of UT A, certainly to
3 my knowledge.
4 MR. HENDERSHOT: Do you believe that Mellon Bank
5 will render fiduciary services to Camilla's trust consistent with
6 those that would have been rendered by Commonwealth National
7 Bank?
8 MR. ROWE: I would hope, having come twenty years
9 down the road, would render even better service.
10 MR. HENDERSHOT: Do you believe that the services
11 that Mellon Bank would render would equal or exceed those
12 rendered by other institutions?
13 MR. ROWE: Absolutely.
14 MR. HENDERSHOT: Why does Mellon Bank desire to
15 serve as trustee for Camilla's trust?
16 MR. ROWE: I think we have a strong sense that a trust
17 document is an important document, which should be given its
18 fullest effect, including the choice as to who will manage a fund for
19 a period of time, for the benefit of the parties that the person names
20 and we take that responsibility very seriously.
21 MR. HENDERSHOT: Have you reviewed the
22 exchange of email that was the subject of discussion?
23 MR. ROWE: I reviewed it some time ago.
24 MR. HENDERSHOT: You're saying essentially not. Do
25 you understand from conversations within the bank and with
138
1 your co-workers that at all times Mellon Bank has been willing to
2 serve as trustee?
3 MR. ROWE: That has been my understanding.
4 MR. HENDERSHOT: Have you communicated that to
5 others involved with the estate?
6 MR. ROWE: I think my letter of August, whatever, to
7 Mr. Morgenthal communicated that.
8 MR. HENDERSHOT: You've met and chatted
9 informally with Bill today here. Do you believe, even considering
10 this proceeding, which is difficult, that Mellon Bank would have a
11 good relationship with Bill as a beneficiary?
12 MR. ROWE: I certainly think so. Just from our
13 interaction here it would be an account in which I wish I had had
14 more immediate responsibility. I think he's a fascinating person
15 with some interesting experience and a person who has got a
16 realistic sense about these trusts and with whom we could work very
17 well.
18 MR. HENDERSHOT: Let me take a bad case scenario.
19 If you heard in your position that people at Mellon Bank were not
20 being responsive at the operational level to William and his
21 requests, what would you do?
22 MR. ROWE: Pull rank.
23 MR. HENDERSHOT: How would you do that?
24 MR. ROWE: Go to the supervisors or go to somebody
25 at my level in that area, be cross departmental as it were,
139
1 but go to the appropriate person who could bring the pressure to
2 bear to make sure that the situation was resolved.
3 MR. HENDERSHOT: Given Mellon's structure, would
4 William have the ability to communicate at various levels, not just
5 the trust administrator level, but perhaps higher on the management
6 level?
7 MR. ROWE: We are always accessible. Generally, it's
8 not done because generally our administrator portfolio managers are
9 competent to handle those things. If somebody has an issue though,
10 Les Brant, who would have testified, if he hadn't had a client
11 meeting this afternoon, is the first line of management. He's
12 perfectly accessible. There are people above him in that
13 management structure. I generally don't get directly involved,
14 because I'm more in an advisory capacity rather than the business
15 line capacity.
16 MR. HENDERSHOT: You mentioned Les Brant. Did
17 he used to work for Commonwealth?
18 MR. ROWE: My understanding is he, actually I think
19 he started with the OCC or one of the examining institutions, and
20 then went to one of the banks that became Commonwealth sometime
21 in the '70s. And then he was at Commonwealth through the '70s and
22 stayed on through Mellon until today.
23 MR. HENDERSHOT: So Les has had an
24 unbroken employment history from Commonwealth to Mellon?
25 MR. ROWE: Right.
140
1 MR. HENDERSHOT: In the pleadings Bill has worried,
2 expressed his worry that Mellon would not be accessible due to
3 physical locations of the offices. Is that worry justifiable?
4 MR. ROWE: I don't think so. More and more we're
5 finding that people don't come to our offices. We go to them for
6 trust matters. There seemed to me the indication that it was around
7 the receipt of the income. It's perfectly simple for us to have the
8 deposit go directly to his current M & T account or any other
9 account he wanted to establish. There would be some restrictions if
10 it went to an account in Canada. There are international regulations
11 around that, but that would not be an issue.
12 We, on the trust and investment side, are accessible to him in
13 any way there. And on the banking side of it, the receipt of the
14 income can be wherever he wants that to be.
15 In addition, on the trust side, with internet capabilities, there
16 would be the ability for Mr. Westcott and his wife to view the
17 account online and look at the trust from time to time. If they had
18 any concerns they could express them so they'd have even more
19 accessibility to information about the trust.
20 MR. HENDERSHOT: In your letter you state that
21 M & T acquired Dauphin Deposit in much the same way
22 Mellon acquired Commonwealth National Bank. Does Mellon Bank
23 offer similar services to M & T, that you are aware of, given client
24 contact in a competitive environment?
25 MR. ROWE: A number of years ago, I think it
141
1 was right before or right after I started at Mellon, Mellon made the
2 strategic decision not to have a branch network. They felt the retail
3 banking part of the business was not a part of the business they
4 wanted to be involved in.
5 At the same time, they bolstered the private banking sector
6 within the wealth management group, so we do have wealth offices
7 that are offices where people who have Mellon checking accounts
8 can go. We offer a range of what would be considered retail
9 products, loans, et cetera, CD's through those facilities, the nearest
10 of which is in Camp Hill.
11 MR. HENDERSHOT: I want to correct the record. I
12 misspoke. I said it was your letter and it's Angie Thompson's letter.
13 I will address that with her then as a witness.
14 If I were to ask you to offer reassurance to William that
15 Mellon Bank will administer his trust properly, legally,
16 responsively, fairly, what would you tell him?
17 MR. ROWE: Hate to toot my own horn. I think that I
18 would say that we have a history of doing this within Mellon, BNY
19 Mellon, for more than 150 years. It's a duty and a privilege that we
20 take very seriously. It's a way in which we can help families to
21 manage their wealth to the benefit of the families,
22 to accomplish their goals, and that's a duty we take very seriously.
23 MR. HENDERSHOT: That's all I have.
24 CROSS EXAMINATION
25 MR. OTTO: Mr. Rowe, the name of your
142
1 organization is BNY Mellon?
2 MR. ROWE: That's correct. That's the holding
3 company.
4 MR. TILEY: Mr. Otto, say that again?
5 MR. OTTO: The name of your organization is BNY
6 Mellon?
7 MS. THOMPSON: That's the holding company. The
8 legal entity, which would be trustee at this time, is Mellon Bank,
9 NA.
10 MR. OTTO: There was discussion earlier when I was
11 corrected; I used the term Bank of New York and was told I wasn't
12 allowed to, it's Mellon?
13 MR. ROWE: Yes.
14 MR. OTTO: BNY Mellon?
15 MR. ROWE: BNY Mellon.
16 MR. OTTO: I may have misunderstood your testimony,
17 but I thought I heard you say that no one in the Mellon organization,
18 BNY Mellon organization, knew that a list of charities was being
19 developed. Was that your testimony?
20 MR. ROWE: I said to my knowledge.
21 MR. OTTO: And you haven't reviewed Ml, the email
22 exchange?
23 MR. ROWE: I did see that. I don't recall
24 specifically about the list. I said to Mr. Hendershot, it was some
25 time ago that I reviewed that.
143
1 MR. OTTO: And I have difficulty remembering what I
2 had for dinner last night. I appreciate your candor. Do we have Ml
3 nearby?
4 (Document handed to Mr. Otto by the Auditor.)
5 MR. OTTO: I'm going to ask you to turn to-- These are
6 hard to make out. I guess it's just there on the first page and ask
7 that you go down to the message from Mr. Morgenthal to Mr. Bell,
8 Friday, May 19, '06.
9 MR. ROWE: Yes.
10 MR. OTTO: And just to yourself, read what Roger
11 says.
12 MR. ROWE: Okay. (Witness complied with request.)
13 MR. OTTO: Does that change your apprehension about
14 what Mellon knew about a potential list of charities?
15 MR. ROWE: I don't think it says anything about a list
16 of charities. It says, "We may be able to come up with a plan using
17 collected charities so that instead of requiring a full hearing we can
18 simply ask the Court to approve an agreement without hearing." I
19 mean, that might imply a list, but it certainly doesn't speak about a
20 list.
21 MR. OTTO: I don't want to argue with about what you
22 think it means. That's fine. You acknowledge this communication
23 occurred between Mellon people?
24 MR. ROWE: I acknowledge that communication within
25 the exhibit, absolutely.
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1 MR. OTTO: Now, you also testified that BNY Mellon
2 takes its responsibilities serious when named as trustee in a trust
3 document. I understand that. I'll ask you to refer to this document
4 again and in particular ask you--
5 MR. ROWE: Are we back on the email?
6 MR. OTTO: Yes, Ml, I'm sorry. I'll point out to you;
7 you can certainly read to satisfy yourself that I'm characterizing it
8 accurately. On at least two occasions here Mr. Bell presses Roger
9 for information about the size of the trust.
10 MR. ROWE: That's correct.
11 MR. OTTO: And finally, when that is revealed the next
12 response is, we will serve as trustee.
13 MR. ROWE: That's correct.
14 MR. OTTO: Does the size of the trust influence the
15 commitment Mellon has to serve as trustee?
16 MR. ROWE: It doesn't influence the commitment. It
17 might influence our view as to whether it is cost effective for the
18 family to have us involved as a trustee.
19 MR. OTTO: Why would it be more or less cost
20 effective for you as opposed to some other trustee?
21 MR. ROWE: There are other trustees, certainly smaller
22 trustees who operate at different levels. They have different fee
23 structures.
24 MR. OTTO: And the fees might be less?
25 MR. ROWE: They might be less.
145
1 MR. OTTO: Is that the point of this exchange, from
2 your prospective?
3 MR. ROWE: That's the point of the exchange. If this
4 were a situation in which it was a smaller trust, it would be more
5 sensible to be with a different trustee.
6 MR. OTTO: And would you renounce in advance in
7 that kind of circumstance?
8 MR. ROWE: We'd renounce.
9 MR. OTTO: And that's the thrust of this part of the
10 conversation?
11 MR. ROWE: As I understand it, not having been part of
12 that conversation.
13 MR. OTTO: I understand you can't speak for Mr. Bell,
14 you're not Mr. Bell.
15 MR. ROWE: That's right
16 MR. OTTO: But that's what you would apprehend?
17 MR. ROWE: It certainly seems consistent with the
18 emails.
19 MR. OTTO: Now you testified about a wealth office.
20 Could you tell me what that is?
21 MR. ROWE: A wealth office would be akin to a branch
22 office or retail branch office, but in the private banking nature that
23 is you have people that can take deposits, cash checks, etc., but you
24 don't see the classic teller windows and that sort of thing. It's a
25 much more personal sort of service. People come in and sit
146
1 at a desk. They do their deposits and cash checks and talk about
2 whether they need a loan and that sort of thing with someone at a
3 desk rather than at a window.
4 MR. OTTO: And that's in Camp Hill?
5 MR. ROWE: That's in Camp Hill.
6 MR. OTTO: What's the distinction between that type of
7 office and what you have in Harrisburg?
8 MR. ROWE: In Harrisburg and Lancaster and York we
9 have offices that are staffed with trust and investment professionals
10 and their support staff, who work directly with the trust and
11 investment clients.
12 MR. OTTO: So it's what I would sort of in a provincial
13 way characterize as a traditional trust relationship would happen in
14 Harrisburg, but I can do some retail banking type functions in Camp
15 Hill?
16 MR. ROWE: That's exactly right.
17 MR. OTTO: That's all I have. Thank you.
18 MR. MORGENTHAL: No questions.
19 MR. TILEY: Redirect?
20 REDIRECT EXAMINATION
21 MR. HENDERSHOT: One clarification. Jeb Bell's
22 name has been mentioned repeatedly here. Why is Jeb no longer
23 with Mellon Bank?
24 MR. ROWE: Because Jeb at 67 decided to retire, go
25 biking in France and visit his grandchildren.
147
1 MR. HENDERSHOT: Thank you.
2 MR. TILEY: You may step down.
3 MR. HENDERSHOT: Next witness is Angela R.
4 Thompson, commonly known as Angie.
5
6 Whereupon,
7 ANGELA R. THOMPSON
8 Having been first duly sworn, according to law by the Auditor,
9 testified as follows:
10 DIRECT EXAMINATION
11 MR. HENDERSHOT: Angie, we'll try not to be
12 duplicative of David's testimony in the interest of time. I'm going
13 to ask you questions that will put the more local and grass roots
14 flavor on it, but there may be some duplication.
15 Begin by telling us your name and address.
16 MS. THOMPSON: Angela R. Thompson. My office is
17 at 2 North Second Street, Harrisburg, PA, 17101.
18 MR. HENDERSHOT: And I'm saying this for Roger.
19 You're going to have to speak up.
20 MS. THOMPSON: Sorry. Shall I repeat that?
21 MR. MORGENTHAL: I got that.
22 MR. HENDERSHOT: What is your personal
23 background including education?
24 MS. THOMPSON: I have a four year degree from
25 Grove City College as an accounting major and then I have
148
1 been working. I started out at Commonwealth National Bank in
2 February of '79 and have been with them since through the merger
3 into Mellon and now BNY.
4 MR. HENDERSHOT: You have been with
5 Commonwealth National Bank since 1979?
6 MS. THOMPSON: February of '79 I started. Yes.
7 MR. HENDERSHOT: Did you ever meet Camilla?
8 MS. THOMPSON: No.
9 MR. HENDERSHOT: What would have been your
10 positions and roles at the bank?
11 MS. THOMPSON: I started out in the tax department
12 and eventually managed the tax department that we had locally. I
13 worked in that area for 17 years, and then I moved into trust
14 administration working for Les Brant and have been doing that ever
15 SInce. I'm currently a VP and portfolio manager.
16 MR. HENDERSHOT: Les Brant was in the courtroom
17 earlier but had to leave. Are you testifying he's your boss?
18 MS. THOMPSON: He's my team leader. That's
19 correct.
20 MR. HENDERSHOT: We call them team leaders now?
21 MS. THOMPSON: We call them team leaders.
22 MR. HENDERSHOT: Are you also authorized to testify
23 on behalf of the bank?
24 MS. THOMPSON: I am.
25 MR. HENDERSHOT: You heard David explain
149
1 Mellon Bank's overall ability to serve as fiduciary. Can you bring
2 that down to the local area and reflect on the locations, the people
3 involved, the systems that you have available, and other aspects?
4 MS.THOMPSON: Basically my job is a relationship
5 manager. It is my duty to get to know the trust beneficiaries, help
6 determine and formulate their goals, and then make sure that the
7 portfolio of the trust responds to those, meeting their long term
8 goals, cash flow needs, balancing, in the case of a trust of this type,
9 needs of income beneficiary versus remainder beneficiary or
10 charities.
11 I meet with my clients as often as they want, generally at their
12 homes or wherever that suits them. I don't have a lot of clients that
13 like to come into the office. We'll meet in the branch if they prefer
14 that. I try to act like a coordinator with their attorney and their
15 accountant to make sure that we're all operating on the same page.
16 It's quite common that they would share information with regard to
17 their outside accounts so that we can coordinate the investment
18 portfolio.
19 I'm not trying to act as a tax accountant or an attorney,
20 but just to make sure that we're all communicating so that options
21 and possibilities and opportunities are explored.
22 We previously mentioned we have the retail branch in Camp
23 Hill. That primarily exists for the benefit of our wealth management
24 clients, and we do provide a retail service that a normal bank would
25 supply.
150
1 MR. HENDERSHOT: How much time do you spend in
2 Harrisburg versus York?
3 MS. THOMPSON: Generally I'm in York two days a
4 week, Harrisburg three days a week. That really is more driven by
5 appointments.
6 MR. HENDERSHOT: If you're not available, do you
7 have back-ups?
8 MS. THOMPSON: I do. The way we operate is I am
9 responsible for my relationships. That said, I have people that I
10 work very closely with. We have 20 professionals on our team in
11 this geographic region and there's always at least one other person
12 back at the office that can field any calls and get to me. They know
13 where I am if they need a decision made or money transferred.
14 MR. HENDERSHOT: And how do you communicate
15 with your clients?
16 MS. THOMPSON: We communicate via email, phone,
17 and meeting. They get statements, monthly statements in the mail.
18 There's access over the internet to their account at any time.
19 MR. HENDERSHOT: Do you occasionally write
20 letters?
21 MS. THOMPSON: Yes. I can write letters too.
22 MR. HENDERSHOT: When you are meeting with a
23 client, what are the issues that you address with them?
24 MS. THOMPSON: Well, generally when we first start a
25 relationship we will try to set up goals and arrive at an
151
1 investment policy statement. Then every meeting we review those
2 to make sure that they are still appropriate, or if they need to be
3 adjusted, they're adjusted. We would also explore like additional
4 cash needs that have come up and perhaps hadn't existed in the past.
5 Then I also to try to address items that I think might be of
6 interest to my client like periodically suggesting estate planning
7 review, maybe planning for income tax consequences and just
8 general items of interest that come up. Also we do like an economic
9 review for them.
10 MR. HENDERSHOT: Do you coordinate your efforts
11 with other professionals, like attorneys, accountants or financial
12 advisors or other trustees?
13 MS. THOMPSON: Well, I try to tailor that to what the
14 client wants and the extent that they want me to be involved in that
15 fashion. I am very willing to do that. I do try to make it a point to
16 meet their attorney and their accountant and just at least open up
17 lines of communication, try to get information to them, especially at
18 the end of the year so they can do end of year tax planning, that sort
19 of thing.
20 MR. HENDERSHOT: Do you have good
21 relationships with other banks?
22 MS. THOMPSON: I believe so. I am active in both
23 York Estate Planning Council and Central Pennsylvania Estate
24 Planning Council, attend meetings and know quite a few attorneys,
25 accountants and trust officers in those areas.
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1 MR. HENDERSHOT: Have you been the president of
2 the York County Estate Planning Council?
3 MS. THOMPSON: I was president and I serve on the
4 board now.
5 MR. HENDERSHOT: In particular, do you think you
6 have a good relationship with the folks at M & T?
7 MS. THOMPSON: Yes. I just met Jane for the first
8 time today, but I have in the past worked with people from M & T
9 and still keep in touch.
10 MR. HENDERSHOT: Are there restrictions, when
11 you're working with another trustee that might limit your ability to
12 conduct those communications?
13 MS. THOMPSON: The only restriction would be first
14 getting client permission to have that communication. If the client's
15 okay with it, there shouldn't be a problem.
16 MR. HENDERSHOT: When you're looking at
17 investment decisions or portfolio allocation of assets of the trust,
18 what are some of the factors and what's the process?
19 MS. THOMPSON: The process is basically having a
20 dialogue with the client so that I understand what their needs
21 are and we try to formulate short-term goals and long-term goals.
22 And my role primarily is the asset allocation to achieve those goals.
23 I do not personally pick what stocks go into their portfolio. That is
24 done at the more specialized level than I am. I have a dialogue.
25 MR. HENDERSHOT: When you say pick, does
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1 that mean that you're told what to do or that a recommendation is
2 suggested that you circulate?
3 MS. THOMPSON: I make a recommendation as to an
4 asset allocation. At Mellon's organization we use proprietary funds
5 for certain phases to be properly diversified. For instance, if we
6 make a determination that a client needs to be in a small cap space,
7 that will be Mellon's small cap funds that will be used.
8 MR. HENDERSHOT: Could you expand a little bit on
9 proprietary fund investment and why Mellon might favor that?
10 MS. THOMPSON: Mellon's view on that is that we
11 take our fiduciary responsibility very highly and we prefer to have
12 full information and control over these investments that are used for
13 our clients' accounts, and we feel that if we don't have that if we
14 use outside funds. So, therefore, we use Mellon funds or perhaps a
15 subsidy of Mellon, which would be Dreyfus.
16 MR. HENDERSHOT: Is there a charge for use of those
17 funds?
18 MS. THOMPSON: They operate the same as any other
19 mutual funds. There is a fee within the fund. We rebate or credit
20 into the account the monthly management portion of that fund.
21 MR. HENDERSHOT: So there's no double dipping?
22 MS. THOMPSON: Correct.
23 MR. HENDERSHOT: How are your accounts reviewed
24 within your organization?
25 MS. THOMPSON: Well, as far as my
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1 review, individually, I'm looking at accounts probably at least
2 quarterly to raise cash, so at that point, we're comparing where I am
3 based against my target allocation and rebalancing. In addition,
4 there is an annual red line review, which is mandatory that we do
5 that. And also I have an investment review committee that I have to
6 present to on an annual basis so that there's oversight over the
7 decisions.
8 MR. HENDERSHOT: Do you review investments if the
9 beneficiary or party in interest requests it?
10 MS. THOMPSON: Yes. Often we'll do review when
11 you first bring an account in. You're reviewing for things,
12 especially to try and like maybe minimize capital gain consequences
13 of moving into our products, make sure that it's properly
14 diversified. And we also have automatic reports that come off if
15 you'd wind up with more than ten percent in a particular holding,
16 which is against our policy, that type of thing
17 MR. HENDERSHOT: How about accounting aspects of
18 your service, do you generate statements?
19 MS. THOMPSON: We generate statements. They can
20 go as often as a client wants them, monthly, quarterly,
21 semi-annually. They have daily access to their account online if
22 they want that. We do a year-end tax information.
23 MR. HENDERSHOT: As a trustee under the
24 Pennsylvania Uniform Trust Act, do you also take responsibility to
25 give the annual notices and accountings that will be required?
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1 MS. THOMPSON: Yes. We will be doing that.
2 MR. HENDERSHOT: When there are sales of assets, as
3 part of your accounting service, do you track those gains and losses?
4 MS. THOMPSON: Yes. We do.
5 MR. HENDERSHOT: Trustees are required to file
6 income tax returns, correct?
7 MS. THOMPSON: Correct.
S MR. HENDERSHOT: How does Mellon adjust that
9 responsibility?
10 MS. THOMPSON: Certainly have
11 PricewaterhouseCoopers hired and they will do that reporting. The
12 way that operates is they review the accounts during the year. I
13 have a particular tax accountant assigned to me. If I know of
14 anything that impacts the tax return I'm communicating back and
15 forth throughout the year. I review personally my accounts, review
16 capital gain and loss situation toward the end of the year to make
17 sure if we need to be proactive in some kind of trading, that we do
18 that.
19 MR. HENDERSHOT: Does Mellon Bank as fiduciary
20 sign returns prepared by Pricewaterhouse?
21 MS. THOMPSON: Yes, they do.
22 MR. HENDERSHOT: Does that offer an additional
23 level of protection for the beneficiary having an independent
24 accountant prepare returns?
25 MS. THOMPSON: I believe that would be the case.
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1 MR. HENDERSHOT: Are you aware of the
2 requirement under the Uniform Trust Act now that response must be
3 made to any inquiries made by the beneficiary?
4 MS. THOMPSON: Yes.
5 MR. HENDERSHOT: Do you need the Act to tell you
6 that?
7 MS. THOMPSON: No. Actually you had asked this
8 question of David earlier. We do, at my team level and me
9 personally, the survey that we do annually, the 97% figure has held
10 true for several years. And I personally don't have unhappy clients.
11 I don't. They track us individually on our clients that leave due to
12 firings and I always exceed that goal.
13 MR. HENDERSHOT: Have you ever been involved
14 with trusts having charitable beneficiaries?
15 MS. THOMPSON: Yes.
16 MR. HENDERSHOT: You've heard David explain
17 about the overall capabilities of Mellon on offering advice and
18 structuring?
19 MR. THOMPSON: Yes.
20 MR. HENDERSHOT: How does that play out at your
21 level in Central Pennsylvania?
22 MS. THOMPSON: Well, when we meet with clients, as
23 you get to know a client you can find opportunities to perhaps
24 advise them on things that would be helpful. I do have several
25 clients that are very wealthy and we're doing charitable giving,
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1 and we advise to do charitable remainder trusts. That's not
2 uncommon that we would suggest that, work with their attorney to
3 put them in place.
4 In addition to individual client relationships, I also have a
5 number of charitable trusts that I am trustee on. I have served and
6 serve now on a board that screen grant requests and we determine
7 whether or not they're appropriate under the language of the trust,
8 and participate in that whole process.
9 MR. HENDERSHOT: Let me clarify. Is that an
10 internal bank committee or group?
11 MS. THOMPSON: What I was referring to, it's a trust.
12 I have a trust. For instance, where it doesn't designate specifically
13 what charity is to get the money, it just says a charitable purpose, so
14 we solicit application for that money, review the grants and I
15 participate on the board that does that.
16 In addition, Mellon has a charitable trust committee but I'm
17 not a part of that.
18 MR. HENDERSHOT: What does it do?
19 MS. THOMPSON: That again screens requests that
20 come in for money for charitable dollars that maybe have a purpose
21 around them but not a specifically designated charity.
22 MR. HENDERSHOT: Have you also personally
23 served on any committee that works with charities?
24 MS. THOMPSON: I have served on the United Way
25 Allocation Panel in the Harrisburg Area for three years.
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1 MR. HENDERSHOT: Do you think you understand
2 the built in tension between an individual income beneficiary and a
3 remainder principal beneficiary that is also a charity?
4 MS. THOMPSON: Yes.
5 MR. HENDERSHOT: What is the tension?
6 MS THOMPSON: Well, preserving principal for the
7 charitable remainder but still making sure that the income
8 beneficiaries are protected too. It is a balancing act. Jane alluded
9 to that earlier. We have procedure or policies in place to try to
10 guide us in that respect, and if it were something that I'm still not
11 sure about, I would bring it to the Trust Administrative Committee
12 for discussion. We meet twice a week and I participate in all those
13 meetings.
14 MR. HENDERSHOT: What's your style when you have
15 that kind of a tension of a beneficiary demanding or requesting one
16 thing but charities are requesting another?
17 MS. THOMPSON: Basically it's to do the most that I
18 can under the law and under our policies to make them both happy.
19 Again, if I'm unsuccessful at that, I'm going to my committee to ask
20 for suggestions to discuss with other colleagues, have you been
21 through similar situations? What would you recommend I try to do?
22 MR. HENDERSHOT: Did you have a copy of this?
23 MR. OTTO: I have it.
24 MR. HENDERSHOT: Will you mark this as Exhibit 2,
25 please?
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1 MR. TILEY: Mellon 2.
2 (Whereupon, Mellon Exhibit 2 was marked for
3 identification.)
4 MR. HENDERSHOT: This is a letter dated October
5 11 tb, 2007, addressed to William from you. Did you write that?
6 MS. THOMPSON: Co-authored it.
7 MR. HENDERSHOT: Did you sign it?
8 MS. THOMPSON: I did sign it.
9 MR. HENDERSHOT: It speaks for itself but what were
10 you trying to generally convey to Bill when you wrote this?
11 MS. THOMPSON: Basically I had received his letter
12 with his objections as to Mellon serving as trustee, and the main
13 thrust that I had from that letter was that he felt that he would not
14 receive personalized attention, maybe we were too big and we
15 weren't local so that he would not receive any kind of personalized
16 attention. I wanted to reassure him that was not the case.
17 I think there was a little misunderstanding that they thought
18 he might have to work out of the Philadelphia office. I wanted to
19 reassure him that was not the case. And, furthermore, that I do go to
20 my client's, they're not required to come to me to communicate.
21 And basically that's what I wanted to do.
22 MR. HENDERSHOT: Did you also send him an email?
23 MS THOMPSON: Yes, I did email this to him and
24 mailed a hard copy. Yes.
25 MR. HENDERSHOT: Did you call him?
160
1 MS.THOMPSON: I did.
2 MR. HENDERSHOT: What was the result of those
3 contacts?
4 MS THOMPSON: Well, I talked to William and it was
5 the same as what he said this morning. He was uncomfortable
6 talking to me at the time, but he was very quick to reassure me it
7 was nothing personal and we may be working down the road
8 together. He just felt it wasn't appropriate that we talk.
9 MR. HENDERSHOT: You've heard William's concerns
10 expressed earlier this morning and you've read the pleadings?
11 MS. THOMPSON: Yes.
12 MR. HENDERSHOT: The way they're formally stated,
13 how would you respond to William face to face to those concerns?
14 MS. THOMPSON: The same concerns about lack of
15 attention, that that's not my style. And I know you don't know me
16 but if I'm given an opportunity to show you I will be responsive to
17 what you need. I try to customize my client's contacts with what
18 they're comfortable with. So, in whatever manner that you're most
19 comfortable, I can come to your house, we can do it over the phone,
20 can do it online. I can write letters, whatever suits you.
21 MR. HENDERSHOT: You've been around the area a
22 long time and seen a lot of bankers in your role as York County
23 Estate Planning Council President. Do you believe that Mellon
24 Bank can render fiduciary services as good as any in this area?
25 MS. THOMPSON: I do.
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1 MR. HENDERSHOT: You heard Dave say, from
2 the macro point of view, why Mellon Bank could offer fiduciary
3 services. Tell me what the commitment is at the local level and
4 personally?
5 MS. THOMPSON: Well, first of all, it's what I like to
6 do. I did taxes for seventeen years, and although I enjoyed that, the
7 part I didn't like about it was that I had no customer contact at all.
8 I sat at a desk and filled out tax returns and never got to meet the
9 people that I was doing the returns for.
10 So once I went over to work for Les that rounded out my role
11 as a wealth manager/trust officer, whatever you want to call me.
12 I'm basically helping people. I help them with the skills that I have.
13 I have bent toward tax so I can kind of advise in that respect, alert
14 to possibilities anyway, and do what I can to help them achieve their
15 goals
16 MR. HENDERSHOT: While you're sitting here
17 testifying today there's probably a lot of clients who need things.
18 Who is taking care of them right now?
19 MS. THOMPSON: Actually name wise, I have Kevin
20 Brubaker that works very closely with me. He's back there working.
21 And I also have other colleagues that are certainly willing to pick up
22 the ball if anything comes up. I don't know if you want me to name
23 names or not. It's not a problem, it just isn't.
24 MR. HENDERSHOT: I'll ask you the same question
25 that I asked Dave. If Mellon Bank continues its appointment
162
1 and begins serving as trustee of Camilla's trust, has anything here
2 today affected your enthusiasm for administering this trust?
3 MS.THOMPSON: Only positively. I mean it has
4 really been kind of nice that despite the fact this is going on ahead
5 of time and between times we've been able to chat and it's, you
6 know, to the extent possible. I hope nobody feels badly about all
7 this. But it should not be a problem for me and hopefully it's not
8 for Bill either.
9 MR. HENDERSHOT: I think that's all I have.
10 MR. TILEY: Cross?
11 CROSS EXAMINATION
12 MR. OTTO: Ms. Thompson, are you in a position to
13 discuss what fees from Mellon there would be for a trust of this
14 kind?
15 MS. THOMPSON: Yes. I have crunched some
16 numbers. I did it based on a three million dollar trust, and it would
17 be about $35,000.
18 MR. OTTO: $35,000 a year?
19 MS. THOMPSON: Yes.
20 MR. OTTO: And how would you allocate that to
21 principal and income?
22 MS. THOMPSON: Normally we do it seventy percent
23 principal, thirty percent income.
24 MR. OTTO: Seventy percent principal and thirty
25 percent income?
163
1 MS. THOMPSON: Yes.
2 MR. OTTO: That's all I have.
3 MR. TILEY: Redirect?
4 MR. HENDERSHOT: None.
5 MR. TILEY: I'm sorry, Roger first?
6 MR. MORGENTHAL: None.
7 MR. HENDERHOST: I just thought of a question.
8 Could I ask it?
9 MR. TILEY: Certainly.
10 REDIRECT EXAMINATION
11 MR. HENDERSHOT: Are fiduciary fees deductible
12 against income?
13 MS. THOMPSON: This type of trust that we're talking
14 about is an irrevocable trust; it would get a deduction for fiduciary
15 fees and the beneficiary then pays tax on the net income after that.
16 MR. HENDERSHOT: That's all.
17 MR. TILEY: I don't think I have any questions.
18 MR. OTTO: Nor do 1.
19 MR. TILEY: Is that it?
20 MR. HENDERSHOT: That's it.
21 MR. OTTO: With all due respect, I don't believe you
22 need argument. I'm happy to provide it but post hearing
23 memorandum perhaps?
24 MR. TILEY: I want to talk about that a little bit and I
25 don't want to get into argument now because I think memos
164
1 would be a better way to address it.
2 But, a couple of things. First of all, very early in today's
3 proceedings I thought I heard either Mr. Hendershot or Mr. Otto
4 say that the consent of the beneficiary was required to remove or
5 change a trustee.
6 MR. OTTO: I believe Mr. Hendershot asserted consent
7 of all beneficiaries was required and we only have one here. I
8 believe, with all due respect, that's a misstatement of law. We can
9 address that in the memorandum.
10 MR. TILEY: I was wondering where that was because I
11 don't see that requirement. Okay.
12 MR. HENDERSHOT: One matter you wanted
13 addressed.
14 MR. TILEY: I wanted to make that clear.
15 MR. OTTO: Need to hear from us on this issue.
16 MR. TILEY: Yes. I don't see that in here.
17 Now, shortly before today's hearing started I grabbed online,
18 on an online source, I believe to be accurate, Section 706 of the
19 Uniform Trust Act.
20 MR. HENDERSHOT: May I ask your source for that?
21 MR. TILEY: UTC Project.org.
22 MR. HENDERSHOT: Each UTC is different.
23 Pennsylvania has its own UTA.
24 MR. TILEY: That's why I went to the UTC.org because
25 I was interested in seeing what then resulted in the act that we have.
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1 MR. OTTO: We can certainly address the
2 differences between the Uniform Act in Pennsylvania. Intend to do
3 so in the memo. It's important in terms of the complete bank case
4 and subsequent history with it. We would address that.
5 MR. TILEY: I think it might be, because I was
6 interested, and I think you might want to know a little bit of my
7 thoughts so I'm giving them to you to assist you in doing that.
8 I was interested in the fact that Section 706 of the UTe at its
9 subsection b4 specifically allowed a beneficiary to change the
10 trustee.
11 MR. OTTO: That's where the section that requires
12 consent of all the qualified beneficiaries resides.
13 MR. TILEY: And so I guess, Mr. Otto, as judges like to
14 do to, I'll tell you some of my concerns. And I'm going to turn to
15 Mr. Hendershot. One of my concerns was our legislature did not
16 choose to give, to include that provision b, that portion of b4.
17 MR. OTTO: We'll address that in our memo.
18 MR. TILEY: That's one thing. And the second thing
19 is, in reading the comment, the official comment. And this is the
20 Uniform law official comment, which is what incidentally I first
21 read, and it started talking about beneficiary permission and it
22 wasn't in the statute, which is why I went-
23 MR. OTTO: Left comment in and took the section out,
24 I think.
25 MR. TILEY: Right. At the end of the comment
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1 they talk about a portion that wasn't there, which is how I ended
2 up online. But in that comment it says, "A corporate reorganization
3 of an institutional trustee is not itself a change of circumstances if it
4 does not affect the service provided the individual trust account".
5 My other concern on Mr. Westcott's case is related to that,
6 and it's related to Mr. Hendershot's argument that the service hasn't
7 started.
8 MR. OTTO : We apprehend the issue and we'll address
9 it in our memo.
10 MR. TILEY: Okay. From Mellon's prospective, I also
11 have two concerns. One is, I must tell you that my sense is that the
12 testimony we have and the facts on the ground are that this wasn't
13 just a change of name for Mellon; this was a change of operation, a
14 different type of operation. I'm not saying it's a bad type of
15 operation but it is a different type of operation and a different
16 physical location to a certain extent.
17 So I think that again I'm going back to that sentence, a
18 corporate reorganization of an institutional trustee is not a change of
19 circumstance if it does not affect the service provided. I think it's
20 more than just a corporate reorganization that has occurred. The
21 testimony itself is, we sold the retail banking. We now have this
22 different kind of operation that we think is actually better and may
23 be better. It's physically located differently but it is a different
24 kind of operation. So that's a thought.
25 The second thing is, I'll preface it with having sat here
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1 all day, I would have rather the judge decided this, because both are
2 fine institutions and both have good assets and a lot to commend
3 them. And there is, I would suspect, and I actually wrote this as
4 one of my many notes, some of which were testimony and some of
5 which were thoughts, that I might write later, that I feel that Mellon
6 could, if permitted by the Auditor and the Court, and if permitted by
7 the beneficiary, provide a good service. But why not allow the
8 beneficiary to guide this.
9 I think that the preamble to subsection b, where it speaks
10 about the best interests of the beneficiaries, I think that does open
11 the door to the beneficiary's wishes founded or unfounded. And
12 that, I think, is also an issue that needs to be addressed.
13 And maybe I'm wrong legally and I understand you may have
14 a different argument legally and factually. So those are the initial
15 thought.
16 MR. OTTO: We appreciate knowing what's on your
17 mind so we can address it. It's very helpful. Thank you.
18 MR. TILEY: Now, a briefing schedule. Let's go off the
19 record.
20 (Off record discussion.)
21 MR. TILEY: We will do this. We will start our
22 briefing schedule when we receive the transcript. We will have
23 thirty days from the date of mailing of the transcript for briefs. I
24 anticipate both briefs being filed contemporaneously. I shouldn't
25 say both. Feel free to do so as well.
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1 MR. MORGENTHAL: Sure.
2 MR. TILEY: And do we know now whether we want
3 responsive briefs after that?
4 MR. OTTO: I would respectfully suggest that all of us
5 be given the option to file a supplemental within two weeks
6 thereafter.
7 MR. TILEY: That's what I was thinking, fifteen days
8 for any response.
9 MR. HENDERSHOT: I think the difference is we
10 thoroughly explored the legal issues before and they're reflected in
11 the facts during the hearing.
12 MR. OTTO: You've told us the issues you want
13 addressed and that's tremendously helpful. And there maybe others.
14 MR. TILEY: That's what I'm thinking. I don't mean to
15 limit you.
16 MR. HENDERSHOT: We do have to be cognizant of
17 the expense of everything here.
18 MR. TILEY: Another issue. I can tell you that I think
19 the cost of the transcript is something that would be chargeable to
20 the estate along with my fees.
21 MR. OTTO: I think we agree on that.
22 MR. MORGENTHAL: I think we did too.
23 MR. OTTO: Claims for counsel fees remain to be seen
24 depending on the result. I think it's fair to say not claim for counsel
25 fees where they're allocated.
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1 MR. TILEY: I'm inclined to have Mr. Westcott pay
2 his fees, Mellon Bank pay their fees, and I think the estate certainly
3 needs to pay Mr. Morgenthal' s fees in addition to his other
4 administrative fee. That's where I'm leaning. If you folks want to
5 address that you can.
6 MR. HENDERSHOT: I think it should be addressed. I
7 think those cases I submitted do talk about that.
8 MR. TILEY: Okay. I haven't thought of it legally.
9 MR. HENDERSHOT: I know.
10 MR. OTTO: I'm not trying to give anything away for
11 the estate. It seems Mellon's position may be entitled to have fees
12 paid from the trust.
13 (Off record discussion.)
14 MR. TILEY: Back on the record. Does anybody else
15 have anything they wish to address? If not-- Wait a minute, one
16 moment please. I believe that Mellon Bank, 1 and 2, you move for
17 admission?
18 MR. HENDERSHOT: Yes.
19 MR. OTTO: No objection.
20 MR. MORGENTHAL: No objection.
21 MR. TILEY: Admitted.
22 (Whereupon, Mellon Exhibits 1 and 2 were admitted
23 into the record.)
24 MR. HENDERSHOT: Another thing, if you will keep in
25 touch with Judge Oler?
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1 MR. TILEY: Well, I'm going to have to request
2 an extension of time. I think I have until November 15th.
3 MR. HENDERSHOT: I give you my consent.
4 MR. OTTO: You may enlarge the time to whatever
5 degree.
6 MR. MORGENTHAL: Yes.
7 MR. TILEY: I can relay that I have consent.
8 (Off record discussion.)
9 MR. TILEY: The hearing is closed.
10 (Adjourned at 2:55 p.m.)
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3 I hereby certify that the foregoing proceedings were taken
4 stenographically by me, and thereafter reduced to typewriting by me
5 or under my direction, and that this transcript is a true and accurate
6 record to the best of my abilities.
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Cheryl Farner Donovan
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Registered Professional Reporter
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12 Notary Public, Cumberland County
13 My commission expires July 23, 2011
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22 (The foregoing certification of this transcript does not apply
23 to any reproduction of the same by any means unless under my
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