HomeMy WebLinkAbout04-09-10IN RE: :1N THE COURT OF COMMON PLEAS OF
ESTATE OF LOTTIE IVY DIXON :CUMBERLAND COUNTY, PENNSYLVANI A
Deceased
:ORPHANS' COURT DIVISION
:NO. 21-07-0686
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IN RE: :IN THE COURT OF COMMON PL - ~ ~o
ESTATE OF GEORGE F. DIXON, JR. :CUMBERLAND COUNTY, PENNS NIA, ;- ,_;
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PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW SUBMITTED BY
GEORGE F. DIXON, III AND RICHARD E. DIXON
I. Proposed Findings of Fact
1. Lottie Ivy Dixon ("decedent"), died on June 28, 2007 at the age of seventy nine
(79), domiciled at 1571 Boiling Springs Road, Boiling Springs, Pennsylvania.
2, Decedent, a widow whose husband, George F. Dixon, Jr., predeceased her on
August 28, 1993, left four children to survive her: George F. Dixon, III and Richard E. Dixon
(together "the brothers"), Marshall L. Dixon ("Marshall"), and a daughter, Charlotte Dixon
("Charlotte")
3. The decedent's Will ("Will") was probated in the office of the Register of Wills
of Cumberland County on July 19, 2007 and is docketed as Will No.: 0686.
4. The Will, dated November 15, 2005, names decedent's son, Marshall, as
executor, provides for certain specific bequests and devises benefiting Marshall and Charlotte
and directs the residue be distributed to the trustees of the decedent's revocable trust ("trust")
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dated August 19, 1985, which had benefited decedent during her lifetime, to hold in further trust
in accordance with the terms of that trust.
5. The trust directs that the trustees pay the income from the trust at decedent's death
to decedent's issue, per stirpes, for a period often years after decedent's death and then to
distribute the trust remainder to her then surviving issue, per stirpes. Accordingly, the brothers,
Marshall, and sister, Charlotte, are current income beneficiaries and contingent remaindermen of
the trust.
6. During the decedent's lifetime, she was the beneficiary of the George F. Dixon,
Jr. QTIP Trust (the "QTIP Trust"), established by the decedent's late husband.
7. The Co-Trustees of the QTIP trust are Manufacturers and Traders Trust Company
("M&T"), and the brothers.
8. During her lifetime, the decedent had established the revocable trust; as a result of
her death, M&T and the brothers succeeded to the position of successor Co-Trustees of that trust.
9. Marshall, in his capacity as executor of decedent's Will, has filed his account for
audit by this Court.
10. Marshall filed his Petition for Adjudication and Statement of Proposed
Distribution on July 25, 2008. The brothers responded by filing several objections on August 22,
2008. M&T also filed objections.
11. The brothers' objections included that substantial assets includable in the estate
were not accounted for and/or were improperly excluded or omitted from the administration of
the estate.
12. On December 1, 2008, this Honorable Court appointed Wayne F. Shade, Esquire
as auditor and directed that he hear the objections and file a report with this Court.
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13. A Petition for Adjudication/Statement of Proposed Distribution was also filed for
the QTIP Trust and objections thereto were filed by Marshall Dixon as executor and in his
individual capacity.
14. The objections to the QTIP Trust account were consolidated for hearing and
disposition with the objections to the estate account by order of Court dated June 17, 2009.
15. Prior counsel for the brothers, Martson Law Offices, was authorized to withdraw
as counsel by order of Court dated December 11, 2009.
16. Undersigned counsel from the law firm of Obermayer Rebmann Maxwell &
Hippel LLP entered their appearance for the brothers on January 22, 2010.
17. Counsel for the brothers filed a Petition for Appointment of Administrator Pro
Tem Pursuant to 20 Pa C.S. § 4301 on February 10, 2010.
18. Counsel for the brothers filed a Petition for Sixty (60) Day Continuance of
Auditor's Hearing on February 19, 2010.
19. By order of Court of February 23, 2010, both petitions were denied based upon
the report and recommendation of the Auditor.
20. Marshall, born August 8, 1962 and now 47 years old, has never married and has
no children. He has lived with his parents or in his parents' home at 1571 Boiling Springs Road,
Boiling Springs, PA, his entire life, except for brief periods while taking college courses and
during his extensive travels. He has always maintained his parents' home or post office box as
his permanent address. [Transcript of Auditor's Hearing of February 24, 2010 (hereinafter "Tr.")
at 40, 64].
21. Marshall Dixon was living full-time with his mother when she died in 2007 and
had been living there full-time since at least 2002. [Tr. 42-43, 64].
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22. Marshall Dixon never had full-time employment during this time and had little to
no salary or business income. [Tr. 43-46, 63-65].
23. Marshall Dixon borrowed money from the family QTIP Trust to start a business
known as Hollywood Trucks, a truck rental company for the movie industry. [Tr. 47-48]. Mr.
Dixon was not able to state what, if any, income he received from that business. [Tr. 44-46].
24. During the late 1990s to the date of decedent's death in 2007 (hereinafter the
"Period"), Marshall did not hold a permanent salaried position but invested in a number of
business ventures, including Hollywood Trucks, Inc., a home theater store, GNT Home
Entertainment, [Tr. 43-46], and an Internet radio station. [Tr. 64-65].
25. These ventures did not produce financial returns sufficient to sustain Marshall's
standard of living during the Period.
26. Despite his lack of business income and lack of a salaried position, Marshall led a
life of leisure and engaged in substantial spending during the Period.
27. Marshall traveled extensively throughout the United States and elsewhere during
the Period. [Tr. 46-47].
28. Decedent had a personal bank account, account # 28675576 that originated at a
predecessor bank to M&T (the "account"). The account was funded solely by the funds of Lottie
Ivy Dixon. [Tr. 62]. Prior to June 2003, Marshall had no signatory authority on the account.
29. The account was converted to a joint account with Marshall in June 2003. [Tr. 71-
73]. As reported on the decedent's Pennsylvania Inheritance Tax Return by Marshall, at the
decedent's death, the account had a balance of $33.25.
30. During the Period checks issued from the decedent's account were paid to or for
the benefit of Marshall. [Tr. 96-100]. During the Period, there were also electronic payments
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and transfers of assets from decedent's accounts to or for the benefit of Marshall, an electronic
feat of which decedent was incapable. [Tr. 84-85].
31. There were many checks written on the account and extensive cash payments and
transfers to or for the benefit of Marshall some allegedly made by the decedent and many made
by Marshall himself during the Period.
32. Marshall sometimes transferred decedent's assets to or for his benefit without
decedent's specific knowledge.
33. Marshall used funds in the decedent's brokerage and bank accounts during the
Period to purchase goods and services benefiting himself - at least some of which occurred
without decedent's specific knowledge and permission.
34. Decedent became dependent upon Marshall. During the Period, decedent's health
deteriorated, she became unable to balance her checkbook and Marshall oversaw the decedent's
financial matters, including the payment of bills of the decedent.
35. Decedent never designated Marshall as her agent under any General Financial
Power of Attorney.
36. The M&T checking account was a "convenience account" set up for decedent's
care during her lifetime and to allow Marshall Dixon to sign checks if necessary to assist his
mother in paying bills/expenses.
37. It is clear that Marshall Dixon was writing checks on the account over many years
for his own benefit. [Tr. 58, 96-100].
38. The Auditor ruled that counsel for the brothers could not question Marshall Dixon
about any of the checks written out of the account. [Tr. 60].
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39. Marshall Dixon did not recall putting any funds into the account. The monies in
the account belonged to Lottie Ivy Dixon during her lifetime. [Tr. 62].
40. With regard to certain checks written to or for the benefit of Marshall Dixon,
Marshall Dixon testified that "some were gifts, some were reimbursements." [Tr. 62].
41. Marshall Dixon wrote many checks on the account in payment of his own credit
cards and signed these checks himself. See, e.g., chart attached as Exhibit A. [Tr. 96-100].
42. Based on the checks attached as Exhibit 6 to the Transcript, on just two days in
2005 -November 14 and December 30 -Marshall Dixon wrote out and signed ten (10) checks
on the account for a total of $9,475.09 in payment of certain of his credit card accounts. See,
Exhibit A. This was so despite the fact that Mrs. Dixon was writing out and signing the majority
of checks during this time.
43. Marshall Dixon conceded that the checking account records for the period of May
2001 through the date of Mrs. Dixon's death reflect payments of at least $154,743.74 from the
account to Marshall Dixon or to credit card companies for Marshall Dixon's credit card
accounts. See, "Second Pre-Hearing Memorandum filed by Marshall Dixon as Executor" at p. 9.
There are extensive additional payments and electronic transfers both before and during this time
period that are not reflected in the $154,743.74 figure.
44. There was no testimony or other evidence regarding the source of funds used to
replenish the joint account on an ongoing basis, whether decedent approved or authorized such
transfers and/or whether such transfers depleted assets that otherwise would have been included
in the estate.
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45. The only testimony or evidence regarding whether checks from the account or
transfers of funds from the account to or for the benefit of Marshall Dixon were "gifts" to
Marshall Dixon from the decedent was the testimony of Marshall Dixon himself.
46. No independent evidence or testimony was presented to establish that the
transfers or payments made from the account to or for the benefit of Marshall Dixon were
intended to be gifts from the decedent to Marshall Dixon.
47. No independent evidence or testimony was presented to establish that the
transfers or payments made from the account to or for the benefit of Marshall Dixon were valid
inter vivos gifts.
48. The brothers timely objections to Marshall's account as executor included
objections to this failure to account for assets taken by him and for his benefit during decedent's
lifetime.
II. Proposed Conclusions of Law
Duty of Executor /Conflict of Interest
Marshall Dixon, as an executor, has a duty to gather decedent's assets, including
decedent's assets in his possession and the possession of others, and add them to and administer
them as part of the decedent's estate.
2. If an executor has reason to know someone has taken possession of decedent's
assets improperly, the executor has a duty to engage in discovery to determine the circumstances
under which those assets were transferred including the obligation to determine whether the
transfers were improper and whether any alleged gifts were conclusively established.
If, as a result of such investigation, an executor determines that someone
wrongfully obtained and holds such assets, the executor has a duty to recover them.
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4. Marshall is in a conflict of interest position and cannot be expected to perform his
duties as executor with respect to the assets transferred to him, and payments made by charge
card and bank accounts to him or for his benefit, by himself and decedent, and their recovery on
behalf of the estate.
5. On the one hand, Marshall, in his capacity as executor, is charged with ensuring
that all of decedent's assets are included as part of the estate. On the other hand, Marshall, in his
individual capacity, is alleged to have misappropriated assets during decedent's lifetime that
have been omitted from administration of the estate. This presents a clear conflict of interest.
6. Likewise, it is a conflict of interest for the law firm of McNees Wallace & Nurick
LLC to represent Marshall in both capacities. See, Rule 1.7 of the Pennsylvania Rules of
Professional Conduct. ("[A] Lawyer shall not represent a client if the representation involves a
concurrent conflict of interest."); See, Opinion 99-03 (7/27/09), from Kansas, stating: "A lawyer
may not represent a widow in her capacity as administratrix of an intestate estate and also in her
capacity as heir, since her dual roles create a personal conflict and the lawyer cannot be released
by the client through a waiver under Rule.1.7. The conflict may be resolved if all the heirs agree
to the widow's position or a special administrator is appointed to handle the widow's claims.
Rule 1.7." The Kansas Rule 1.7 is identical to Pennsylvania's Rule 1.7, and is derived from the
ABA's Model Rules.
7. The McNees firm entered its appearance on behalf of Marshall Dixon as executor.
The McNees firm's duty is to represent Marshall, who, as an executor, has a fiduciary duty to
collect and preserve estate assets. It is inconsistent and conflicting that McNees could also
represent him as a party who is alleged to have misappropriated assets before he became
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executor and should, himself, be the subject of asset collection efforts. Daniel L. Sullivan,
Esquire entered his appearance to represent Marshall Dixon in his individual capacity.
It was error for the Auditor to rule that there is no conflict and allow the McNees
firm to act in court by representing Marshall Dixon when he was being questioned in his
individual capacity concerning his use of funds from the joint account prior to becoming
executor.
The Joint Bank Account
9. The Multiple-Party Accounts Act at 20 Pa. C.S. §6303(a) provides: "A joint
account belongs, during the lifetime of the parties, to the parties in proportion to the net
contributions by each to the sum on deposit, unless there is clear and convincing evidence of a
different intent."
10 The official Advisory Committee Comments to Section 6303 state: "This section
reflects the assumption that a person who deposits funds in a multiple-party account normally
does not intend to make an irrevocable gift of all or any part of the funds represented by the
deposit. Rather, he usually intends no present change of beneficial ownership. The assumption
maybe disproved by proof that a gift was intended." See, In re Novosielski, 20 WL 1078284 (Pa.
Mar. 25, 2010); Lessner v. Rubinson, 382 Pa. Super. 306, 555 A.2d 193 (1989), aff'd, 527 Pa.
393, 592 A.2d 678 (1991).
11. The Comments further state: "The theory of these sections is that the basic
relationship of the parties is that of individual ownership of values attributable to their respective
deposits and withdrawals...That is to say, the account operates as a valid disposition at death
rather than as a present joint tenancy."
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12. In Wilhelm v. Wilhelm, 441 Pa. Super. 230, 657 A.2d 34 (1995), the
Pennsylvania Superior Court applied the test for ownership of assets in a joint account: "Under
Section 6303 [20 Pa.C.S. §6303], during the lifetime of the parties, a joint account belongs to the
party or parties who contributed the funds to the account, unless there is clear and convincing
evidence of a different intent. Proof that a different intent existed and a gift was given is the
burden of the party who is claiming to have received the benefit of that gift. Such proof must be
established by clear, precise, direct and convincing evidence." 441 Pa. Super. at 236, 657 A.2d at
37 (citing Lessner v. Rubinson, 382 Pa. Super. 306, 555 A.2d 193 (1989)). The Superior Court
ruled that where the decedent contributed 100% of the funds in the joint account and his
children's names were added to the accounts, the children had no right to control the money
during decedent's lifetime as they did not make any contribution and did not prove an inter vivos
gift. Id., 657 A.2d at 38.
13. In Lanning v. West, 2002 Pa. Super. 224, 803 A.2d 753 (2002), prior to
decedent's death, decedent brought suit against her daughter for improper use of their joint
account funds. The Court found that the decedent contributed 100% of the funds in the joint
account and 100% of the account belonged to the decedent. In order to overcome Section 6303,
the daughter would have to show clear, direct and convincing evidence of a gift. Id., 803 A.2d at
761. The Court noted: "After a thorough review of the evidence in this case, it is clear that
[daughter's] testimony failed to establish, by clear, precise and convincing evidence that
decedent gave her the funds in the joint account as an inter vivos gift. West's testimony also
failed to refute [the] allegation that West converted the funds to her own use without legal
justification." Id., 803 A.2d at 764. Accordingly, the Court affirmed the lower court ruling that
the funds misappropriated by the daughter must be returned to the decedent's estate. Id.
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14. In Mallalieu v. Mallalieu, 15 Fiduc. Rep. 2d 139 (Chester 1994), mother added
son's name to her bank account with right of survivorship. The court stated, "since [son] did not
own or contribute any of the funds invested, I must decide if there is clear and convincing
evidence that the plaintiff intended to make an immediate gift at the time she titled the account
jointly. The evidence shows an intent on the part of the plaintiff to have the money in question
go to her son upon her death. However, there is no evidence, and certainly not clear and
convincing evidence, from which I can find that she intended an immediate gift to [son] at the
time the account was created." Id. at 141. Thus, mother was free to change the ownership of her
account as she wished.
15. In Hawk Estate, 8 Fiduc. Rep. 2d 391 (Allegh. 1988), decedent's estate brought
an action against daughter who was the survivor owner of a joint bank account with decedent.
At decedent's death, the account that originally had a balance of over $100,000.00, had a balance
of $3.42. The Court noted that, "respondent concedes that all of the sums on deposit of the joint
accounts came solely from the decedent and that the primary purpose in creating the joint
accounts was to enable respondent to pay the decedent's bills." Id. at 394. The Court also noted,
"respondent conceded that the decedent totally relied upon respondent to manage decedent's
financial affairs. Respondent managed the day-to-day signing of checks from the joint accounts
without any intervention from her brother or sister." Id. The Court held, "there is no proof,
aside from the respondent, that the decedent intended or comprehended that she was
relinquishing complete control over the funds in question" and the daughter was ordered to
return the funds used for her use, plus interest, to the decedent's estate. Id. at 395.
16. Marshall did not contribute any of the funds to the account, yet checks or transfers
drawn on the account were for his personal benefit. It was not until the decedent's health
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declined that she named Marshall as joint owner on her bank account. There is no evidence that
the decedent intended this to be an immediate gift to Marshall. Even as Marshall explained in
his testimony, the account was to be used for expenses for his mother.
17. Just days ago, the Supreme Court of Pennsylvania, in In re Novosielski, 2010 WL
1078284 (Pa. Mar. 25, 2010), slip op. at 20, reiterated:
Like other testamentary devices, creation of a joint account,
without more, accomplishes no present transfer of title to
property. If, as in this case, one person deposits all sums in the
joint account, this arrangement contemplates transfer of title to
those funds to the other person or persons named on the account
upon the death of the depositor. Moreover, the creator of a joint
account, like the maker of a will and unlike the giver of a gift,
may change his or her mind prior to death.
Quoting Deutsch Larrimore & Famish v. Johnson, 848 A.2d 137, 143-44 (Pa. 2004) (plurality).
18. The Court further explained:
[T]he MPAA [Multiple-Party Accounts Act] makes clear that
joint accounts with a presumed right of survivorship are not
treated as inter vivos gifts from one account holder to another.
Rather, the MPAA plainly provides: "A joint account belongs,
during the lifetime of all parties, to the parties in proportion to the
net contributions by each to the sum on deposit, unless there is
clear and convincing evidence of a different intent." 20 Pa. C.S. §
6303(a). As the official comment to Section 6303 states:
The theory of these sections is that the basic
relationship of the parties is that of individual
ownership of values attributable to their
respective deposits and withdrawals; the right
to survivorship which attaches unless ne ag ted
the form of the account really is a right to
the values theretofore owned by another which
the survivor receives for the first time at the
death of the owner. That is to say, the account
operates as a valid disposition at death rather
than as a present joint tenancy. 20 Pa.C.S. §
6303(a).
*~*
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Second, as we stated in Deutsch, joint accounts with rights of
survivorship are typically created as "convenience accounts" to
allow caretakers to assist senior citizens with the management of
their finances. "Like other testamentary devices, creation of a
joint account, without more, accomplishes no present transfer of
title to property. If...one person deposits all sums in the joint
account, this arrangement contemplates transfer of title to those
funds to the other person or persons named on the account upon
the death of the depositor. Moreover, the creator of a joint
account, like the maker of a will and unlike the giver of a gift,
may change his or her mind prior to death." Deutsch, supra at
144. In Deutsch, we determined that, pursuant to Sections 6303
and 6304(a) of the MPAA, ...the non-contributing owner had no
right of ownership in the account funds until the death of the
contributing owner.
Id., slip op. at 24-25. (emphasis original).
19. Thus, adding Marshall Dixon's name to the account in June 2003 did not transfer
any title to property and Marshall Dixon had no right of ownership in the account funds during
the decedent's lifetime.
The Law Regarding Inter Vivos Gifts
20. The Court must determine whether the payments made and transfers of assets to or
for the benefit of Marshall Dixon constituted valid inter vivos gifts.
21. In order to prove a valid inter vivos gift, the alleged donee must make a prima
facie showing of donative intent and delivery. E.g., Hera v. McCormick, 425 Pa. Super. 432, 625
A.2d 682 (1993).
22. If one of these two prongs cannot be proved, the "gift" will fail. The standard of
proof for the two required elements is by clear and convincing testimony. Id.
23. The Pennsylvania Supreme Court has defined "clear and convincing" evidence to
establish a gift in In re Estate of Fickert, 461 Pa. 653, 658, 337 A.2d 592, 594 (1975), as follows:
[T]he witnesses must be found to be credible, that the facts to
which they testify are distinctly remembered and the details
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thereof narrated exactly and in due order, and that their testimony
is so clear, direct, weighty, and convincing as to enable the jury
to come to a clear conviction, without hesitancy, of the truth of
the precise facts in issue.
This standard was very recently restated by the Court in In re Novosielski, supra.,
slip op. at 27.
24. In Hera v. McCormick, supra, the issue was whether decedent made valid inter
vivos gifts of her certificates and the proceeds of her checking and savings accounts. The Court
summarized Pennsylvania law as follows:
The prerequisite elements necessary to prove a valid inter vivos
gift are donative intent and delivery. Estate of Korn, 332 Pa.
Super.154, 480 A.2d 1233 (1984). Initially, the burden is on the
alleged donee to prove a gift inter vivos by clear, precise and
convincing evidence. In re Pappas Estate, 428 Pa. 540, 239 A.2d
298 (1968). Once prima facie evidence of a gift is established, a
presumption of validity arises and the burden shifts to the
contestant to rebut this presumption by clear, precise and
convincing evidence. Id. As discussed below, a presumptively
valid gift maybe rebutted by establishing that donor and donee had
a confidential relationship at the time the alleged gift was made.
Banko v. Malanecki, 499 Pa. 92, 451 A.2d 1008 (1982); In re
Estate of Clark, 467 Pa. 628, 359 A.2d 777 (1976).
25. Thus, the burdens of proof for an inter vivos gift have been summarized as
follows:
At inception of trial:
(a) the burden of proof is on the proponent of the gift
(b) to prove the gift (donative intent and delivery)
(c) by clear and convincing evidence.
2. Thereafter, if the proponent has established a prima facie case of gift:
(a) the burden of proof shifts to the contestant
(b) to rebut the presumption of the validity of the gift
(c) by clear and convincing evidence.
3. The contestant may rebut the presumption of validity by proving a
confidential relationship existed between decedent and donee. If he does:
(a) The burden of proof shifts back to the proponent
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(b) To prove that the gift was freely, voluntarily and intelligently
made.
E.g., In re Estate of Clark, 467 Pa. 628, 359 A.2d 777 (1976).
26. The burden of proof is on Marshall Dixon as the alleged donee to prove inter
vivos gifts by evidence arising from legally competent witnesses that is clear, precise,
convincing and independent evidence. In re Pappas Estate, 428 Pa. 540, 239 A.2d 298(1968);
Hera v. McCormick, supra.
27. The Auditor erred in sustaining the objection to counsel for brothers questioning
Marshall Dixon about checks written on the account.
28. The Auditor erred in ruling that the above objection was sustained unless counsel
for brothers could prove that it was not decedent's intent to make a gift.
29. The Auditor failed to apply the correct burden of proof. The burden of proof is on
Marshall Dixon to establish valid inter vivos gifts. The burden is not on the brothers to disprove
gifts in the first instance.
30. The Auditor erred as a matter of law in stating that "when you place funds in joint
ownership... the law is clear that when you do that, you're making a gift... the gift happens right
then." [Tr. 51-52]. The law in Pennsylvania is just the opposite. See, supra, paragraphs 9-18.
31. Proof of the donative intent by the donee alone is not sufficient to show intent to
make a gift under the clear and convincing evidence standard. Hera v. McCormick, supra.
32. Marshall Dixon was unable to prove delivery and intent, since the only testimony
offered to prove intent was the donee's own statements as to the decedent's alleged
conversations with him.
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33. Marshall Dixon failed to introduce prima facie evidence of donative intent, and
accordingly, his testimony as to the decedent's statements of intent was inadmissible, based on
the applicability of the Dead Man's Act, 42 Pa. C.S. §5930. As the Court determined in Hera v.
McCormick, supra, 425 Pa. Super. at 444,
"Where, as in this case, there is an issue regarding the validity of
an inter vivos gift, the court may not admit statements of
decedent absent independent testimony establishing prima facie
evidence of donative intent and delivery. Friedeman v. Kinnen,
452 Pa. 365, .305 A.2d 3 (1973). If the alleged donee fails to
establish prima facie evidence of a gift or transfer by independent
testimony before he takes the stand, he is not competent to
testify. Id."
See, In re Estate of Petro, 694 A.2d 627 (Pa. Super. 1997), appeal denied sub. nom.
Estate of Petro v. Cuniak, 550 Pa. 719, 706 A.2d 1213 (1997). ("Thus, in the instant case, the
court could not admit the daughters' testimony regarding John Petro's statements about inter
vivos gifts without independent testimony establishing prima facie evidence of donative intent
and delivery." 694 A.2d at 632-33); See also, Ford Estate, 431 Pa 185, 245 A.2d 443 (1968).
34. In this case, the sole testimony to support the inter vivos gift is the testimony of
Marshall Dixon. Since there was no legally sufficient evidence to demonstrate a prima facie gift,
however, this testimony was not competent. Id.
35. The evidence in this case is insufficient to prove donative intent or delivery.
There was no dispositive proof that Marshall Dixon was authorized to conduct all of the financial
transactions made. There was no evidence that a power of attorney or the joint account
authorized Marshall Dixon to make substantial gifts to himself. See, Hera v. McCormick, supra.
36. Marshall Dixon failed to proffer sufficient evidence of decedent's donative intent
for each and every transaction he performed. Hera v. McCormick, supra.
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37. Marshall Dixon was not competent to testify about alleged conversations with
decedent regarding the alleged gifts or alleged authorizations to make the gifts because he failed
to establish prima facie evidence of valid inter vivos gifts by independent testimony. Friedeman
v. Kinnen, 452 Pa. 365, 305 A.2d 3 (1973); In re Estate of Petro, 694 A.2d 627 (Pa.Super.1997);
Hera v. McCormick, supra.
38. Marshall Dixon had the burden to establish by clear, convincing and independent
evidence that decedent intended to make inter vivos gifts of monies and transfers from the joint
account and brokerage account. Id. Because he did not meet this burden, the Dead Man's Act
disqualifies his testimony about decedent's intent regarding these transfers of assets. Id.
39. For the Auditor to suggest that because Marshall Dixon wrote a "bunch of
checks" for his own benefit that "that's the clear and convincing and precise evidence that I
would need to establish [donative] intent..." [Tr. 56] begs the question. There is no independent
evidence that Lottie Ivy Dixon knew about every self-dealing transaction, knew the amounts and
details involved, knew or understood Marshall Dixon's financial affairs and intended for each
and every payment or transfer of funds to be gifts to Marshall Dixon.
40. All but one check shown in Exhibit 6 to the Transcript that represents payment for
Marshall Dixon's credit cards or otherwise for his benefit was signed by Marshall Dixon and not
by the decedent -even though the decedent was signing the great majority of the checks during
most of this time period. In addition, we already know that Marshall Dixon handled electronic
payments or transfers or withdrawals because decedent did not use a computer. [Tr. 85].
41. The Auditor erred in concluding that "it seems clear to me that Mrs. Dixon never
raised any objection to these checks being drawn against her account" [Tr. 55] when obviously
4455697 1 7
there was no testimony from Mrs. Dixon, no independent testimony competent under the Dead
Man's Act and no record to support the statement.
42. The Auditor erred as a matter of law and made assumptions not of record in
stating: "So it would seem to me that the evidence of her intent to make a gift to Marshall for
whatever he needed is apparent from a course of dealing over many years... my ruling remains
that unless you can establish that she did not intend to, that Marshall could write checks against
this account for his own benefit... I would find it very difficult to believe that she did not
authorize whatever he was doing." [Tr. 56-57]. Again, this statement assumes facts that had not
yet and never were established in the record with respect to "a course of dealing" and, again,
misapplies the law of Pennsylvania on the burden of proving inter vivos gifts.
43. The Auditor erred in stating that: "if I sat here and assumed that he wrote
$200,000 worth of checks out of this account for his own benefit, I don't see how that changes
anything because if he's a joint owner of the account... I don't see how the estate suffered any
losses as a result of that." [Tr. 61 ]. The estate- suffered losses because Marshall Dixon was using
funds that belonged to the decedent for his own benefit, thus depleting assets that should have
been in the estate, and he is unable to prove that the checks were valid inter vivos gifts.
44. Assuming arguendo that Marshall Dixon was able to suggest the existence of
donative intent through other means, he must also meet the clear and convincing standard for
delivery of gifts of assets. The test for delivery is whether the donor relinquished "all dominion
and control over the property, but also must invest donee with complete control over the subject
matter of the gift." Hera v. McCormick, 625 A.2d at 686, citing In re Estate of Evans, 467 Pa.
336, 356 A.2d 778 (1976).
4455697 18
45. There was no "delivery" in this case since the decedent did not divest herself of
dominion and control over the joint account or other funds.
Confidential Relationship
46. Assuming arguendo that there was a prima facie showing of delivery and also
donative intent, any presumption of the validity of the gift is negated by the fact that a
confidential relationship existed between the donor and the donee. Once it has been shown that a
confidential relationship exists at the time of the alleged gift, the burden shifts to the donee to
affirmatively show that the alleged gift was freely, voluntarily and intelligently made. In re
Estate of Clark, supra; Thomas v. Seaman, 451 Pa. 347, 304 A.2d 134 (1973).
47. This Court recently reiterated that "a confidential relationship is
any relationship existing between the parties to a transaction
wherein one of the parties is bound to act with the utmost good
faith for the benefit of the other party and can take no advantage
to himself from his acts relating to the interest of the other party."
Biddle v Johnsonbaugh, 444 Pa. Super. 450, 455, 664 A.2d 159,
161-62 (1995) (citations omitted). This confidential relationship
is not limited to any particular association of the parties, but
exists whenever one is in a position of advisor or counselor,
whereby the other party, with reasonable confidence, trusts that
person to act in good faith for the other's interest. Id.
Rebidas v. Murasko, 677 A.2d 331, 334 (Pa. Super. 1996).
48. Kinship or a family tie such as the relationship of a parent-child is a factor to be
considered in establishing a confidential relationship. Id.; See, In re Dzierski Estate, 449 Pa. 285,
296 A.2d 716 (1972) ~ .
49. The facts show that the decedent placed Marshall Dixon on the joint account,
specifically the one with whom she had a very close relationship, whom she saw on a nearly
daily basis, and on whom she heavily relied. In addition to the daily contact with this son, Mrs.
~ Dzierski Estate, 449 Pa. 285, 296 A2d 716 (1972) involved an executor's claim to a joint bank account, which the
surviving joint holder claimed by right of survivorship and gift. One of the issues was a question of whether an intent to gift
could be inferred from the joint title on the account. The issue is now addressed by statute, namely 20 Pa. C.S. § 6303(a).
4455697 1 C~
Dixon depended on him for shopping and assistance with various activities of daily living. In
short, Mrs. Dixon trusted Marshall Dixon, and depended on him, and gave him authority to act
on her behalf on the joint account.
50. Based on the totality of the circumstances, the very close relationship between the
donor and the donee, the joint account, the size and impact of the alleged gifts, the existence of a
confidential relationship between Mrs. Dixon and Marshall Dixon has been established.
51. Once a confidential relationship has been established, the burden of proof lies
with Marshall Dixon to prove by clear and convincing evidence that the gifts were made freely,
voluntarily and intelligently, independently, entered or executed with knowledge and
understanding of the nature, terms, and consequences thereof. E.g., Estate of Buriak, 492 A.2d
1166 (Pa. Super.1985). This burden could not be met inthis case by Marshall Dixon.
52. The Auditor erred as a matter of law in finding that whether a "confidential
relationship" existed between Marshall Dixon and his mother was irrelevant: "So what difference
does it make if there were a confidential relationship or not?" [Tr. 13], and see [Tr. 18]. The
difference is that the burden of proof to establish valid lifetime transfers of assets remains with
Marshall Dixon once a confidential relationship is found to exist.
53. In this case, Marshall Dixon's status on the joint account, his extensive
involvement in the management of decedent's financial affairs and his intimate involvement with
his mother's daily care establish the existence of a confidential relationship. See, e.g. In re
Novosielski, supra.
54. Marshall Dixon should be surcharged and return to the estate an amount in excess
of $200,000 still to be determined for questionable or undocumented transfers of funds because
he breached his fiduciary duty and converted funds by making extensive payments from
4455697 20
decedent's accounts for his own benefit, beyond any rightful use of the joint account, and
without proving valid inter vivos gifts of funds in the joint account or other funds of the
decedent. See, In re Novosielski, supra.
Bias and Prejudice
55. At the hearing, the Auditor made statements showing that he was being
influenced by and considering factors relating to the brothers that have no legal relevance or
bearing upon the legal issues to be decided by him, including:
(a) "And in the back of my mind throughout this, I'm going to be saying,
well, if the brothers had concerns about what was going on between Marshall and their mother,
where were they in all this time during her lifetime?" [Tr. 6].
(b) "And I'm going to be somewhat skeptical... if the brothers basically sat on
their hands and let this arrangement continue for a long period of time..." [Tr. 6-7].
(c) "But for the record, I'm really skeptical...especially ifthe brothers sat
back for however long it was and allowed this to continue... where were they?" [Tr. 16].
(d) "... I have serious reservations about the relevance and probative value of
whatever is going to be introduced here today of events that were ongoing for years during the
lifetime of Lottie Ivy Dixon." [Tr. 34].
56. The above statements regarding what the brothers did or did not do viz-a-viz
Marshall Dixon's relationship with Lottie Dixon while she was living have no bearing on a legal
determination of whether assets of the estate were transferred that should be accounted for or
whether assets were misappropriated and/or improperly transferred. The Auditor demonstrated a
clear bias against the brothers in making the above statements which caused great prejudice and
harm to them in their ability to put on their case.
4455697 2 I
57. The brothers were effectively denied a full and fair opportunity to be heard on the
objection of missing assets.
The Costs of Audit
58. The general rule is that ordinarily the costs of an audit are deducted from the
estate. E.g. In re Grollman's Estate, 273 Pa. 565, 117 A. 351 (1922); In re Estate of Vaughn, 315
Pa. Super. 354, 461 A.2d 1318 (1983).
59. While ordinarily the costs of an audit are deducted from the estate, an
administrator or executor maybe charged with the costs of an audit made necessary by his fault
or conduct. Id.
60. Where the objections are made on a good faith basis or the objectors had probable
cause for disputing the account, the costs of audit, under the usual rule, should be deducted from
the estate or the funds for distribution. Id.; In re Burns Estate, 8 D.&C. 2d 277 (Pa. Orph. Cumb.
1956).
61. There were a number of Objections to the Estate Accounting filed in good faith by
the brothers and M&T Bank, including: various expenses paid out by the estate improperly, loss
in value of marketable securities, understated appraisals for personal property, and substantial
assets includable in the estate not accounted for. There were also objections filed to the proposed
distribution of the QTIP trust both by the brothers and by Marshall Dixon. All of the Objections
in both matters were resolved by the parties and their counsel prior to the hearing -except for the
missing assets objection. The interests of the estate were advanced and the estate benefited from
the resolution of the objections filed by the brothers.
62. The brothers had good faith bases and reasonable belief for disputing the
proposed account, including grounds to dispute the many thousands of dollars paid and/or
4455697 22
transferred out of decedent's accounts by, to or for the benefit of, Marshall Dixon that were not
accounted for as included in the estate. The estate stands to gain a significant recovery if this
objection is successful - an objection required because Marshall Dixon is unable to prove valid
inter vivos gifts.
63. The Auditor's fees and costs of the Audit should be charged to the estate and/or to
Marshall Dixon both in his individual capacity and in his capacity as executor.
64. Any delay in the termination and distribution of the QTIP Trust was based on
outstanding issues, including: (a) competing objections with regard to the unified tax credit and
the proper allocation of the estate tax refund; and (b) the trustees' consensus that the best manner
to maximize value for the beneficiaries of the real property was to obtain necessary development
approvals. Further, as a practical matter, M&T also needed to set an appropriate reserve for
defense costs. For these reasons, the costs of the audit related to the QTIP Trust objections
should be charged to the estate or the trust fund.
Date: April 9, 2010
By: 'h~'~"~`
Walter .Cohen, Esq.
Attorney ID #12097
Kevin J. Kehner, Esq.
Attorney ID # 33539
200 Locust Street, Suite 400
Harrisburg, PA 17101
717-234-9730
717-234-9734 (fax)
Paul C. Heintz, Esq.
Attorney ID #02906
Nina B. Stryker, Esq.
Respectfully submitted,
OBERMAYER REBMANN
MAXWELL & HIPPEL LLP
4455697 23
Attorney ID #36531
Erin E. McQuiggan, Esq.
Attorney ID #205673
One Penn Center, 19`x' Floor
1617 JFK Boulevard
Philadelphia, PA 19103
215-665-3212
215-665-3165 (fax)
4455697 24
EX~-IIBIT A
EXHIBIT A
Re: Exhibit 6 of Transcript
Checks signed by Marshall Dixon in payment of his credit cards or expenses:
Pale Check# Date Payee Amount
427 4341 11/14/05 Chase Card Services $ 750.00
427 4342 11/14/05 USAA $ 1,500.00
427 4343 11/14/05 US Bank $ 2,000.00
428 4693 11/14/05 Chase Card Services $ 1,200.00
438 4366 12/30/05 USAA $ 1,278.00
440 4364 12/30/05 Diners Club $ 386.20
440 4363 12/30/05 Bank of America $ 882.33
440 4365 12/30/05 USAA $ 1,000.00
440 4367 12/30/05 USAA $ 278.56
441 4369 12/30/05 Chase $ 200.00
447 4386 1/25/05 USAA $ 1,973.00
447 4387 1/25/05 US Bank $ 2,056.51
459 4722 3/22/06 USAA $ 122.80
454 4758 5/18/06 Chase Card Services $ 558.10
464 4760 5/19/06 Chase Card Services $ 271.00
492 4857 11/1/06 S. Neff Enterprises $ 1,500.00
492 4859 11/1/06 Bank of America $ 396.00
495 4862 12/13/06 S. Neff Enterprises $ 2,987.00
506 4920 4/12/07 Bank of America $ 205.00
459 4756 5/19/06 Marshall Dixon $1,000.00
503 4905 3/20/07 Cash $1,000.00
$9,475.09
$ 19,544.50
4458045
CERTIFICATE OF SERVICE
I, KEVIN J. KEHNER, ESQUIRE, certify that on this date, I have served a true and
correct copy of the foregoing Proposed Findings of Fact and Conclusions of Law on behalf of
George F. Dixon, III and Richard E. Dixon upon the following, by first class mail, addressed as
follows:
Daniel L. Sullivan, Esq.
Saidis Flower & Lindsay
2109 Market Street
Camp Hill, PA 17011
Elizabeth P. Mullaugh, Esq.
Kimberly M. Colonna, Esq.
McNees Wallace & Nurick
100 Pine Street, P.O. Box 1166
Harrisburg, PA 17108
Mark D. Bradshaw, Esq.
Stevens & Lee
Harrisburg Market Square
17 North Second Street, 16t~' Floor
Harrisburg, PA 17101
Charlotte Dixon
323. Bayview Street
Camden, ME 04843
Date: April 9, 2010
Wayne F. Shade, Esq.
53 West Pomfret Street
Carlisle, PA 17013
~c,~~~
Kevi . Kehner, Esq.
4455697 25