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HomeMy WebLinkAbout10-11-89 ". IN THE ESTATE OF ROBERT M. MUMMA, DECEASED IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-86-398 BRIEF OF GUARDIAN AD LITEM IN OPPOSITION TO PETITION OF ROBERT M. MUMMA. II INTRODUCTION Robert M. Mumma (the Testator) died on April 12, 1986, leaving a Last Will and Testament with a Codicil, both of which have been duly probated in the Office of the Register of Wills in and for Cumberland County to the above term and number. Robert M. Mumma II (the Petitioner) is one of four adult surviving children of the Testator and is named as one of the remaindermen of t!1.lsts created in Testator's will. On January 6, 1987, Petitioner executed a document entitled "Disclaimer by Robert M. Mumma, II". The disclaimer recited the provisions of t!1.lsts created under the will and concluded with Petitioner's disclaimer of "all right, title and interest in and to the principal of the trust under Article SEVENTH of the Will and the principal of the trust under Article EIGlITH of the WilL. ." This disclaimer was filed in the Office of the Register of Wills on January 12, 1987. On June 20, 1989, two and one-half years later, Petitioner filed a petition to revoke this disclaimer. Answers were filed in opposition to the petition by the Executrices/Trustees, Robert M. Frey, guardian ad litem of the minor children of Petitioner, and by Linda Roth, a sister of Petitioner. ARGlJMENT I. Disclaimers are enforceable The Probate, Estates and Fiduciaries Code, 20 Pa.C.S.A. ~6201 states that any person may disclaim an interest in property which would have devolved to the disclaimant if the disclaimer is in writing and it (1) describes the interest disclaimed; (2) declares the disclaimer and extent thereof; and (3) is signed by the disclaimant. Page 1 67/ If the disclaimer satisfies the above requirements, it has the effect of treating the disclaimant as having predeceased the testator. 20 Pa.C.S.A. ~6205. With this statute in mind, the relevant inquiry is whether Petitioner's disclaimer satisfies the statutory requirements. The first and last requirements are not at issue since a written disclaimer signed by Petitioner was filed in the Estate of Robert Mumma. The first question to be examined is whether Petitioner's disclaimer describes the interest to be disclaimed. Petitioner argues that it does not describe the interest disclaimed because he alleges he was given inaccurate information regarding the estimated value of the estate. Petitioner's emphasis on the valuation is misplaced. The question is not whether the disclaimer describes the value of the property disclaimed, but whether he recoguized what interest in the estate he was disclaiming. This precise issue was reviewed by the Westmoreland Common Pleas Court in Kuhns Estate, 9 Fiduc. Rep. 2d 209 (0. C. Westmoreland 1989). In that case the court concluded that "interest in property" did not mean a "precise delineation of the property disclaimed," but required "only that the individual recognize what interest he or she may have in the estate before disclaiming it instead of having to go through the more rigorous requirement of identifying all items of personalty and realty which may be contained within the estate itself." The court's reasoning supports the statute's purpose of recognizing and allowing disclaimers. To use Petitioner's reasoning would require' a valid disclaimer to not only require a precise listing of all property disclaimed but also require a precise and accurate valuation of the property. Placing such an onerous burden on the party seeking to enforce the disclaimer would not further the statute's stated purpose "to liberalize property law requirements for disclaimer" to allow tax planning. See Official Comment - 1976 to 20 Pa.C.S.A. ~6201. There can be no doubt that Petitioner's disclaimer satisfies the requirement of stating the interest disclaimed. The disclaimer recites the will of Testator, the paragraphs under which Petitioner is named as a beneficiary of the two trusts natned in the will, and that Petitioner desired to "make a qualified disclaimer, within the meaning of Section 2518 of the Internal Revenue Code, of his entire interest in both such trusts. . . ." The disclaimer leaves no doubt that Petitioner not only recognized to what he was entitled, but that he desired to disclaim the entire interest for the purpose of tax planning under the Internal Revenue Code. Page 2 ,c .iI 'i" -. For the same reasons, there can be no doubt that Petitioner's disclaimer satisfied the statutory requirement that it declared the disclaimer and the extent thereof. The written statement is entitled "DISCLAIMER BY ROBERT M. MUMMA If' (emphasis in original), it states Petitioner's wish to "make a qualified disclaimer", it recites an Intemal Revenue Code section entitled "DISCLAIMERS" and dealing with disclaimers, and states in the paragraph immediately above Petitioner's signature: NOW, THEREFORE, ROBERT M. MUMMA, II, for himself, his successors and assigns, intending to be legally bound, does hereby, pursuant to Section 6201 of the Pennsylvania Probate, Estates and Fiduciary Code, absolutely, irrevocably and unqualifiedly renounce and disclaim all right, title and interest in and to the principal of the trust under Article SEVENTH of the WiII and the principal of the trust under Article EIGHTH of the WiII and refuses to accept any benefits whatever under said Articles of the Will. Thus, it is apparent that Petitioner's disclaimer satisfies all the statutory requirements for disclaimer and, in fact, was specifically designed with the statute in mind. It being settled that Petitioner validly disclaimed his interest in the estate of the Testator, the sole question remaining is whether Petitioner alleges facts, which if proven true, would allow him to revoke his disclaimer. II. Petitioner does not alIege facts justifying a revocation of a valid disclaimer a) Petitioner does not alIege fraudulent inducement Petitioner concludes at paragraphs 11 and 12 of his petition that he should be allowed to revoke his disclaimer because he was fraudulently induced to execute the disclaimer. To allege fraud, the facts of fraud must be pleaded specifically; the mere conclusion of fraudulent inducement is insufficient to plead fraud. Pa.R.C.P. 1019(b). The facts on which Petitioner relies for the fraud are that in or about December 1986, the Petitioner was told by the attorney representing the estate that the estimated value of the Estate was approximately Nine (9) Million Dollars. "Based in part on this representation" Petitioner alleges that he executed the disclaimer. See :etition of Robert M. Mumma, II at page 3. These allegations are insufficient to allege fraud. As was said in Dl\Ys Estate, 22 Fiduc. Rep. 662 (Del. Co. 1971), "The ultimate question is not merely whether the persuasion induced the transaction, for such persuasion is often permissible, but whether the result was produced on the one hand by influencing a freely exercised and competent judgment or on the other by Page 3 L '',)',.. ,.) ,.....1 dominating the mind or emotions." [d., at 667 (emphasis in original). The court put great weight on certain facts tending to show that the disclaimants were denied the opportunity to make a rational decisions as to the disclaimer. First, the disclaimants were called on short notice to attend a meeting without any information as to the purpose of the meeting, and they were insttucted to come to the meeting without counsel. Second, the disclaimants were denied the opportunity to consult with counsel and the immediate member of their families. Finally, the disc1aimants were denied the opportunity to contemplate the matter for a reasonable period of time. Nothing is alleged by Petitioner to indicate anything other than that he now disagrees with a December 1986 valuation of the estate. He alleges nothing which indicates a domination of his mind or emotions. In fact, his petition admits that he only based his decision in pan on the statements of the Estate's attorney. In reviewing the record, it is obvious that Petitioner could not have been induced, fraudulently or otherwise, to sign a disclaimer by the opinion of an attomey as to the value of the Decedent's Estate. The record reflects that Petitioner was actively involved in many of the assets listed on the Pennsylvania Inheritance tax return, filed in July of 1987. Of particular note, Petitioner is listed as the vice president of Pennsy Supply, given a value in the return in excess of Nine (9) Million Dollars. He is also listed as an officer or part owner of the following closely held corporations which were listed as assets of the estate: Derry Aire, Inc., High Spec, Inc., Lebanon Rock, Inc., Middle Park, Inc., Kim Co., Pennsy Supply Co., Nine Ninety Nine, Inc., Pennsy Supply, Inc., Robert M. Mumma, Inc. In addition, several corporations are listed as being owned by one or more of the before-listed companies. It is also important to note that nowhere in Petitioner's Brief does he present the argument that he should be allowed to revoke his disclaimer because of fraudulent inducement It is the rule in Cumberland County that any argument not briefed is deemed abandoned. C.C.R.C.P.210-7. b) Petitioner does not allege mistake of fact justifying revocation Petitioner argues in his brief that he should be allowed to revoke his disclaimer because of his mistaken assumption as to the value of the Estate. He relies on Dl\)"s Estate. supra, to support this argument. However, as discussed above, the holding in Dl\)"s Estate was based, not on the fact that the disclaimants did not know the value of the estate, but that they were asked to sign the Page 4 .fi 7 'I document under circumstances which indicated that there was a dominating of their minds and emotions. [d., at 667. There appears to be no decisions in Pennsylvania deciding the issue of whether a disclaimer may be revoked because of a mistake of fact made by the disclaimant. In analyzing the issue of mistake of fact, a parallel can be found in the Pennsylvania cases dealing with the revocation of an inter vivos gift. It is a well established rule that for a gift to be valid, "two essential elements are requisite: An intention to make an immediate gift, and such an actual or constructive delivery to the donee (a) as to divest the donor of all dominion and control ...." Post Est~te v. Commonwealth Bank and Trust Company, 500 Pa. 420, 422, 456 A.2d 1360 (1983); see also Lessner v. Rubinson. _Pa. Superior Ct. _, _ 555 A.2d 193,197 (1989). There can be no doubt that the requirements of an inter vivos gift were met in this instance. Petitioner's disclaimer of his interest took effect immediately and expressed in the present tense his intent to renounce and disclaim. Furthermore, the language clearly divests Petitioner of all dominion and control. Thus, he made a valid gift. A valid gift having been made, the burden rests on Petitioner to prove that the gift should not be honored. The rule remains the same as was stated by the Supreme Coun in 1893: If there is no evidence which tends to that the donor was incompetent to the make the gift, or which raises a suspicion of fraud or undue influence on the part of the donee, the capacity of the donor and the fairness of the transaction will be presumed, unless the relation between the parties is such that the policy of the law casts upon the donee the burden of showing that the gift was the voluntary and intelligent act of the donor. In the absence of such evidence this burden does not rest on children who receive gifts from their parents. These gifts are, prima facie, good, and it requires something more than the mere relation of parent and child to nullify them, or to impose on the donee the burden of showing that they are free from any taint of fraud or undue influence: Worrall's Appeal. 110 Pa. 349. Yeakel v. McAttee. 156 Pa. 600, 27 A. 277 (1893). As is stated above, Petitioner does not set fonh a case of fraud or undue influence and the record is clear that Petitioner's disclaimer was a voluntary and intelligent act. The rule stated by the Supreme Coon points to no other reasons for revoking a gift, and research discloses no Pennsylvania cases supponing the proposition that a donor may revoke a gift if he was mistaken as to its wonh. The reason is clear: a mistake as to value is not sufficient reason to overturn a gift. It is recognized that a coon's power to set aside gifts may only be invoked "when the manifest justice of the case requires it." Bauman v. Reithel 302 Pa. 239, 153 Page 5 .,' 7 ,,_. t::' ,.::, A.2d 330 (1931). Thus, couns have recognized fraud and undue influence as requiring coun intervention, but have not intervened because of the donor's mistake in value or judgment. Indeed, it has been held that a gift is valid although it is undeserved or improvident. McCown v. Fraser, 327 Pa. 561, 192 A. 674 (1937). Finally, Petitioner does not allege facts, which if proven true, would support the proposition that he executed the disclaimer because of a mistaken belief as to the value of his interest. For the same reason that Petitioner could not have been fraudulently induced, he could not have been mistaken: Petitioner was a controlling officer or pan owner of most of the estate assets. Funhermore, he does not allege that he relied on the attorney statements, only that he partially relied. Thus, even assuming that the estimates were mistaken, the mistake was not the cause of Petitioner's disclaimer. c) The disclaimer does not alter Testatamentary intent Petitioner argues that to honor the disclaimer would be to favor Petitioner's child born before the death of the Testator at the expense of after-born children and would, therefore, violate the intent of the Testator to benefit his issue equally. This is not well founded as it is based on an incorrect reading of 6205 of the Probate, Estates and Fiduciary Code and on the mistaken assumption that the date for determination of the members of the class of remaindermen is the date of Testator's death rather than the date of death of the life tenant. Petitioner correctly recites Section 6205 which states that for the purposes of determining the rights of other parties, a disclaimer is treated as being "equivalent to the disclaimant's having died before the decedent" as having predeceased the testator. Petitioner is incorrect in concluding that this section means that if he is treated as not having survived the Testator, only the child who was living at the time of the Testator's death may be considered as having survived Testator. Petitioner cites no case law to suppon this proposition. Petitioner's first error is in constrUing "equivalent" to predeceasing. Petitioner concludes that if he is considered to have predeceased Testator, any children born after the date of Testator's death could not be considered. See Petitioner's brief at page 3. The section clearly is not intended to have such far reaching results. Its sole purpose is to aid in the constrUction of wills which normally speak in terms of "failing to survive" rather than "chooses to disclaim." The section's Page 6 L OJ' ed (k, purpose is evident from the introductory clause: "Unless a testator or donor has provided for another disposition. . . .." It is further evident from the latter clauses of the section which state that a disclaimant shall be recognized as having survived for some purposes. Pennsylvania courts have had no problem construing the statute as treating a disclaimer as the equivalent of failing to survive for purposes of taking under a will, while at the same time recognizing that the disclaimant had survived for purposes of intestacy. See Kirk Estate. 7 Fiduciary Rep. 2d 215, Jl!f4 369 Pa. Superior Ct. 515 (1985). To construe on the one hand that the legislature intended the statute to mean that a disclaimant is deemed to have predeceased the testator for all purposes, including the ability to have further children, but on the other hand that he can be deemed to have predeceased for some purposes but not others, imports an inconsistent and unreasonable construction upon the statute. Such constructions are not favored. 1 Pa.C.S.A. ~ 1921(1). Petitioner's theory is also incorrectly based on the assumption that the determination of the class of survivors is necessarily made as of the death of the testator rather than as of the time of vesting. "The rule is well established, however, that where there is a bequest to a class its members are determined as of the time appointed for distribution, and it is of no consequence that the testator, at the time of the execution of his will, may not have had in mind the individuals who might eventually come to compose such class." Ho~!!'s Estate. 329 Pa. 163, 196 A. 503 (1938). See also, Tratrner Estate, 349 Pa. 133, 145 A.2d 678 (1958), recognizing the distinction, for the purposes of determining members of a class of beneficiaries, between testamentary gifts that are immediate and those in which there is an intermediate estate in trust. Thus, Petitioner's concern that the disclaimer will prevent after born grandchildren from taking under the will is misplaced since the members of the class of remaindermen in this case is to be fixed at a time still in the future, rather than Testator's death. Petitioner's disclaimer changes the testamentary scheme in one way only: he will not be deemed to have survived his father and will not be entitled to a share. For all other purposes the will would still control as stated by the terms of the will. , Petitioner argues that ZeJlJl Estate. 4 Fiduciary Rep. 281 (Montgomery Co. 1984), stands for the proposition that a disclaimer should be allowed to be revoked whenever the revocation will effectuate the testator's intent. Such a conclusion would make all disclaimers of a legacy voidable at the discretion of the disclaimant since a disclaimer of a legacy necessarily rejects the intent of the testator. This result would effectively nullify the clear purpose of the Pennsylvania legislature in Page 7 ~"7'J I . authorizing such disclaimers and setting the requirements for their enforcement. It is a cannon of statutory construction that a statute shall be construed to give effect to the intention of the statute, I Pa.C.S.A. ~1921, that it is to be effective and certain, I Pa.C.S.A.~1922(2), and that it is not to be construed to lead to an absurd result, I Pa.C.S.A. ~1922(1). As stated above, the legislature clearly exhibited and intent to allow disclaimers. Z!am should, therefore, be limited to its facts. In that case, a named church disclaimed a bequest in favor of another church, not named in the will, so as to avoid a family dispute. The court noted that enforcing the disclaimer would have the effect of benefiting a totally different and unrelated legatee than that named by the testator. Here Petitioner's disclaimer does not have the effect of benefiting a different class. The intent of the Testator was to benefit his issue; that effect is not altered by Petitioner's disclaimer. d) Disclaimer is valid regardless of recitation of statutory section Petitioner's last argument is that he should be allowed to revoke his disclaimer because it recites the incorrect section of the Probate, Estates and Fiduciary Code and that it is, therefore, invalid. A review of the disclaimer discloses, however, that the correct statutory section is recited. Petitioner correctly states in his brief that the correct section for disclaiming an interest arising from an estate is Section 6201 of the Code. This is the section of the Probate Code which Petitioner recites in the last paragraph of his disclaimer. Petitioner is under the mistaken impression that Section 6103 of the Code, a related and older statutory prvision, was recited. In fact, Section 6103 is not referred to anywhere in the disclaimer filed in the Office of the Register of Wills. Since Petitioner admits that the section he recited is the correct section for effecting a disclaimer, further analysis of his argument seems unnecessary. Page 8 6 ?f CONCLUSION Petitioner's request to revoke his disclaimer should be denied. Disclaimers are recognized by statute and by the courts in Pennsylvania to be valid. Petitioner's disclaimer, having satisfied all the statutory requirements for a valid disclaimer, should be enforced as a legally binding document. Petitioner has not alleged any facts, which if proven correct, would justify a court intervening to disqualify an otherwise valid document. For these reasons, Petitioner's request should be denied. Respectfully submitted, ~'-A-<_ hr Robert M. 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