In Re: Schenck, F. Appeal of Walters, C. ( 2017 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
IN RE: FRANCIS MICHAEL SCHENCK : IN THE SUPERIOR COURT OF
A/K/A F. MICHAEL SCHENCK, : PENNSYLVANIA
DECEASED :
:
:
APPEAL OF: CYNTHIA WALTERS, :
EXECUTRIX OF THE ESTATE OF :
FRANCIS MICHAEL SCHENCK A/K/A :
F. MICHAEL SCHENCK : No. 194 WDA 2017
Appeal from the Order January 10, 2017
In the Court of Common Pleas of Butler County
Orphans’ Court Division at No(s): O.C. No. 7 of 2016
IN RE: FRANCIS MICHAEL SCHENCK : IN THE SUPERIOR COURT OF
A/K/A F. MICHAEL SCHENCK, : PENNSYLVANIA
DECEASED :
:
:
APPEAL OF: CYNTHIA WALTERS, :
EXECUTRIX OF THE ESTATE OF :
FRANCIS MICHAEL SCHENCK A/K/A :
F. MICHAEL SCHENCK : No. 292 WDA 2017
Appeal from the Order January 27, 2017
In the Court of Common Pleas of Butler County
Orphans’ Court Division at No(s): O.C.. Case No 7 of 2016
BEFORE: BOWES, LAZARUS and OTT, JJ.
MEMORANDUM BY OTT, J.: FILED OCTOBER 23, 2017
Cynthia Walters, Executrix of the Estate of Francis Michael Schenk A/K/A
F. Michael Schenck (Appellant) appeals from the orders entered January 10,
2017, and January 27, 2017, in the Court of Common Pleas of Butler County,
Orphans’ Court Division, ordering advance distributions to Beverly J. Schenk
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(Appellee).1 Appellant asserts the orphans’ court erred in (1) ordering an
advance distribution to Appellee prior to the filing of an Estate Accounting,
and (2) ordering that Appellee was entitled to select specific assets from which
the value of her elective share is derived. Appellant’s Brief at 5. Based upon
the following, we affirm.
By way of background, at the time of his death on November 9, 2015,
F. Michael Schenck (Decedent) had three adult children from a previous
marriage, David M. Schenk, Deborah L. Smith, and Cynthia L. Walters, and
was married to Appellee. On January 13, 2016, Appellee filed an Election to
take against Decedent’s Will. See 20 Pa.C.S. § 2203 (providing surviving
spouse with right to an elective share of one-third of deceased spouse’s
property). In 2016, the orphans’ court authorized two advance distributions
to Appellee that were not contested. However, the court ordered two more
advance distributions to Appellee in January of 2017 that are the basis of this
consolidated appeal.
The trial court has summarized the facts and procedural history that
occurred subsequent to Appellee’s election, as follows:
On or about February 11, 2016, this Court granted the first
preliminary distribution, of four advance distributions, from
Cynthia L. Walters, Executrix of the Estate of Michael Schenck
a/k/a F. Michael Schenck, Deceased, to Beverly J. Schenk, wife of
Michael Schenck a/k/a F. Michael Schenck, Deceased. See Order
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1On March 13, 2017, this Court consolidated the above-captioned appeals sua
sponte.
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of Court under date of February 11, 2016.[2] In said Order of
Court, Ms. Walters was directed to ensure that “any activity and/or
distributions from the Morgan Stanley portfolio shall be limited
such that assets maintained in the portfolio shall at no time be
less than five million dollars ($5,000,000.00) in value ….”
Another distribution was granted to Mrs. Schenck by
Consented to Order under date of September 29, 2016.[3]
Likewise, this Court granted Ms. Walter’s Motion to Make an
Advanced Distribution by Order under date of December 1, 2016,
to David M. Schenk, Deb[or]ah L. Smith, and Cynthia L. Walters
[of $100,000.00 each from marketable securities in the Morgan
Stanley accounts]. It is the understanding of this Court that all
aforesaid distributions were undertaken by the parties without
incident or complaint.
In accordance with provision of the Order of Court under
date of February 11, 2016, directing Ms. Walters to maintain the
integrity of the Morgan Stanley accounts, and with the
understanding that such funds still existed, this Court ordered two
further advanced distributions to Mrs. Schenck. [On January 10,
2017, the orphans’ court entered an order directing Cynthia L.
Walters, Executrix of the Estate of Francis Michael Schenck, a/k/a/
F. Michael Schenck, to make distribution of assets, in cash or in
kind, to be determined at the request of counsel for Mrs. Beverly
J. Schenck, in the amount of $1,500,000.00. By Order dated
January 25, 2017, and entered on January 27, 2017, the orphans’
court directed Cynthia L. Walters, Executrix of the Estate of
Francis Michael Schenck a/k/a F. Michael Schenck, Deceased, to
make an additional distribution of assets, in cash or kind, to be
determined at the request of counsel for Mrs. Beverly J. Schenck,
in the amount of $500,000.00.] See Order of Court Regarding
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2 The Order directed Cynthia L. Walters, Executrix of the Estate of Francis
Michael Schenck, Deceased to provide a preliminary distribution in the amount
of $50,000.00 to Beverly J. Schenck as an advance distribution against her
share/interest in the Estate.
3 The Consented to Order provided that “upon consent of the Executrix,
Cynthia L. Walters, and Beverly J. Schenck, … Cynthia L. Walters, Executrix of
the Estate of Francis Michael Schenck (‘the Estate’), shall tender an advance
distribution in the amount of $100,000.00 by check from the Estate’s Morgan
Stanley portfolio to the surviving spouse, Beverly J. Schenck ….”
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Counter-Motion for Advance Distribution under date of January
10, 2017; and, Status Conference Order under date of January
25, 2017. It is from those two aforementioned Orders that
Appellant, Cynthia L. Walter, Executrix of the Estate of Michael
Schenck a/k/a F. Michael Schenck, Deceased, has appealed.
Appellant filed her Notice of Appeal to the Superior Court of
Pennsylvania from the Order of Court Regarding Counter-Motion
for Advance Distribution under date of January 10, 2017, on or
about January 27, 2017. Upon receipt of said Notice of Appeal,
on or about February 2, 2017, in accordance with Rule 1925(b) of
the Pennsylvania Rules of Appellate Procedure, this Court entered
an Order of Court wherein the Appellant was directed to file of
record and serve upon the undersigned trial judge a Concise
Statement of Matters Complained of on Appeal no later than
twenty-one (21) days from the date of the Order of Court.
It should be noted that counsel for both parties appeared in
Motions Court on an issue relating to contempt on or about March
2, 2017. At the time, this Court was advised by counsel that
Appellee, Beverly J. Schenck, had passed away. [4] Counsel further
indicated that in light of the passing, significantly less hostility
exists between the parties now in interest.
[With respect to the January 10, 2017, Order, o]n or about
February 23, 2017, the Appellant, Cynthia L. Walters, Executrix of
the Estate of Michael Schenck a/k/a F. Michael Schenck,
Deceased, filed a [timely] Concise Statement of Matters
Complained of On Appeal pursuant to the Pennsylvania Rules of
Appellate Procedure.[5]
Trial Court Opinion, 3/28/2017, at 1–3.
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4 After these appeals were filed, Appellee died on February 17, 2017.
Appellee’s Estate filed a Motion for Substitution of Party, which this Court
granted on April 18, 2017.
5 On March 10, 2017, Appellant filed a timely concise statement of errors
complained of on appeal pursuant to Pa.R.A.P. 1925(b) as to the orphans’
court’s order, dated January 25, 2017, and entered January 27, 2017.
Appellant’s Rule 1925(b) statement filed on February 23, 2017, and
Appellant’s Rule 1925(b) statement filed on March 10, 2017, are identical.
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Our standard of review for decisions of the Orphans’ Court is well
settled: “We will modify a decree [or order] only if it is not supported by
competent or adequate evidence, if an error of law has been committed, or if
the [Orphans’ Court] abused its discretion or capriciously disbelieved credible
or competent evidence.” In re Sweeney, 695 A.2d 426, 428 (Pa. Super.
1997) (quotation omitted).
In the first issue, Appellant claims the orphans’ court “erred in [o]rdering
that the Estate make advance distributions [that total $2,000,000.00] to the
electing spouse [Appellee] prior to the filing of an accounting.” Appellant’s
Brief at 11. Appellant argues:
The actions of the Lower Court, here, have effectively divested the
Executrix of her responsibilities and duties related to the
Administration of the Estate of her father. “An executor’s duty is
to take care of the estate and to administer it so as to preserve
and protect the property for distribution to the proper persons
within a reasonable time.”
Id. at 12, citing In re Estate of Campbell, 692 A.2d 1089, 1101 (Pa. Super.
1997). Appellant further contends there are outstanding issues regarding
“argument on the inclusion or exclusion of certain assets in the Elective Estate,
and the calculation of administrative expenses and other amounts” that can
only occur after the Estate files an Accounting and Statement of Proposed
Distribution, which cannot be accomplished until approval of four previous
filed tax returns. See id. at 13.
Appellant claims “[t]he distribution of an amount so close to an
estimated elective share in this matter, without the Court’s approval of an
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elective share calculation, places the Estate at a much higher risk that
[Appellee] will receive more than the amount to which she is entitled as a
result of her election.” Id. at 14. Appellant contests the orphans’ court’s
explanation that it ordered the advance distributions “in an attempt to
‘assuage the parties’’ animosity toward one another, and efficiently administer
the Estate ….” Appellant maintains that “it is the Executrix’s duty to administer
the Estate, and there has been no wrongdoing by the Executrix nor a
demonstrated inability of the Executrix to administer the Estate.” Id. at 14–
15.
Appellant points out that the Court had imposed a requirement that the
Morgan Stanley portfolio of the Estate remain in excess of $5,000,000.00 in
value, pending further order of court or final distribution and, “[t]o that end,
the assets of the Estate are sufficiently safeguarded, such that the Estate will
be financially able to make distribution to [Appellee] upon final calculation of
the Elective share and approval of a final Accounting.” Id. at 15.
Appellant concludes that “Without breach of a fiduciary duty, or
mismanagement of the Estate, and without an accounting having been filed,
it was improper for the [c]ourt to [o]rder advance distributions totaling two
million dollars ($2,000,000.00) over the objection of the Estate. The [c]ourt
had no authority to do so.” Id. at 16.
Section 2211 of the Probate, Estates and Fiduciaries Code, entitled
“Determination of effect of election; enforcement,” provides, in relevant part:
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(a) Power of court of domicile. — After notice and hearing,
the orphans’ court division of the county of the decedent’s
domicile shall determine all matters concerning the spouse’s
election, including the interests and liabilities of the spouse and
others in or with respect to all property, regardless of its situs,
which is subject to the election or which must be disclaimed,
released or conveyed by the spouse or charged against the
elective share.
****
(c) Enforcement. — The rights of the electing spouse may be
enforced, as the court considers appropriate, by orders, decrees
or judgments requiring the performance of specific acts by, or
imposing personal liability on:
(1) any fiduciary, custodian or obligor to the extent that he is in
possession of property subject to the spouse’s election or its
proceeds; …
20 Pa.C.S. § 2211 (a), (c)(1).
Here, the trial court justified its decision, as follows:
This Court has exercised its equitable powers in this matter in an
attempt to assuage the parties’ animosity toward one another,
and efficiently administer the Estate of Michael Schenck a/k/a F.
Michael Schenck, Deceased. In conferring with counsel throughout
this matter, this Court was made aware that there are more than
sufficient assets in the Estate to cover the Elective Share of
Beverly J. Schenck. It is this Court’s position, as it has always
been, that there can be no harm done in advancing assets to the
Appellee, especially given that the total ordered advancements in
no way come close to the total estimation of her Elective Share.
While it is not lost on this Court that … Ms. Walters and Mrs.
Schenck did not care for one another, it serves neither party any
benefit to delay this matter any longer than need be. Although
Appellee has since passed, during the time she remained alive in
the pendency of this action, her opposition was her family. The
purpose of the advancements was to both provide Mrs. Schenck
with funds to live, while simultaneously decreasing the assets in
conflict with the desire that resolution would be achieved between
the litigants.
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Orphans’ Court Rule 1925(a) Opinion, 3/28/2017, at 3–4. Based on our
review, we find no basis upon which to disturb the decision of the orphans’
court.
The orphans’ court has “all legal and equitable powers required for or
incidental to the exercise of its jurisdiction.” In re Estate of Damario, 412
A.2d 842, 844 (1980), citing 42 Pa.C.S. § 323. Section 323 of Title 42
provides:
Every court shall have power to issue, under its judicial seal, every
lawful writ and process necessary or suitable for the exercise of
its jurisdiction and for the enforcement of any order which it may
make and all legal and equitable powers required for or incidental
to the exercise of its jurisdiction, and, except as otherwise
prescribed by general rules, every court shall have power to make
such rules and orders of court as the interest of justice or the
business of the court may require.
42 Pa.C.S. § 323.
Here, the orphans’ court determined that the distributions would help to
“‘assuage the parties’ animosity toward one another, and efficiently administer
the Estate.”6 Furthermore, the court ascertained that “the total ordered
advancements in no way come close to the total estimation of her [one-third]
Elective Share.”7 One month before the advance distributions ordered January
10, 2017, and January 27, 2017, the Executrix had averred that Estate assets
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6 Orphans’ Court Opinion, 3/28/2017, at 3.
7 Id.
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“consist of some real estate and personal property, but the large majority of
the assets consist of more than $9,000,000.00 in marketable securities in
accounts held by Morgan Stanley.” Motion Requesting to Make an Advance
Distribution to David M. Schenk, Deborah L. Smith, and Cynthia L. Walters
(With Consent), at 12/1/2016, ¶7 (emphasis added).
Although Appellant argues that the amount of the advance distribution
is “so close” to the elective share and that the Estate is at “a much higher
risk” that Appellee will receive more than her elective share, Appellant failed
to support her position that the amount of the elective share cannot be
ascertained until she files an Accounting and Statement of Proposed
Distribution.8 The challenged distribution was made fourteen months after
the decedent’s death. The Pennsylvania Inheritance Tax Return detailing the
gross and net taxable value of the estate was due nine months after the date
of death, i.e., July 9, 2016. Appellant’s brief represents that tax returns were
filed after the entry of the orders presently under appeal.9 However, Appellant
did not aver in her Reply to New Matter and Counter-Motions of Beverly
Schenk, Paragraphs 19-29, filed December 29, 2016, that any late filing of
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8 See Appellant’s Brief at 13.
9 See id. at 11.
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those returns would affect the calculation of the advance distribution of the
elective share requested by Appellee in the range of $1 million.10
No hearings were held prior to the orders of January 10 and 27, 2017.
The pleadings of both parties reference status conferences, but no transcripts,
if any exist, have been filed of record. The only information available to the
orphans’ court judge upon which to estimate the Appellee’s elective share was
contained in Appellant’s Motion of December 1, 2016. His determination that
advance distributions in the amount of $2,000,000.00, combined with the
prior advance distributions to Appellee totaling $150,000.00, would not
exceed Appellee’s one-third elective share of the $9,000,000.00 Morgan
Stanley account, was supported by the information available to him.
Therefore, we reject Appellant’s first claim.
In the second issue, Appellant argues the orphans’ court erred in
ordering that the electing spouse is entitled to select which Estate assets will
comprise the value of Appellee’s elective share. Appellant argues:
In the Orders of Court being appealed herein, the Court directed the
Estate to make the advance distributions to Beverly J. Schenk, “in cash
or in kind, to be determined at the request of counsel for Mrs. Beverly
J. Schenk …” Title 20 of the Pennsylvania Consolidated Statutes, Section
2211, subsection (b)(1), provides as follows:
Property which otherwise would pass by intestacy shall first
be applied toward satisfaction of the spouse’s elective
share. The balance of the elective share shall then be
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10See Appellee’s Response to Motion to Compel Production of Tangible
Property to Estate and Counter-Motions for Advance Distribution, Interim
Accounting, Removal of Executrix, 12/28/2016.
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charged separately against each conveyance subject to the
election, the passing of property by will to be treated as a
conveyance for this purpose, but the spouse shall have
no right to share in any particular item of property
within each conveyance.
Appellant’s Brief at 16, citing 20 Pa.C.S. § 2211(b)(1) (emphasis and
underling in original) (footnote omitted).
Appellant’s argument, however, ignores the opening language of
subsection (b), which states:
In exercising its powers under subsection (a), the court shall
honor any provision in the decedent’s will or other conveyance
concerning interests of those other than his spouse in the event
of an election. Subject to any such provision, the court shall be
guided by the following rules but shall have the power to
supplement or depart from them, if in its opinion, a different
determination of the rights of the spouse and others would more
nearly carry out what would have been the particular decedent’s
intention had he known of the election.
20 Pa.C.S. § 2211(b) (emphasis added).
We conclude the orphans’ court’s decision properly exercises its
equitable powers.11 Accordingly, we affirm.
Orders affirmed.
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11Based on representations in Appellee’s brief and at oral argument, this issue
appears to be moot. See Appellee’s Brief at 14–16. Appellee points to
testimony at a subsequent contempt hearing at which the parties were
present. There, Stanley D. Pavkovich, the son of Beverly J. Schenk and
executor of her estate, testified that no selection of assets would be necessary
to satisfy payment of her elective share. See N.T., 3/2/2017, at 12–14.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/23/2017
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