In Re: Estate of Robert M. Mumma
125 A.3d 1205
Pa. Super. Ct.2015Background
- Robert M. Mumma, Sr. died in 1986 leaving a widow (Barbara McK. Mumma), and four children: Barbara, Robert II, Linda, and Lisa; Widow and Lisa served as co‑executrices/trustees, and Lisa became sole trustee after Widow’s 2010 death.
- Two testamentary trusts (Marital Trust and Residual Trust) provided income to Widow and named the four children as remaindermen; the will gave trustees discretion to distribute in money or in kind and included precatory language favoring continued family control of businesses.
- Decades of litigation followed over valuations, allocations between trusts, distributions (in kind v. monetary), and trustee conduct; extensive auditing produced a Final Auditor’s Report recommending confirmation of accounts and rejection of beneficiaries’ objections.
- Orphans’ Court confirmed the accounts (April 30, 2014) and, after a separate hearing, held Lisa (trustee) had authority to vote 1.4044 shares of Bobali Corporation owned by the Residual Trust (July 7, 2014).
- Appeals by Barbara and Robert II challenged (inter alia) the refusal to require in‑kind distributions, valuation and allocation decisions (alleged overfunding of Marital Trust), jurisdiction over non‑estate entities, and Lisa’s voting authority; the Superior Court consolidated and affirmed the Orphans’ Court orders.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trustee must distribute trust assets in kind per “share and share alike” | Barbara/Robert II: will requires equal in‑kind division of each trust’s assets to preserve family businesses | Trustee (Lisa)/Orphans’ Ct: will grants trustee discretion to distribute in money or in kind; precatory language is non‑binding | Affirmed: trustee discretion controls; “desire” language is precatory; prior appellate rulings apply (law of the case) |
| Construction of Article Seventh formula for Marital Trust funding (“including therein”) | Barbara: phrase requires excluding assets passing outside the will, so Marital Trust was miscalculated/overfunded | Lisa/Auditor: phrase requires including such assets to determine 50% funding; experts and IRS treatment support inclusion | Affirmed: Orphans’ Ct accepted Auditor’s construction that includes assets passing outside the will when computing Marital Trust funding |
| Alleged improper valuations and allocation of professional fees (overfunding Marital Trust; undervaluing Pennsy Supply) | Barbara: assets (e.g., Pennsy Supply) were grossly undervalued and fees misallocated to benefit Widow and Lisa | Auditor/Orphans’ Ct: valuations were battle of experts; Hadley’s valuations credited; fee allocations supported by records | Affirmed: factual findings credited Auditor/Hadley; no abuse of discretion in accepting valuations and fee allocations |
| Authority to vote Residual Trust’s Bobali shares | Barbara: remaindermen are beneficial owners and can direct trustee’s vote; stock should be distributed in kind | Lisa/Orphans’ Ct: trustee is legal owner with statutory and dispositive authority to vote securities as trustee deems in beneficiaries’ best interest | Affirmed: trustee may vote the shares; Pennsylvania statute and trust powers authorize voting despite remaindermen’s wishes |
| Sanctions / allocation of audit costs and fees against objector (Robert II) | Robert II: challenges award and asserts procedural abuses (trial timing, jury right, jurisdictional defects) | Trustee/Auditor: Robert II’s conduct was dilatory, vexatious, and obstructive; court may tax costs and fees for such conduct | Affirmed: Orphans’ Ct properly assessed costs/fees against Robert II for obdurate, dilatory conduct; several procedural claims waived for lack of argument |
Key Cases Cited
- Dingee v. Wood, 77 A. 440 (Pa. 1910) (auditor’s findings entitled to great weight because of opportunity to assess witness credibility)
- In re Estate of Corbett, 241 A.2d 524 (Pa. 1968) (distinguishing mandatory language from precatory expressions in wills)
- In re Estate of Pearson, 275 A.2d 336 (Pa. 1971) (test for whether precatory words are mandatory or merely wishful)
- In re Scheidmantel, 868 A.2d 464 (Pa. Super. 2005) (standard of review for Orphans’ Court abuse of discretion)
- In re Estate of Pendergrass, 26 A.3d 1151 (Pa. Super. 2011) (legal conclusions reversed only when rules of law are palpably wrong)
- Ario v. Reliance Ins. Co., 980 A.2d 588 (Pa. 2009) (law of the case doctrine and avoiding reopening decided questions)
- George v. Ellis, 820 A.2d 815 (Pa. Super. 2003) (finder of fact not bound to accept any one expert’s testimony)
- Green v. Green, 69 A.3d 282 (Pa. Super. 2013) (issues not developed in appellate brief are waived)
- Hess v. Fox Rothschild, LLP, 925 A.2d 708 (Pa. Super. 2007) (issues not raised in Pa.R.A.P. 1925(b) statement are waived)
- Booher v. Olczak, 797 A.2d 342 (Pa. Super. 2002) (appellate technical defects excused where they do not impede review)
- In re King’s Estate, 7 A.2d 297 (Pa. 1939) (court may tax audit costs against objector whose conduct caused them)
- Estate of Mumma, 41 A.3d 41 (Pa. Super. 2012) (prior appellate decision rejecting similar challenges to trustee distribution authority)