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NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
IN RE: ESTATE OF : IN THE SUPERIOR COURT OF
DONALD KEITH BIRCHARD : PENNSYLVANIA
A/K/A KEITH BIRCHARD :
: No. 141 MDA 2017
APPEAL OF: JANET BIRCHARD :
Appeal from the Order Entered December 28, 2016,
in the Court of Common Pleas of Susquehanna County
Orphans’ Court Division at No. OC048-2015
BEFORE: OLSON, J., MOULTON, J., AND FORD ELLIOTT, P.J.E.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED AUGUST 18, 2017
Janet Birchard appeals the order of the Court of Common Pleas of
Susquehanna County that denied her counterclaim that sought an
accounting from the estate of Donald Keith Birchard (“Decedent”) 1 for
personal property taken from the 116 High Street property (“Property”), and
the return of that personal property or reimbursement for any property sold
by the estate as the claim was barred by equitable estoppel; her
counterclaim that sought rental income for the use of the Property by
Decedent and her counterclaim that sought reimbursement for accounts
receivable collected by Diana Birchard (“appellee”) for work performed by
1
Decedent was the son of Donald and Janet Birchard and the husband of
Diana Birchard.
J. S42032/17
B & D Plumbing, Heating, and Electrical (“B & D”).2 After careful review, we
affirm.
The relevant facts and procedural history, as found by the trial court,
are as follows:
On October 27, 2014, Donald Keith Birchard
a/k/a Keith Birchard (hereinafter referred to as
[D]ecedent) died. On November 4, 2014, [appellee],
[D]ecedent’s widow, was granted letters
testamentary appointing her as the Executrix of
[D]ecedent’s estate. On June 9, 2015, [appellee]
filed a petition seeking access to a business property
located at [the Property]. [Appellee] contended that
some of [D]ecedent’s assets were stored at that
premises and that the assets were necessary to
conclude the administration of the Estate. The
person in control of the [Property] was [D]ecedent’s
mother, [appellant].
On June 22, 2015, [appellant] filed an answer
to the petition seeking access to the [Property].
[Appellant] did not consent to [appellee] having
access to the [Property] except “as part of a ‘global’
resolution of issues between the parties.” In this
answer, [appellant] included a “new matter” and a
“counterclaim” through which she contended that
assets belonging to her late husband,
Donald Birchard, had been misappropriated by
[D]ecedent’s estate. [Appellant] claimed damages
relating to (1) rental income for the period of time
that [D]ecedent utilized the [Property] for his
business operations; (2) reimbursements for any
accounts receivable relating to the former business
2
The trial court also denied Diana Birchard’s petition that sought to seize
personal property from the Property. The trial court found that
Diana Birchard’s counterclaim that sought reimbursement for her work
collecting accounts receivable for B & D and her work resolving outstanding
accounts payable of B & D was moot. The trial court denied Diana Birchard’s
counterclaim that sought compensation for Decedent’s unpaid wages for
work performed for B & D. Diana Birchard did not appeal these rulings.
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operated by [appellant’s] late husband, but which
were collected by [D]ecedent’s estate; and (3) an
accounting of any assets or inventory of her late
husband’s business taken by [D]ecedent’s estate
(and reimbursement for any of her late husband’s
assets or inventory sold by [D]ecedent’s estate).
On July 13, 2015, [appellee] filed an answer to
[appellant’s] new matter and counterclaim.
[Appellee] also filed her own new matter asserting
the affirmative defenses of (1) estoppel;
(2) impossibility of performance; (3) justification;
(4) statute of limitations; and (5) unclean hands.
....
On February 23, 2016, [appellant’s] counsel
wrote to the Court requesting a trial date on
[appellant’s] counterclaim. On February 26, 2016,
[appellant] filed a formal petition seeking a hearing
on her counterclaim. On March 1, 2016, this Court
scheduled a hearing date for May 23, 2016.
On May 11, 2016, [appellee] filed an amended
answer to [appellee’s] counterclaim in which
[appellee] then asserted additional claims against
[appellant]. While [appellee] maintained the
position that [D]ecedent had taken over the business
operations in total in April 2014, [appellee] raised
the following claims in the event that it was
determined that no formal transfer of the family
business occurred: (1) quantum meruit relating to
work performed by [appellee] in collecting the
accounts receivable; (2) quantum meruit relating
to work performed by [D]ecedent for [appellee’s]
business for which he was never compensated; and
(3) quantum meruit for [appellee’s] work in
resolving debt owed by respondent in connection
with the former business entity.
A hearing was held on May 23, 2016. Each
party has submitted supporting briefs and the matter
is now ripe for disposition.
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II. Findings of Fact
1. [Appellant] and Donald I. Birchard were
married in 1958.
2. During the parties’ marriage, Donald I.
Birchard owned and operated a business
known as [B & D] which had a business
location and building at [the Property].
3. Donald I. Birchard initially owned and operated
[B & D] with Charles C. Dietrich, Jr., as
partners.
4. In 1974, Donald I. Birchard bought out
Charles C. Dietrich, Jr.’s interest in the
partnership and [B & D] became a sole
proprietorship.
5. Decedent was born on April 1, 1959. Decedent
is the son of Donald I. Birchard and
[appellant]. Decedent spent most of his adult
life as an employee of [B & D]. Decedent
worked with his father at [B & D] for 30 years.
6. On October 9, 2010, Donald I. Birchard died
testate leaving all of his estate to his wife,
[appellant], which included [B & D].
7. Prior to his death in October 2010, Donald I.
Birchard had been sick and [D]ecedent had
been running the family business.
8. Aside from [D]ecedent, Gary Travis was the
only other employee of the family business.
9. After the death of Donald I. Birchard,
[D]ecedent continued to run the family
business and [appellant] continued to assist
with the bookwork, answering the phone,
making deposits and writing out checks for
payroll and other expenses. Decedent began
sending out the bills and invoices for the work
performed by [B & D].
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10. From 2010 through April 2014, [D]ecedent
remained an employee of [B & D] and was paid
an hourly wage of $23 per hour based upon a
40 hour week.
11. [Appellant] continued to report the income
from [B & D] on her income tax return.
12. On March 31, 2014, [appellant] closed [B & D].
13. On April 1, 2014, [D]ecedent formally took
over his father’s business and began operating
it as his own business under the name of
Birchard Plumbing.
14. Terry Cooper, an employee at NBT Bank,
testified that she assisted [D]ecedent in
starting up his new business entity. Initially,
[D]ecedent simply wanted to use the pre-
existing business name of [B & D], but was
unable to do so because he was not an owner
of that business entity. Decedent discovered
that he needed to start a separate business
entity, Birchard Plumbing.
15. Decedent opened up a new business account
and [appellant’s] name was placed on the new
account. Decedent was the sole proprietor of
Birchard Plumbing.
16. Decedent also purchased a new truck for
Birchard Plumbing.
17. [Appellant] continued to assist in the transition
of the business and transferred monies
($800.00) in April 2014 from the Birchard
Plumbing business account into [B & D]
account to cover expenses for unemployment
compensation fund payments and tax
payments.
18. At the time that [D]ecedent created the new
business of Birchard Plumbing, there was still
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outstanding work that had been contracted out
through [B & D]. Gary Travis completed this
prior work and the payments were received by
Birchard Plumbing -- not [B & D] -- and placed
in the Birchard Plumbing business account.
19. Decedent was making deposits into the
Birchard Plumbing account of payments
received from work performed by [B & D].
[Appellant] never demanded that [D]ecedent
remit any monies to her for the work
performed by [B & D].
20. After March 31, 2014, when a payment was
received for work previously performed by
[B & D], [appellant] turned this money over to
[D]ecedent for deposit into the account of
Birchard Plumbing.
21. Birchard Plumbing operated out of the same
address as [B & D], namely [the Property].
22. Decedent never paid respondent any rent for
the [Property], and [D]ecedent and [appellant]
never discussed any rental arrangement.
23. [Appellant] admitted that she allowed
[D]ecedent to use [the Property] without
paying any rent.
24. [Appellant] closed out all of the former
business accounts and took no efforts
whatsoever to collect on any accounts
receivable relating to [B & D].
25. After the creation of Birchard Plumbing,
[appellant] was turning over checks received
for work performed by [B & D] to [D]ecedent
for deposit into the Birchard Plumbing business
account. [Appellant] did not seek any
reimbursement for these monies except to the
extent necessary to pay any outstanding
obligations of [B & D] debts and obligations.
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26. On October 27, 2014, [D]ecedent died.
27. On November 4, 2014, [appellee] probated
[D]ecedent’s will and was appointed as the
Executrix of [D]ecedent’s estate.
28. As part of her duties to the Estate, [appellee]
attempted to obtain [D]ecedent’s assets,
collect outstanding monies owed to
[D]ecedent’s business, Birchard Plumbing, and
pay the outstanding debts owed by Birchard
Plumbing.
29. [Appellee] discovered that suppliers had
continued to bill [B & D] even after Birchard
Plumbing had been formally created.
30. [Appellee] made arrangements with some of
the suppliers to return the inventory in order to
pay off outstanding bills even where those bills
were in the name of [B & D], not Birchard
Plumbing.
31. [Appellee] sent out bills for unpaid work
associated with [B & D] based upon
[D]ecedent’s records.
32. [Appellee] was able to identify $164,092.13 in
outstanding accounts receivable for work
performed by [D]ecedent (or Gary Travis)
while they worked for [B & D] prior to April 1,
2014. As of the date of the hearing in this
matter, [appellee] had collected $95,691.40 in
accounts receivable for work performed prior
to April 1, 2014.
33. [Appellant] has never personally taken any
steps whatsoever to collect on any outstanding
accounts receivable associated with [B & D].
34. [Appellant] never made any claim to the
revenues generated from collection of accounts
receivable from [B & D] until [appellee] filed
her request to gain access to [the Property] in
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order to seize personal Property she believed
belonged to [D]ecedent’s estate. [Appellant’s]
assertion that she was entitled to the former
accounts receivable associated with [B & D]
was made 8 months after [D]ecedent’s death,
and 14 months after [B & D] ceased operation
and Birchard Plumbing took over all of its work
and accounts.
35. [Appellee] has never paid [appellant] any
monies in connection with the collection efforts
that related to work (and materials) that
occurred prior to April 1, 2014 while
[D]ecedent was working for [B & D].
Trial court opinion, 12/27/16 at 1-8 (footnote and citations omitted).
The trial court determined that appellant made a gift of B & D to
Decedent which became the property of Decedent’s estate under the
administration of appellee. As a result, the trial court ruled that none of
appellant’s claims had merit. On January 16, 2017, appellant filed a timely
notice of appeal.
On appeal, appellant raises the following issues for this court’s review:
[1.] Did the [trial court] err in determining that
[a]ppellant “gifted to [D]ecedent on April 1,
2014, the business entity known as [B & D]
together with its supplier accounts, accounts
receivable and use of [the Property]”?
[2.] Did the [trial court] misapply the law of “gift”
with respect to the creation of a “presumption”
with respect to an alleged gift of the business
entity known as [B & D] together with its
supplier accounts, accounts receivable and use
of [the Property]?
[3.] Did the [trial court] err in its application of the
law of “gift” to the facts of this case?
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[4.] Did the [trial court] err in failing to determine
that the amounts of “accounts receivable”
owned by [B & D] that were collected by
[a]ppellee actually belonged to [a]ppellant to
whom these amounts should have been paid?
[5.] Did the [trial court] err in its interpretation of
actions taken by [a]ppellant concerning
[D]ecedent’s business started April 1, 2014?
[6.] Did the [trial court] err in failing to recognize
that the [D]ecedent acted as an employee of
[a]ppellant at all times prior to April 1, 2014?
[7.] Did the [trial court] err in dismissing the
counterclaim of [a]ppellant seeking payment of
monies due from [a]ppellee to [a]ppellant as
owner of [B & D]?
Appellant’s brief at 2-3.
Initially, appellant contends in the argument section of her brief that
until March 31, 2014, Decedent was an employee of B & D.3
This court’s review of a decision of an Orphans’ Court is as follows:
Our standard of review of the findings of
an [O]rphans’ [C]ourt is deferential.
When reviewing a decree
entered by the Orphans’ Court,
this Court must determine
whether the record is free from
legal error and the court’s
factual findings are supported
by the evidence. Because the
Orphans’ Court sits as the fact-
finder, it determines the
credibility of the witnesses and,
3
Appellant has presented her issues in a different sequence in the argument
section of her brief than she did in her “Questions Raised on Appeal.”
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on review, we will not reverse
its credibility determinations
absent an abuse of that
discretion.
However, we are not constrained to give
the same deference to any resulting legal
conclusions.
In re Estate of Harrison, 745 A.2d 676, 678-679,
appeal denied, 758 A.2d 1200 (Pa. 2000).
(internal citations and quotation marks omitted).
“[T]he Orphans’ [C]ourt decision will not be reversed
unless there has been an abuse of discretion or a
fundamental error in applying the correct principles
of law.” In re Estate of Luongo, 823 A.2d 942,
951 (Pa.Super. 2003), appeal denied, 847 A.2d
1287 (Pa. 2003).
In re Estate of Whitley, 50 A.3d 203, 206-207 (Pa.Super. 2012) (internal
citations and quotation marks omitted).
Appellant agrees with the trial court’s findings that Decedent spent
most of his adult life as an employee of B & D and that from 2010 through
March 31, 2014 Decedent remained an employee at B & D. It is not in
dispute that Decedent was an employee of B & D through March 31, 2014.
However, appellant raises this issue because the trial court referred to
Decedent as the “de facto” owner of B & D. While Decedent did perform a
wide variety of tasks for B & D after the death of his father and was in
charge of the day-to-day operations of the business, he was not the owner.
However, the resolution of this issue does little to resolve the central
question of whether the trial court erred or abused its discretion when it
determined that appellant made a gift of B & D to Decedent.
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Appellant next contends that since the death of her husband in 2010,
she has been the owner of B & D and continued to report the income from
B & D until March 31, 2014, on her income tax return as the trial court found
in Finding of Fact No. 11. However, she questions the accuracy of Finding of
Fact No. 12 that she closed B & D because, according to her, she never
closed it. She just stopped operating a plumbing business. Again, it is not
clear whether this difference is significant. B & D did not operate as a
plumbing business after April 1, 2014. It is also not clear that the term
“closed” is different than “stopped doing plumbing business.” (Appellant’s
brief at 10.)
Appellant also asserts that Decedent was never the “real owner” of
B & D. Appellant takes issue with the trial court’s description of Decedent’s
role in B & D after the death of her husband, i.e., “there would have been no
[B & D] after October 9, 2010 but for [D]ecedent’s work, long hours and
efforts to keep the family business afloat.” (Trial court opinion, 12/27/16 at
9-10.) Appellant asserts that there is no evidence that B & D would not
have survived without Decedent’s efforts as other plumbers could have been
employed. The record does not indicate that the business would not have
survived without Decedent. The record does reflect that he worked very
long hours at a variety of tasks.
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Appellant next contends that the concept of “gifts” was not pled or
argued before the trial court by appellee. However, other than stating this
point, appellant does not really raise an issue for this court’s review.
Appellant next contends that the trial court erred when it found that
there was donative intent on the part of appellant to give the accounts
receivable of B & D to Decedent.
In order to be considered a valid inter vivos gift, a gift:
requires donative intent, delivery, and acceptance.
There must be evidence of an intention to make a
gift accompanied by delivery, actual or constructive,
of a nature sufficient not only to divest the donor of
all dominion over the property, but to invest the
donee with complete control. All of the
circumstances must be considered in determining
whether a gift was made. Donative intent can be
inferred from the relationship between the donor and
donee.
In re Estate of Moskowitz, 115 A.3d 372, 386 (Pa.Super. 2015), appeal
denied, 130 A.3d 1291 (Pa. 2015) (internal citations and quotation
omitted).
Appellant asserts that with respect to the accounts receivable,
appellant possessed neither donative intent nor delivery. As of the date of
the hearing before the trial court, the trial court found that appellee had
collected $95,691.40 in accounts receivable for work performed prior to
April 1, 2014, or in other words, for work performed for or by B & D.
Appellant argues that it is very unlikely that appellant, who was 74 years old
at the time with no other means of support, would just give this money
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away. Appellant also adds that there is no evidence that she gave the
business (B & D) to Decedent either in 2014 or ever.
With respect to this issue, the trial court determined:
The record in this case clearly demonstrates that
[appellant] made an inter vivos gift of the family
business to [D]ecedent on April 1, 2014. Given the
familial nature of the gratuitous transfer of this
business, the evidentiary burden is slight and it has
been overwhelmingly met. Decedent had worked for
the family business for 30 years. Decedent had run
the family business when his father became ill.
Decedent continued to run the family business after
his father died. Upon learning that [D]ecedent could
not continue to operate under the business name of
[B & D], [D]ecedent started his own business,
Birchard Plumbing, on April 1, 2014. [Appellant] was
involved in the creation of this business entity.
[Appellant] closed out the business accounts of
[B & D] and took no steps whatsoever to collect on
any accounts receivable. When checks came in for
work performed by [B & D], [appellant] personally
turned them over to [D]ecedent for deposit into the
new business account. [Appellant] never sought any
reimbursement for these payments from Birchard
Plumbing. The new business also paid off the
outstanding debt of the old business account. After
April 1, 2014, [appellant] demonstrated no
ownership interest whatsoever in any aspect of the
family business now known as Birchard Plumbing.
[Appellant] never even discussed any rent for the
use of [the Property] by Birchard Plumbing. As of
April 1, 2014, [D]ecedent had total control over the
family business and [appellant] had withdrawn
herself to simply being a signatory on the new
business account. Thus, there is overwhelming
evidence that [appellant] intended to give her son
the family business and that she delivered and
transferred the family business over to him.
Given this evidence, there is a presumption
that [appellant] gifted to [D]ecedent on April 1, 2014
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the business entity known as [B & D] together with
its supplier accounts, accounts receivable and use of
[the Property]. Not only was [D]ecedent that natural
object of [appellant’s] bounty, but [D]ecedent ha[d]
spent nearly his entire adult life working for the
family business and it would have simply terminated
but for his efforts to keep it up and running through
his father’s illness and after his father’s [death]. In
order to rebut the presumption that the family
business was gifted to [D]ecedent, [appellant]
needed to present clear and convincing evidence that
she had a contrary intent. [Appellant] has failed to
present any evidence that she had a contrary intent.
[Appellant] has failed to present any evidence at all
that would suggest a contrary intent. Rather, the
evidence points to but one conclusion, [appellant]
intended for [D]ecedent to take over the family
business in its entirety as of April 1, 2014 and she
actively assisted [D]ecedent in making the transition
to Birchard Plumbing.
For this reason, [appellant] has failed to
sustain her burden of proof as it relates to her claims
for (1) rental income in connection with the use of
[the Property] between April and October 2014, and
(2) reimbursement for the collection of any accounts
receivable recovered by the Estate for any work
performed prior to April 1, 2014.
Trial court opinion, 12/27/16 at 14-15 (footnote omitted).
Appellant argues that the factors cited by the trial court as evidence of
a gift of the accounts receivable are, instead, consistent with appellant
making it easier for Decedent, her son, to start his new business. While it is
true that these factors could indicate just that appellant was helping her son,
they also support the alternate determination made by the trial court that
appellant gave the business of B & D to her son.
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Appellant also argues that there was no delivery of the accounts
receivable because appellee removed the records containing the accounts
receivable from the Property. However, the trial court found that appellant
had given the use of the Property to the Decedent for the business, so it
would logically follow that the records of the business would be located at
the Property. This argument does not persuade this court.
Appellant next contends that the trial court incorrectly applied the
burden of proof and presumptions in this case.
“Initially, the burden is on the alleged donee to prove a gift inter vivos
by clear, precise and convincing evidence. 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.” Hera v. McCormick, 625 A.2d 682, 686 (Pa.Super. 1993)
(citations omitted). Further, where the transfer is from a parent to a child,
the action of the donor is viewed as natural and less evidence is needed to
establish the intent to give a gift. See Brightbill v. Boeshore, 122 A.2d
38, 41-42 (Pa. 1956).
Appellant asserts that, even given the reduced burden of proof for a
parental transfer, that appellee did not establish that appellant made an
inter vivos gift.
A review of the record reveals that appellee testified that appellant and
Decedent had a conversation after appellant’s husband’s death that it was
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not fair for Decedent to resume all the responsibilities of the business and it
not be his. (Notes of testimony, 8/29/16 at 57.) Appellee also explained
that appellant took $800 from the Birchard Plumbing bank account to pay
taxes for the first quarter of 2014 for B & D. (Id. at 60.) Appellee also
testified that appellant was aware that appellee was collecting accounts
receivable for amounts owed to B & D. (Id. at 61-65.) In fact, appellee
reported that appellant filled out the deposit slips and did not demand any of
the money. (Id. at 66-67.) Appellee also handled the return of inventory
and payments to suppliers for goods that were purchased by B & D. (Id. at
71-72.) Appellee further explained that, after the creation of Birchard
Plumbing, Decedent continued to purchase inventory under the B & D
account. (Id. at 74.)
This testimony supports the findings and conclusions of the trial court
that appellant transferred the assets and liabilities of B & D to Birchard
Plumbing when Decedent commenced operating as Birchard Plumbing. This
court finds no abuse of discretion or error of law by the trial court in the
application of the burden of proof and that appellee met her burden of
proof.4
4
Appellant concedes that there were gifts from her to Decedent but that the
whole business and the accounts receivable were not given to Decedent.
Appellant further argues that there was no evidence that she was aware that
work that had been contracted out through B & D was completed by Birchard
Plumbing and placed in the Birchard Plumbing account. Similarly, there was
no evidence that deposits were made into the Birchard Plumbing account
with appellant’s knowledge. However, appellee entered into evidence
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Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/18/2017
deposit slips in appellant’s handwriting from this period. Appellant also
seeks rental payments of $1,000 per month for the six months that
Decedent operated Birchard Plumbing. There is no record of appellant ever
requesting rent from Decedent. Given that the trial court found that
appellant gave the business to Decedent, that presumably included the use
of the Property.
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