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09/27/77 JAMES SANDOR FUSS v. MARCIA PITCAIRN FUSS

September 27, 1977

JAMES SANDOR FUSS
v.
MARCIA PITCAIRN FUSS (NO. 2)



Barnstable. Bill in equity filed in the Probate Court for the county of Barnstable on June 28, 1974. The suit was heard by Knight, J. The Supreme Judicial Court granted a request for direct appellate review.

Hennessey, C.j., Quirico, Braucher, Kaplan, & Liacos, JJ.

SYLLABUS BY THE COURT

Husband and Wife, Gift. Gift. Deed, Construction.

The opinion of the court was delivered by: Liacos

Evidence warranted a finding that the conveyance of certain property on the condition that the grantee pay the gift tax attributable to the transaction was a gift without consideration rather than a sale. [449-450]

Evidence warranted a finding that the donor of certain property intended to convey it to his daughter and her putative husband even though at the time of the conveyance the donees erroneously believed that the gift was to the daughter alone. [450]

A gift of real estate to a husband and wife as tenants by the entirety was not defeated by a subsequent determination of the invalidity of the marriage but became a conveyance to them as tenants in common. [450]

Where certain real estate was given to a husband and wife on the condition that they pay the gift taxes attributable to the gift and the taxes were paid out of the wife's funds, after the invalidation of their marriage the wife was entitled to an equitable lien on the property in the entire amount of her payment plus interest from the time of the payment to the date of partition or sale since her payment of the entire gift tax was a requisite to her husband's acquisition of his interest in the property. [450-451]

The parties to this case were previously before this court in Fuss v. Fuss (No. 1), 372 Mass. 64 (1977), which dealt with matters pertaining to their putative marriage. The present controversy arises out of the same factual background. This litigation concerns the ownership of real and personal property in Oyster Harbors in the town of Barnstable which formerly belonged to the defendant's father, the Reverend Theodore Pitcairn. By deeds dated November 13, 1972, Reverend Pitcairn conveyed the property to Marcia and James as tenants by the entirety; at that time, the donees erroneously believed the gift was to Marcia alone. Since learning the nature of the deed, Marcia has refused to acknowledge James's ownership rights. James therefore brought this suit for declaratory judgment to establish his interest in the property.

The probate Judge held that the parties are the owners, as tenants in common, of the real and personal property in dispute. The Judge further held that the defendant, Marcia, has an equitable lien on the property in the amount of certain gift tax payments made by her, with interest thereon. Both parties took an appeal from this amended judgment of the Probate Court. The matter is before us on our allowance of the application of James for direct appellate review. Mass. R. A. P. 11, 365 Mass. 854 (1974). We affirm the judgment of the Probate Court.

We summarize the relevant facts as found by the probate Judge. For many years prior to the disputed transfer, Reverend Pitcairn had spent his summers at the Oyster Harbors property which is the subject of this litigation. During the summer of 1970, Reverend Pitcairn -- then seventy-six years old -- discussed the Disposition of the property with members of his family. Marcia indicated that she would like to have it.

In the fall of 1970, James spoke with a Mr. Brown, the associate general counsel of the Pennsylvania company which manages the Pitcairn family trusts, concerning plans for the Oyster Harbors property. Mr. Brown indicated that Reverend Pitcairn was unwilling to take any action at that time. There were no further Discussions until 1972, when Reverend Pitcairn, Marcia and James visited the situs, paced the boundaries, and spoke about transferring title. Because Reverend Pitcairn was in a very high gift tax bracket, he would not make an inter vivos gift unless the donee agreed to pay the gift tax under the "net gift method." Mr. Brown advised James, Marcia and her father that the gift tax -- based on an appraiser's estimate of $215,000 -- would be approximately $80,000. The Judge found that all persons realized that the tax would have to be paid by Marcia, as James did not have sufficient funds of his own.

Mr. Brown subsequently prepared the documents necessary to effect transfer of the property. In so doing, he represented all three parties to the transaction. Having received no instructions as to the form in which title was to be conveyed, he decided on his own initiative to list the grantees as tenants by the entirety. Neither James nor Marcia was aware of this decision at the time. Neither Mr. Brown nor Reverend Pitcairn knew that the parties were experiencing marital difficulties; indeed, Reverend Pitcairn was never aware (although Mr. Brown was) that Marcia's prior Mexican divorce and marriage to James were highly questionable. *fn1

Mr. Brown engaged a Massachusetts attorney to prepare the deed passing title to James and Marcia as tenants by the entirety. Mr. Brown's letter of instructions to that lawyer related that "Reverend Pitcairn desires to transfer the property to his daughter and son-in-law. He will receive no consideration for the transfer, but the grantees have agreed to pay and discharge the Federal Gift Tax. . . . The grantees are Marcia Pitcairn Fuss and James Sandor Fuss." A copy of this letter was sent to Reverend Pitcairn, who made no objection to Mr. Brown. The Judge found that Reverend Pitcairn, although then seventy-eight, was "alert for a man of ...


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