author: CIRILLO, Judge: BECK, Judge

text:
    644 A.2d 777
    Mary Jo LABAR v. Thomas S. LABAR, Appellant.
    Superior Court of Pennsylvania.
    Argued Jan. 11, 1994.
    Filed July 11, 1994.

      Kimberly A. Cicci, Bangor, for appellant.
    April L. Cordts, Easton, for appellee.
    Before CIRILLO, BECK and HOFFMAN, JJ.
   CIRILLO, Judge:

Thomas S. Labar (Husband) appeals from an order entered in the Court of Common Pleas of Northampton County dismissing Husband’s objections to support calculations and affirming an earlier order directing Husband to remit spousal and child support payments in the amount of $474.00 per week. We vacate and remand.

On November 6, 1992, a petition for support was filed on behalf of appellee Mary Jo Labar (Wife) and two minor children, Ryan and Jason Labar. An order of support followed, providing that Husband pay $144.00 per week for spousal support, $251.00 per week for child support, and $79.00 per week in arrearages — for a total of $474.00 per week. The trial court based these amounts on its determination that Husband’s net income was $1,203.73 per week. Husband was given credit for remitting weekly payments of $36.46 towards a second mortgage loan on the marital residence and weekly payments of $76.00 on another support obligation. Objections were filed by Husband, and a hearing was held to adjudicate the issue of support payments. The Honorable James C. Hogan subsequently affirmed the support order.

Husband filed a petition for reconsideration challenging the court’s calculation of his disposable income. Specifically, Husband argued that the trial court improperly inflated Husband’s disposable income by factoring in fifty percent of depreciation expenses and entertainment expenses of Blue Valley Lanes, Inc. (Blue Valley), a Subchapter “S” Corporation (S-Corp.), of which Husband is a fifty percent shareholder.

Judge Hogan denied Husband’s petition for reconsideration, and this appeal followed. Husband raises the following issues for our consideration:

(1) Whether the trial court abused its discretion when it included S-Corp. depreciation of corporate assets, as part of appellant’s disposable income for calculation of support payments, when the entire depreciation amount was expended on debt obligations and other necessary business expenses?
(2) Whether the trial court abused its discretion when it included entertainment expenses expended by a S-Corp., in which appellant is a fifty percent (50%) shareholder, as part of his disposable income for calculation of support payments?
(3) Whether the trial court abused its discretion in rendering an opinion that is inconsistent with its previous, recent order, in a case involving appellant in which it held that appellant did not recognize any disposable income from the S-Corp. because the depreciation was offset by corporate expenses?

1. The Standard of Review

Initially, we note that our standard of review for claims concerning support orders is a narrow one.

A trial court has broad discretion concerning support payments and we will not reverse its decision unless there is insufficient evidence to sustain it or the trial court abused its discretion in fashioning the award. More than mere error of judgment is required, discretion is abused only if the law is overridden or misapplied or the judgment exercised is manifestly unreasonable.

Caplan v. Captan, 400 Pa.Super. 352, 355, 583 A.2d 823, 824 (1990) (quoting Lesko v. Lesko, 392 Pa.Super. 240, 243, 572 A.2d 780, 782 (1990) (citations omitted)).

II. The Depreciation Expense

Husband is a fifty percent owner of Blue Valley, a bowling alley where he works full time, acts as manager, and does all of the accounting and ordering. Husband contends that the court abused its discretion by doubling the financial resources he “actually received” in 1991 in its calculation of his support obligation, the exaggerated figure resulting largely from the trial court’s inclusion of one-half of Blue Valley’s depreciation expenses, or $34,066.00. Thus, in 1991, $34,066.00 worth of depreciation and $1,914.50 of entertainment expenses were added to Husband’s disposable income of $32,627.00 in its determination of Husband’s support obligation; for a total disposable income of $68,607.50.

As a threshold matter, it is critical to recall that the purpose of reviewing a business transaction of either spouse is to prevent one or the other from sheltering actual personal income that should be included in calculating child support. The Supreme Court of Pennsylvania has recognized that a parent may not “voluntarily decrease” the ability to provide support by sheltering income through “unreasonable or unnecessarily large expenditures for his or her own benefit.” Meltzer v. Witsberger, 505 Pa. 462, 472, 480 A.2d 991, 996 (1984) (emphasis added) (citing Costello v. LeNoir, 462 Pa. 36, 40, 337 A.2d 866, 868 (1975)). See also King v. King, 390 Pa.Super. 226, 568 A.2d 627 (1989).

Despite the apparent clarity of this standard, its application has proven most difficult. The courts of this Commonwealth have seemingly seized upon this touchstone and used it as a springboard for advancing an otherwise unwarranted position. This process began with the language used by the majority in Cunningham v. Cunningham, 378 Pa.Super. 280, 548 A.2d 611 (1988), which stated, “depreciation and depletion expenses should be deducted from gross income only where they reflect an actual reduction in ... personal income.” Id. at 282, 548 A.2d at 613. This language implies an analysis of the reasonableness of the depreciation or depletion expenses taken to determine whether they in fact reduced the income of the business, and consequently, the personal income of Husband.3 *

The Cunningham majority, however, continues with an example, stating, “such as where, e.g. he or she actually expends funds to replace worn equipment or purchase new reserves.” Id. (emphasis added). This language implies an analysis of the reasonableness of the initial outlays on assets. These are two discrete inquiries, which, improperly, have been merged into one. This point is strengthened by the fact that the court then analyzed the facts of Cunningham using only the second part of this language. The majority states, “[the defendant] does not claim ... that he in fact spent any of his $24,000 [gross ] income ... to replace ... or purchase new ... reserves.” Id.

Both of these statements implicate opportunities in the operation of a business when it is possible for the proprietor to shelter income: by manipulating the purchases and other cash outflows of the business and by manipulating the accounting of those transactions. These situations create two related, but independent inquiries which must be resolved.

First, a choice of accounting methods may be utilized to raise or lower the depreciation expense taken so as to raise or lower net income. When gross income is reduced, this produces a marginal income tax savings, which then becomes income that is available to the business or that can be distributed to the proprietor as he or she may choose. Thus, in inquiring into whether the depreciation and depletion expenses reflected an actual reduction in Husband’s personal income, under Cunningham, we must look at whether any such marginal income created through tax savings was reinvested in the business or distributed to the Husband directly.

Second, even if the accounting method is unaltered, the proprietor may simply make substantial capital outlays, which will proportionately increase the depreciation expense, even though the capital outlays are unnecessary to maintain the business. Thus, we must also inquire as to whethér the capital outlays underlying the reduction were necessary, under Cunningham, or whether they represented an attempt to shelter income for purposes of avoiding spousal and child support obligations, under Meltzer. Each must be examined separately and the trial court must be clear as to which factor it is scrutinizing.

A. The Propriety of the Expenses

Before proceeding with the first part of the analysis, we must recognize that it is not unusual in a small business setting, such as this, for a proprietor to own as well as manage the business. This arrangement does not render a proprietor’s business decisions inherently suspicious or unreasonable. When these business decisions impact other obligations, such as support payments, an inquiry by the courts should be carefully tailored.

In Commonwealth ex rel. ReDavid v. ReDavid, 251 Pa.Super. 103, 380 A.2d 398 (1977) and its progeny, the court expressed a concern with allowing a depreciation expense for real estate, which is permitted for federal income tax purposes, to reduce available income for support. See also Lyday v. Lyday, 360 Pa.Super. 16, 519 A.2d 967 (1986). In ReDavid, the court found that recognizing such an expense for support purposes was legitimate, since real estate is an asset which generally appreciates in value, making it possible for its cost to be fully recovered upon resale. Thus, taking a depreciation expense against this asset creates somewhat of a financial fiction by improperly deflating net income of the business. However, as with those in question here, most other classes of assets actually do decrease in value as time passes and depreciation legitimately, and more appropriately, represents the recovery of cost less resale value, over the useful life of the asset.

Depreciation, however, does not translate directly into cash flow, as its direct effect is on the tax liability of the business. This reduction in tax liability is not a dollar for dollar relationship, but rather is a product of the tax rate applied to the income. Therefore, savings are created from the depreciation which marginally increases the cash flow of the business. This court recognized this fact in Williams v. Williams, 175 Pa.Super. 409, 413, 104 A.2d 499, 501 (1954), stating, “Although depreciation must not be treated as an expense, neither can it be treated in the same category as net profit.” Likewise, this court has allowed only a portion of depreciation, representing monies actually available to the defendant for personal use, to be considered when making a support award. See Commonwealth ex rel. Maier v. Maier, 274 Pa.Super. 580, 418 A.2d 558 (1980).

In general, there should be little concern over the amount of depreciation as it is limited to very specific regulations set forth by the Internal Revenue Service, which cannot be manipulated without risking income tax fraud. With this in mind, a finding of unreasonable depreciation expense by the court should be limited to those cases where there is evidence of blatant unreasonableness or vast change in expenditures from one year to another. See Snively v. Snively, 206 Pa.Super. 278, 212 A.2d 905 (1965). No such manifest unreasonableness in the figures exists here. The largest change in amount of depreciation taken by Husband occurred between 1990 and 1991. This change is legitimately explained by the use of a half-year convention for taking depreciation between 1990 and 1991. N.T. 4/1/93 at 18. This decision, by its very nature, is contrary to the notion that the expenditures were made with the intent to minimize net income, since that switch served to “spread out the depreciation over the longest period of time.” N.T. 4/1/93 at 18. Thus, standing alone, the switch to a mid-year convention for taking depreciation increased net income which would be available for support.

Moreover, our reading of the record reveals ample evidence that the marginal income made available through Husband’s depreciation expenses was actually expended on Blue Valley in the satisfaction of principal on business loans which were due in that year, as well as on the purchase of new equipment. Husband further testified as follows:

Q. In terms of that [1991] $68,000 depreciation figure, does that relate in any way to any income directly for either you or your partner?
[HUSBAND]: No, John and I don’t have access to that income. That income has to be programmed to be put back into the business to keep the operation of the business going.
Q. Mr. Labar, in 1992, the figure on depreciation, did either you or your partner realize any cash or income that you could dispose of, personally?
[HUSBAND]: No. You can’t write yourself a check for the depreciation. If we started taking money out of that business and don’t do what we are supposed to, we have the bank looking over our shoulders to tell us we are wrong. We just can’t write checks whenever we please. If there is extra money there, we could write ourselves a small bonus, maybe, somewhere down the road. But right now the way it is structured it is a long-term investment for us and we have got to keep the place running.

N.T. 4/1/93 at 17, 21-22. We find, therefore, that the expenditures did, in fact, reduce Husband’s actual income.

B. The Necessity of the Capital Outlays

We turn now to the second part of the analysis dealing with the necessity of Husband’s expenditures on the particular assets at issue. McAuliffe, 418 Pa.Super. at 44, 613 A.2d at 22. As stated earlier, the intent to shelter income by Husband may also exist if it was unreasonable for Husband to make the initial purchase of the assets for which the depreciation expense was later taken. Meltzer, supra. The trial court, in its opinion, addressed Husband’s testimony regarding the propriety of the expenditures on assets as follows: “What defendant fails to state is that he is building up equity in his business and creating a ‘good bowling center for the community’ at the expense of his children’s support. We cannot and will not permit this to occur.” Before the court reached this conclusion, it pointed out the fact that Husband made no mention of the amount of increased income generated by the business’s improvements, that Husband did not testify as to whether the improvements were necessary to maintain the current level of business, that Husband stated that the federal tax profit of $7,511.00 was reinvested in the corporation, and that Husband admitted that his equity in the business is increasing as each year passes.

Husband’s testimony at the hearing, however, did indicate that when the business was purchased in 1985, the partners had a long range plan to update the bowling alley year to year, “taking the money and not putting it back in our pockets but putting it back in so that the community would have a good bowling center over the years.” N.T. 4/1/93 at 13.

It is natural for a business to make investments which negatively impact the short term profit of the enterprise with the expectation of greatly increasing long term profits. See Weiser v. Weiser, 238 Pa.Super. 488, 362 A.2d 287 (1976). It is unrealistic to expect a person to make an investment without expecting a reasonable return. Moreover, the maintenance and preservation of a business requires more than simply a coat of paint in order to maintain competitiveness. Equipment must be updated to meet the standards in the industry. It is unlikely that a bowling alley which maintains manual scoring will be very competitive in its industry when all the other alleys have computerized scoring systems. The possibility that Husband’s business decisions could be motivated by an attempt to shelter his income from support obligations is not evident from these facts. A groundless business decision to expend sums proportionately large as compared to the income of the business, based only on malicious intent, would certainly adversely affect the business to a greater degree than could possibly benefit Husband by reducing his support payment. Absent specific evidence of intent to shelter income in the record, it must be presumed from the facts that the expenditures on the assets mentioned were legitimate and necessary. See Weiser, 238 Pa.Super. at 491, 493, 362 A2d at 288, 289.

Recognizing Husband’s primary obligation of support, we cannot, based on this record, uphold a computation of support that is based upon an inflated disposable income. Adding $34,066.00 to Husband’s income under the instant circumstances creates a “fictional financial picture.” Cunningham, 378 Pa.Super. at 282, 548 A.2d at 612-13. As revealed at the support hearing, these monies must be viewed as business assets, allocated to the replacement of worn out equipment, new equipment (such as the computerized scoring system), and business debt. We conclude, therefore, that the law has been misapplied by the trial court. Copian, supra.

The support payments in question must only be taken from that amount available to Husband personally, after the business has been taken into account. See Beegle v. Rasler, 395 Pa.Super. 174, 576 A.2d 1100 (1990) (when considering a parent’s ability to pay support, the ultimate goal is to arrive at a monetary figure which accurately represents a parent’s ability to pay, while providing that parent with a reasonable allowance). Once again, it has been noted by this court that, “[i]f, for the purpose of complying with a court order, a man is compelled to expend or exhaust his capital, without opportunity to maintain and preserve that which makes his business possible, it will eventually work to the detriment of both parties.” Williams, 175 Pa.Super. at 413, 104 A.2d at 501. Given the instant circumstances, we are of the opinion that the trial court misapplied the law in failing to correctly analyze Husband’s situation in light of the reasoning and case law set forth above. Caplan, supra. Thus, the inclusion of fifty percent of the depreciation value on Husband’s income unfairly impacted upon his support obligations. We remand this issue for a corrected determination of Husband’s disposable income.

III. The Entertainment Expenses

Husband’s second issue concerns the inclusion of entertainment expenses in the amount of $1,914.50 in his disposable income for support purposes. While we are of the opinion that the analysis used in the depreciation expense issue is also pertinent to the entertainment expense issue, we are precluded from reviewing that question at this juncture. The only mention of Husband’s entertainment expenses at the support hearing is reflected in the following exchange:

THE COURT: All right. Let’s take a little testimony----
COUNSEL FOR HUSBAND: I think the other issue was entertainment expenses, I don’t know if you want to cover that at all.
THE COURT: Were they substantial?
COUNSEL FOR HUSBAND: They are not that substantial.
COUNSEL FOR WIFE: I do not think we will be disputing them. I have seen copies of the statement, it is my understanding the entertainment expenses are for music played at the bowling alley.
THE COURT: Apparently, the only thing we have to look at is the depreciation.
COUNSEL FOR HUSBAND: Okay, fíne.

N.T. 4/1/93 at 9-1Q. From this exchange it is evident that, at the time of the hearing, the parties did not think the amount of the entertainment expenses to be of consequence. However, if this issue is pursued further on remand, there should be additional testimony as to the necessity of these expenses on the record in order to utilize the analysis suggested herein.

We vacate and remand for a recalculation of support. Jurisdiction relinquished.

. BECK, J., files a Dissenting Opinion.

BECK, Judge

dissenting.

This is an appeal from an order for the support of appellee wife and her two children in the amount of $474.00 per week. Appellant husband alleges that this figure is based on an erroneously high calculation of his income. He contends that the trial court erred in calculating his income by improperly including in that calculation a portion of the depreciation expenses of Blue Valley Lanes, Inc., a corporation in which husband is a fifty percent shareholder. Blue Valley Lanes owns and operates a bowling alley which Husband manages on a fulltime basis.

The majority agrees with husband and remands for a recalculation of husband’s income and, therefore, of his support obligation. I disagree with this conclusion on two grounds. First, although the majority faithfully recites the standard of review applicable to an appeal from a support order, the majority fails to comply with that standard in reviewing this case. Second, the majority’s resolution of the substantive issue presented in this case is inconsistent with this court’s clear precedent on that issue.

The majority sets forth the applicable standard of review as follows:

A trial court has broad discretion concerning support payments and we will not reverse its decision unless there is insufficient evidence to sustain it or the trial court abused its discretion in fashioning the award. More than mere error of judgment is required, discretion is abused only if the law is overridden or misapplied or if the judgment exercised is manifestly unreasonable.

Maj.Op. at 616 (quoting Caplan v. Caplan, 400 Pa.Super. 352, 355, 583 A.2d at 823, 824 (1990)).

This is an accurate statement of the law. See Crawford v. Crawford, 429 Pa.Super. 540, 633 A.2d 155, 158-59 (1993). It is not, however, all that may accurately be said of our standard of review, particularly in a case such as this where the issue is whether the trial court erred in assessing the income of the party against whom a support order is to be entered. In such a case, a panel of this court has recently stated, “[w]here the trial court finds that claims of reduced income are simply not credible, a reviewing court will generally not disturb this determination on appeal.” McAuliffe v. McAuliffe, 418 Pa.Super. 39, 42, 613 A.2d 20, 22 (1992).

Rather than curtailing its review of the instant matter so as to remain within these parameters, the majority reanalyzes the only testimony provided on the issue of appellant’s income, which was the testimony of appellant himself, and reaches a conclusion contrary to that reached by the trial court.

Moreover, in reaching this conclusion, the majority fails to follow the dictates of Pennsylvania case law in which the proper treatment of depreciation expenses in determining the income of a support obligor is clearly set forth. Older Pennsylvania cases established the principle that “depreciation is not to be considered in determining the income from which the wife may seek support.” Commonwealth ex rel. ReDavid v. ReDavid, 251 Pa.Super. 103, 106, 380 A.2d 398, 399 (1977) (quoting Commonwealth v. Turnblacer, 183 Pa.Super. 41, 44, 128 A.2d 177, 179 (1956)). See also Parkinson v. Parkinson, 354 Pa.Super. 419, 512 A.2d 20 (1986); Commonwealth ex rel. Hagerty v. Eyster, 286 Pa.Super. 562, 429 A.2d 665 (1981).

More recent cases have refined the current standard used to evaluate depreciation expenses in calculating the income of a support obligor. In Cunningham v. Cunningham, 378 Pa.Super. 280, 548 A.2d 611 (1988), appeal denied, 522 Pa. 576, 559 A.2d 37 (1989), a panel of this court opined:

It is well established that depreciation and depletion expenses, permitted under federal income tax law without proof of actual loss, will not automatically be deducted from gross income for purposes of determining awards of alimony and equitable distribution. In determining the financial responsibilities of the parties to a dissolving marriage, the court looks to the actual disposable income of the parties:
[T]hat income must reflect actual available financial resources and not the oft-time fictional financial picture which develops as the result of depreciation deductions taken against ... income as permitted by the federal income tax laws.
Depreciation and depletion expenses should be deducted from gross income only where they reflect an actual reduction in the personal income of the party claiming the deductions, such as where, e.g., he or she actually expends the funds to replace worn equipment or purchase new reserves.

Id. at 282, 548 A.2d at 612-13 (citations omitted). See also Heisey v. Heisey, 430 Pa.Super. 16, 633 A.2d 211 (1993) (actual available financial resources are correct basis for calculation of support obligor’s income).

This standard was even more recently supplemented by the decision in McAuliffe v. McAuliffe, 418 Pa.Super. 39, 613 A.2d 20 (1992). There, the issue was whether the trial court had erred in refusing to accept the testimony of the husband concerning the necessity of certain major expenditures he had made in purchasing new equipment for his business, thereby allegedly reducing his income available for spousal support. After stressing the narrowness of the standard of review applicable to support matters and quoting the pertinent language from Cunningham, the McAuliffe court explained:

Furthermore, the “new reserves” contemplated above should not be read to mean an allocation for future expenditures or the expansion of a party’s business. To the contrary, the cash outlays for “new reserves” must be necessary for the continued operation and smooth running of the business. Id. As this court has previously stated:
To allow husband to shield substantial income of his business from consideration in determining his support obligation without more evidence as to a legitimate need to do so would allow spouses with support obligations to evade their obligations by unilaterally reducing their income. This is obviously impermissible under Pennsylvania law.

King v. King, 390 Pa.Super. 226, 568 A.2d 627 (1989). Id. at 44, 613 A.2d at 22.

The McAuliffe court affirmed the trial court’s decision that approximately $200,000 spent by husband in purchasing new equipment for his business was not proven to be “necessary to maintain or preserve the business,” id., and, therefore, could not be excluded from husband’s income for purposes of setting his support obligation. The McAuliffe court specifically refused to interfere with the trial court’s assessment of the credibility of husband’s testimony.

The McAuliffe court’s requirement that expenditures be shown to be “necessary to preserve and maintain the business” before they may be deducted in calculating the income of the business owner is not a new concept in Pennsylvania support law. In fact, the selfsame language is found in an older case, Williams v. Williams, 175 Pa.Super. 409, 104 A.2d 499 (1954), where the court opined:

Although depreciation must not be treated as an expense, neither can it be treated in the same category as profit. If, for the purpose of complying with a court order, a man is . compelled to expend or exhaust his capital, without opportunity to maintain and preserve that which makes his business possible, it will eventually work to the detriment of both the parties.

Id. at 413, 104 A.2d at 5Ó1 (emphasis added). Clearly the McAuliffe court was on solid ground in determining that only amounts expended on necessary maintenance and preservation of a business are properly excluded in calculating the owner’s income.

Surprisingly, the majority makes reference to McAuliffe only in response to this Dissent and then dismisses the case as not apposite to the case before us. Rather, the majority crafts its own new standard and ultimately draws a conclusion that contradicts the clear mandate of McAuliffe and Cunningham. The majority requires that two questions be answered in the affirmative before depreciation expenses may properly be excluded from a support obligor’s income — first, do the expenses represent an actual reduction in the obligor’s income, and second, were the expenses underlying the reduction reasonable or were they an attempt to shelter income for the purpose of avoiding a support obligation. Maj.Op. at 621. Thus, the majority concludes that “a finding of unreasonable depreciation expense by the court should be limited to those cases where there is evidence of blatant unreasonableness or vast change in expenditures from one year to another.” Id. at 781.

This is not the standard of decision established by Cunningham and McAuliffe. As the foregoing discussion indicates, although it is proper to ask whether the expenses represent an actual reduction in income, the second question is not whether the expenses were reasonable and not an intentional attempt to evade a support obligation. Rather, we must ask whether the expenses were necessary to preserve and maintain the business. McAuliffe, 418 Pa.Super. at 43, 613 A.2d at 22. In other words, the standard is clear. Unless the amounts expended were reasonably necessary to preserve and maintain the business, they may not be used to reduce the income available for support.

Clearly it is reasonable, as the majority states, for a business owner to invest money in the expansion of the business and in the improvement of its facilities. However, the business owner, who is also a support obligor, may not improve and expand at the expense of those to whom he or she owes a legal duty of support. That duty comes first and is “well nigh absolute.” In order to expand or improve the business, the owner may be required to seek other sources of funds, such as bank loans or the owner may have to rely on his or her own resources. However, the law is clear that the overriding limitation is that it is impermissible for the owner to expand or improve the business if it means reducing the support obligations to the family. It is also impermissible for the business owner to increase the equity in the business, to his or her sole advantage, to the detriment of the support obligees. There is inherent wisdom in the principle enunciated in McAuliffe which the majority erodes. It provides a family with a stable source of support. It prevents a business person from using an accounting mechanism in order unilaterally to reduce the support obligations. Under the McAuliffe standard the business person can deduct reasonable sums to maintain and preserve the business. To expand or improve it, the business person/support obligor must rely on funds other than those necessary to support the family. The McAuliffe principle recognizes the need of maintaining a business as the source of family support without sacrificing reasonable support to the family.

In this case, the trial court heard the testimony of husband to the effect that the depreciation expense at issue yielded a cash flow that was reinvested in the business. Husband testified that he and his partner had purchased the business in poor condition in a highly leveraged transaction and now needed continually to update and improve the physical plant and services of the business in order to generate income with which to pay off long and short term debt as well as to provide the community with a better bowling facility. I agree with the majority that this represents a highly reasonable course of pure business decisionmaking. However, we are not reviewing husband’s decisionmaking as a business person. We are reviewing the trial court’s attempt to fashion a fair and equitable support award. In doing so, we must ascertain what income husband has available for the support of his ex-wife and children, without reduction for amounts expended to achieve husband’s personal goals for the expansion of his business or service to his community.

I find no error in the trial court’s conclusion that in this case, husband’s share of the depreciation expense of the corporation should not be subtracted from his income for purposes of calculating his support obligation. The trial court obviously did not believe that the money yielded by the depreciation expenses in this case was required to be reinvested in the business in order to preserve and maintain it. The court found instead that Husband was attempting to enhance his equity in the business at the expense of his wife and children. This is a reasonable conclusion, and certainly repre- • sents no abuse of discretion or error of law.

Since I also find no merit to either of husband’s other claims of error, I would affirm the order of the trial court.

      . Without delving into a full explanation of the structure of an S-Corp., the significance of the designation, for purposes of this opinion, is as follows. First, it is a designation for federal income tax purposes and has no effect for corporate law purposes. Second, the chief characteristic of an S-Corp. implicated in Mr. Labar's case is that income or losses are not recognized at the corporate level, but flow through to the individual members. See generally I.R.C. § 1361 et seq.

      . The trial court also included entertainment expenses of $1,914.50, which will be discussed below. The Hearing Officer of the Domestic Relations Section of the Court of Common Pleas of Northampton County included these as part of Husband’s disposable income based on the Wife’s objection to these amounts being excluded.

      . This income figure consists of $26,000.00 in personal income, $2,527.00 in interest, $3,540.00 in profit to Blue Valley, and $560.00 in amortization. These amounts are uncontested.

      . Although the dissent makes a point of resting on McAuliffe v. McAuliffe, 418 Pa.Super. 39, 613 A.2d 20 (1992), we find that the facts of that case are sufficiently close to Cunningham and McAuliffe's reliance so dependent on Cunningham, so as to require only a single discussion of the seminal case of Cunningham. We further distinguish McAuliffe from the facts at hand by noting that McAuliffe involved a dramatic and unexplainable increase in capital outlays from one year to another ($66,046 in 1989 to $201,894 in 1990). McAuliffe, 418 Pa.Super. at 43, 613 A.2d at 22.

      . The income, deductions, and debts of a business do not translate directly into income, deductions, and debts of the proprietors. It is only through the operation of federal tax law or state partnership law that this occurs. Here, it is only because Blue Valley is an S-Corp. that its gross income and depreciation expenses can be translated into those of Husband. See supra, note 1.

      . A third opportunity occurs when subtleties in the federal tax law are utilized to manipulate numbers to benefit the taxpayer. This court addressed this point in Cunningham and earlier cases, stating that the disposable income of the parent “must reflect actual available financial resources and not the oft-time fictional financial picture which develops as the result of depreciation deductions taken against ... income as permitted by the federal income tax laws. Otherwise put, ‘cash flow’ ought to be considered and not federally taxed income.” Cunningham, 378 Pa.Super. at 282, 548 A.2d at 612-13 (quoting Commonwealth ex rel. Hagerty v. Eyster, 286 Pa.Super. 562; 568-69, 429 A.2d 665, 668-69 (1981) (citations omitted)). Accord, Flory v. Flory, 364 Pa.Super. 67, 527 A.2d 155 (1987); Parkinson v. Parkinson, 354 Pa.Super. 419, 512 A.2d 20 (1986).

      . For example, a business may choose to depreciate an asset by straight-line depreciation (taking an equal portion over a period of years), by double declining balance (two times the amount calculated by the straight-line method), or under ACRS (accelerated cost recovery system) as set forth in I.R.S. regulations.

      . It is important to note that capital outlays of a business reflect purchases made from cash or on credit and affect the net income of a business only to the marginal extent that they generate expenses (such as depreciation or interest).

      . Our review of the record indicates that more conservative depreciation figures were used by Blue Valley on IRS Form 4562 (Schedule of Depreciation and Amortization) for each of the relevant years, as compared to the figures used in the Statement of Income of Blue Valley for those same years.

      . This applies to property placed in service during the taxable year. I.R.C. § 168.

      . For example, Husband’s testimony on direct examination revealed the following:
      Q. Mr. Labar, going to the 1991 tax return, referring you to ... the depreciation line ... the amount is, I believe, $68,000.00 approximately. You indicated that [this] is supposed to generate cash flow in your introductory remarks.... In terms of applying that $68,132.00 figure to operating costs of the business, could you explain to the court how that figure was directly applied to your business expenses? [HUSBAND]: Okay. You have $68,000 in depreciation that is generated. That generates you a cash flow.... [0]ur debt exceeded, at that time, $950,000. In order to cover that, you have to generate a cash flow and be able to prove to the bank you are going to cover your debt. Your short term debt for that year alone was $46,700. So if you have to cover that short term debt, that has to be paid off in that year. That gives you an extra $20,000 to work with. Of that $20,000, that goes into other expenses, other improvements, other places where in the corporation you will need money, upgrading your chassis, your computer works, your motors, your machinery, buying a new lane machine.... That is how the money is used. And that is the same thing in 1992.
      N.T. at 15-16.

      . The record reflects that, starting in 1990, Blue Valley's new equipment/improvements included the following: 24 pin setters ($260,760); computer score system ($135,362); 12 lanes of permanent bumpers ($12,600); 4 pin decks ($3,900); updated phone system ($2,585); new alarm system ($2,175); and paving ($4,590).

      . Although the "necessary” language was never used in Cunningham, we agree that this standard is proper given the countervailing importance of the support obligation.

      . Expenditures, beginning in 1990, totaled $412,622.00. See supra, note 5. In fact, there were net losses of $51,840.00 for 1990 and $26,357.00 for 1991.

      . Contrary to the dissent’s conclusion, this decision does not "reanalyze” the testimony. Rather, it attempts to clarify the lapse that occurred at the trial level, and in this court, as a result of a less than thorough analysis of Husband’s income and a misapplication of the law.

      . The derivation of this figure is discussed in the support calculation, supra.

      . Due to the disposition of the first issue on appeal, it is not necessary that we reach Husband’s third issue.

      . The McAuliffe court noted that the trial court had assumed that all of the depreciation expense claimed by husband had been properly spent to replace fully depreciated equipment or otherwise to preserve and maintain the business and had thereby made husband’s job of proving that his expenditures were necessary much easier. Since this assumption by the trial court was not challenged on appeal, the McAuliffe did not specifically review it.

      . The majority cites Snively v. Snively, 206 Pa.Super. 278, 212 A.2d 905 (1965), in support of this proposition. The issue in Snively was whether a father could receive a reduction in his child support obligation so that he could go to college. The court refused the reduction. The case includes no commentary whatsoever on depreciation expenses or the proper manner of calculating the income of a business owner who claims a reduced income as a result of amounts expended on the improvement of the business.

      . Husband also contends: 1) that the trial court’s decision in this case contradicts an earlier decision by the trial court in an action between husband and another woman to whom he was previously married; and 2) that the trial court erred in adding back into Husband’s income an entertainment expense for music played at Husband’s bowling alley. I would affirm on the basis of the trial court opinion on both of these issues.


source: Caselaw Access Project

author: POPOVICH, Judge:

license: Public Domain

text:
    644 A.2d 787
    COMMONWEALTH of Pennsylvania, Appellee, v. Solomon K. HICKMAN, Appellant.
    Superior Court of Pennsylvania.
    Submitted May 16, 1994.
    Filed July 11, 1994.

      Chris R. Eyster, Pittsburgh, for appellant.
    Michael Streily, Asst. Dist. Atty., Pittsburgh, for Com. appellee.
    Before POPOVICH, JOHNSON and HESTER, JJ.
   POPOVICH, Judge:

This is an appeal from the order of the Court of Common Pleas of Allegheny County which dismissed, without a hearing, appellant’s petition for relief pursuant to the Post Conviction Relief Act. 42 Pa.C.S.A. § 9541 et seq. Herein, appellant alleges the lower court erred in denying his petition without a hearing since he alleged that his trial counsel was ineffective for failing to file a motion to reconsider sentence and a direct appeal. We agree with appellant and remand for a hearing on the issue of whether trial counsel’s actions deprived appellant of his constitutional right to a direct appeal from his judgment of sentence and, thus, appellant should be permitted to appeal nunc pro tunc.

The record reveals that on October 11, 1989, appellant pleaded guilty to seven counts of robbery, four counts of possession of a prohibited offensive weapon, one count of forgery, one count of attempted escape, one count of possession of weapons or implements of escape and one count of criminal conspiracy. On December 1, 1989, appellant was sentenced to an aggregate term of not less, than fourteen years nor more than twenty-eight years of incarceration. Appellant alleged in his pro se PCRA petition that trial counsel unlawfully induced his guilty plea by indicating that his sentence was to be lighter than that actually imposed. He also alleged in his counseled PCRA petition that he directed counsel to file a motion to modify sentence and to file a direct appeal. However, post sentencing motions and a direct appeal were not filed.

In denying appellant’s PCRA petition, the lower court reasoned that appellant was actually attempting to attack the discretionary aspect of his sentence in the post conviction proceeding. Since issues related to the discretionary aspect of a sentence are not cognizable PCRA claims, see Commonwealth v. Wolfe, 398 Pa.Super. 94, 580 A.2d 857 (1990), the lower court concluded that the petition should be summarily dismissed. However, we disagree with the lower court’s analysis.

Instantly, the important issue before the PCRA court was not the propriety of appellant’s sentence. Although appellant ultimately wants to have his sentence reviewed, he currently seeks permission to file a direct appeal nunc pro tunc on the grounds that he asked counsel to file a motion to modify sentence and a direct appeal and counsel neglected to act on appellant’s requests. Thus, appellant submits that his constitutional right to a direct appeal was violated by counsel’s failure to act as requested. Such a claim is certainly cognizable under the PCRA. 42 Pa.C.S.A. § 9543(a)(2(v). If appellant’s averments are true, then appellant would be entitled to a direct appeal nunc pro tunc. See, Commonwealth v. Hoyman, 385 Pa.Super. 439, 442-43, 561 A.2d 756, 758 (1989); Commonwealth v. Miranda, 296 Pa.Super. 441, 451, 442 A.2d 1133, 1138 (1982). Accordingly, we remand for a hearing on appellant’s PCRA petition to determine whether prior counsel’s actions deprived appellant of his constitutional right to a direct appeal. If so, then appellant should be permitted the right to appeal nunc pro tune.

Order reversed. Case remanded for proceedings in accordance with this opinion.


author: OLSZEWSKI, Judge:

text:
    644 A.2d 789
    BENEFICIAL CONSUMER DISCOUNT, a Pennsylvania Business Corporation, Appellee, v. Philip E. DAILEY and Brenda J. Dailey, His Wife, Appellants.
    Superior Court of Pennsylvania.
    Argued April 27, 1994.
    Filed July 11, 1994.
    Petition for Allowance of Appeal Granted Sept. 29, 1994.

      Anne L. Crotty, Kittanning, for appellants.
    Robert E. Pryde, Kittanning, for appellee.
    Before ROWLEY, P.J., and CIRILLO, and OLSZEWSKI, JJ.
   OLSZEWSKI, Judge:

There is one question presented here: Did the Daileys sign a contact under seal when they took a loan from Beneficial? If they did, Beneficial’s action to enforce the agreement was timely. If they did not, the action is barred by the statute of limitations. We find that they signed a contract under seal and affirm the trial court.

The Daileys borrowed $2,880.00 from Beneficial in 1985. When they signed the loan agreement — a pre-printed form used by Beneficial in all consumer loan transactions — the word “SEAL” was pre-printed to the right of their names. The Daileys defaulted on their loan payments in November, 1986. Four years and five months later, Beneficial brought this action to recover the balance of the loan. The trial court held that the evidence established that the Daileys signed a contract under seal, subjecting them to a 20-year statute of limitation. 42 Pa.C.S.A. § 5529(b)(1). The Daileys claim that they did not understand that they were signing a sealed agreement, and that the general four-year statute of limitation governing contracts, 42 Pa.C.S.A. § 5525(7), should apply. We disagree.

It is well-established that, although a vestige of the past, the contract under seal may still operate to lengthen the statute of limitation. The Daileys argue forcefully — and we do not think anyone would disagree — that an ordinary consumer transaction hardly represents the solemnity that was once envisioned by a party signing a contract under seal. Yet, this court has held, in accord with many cases written by our Supreme Court, that when a party signs a contract which contains a pre-printed word “SEAL,” that party has presumptively signed a contract under seal. Klein v. Reid, 282 Pa.Super. 332, 422 A.2d 1143 (1980).

While we share the Daileys’ concern, we do not feel that Klein, which was decided on similar facts, was necessarily unwise, for it too acknowledges that signing a pre-printed form only gives rise to a presumption that the signing party intended to adopt the seal as his own. Id. at 335, 422 A.2d at 1144. In Klein, we held that the signing parties “presented no evidence that that they did not intend to adopt the printed seal,” and that without such evidence, it must be found that the parties did, in fact, adopt it. This holding is reasonable, since it gives effect to (1) the objective manifestations of the parties, and (2) our legislature’s acknowledgment that the contract under seal is a valid type of risk-shifting agreement.

The Daileys also argue that they rebutted the presumption that they intended to adopt the pre-printed word “SEAL” because they would not have signed the document had they understood the significance of signing a contract under seal. Thus, the Daileys posit, the presumption was rebutted because they could not have intended to adopt something which they did not understand. This argument is flawed.

The Daileys argue against the face of the document, that is, their argument’s essence is that they never entered into a contract under seal. The parol evidence rule precludes this contention because the four corners of the contract are unambiguous. Their agreement was, in fact and in law, a contract under seal. The only question remaining — the one addressed by the presumption — is whether the word “SEAL” was intended to act as the Daileys’ seal. Put another way, a preprinted “SEAL” is always an effective way to seal a document unless the maker refuses to accept the pre-printed word as his seal. If for example, the Daileys could prove that they always sealed documents with wax and ribbons, and that their personal seal was absent from this document, they could admit their personal seal into evidence to prove their intention not to adopt the pre-printed word as their own. The rub in this scenario is that very few consumers have their own seals. But this does not prove that the Daileys could not intend to adopt the printed word as their own seal; it actually proves the opposite.

As our Supreme Court explained long ago:

[A]ny flourish or mark, however irregular or inconsiderable, will be a good seal, if so intended; and a fortiori, the same result must be produced by writing the word “seal,” or the letters “L.S.,” meaning originally “locus sigilli,” but now having acquired the popular force of an arbitrary sign for a seal, just as the sign “ & ” is held and used to mean “and” by thousands who do not recognize it as the middle ages manuscript contraction for the Latin word “et.” If, therefore, the word “seal” on the note in suit had been written by Nissley after his name, there could be no doubt about its efficacy to make a sealed instrument. Does it alter the case any that it was not written by him, but printed beforehand? We cannot see any good reason why it should. Ratification is equivalent to antecedent authority, and the writing of his name to the left of printed word, so as to bring the latter into the usual and proper place for a seal, is ample evidence that he adopted the act of the printer in putting it there for a seal. The note itself was a printed form with blank spaces for the particulars to be filled in, and the use of it raises a conclusive presumption that all parts of it were adopted by the signer except such as were clearly struck out or intended to be canceled before signing.

Loraw v. Nissley, 156 Pa. 329, 331-332, 27 A. 242, 242 (1893). The only way the presumption might possibly be rebutted, according to the Loraw Court, would be if the maker signed the document, but signed it a considerable distance from the pre-printed seal. Even this would be a “special ground” upon which to rebut the presumption, id. at 333, 27 A. at 242, and given Loraw’s tone, we doubt that the Supreme Court would recognize it. See Appeal of Hacker, 121 Pa. 192, 15 A. 500 (1888) (no reason to believe that the “flourish of a pen” underneath a person’s signature was not intended to act as a seal).

This might very well, as the Daileys’ argue, render the presumption irrebutable. But this is not to say that the presumption is a meaningless fiction. It becomes important, for example, when a corporation, who has registered its corporate seal with the state, is sued on a contract signed by one of its officers. If the officer signs his name next to a pre-printed seal and the corporation’s actual seal is absent from the document, legitimate questions regarding the authority of the officer to bind the corporation are raised. Did the corporation intend to adopt the pre-printed seal as its own? Although it is presumed that it did, ultimate resolution of the issue is a question' of fact. Collins v. Tracy Grill & Bar Corp., 144 Pa.Super. 440, 19 A.2d 617 (1941); see Swaney v. Georges Township, 309 Pa. 385, 164 A. 336 (1932) (municipality did not intend to adopt pre-printed seal where one of its supervisors signed document and municipality seal was absent). It would be difficult, of course, for a private party to argue that he had no authority to accept a seal on his own behalf, and this is probably why the Loraw Court termed the presumption conclusive, as it applied to that case. Such is also the case here.

Unless one distances himself from the pre-printed seal, the other party to a contract should be entitled to rely on the objective manifestations of the maker’s actions. There can be no question that the pre-printed “SEAL” is an actual seal and that the Daileys signed next to it. The Daileys were under no duty to accept the seal, and had every opportunity to inquire about its significance, and signed the agreement freely. We must therefore agree with the trial court that the obligation should be enforced.

Order affirmed.

      . At least until 1998, that is, when the statute of limitation with regard to contracts under seal expires. 42 Pa.C.S.A. § 5529(b)(2).

      . The trial court found as a fact that nobody explained the meaning of the seal to the Daileys and that had they understood its significance, they would not have signed.


author: FORD ELLIOTT, Judge:

text:
    644 A.2d 791
    In re ESTATE OF Theodora H.D. SIMMONS-CARTON a/k/a Theodora Helena D. Carton a/k/a Dory Simmons, Deceased. Appeal of Mirjam SIMMONS-CARTON, Mother, Appellant.
    Superior Court of Pennsylvania.
    Argued Jan. 5, 1994.
    Filed July 12, 1994.

      F. Curtis Davis, Jr., Philadelphia, for appellant.
    Laurence I. Tomar, Langhorne-Newton, for appellee.
    Before KELLY, FORD ELLIOTT and BROSKY, JJ.
   FORD ELLIOTT, Judge:

This is an appeal from the June 18, 1993 order of the Court of Common Pleas of Bucks County which reversed the decision of the Register of Wills to revoke Letters of Administration previously granted to appellant, Mirjam Simmons-Carton, and appellee, Donald Simmons.

This case involves the tragic death of Theodora “Dory” Simmons on December 24, 1988 in an automobile accident. Dory was twenty-three years old at the time. At issue is whether Dory’s mother, Mirjam Simmons-Carton, and her alleged father, Donald Simmons, should both be named as co-administrators of Dory’s estate. Dory died intestate. Her estate consists primarily of potential assets from pending wrongful death actions.

Before addressing the merits of this appeal, an understanding of the factual and procedural history of this matter is necessary. As much of the factual history is disputed by Mirjam and Donald, the trial court in its opinion dated June 18, 1993, recites both Mirjam’s and Donald’s version of the facts. We adopt that portion of the trial court opinion for purposes of this review.

Mirjam Simmons testified that she was the mother of the decedent who was born on January 3, 1965 in the Netherlands. She further testified that she had met Donald Simmons the spring of 1963 and had a relationship with him until around Christmas time of that year. She denied access with Simmons in the spring of 1964 and did not see him again until October of 1964 when she was already pregnant. (3/3/92 N.T. 12) However, later in her testimony she acknowledged that she may have seen Donald ‘in the neighborhood’ sometime in the spring of 1964. (3/3/92 N.T. 17)
Ms. Simmons then testified that she believed she was made pregnant by a person other than Donald Simmons with whom she had a brief relationship in the spring of 1964. In the course of this testimony, she refused to name the alleged father ‘as matter of principle’. (3/3/92 N.T. 17, 18) She claimed it was because of this principle that no person was named as the father on the decedent’s birth certificate.
Sometime in 1965 Donald Simmons returned to the United States and early in 1966 Mirjam Simmons came with her daughter for a visit. She returned to the Netherlands for a brief time, came back to the United States in November 1966 and she married Donald Simmons, assuming the name Mrs. Mirjam Simmons. Her daughter’s name remained Theodora Carton. The parties subsequently had a child David Simmons.
Further testimony from Ms. Simmons included allegations that Donald Simmons had agreed to adopt Theodora, in order to permit her to become a United States citizen. The adoption did not take place, though she testified that the issue arose every couple of years when questions concerning the name difference arose. In one instance, Ms. Simmons changed the name on a copy of the birth certificate so as to make it appear that Theodora’s last name was Simmons. (3/3/92 N.T. 22)
Until the parties separated in 1987, they lived together as a family unit consisting of the parties and the two children, Theodora and David. In 1987, Theodora was a student at American University, for which Donald Simmons had paid at least two years of tuition. (3/3/92 N.T. 108). [Footnote] Ms. Simmons agreed that during Theodora’s first 18 years Donald Simmons provided the primary support for the family. (3/3/92 N.T. 107)
Upon Theodora’s death, a death certificate was issued in which Donald L. Simmons’ name appears as father and Mirjam Simmons as the informant. Ms. Simmons testified that the information was not given by her, but by an attorney acting on behalf of both her and Donald Simmons. Thereafter, an amended certificate of death was issued at her request eliminating the name of Donald L. Simmons as the father. (Exhibit P-3 and P-4)
From further testimony by the mother and Donald Simmons, it has become apparent that he was reluctant and withheld proceeding to an adoption. He testified that he saw no reason to do so in view of the fact that he was Theodora’s father. We conclude from an examination of the testimony of both parties that the name of a father would not appear on a birth certificate issued in the Netherlands, unless he was married to the mother. This accounts for the designation of Ms. Simmons’ father as a guardian for the child born out of wedlock.
Mr. Simmons’ testimony was that upon the mother’s return from her stay in England in December of 1963, the parties continued to ‘live together’ through early 1964 up to the time that the child was born. He testified that although he had a small room in a friend’s apartment, the mother was living a short distance away and that, for all intents and purposes, he was sharing her apartment with her. This includes the significant period of time when conception would have occurred, during which period Ms. Simmons says she ‘may have’ seen Donald in the neighborhood. This is clearly not significant evidence of non-access.
On cross-examination, Ms. Simmons acknowledged that the relationship had started a couple of years prior to the conception of the child; that soon after Theodora was born the parties continued to live together. Ultimately, the mother brought the child to the United States, the parties were married to one another and for twenty years Donald Simmons treated Theodora as one of his children. It was not refuted that he supported her, including a substantial period of time when Ms. Simmons did not work outside the home. He continued to support Theodora for two or three years that she was in college up to the time that he left the marital home.
Further, on cross-examination, Ms. Simmons acknowledged that she never once said to Mr. Simmons that some other person was Theodora’s father. (N.T. 103, 1. 9 et seq.)
Although Simmons acknowledged that he did not see the birth certificate, it is apparent that he knew that his name did not appear as the father. This explains the need for a ‘change of name’ in order to establish citizenship for Theodora. This was established by the attorney and longtime friend of the parties who testified to discussions with Ms. Simmons with regard to accomplishing the appropriate correction of documents for application for Theodora’s citizenship.
The death certificate and obituaries were supplied from information given at a time when Donald Simmons was not available by reason of his separation from Ms. Simmons and the fact that he was then living in St. Croix. These documents referred to Donald Simmons as Theodora’s father. It was only after this litigation,,that through counsel, Ms. Simmons arranged to have the death certificate amended deleting the reference to Donald Simmons as Theodora’s father.

Trial court opinion, 6/18/93 at 3-7.

Letters of administration were first issued to Mirjam several days after the death of Dory. A short time later, Donald was added as a co-administrator. Upon learning that a co-administrator had been appointed, Mirjam petitioned the Register of Wills to remove Donald on the basis that he was not the father of Dory, and therefore not entitled to administer the estate. The Register of Wills conducted two days of hearings on March 3, 1992, and April 3, 1992. On September 11, 1992, an opinion was issued by the Register of Wills revoking the letters of administration previously granted to Mirjam and Donald. On October 22, 1992, letters were issued solely to Mirjam. Donald appealed to the Orphans’ Court Division of the Court of Common Pleas of Bucks County. The Orphans’ Court determined that the extent of its review was limited to whether the Register of Wills had abused her discretion. After its review of the record made by the Register of Wills, the court found the Register had abused her discretion and as a result was compelled to reverse and vacate the decision. The court reinstated the letters previously-granted to Mirjam and Donald. This timely appeal taken by Mirjam Simmons-Carton followed.

Mirjam first contends that the Orphans’ Court erred in reversing the decision of the Register of Wills. Mirjam’s argument consists of two subparts. First, Mirjam claims that the Register of Wills has the exclusive authority and responsibility to issue letters of administration, and the scope of review of the Orphans’ Court, on appeal, is limited strictly to the question of whether the Register abused her discretion. Second, Mirjam argues that the Register of Wills properly exercised judicial discretion in receiving the evidence and rendering an opinion rejecting the claim of Donald and appointing her, the mother of the decedent, as the sole administratrix of the estate.

In response to. Mirjam’s first sub-issue, we begin by setting out the jurisdiction of both the Orphans’ Court and Register of Wills. Turning to Title 20, Decedents, Estates and Fiduciaries, of the Pennsylvania Consolidated Statutes Annotated, Section 711 governs the mandatory exercise of jurisdiction through Orphans’ Court in general. It provides, in relevant part:

[T]he jurisdiction of the court of common pleas over the following shall be exercised through its orphans’ court division:
(12) Fiduciaries. The appointment, control, settlement of the accounts of, removal and discharge of, and allowance to and allocation of compensation among, all fiduciaries of estates and trusts, jurisdiction of which is exercised through the orphans’ court division, except that the register shall continue to grant letters testamentary and of administration to personal representatives as heretofore.

20 Pa.C.S.A. § 711(12).

Section 901 sets out the jurisdiction for the Register of Wills.

Within the county for which he has been elected or appointed, the register shall have jurisdiction of the probate of wills, the grant of letters to a personal representative, and any other matter provided by law.

20 Pa.C.S.A. § 901.

In Estate of Osborne, 363 Pa.Super. 200, 525 A.2d 788 (1987) (en banc), this court was called upon to determine whether the Orphans’ Court Division may direct the Register of Wills to issue letters of administration to an individual selected by the Orphans’ Court. The appellant claimed that the selection of a proper administrator is within the exclusive jurisdiction of the Register of Wills. A thorough review of the relevant statutes and procedures was undertaken by this court. The Osborne court concluded that while the original selection of an administrator is normally a task within the jurisdiction of the Register, it held that, upon a finding by the Orphans’ Court that the Register has abused its discretion in the selection of the original administrator, the Orphans’ Court may review the evidence presented, revoke the letters, and direct the Register to issue letters to the individual whom the court finds to be entitled to administer the estate. Id. at 207, 525 A.2d at 792.

Applying the reasoning of Osborne to the case sub judice, we find that while the Register indeed has the task of appointing administrators, once the decision is appealed to the Orphans’ Court it is for that court to determine if an abuse of discretion has taken place. Furthermore, once the court has determined that an abuse of discretion has occurred, the court may direct the Register to issue letters to the individual whom the court finds is entitled. See 20 Pa.C.S.A. § 3183.

We recognize that Osborne differs factually from the matter presently before us. Instantly, the Orphans’ Court directed the Register to reinstate Donald as a co-administrator of the estate. In Osborne, the Orphans’ Court directed the Register to revoke a previous grant of letters of administration and to issue letters to another party. We believe this is a factual distinction without a difference. Both cases demonstrate that once the Orphans’ Court is requested to review a Register’s decision concerning the grant of letters of administration, upon a finding of an abuse of discretion, the Orphans’ Court may take the necessary steps to correct the matter. Those steps may include reinstatement, removal, or the addition of a new party.

Mirjam’s second sub-issue contends that the Register of Wills properly exercised her judicial discretion; hence, her decision should not have been reversed and vacated by the Orphans’ Court. Mirjam argues that her testimony, as the natural mother, was properly given strong probative value by the Register of Wills. Mirjam cites to Estate of Owen S. Hoffman, 320 Pa.Super. 113, 466 A.2d 1087 (1983), in support of her position. As discussed below, we believe Mirjam’s reliance on Hoffman is misplaced.

The facts of Hoffman, briefly stated, reveal that Ruth H. DeLong, the appellant in Hoffman, shortly after her birth in 1927 was taken to the home of her mother’s sister, Mary Hoffman, and Mary’s Husband, Sidney S. Hoffman. Ruth was raised by Mary and Sidney and lived with them until her marriage in 1946. However, around the time Ruth was twelve or thirteen, she learned by accident that her “Aunt” Marian Mentch was in fact her natural mother. Ruth was never adopted by Mary or Sidney. Sidney died in 1953 and Mary died in 1972. In 1978 Owen Hoffman, Sidney’s brother died. Owen, whose wife had predeceased him, died without leaving issue. Ruth claimed to be the natural daughter of Sidney S. Hoffman, in an attempt to claim entitlement to one-half of Owen Hoffman’s residuary estate. The trial court found that the claim of Ruth DeLong had not been sustained by clear and convincing evidence. The trial court stated:

‘The record merely indicates that Sidney and Mary took their illegitimate niece into their home to raise as their own child. There were no facts tending to support claimant’s allegation that Sidney was her natural father. All of the evidence presented in this case is consistent with the fact that Mary and Sidney were raising claimant as their foster child.’

Id. at 118-19, 466 A.2d at 1090. This court observed “that claims of paternity made after the lips of the alleged father have been sealed by death are in that class of claims which must be subjected to the closest scrutiny and which can be allowed only on strict proof so that injustice will not be done.” Id. at 117, 466 A.2d at 1089. We noted that while Ruth DeLong presented competent evidence to show the existence of a close relationship between herself and Sidney Hoffman, her failure to call her natural mother, who was available, to testify diluted her case. We stated:

Thus the failure of a party, without explanation, to call as a witness her own mother to testify to the identity of that party’s father permits an inference by the fact finder that the mother’s testimony would have been unfavorable to the claimant who had the burden of proving the paternity necessary to substantiate her claim.

Id. at 119, 466 A.2d at 1091.

We believe the Hoffman case does not stand for the proposition that a mother’s testimony conclusively establishes paternity. Based on the factual setting in Hoffman, it was the absence of the natural mother’s testimony which cast doubt on Ruth DeLong’s claim. Thus, she failed to sustain her burden of proving that she was testator’s niece.

Mirjam’s next claim raises a unique question which concerns the intestacy provisions of 20 Pa.C.S.A. § 2107. She argues that Donald relied primarily on 20 Pa.C.S.A. § 2107 and that that statute is not intended to prove paternity or to allow inheritance by estoppel.

Section 2107 provides as follows:

Section 2107. Persons born out of wedlock
(a) Child of mother. — For purposes of descent by, from and through a person born out of wedlock, he shall be considered the child of his mother.
(c) Child of father. — For purposes of descent by, from and through a person born out of wedlock, he shall be considered the child of his father when the identity of the father has been determined in any one of the following ways:
(1) If the parents of a child born our [sic] of wedlock shall have married each other.
(2) If during the lifetime of the child, the father openly holds out the child to be his and receives the child into his home, or openly holds the child out to be his and provides support for the child which shall be determined by clear and convincing evidence.
(3) If there is clear and convincing evidence that the man was the father of the child, which may include a prior court determination of paternity.

Mirjam claims Donald Simmons should not be permitted to establish his paternity by using this statute as the statute was intended as a method to allow inheritance by an illegitimate child and to provide means for the proof of the acknowledgement of that paternity in the father after the lips of the father have been sealed. However, Mirjam fails to consider that the statute allows for a determination of intestate descent by, from, and through the child born out of wedlock.

We see no reason why Donald should not be permitted to rely on this statute. Donald testified in accordance with subsection (c)(2) that from the time of Dory’s birth, he believed himself to be her father. While Mirjam disputes Donald’s testimony that he lived with her for a time before the birth, was present at the birth, and subsequently returned to the United States with the promise that he would end the marriage he was in at the time, certain facts are undisputed. Those undisputed facts reveal that Donald did return to the United States and divorced his wife. Mirjam and Dory came to the United States in the fall of 1966. Soon after their arrival, Mirjam and Donald were married. They lived together until 1987 at which time Donald left the marital residence. Mirjam admits that even though Dory was a Dutch citizen with her maiden name on her birth certificate, she was known at school and in their neighborhood as Dory Simmons. Mir-jam also testified that throughout the marriage which spanned 21 years she never mentioned that Donald was not Dory’s father. Donald contends that he has always considered himself the father of Dory, always provided a home and support for her, and was unaware of any other man that had access to Mirjam at the time Dory was conceived. This evidence meets the criteria of § 2107 for determining whether a child born out of wedlock will be considered the child of the father for purposes of descent.

While Donald does rely on § 2107, he also refers us to the text of 23 Pa.C.S.A. § 5102, Children declared to be legitimate. He points out, in particular, that the wording of subsection (b)(1), (2) and (3) of § 5102 is substantially the same as the text of 20 Pa.C.S.A. § 2107(c)(1), (2) and (3). Section 5102 states:

§ 5102. Children declared to be legitimate
(a) General rule. — All children shall be legitimate irrespective of the marital status of their parents, and, in every case where children are born out of wedlock, they shall enjoy all the rights and privileges as if they had been born during the wedlock of their parents except as otherwise provided in Title 20 (relating to decedents, estates and fiduciaries).
(b) Determination of paternity. — For purposes of prescribing benefits to children born out of wedlock by, from and through the father, paternity shall be. determined by any one of the following ways:
(1) If the parents of a child born out of wedlock shall have married each other.
(2) If, during the lifetime of the child, it is determined by clear and convincing evidence that the father openly holds out the child to be his and either receives the child into his home or provides support for the child.
(3) If there is clear and convincing evidence that the man was the father of the child, which may include a prior court determination of paternity.

We note that 20 Pa.C.S.A. § 2107 is cross referenced after the above statute along with the notation “Legitimation by marriage of parents.” The above statutory language, when applied to the facts of this case, indicates that Donald certainly would be held to be Dory’s father for purposes of a determination of paternity. As the child of Donald, Dory would be able to inherit from him. It follows that Donald should be able to inherit from Dory under the intestacy provisions of § 2107.

In her second argument, Mirjam asserts that the Orphans’ Court erred in applying a theory of equitable estoppel to reject her testimony which controverted the testimony of Donald that he was the father of the decedent and thus entitled to inherit under the intestate laws of Pennsylvania.

In Curran v. Eberharter, 361 Pa.Super. 65, 521 A.2d 474, appeal denied, 515 Pa. 613, 530 A.2d 867 (1987), we defined the doctrine of equitable estoppel.

‘Equitable estoppel arises when a party by acts or representation intentionally or through culpable negligence, induces another to believe that certain facts exist and the other justifiably relies and acts upon such belief, so that the latter will be prejudiced if the former is permitted to deny the existence of such facts.’

Id., 361 Pa.Super. at 74, 521 A.2d at 479-480, quoting Straup v. Times Herald, 283 Pa.Super. 58, 71, 423 A.2d 713, 714 (1980). In simplistic terms, the doctrine is one of fundamental fairness such that it prevents a party from taking a position that is inconsistent to a position previously taken and thus disadvantageous to the other party.

Mirjam’s claim that the application of estoppel in this situation abrogates the application of the burden of proof requirements is without merit. Donald must prove by clear and convincing evidence that during the lifetime of the child he openly held out the child as his and received the child into his home, or held the child out as his and provided support. See 20 Pa.C.S.A. § 2107(c)(2). We believe, as did the trial court, that Donald has carried his burden.

Mirjam, after 21 years of marriage in which she held out her daughter Dory as the daughter of Donald, now refutes that claim. The only purpose served by her action is to eliminate her former husband from receiving a share of Dory’s estate. We believe this is the type of situation to which the doctrine applies. Mirjam will not now be permitted to change her position.

Another line of cases has spoken on the subject of equitable estoppel in paternity cases. In the seminal case of John M. v. Paula T., 524 Pa. 306, 571 A.2d 1380 (1990), cert. denied, 498 U.S. 850, 111 S.Ct 140, 112 L.Ed.2d 107 (1990), our supreme court stated:-

We see the Commonwealth/family interests highlighted by the ‘estoppel’ cases. In these cases, it is recognized that, under certain circumstances, a person might be estopped from challenging paternity where that person has by his or her conduct accepted a given person as father of the child. The classic example of this principle is where a man who has lived with a woman and her children for a number of years and has held himself to the world as the father of said children, may be estopped from seeking court-ordered blood tests in a belated attempt to deny paternity. Commonwealth ex rel. Weston v. Weston, 201 Pa.Super. 554, 193 A.2d 782 (1963), cited with approval in Adoption of Young, supra at 469 Pa. [141] at 148-49, 364 A.2d 1307 [ (1976) ]. These estoppel cases indicate that where the principle is operative, blood tests may well be irrelevant, for the law will not permit a person in these situations to challenge the status which he.or she has previously accepted. See, e.g., Commonwealth ex rel. Palchinski v. Palchinski, 253 Pa.Super. 171, 384 A.2d 1285 (1978); Commonwealth ex rel. Gonzalez v. Andreas, 245 Pa.Super. 307, 369 A.2d 416 (1976).
The General Assembly has codified the principle of ‘paternity by estoppel’ in its act of June 17,1971, P.L. 175, No. 17, § 1, os amended by Act of November 26, 1978, P.L. 1216, No. 288 § 1, 48 Pa.Stat.Ann. § 167 (Purdon’s Supp.1989) (hereinafter referred to as ‘section 167’), which provides:
Children; legitimacy; determination of paternity
See also 20 Pa.C.S.A. § 2107(c)(2).

Id., 524 Pa. at 318, 571 A.2d at 1386-87 (emphasis in original). We recognize that John M., supra, and its progeny address custody and visitation matters and that the instant matter is one of intestate succession. However, because the language at issue in § 2107 is the same language interpreted by John M. we cannot ignore those rulings.

In In re Montenegro, 365 Pa.Super. 98, 528 A.2d 1381 (1987), this court applied the doctrine of equitable estoppel to prevent a parent from questioning paternity. Montenegro involved a man who allowed his name to be designated on the birth certificate as father of the child. He subsequently married the mother, thereafter living with the child in a family relationship, during which relationship a daughter was born. Five years after the marriage, Montenegro separated from his wife and questioned his paternity of the child in a support proceeding. This court, referencing 23 Pa.C.S.A. § 5102, held that when putative fathers hold themselves out to be the father of the child, by marrying the mother and assuming responsibility for the care of the child, paternity is thereby determined. Thus, the father was estopped from denying paternity.

In Gulla v. Fitzpatrick, 408 Pa.Super. 269, 596 A.2d 851 (1991), the natural mother, Fitzpatrick, informed Gulla that she was pregnant and he was the father of the child. Gulla proposed marriage which Fitzpatrick accepted. The parties planned to marry, but the wedding did not take place due to Fitzpatrick’s vacillation. The baby was born and Gulla’s name was placed on the birth certificate. Gulla paid Fitzpatrick’s hospital bill as well as living expenses for Fitzpatrick and the baby. Gulla was involved in all aspects of the child’s life and care. Several months after the birth of the baby, Fitzpatrick claimed Gulla was not the father. Despite this claim, Fitzpatrick filed a complaint for child support against Gulla. A support order was entered and Gulla willingly paid the required amount. A few months after the order was entered Fitzpatrick stopped cashing Gulla’s checks as Gulla had filed a complaint for custody. The trial court ordered the parties and the child to submit to HLA blood testing. The blood tests conclusively excluded Gulla as the biological father of the child. Fitzpatrick then sought and received an ex parte order withdrawing the support complaint she had previously filed and vacating the support order entered. Both parties filed motions for summary judgment on the issue of custody/visitation. Fitzpatrick argued that Gulla had no right to custody or visitation because he was not the biological father. Gulla claimed that Fitzpatrick was both collaterally and equitably estopped from questioning his paternity, and that he had developed a constructive parental relationship with the child. This court agreed with the trial court that this case properly-called for the application of equitable estoppel to prevent Fitzpatrick from questioning the paternity of Gulla.

Recently, in Jefferson v. Perry, 432 Pa.Super. 651, 639 A.2d 830 (1994), this court stated “[PJrinciples of estoppel are peculiarly suited to cases where the child is conceived out of wedlock and no presumptions regarding paternity apply.” At 656, 639 A.2d at 833. Clearly, the case before us is a classic example of a case where the doctrine of equitable estoppel should be applied.

Donald Simmons held himself out as the father of Dory and provided for her support. That Donald Simmons did that which he was required to do under the statute is uncontradicted, and in fact admitted by Mirjam. Mirjam, in her testimony before the Register of Wills, stated that throughout their marriage and until the time of Dory’s untimely death, she never mentioned to Donald that he might not be the father of Dory. Dory was enrolled in school under the Simmons’ name and held out to the community as Dory Simmons. Mirjam cannot now challenge Donald Simmons’ paternity. Application of the doctrine of equitable estoppel aims at achieving fairness as between the parents by holding them, both mother and father, to their prior conduct regarding the paternity of the child. Gulla, supra, 408 Pa.Super. at 278, 596 A.2d at 856. Mirjam must be held to her actions during the course of the marriage and afterward up to the time of Dory’s death. Thus, we find she is estopped from now denying Donald’s paternity.

Order affirmed.

      . The procedure for and effect of removal is found at Section 3183. This section authorizes the Orphans’ Court to consider revocation sua sponte of letters of administration previously granted by the register.
      § 3183. Procedure for and effect of removal
      The court on its own motion may, and on the petition of any party in interest alleging adequate grounds for removal shall, order the personal representative to appear and show cause why he should not be removed, or, when necessary to protect the rights of creditors or parties in interest, may summarily remove him. Upon removal, the court may direct the grant of new letters testamentary or of administration by the register to the person entitled and may, by summary attachment of the person or other appropriate orders, provide for the security and delivery of the assets of the estate, together with all books, accounts and papers relating thereto. Any personal representative summarily removed under the provisions of this section may apply, by petition, to have the decree of removal vacated and to be reinstated, and if the court shall vacate the decree of removal and reinstate him, it shall thereupon make any orders which may be appropriate to accomplish the reinstatement.

      . Miijam posits that to allow for inheritance by estoppel would establish step-fathers as a new class of beneficiaries under the Intestate Act. We note that Donald does not claim to be Doty’s step-father. Rather, he asserts that Dory was a child bom out of wedlock who was fathered by him. Under the intestate act there are specific statutory heirs designated for inheritance purposes. With the exception of surviving spouses and adopted children, only those heirs in some degree of consanguinity may inherit. The clear legislative purpose of § 2107(c) is to provide a means by which children bom out of wedlock and those who seek to inherit from or through them can legally establish the requisite degree of consanguinity where paternity is a relevant fact. In the case of a "step-father,” by definition, paternity is not a relevant fact. Therefore, Mirjam’s fears regarding the designation of "step-fathers” as a new class of beneficiaries are misplaced.

      [Footnote] He claims to have paid the third year’s tuition as well.