Opinion
No. CV 97 0348895
September 9, 2003
MEMORANDUM OF DECISION
I. BACKGROUND
This is an appeal by the appellant, Brian B. McGovern (appellant), from a decree of the Probate Court for the District of Trumbull (Probate Court) dated October 9, 1997, regarding the estate of James L. McGovern, Jr., the appellant's late father (the estate).
The appellants are the five brothers of the appellant, Paul, Patrick, Roger, David and James L. McGovern, III (a co-executor of said estate) and Thomas A Mulligan (a cousin of the appellant and the other co-executor of the estate).
The issues on appeal are set forth in the appellant's Revised Reasons of Appeal, dated January 28, 2000, and are more particularly set forth herein after below.
In his opening remarks at the time of trial, counsel for the co-executor conceded that it was their burden to establish a prima facie case that the accounting accepted by the probate court was correct.
The appellant and the co-executors offered evidence and testimony regarding the issues before the court, the remaining pro se litigants were also given the opportunity to offer testimony. The court heard the evidence and testimony at trial and reserved decision. The parties were provided additional time after trial to file briefs.
Having considered the evidence and testimony, the arguments of counsel and the case law and statutory authority provided by the parties, the court makes the following findings of facts.
The decedent, James L. McGovern, Jr. died on or about December 8, 1988. He was survived by his sister, Jean Mulligan and six sons, James III ("Pete"), Brian, Paul, Patrick, Roger and David McGovern.
At the time of his death, the decedent owned several parcels of real property, including a five-eighths (5/8ths) interest in a certain parcel of real property situated at 865 Clinton Avenue in the City of Bridgeport. The remaining three-eighths (3/8ths) interest was owned by his sister, Jean Mulligan. He also owned real property in the town of Trumbull and in West Yarmouth, Massachusetts.
In his Last Will and Testament and in a codicil thereto, he nominated his son, James III and his nephew, Thomas A. Mulligan, Jr., his nephew, to act as the co-executors of his estate. Upon his death, his Will was submitted for probate to the Probate Court and James McGovern III and Thomas Mulligan were appointed to act as co-executors of the estate.
The co-executors submitted an interim accounting to the probate court in January 1996 and they submitted a final accounting to the court on or about December 31, 1996.
The final account was approved by the Probate Court on or about October 9, 1997.
Thereafter, Brian McGovern took a timely appeal to this court from the approval of the final account by the Probate Court. As previously noted, the appellant's Revised Reasons of Appeal was filed on or about January 28, 2000 with this court.
II. STANDARD OF REVIEW
"An appeal from a probate court to the Superior Court is not an ordinary civil action." Kerin v. Strangle, 209 Conn. 260, 263, 550 A.2d 1069 (1988). When entertaining an appeal from an order or decree of a Probate Court, the Superior Court takes the place of and sits as the court of probate. Satti v. Rago, 186 Conn. 360, 365, 441 A.2d 615 (1982); Stevens' Appeal, 157 Conn. 576, 581, 255 A.2d 632 (1969); Dunham v. Dunham, 97 Conn. 440, 443, 117 A. 504 (1922). "In ruling on a probate appeal, the Superior Court exercises the powers not of a constitutional court of general or common law jurisdiction, but of a Probate Court." Kerin v. Strangle at 264.
The superior court's role in a probate appeal is unlike its role in other appeals. "The function of the Superior Court in appeals from a Probate Court is to take jurisdiction of the order or decree appealed from and to try that issue de novo." Id. In other words, this court must consider all the evidence that would have been admissible in the Probate Court and then "should exercise the same power of judgment which the Probate Court possessed and decide the appeal as an original proposition unfettered by, and ignoring, the result reached in the Probate Court." Prince v. Sheffield, 158 Conn. 286, 298 (1969). Probate court appeals are not from the cause of action in toto, but only from some specific order . . . or decree." Folsom, Connecticut Estates Practice Probate Litigation § 7.3, p. 250, citing Curtis v. Beardsley, 15 Conn. 518 (1843); Sullivan v. Karliner, 28 Conn. Sup. 210 (1969). The appeal presents to the Superior Court for redetermination, after a retrial of the facts, the special and limited issues embraced within the particular decree appealed. Id. At § 7.10, p. 278, citing Case v. Case, 1 Kirby 284 (1787). Moreover, the appeal brings to the Superior Court only the order appealed from . . . The Superior Court may not consider or adjudicate issues beyond the scope of those proper for determination by the order or decree attacked . . . The Superior Court cannot enlarge the scope of the appeal . . . As to the order or decree appealed from, the jurisdiction of the Superior Court is coextensive with that of the Probate Court in the first instance.
Morris Silverstein's Appeal from Probate, 13 Conn. App. 45, 54, 534 A.2d 1223 (1987).
III. ISSUES
At the time of trial, the parties stipulated and agreed that several of those issues originally set forth in the Revised Reasons of Appeal were resolved and/or withdrawn and would not be issues tried to the court. Those items included Reason 1, regarding attorneys fees incurred by the estate and Reasons 4(a) — 4(d), regarding issues concerning proceeds or funds which the appellant had claimed had not properly been accounted for in the final account.
The remaining reasons of appeal, as set forth herein below, are the only issues properly before this court:
Reason of Appeal 2: The proposed final account is inaccurate because it does not properly reflect various advance distributions made to certain benefactors of the estate;
Reason of Appeal 3: The proposed final account does not reflect any computation for the charge of interest on various advances made to certain beneficiaries when the charging of interest had been agreed upon by the co-executor of the estate and various beneficiaries; and,
Reason of Appeal 4(e): The plaintiff, Brian McGovern, has not, in fact, received a distribution of his interest in the Clinton Avenue property.
AS TO REASON OF APPEAL 2: The proposed final account is inaccurate because it does not properly reflect various advance distributions made to certain benefactors of the estate.
In order to find that the final account was inaccurate because it did not reflect various advance distributions made to certain benefactors of the estate, the court must determine whether, in fact, any advance distributions were made by the co-executor as claimed by the appellant.
A. CASH ADVANCES TO BENEFICIARIES
One form of advance distribution cited by the appellant consists of cash payments made by the estate to beneficiaries as advances on their distributive share.
The accounts indicate that David, Paul and Patrick McGovern did receive cash payments from the estate prior to acceptance of the final account.
In David's case, both the appellant and the estate agree that he received the sum of $7,025.00 from the estate as a cash advance. He was charged eight (8%) per cent interest for that advance. The appellant has not cited cash distributions to David as part of the inaccuracies in the final account and he has not requested an order from this court concerning the amount David received. The appellant does note that the rate of interest charged to David is a reason of appeal.
The cash advances to Paul and Patrick are more of a concern to the court because there is a lack of agreement between the appellant and the estate as to exactly how much each of them received. The propriety of the interest rate charged to each of them is also at issue as it is with the advancement to David, as set forth herein after in Reason of Appeal.
In somewhat of a twist, the appellant argued that Paul received as a cash advance $8,920.00 while the estate had him scheduled as having received a greater amount — $9,600.00 — in advance.
The Trumbull Probate court record (Ex. 4) indicates that Paul received a total sum of $9,600.00 sum in four payments ($500.00 + $600 + $500 + $8000) at 8% interest. The appellant proved no credible evidence to indicate that the true amount was $8,920.00.
Patrick's cash advancement was also disputed. The appellant claiming the true figure to be $20,800.00 and the estate set the sum of $12,970.00. The apparent reason for the discrepancy is the election by the fiduciary not to include an ante-mortem gift by the decedent, James L. McGovern, Jr. to his son, Patrick. While the fact of the $9,500.00 payment by the decedent to Patrick is unrefuted, little or no competent testimony was elicited to permit a finding that the payment was an advance against Patrick's distributive share of the estate. No documents or other writings were offered into evidence to explain the nature or purpose of the payment to Patrick. There was no evidence offered to permit a finding that it was a loan or anything other than a gift with no expectation by the decedent of repayment either before or after his death. The fiduciary elected not to treat it as an advance to be repaid to the estate or to be used as a set-off against Patrick's share. It was not considered to be an asset of the estate and was not contained in the inventory. There was no evidence offered to permit this court to find that it should have been treated otherwise by the co-executor.
The Trumbull Probate Court record (Exhibit 4) indicates that Patrick received a total sum of $12,970.85 in six payments ($135.00 + $145.00 + $3,000.00 + $236.89 + $1,273.86 + $8,000.00) at 8% interest. The appellant did not present any credible evidence that the sum total of the advances to Patrick was $20,800.00 as he claimed.
B. ADVANCES BY WAY OF FORGIVENESS OF USE AND OCCUPANCY EXPENSES
A second form of advancement made by the estate to Patrick and/or Paul, according to the appellant, is the financial benefit they received, at the expense of the estate, as a result of the co-executor's election to treat the cost and value of their use and occupancy of certain real property owned by the estate as estate expenses. This claim is elaborated upon and made more specific in the Appellant's "overview" (Appellant's Exhibit A (A 61-66)) and by his evidence at trial.
The appellant has maintained that the co-executor in this case acted inappropriately when he allowed beneficiaries the use of the Trumbull and West Yarmouth homes, which were assets of the estate, without exacting a fee for the expenses related to their use (e.g. electric, heat, etc.) and without considering the value and expense associated with such use as an advancement of the distributive share of those heirs using the properties without charge. His decision to treat those expenses as estate expenses in this accounting was additionally wrong, according to the appellant.
The Co-Executor has maintained that there was a benefit to the estate to have the properties occupied, even occasionally, and that in his judgment the cost related to such use was properly an estate expense.
The general rule as to the duty of an executor is that he must exercise due diligence in the light of the particular circumstances surrounding the administration of his estate. McClure v. Middletown Trust Company, 95 Conn. 148, 153; The duties and liabilities of a director must depend in each case upon the terms of their agency and the particular circumstances of the case. New Haven Trust Co. v. Doherty, 75 Conn. 555, 558 (1903). In other words, he must act as a prudent man under the circumstances. Lyman v. Stevens, 123 Conn. 591, 599; 2 Scott, Trusts, § 174. The courts have no occasion to interfere unless it appears that the trustee or executor has not acted in good faith or that he has abused the discretion vested in him. McCarthy v. Tierney, 116 Conn. 588, 592. A mere error of judgment does not impose liability. Matter of Clark, 257 N.Y. 132.
More particularly, it was within the Co-executor's discretion in this case to decide whether certain expenses should be allocated as expenses of the Estate rather than as advances to beneficiaries. According to powers enumerated in the General Statutes, an executor has the power " if [he] deems payment expedient and for the best interests of the estate . . . to pay for repairs and other expenses incurred in the management, collection, care, administration and protection of the . . . estate . . ." General Statutes § 45a-234 (6).
An executor, in his "sole and absolute discretion and without in any way being required so to do, may advance money for the protection of the . . . estate, and for all expenses, losses and liabilities sustained in the administration of the . . . estate." General Statutes § 45a-234 (27) Finally, an executor has the power to make distribution of assets of the estate or trust in kind or in cash, or partially in kind and partially in cash, in divided or undivided interests, provided shares may be composed differently and specific assets may be allocated to particular distributions; to make such distribution either upon final distribution or during one or more preliminary distributions, at the then current values, as the fiduciary finds to be most practicable and for the best interests of the distributees; and to make reasonable determinations of said values for the purpose of making distribution if there is more than one distributee thereof, which determination shall be binding upon the distributees . . .
General Statutes § 45a-234 (21). In other words, "[in] general, it is the duty of an executor . . . to take custody of the estate and to administer it in such a manner as to preserve and protect the property therein for ultimate distribution to the proper persons." In re Estate of Zajicek, Superior Court, Judicial District of Hartford-New Britain at Hartford, Docket No. 528186 (February 27, 1997) (Lavine, J.).
The law is clear that an executor holds a broad range of power and wide discretion so long as he acts with reasonable care. In contrast, there is nothing in the Connecticut statutes, nor in the Connecticut common law, which mandates that the expenses paid should be allocated as advances to certain beneficiaries when those beneficiaries lived on the properties. It was within the Executor's discretion to decide whether certain expenses should be allocated as expenses of the estate rather than as advances to beneficiaries.
Given the circumstances of this case, paying the operating expenses of the properties while they were occupied by various heirs was consistent with the acts of a reasonably prudent owner of those properties. Keeping the properties occupied is consistent with the executor's duty to maintain and preserve real estate and, therefore, to keep it in proper repair. See 34 C.J.S. Executors and Administrators § 286. In addition, Co-executor Mulligan testified that it was to the Estate's advantage to have the premises occupied. (TS. 3/4/3 pp. 52-54 passim.) Because the executor is charged with reasonably and prudently protecting the realty, Co-executor Mulligan had made the decision, which was within his discretion to do, that it was preferable for the estate to have the properties occupied verses unoccupied. Id. Co-executor Mulligan felt that having the properties occupied would better protect them from vandalism and burglary and would allow him to obtain homeowner's insurance protection on the properties and get the insurance at a cheaper rate. Id. Since having the properties occupied was for the benefit of the estate as a whole, the expenses incurred to keep the properties occupied were charged to the estate as a whole.
The only possible tenants for the two houses, while the houses were part of the Estate, were the six sons, because the decedent specifically provided in his codicil:
I . . . give and devise to my son PATRICK McGOVERN, use of my residences at 5443 Main Street, Trumbull, Connecticut and 40 Whale Road, West Yarmouth, Massachusetts until said premises are sold by my Executors or title passes to my beneficiaries in accordance with my will dated February 23, 1982. My other sons shall be entitled to use said residences also until said premises are sold by my Executors or title passes to my beneficiaries in accordance with my will dated February 23, 1982.
Respondent's Exhibit 2 (A — pp. 27-28) at Paragraph First.
When a will grants a devisee use and possession of the property, but is silent as to whether the devisee is to pay rent, California courts generally rule that the devisee uses the property rent-free. See, e.g., In re Dolsen's Estate, 203 P.2d 775, 777 (Cal.Dist.Ct.App. 1949); In re Dow's Estate, 186 P.2d 977, 980 (Cal.Dist.Ct.App. 1947). For example, in Dolsen's Estate, the court reasoned that where the will bequeathed the real property to the three sons equally, and one of the sons occupied the property prior to sale but never claimed exclusive possession, the son was entitled to live there rent-free. In re Dolsen's Estate, 203 P.2d at 777.
The underlying reasoning in these holdings is that whenever possible the intention of the testator should prevail, and when the testator has granted use and possession, but has not indicated whether the estate should pay the costs of use and possession, the costs are chargeable to the estate, not the individuals. Estate of Sharp, 95 Cal.Rptr. at 831. Also, in a New York case, In re John's Will, the court held that absent a direction in the will to the contrary, a life tenant pays insurance, taxes and ordinary costs of maintenance and repair of real property. In re John's Will, 75 N.Y.S.2d 693, 696 (Surrogate's Ct. 1947) (emphasis added). However, where, as here, the will indicates that the devisee should have use and occupancy of the real property, it should be liberally construed in favor of the one making use of the property and is reasonably interpreted as providing that expenses are be paid from the estate. Id. at 697 (emphasis added).
Additionally, and perhaps of more importance than the security issue, was the Co-executor's decision to effectuate the intent of the testator. Patrick had lived for years in the Trumbull homestead with his father and was known to be unemployed. The codicil specifically provided for "use" by Patrick and "my other sons" during the Estate's pendency.
Mr. Mulligan testified that he understood the language of the codicil to allow use until a "closing" of some sort took place either a sale to third parties as did take place, or a certificate of devise to the six sons in equal shares in the event no sale took place.
Based on the evidence and testimony, the court finds that the decision by the Co-Executor to allow beneficiaries to use the properties without charge in consideration for the benefits of having the premises occupied, whether consistently or sporadically, was a proper exercise of the fiduciaries' discretion and it did not necessitate or require him to charge a fee for them to use it or to deem their free use of the property an advancement on their distributive share of the decedent's estate.
The court has been asked to determine whether or not such expenses are, indeed, advances on the beneficiaries' distributive share of the estate and, if so, what amount of interest, if any, should have also been charged to them and included in the final account.
Based on the evidence and testimony the court finds that it was not incorrect for the co-executory to treat the costs and expenses incurred in maintaining those homes during their occupancy by beneficiaries, including the decedent's sister, Jean Mulligan, as estate expenses. His election to allow their use without charge resulted in a benefit to the estate which offset the cost which resulted from such use. The decision to permit the use without payment was a decision properly within the discretion of the fiduciary.
AS TO REASON OF APPEAL 3: The proposed final account does not reflect any computation for the charge of interest on various advances made to certain beneficiaries when the charging of interest had been agreed upon by the co-executor of the estate and various beneficiaries.
The appellant argues that the fiduciary should have charged ten (10%) per cent interest on such advances to David and that in certain correspondence or otherwise the co-executor intimated that 10% was proper and that is what he should charge.
In his sworn statements, the Co-executor, Mulligan, indicated that his decision to assess 8% interest was, in his mind, the correct and fair thing to do. He noted the intense acrimony between certain heirs and his efforts avoid either extreme. It was also noted that at the time of the filing of the proposed Distribution, the "legal rate" of interest in the State of Connecticut was eight percent. See C.G.S.A. § 37-1 (rev. 1997).
While there was some testimony offered by the appellant that there was an agreement among all of the heirs that interest would be assessed on all cash advances, it was less than convincing and the court cannot find that there was any consensus by the heirs which was binding on the co-executor. The parties stipulated that the court was to determine whether the fiduciary acted properly in charging interest and whether 8% was reasonable. Having considered the evidence and testimony, the court finds that the fiduciary decision to assess interest on such advances was proper and the rate of 8% is found to be appropriate under all of the circumstances, not the least of which is the familial background and issues which the fiduciary was required to referee.
For the foregoing reasons, the court finds that the assessment of 8% was not improper nor an abuse of the fiduciary's discretion and that the final account should not be rejected by the court on the basis of his decision to do so.
As with the cash advancement made to David, the cash advancements made to Paul and Patrick were subject to 8% interest. The appellant maintains that the co-executor improperly failed to charge each of them 10% interest. The propriety of the co-executor's decision to charge 8% interest has been considered by the court, above, and the court's finding is the same. It was not illegal or improper for the co-executor to do that and it is not a basis for rejecting the final account.
AS TO REASON OF APPEAL 4(e): The plaintiff, Brian McGovern, has not, in fact, received a distribution of his interest in the Clinton Avenue property.
The parties have not provided the court with evidence or testimony which takes issue with the allegation contained in the appellant's Reason of Appeal 4(e) which is his claim that he has not received a distribution of his interest in the Clinton Avenue property. In fact, the co-executor, in his proposed orders, has included an order that the Distribution be amended to reflect the fact that no effective distribution of a 1/6 share in the remainder interest in 62.5% of 865 Clinton Avenue has been made to the appellant Brian McGovern, or to T. Paul McGovern.
ORDERS
Having made the foregoing findings of fact, the court enters the orders as set forth in the Decree Upon Appeal From Approval of Final Account and Distribution attached hereto.
The Court further orders that all outstanding issues in regard to the Estate of James L. McGovern, Jr. shall be adjudicated by this court and for that purpose this court retains jurisdiction as a court of probate over all such issues. This order is entered pursuant considerations expressed by our Supreme Court in the matter of Reiley v. Healy, 124 Conn. 216, 220-22 (1938), primarily for the limited purpose of expediting the final disposition of the Final Account and Distribution and is intended in no way to usurp the authority or jurisdiction of the Probate Court for the District of Trumbull.
BY THE COURT,
JOSEPH W. DOHERTY, JUDGE