In re Estate of Piche

In re Estate of Piche (96-265); 166 Vt. 479; 697 A.2d 674

[Filed 13-Jun-1997]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                            No. 96-265


In re Estate of Charles E. Piche             Supreme Court

                                             On Appeal from
                                             Washington Probate Court

                                             March Term, 1997


George K. Belcher, J.

       Frederick G. Cleveland and David P. McHugh of McKee, Giuliani &
  Cleveland, P.C., Montpelier, for appellant Vermont State Employees Credit
  Union

       David Putter of Saxer, Anderson, Wolinsky and Sunshine, Montpelier,
  for cross-appellant Arthur Simonds

       Stephen J. Murphy, Montpelier, for appellee Fred R. Boudreau


PRESENT:  Amestoy, C.J., Gibson, Dooley and Morse, JJ.


       AMESTOY, C.J.  The Vermont State Employees Credit Union (VSECU)
  appeals a decision of the Washington Probate Court, arguing that the court
  does not have subject matter jurisdiction to determine title to decedent's
  VSECU account.  Both decedent's personal representative and decedent's
  nephew, the stated beneficiary on a designation-of-beneficiary card filed
  at VSECU, claim title to the account.  We hold that the probate court has
  jurisdiction to determine title to personal property where the issue is
  necessary and incidental to the determination of other matters within the
  probate court's jurisdiction.

       Decedent died testate in January 1996.  His will named his nephew
  beneficiary of two life insurance policies, one issued by VSECU and the
  other by the State of Vermont.  Decedent left the remainder of his estate
  in equal portions to his nephew and two others.  He also left a signature
  card and a designation-of-beneficiary card, naming his nephew beneficiary
  of all sums paid under the VSECU life insurance policy "and all monies on
  deposit" at VSECU.

 

       The executor filed a petition for declaratory judgment asking the
  probate court to declare the rightful owner of a VSECU account containing
  $51,810.  The court concluded "that the determination of the ownership of
  the account in question among the heirs and legatees is within the
  declaratory judgment jurisdiction of the probate court" and that the
  account was an asset of the estate.  VSECU appealed, arguing that the
  probate court did not have subject matter jurisdiction to determine title
  to the account.  The nephew filed a cross-appeal, agreeing with VSECU, and
  the executor filed a brief in opposition.

       VSECU argues that although the probate court has plenary and exclusive
  jurisdiction over the probate of wills and the settlement of estates, see 4
  V.S.A. § 311; Murray v. Cartmell, 118 Vt. 178, 180, 102 A.2d 853, 855
  (1954), this jurisdiction is special and limited, and conferred by statute. 
  In re Will of Prudenzano, 116 Vt. 55, 60, 68 A.2d 704, 708 (1949).  It
  contends that there is no statute specifically conferring upon the probate
  court subject matter jurisdiction to determine title to personal property. 
  While conceding that there is "some authority" for the proposition that a
  probate court may determine title to property where the determination is a
  necessary incident to the administration of the estate, VSECU asserts that
  the absence of an enabling statute requires us to vacate the probate
  court's ruling declaring title to the disputed savings account.(FN1)

       We disagree because VSECU's argument (1) ignores cases of this Court
  that have implicitly acknowledged the authority of the probate court to
  determine title to property where the determination is a necessary incident
  to the administration of the estate; (2) understates the

 

  significant authority from other jurisdictions that have addressed the
  issue; and (3) urges a result that runs counter to the sound, practical,
  and efficient administration of estates.  See id. at 60-61, 68 A.2d  at 708
  ("The leading idea of the Probate Court system is to confer upon it
  original, plenary and exclusive jurisdiction in the settlement of
  estates.").

       While VSECU is literally correct that Vermont case law has not
  "squarely decided" whether a probate court has subject matter jurisdiction
  to determine title to property, it fails to recognize opinions of this
  Court that have necessarily been predicated on such jurisdiction.  As in
  the case before us, the probate court in In re Estate of Holbrook, 138 Vt.
  597, 420 A.2d 110 (1980), determined title to disputed savings accounts. 
  The decedent died testate leaving her bank deposits to one daughter and her
  real estate to another.  The bank accounts -- all in New Hampshire -- were
  in the names of the decedent and her two daughters.  Upon the decedent's
  death, the daughters withdrew the money in the accounts and divided it
  equally.  The daughter who was to receive the bank deposits under her
  mother's will petitioned the probate court to include the accounts in the
  assets of the estate.  The probate court applied New Hampshire law, and
  determined that the accounts were not part of the estate.  The daughter
  appealed, arguing that under Vermont law, legal title to the decedent's
  personal property passes to her executor. This Court observed that "the
  real point in issue" and "[t]he first decision to be made" was "whether the
  accounts and deposits were, upon the death of the testatrix, her personal
  property." Id. at 600, 420 A.2d  at 112 (emphasis omitted).  It then upheld
  the probate court's determination that governing New Hampshire law refuted
  the contention that the accounts in question were assets of the probate
  estate.  Id. at 600, 420 A.2d  at 112-13.  This Court approved the exclusion
  of the accounts from the inventory, but vacated the order and decree for a
  recalculation of estate taxes.  Id. at 600-02, 420 A.2d  at 113.

       Had this Court shared VSECU's view that Vermont's probate courts are
  without authority to determine title to property when such a determination
  is a necessary incident to matters within its jurisdiction, the decision in
  Holbrook would not have addressed whether the probate court

 

  correctly determined title to the bank accounts.  See Glass v. Newport
  Clothing Co., 110 Vt. 368, 373, 8 A.2d 651, 653 (1939) (Supreme Court will
  "dismiss a cause at any stage, whether moved by a party or not, when a lack
  of jurisdiction is discovered").  This Court has affirmed determinations of
  title to personal property by probate courts before and since Holbrook. 
  See, e.g., In re Estate of Adams, 155 Vt. 517, 519, 522, 587 A.2d 958,
  959-61 (1990) (affirming in part probate court's determination that title
  to bank accounts passed by right of survivorship); Trask v. Walker's
  Estate, 100 Vt. 51, 55, 64-65, 134 A. 853, 855, 859 (1926) (upholding
  probate court's determination that decedent spent or transferred property
  inter vivos and that executrix was correct in not including such property
  in accounting of estate).(FN2)

       As the probate court noted, determining title to personal property, or
  "what is `in' and what is `out' of the probate estate is a common aspect of
  estate administration."  See Carlson v. Carlson, 273 S.W.2d 542, 544 (Ark.
  1954) ("[T]he probate court, in the exercise of its jurisdiction to
  administer the estates of decedents, is authorized to determine what
  property belongs to the estate.").  Many jurisdictions agree with Vermont
  that the determination of title to property is a necessary incident to the
  settlement of a decedent's estate.  See, e.g., Snow v. Martensen, 505 S.W.2d 20, 22 (Ark. 1974) (probate court can determine question of title to
  property, for question arises as necessary incident to administration of
  estate); Egnatic v. Wollard, 137 P.2d 188, 196, 198 (Kan. 1943) (when
  estate is being administered by probate court, it is necessary that right
  or title to funds, real estate, or other property be determined so that
  estate may be settled; probate court has jurisdiction over all matters
  incident and ancillary

 

  to control, management, administration, settlement, and distribution of
  estate); Stephens v. Estate of Campbell, 865 S.W.2d 411, 412 (Mo. Ct. App.
  1993) ("Once competent jurisdiction is obtained by a probate court over an
  estate, it continues exclusively in that court as to all matters pertaining
  directly to the settlement of the estate until the final distribution . . .
  ."); Graves v. First Nat'l Bank, 138 N.W.2d 584, 588 (N.D. 1965) (probate
  court has jurisdiction to determine whether trustee named in will or heirs
  at law are entitled to property as decision is necessary to administration
  of estate).

       Whether the determination of property ownership is necessary and
  incidental to matters within the probate court's jurisdiction depends upon
  the relationship of the parties to the estate. "The general rule is that
  the probate court is without power to decide a disputed claim between an
  estate and a stranger thereto."  Philbrick v. Huff, 131 Cal. Rptr. 733, 744
  (Ct. App. 1976); see also Snow, 505 S.W.2d  at 23 (probate court does not
  have jurisdiction to determine title to property between personal
  representative and third person claiming adversely to estate).  A
  "stranger" to the estate is generally defined as a person or entity that is
  not an heir or beneficiary under the will.  See In re Estate of Blaney, 607 P.2d 354, 356 (Wyo. 1980) ("`It is thoroughly established that in probate
  proceedings title to property as between the estate, the heirs or devisees,
  and a third person may not be tried.'") (quoting 1 Bancroft's Probate
  Practice § 27, at 70-71 (2d ed. 1950)) (footnote omitted).

       In the present case, the stated beneficiary on the
  designation-of-beneficiary card filed with VSECU, is also, as nephew of the
  decedent, a beneficiary under the will.  He is not a stranger to the
  estate, and therefore, the probate court may determine whether he or the
  estate is entitled to the VSECU account.  See Wayman v. Alanko, 351 P.2d 100, 104 (Wyo. 1960) (if controversy is between estate and those not
  strangers thereto, superior court sitting in probate has power to
  adjudicate conflicting claims).

       Not only is our holding consistent with the case law of this and other
  jurisdictions, it also furthers the sound, practical, and efficient
  administration of estates.  By forcing parties to litigate

 

  their title disputes in a separate court, we prolong the probate process
  and increase its cost.  See Noble v. McNerney, 419 N.W.2d 424, 427 (Mich.
  Ct. App. 1988) (allowing probate court to determine what assets are within
  estate undoubtedly is beneficial to estate's general administration).  We
  agree with the executor in this case that the probate court has
  jurisdiction to determine title to personal property; to find otherwise
  would deprive the probate court of the ability to function efficiently and
  effectively and result in many contested cases having hearings in the
  superior court before the settlement of the estate could proceed.  We
  decline to complicate the probate process by precluding the probate court
  from deciding matters that are necessary and incidental to the effective
  administration of estates.

       Finally, in his cross-appeal decedent's nephew notes that 12 V.S.A. §
  2555 provides a right of appeal from the probate court to the superior
  court, apparently believing that VSECU's appeal to this Court rendered the
  superior court "unavailable" to decide his claim of ownership. We do not
  address the validity of this belief, but instead, pursuant to the request
  of all parties, transfer the cause to the superior court for a de novo
  trial on the issue of ownership.  See 4 V.S.A. § 2(b) (Court has
  "jurisdiction to issue all . . . orders that may be necessary to the
  furtherance of justice"); In re Estate of Johnson, 158 Vt. 557, 560, 613 A.2d 703, 705 (1992) (transferring cause to superior court pursuant to
  supervisory authority).

       The decision of the probate court that it has subject matter
  jurisdiction to determine title to the VSECU account is affirmed.  The
  matter is transferred to the superior court for a de novo trial.


                              FOR THE COURT:



                              _______________________________________
                              Chief Justice



  ----------------------------------------------------------------------------
                                  Footnotes



FN1.  VSECU also argues that the probate court's reliance on the
  Declaratory Judgment Act is misplaced.  See 12 V.S.A. § 4711 ("probate
  courts within their respective jurisdictions shall have power to declare
  rights, status and other legal relations").  This argument is predicated
  upon the notion that the probate court does not have jurisdiction to try
  title to property when determination of the issue is a necessary incident
  to the administration of the estate.  Because we hold that under the facts
  of this case the probate court was acting within its jurisdiction in
  determining title to the disputed account, VSECU's contention that the
  probate court was not authorized to rely on the Declaratory Judgment Act
  must fail.  See 4 V.S.A. § 311 (authorizing probate court to issue
  declaratory judgments).

FN2.  VSECU cites In re Estate of Allen, 129 Vt. 107, 272 A.2d 130
  (1970), to support its contention that in the absence of a specific statute
  the probate court cannot determine title to personal property.  Yet nothing
  in Allen is inconsistent with our decision today that probate courts have
  the authority to decide title to property where such determinations are a
  necessary incident to the administration of an estate.  See id. at 110, 272 A.2d  at 132 ("In general, a probate court cannot determine a question of
  title to real property unless such question arises collaterally as a
  necessary incident to the determination of other matters within the probate
  jurisdiction.") (emphasis added).