Appellate Division Cites Equitable Factors In Denying Entitlement to Elective Share
March 30, 2010
This month, the Second Department has issued two important decisions on entitlement to an elective share when a marriage occurred while the decedent lacked the requisite mental capacity to enter into a marital contract. Matter of Berk and Campbell v Thomas were both cases in which a caregiver secretly married the incapacitated individual for whom she worked, in an effort to manipulate a testamentary scheme for her own financial gain. Although the statutory limitations on disqualification from the right of election did not infringe upon the “surviving spouses’” rights to inherit from their respective “husbands” (see EPTL §5-1.2), the Appellate Division followed equitable principles in determining the parties’ respective rights.
In Matter of Berk, 20 Misc 3d 691 (Sur Ct, Kings County 2008), summary judgment was granted to the “surviving spouse” on the issue of her entitlement to an elective share, despite the suspicious circumstances surrounding her marriage to the decedent. A discussion of the lower court’s decision can be found in a prior entry. To briefly recap, the decedent’s “spouse” had been the decedent’s live-in caretaker since 1997. By the time the two secretly married in 2005, he had become completely dependent upon her. In fact, the marriage occurred almost exactly one year prior to his death, when he was 99 years old (she was 47), was suffering from dementia, and had been deemed by a physician to be incapable of entering into binding contracts or managing his social affairs. The lower court dismissed these facts as irrelevant for purposes of determining entitlement to the right of election. Rather, it limited its inquiry to (1) whether the petitioner was the decedent’s surviving spouse upon his death, i.e., whether the marriage was void under the circumstances; and (2) whether any of the disqualifying factors of EPTL §5-1.2 had been met. Because the petitioner demonstrated that she was the surviving spouse at the time of the decedent’s death, as the marriage was potentially voidable but not void according to DRL §7, the Surrogate held that she was entitled to judgment as a matter of law. Indeed, the result of the determination that the marriage was voidable, not void, foreclosed inquiry into the validity of the marriage because no steps were taken to void the marriage during the decedent’s lifetime. But under the circumstances, where the marriage in issue had been kept a secret by the petitioner while the decedent was alive, no such steps could possibly have been taken.
In overturning the Surrogate’s decision, the Second Department recognized the existence of “a triable issue of fact as to whether the petitioner had forfeited the statutory right of election” on equitable grounds. In particular, relying on Campell v Thomas (2010 NY Slip Op 02082 [2d Dept 2010]), the Court stated that the estate had presented evidence that could prove the petitioner was aware of the decedent’s incapacity and inability to consent to marriage, and deliberately took “unfair advantage . . . by marrying that person for the purpose of obtaining pecuniary benefits that becomes available by virtue of being that person’s spouse, at the expense of that person’s intended beneficiaries" (Matter of Berk, 2010 NY Slip Op 02139 [2d Dept 2010]). Thus, the order was modified, denying the petitioner’s motion for summary judgment, and reinstating counterclaims.
In sum, while the lower court’s holding was based upon statutory authority, equity was the cause for its reversal. The Appellate Division explained its rationale for this determination in further detail in its simultaneous decision in the very similar case of Campbell v Thomas.
In Campbell, the decedent was suffering from severe dementia and terminal cancer when he and his short-term caregiver, Nidia, who stayed with the decedent while his daughter went on vacation, were married. Immediately thereafter, while the decedent’s daughter was still away, Nidia transferred the decedent’s Citibank account from the decedent’s name to the couple jointly, and named herself the sole beneficiary of his retirement account.
The decedent died in August 2001, less than two years after the purported marriage. Unlike the situation in Berk, however, the decedent’s daughter learned of the marriage prior to his death, and the decedent had allegedly had a prior romantic relationship with his new spouse. But when his daughter confronted him about getting married, it was clear that the decedent had no understanding of what had occurred.
Soon after the his death, the decedent’s children commenced an action against Nidia in Supreme Court, seeking a judgment declaring the marriage, as well as the subsequent asset transfers, to be null and void. Their argument was that the decedent lacked the capacity to marry or make the subject conveyances due to his severe dementia, the progression of his cancer, and the effects of powerful medications that he had been taking. Following some motion practice and a subsequent appeal, in 2007 the Second Department remitted of the matter to the Supreme Court for the entry of a judgment declaring the marriage, the beneficiary change on the retirement account, and the transfer of the Citibank account, all null and void for the decedent’s inability to consent for want of understanding (see DRL §7). The Supreme Court, Putnam County then issued an order consistent with Appellant Division’s ruling. It directed, among other things, that the decedent’s estate was to receive ownership of all property in his name as of October 1, 2000, and that the estate was to distribute those funds to the decedent’s children and grandson. Thereafter, Nidia moved to modify or vacate the order, claiming entitlement to an elective share. The Supreme Court denied the motion, and Nidia appealed.
On appeal, Nidia contended that pursuant to the relevant statutes, she was to be considered the surviving spouse even after the marriage was voided. In addressing this claim, the Court explained that the marriage in issue was considered voidable, which meant that it was “void from the time its nullity [was] declared by a court of competent jurisdiction” [DRL §7]. Voidable marriages are distinct from marriages that are void, and therefore deemed nonexistent from the beginning; the latter falling within the categories of EPTL §5-1.2, enumerating those circumstances under which the right of election is extinguished. As we learned from the lower court’s decision in Matter of Berk, a voidable marriage is not within the realm of the disqualification statute (see also Bennett v Thomas, 38 AD2d 682 [4th Dept 1971]).
Unlike the Surrogate’s Court that decided Berk, the Second Department did not end its inquiry at the statutory level. Instead, the Court acknowledged that “[t]he literal terms of a statute should not be rigidly applied if to do so ‘would be to ordain the statute as an instrument for the protection of fraud’” (Campbell v Thomas, quoting Citizens Util. Co. v. American Locomotive Co., 11 NY2d 409, 420 ).
Acknowledging the equitable authority of the Supreme Court pursuant to the New York State Constitution, the Second Department stated that it “was empowered to grant relief consistent with the equitable principle that ‘[n]o one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to found any claim upon his own iniquity, or to acquire property by his own crime’” (Campbell v Thomas, citing Riggs v Palmer, 115 NY 506, 511 ). It is this notion that formed the basis for the now well-known rule that a murderer cannot inherit from the victim of his crime (see id.). While the Court recognized that the conduct in issue was much less severe than the aforementioned, the evidence revealed that Nidia had been aware of the decedent’s mental incapacity, had been in a position of trust, and abused that trust to wrongfully alter the decedent’s testamentary plan in her favor. Accordingly, the Court held that she was not entitled to benefit from her own misconduct, and therefore was not entitled to an elective share. However, it should be noted that Nidia’s actions did bar her from inheriting that portion of the decedent’s retirement account that had originally been designated by the decedent for her benefit, as her receipt of that particular share was not a product of her wrongdoing (Campbell v Thomas, relying on Matter of Covert, 97 NY2d 68, 74 ). This serves to further differentiate this particular line of cases from those considered to be more egregious (see e.g., Riggs v Palmer, supra).
Interestingly enough, despite the clear parameters of spousal disqualification pursuant to EPTL §5-1.2, the Court deemed its determination to be complementary, not contrary, to statutory authority, finding that “the Legislature did not contemplate the circumstances presented by this case” when enacting the law. To support its conclusion, the Court explained that in many voidable marriages in which the deceased spouse may have lacked the capacity to marry, the surviving spouse may have been unaware of the disability; or alternatively, where the surviving spouse may have perpetrated a fraud upon the decedent, the deceased spouse may have ratified the marriage prior to his or her death. But in Campbell, neither of those scenarios was applicable. By virtue of this fact, and the Court’s confidence that the legislature intended EPTL §5-1.2 to protect a surviving spouse but never to “provide refuge for a person seeking to profit by means of a nonconsensual marriage”, the decisions of both Campbell and Berk have established new standards in the area of estate law.
It is likely that the impact of these decisions will not be limited to circumstances in which a decedent was incapacitated upon entering into a marriage. The equitable principles applied by the Second Department should transcend to situations in which a decedent may have had diminished capacity, or was simply unduly influenced into entering into the marital contract. In all cases, the rules set forth in both decisions should serve to curb some of the unfortunate abuses of the elderly, and will protect families from the injustices that could have previously followed such misconduct.