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Gray v. Binder

Supreme Court of Virginia

November 2, 2017





         In this appeal, we consider whether a potential beneficiary under a will may collaterally attack the distribution of the decedent's estate by challenging the subject matter jurisdiction of the commissioner of accounts who, without a referral from the circuit court, gave aid and guidance in the interpretation of the decedent's will and the determination of his heirs. Additionally, we clarify the tribunal from which an appeal of this nature is taken.

         I. Facts and Proceedings

         The relevant facts of this case are undisputed. Appellant Steven C. Gray ("Gray") is the step-grandson of Albert F. Bahnfleth ("Bahnfleth"). At the time of his death on July 19, 2012, Bahnfleth was widowed, without living issue, and had assets of approximately half a million dollars. Shortly thereafter, attorney Richard E. Knight ("Administrator") qualified as Administrator of Bahnfleth's estate in the Circuit Court of Fairfax County ("circuit court"). The Administrator initially believed that Bahnfleth had died intestate, but he later discovered a 1966 copy of Bahnfleth's will, which was thereafter admitted to probate. The will provided that if Bahnfleth's wife predeceased him, his estate would be divided between his parents, his only sibling, and his step-daughter, Jean Gray ("Jean"). The devise to Jean expressed Bahnfleth's "desire that she use it for the education of my step-grandson, Steven C. Gray." Each of the family members named in the will, including Jean, predeceased Bahnfleth.

         On November 1, 2013, the Administrator wrote a letter to John H. Rust Jr., the Commissioner of Accounts for Fairfax County ("Commissioner"). Although the letter is not reproduced in the record on this appeal, the parties submitted a consolidated statement of facts that was signed by the circuit court judge who presided over this case. According to the statement of facts, the Administrator inquired in the letter whether the Commissioner could hear issues of heir determination and will interpretation concerning Bahnfleth's estate. The Commissioner responded affirmatively, and, thereafter, the Administrator requested a hearing for this purpose. The Commissioner provided adequate notice to all parties and scheduled an evidentiary hearing. In advance of the hearing, the Administrator submitted several documents to the Commissioner including "a petition styled 'Petition to Commissioner of Accounts for Aide (sic) and Direction: For Construction of the Will of Albert Frank Bahnfleth, Jr., and Determination of Identity and Shares of Heirs & Beneficiaries.'" In his petition, the Administrator requested:

         [T]hat the Commissioner of Accounts provide the administrator with the aide [sic] and direction in determining the following:

A. The construction of the decedent's Will[.]
B. The determination of the rightful beneficiaries of the Will, if any; the determination if any of the dispositions under the Will have lapsed; and the determination of the beneficiaries' respective share of the estate under the Will, if any.
C. The determination of the intestate heirs of the decedent's estate, if any, and the determination of the rightful shares of the decedent's estate for each intestate heir, if any.
D. That the validity of the assignments between 27 paternal heirs and Kemp and Associates be established and that the administrator be authorized to make distribution in accordance with said assignments.
E. That the administrator may proceed and conclude the administration of this estate under the direction and protection of the Commissioner of Accounts.

         The Commissioner conducted an evidentiary hearing at which Gray appeared with counsel. The Commissioner filed a report after the hearing, which described the evidence and argument that each party presented at the hearing. Gray presented evidence of his close relationship with Bahnfleth and argued that Bahnfleth intended to leave him half of his estate. Gray asked the "Commissioner to prioritize the decedent's intention to benefit Gray and avoid intestacy." The Appellees, Bahnfleth's first cousin, Francis Binder, and his 24 other cousins or their surviving descendants ("Cousins") argued that the language regarding using the funds for Gray's education was precatory. The Cousins further argued that the bequest to Jean was not encumbered with a trust provision, and therefore showed only an intent to benefit Jean.

         On January 5, 2015, the Commissioner filed his report, holding that the provision regarding Gray in the will had lapsed. Specifically, the Commissioner determined that with Jean's death, all bequests in Bahnfleth's will lapsed pursuant to Code § 64.2-418, and the estate passed pursuant to the law governing intestate distribution. The Commissioner found that Bahnfleth's only heirs were his Cousins, and therefore they each took a share under the rules of intestacy. With respect to the provision of the will which provided that Jean use the money for Gray's education, the Commissioner agreed with the Cousins' argument that it was precatory, and noted that even if the provision imposed the creation of a trust, Gray had completed his education and the trust's purpose had been achieved.

         Gray filed exceptions to the January 2015 report. The circuit court entered an order confirming the report. Gray then filed a motion to reconsider, arguing the circuit court "must give a liberal construction to the will" to carry out Bahnfleth's intent to benefit Gray and avoid intestacy. The court held a hearing on the motion and heard argument from counsel. On March 13, 2015, the court entered an order holding that "the Commissioner of Accounts has properly interpreted the law on the applicable facts in this case, " and "Gray is not entitled to take under the will." Gray appealed that order to this Court, but we refused Gray's petition for appeal and his petition for rehearing. See Gray v. Binder, Rec. No. 150899. Meanwhile, the probate process continued with the Administrator tending to Bahnfleth's estate and preparing it for distribution among the heirs identified by the Commissioner.

         On May 4, 2016, the Commissioner filed a routine debts and demands report with the circuit court, authorizing the Administrator to "distribute the remainder of the estate to the beneficiaries after the final payments of any administrative expenses and debts known to the fiduciary." Upon receiving a copy of the May 2016 report, Gray filed exceptions challenging the jurisdiction of the Commissioner to issue its January 2015 report. On June 9, 2016, the circuit court entered an order confirming the May 2016 report. Gray moved for reconsideration and to vacate the Commissioner's May 2016 report. In his motion, Gray argued that based on this Court's recent holding in Parrish v. Federal National Mortgage Association, 292 Va. 44, 787 S.E.2d 116 (2016),

the Commissioner of Accounts clearly lacked jurisdiction to hear the Petition filed by the Administrator, and that, because the court's jurisdiction on considering his Reports and the Exceptions filed was derivative of the Commissioner's, the court likewise lacked jurisdiction to do anything concerning the ...

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