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MATTER OF CLARK
Factual and Procedural Background
This intermediate accounting proceeding involves the successor trustee's request to dispense with service of process on certain great-grandchildren and an adopted child of a son under the virtual representation statute (SCPA 315). The decedent's will created a trust with income payable to five children during the lives of two designated grandchildren, with income shares passing to descendants per stirpes upon the death of any child during the trust's continuance. Two of the five children are deceased, and several grandchildren and great-grandchildren are contingent income beneficiaries and contingent remaindermen. The trustee seeks to determine which beneficiaries must be served in the accounting proceeding.
Legal Issues Presented
- Whether service of process on certain great-grandchildren and an adopted child can be dispensed with under the virtual representation statute (SCPA 315).
- Whether the virtual representation statute permits currently receiving income beneficiaries to virtually represent their contingent income-remainder descendants.
- How the court should apply precedent regarding the scope of virtual representation in cases involving dual contingent income-remainder interests.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Matter of Snyder, 54 Misc.2d 695 | Holding that the virtual representation statute does not permit dual contingent income-remainder interests to represent subsequent contingent income-remainder interests because it applies only to remainder interests. | Referenced as part of the line of cases limiting virtual representation, but the court declined to follow this restrictive interpretation. |
| Matter of Blake, 208 Misc. 22 | Similar holding to Snyder on the limitation of virtual representation to remainder interests only. | Not followed by this court; cited to show the contested interpretation of the statute. |
| Matter of Schwartz, 71 Misc.2d 80 | Permitted a contingent income beneficiary who was also a remainderman, but not currently receiving income, to virtually represent her child with a contingent income-remainder interest. | Applied as controlling precedent to allow virtual representation where no actual conflict exists and the representative is not currently receiving income. |
Court's Reasoning and Analysis
The court analyzed the application of the virtual representation statute (SCPA 315) in the context of the trust's income and remainder interests. It recognized that all descendants have similar or identical interests as contingent income beneficiaries and remaindermen. The court acknowledged prior decisions (Snyder and Blake) that restricted virtual representation to remainder interests only, excluding contingent income interests, but noted that these decisions have been criticized and were not followed by this court in Schwartz. Applying Schwartz, the court reasoned that where a beneficiary is currently receiving income, they cannot virtually represent their descendants who have only contingent interests, necessitating direct service on those descendants. Conversely, where a beneficiary is not currently receiving income, they may virtually represent their descendants. Thus, the court distinguished between currently receiving income beneficiaries and those who are not, applying virtual representation accordingly.
Holding and Implications
The court held that service of process may be dispensed with under the virtual representation statute only for those beneficiaries not currently receiving income, who may virtually represent their contingent income-remainder descendants.
The direct effect of this decision is that certain great-grandchildren and the adopted child who are contingent beneficiaries may be represented virtually and need not be served, while others currently receiving income cannot represent their descendants and must be served. The opinion does not establish new precedent beyond reaffirming and applying the principles from Matter of Schwartz, focusing on the absence of conflict and current income receipt status as determinative factors for virtual representation.
JOHN D. BENNETT, J.
In this intermediate accounting proceeding, the successor trustee requests that service of process on certain great-grandchildren and an adopted child of a son be dispensed with by reason of the virtual representation statute (SCPA 315).
Paragraph "Fifth" of the will in part provides for a trust to continue during the lives of two designated grandchildren with income payable in equal shares to his five children — Theodore S. Clark, Allan G. Clark, Edward V. Clark, Olive C. Stiles and LeGrand L. Clark, Jr. Upon the death of any child during the continuance of the trust, that share of the income is payable to his or her descendants per stirpes.
Of the five children who survived the decedent, two are now dead. Allan G. Clark died leaving four children — Allan Belden Clark, Judith Clark Elam, Thomas Sheridan Clark and Theodore G. Clark. One of these four, Thomas Sheridan Clark, has died, leaving no descendants. The three remaining grandchildren are presently receiving a portion of the income previously payable to their father, Allan G. Clark. In turn, each of these three surviving grandchildren has a child or children, being great-grandchildren of the decedent and contingent income beneficiaries and contingent remaindermen of the trust. The other deceased son, Theodore S. Clark, died leaving no descendants. Of the three surviving children, Edward V. Clark has one son, Edward Donald Clark, who in turn has four children. Since Edward V. Clark is currently receiving income, his son and the children of his son are only contingently interested in income. Olive Clark Stiles, the only daughter of the decedent, has three children — Linford Edward Stiles, Jr., Elizabeth Stiles Siegal and Catherine Louise Henderson — each of whom in turn has a child or children. Since Olive Clark Stiles is presently receiving income, all of her descendants are likewise only contingently interested in income. The third surviving child, LeGrand L. Clark, Jr., has an adopted son, LeGrand L. Clark, III, who is presumably a contingent income beneficiary and a contingent remainderman.
Under the virtual representation statute, the question as usually posed is whether those persons who are parties and are said to virtually represent their successors have "the same interest" (SCPA 315, subd. 2, par. [a], cl. [ii]). Here, all of the decedent's descendants can theoretically be said to have the same or similar interests since all of them are or can be interested in income and certainly all of them are contingent remaindermen.
Both in Matter of Snyder ( 54 Misc.2d 695) and Matter of Blake ( 208 Misc. 22) the virtual representation statute was held not to permit dual contingent income-remainder interests to represent subsequent contingent income-remainder interests on the ground that the virtual representation statute applies only to remainder interests. This position has been the subject of criticism (Third Report of Temporary State Comm. on Estates, N Y Legis. Doc., 1964, No. 19, p. 285; Looker, Virtual Representation, 34 Bklyn. L. Rev. 395, 402) and has not been followed by this court ( Matter of Schwartz, 71 Misc.2d 80). In the last cited case, a daughter who was both a contingent income beneficiary and remainderman, but not currently receiving income, was permitted to represent her child who also had a contingent income-remainder interest. There, this court said at page 82: "Here there is no actual conflict between the daughter and granddaughter vis-a-vis income or principal, since neither of them is receiving any sums from either source at this time and consequently no conflict of interest is presented." Applying those same principles to this case, since Allan Belden Clark is currently receiving income and his children are only contingently interested in such income, they will be required to be cited. The same is true of the children of Judith Clark Elam and Theodore Gray Clark. Since Edward Donald Clark is not currently receiving income, he may virtually represent his children. Similarly, since Linford Edward Stiles, Jr. is not currently receiving income, he may virtually represent his children, as may Elizabeth Stiles Siegal and Catherine Louise Henderson.
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