Bequest From Elderly Bank Customer To Bank Employee Upheld On Appeal 

The decedent was an elderly man with no immediate family. His Last Will and Testament left his estate to a cousin, several charities and individuals, and to two Valley National Bank employees, including the defendant.

One of the bank employees refused the bequest as unethical, based on the bank’s Employee Code of Conduct. The defendant bank employee, on the other hand, resigned from the bank and began working at another bank. She did not renounce her bequest of $11,000.

The executor of the estate filed a complaint seeking to dishonor the bequest to the defendant bank employee. Originally, the trial court granted the estate’s application. The court found that the FDIC guidelines requiring banks to ban “self-dealing” are designed to “cast a very wide net” and that it applied to the defendant. Otherwise, the judge reasoned, “mischief” would be created if an employee could simply resign to avoid the bank regulations.

The defendant filed a motion for reconsideration. She argued that she was not involved in any Valley Bank decisions relating to the decedent, that she performed her bank duties without any expectation of receiving anything from the decedent, and that she resigned from the bank before the will was probated.

The trial judge granted the motion for reconsideration, thus finding that the bequest to the defendant bank employee was permissible. The judge noted that there was no evidence that the bequest was connected to any banking decision, or that the defendant employee knew the gift was in the will. He found that the employee resigned two or three months prior to probate of the will. In sum, he concluded on reconsideration that there was “nothing in the record which indicates any kind of corruption, bribery, or fraud that would taint the bequest.”

The executor appealed the decision, which was affirmed by the Appellate Division. The appeals court found that reconsideration is within the court’s sound discretion, so it is reviewed under an abuse of discretion standard. Reconsideration of a decision is appropriate if the prior decision was based on a “palpably incorrect or irrational basis” or if the court had not considered, or failed to appreciate the significance of, the evidence. The appeals court concluded that the motion judge had expressed “sufficient findings and rationale” to support his decision. He had originally felt that the defendant had quit her job to circumvent the bank Code of Ethics, but later found that she was not working for the bank when the will was probated, and that no fraud or corruption was shown. The appeals court noted that the decedent was in his eighties and considered the defendant bank teller to be his friend. It further noted that the relatively modest size of the bequest did not suggest that the decedent had been “overborne by undue influence.” It concluded that there had been “no reason to depart from our longstanding jurisprudence of enforcing testamentary dispositions by citizens of our State who are of full age and sound mind as they deem fit.”

Finally, the appeals court rejected the argument of the Attorney General (who was involved because of the charitable bequests) that the trial judge should not have permitted the executor to represent the estate as a layperson. The estate’s attorney had filed opposition to the motion for reconsideration, but had retired before the motion was heard. The Attorney General argued that an entity cannot appear in court, except through an attorney. The Appellate Division disagreed, finding that “an estate is not a legal or business entity,” and that “in general, an attorney hired to represent an estate represents the executor or executrix as a fiduciary and not the estate as an entity.” Consequently, it concluded that the statutes do not suggest that the fiduciary of an estate must be represented by an attorney. Therefore, the judge correctly permitted the lay executor to represent the estate when the attorney of record was not present for oral argument of the reconsideration motion.

A copy of In re Estate of Paruta can be found here – In re Estate of Paruta

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