Court Opinion

ID: 4217187
Source: CourtListenerOpinion
Date Created: 2017-11-02 13:26:21.447518+00
Date Added: 2024-06-11T14:42:14.190869
License: Public Domain

PRESENT: All the Justices

STEVEN C. GRAY
                                                              OPINION BY
v. Record No. 161419                               CHIEF JUSTICE DONALD W. LEMONS
                                                            November 2, 2017
FRANCES BINDER, ET AL.

                    FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
                               Brett A. Kassabian, Judge

       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.

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                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

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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 Commissioner’s
               Reports except vacate them for lack of subject matter jurisdiction.

       The circuit court suspended its June 9, 2016 order and granted the Commissioner leave to

respond to Gray’s motion for reconsideration. In his response, the Commissioner distinguished

Parrish and argued that the circuit court “does not delegate judicial authority to the

commissioner of accounts,” but that the commissioner “has authority to hear any matter”

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concerning the settlement of a fiduciary’s account. The circuit court entered a final order

denying Gray’s motion for reconsideration and vacating the suspending order. In the order, the

circuit court explained that a commissioner, pursuant to Code § 64.2-1209, may “hear and

determine any matter which could be insisted upon or objected to by an interested person if the

commissioner of accounts were acting under an order of a circuit court.” Gray appealed to this

Court, and we granted his appeal on the following assignment of error:

               The circuit court erred in ruling that the Commissioner of
               Accounts had subject matter jurisdiction to hear a Petition for Aid
               and Direction filed initially with him seeking construction of the
               Will and the determination of the intestate heirs of Bahnfleth.

                                             II. Analysis

                                        A. Standard of Review

       Subject matter jurisdiction “is the authority granted through constitution or statute to

adjudicate a class of cases or controversies.” Morrison v. Bestler, 239 Va. 166, 169, 387 S.E.2d
753, 755 (1990). A challenge to subject matter jurisdiction presents a question of law that we

review de novo. Glasser & Glasser, PLC v. Jack Bays, Inc., 285 Va. 358, 369, 741 S.E.2d 599,

604 (2013).

                                             B. Rule 5:25

       As a threshold matter, the Cousins contend that Gray failed to comply with Rule 5:25 by

neglecting to “raise a challenge to subject matter jurisdiction while he still had standing.” The

Cousins claim that “Gray no longer had standing as a party interested in the Estate as of February

5, 2016,” the date this Court refused Gray’s petition for rehearing on his direct appeal of the

circuit court’s March 13, 2015 Order. The Cousins acknowledge that subject matter jurisdiction

can be raised at any time, however, they say “it cannot be that ‘any time’ includes times after

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entry of a final order by persons lacking standing to participate in the case.’” Consequently, they

argue Gray failed to timely object “with reasonable certainty as required by Rule 5:25.”

       Standing, subject matter jurisdiction, and preservation of error are separate legal

doctrines. “The purpose of requiring standing is to make certain that a party who asserts a

particular position has the legal right to do so and that his rights will be affected by the

disposition of the case.” Goldman v. Landsidle, 262 Va. 364, 371, 552 S.E.2d 67, 71 (2001). In

contrast, “[s]ubject matter jurisdiction is the power of a court to adjudicate a class of cases or

controversies.” Virginian-Pilot Media Cos. v. Dow Jones & Co., 280 Va. 464, 467, 698 S.E.2d
900, 901 (2010). Rule 5:25 requires litigants to preserve arguments for appeal by stating an

“objection . . . with reasonable certainty at the time of the ruling.” Gray has standing to bring

this appeal because if we ruled for him, the circuit court could determine that Gray is a

beneficiary of the will on remand. Rule 5:25 also does not bar this appeal because challenges to

subject matter jurisdiction can be raised at any time, even for the first time on appeal. See

Virginian-Pilot Media Cos., 280 Va. at 468, 698 S.E.2d at 902. Accordingly, Rule 5:25 does not

bar our consideration of Gray’s appeal.

                                    C. Commissioners of Accounts

       The office of the Commissioner of Accounts is unique to Virginia and West Virginia.

Frank O. Brown, Jr., Virginia Practice: Probate Handbook, § 2:11 (2014). Since their creation,

Virginia circuit courts have been vested with jurisdiction over fiduciary matters, including the

administration of estates. See Code § 64.2-1200 et seq.; see also John M. Patton & Conway

Robinson, Report of The Revisors of The Code of Virginia (January 8, 1849), tit. 39, ch. 132, at

676-88 (Richmond, Samuel Shepherd 1849). It would be “impracticable” for circuit courts to

perform every aspect of estate administration. Shipman v. Fletcher, 91 Va. 473, 477, 22 S.E.
6
458, 459 (1895). The Commonwealth established the office of the Commissioner of Accounts

“to afford a prompt, certain, efficient, and inexpensive method” for the settlement of fiduciaries’

accounts and the distribution of estates. Carter v. Skillman, 108 Va. 204, 207, 60 S.E. 775, 776

(1908).

          This office evolved from the long-established position of the Commissioner in Chancery.

Judicial Council of Virginia, Manual for Commissioners of Accounts 235 (5th ed. 2014). “A

commissioner in chancery is an officer appointed by the chancellor to aid him in the proper and

expeditious performance of his official duties.” Raiford v. Raiford, 193 Va. 221, 226, 68 S.E.2d
888, 891 (1952). “A good commissioner is the right arm of the court, and his services are

indispensable to the due administration of justice.” Id. at 226, 68 S.E.2d at 892 (citing Hartman

v. Evans, 38 W.Va. 669, 677, 18 S.E. 810, 813 (1893)). As we held in Bowers v. Bowers, 70 Va.

(29 Gratt.) 697, 700 (1878), “the office of commissioner in chancery is one of the most important

known in the administration of justice.” Nonetheless, commissioners serve to assist the court,

not to supplant it. Shipman, 91 Va. at 477, 22 S.E. at 459-60.

                 [F]rom the very necessity of their appointment and the nature of
                 their office, their work is subject to the review of the court. It may
                 accept or reject it, in whole or in part, as its judgment, upon such
                 review, may dictate, whether it be of law or fact.

Id.

          In his sole assignment of error, Gray argues that the Commissioner exceeded his

authority when, at the request of Bahnfleth’s Administrator, he conducted a hearing and

produced a report interpreting Bahnfleth’s will and determining his heirs. Gray contends that the

Commissioner lacked subject matter jurisdiction to hear the Administrator’s petition “for aid and

direction” because the petition “invoke[d] the equitable jurisdiction of a circuit court, in contrast

to the limited probate jurisdiction of a commissioner.”

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       Gray relies on our recent holding in Parrish, where we considered whether a circuit court

had subject matter jurisdiction to decide an appeal of an unlawful detainer action that was

originally filed in general district court. Prior to filing the unlawful detainer action, the Federal

National Mortgage Association (“Fannie Mae”) had purchased the defendant homeowners’

property at a foreclosure sale. 292 Va. at 48, 787 S.E.2d at 119. The homeowners challenged

the validity of the foreclosure in the general district court proceeding. Id. Because Fannie Mae’s

unlawful detainer action was based on its claim of title to the property, we held that the

homeowners’ defense divested the general district court of subject matter jurisdiction because

courts not of record cannot try title to real property. Id. at 54, 787 S.E.2d at 123. We also

observed that the subject matter jurisdiction of a circuit court, when exercising its de novo

appellate jurisdiction in an appeal from a court not of record, is derived from and limited to the

subject matter jurisdiction of the court from which the appeal is taken. Id. Accordingly, when

the homeowners appealed to the circuit court, the circuit court also lacked subject matter

jurisdiction to decide the question of title and should have dismissed the action without

prejudice. Id.

       Gray urges the Court to apply the reasoning in Parrish to this case because “exceptions to

a report of a commissioner of accounts are akin to appeals from a district court to the circuit

court.” We hold that Parrish is not applicable to this case because the circuit court here, in

confirming the Commissioner’s report, was not acting as an appellate court. Commissioners are

appointed by the judges of each circuit court and are removable at the pleasure of the court.

Code § 64.2-1200. They are not lower tribunals from which appeals are taken. When a

commissioner files a report, it becomes the opinion of the circuit court if no exceptions are filed.

Code § 64.2-1213. When exceptions are filed, the court can accept or reject the report in whole

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or in part. Code § 64.2-1212. Given these provisions, Gray’s contention that circuit courts have

equitable jurisdiction, while commissioners have limited probate jurisdiction is misplaced. A

commissioner’s authority to assist the circuit court with the settlement of estates is simply an

extension of the circuit court’s subject matter jurisdiction to administer estates.

        The Cousins have asked us to hold that the Commissioner had subject matter jurisdiction

to issue his report interpreting Bahnfleth’s will and determining his heirs pursuant to Code

§ 64.2-1209. However, we do not review the reports prepared by commissioners of accounts.

Our appellate jurisdiction is limited to reviewing certain judgments of the circuit courts and the

Court of Appeals. See Va. Const. art. VI, § 1; Code §§ 8.01-670 to 672, §§ 17.1-405 to

411. The circuit court’s jurisdiction to interpret wills and determine decedents’ heirs is

undisputed. See Code § 64.2-443 (“The circuit courts shall have jurisdiction of the probate of

wills.”).

        In this case, the Commissioner of Accounts filed a debts and demands report in May

2016. Gray filed exceptions to the May 2016 report challenging the subject matter jurisdiction of

the Commissioner to issue its January 2015 report, which held that the provision in the will

regarding Gray had lapsed. The circuit court entered an order confirming the May 2016 report.

Gray then moved for reconsideration and to vacate both the January 2015 and May 2016 reports.

The circuit court suspended its order and granted the Commissioner leave to respond to Gray’s

motion for reconsideration. After considering Gray’s motion and the Commissioner’s response,

the circuit court entered a final order denying Gray’s motion and vacating the suspending order.

        The assignment of error before this Court asserts that the “circuit court erred in ruling

that the Commissioner of Accounts had subject matter jurisdiction to hear a Petition for Aid and

Direction filed initially with him.” The circuit court’s order stated:

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               This matter came to be heard on the Motion for Reconsideration
               filed on behalf of Steven C. Gray and the Response of the
               Commissioner of Accounts. The Court has made a personal
               examination of the exceptions filed in this matter and has considered
               the pleadings, memoranda in support, and the arguments of counsel.

               And it appearing that the Commissioner of Accounts has properly
               interpreted the law on the applicable facts in this case.

               And it further appearing to the Court that the commissioner of
               accounts is not a lower tribunal of limited jurisdiction, rather the
               Court appoints the commissioner of accounts to provide general
               supervision of fiduciaries within the Court’s jurisdiction.

               And it further appearing to the Court that pursuant to Virginia Code
               § 64.2-1209, the commissioner of accounts may hear and determine
               any matter which could be insisted upon or objected to by an
               interested person if the commissioner of accounts were acting under
               an order of a circuit court for the settlement of a fiduciary’s accounts
               made in a suit to which such interested person was a party.

               Upon consideration whereof, it is therefore ORDERED that the
               Commissioner’s Report is confirmed and affirmed and Steven C.
               Gray’s Motion for Reconsideration is DENIED and the suspending
               order of June 30, 2016 is hereby VACATED.

Clearly, the circuit court had subject matter jurisdiction over the case. This Court reviews

decisions of the circuit court, not decisions of the Commissioner of Accounts.

                                          III. Conclusion

       Accordingly, we will affirm the judgment of the circuit court.

                                                                                           Affirmed.

JUSTICE McCULLOUGH, concurring.

       The question that underlies this appeal, which the procedural posture of the case

precludes us from addressing, is the extent of a Commissioner of Accounts’ authority to hear

certain matters without an order of reference from the circuit court.

       Code § 64.2-1209 provides that

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               Any interested person, or the next friend of an interested person,
               may, before the commissioner of accounts, insist upon or object to
               anything which could be insisted upon or objected to by such
               interested person if the commissioner of accounts were acting
               under an order of a circuit court for the settlement of a fiduciary’s
               accounts made in a suit to which such interested person was a
               party.

       The appellants argue that Code § 64.2-1209 grants Commissioners broad authority,

without an order of reference from the circuit court, over the settlement of fiduciary accounts –

but not other distinct (if related) matters. Code § 64.2-1210 could be cited to support this

reading:

               The commissioner of accounts shall report every account stated
               under this part, including a statement of the cash on hand and in
               bank accounts and the investments held by the fiduciary at the
               terminal date of the account, and, where applicable, reports of
               debts and demands under § 64.2-551, along with any matters
               specially stated deemed pertinent by the commissioner of accounts
               or that an interested person may require.

Read together, Code § 64.2-1209 and Code § 64.2-1210 could be interpreted to support the

argument that the General Assembly has given Commissioners of Accounts broad oversight over

fiduciary accounts but not over other probate matters not mentioned in Code § 64.2-1209. * A

proceeding for aid and direction differs in nature and scope from the settlement of a fiduciary’s

accounts. On this reading, the fact that the construction or invalidation of a will or a trust may

ultimately have some bearing on the settlement of the accounts would not render that proceeding

one “for the settlement of a fiduciary’s accounts.”

       *
          Other matters the General Assembly has authorized Commissioners of Accounts to hear
include receiving proof of debts and demands against the decedent or the decedent’s estate, Code
§ 64.2-550; adequacy of the fiduciary’s surety bond and whether the fiduciary should be
removed, Code § 64.2-1204; parental spending of a minor’s funds, Code § 64.2-1802; and the
sale of the real estate of an incapacitated adult pursuant to Code § 64.2-2022(B) or of an
unemancipated minor pursuant to Code § 64.2-1805(B).

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       Beyond the plain statutory text, other factors could lead to the conclusion that

Commissioners of Accounts lack the authority to hear a petition for aid and direction without a

circuit court referral. First, although Commissioners have long been a valued part of Virginia’s

legal landscape, there does not appear to be any prior reported case where a Commissioner heard

a petition for aid and direction without a referral from a court. Second, the detailed Manual for

Commissioners of Accounts that guides Commissioners in performing their duties says nothing

about the authority of a Commissioner to hear a petition for aid and direction.

       The appellees point out, however, that a petition for aid and direction, as well as other

matters, can be heard by a Commissioner because it unquestionably relates to the settlement of

accounts. Code § 64.2-1209. An account cannot be settled if the executor does not know who is

entitled to distributions from the estate. A Commissioner’s broad authority also finds support in

Code § 64.2-1200, which provides that “[t]he commissioner of accounts shall have general

supervision of all fiduciaries admitted to qualify in the court or before the clerk of the circuit

court and shall make all ex parte settlements of the fiduciaries’ accounts.” Finally, the appellees

point to case law that describes the authority of Commissioners in expansive terms. See

Nicholas v. Nicholas, 169 Va. 399, 403-04, 193 S.E. 689, 690-91 (1937); Carter v. Skillman, 108
Va. 204, 213, 60 S.E. 775, 779 (1908).

       Regardless of the broad or narrow view one takes of Code § 64.2-1209, it is undisputed

that a Commissioner can be appointed to hear such a matter as a Commissioner in Chancery

under Code § 8.01-607. In addition, just as parties can consent to have their cases heard by a

mediator or an arbitrator, the parties could likewise consent to have a petition for aid and

direction heard by the Commissioner of Accounts.

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       The appellants did not timely raise the question before us, and because their challenge

does not involve the subject matter jurisdiction of the court below, their failure to timely object

to the hearing constitutes a waiver under Rule 5:25. We will have to resolve in a future case

what authority the Commissioners possess in this and similar circumstances, unless the General

Assembly provides some clarification in the interim.

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