In re Estate of Maggio, 2012 VT
99
This
case seems complicated at first, but it can be broken down into two primary sets
of issues. The first set of issues
concerns whether certain evidence is admissible; the second set of issues concerns
how the Uniform Partnership Act (UPA) applies to a Connecticut partnership that
held property in Vermont, when one partner has died.
But
if you like complicated . . . the instant case stems from a quiet-title action,
which morphed into an ancillary intestate estate proceeding, followed by a
superior court appeal, which went one way when appellant thought it should’ve
gone another.
Confused? If you’re not, I am. Let’s go through it a little bit slower.
Mr.
Maggio and Mr. Silas had a Connecticut-based partnership. Back in the days of big hair and Mötley Crüe,
Mr. Silas made a down payment on eight lots in Holland, Vermont and executed a
promissory note in favor of the seller company.
A year later he re-conveyed the lots to himself and Mr. Maggio as
tenants in common (for our non-law-initiated readers, “tenants in common” means
that each “tenant” (read owner) owns an interest in real property that survives
that owner’s demise). You’re going to
want a more-eloquent-and-detailed definition if you’re taking the bar exam, but
for purposes of our discussion today, that should suffice.
The
Maggio–Silas partnership ended in ’91.
And Mr. Maggio died three years later.
In 1992, Mr. Silas learned that the divided lots as conveyed violated
Act 250. So, he stopped paying on the
note. Then the seller-company sued him
and Mr. Silas counterclaimed seeking rescission (a fancy-lawyer word for “take
it back ‘cause it ain’t what I paid for).
He won at the trial court and at the SCOV. Neither Mr. Maggio nor his estate was
involved.
Mr. Silas foreclosed on the judgment, but then he couldn’t
sell the property because Mr. Maggio’s name was still on the deed.
So, Mr. Silas goes to probate court to quiet title, and Mr.
Maggio’s widow (and sole beneficiary) objects.
They agree to sell the property, and then decide who owes whom
what.
This ends the real estate portion of the case. From this is the point, it becomes an
ancillary intestate proceeding and shifts forums to the Probate Division. The probate court’s mission?: To determine
whether Mr. Maggio owned an interest in the property at the time of his
death.
The probate court looks at the deed and decides that Mr.
Maggio had a one-half interest at the time of his death. That’s what the deed says, right?
Yeah, but . . . .
Mr. Silas appeals to the superior court, which holds a bench
trial: one witness, neither party, and a whole bunch of documents. The superior court reverses the probate court
on the basis that despite the deed’s characterization, the property was a
partnership property, and when the partnership ended, Mr. Maggio’s interest
went with it.
The trial court finds a few indicators that the property was
partnership property. One indicator is
Mrs. Maggio’s answer to an interrogatory, which indicated that the property was
purchased with partnership funds.
Another indicator is tax returns that show carrying costs paid with
partnership funds. According to Mrs.
Maggio’s interrogatory answers, Mr. Maggio received $15,000 when the
partnership ended and Mr. Silas received everything else. The superior court notes Mr. Maggio’s lack of
involvement in the previous litigation concerning the property.
Under Connecticut law, property purchased with partnership
funds is partnership property regardless of deed classification. Further, any interest in a partnership,
including real property held by the partnership, is personal property. Hence, the trial court found that the property
was partnership property; that Mr. Maggio’s interest accrued to Mr. Silas when
the partnership ended; and that there was no statute-of-frauds issue because
the transfer was of personal, not real property. Do not pass “GO”; do not collect $200.
Mrs. Maggio appeals, arguing that the superior court screwed
up by: “(1) admitting her answers to interrogatories in violation of the best
evidence rule and the ‘dead man’s’ statutes, and without an adequate foundation
showing that she had personal knowledge about her husband’s business affairs;
(2) finding that the property was a partnership asset; (3) finding that Mr.
Maggio relinquished his interest in the property to Mr. Silas in the partnership
dissolution; (4) holding that the statute of frauds did not apply to the
transfer of Mr. Maggio’s interest in the property to Mr. Silas; and (5) relying
on Connecticut law in its decision without first notifying the parties.”
The evidentiary issues subject to the trial court’s
discretion are reviewed for abuse of that discretion; questions of law are
reviewed de novo.
The SCOV first considers the best-evidence-rule
argument. Simply stated, the
best-evidence rule prohibits testimony about the content of a writing in lieu
of the writing itself. Mrs. Maggio’s
argument is that her answer about what Mr. Maggio and Mr. Silas received in
business assets was based on what was probably a written dissolution agreement
and Mr. Silas didn’t make a good-faith effort to find the agreement.
It’s an interesting argument, but it gets about as much
traction as racing slicks on a steep incline during freezing rain. Mrs. Maggio’s “testimony” is not based on her
viewing of the document and her suspicion that there was a partnership
separation agreement doesn’t necessarily mean there was. The best-evidence rule doesn’t apply.
So-called “dead man’s” statutes forbid testimony in one’s
favor from a party to a contract when the other party is dead or insane. Mrs. Maggio’s argument here is that admitting
her interrogatory answers allowed Mr. Silas to accomplish that forbidden act by
proxy. The SCOV is not convinced.
Because the bar applies only to the other party, and not to
a non-party, there was no violation of the dead man’s statute.
Mrs. Maggio also argues that there was no foundation of
personal knowledge as to her husband’s business affairs to admit her
interrogatory answers. Mr. Silas
counters that they are admissions by a party-opponent, and that there’s no
requirement of personal knowledge to admit such statements.
The SCOV agrees with Mr. Silas. What hearsay is and isn’t is well beyond the
scope of this summary, but as some of you likely know, a statement made by a
person who is a party to a lawsuit is not, by definition, to be considered hearsay. Though there’s a lengthy discussion about
this provision to the hearsay rule and the foundational aspects required to
admit an admission by a party opponent (there’s really no foundation required),
the answer to the problem is simple.
Under the admission-by-a-party-opponent rule, no personal-knowledge
foundation is required. And, thus, the
interrogatory statements are admissible as they stand. In other words, if you admit it in discovery,
you should be prepared for it to come into court.
Mrs. Maggio also argues that the trial court oughtn’t to find
that the Holland property was partnership property because the deed didn’t
mention the partnership. The applicable
Connecticut statute provided that property purchased with partnership funds is
partnership property absent evidence of contrary intent.
In the realm of issues before the SCOV: Was the trial court
required to find that the property was owned as the deed said it was? Was the deed compulsory contrary intent?
Nope. The deed is a
factor in the determination, but not the final say. Accordingly, when the trial court had
evidence supporting its determination that the property was purchased and
maintained with partnership funds, including the interrogatory answers and
partnership tax records, then its determination that the property belonged to
the partnership is adequately supported by the evidence.
Mrs. Maggio’s next argument is that the trial court had
insufficient evidence to conclude that Mr. Maggio’s partnership interest
transferred to Mr. Silas on dissolution of the partnership. The trial court’s conclusion was based on
Mrs. Maggio’s interrogatory answer that Mr. Silas got “everything else” when
the partnership dissolved. The trial
court also noted Mr. Maggio’s lack of involvement in the lack-of-Act-250-approval-snafu
litigation.
This is where Mrs. Maggio focused most of her brief. The SCOV concludes that focus is
misplaced. The lack of involvement in
the litigation is simply indicative that no one really thought Mr. Maggio had
an interest in the property after the partnership dissolved. Accordingly, the SCOV finds no error with the
trial court’s finding.
The statute of frauds requires a writing to prove legal
relationships in certain circumstances.
One of those circumstances is a transfer of an interest in real
property. Mrs. Maggio argues that no
writing transferred Mr. Maggio’s interest in the property to Mr. Silas. In this case, the SCOV agrees with the trial
court’s conclusion that the property was partnership property. Because partnership property is considered
personal property under Connecticut’s version of the Uniform Partnership Act
(UPA), the statute of frauds does not apply.
Accordingly, when the partnership dissolved, Mr. Silas received
“everything else,” which included the partnership’s interest in the property.
Still with me? Mrs.
Maggio’s final argument is that the trial court erred when it applied
Connecticut law to the case without adequate notice to the parties. The SCOV notes that in response to Mrs.
Maggio’s motion to reconsider, the trial court reached the same conclusions
applying Vermont law. Accordingly, the
SCOV concludes that this is a six-in-one-half-dozen-in-the-other argument and
has no merit.
This case illustrates the importance of a clean wrap-up when
a partnership dissolves. If there had
been a dissolution agreement that spelled out the parties’ respective rights to
all purported partnership property and required a quitclaim deed or
reformation, none of this litigation would have been necessary. Undoubtedly, all this litigation must have
cost more than the property was ever worth . . . . Or to put it another way, “Lots”
of luck to Appellee in trying to re-coup legal fees from the sale of the
property.
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