SALCE v. CARDELLO
SC 20739
Supreme Court of Connecticut
January 23, 2024
348 Conn. 544
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D‘AURIA, J., dissenting. In this certified appeal, the court today holds that, in terrorem clauses, also known as no-contest causes, violate the state‘s public policy, unless a beneficiary‘s challenge to a trustee‘s or executor‘s actions is in bad faith or frivolous.
Initially, I observe that, when asked to exercise our judicial authority to declare the public policy of the state, and to declare further that this public policy trumps otherwise legal actions or relationships, we have, in
For example, notwithstanding that contracts of employment for an indefinite term, at common law, were, and remain, terminable “at will,” without the need for “a showing of just cause for
A complication that can arise, when considering whether to invalidate a contractual provision in the name of public policy, is that there may be competing public and private interests. For example, this court has recognized as “well established that parties are free to contract for whatever terms on which they may agree . . . [although] it is equally well established that contracts that violate public policy are unenforceable.” (Internal quotation marks omitted.) Geysen v. Securitas Security Services USA, Inc., 322 Conn. 385, 392, 142 A.3d 227 (2016). In light of these dueling principles of law, a contract provision violates public policy, and is unenforceable, if it “negate[s] laws enacted for the common good or is designed to evade statutory requirements . . . .” (Internal quotation marks omitted.) Id., 397.
A “specific application” of this “general [common-law] doctrine . . . that a court may refuse to enforce contracts that violate law or public policy” is found in our cases in which a party to a voluntary arbitration agreement asks a court to vacate the arbitration award on the ground that enforcing it would violate public policy. (Internal quotation marks omitted.) HH East Parcel, LLC v. Handy & Harman, Inc., 287 Conn. 189, 197, 947 A.2d 916 (2008). “The public policy exception applies only when the award is clearly illegal or clearly violative of a strong public policy.” (Emphasis added; internal quotation marks omitted.) State v. New England Health Care Employees Union, District 1199, AFL-CIO, 271 Conn. 127, 135, 855 A.2d 964 (2004). We have said further in this context that “the public policy exception to arbitral authority should be narrowly construed and [a] court‘s refusal to enforce an arbitrator‘s [award] is limited to situations [in which] the contract as interpreted would violate some explicit public policy that is well defined and dominant, and is to be ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interests.” (Emphasis added; internal quotation marks omitted.) Id., 135-36. “[G]eneral notions of the public good, public accountability or the public trust are insufficient grounds for invoking the extremely narrow public policy exception to judicial enforcement of arbitral awards.” New Haven v. AFSCME, Council 4, Local 3144, 338 Conn. 154, 187-88, 257 A.3d 947 (2021).
I would scrutinize with the samе rigor as in these other contexts the claimed public policy the defendant, Joan Cardello, advances to invalidate the in terrorem clauses at issue in the present case. In other words, I believe that, for a public interest to constitute a public policy of such importance as to negate the clear and explicit intent of a testator, as stated in an in terrorem clause, the public interest must be strong, important, clearly articulated, and dominant. This approach is justifiable and logical, in my view, because, in weighing the importance of a probate court‘s supervision of fiduciaries and in ultimately vindicating this supposed public interest, this court should also be mindful of any competing interests—private or public—that our law has historically protected. If we fail to consider the strength of the competing public and private interests
In particular, for more than one century, this court has recognized the “general rule [that] a testator has the right to impose such conditions as he pleases upon a beneficiary as conditions precedent to the vesting of an estate . . . .” (Internal quotation mаrks omitted.) DeLadson v. Crawford, 93 Conn. 402, 410, 106 A. 326 (1919); accord Greenwich Trust Co. v. Tyson, 129 Conn. 211, 218, 27 A.2d 166 (1942); see also Peiter v. Degenring, 136 Conn. 331, 335, 71 A.2d 87 (1949) (“[a] testator may impose such conditions as he pleases upon the vesting or enjoyment of the estate he leaves, provided they are certain, lawful and not opposed to public policy“). Our courts have “sustain[ed] forfeiture clauses as a method of preventing will contests, which so often breed family antagonisms, and expose family secrets better left untold, and result in a waste of estates through expensive and long drawn-out litigation.” South Norwalk Trust Co. v. St. John, 92 Conn. 168, 175, 101 A. 961 (1917); see also McGrath v. Gallant, 143 Conn. App. 129, 132, 69 A.3d 968 (2013) (testator inserted in terrorem clause into will given “history of strife among his children . . . anticipat[ing] that the animosity among the siblings would only escalate after his death“); cf. Parker v. Benoist, 160 So. 3d 198, 205 (Miss. 2015) (“forfeiture clauses may serve a valuable purpose in deterring ‘unwarranted challenges to the donor‘s intent by a disappointed person seeking to gain unjusti-fied enrichment,’ or preventing ‘costly litigation that would deplete the estate or besmirch the reputation of the donor,’ or discouraging ‘a contest directed toward coercing a settlement—the so-called strike suit‘“); Russell v. Wachovia Bank, N.A., 370 S.C. 5, 12, 633 S.E.2d 722 (2006) (“[No-contest] clauses may protect estates from costly and time-consuming litigation and minimize the bickering over the competence and capacity of testators, and the various amounts bequeathed. . . . No-contest clauses may have the desirable effect of ensuring that the details of a testator‘s private life are not made public.” (Citation omitted; internal quotation marks omitted.)). There has been no suggestion in the present case that these principles and interests do not apply equally to trusts.
More recently, we have reiterated that “[t]he cardinal rule of testamentary construction is the ascertainment and effectuation of the intent of the testator, if that [is] possible. If this intent, when discovered, has been adequately expressed and is not contrary to some positive rule of law, it will be carried out.” (Internal quotation marks omitted.) Schwerin v. Ratcliffe, 335 Conn. 300, 310, 238 A.3d 1 (2020); see also Corcoran v. Dept. of Social Services, 271 Conn. 679, 700, 859 A.2d 533 (2004) (“[i]t is well settled that in the construction of a testamentary trust, the expressed intent of the testator must control” (internal quotation marks omitted)). Thus, it is clear that Connеcticut law has historically protected a testator‘s right to control his property while he or she is living, and by will to direct its use after his or her death, unless to effectuate that intent would violate a positive rule of law. See Peiter v. Degenring, supra, 136 Conn. 335.1 One such “positive rule of law” in Connecticut is statutory: namely, that, regardless of any provisions in the will, a surviving spouse may, subject to certain exceptions, elect “to take a statutory share of the real and personal property passing under the will of the deceased spouse” rather than take what the deceased spouse has by will devised or bequeathed to the surviving spouse.
To secure a judicial determination that this compеting interest in favor of upholding a testator‘s stated intent has been overcome—that is, it violates a positive rule of law—I would require a showing of a strong, important, clearly articulated, and dominant public interest that outweighs the private interests in allowing testators to devise their property as they see fit. In the present case, the defendant contends, and the majority agrees, that, when a beneficiary brings a good faith challenge to the actions of a fiduciary, enforcement of the in terrorem clauses at issue contravenes the administrative interests embodied in
The majority‘s survey of the few other jurisdictions that have addressed the issue reveals that some courts have in fact held that these clauses are unenforceable because insulating the fiduciary from challenge violates the policy underlying state statutes requiring court supervision of these fiduciaries. The majority‘s discussion of these cases is accurate, and I will not repeat it here.
There are cases that take a different approach than the court does in the present case, however. For example, Wyoming courts have held that in terrorem clauses are enforceable, recognizing both a long judicial history of upholding of a testator‘s clearly expressed intent and the fact that Wyoming‘s legislature has not adopted the rule the majority in the present case adopts judicially, despite having had a chance to do so. Specifically, in EGW v. First Federal Savings Bank of Sheridan, 413 P.3d 106 (Wyo. 2018), the plaintiffs claimed that an in terrorem provision was
The court in EGW noted that, because of that policy, the court in Dainton v. Watson, 658 P.2d 79, 81 (Wyo. 1983), “previously [had] rejected the claim that no-contest clauses are unenforceable as violative of public policy, even [when] a challenge to the testamentary instrument is made in good faith and with probable cause.” EGW v. First Federal Savings Bank of Sheridan, supra, 413 P.3d 110. Specifically, in Dainton, the trial court declared a bequest to the defendant forfeited pursuant to the terms of an in terrorem clause in the will. Dainton v. Watson, supra, 79. The defendant appealed, claiming that the in terrorem clause was invalid because “public policy demands that those whо contest wills in good faith and with probable cause to believe that a will is invalid should be protected from strict enforcement of the terms of a no-contest clause“; id., 82; based on § 3-905 of the Uniform Probate Code, which provides: “A provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting proceedings.” (Internal quotation marks omitted.) Id., 80. The court in Dainton rejected the defendant‘s argument, holding that (1) the claim “ignore[d] the overriding policy of [the] court and the [well accepted] principle elsewhere that a testator‘s intent as determined by the language in his will is controlling“; id., 82; and, (2) unlike the legislatures of other states, Wyoming‘s legislature had chosen not to incorporate § 3-905 of the Uniform Probate Code into Wyoming‘s then recent enactment of its probate code. Id.; see also In re Houston‘s Estate, 371 Pa. 396, 399, 89 A.2d 525 (1952) (“[I]f a testator may disinherit his children, he may also condition their legacies so that the happening of a certain event will result in their disinheritance. Here . . . the widow was faced with the unfortunate choice of receiving a small legacy or causing the children to lose their bequests, but that, once again, is a question of the wisdom of the testator and not public policy.“); T. Challis & H. Zaritsky, State Laws: No-Contest Clauses, p. 2 (“The largest group of states (22) adopt the Uniform Probate Code rule and state that no-contest clauses are enforceable, unless the contest is based on probable cause. Sixteen of these states have adopted [§] 2-517 and/or [§] 3-905 of the Uniform Probate Code, to this effect. See Alaska, Arizona, Colorado, Hawaii, Idaho, Maine, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Jersey, New Mexico,
The two concerns raised by the court in Dainton apply equally in the present case. In my view, our state‘s probate administration statutes, which have existed for decades, in tandem and in harmony with in terrorem clauses, manifest at best a generalized notion of the public good; see New Haven v. AFSCME, Council 4, Local 3144, supra, 338 Conn. 187-88; and not the strong, important, clearly articulated, and dominant public policy that we should require before acting judicially to overcome the testator‘s explicit intent. The court‘s holding today means that the enforcement of in terrorem clauses has been violating public policy since the advent of our current Probate Court system and that the innumerable in terrorem clauses inserted by individuals into wills and trusts for decades—perhaps centuries—are suddenly illegal notwithstanding that this court has “sustain[ed]” them for more than one century “as a method of preventing will contests . . . .” South Norwalk Trust Co. v. St. John, supra, 92 Conn. 175.
Moreover, despite various amendments to the statutes governing probate procedures, wills, and trusts in the last decade; see, e.g., Public Acts 2019, No. 19-137 (adopting Connecticut Uniform Trust Code,
The majority itself acknowledges that it is for the legislature to determine whether a good faith and probable cause exception applies to in terrorem clauses, allowing beneficiaries tо object to a fiduciary‘s actions if they do so in good faith and with probable cause. Although the majority states that it is not deciding the applicability of the good faith, probable cause exception by holding that in terrorem clauses are viable only when a beneficiary‘s challenge to the fiduciary‘s actions is not brought in good faith, the majority, in essence, takes this decision out of the legislature‘s hands.
The majority takes this action by invoking the public interest in the Probate Court‘s supervision of fiduciaries but fails to explain how the enforcement of in terrorem provisions has hampered this interest in the decades that these kinds of clauses have been quietly coexisting with our statutes governing probate proceedings. The answer may lie in the fact that other statutes
after notice and hearing, remove any fiduciary“);
The in terrorem clauses at issue in the present case in particular provide another means for the Probate Court to supervise fiduciaries. These clauses explicitly contemplate actions by the beneficiary that would not implicate these clauses. Specifically, both clauses prohibit a beneficiary from objecting to the fiduciary‘s actions but only so long as the fiduciary has taken those actions in good faith.5 Thus, if the
But the clauses also contemplate that the executor or trustee might make mistakes or that there might be good faith disagreements over actions the executor or trustee might undertake. Nonetheless, it is clear from the language of the clauses that the testator intended for the determinations of the executor or trustee, absent bad faith, to be the end оf the matter. This result would not be so unusual. Under our various standards of review, our courts are required under certain circumstances to tolerate the mistakes of other denominated decision makers, even when the court itself would have made different findings or reached different conclusions. See, e.g., McCann v. Dept. of Environmental Protection, 288 Conn. 203, 217, 952 A.2d 43 (2008) (“[F]actual errors do not constitute grounds for vacating the arbitrator‘s decision. . . . [T]he arbitrators are empowered to decide factual and legal questions and an award cannot be vacated on the [ground] that . . . the interpretation of the agreement by the arbitrators was erroneous.” (Citation omitted; internal quotation marks omitted.)).
In my view, enforcing the in terrorem clauses in this case implicates no issues of public importance. Rather, the facts of the present case illustrate how broadly applying a generalized—and in this case, at best, administrative—interest in the name of “public policy” constitutes an unwarranted intrusion on private interests. This is not a case involving a beneficiary who acted as a whistle-blower, shedding light on scandalous or improper behavior by a fiduciary. Rather, the defendant, as the single beneficiary of nearly the entire estate of the decedent, challenged the executor‘s filing of an allegedly inaccurate tax return. Describing the supposed public policy at stake as “the state‘s interest in
receiving accurate tax filings and payments“; Salce v. Cardello, 210 Conn. App. 66, 80, 269 A.3d 889 (2022); or the fiduciary‘s actions as “endanger[ing] the interests of the beneficiaries or the estate,” dresses up what is essentially a dispute about how much the defendant would receive from the estate. Id., 81. Perhaps the fiduciary‘s actions resulted in the estate‘s overpayment of taxes and therefore, perhaps, in turn, reduced the defendant‘s inheritance. As far as I can see, no state interest justifies voiding previously valid in terrorem clauses on the ground of public policy. The testator expressly stated her intent that beneficiaries should not contest the actions of the executor or trustee and thereby waste time and money on such a dispute.
That this is fundamentally a private matter not implicating a strong, important, clearly articulated, and dominant public policy is made even more clear by the fact that the testator originally appointed the defendant the executor of her estate. As the executor, the defendant would have been the one to file the tax documents at issue and, presumably, would have insisted on including what, in her view, was the accurate information. Instead of being personally involved in filing the tax documents, however, the defendant declined to take on the executor role her mother had asked her to, instead deciding to second-guess determinations the executor made in his role that might be agаinst her interest. By the terms of the trust and will, that is
Accordingly, I respectfully dissent.
D‘AURIA, J.