Bar Journal - December 1, 2001
Lex Loci: A Survey of New Hampshire Supreme Court Decisions
By: Attorney Charles A. DeGrandpre
The author is still puzzled by the method used by the Supreme Court pursuant to its authority under RSA 490:3 to fill its bench with five judges when there are absences, conflicts, etc., preventing all five appointed Supreme Court justices from sitting. Under 490:3, retired Supreme Court justices and retired superior court justices can be chosen, as can sitting superior court judges. However, questions remain as to whether volunteers are accepted, whether the assignment of a substitute is selected from a pre-set list by lottery, etc. It would well serve the Court to formulate an impartial procedure for choosing alternate judges or, if there is such a procedure in place, to acquaint the bar and the public with it. Litigants before the highest court of our state have the right to know how the judges who will decide their cases have been chosen.
It seems fair to say that our newly constituted Supreme Court, oft times augmented by superior court judges, continues to surprise members of the New Hampshire bar with several of its unexpected opinions and novel approaches to prior law. Even with the large number of superior court judges serving on the high bench from time to time, this is a Court that does not hesitate to overturn lower court judges or to fashion new law or remedies as the occasion presents.
The Memorandum Opinion of Justice Broderick in Estate of Tremaine v. Tremaine, decided July 31, 2001, is one such noteworthy case. The issue at contest was over ownership of an IRA that the decedent had established prior to his marriage. After his marriage, the decedent named his wife (the present defendant) the beneficiary of the IRA. The parties were subsequently divorced in 1997. The divorce decree had a customary provision which provided that each party was awarded any interest in any 401(k) or IRA that each had, free and clear of the claim of the other. However, the decedent did not change the name of the beneficiary on his IRA and he subsequently died without making a change.
The trial court ruled that the specific provision in the parties' divorce decree was unequivocal and awarded the proceeds to the decedentís estate. The Supreme Court, however, unanimously held to the contrary. It recognized that "absent a controlling statute, divorce alone does not revoke an individualís status as a contractually designated beneficiary." The Court then moved to the issue of whether the language of the stipulation was legally sufficient to terminate the respondentís beneficiary interest. The Court very narrowly interpreted the divorce stipulationís provisions holding that "[w]hile it may be that the stipulation of the parties in the decree was intended to terminate the respondentís beneficiary interest in the petitionerís IRA, the language could be interpreted to mean that she was to retain her interest. Accordingly, the divorce decree fails to unambiguously change the beneficiary designation." This is a surprising result in light of the pretty clear language of the divorce stipulation:
10. PENSIONS AND OTHER TAX-DEFERRED ASSETS: Each party is awarded any interest in any pension, retirement, 401(k), IRA or other retirement account that each one may have and as shown on her or his respective Financial Affidavit, free and clear of any right, title, interest, or claim of the other.
Compare this rather narrow holding with the opinion of former Chief Justice Frank Kenison in Mamalis v. Bornovos, 112 N.H., 423, 426 (1972), where, in broadly worded language, Kenison ruled that a divorce decree terminated a joint tenancy [where one tenant died after the divorce but before new deeds were done] where the parties "clearly express an intention to mutually terminate their mutual rights of survivorship." This entire issue of the effect of divorce upon prior wealth transfer designations needs to be addressed by the Legislature to prevent the validation of what the decedent clearly would not have intended.
In an important case involving the rights of juveniles, In Re Jeffrey C., decided August 31, 2001, the Supreme Court overturned a decision of a district court that authorized confinement of a juvenile to an adult "correction" facility without a jury trial. In a unanimous opinion written by Justice Dalianis, the Court held that it was unconstitutional to sentence a juvenile to the House of Correction (what a wonderful legal euphemism: correction facility means the county jail) after a finding of delinquency under RSA 169-B, III. This section authorizes the district court to commit juveniles to adult correctional facilities in certain circumstances, including the house of correction, after a finding of delinquency without a jury trial. The Court found that this statute violated Part I, Article 15, of the New Hampshire Constitution (our New Hampshire jury trial provision):
to the extent that [these provisions] authorize incarceration of juveniles in adult correctional facilities without first affording the juvenile the right to a jury trial, are unconstitutional. This conclusion is mandated by the well-settled principle that all defendants facing the possibility of incarceration are entitled to a trial by juryÖ.Imprisonment in an adult facility fundamentally changes the nature of the underlying proceedings.
In another juvenile case, In Re Ryan D., decided July 23, 2001, a unanimous Supreme Court reversed a district court judge who denied a fifteen-year-old juvenileís request that his name and address not be made public by the district court. It appeared that the juvenile was charged under two juvenile petitions, one alleging reckless conduct under RSA 631:3 and one alleging criminal mischief under RSA 634:2. The juvenile entered pleas of "true" to each petition, and as part of his plea agreement he was placed on conditional release and ordered to pay restitution. In addition, the State agreed that it would not disclose the juvenileís name to the public. However, the district court ruled that RSA 169-B:46 required the disclosure by the court of the juvenileís name and this appeal followed. RSA 169-B has several provisions addressing when and how information in juvenile proceedings may be published or disclosed and the general rule is that the juvenile court records are withheld from public inspection except under certain statutory exceptions. An example of such an exception is RSA 169-B:35, II, which establishes certain conditions when a district court may disclose the name and address of the juvenile charged. The Supreme Court pointed out that "even when a juvenile has committed a violent crime, it is within the courtís discretion to determine whether the juvenileís personal information should be released to the public."
Turning to RSA 169-B:46, which provides that there shall be no restriction on the publishing or broadcasting of the name or address of any juvenile (who is at least twelve years of age at the time of said offense) found to have committed vandalism under RSA 169-B:45, the Court concluded that the emphasis of this provision was on the ability of the media to publish the name and address of a juvenile van dalism offender, but that the statute "does not require that courts disclose the name or address of a juvenile who has committed vandalism." (Emphasis added).
Dual extraordinary petitions for a writ of prohibition and for a writ of mandamus were before the Supreme Court in Petition of Cigna Healthcare, Inc., dated July 31, 2001.1† These seldom-seen writs come directly to the Supreme Court under the Courtís original jurisdiction and were brought directly to it as a result of original petitions to the Supreme Court filed by Cigna Healthcare, Inc. (formerly Healthsource New Hampshire, Inc.). Cigna sought to prohibit the probate court for Hillsborough County (overseeing the disaffiliation of Manchesterís Elliot Hospital and Catholic Medical Center) from exercising jurisdiction upon the issue in question. Cigna argued that the probate court lacked subject matter jurisdiction over the contractual dispute between it and the two hospitals. It appeared that Cigna had originally intervened in the probate court to protest its contractual interests in the charitable trust probate court action filed in the probate court jointly by the attorney general and Optima (the parent of Elliot and Catholic Medical Center) to oversee the disaffiliation process between the two Manchester hospitals pursuant to the attorney generalís earlier report in the matter. The motion to intervene was granted by the probate court. In the course of the probate court proceedings, it appeared there was a dispute (1) whether or not Cigna was owed money and, if so, by which or both hospitals and/or (2) whether Cigna owed both or one or the other of the hospitals money. Cigna sought to have this issue addressed by the superior court and the probate court issued orders prohibiting Cigna from proceeding in the superior court to seek its claimed arbitration rights and challenging the probate courtís claimed jurisdiction to decide the matter.
The Supreme Court first defined the two extraordinary writs requested: Mandamus "is used to compel a public official to perform a ministerial act that the official has refused to perform, or to vacate the result of a public officialís act that was performed arbitrarily or in bad faith," while a writ of prohibition "is used to prevent subordinate courts or other tribunals, officers or persons from usurping or exercising jurisdiction with which they are not vested."
Surprisingly, a unanimous Supreme Court, speaking through Justice Nadeau, seemed to harken back to earlier times and ruled that a probate court "is not a court of general jurisdiction. Its powers are limited to those conferred upon it by statute" [isnít this true of all of our courts, except the Supreme Court, and for it, only recently?] and, thus, it was dependent on the Court to determine whether or not the statute conferring jurisdiction upon the probate court encompassed the dispute before it. The Court did not address the issue of whether Cignaís motion to intervene in the probate court action was a submission to jurisdiction.
The Supreme Courtís opinion is apparently the first decision of the Court interpreting the Omnibus Justice Act of 1993, which substantially increased probate court jurisdiction. The Court agreed that the Omnibus Justice Act "reveals a legislative intent to expand probate court jurisdiction,Öbut to a limited extent." The Court held that the Omnibus Justice Act
was not intended to expand the probate courtís jurisdiction beyond the subject matter necessary for it to handle efficiently matters over which it had jurisdiction. The Legislature did not intend that the probate court exercise concurrent jurisdiction with the superior court over every case in law and equity which might result from the existence of a trust. Nor did it intend to force a party entitled to a jury trial in superior court to first subject itself to a trial before a probate court judge and then to appeal an adverse decision to the superior court for a jury trial.
The Court concluded by ruling that the Omnibus Justice Act of 1993 expanding probate court jurisdiction "does not confer upon the probate court general jurisdiction to adjudicate contractual claims rising between charitable trusts and third parties. We also conclude that in light of our prior rulings on the probate courtís jurisdiction, the courtís lack of jurisdiction in this case was sufficiently clear to warrant a writ of prohibition." This case appears to be a clear setback to the court reformers2† of the '90s, which sought to substantially increase the jurisdiction of probate courts in matters involving estates, trusts and charitable trusts. Itís interesting that two superior court judges sat on the appeal and joined in the decisions.
A couple of very significant decisions involving property tax charitable exemptions were handed down by the Court among its recent decisions. In Appeal of the City of Laconia, dated August 31, 2001, the Court, speaking through Justice Dalianis, unanimously upheld the decision of the New Hampshire Board of Tax and Land Appeals (BTLA) granting a tax exemption to property owned by the plaintiff, Taylor Home (Home), in the face of a strenuous appeal of that decision by the City of Laconia. The Home was legislatively chartered in 1907 and presently operates a large elderly housing complex in Laconia, including independent living, assisted living and nursing care facilities, for which residents pay substantial entrance fees and monthly fees. The Supreme Court first recognized that the 1907 charter granting a special charitable exemption to the home was repealed by the current law governing charitable exemptions, RSA 72:23, and therefore this later statute was held to be applicable to the question whether or not the Home qualified for a charitable property tax exemption. The main thrust of the cityís appeal hinged upon its claim that the property was not used and occupied directly for its charitable purposes because entrance fees to the Home averaged well over $100,000 and the fees for independent living units ranged between $500 and $1,000 a month. However, the Supreme Court looked to other facts, which indicated that the Home had provided, over the years, in excess of $2,000,000 in entry fee assistance and presently provided some $700,000 in monthly fee assistance to residents who could not otherwise afford the cost. The Court upheld the BTLAís findings that the Homeís independent living units, assisted living units and nursing care facility "work in concert to fulfill [its] charitable mission" and, in particular,
that the independent living units [are] one of the main Ďmoney enginesí generating funds necessary to carry out [the] Homeís legislative purpose. Just as fundraising is the lifeblood of most charitable organizations, cost shifting at [the] Home provides a significant source of funds for providing charitable assistance to older residents requiring intensive assisted or nursing care services.
Contrast that broad approach to the much more strictive approach of the Court in the almost contemporaneous opinion in East Coast Conference of The Evangelical Covenant Church of America, Inc. v. Town of Swanzey, decided July 26, 2001. This case brought forth a stellar roster of attorneys to argue the pros and cons of the Churchís petition for abatement. The superior court had denied the Churchís petition for tax abatement in part because it held that certain portions of the Churchís property did not qualify for the charitable tax exemption. The facts showed that the Church is a denomination of the Christian faith and is registered as a New Hampshire, not-for-profit, corporation and has a section 501 (c)(3) exemption from tax under the United States Internal Revenue Code. The Church owns and operates two lake shore properties on the shores of Swanzey Lake, only one of which was at issue on the appeal. The property at issue was separated from the main Church camp property by land owned by third parties. This second property was basically a conference center, and included lodging areas, a dining room, a chapel, a maintenance building and various meeting and recreational facilities for a family camp and conference center located on this property. There were free-standing cabins both on and off the lakeshore and some condominium-type townhouses with kitchens, as well as camp site areas to accommodate a very large number of trailers, with water and sewer supply hookups and bathroom facilities. There was a dining hall, a tennis court, a golf course, a basketball court, a swimming beach, boating and fishing access and cross country skiing trails, as well as staff quarters, maintenance buildings, a preschool, administrative offices and a large acreage of undeveloped land.
During the summer months, the conference center land was used by the Church to host week-long camp programs for families and adults with Christian-based themes, run by the Churchís clergy. About 60 percent of the guests were members of the Church, although all non-Church members in attendance were expected to participate in Church services. During the non-summer months, the conference center was rented to Church-approved groups, including Elderhostel, other religious groups, and municipal, college and hospital organizations. Beginning in 1996, the Town of Swanzey took the position that, as to the conference property, only the preschool, dining facility, kitchen, administrative facilities, bathhouse, barn, meeting hall and chapel were exempt under RSA 72:23 (only a small portion of the total acreage of the conference parcel).
In a unanimous opinion written by Justice Nadeau, the Court affirmed the superior courtís decision, hinging its decision on RSA 72:23-l, which defines "charitable" as relating to the "Öwell-being of the general public or a substantial and indefinite segment of the general public." The Court pointed out that its prior decisions had held that a charitable organization is not entitled to the property tax exemption if its purposes are confined mostly to benefiting its own members. Looking at the factual record, the Court found that "the Church failed to proved that the beneficiaries of [the conference center] were a substantial and indefinite segment of the public." Summing up its new definition of the charitable property tax exemption, the Court ruled as follows: "We hold that where an organization makes efforts to limit its services, and targets its benefits only to its members, that organization is not obligated to serve an indefinite segment of the population."
This case appears to be a harbinger that this Court will be sympathetic to many municipalitiesí recent attempts to raise property tax revenues by strictly interpreting the charitable use property tax exemption. There seem to be many lake- or shore-side facilities that have a charitable property exemption and that fit the description of the kind of operation that the Court described here. Another, but different, example is the growth of hospital complexes into gargantuan, multi-facility, high-income entities with stores, atriums, gift shops, etc. These hospital entities often claim property tax charitable exemptions, which are currently being countered by the need of municipalities for increased tax revenues.
In an interesting case decided October 3, 2001, Robbins v. Johnson, which involved the common practice of using revocable trusts to dispose of the majority of a personís estate, the Supreme Court declined to extend the operation of the pretermitted child statute (RSA 551:10) to revocable trusts:
The plaintiffs urge us to extend the statute to the trust at issue as a matter of policy. We note that trusts are not the only type of so-called will substitutes by which individuals pass property at death. Other will substitutes include payable on death accounts, transfer on death accounts, life insurance proceeds to a named beneficiary, and pension funds. We believe that the Legislature should decide whether, as a matter of policy, it wishes to extend the pretermitted heir statute to will substitutes, such as the trust at issueÖAbsent clear indication from the Legislature that this is its intention, we decline to apply the statute to the trust. (Emphasis added).
The Legislature should act quickly to clarify this important matter, having been invited to do so by the Court.
A test of the 1996 legislation that validated spendthrift trusts for the first time in New Hampshire (RSA 564:23, I) was before the Court in Scheffel v. Krueger, decided July 26, 2001.3† A little background is warranted. Until 1996, New Hampshire was in the minority of jurisdictions that did not recognize the validity of a spendthrift trust, i.e., a trust established by a third party for another that contains a provision protecting the trust assets from the reach of creditors, spouses, etc. This minority position reflected New Hampshireís very long held, strong, pro-creditor stance. However, in 1996, as a result of an effort to make New Hampshire trust law more user-friendly, RSA 564:23, I was enacted, which provides that
In the event the governing instrument so provides, a beneficiary of a trust shall not be able to transfer his or her right to future payments of income and principal, and a creditor of a beneficiary shall not be able to subject the beneficiaryís interest to the payment of its claim.
The plaintiffís claim to reach the assets of the trust in this case grew out of a default judgment she had received on behalf of her daughter against the defendant trust beneficiary as a result of the defendantís sexual assault on the plaintiffís young daughter. The plaintiff argued that the Legislature did not intend RSA 564:23 "to shield the trust assets from tort creditors, especially when the beneficiaryís conduct constituted a criminal act." However, the Court emphasized the very explicit language of the statute and refused "to create a tort creditor exception to the statute" where the statute had none since if there was an omission, "the courts cannot supply it. That is for the Legislature to do." To be clear: the 1996 legislation did not provide creditor protection for trusts established by a grantor to benefit her/himself.
DeVere v. Attorney General, decided September 20, 2001, involved RSA 260:14, III of the Driver Privacy Act, where a unanimous Supreme Court reversed a superior court ruling that this Act required the disclosure of certain motor vehicle records to the plaintiff, a citizen taxpayer. Itís a case thatís the stuff of politicians in our state. The plaintiff sought the names, home towns and license plate numbers for all 1-, 2-, 3- and 4-digit license plates issued by the Division of Motor Vehicles during a certain period of time. The publicís interest in low-digit vehicle plates continues to baffle the author. Tales are legend about negotiations between the director of the Division of Motor Vehicles and the Governorís Office and between the Governorís Office and individuals about the right to a particular low-number license plate. Some citizens maintain that such plates are inheritable and others say it's one of the few perks that a New Hampshire governor has to dispense.
Acting as a citizen, the plaintiffís purported reason for his request was to determine whether or not the governor was violating the Constitution by giving out low-digit license plates to campaign contributors (which is against the law) and whether certain individuals are being treated differently than ordinary citizens, contrary to law. He also asserted that he needed the information for testimony that he intended to give before the New Hampshire Senate Transportation Committee, which was considering legislation relative to the issuance of low-digit license plates. The superior court granted the plaintiffís petition, finding that his request was for the purpose of legislative research and, as such, was official business for purposes of RSA 260:14, III. The trial court ordered that the State release the information. The State, on appeal, argued that the superior courtís decision was "at odds with the language and the purpose of the Driver Privacy Act (DPA)," and the Supreme Court agreed. The Driver Privacy Act, RSA 260:14, was enacted in New Hampshire 1996 as a result of Congressí 1994 passage of the federal Driverís Privacy Protection Act (DPPA), regulating the authority of state motor vehicle departments to disclose information contained in their records. In a split opinion (the majority was authored by Justice Duggan), the Court held that, although RSA 260:14, III speaks about official business, "the plaintiff was not acting as a governmental official, but as a private citizen, and held that the Senate might obtain information under that statute, but the plaintiff citizen taxpayer could not." The Court then went on to interpret section V of RSA 260:14, which permits disclosure for private use by nongovernmental entities such as the plaintiff, but held that this exception was unavailable to the plaintiff citizen since this exceptionís use is limited to a use for "legitimate business," and that issue had not been squarely addressed by the superior court. The Court remanded that issue for further action by the superior court.
In a special dissent, superior court Judge Lynn, specially assigned under RSA 490:3, contended that
the majority has construed the protective purposes of the New Hampshire Driver Privacy Act (DPA), RSA 260:14, more broadly than the General Court intended, and that this error had led the majority to impose a judicial gloss on section III of the DPA that is at odds with both the plain language of the statute and its legislative history.
This is a highly charged political issue, as shown by the issuance of the 14-page advance sheet opinion. The lengthy opinion in the case illustrates the political potency of this issue. The author believes that a high-digit vehicle license plate number is desirable, since it guarantees at least some anonymity. However, it clearly appears that the author is in a minority.
Notwithstanding his feelings, however, the author has from time to time toyed with the idea of burnishing his image of derring-do (and his new Sean Connery look?) by obtaining license plate number 007. Ruefully, however, the author has been bluntly told that the image of a 007 plate on the authorís Toyota automobile hardly brings to mind visions of James Bond in his Aston Martin dream machine. Is there a disconnect here?
The author previously represented a party to the action and, therefore, the authorís views may be colored.
The author was one such.
The authorís firm represented a party to the action and, therefore, the authorís views may be colored. Additionally, the author testified in support of the 1996 legislation.
Charles A. DeGrandpre is a director and treasurer in the firm of McLane, Graf, Raulerson & Middleton, P.A., Portsmouth, New Hampshire.