Bank Employee Gets To Keep Surprise Gift Left To Him In Former Customer’s Will

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Imagine being a bank employee and learning that, unbeknownst to you, a customer you helped left you $11,000 in his will, only to then learn that you may not be allowed to accept it because of a bank policy prohibiting you from accepting gifts in excess of $100. That is the scenario defendant faced in I/M/O the Estate of Anthony Paruta. Although probably not a common occurrence, the decision is nonetheless interesting and a reminder that New Jersey courts will generally enforce the terms of a will as written, absent any evidence of undue influence, incapacity, etc.

In Paruta, decedent had no immediate family members. When he died, he made bequests to a cousin, four charities, several individuals, and two Valley National Bank employees. The bank’s Code of Conduct and Ethics prohibited employees from accepting gifts in excess of $100. The bequests to the employees were for approximately $11,000 each. One of the employees “denounced the bequest as unethical, comporting with a letter opinion from Valley, because she was still an employee” of the bank. But defendant was no longer an employee of the bank, having left a few months before the will was probated, so she “chose not to renounce the bequest, claiming [the bank’s] Code no longer applied to her.”

The executor of the estate sued, seeking to “dishonor the bequest” to defendant. The trial court originally ruled in the executor’s favor, holding that “as a matter of public policy, the federal regulations have cast a very wide net and prohibit bank employees from accepting gifts from their customers.” The trial court saw defendant as “falling into the same category” as the other bank employee who renounced her bequest. The trial court noted the “mischief that would be created if a bank employee could simply resign her employment upon learning that there [was] a bequest,” holding that this would “circumvent the entire statutory and regulatory scheme.”

The federal regulations the trial court referenced prohibit bank employees from “corruptly solicit[ing] or demand[ing] for the benefit of any person, or corruptly accept[ing] or agree[ing] to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business or transaction” in relation to procuring loans. They were designed to assist banks in creating anti-bribery policies aimed at “proscrib[ing] corrupt activity within financial institutions.”

After receiving the trial court’s decision, defendant moved for reconsideration. She clarified that she had no role in approving loans for decedent or otherwise influencing the bank to “do (or not do) anything” for him. The things she did do — advising decedent to cancel a second insurance policy because he was “paying a high cost for little benefit,” and assisting him with his banking because “he did not comprehend it and could not write checks” — were within her duties as a bank employee. Defendant also clarified that she was not aware of the bequest from decedent until after she left Valley National.

The trial court granted defendant’s motion and reversed itself. The trial court held that there was nothing in the record that: contradicted defendant’s claim that she did not know the gift was in the will; suggested that defendant left her job at the bank to avoid any potential issues with the bequest; or suggested “any kind of corruption, bribery, or fraud that would taint the bequest.”

The executor and the State appealed. (The State represented the charities named in the will.)

The Appellate Division affirmed the trial court. It first held that the trial court was within its discretion to reconsider its initial decision after defendant provided additional information — or, at least, clarity — about the underlying events that showed there was no corruption, bribery, or fraud. The Appellate Division also affirmed the trial court’s decision on the merits. It observed that: (1) there was nothing about the size of the bequest — which was approximately 1/11th of the residuary estate — that suggested decedent was “overborne by undue influence” from defendant; and (2) defendant resigned from the bank before she even knew about the bequest, thus “negating any ‘mischief'” the trial judge may have contemplated when he rendered his initial decision. Thus, the Appellate Division saw “no reason to depart from our longstanding jurisprudence of enforcing testamentary dispositions by citizens of our State . . . as they deem fit.”

The Appellate Division also resolved another interesting, albeit admittedly wonkish, issue in Paruta. The executor’s counsel retired after filing his opposition to the motion for reconsideration. Thus, when it came time for oral argument on the motion, the executor appeared pro se. The attorney general argued that this was improper because, under New Jersey law, “an entity, however formed for whatever purpose” cannot appear in any New Jersey court “except through an attorney authorized to practice in this State.” The Appellate Division rejected this argument, holding that “[a]n estate is not a legal or business entity,” and that, even if this were not the case, “an attorney hired to represent an estate [generally] represents the executor or executrix as a fiduciary and not the estate as an entity.” Therefore, it was appropriate for the trial court to allow the executor to appear and argue the motion without counsel.

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