Estate of McCarthy v. United States

This is a suit by executors of a decedent’s estate for refund of federal estate taxes. Neil D. McCarthy is a one-quarter residuary legatee who seeks to intervene as a plaintiff (apparently in order to monitor the executors’ pursuit of the litigation). Trial Judge Bernhardt has allowed this intervention on the ground that he is compelled to do so by the wording of our Rule 65(a)(2), even though plaintiff estate could be adequately represented without Mr. McCarthy’s participation and Mr. McCarthy’s interest as residuary legatee would be fully protected by plaintiff co-executors. Defendent seeks interlocutory review of this order. We grant such review as forecast in our order of February 24, 1981, 226 Ct. Cl. 705 in No. 406-79T,1 and *755now consider the matter on its merits. Defendant and plaintiffs ask; us to reverse the trial judge. Mr. McCarthy supports his action.

Rule 65(a), on intervention, provides:

Upon timely application, anyone may be permitted by the court (or the trial judge) to intervene in an action (1) when the representation of the applicant’s interest by existing parties is or may be inadequate and the applicant is or may be bound by a judgment in the action, or (2) where the applicant has a pecuniary interest in the subject matter of the main action.

The trial judge did not consider Rule 65(a)(1) applicable (he did not find that the executors’ representation of Mr. McCarthy’s interest would or might be inadequate), but he felt forced to allow the intervention by the language of subsection (2). In his opinion, Mr. McCarthy had a "pecuniary interest in the subject matter” of this tax refund action because as one of the residuary legatees the applicant’s ultimate share could very well be affected by the outcome of this litigation.2 We disagree with this analysis for the following reasons.

Under the law of California — Mr. McCarthy’s domicile and the locus of the administration of plaintiff estate — as a legatee or heir Mr. McCarthy, "in the absence of special circumstances,” had no right to bring a suit to recover for, or affecting, this decedent’s estate. See Hollan v. McCarthy, 177 Cal. 507, 510 (1918); Klopstock v. Superior Court, 17 Cal. 2d 13, 17-19, 108 P.2d 906 (1941); Bohn v. Smith, 252 Cal. App.2d 678 (1967); 24 Cal. Jur. 3d, Decedent’s Estates § 49, at 111 (Supp. 1980). Here, the applicant has shown no "special circumstances,” none has been found by the trial judge, and we can discern none. Under California law, *756therefore, the would-be intervenor has no right to maintain this suit. It follows that under Rule 61(b) ("capacity to sue or to be sued”), which looks to the law of the domicile to determine capacity to sue, he has no capacity to maintain this action as an intervening plaintiff.

In these circumstances we think applicant is likewise not "anyone” with a "pecuniary interest in the subject matter” of this tax refund suit within the meaning of Rule 65(a)(2). A person without capacity to bring the particular suit does not normally have a sufficient "pecuniary interest” to intervene in the role of a plaintiff in that suit — as Mr. McCarthy seeks to do. Otherwise, Rules 61(b) and 65(a)(2) would tend to be conflicting and at odds with one another.3 There is no reason to depart from this principle in this instance. The applicant’s position is no better than that of a creditor of a suing plaintiff who is sure that the plaintiffs recovery will lead to the creditor’s being paid, or of a stockholder of a suing corporation who is convinced that recovery will increase the value of his stock or permit dividends to be paid. We are certain that Rule 65(a)(2) does not require, or by itself allow, intervention by such a creditor or stockholder. Mr. McCarthy deserves no more preferable treatment, and Rule 65(a)(2) does not compel it.

Accordingly, the trial judge’s order of April 14, 1981, allowing Mr. McCarthy to intervene, is reversed and the application to intervene is denied.

IT IS SO ORDERED.

Would-be intervenor’s motion for rehearing was denied July 10, 1981.