Riverside Healthcare Association, Inc. v. Forbes

Summary

The Supreme Court of Virginia held that condemnation compensation received by a trust was properly allocated to income because the trust terms defined net income to include proceeds from the trust property, superseding the Uniform Principal and Income Act's default allocation to principal. The court also held that the remainder beneficiary adequately stated a claim for an equitable accounting under Virginia Code § 8.01-31. The judgment was affirmed in part, reversed in part, and remanded.

Holdings

1. The trust's provision defining net income to include any proceeds from the trust property allocated the condemnation compensation to income. Because the trust terms supplied a different allocation rule, the Uniform Principal and Income Act's default rule allocating eminent-domain proceeds to principal did not apply.
2. Riverside sufficiently stated a claim for an equitable accounting under Code § 8.01-31 by alleging that the fiduciary failed to pay required property taxes and storm-water fees, resulting in an overstatement of net income and receipt of more than the fiduciary's just share.

Questions Presented

1. Whether the trust terms allocated eminent-domain compensation to income despite the Uniform Principal and Income Act's default rule allocating proceeds of property taken by eminent domain to principal.
2. Whether Riverside stated a claim for an equitable accounting under Code § 8.01-31.
3. Whether the circuit court improperly considered an accounting that was not attached to or incorporated into the pleading when ruling on the demurrer.

Disposition

reversed_and_remanded