A recent decision of the Kings County Surrogate’s Court[1] demonstrates the importance of thoroughly analyzing all aspects of a statute of limitations defense prior to making a dismissal motion.  In Matter of Coiro, 5/6/2016 NYLJ p.23, col. 2, the court denied such a motion, determining that an SCPA § 2104 turnover proceeding was timely.  Notably, the parties disputed both the applicable limitations period and the date of the claim’s accrual.  Side-stepping both those issues, the court determined that a statutory toll rendered the claim timely in any event.

Determining whether a claim has been timely asserted requires analysis of at least three factors – the applicable limitations period, the date of the claim’s accrual, and whether any toll applies.  (I say “at least” three factors because, in an appropriate case, a court may determine other matter – such as whether a defendant/respondent is equitably estopped from asserting the statute of limitations, where specific actions by the defendant/respondent “somehow kept [the plaintiff] from timely bringing suit” [see Zumpano v Quinn, 6 NY3d 666, 674 (2006)].) Coiro involved all three factors.

Janet Coiro died on January 16, 2012. Some 19 months later, one of her daughters, the executor nominated in her last will and testament, offered the will for probate, receiving letters testamentary on December 18, 2013.  On June 12, 2015, more than three years after the decedent’s death, the executor brought a turnover proceeding pursuant to SCPA § 2104,[2] alleging that on the day after the decedent died, January 17, 2012, the respondent (the decedent’s son) submitted a power of attorney to the bank at which the decedent maintained several accounts, adding his name to those accounts.  Allegedly, respondent also deposited a matured Treasury bill (of which the executor claimed to be the beneficiary) into one of the accounts, and later withdrew or transferred all the funds from the accounts.  Respondent moved to dismiss the proceeding as time-barred.

The parties disputed the applicable limitations period. Respondent argued that the three-year period applicable to conversion claims governed, while the executor argued that respondent’s action in improperly adding his name to the decedent’s bank accounts after her death warranted application of the six-year limitations period applicable to fraud-based claims.

Petitioner also argued, alternatively, that even if the three-year “conversion” limitations period applied, the claim accrued not on the date on which the respondent added his name to the bank accounts, but on the date he transferred the balances thereof, to wit, May 17, 2013, and thus the proceeding was timely in any event.

While noting that discovery and turnover proceedings are usually subject to the three-year statute of limitations applicable to actions in replevin and conversion, i.e., CPLR 214(3), the court further noted that it was not required to decide whether that period or a six-year period applied.  It also noted that it was not required to decide the date of accrual of the claim.  The court determined that the proceeding was timely in any event, by reason of the toll provided in CPLR § 210(c).

Section 210(c) provides that “[i]n an action by an executor or administrator to recover personal property wrongfully taken after the death [of a decedent] and before the issuance of letters,  . . . the time within which the action must be commenced shall be computed from the time the letters are issued or from three years after the death, whichever event first occurs.”

The court determined that the limitations period applicable to the claim asserted in the proceeding was tolled until December 18, 2013 (the earlier of the date of issuance of letters or three years from the date of death). The executor commenced the proceeding on June 12, 2015, less than three years after the end of the toll.  Thus, even applying the shorter, three-year limitations period, the proceeding was timely.

When performing a statute of limitations analysis, care must be taken to determine whether a toll is applicable. Aside from the toll provided in CPLR 210(c), a practitioner should consider whether any other toll applies.  Such tolls might include the “insanity” toll provided in CPLR § 208, or the “fiduciary toll” applied in cases such as 212 Inv. Corp. v Kaplan, 44 AD3d 332 (1st Dept 2007).  Continuing undue influence or duress can also operate to toll a limitations period (see Pacchiana v Pacchiana, 94 AD2d 721 [2d Dept 1983]).

[1] The version of this decision that appears on lexis.com erroneously refers to this decision as emanating from the New York County Surrogate’s Court.

[2] The Court’s decision states that the proceeding was brought pursuant to section 2104; it was likely brought pursuant to section 2103.

In a decision that could well cause even the most casual trusts and estates practitioners to scratch their proverbial heads in wonder, the Appellate Division, Third Department, in Matter of Buchting, 111 AD3d 1114, 975 NYS2d 794 (3d Dept 2013), recently affirmed the determination of the Surrogate’s Court, Greene County, dismissing a “due execution” objection to probate, notwithstanding that both attesting witnesses invoked their Fifth Amendment rights against self-incrimination and refused to testify at their SCPA 1404 examination concerning the execution of the will, and notwithstanding that the Surrogate determined that summary judgment was improper because of “conflicts in the evidence.”

The petitioner in Buchting was the surviving spouse of decedent, who offered his will for probate shortly after his death.  The respondents were the decedent’s surviving children from a previous marriage. The attorney draftsman of the will (also the attorney who supervised its execution) testified at his SCPA 1404 examination in detail concerning the due execution of the will.  The two attesting witnesses were also called, but upon taking the stand, refused to testify, invoking their Fifth Amendment rights against self-incrimination.

The respondents objected to probate on the grounds of lack of due execution, lack of testamentary capacity, and undue influence.  They moved to dismiss the petition based upon the petitioner’s failure to establish due execution.  The petitioner cross-moved for summary judgment admitting the will to probate.  It appears from the Appellate Division’s decision that the Surrogate denied both motions, determining that summary judgment was improper because of “conflicts in the evidence,” but nevertheless dismissed the respondents’ objections and admitted the will to probate.

On appeal, the Appellate Division first concluded that the Surrogate properly denied the respondents’ motion to dismiss the petition because the petitioner complied with the requirement, imposed by SCPA 1404(1), that she produce the attesting witnesses for examination.  The court rejected the respondents’ argument that an attesting witness who invokes the privilege against self-incrimination and refuses to testify has not been “examined” within the meaning of section 1404.  It relied upon its prior decision in Matter of Hutchinson, 13 AD3d 704 (3d Dept 2004), in which it held that an attesting witness’ invocation of the Fifth Amendment “is akin to a failure to recall the events surrounding a will’s execution” (see id.).  It further noted that a will may be admitted to probate even where no attesting witness recalls it execution.  While the law requires the examination of at least one attesting witness, it imposes no requirements upon the substance of the testimony.

The issue, according to the court, “thus distills to whether there was sufficient other evidence to establish a prima facie case of due execution, and we find that there was.”  In this regard, the court relied exclusively on the testimony of the attorney draftsman and the presumption of due execution that resulted from the attorney’s supervision of the will’s execution.  The court determined that, in light of this presumption, the respondents had the burden to come forward with evidence contradicting the testimony of the supervising attorney.  It further determined that the respondents failed to meet their burden, notwithstanding that they “challenge[d] the veracity of the supervising attorney and argue[d], based upon various minor irregularities in the documents that she drafted, that she was unfamiliar with the necessary procedure. . . .”  Thus, according to the Appellate Division, the Surrogate properly denied the respondent’s motion to dismiss the petition and dismissed the due execution objection. 

Notably, the court stated that “to preclude the probate of a will as a matter of law because both attesting witnesses refuse to testify on constitutional grounds would come perilously close to drawing a prohibited inference from the invocation of the privilege by nonparties” (id.).

The court held that the Surrogate erred, however, in dismissing the remaining objections, grounded in testamentary capacity and undue influence, particularly prior to discovery.

A few thoughts on the Buchting decision. 

First, it seems fundamentally unfair to saddle an objectant with the burden to come forward with evidence to rebut a supervising attorney’s testimony concerning the due execution of a will in order to survive summary judgment where both attesting witnesses — likely the only other persons in the room with the decedent – refuse to testify for fear of self-incrimination.  It is difficult to imagine how an objectant could ever meet that burden.  Forgive me for stating the obvious, but it seems plain that the mere fact that both attesting witnesses have invoked the Fifth Amendment in order to avoid testifying concerning a will’s execution should itself be sufficient to justify further proceedings before admitting the will to probate.  The decision in Buchting essentially ignores that a court is obligated by statute to “inquire particularly into all the facts” in order to satisfy itself “with the genuineness of the will and the validity of its execution” (SCPA 1408).

Second, the court’s decision is grounded in its determination that a witness who has refused to testify concerning the execution of a will for fear of self-incrimination is “akin” to a witness who fails to recall the execution.  However, the decision reveals no substantial authority for that comparison.  The Buchting court cites only Hutchinson as authority — but this is a chain without an anchor, as the Hutchinson court cites no authority (see 13 AD3d at 707 [“In our view, the submission of conflicting affidavits followed by a refusal to testify falls more closely in line with a witness who has ‘forgotten the occurrence’”]).  Another statement of the obvious — failing to recall a will’s execution and refusing to testify concerning the execution for fear of self-incrimination are very different things. 

Third, in order to conclude that the petitioner satisfied SCPA 1405(3) – which requires, as a condition for probate, the “examination” of at least one attesting witness – the court essentially determined that a witness who invokes the privilege against self-incrimination and refuses to testify has nevertheless been “examined.”  However, this seems to be in conflict with the Court of Appeals’ statement in Matter of Collins that, historically, the requirement that a witness be “examined” was “fulfilled when the witnesses took the stand and related what they knew of the circumstances” (60 NY2d 466, 471 n.3 [1983]).  Collins provides no authority for the proposition that a witness who refuses to testify altogether has nevertheless been “examined.”   

Fourth, even assuming a non-testifying witness could be deemed to be “examined” within the ambit of section 1405(3), that section requires actual testimony before a will may be admitted to probate.  It provides that where an attesting witness “has forgotten the occurrence or testifies against the execution of the will” the will may nevertheless be admitted to probate “on the testimony of the other witness and such other facts as would be sufficient to prove the will.”  But where the “other witness” invokes the Fifth Amendment, there is no testimony upon which to admit the will to probate.

Fifth, the court’s determination could well put a petitioner whose witnesses refuse to testify for fear of self-incrimination in a better position that a petitioner whose witnesses actually testify against the will.  A grant of summary judgment admitting a will to probate may be inappropriate where one attesting witness testifies against the will, even where the other witness and the supervising attorney testify favorably (see generally Matter of Jacinto, 172 AD2d 664 [2d Dept 1991]).  Why should the result be different where a witness – indeed, where both witnesses – refuses to testify concerning the execution of the will for fear of self-incrimination? 

Sixth, the presumption of regularity should not permit a court to turn a blind eye to facts calling into question a will’s validity.  A court should not employ a presumption where to do so would “elevate a legal construct above common sense” (People v Giordano, 87 NY2d 441 [1995]).  Even the presumption of legitimacy, “one of the strongest and most persuasive known to the law,” will fail if, in the words of Judge Cardozo, “common sense and reason are outraged by a holding that it abides” (Matter of Findlay, 253 NY 1 [1930]).  Depriving an objectant of a trial on the basis of the presumption of regularity, where both attesting witnesses refuse to testify concerning the execution of the will for fear of self-incrimination, offends both common sense and reason.

Of course, courts should resist the “temptation to overlook or ignore fixed legal principles when they are opposed to persuasive equities” because, as the ancient legal proverb teaches, “hard cases make bad law” (Dodd v Anderson, 197 NY 466, 469 [1910]).  However, “it might also be safely said that the occasional easy case makes law that is even worse” (People v Ramos, 40 NY2d 610, 628 [1976] [Jasen, dissenting]).  By placing undue reliance upon the presumption of regularity in order to deprive an objectant of a trial, in the face of facts calling into question the validity of the will, the court in Buchting made the case too easy, and established a troubling precedent.

My most recent blog post, titled No Sex, No Elective Share?, discussed a recent case involving allegations of constructive abandonment as a basis for disqualifying a surviving spouse from receiving an elective share. In that post, I also discussed, briefly, actual abandonment as a basis for disqualification. Unlike constructive abandonment, actual abandonment requires proof that the surviving spouse lived apart from the decedent, without consent.

In early January, the Appellate Division, Third Department, decided Matter of Yengle, 2014 NY Slip Op 00156 (3d Dept, Jan. 9, 2014). In that case, the decedent’s sister sought to disqualify the respondent as the decedent’s surviving spouse, and to remove her as administrator of the decedent’s estate, on the ground that she had abandoned the decedent. The Appellate Division determined that the Surrogate’s Court improperly granted the respondent’s motion for summary judgment dismissing the petition.


It appears to have been undisputed that the decedent and the respondent, although legally married, lived separately for about a decade. The respondent, according to the Appellate Division, made out a prima facie case for summary judgment by offering proof that that she and decedent resided together for some time following their marriage, during which the decedent drank heavily and abused her, physically and mentally, occasionally requiring police intervention; the decedent would leave their home for periods of time and the respondent ultimately suggested that they live separately; following their separation, the decedent and the respondent mostly communicated by telephone every couple of months and saw each other occasionally; and the decedent was aware that the respondent had two affairs during their marriage, and was not angry. This evidence, according to the Court, was sufficient to meet the respondent’s threshold burden on her summary judgment motion, thus shifting the burden to the petitioner to demonstrate the existence of a question of fact for trial.

 

The Appellate Division determined that the petitioner did, indeed, raise an issue of fact for trial. The petitioner’s testimony casted doubt onto respondent’s allegations concerning the decedent’s alcoholism and her allegations of abuse. The court noted that the respondent never pursued criminal charges against the decedent, initiated a family offense proceeding, or otherwise sought an order of protection against the decedent as a result of the alleged abuse.  The petitioner further testified that she knew, based upon her conversations with the decedent and her observations of his emotional distress, that he wanted to be with the respondent and would not have consented to her living apart from him.  The record also contained cards that the decedent gave to the respondent, in which he expressed his love for her. Finally, the respondent testified that the decedent had asked her to return to him, but she allegedly refused to do so because of his alcohol abuse. This evidence, according to the Appellate Division, raised a triable issue of fact concerning the decedent’s consent to the respondent’s absence. (Notably, much of this evidence would be potentially excludable at trial, pursuant to the Dead Man’s Statute (CPLR 4519), but nonetheless could be considered on a motion for summary judgment.)

 

As the Appellate Division noted in its decision, quoting authority, “[t]he question of abandonment is one of fact, and often a close one.” Summary judgment in such a case will rarely be appropriate. The party claiming abandonment ultimately bears the burden of proof, and that burden is a heavy one. Evidentiary hurdles, moreover, may prove insurmountable. 

A recent decision emanating from the Surrogate’s Court, Kings County, Matter of Nichols, N.Y.L.J., Nov. 15, 2013, p.40, addresses the rarely litigated issue of constructive abandonment (i.e., a spouse’s unjustified refusal to engage in sexual relations) as a basis for disqualifying a surviving spouse from receiving an elective share. This case teaches that a claim of constructive abandonment must be supported by more than hearsay testimony in the record that the decedent told his grandson, on a single occasion, that “the dingbat hasn’t given me any in years.”

Perhaps because of the difficulties in proving — post-mortem — a decedent’s sexual activity, disqualification cases grounded in allegations of constructive abandonment are few and far between (see, e.g., Matter of Reisman, N.Y.L.J., Feb. 8, 2000, p.33, col. 3 [Sur Ct, Nassau County 2000]). Constructive abandonment is most often alleged as a grounds for separation or divorce, in the context of matrimonial law. The disqualification statute — EPTL § 5-1.2 — provides for the disqualification of a surviving spouse if “[t]he spouse abandoned the deceased spouse, and such abandonment continued until the time of death”; the statute contains no definition of “abandonment.” In determining whether a spouse is disqualified, courts generally employ the standard used to determine if a party would be entitled to a decree of separation or divorce on the grounds of abandonment under the Domestic Relations Law (see, e.g., Matter of Hama, 39 Misc 3d 429, 435 [Sur Ct, New York County 2012]).

 

Unlike actual abandonment, which requires proof that the surviving spouse lived apart from the decedent, without consent, constructive abandonment requires no physical separateness. Constructive abandonment is routinely defined as the refusal of one spouse to engage in sexual relations with the other spouse for one or more years, when such refusal is unjustified, willful, and continual, and despite repeated requests for the resumption of sexual relations (see Davis v Davis, 71 AD3d 13 [2d Dept 2009]; Gianis v Gianis, 67 AD3d 963 [2d Dept 2009]). A third type of abandonment, abandonment by lock out, “occurs when one spouse changes the lock on the entrance door of the marital abode, or the place where he or she is living, thus effectively excluding the other spouse, unless the act is justified” (Soldinger v Soldinger, 21 AD3d 469, 470 [2d Dept 2005]).

 

Matter of Nichols involved allegations of all three types of abandonment. The decedent was survived by his spouse, Edlyn, and two adult children of a prior marriage. Edlyn filed a notice of election with the Court, followed by a petition to determine the validity and effect of her election. She alleged that the decedent had made no provision for her, and that at the time of his death the decedent held certain real and personal property, including real property, jointly with his children. The children objected to the petition, alleging disqualification on the grounds, inter alia, of abandonment, constructive abandonment, and abandonment by lock out. The parties could not resolve the matter informally and Edlyn ultimately moved for summary judgment seeking dismissal of the objections and determining the validity of her right of election.

 

While there were differences in their testimony, both children, and the decedent’s grandson, testified that the decedent and Edlyn lived separate and apart from each other, the decedent sleeping in a hospital bed on the first floor of the real property, and Edlyn living with her adult disabled daughter in a separate, locked residence on the second floor of the property. 

 

However, fatal to the children’s abandonment claim, according to the Court, was the absence of evidence that the separation within the property was without justification or without the decedent’s consent. The Court credited the children’s own testimony regarding the impact of the decedent’s failing health on his mobility.

 

The Court likewise disposed of the claim of abandonment by lock out, finding an absence of evidence that the decedent could not enter Edlyn’s locked living quarters when access was required.

 

Addressing the children’s claim of constructive abandonment, the Court noted that such exists when “the abandoning spouse unjustifiably refused to fulfill the basic obligations arising from the marriage contract and that the abandonment continues for at least one year” (id.,quoting Lyons v Lyons, 187 AD2d 415, 416 [2d Dept 1992]). The “refusal must be unjustified, willful, and continued despite repeated requests for continued conjugal relations” (id.). 

 

To establish that Edlyn denied the decedent his conjugal rights in the final years of his life, the children relied solely on the testimony of the decedent’s grandson, Donnell, that, on a single occasion, the decedent told him that “the dingbat hasn’t given me any in years.” The children conceded they never discussed with the decedent his sexual relationship with Edlyn. (Although, as the Court noted in a footnote, one child testified “that the decedent slept alone, on the first floor, in a twin-sized hospital bed, and[opine[d] that it was spacious enough for two people to share, implying that [Edlyn] would have been able to sleep in the hospital bed with the decedent if she so desired.”) 

 

The Court determined that the “evidence” was insufficient to raise a triable issue of fact regarding constructive abandonment, noting that “[t]he respondents rely on a single statement by the decedent to a third party, on some unspecified date, that the movant and the decedent had not engaged in marital relations for an unknown period of time.” Quoting Lyons, an Appellate Division matrimonial case, the Court noted that, “[p]roof that one spouse, in response to a single request, refused to engage in sexual relations, in the absence of proof that the other spouse thereafter repeatedly and unsuccessfully requested a resumption of sexual relations, is insufficient” to warrant a finding of constructive abandonment. The Court noted that the children offered no evidence that the decedent ever requested that Edlyn resume marital relations, even assuming such relations had ceased, or that she refused any such request.

It is likely that “constructive abandonment” spousal disqualification cases will continue to be a rare breed. While determining such cases will almost always involve disputed factual issues, a court will require the party seeking disqualification – the party with the burden of proof – to offer substantial evidence in order to proceed. Parties seeking to disqualify a surviving spouse should be mindful that, as the Nichols court noted, the “statutes granting to a spouse a right of election are remedial and should be construed in the interest of the surviving spouse to give . . . her the broadest possible protection” (quoting Matter of Bartley, 83 Misc 2d 672, 679 [Sur Ct, Cattaraugus County 1975]).

 

 

A recent post to this blog discussed a case in which a court declined to remove a fiduciary based on allegations of a potential conflict of interest, but in the absence of actual misconduct on the part of the fiduciary. While it is certainly rare for a court to remove a fiduciary in the absence of actual misconduct, it is still rarer for a court to do so on its own initiative, i.e., sua sponte. But that is precisely what happened in Matter of Young decided earlier this year by Nassau County Surrogate Edward W. McCarty III.

 

The decedent, Joseph Young, was an acclaimed lyricist of the early 20th Century, having written such classic songs as “I’m Gonna Sit Right Down and Write Myself a Letter,” “Dinah,” and “I’m Sitting on Top of the World.” He died in 1939, intestate, survived by his wife, Ruth Young, and his father, Samuel Young.  Pursuant to the law of intestacy applicable at the time, Ruth and Samuel were the decedent’s only distributees.  Ruth was appointed administrator of the decedent’s estate in 1939 (and she died in 1973).

 

Fast forward 70 years. 

 

In 2009, Nicholas Al Young, allegedly the Decedent’s grandnephew, petitioned the court for letters of administration de bonis non.   (An administrator de bonis non or “d.b.n.” is a successor administrator appointed to administer estate property not yet administered.) Nicholas’s petition alleged that the decedent was not survived by either a spouse or a parent, and that his distributees included 22 nephews/nieces and great-nephews/great-nieces.  He alleged that the value of the assets in need of administration was $9,000. The Court issued letters to Nicholas.

 

In 2012, Rytvoc Inc. and Warock Corporation — the alleged owners of copyrights in various musical compositions written by the Decedent — commenced a proceeding to revoke Nicholas’s letters.  (In the interest of full disclosure, Farrell Fritz represented Rytvoc and Warock in the proceeding.) Rytvoc and Warock alleged that Nicholas, armed with his letters of administration, was wrongfully interfering with their ownership of the copyrights by attempting to enforce termination rights allegedly available under Federal law.  They sought his removal pursuant to SCPA § 711(4), which provides for the revocation of letters obtained “by a false suggestion of a material fact.” Specifically, they alleged that Nicholas was ineligible for letters; that he obtained them only by virtue of his misrepresentation that the decedent was not survived by a spouse or a parent; that the individuals identified in the petition were not the decedent’s distributees; and, finally, that no administrator was necessary in any event, because the estate had no rights in the compositions for a fiduciary to exercise.

 

Nicholas moved to dismiss Rytvoc and Warock’s petition for lack of standing.  He argued that SCPA § 711, which governs removal proceedings, confers standing only on “a co-fiduciary, creditor, person interested, any person on behalf of an infant or any surety on a bond of a fiduciary.” Rytvoc and Warock, Nicholas argued, were only “adverse parties in possible future litigation over the ownership of copyrights.” Rytvoc and Warock argued that, in fact, they were creditors of the estate, having filed a claim for damages resulting from Nicholas’s alleged wrongful interference with their intellectual property rights. The Court rejected that argument, however, and dismissed the petition for lack of standing.

 

But the song continues.

 

Rytvoc and Warock argued, alternatively, that the issue of standing was a “red herring” because the Court had the authority pursuant to SCPA § 719, and the inherent authority, to revoke Nicholas’s letters. Section 719 provides, in relevant part, that a court may revoke, suspend, or modify letters it issued; it may do so sua sponte, without a petition or the issuance of citation, in certain circumstances, including when any facts provided in SCPA § 711 are brought to its attention. As previously noted, section 711(4), provides for the revocation of letters obtained “by a false suggestion of a material fact.”

 

The Court began its analysis by reviewing the law governing revocation of  letters obtained through misrepresentations, noting that a fiduciary’s removal is appropriate even where the alleged misrepresentation was made inadvertently and without an intent to defraud the court. It concluded, therefore, that “ it is not necessary for the court to ascertain whether Nicholas made the error in bad faith.” (Although it noted that “it appears from the court file that Nicholas did not attempt to deceive the court as to the fact that Ruth Young survived the decedent. Nicholas provided the court with numerous documents evidencing Ruth’s date of death.”)

 

The Court then reviewed the statutory framework governing letters of administration d.b.n., to determine whether Nicholas was eligible for letters. It explained in this regard that SCPA§ 1001 (made applicable to administrators d.b.n. by section 1007) requires that letters be issued to the distributees of an intestate decedent, or, if deceased, to their fiduciaries, or to any eligible “person who is not a distributee upon the acknowledged and filed consents of all eligible distributees, or if there are no eligible distributees, then on the consent of all distributees” (SCPA § 1001[6]).  It also explained that, pursuant to SCPA § 1001(8), where letters are not granted as set forth above, they are properly granted in the following order to: (a) the public administrator, (b) the petitioner, in the court’s discretion, or (c) to any other person or persons. 

 

The Court stated that it “has an obligation to make sure that the proper person is administering the estate.”  It concluded that “[i]t is unclear whether the proper person is administering this estate.” The Court also expressed its concern regarding the petition’s allegation that the value of the Decedent’s assets in need of administration was only $9,000, stating that “[t]he court is concerned that this figure is underestimated as it appears the decedent was a successful songwriter whose estate consisted of royalty interests which may be of a greater value than indicated given the possible copyright battle.”

 

The Court revoked Nicholas’s letters “[b]ased upon such concerns and due to the misstatement in Nicholas’ petition. . . .” It issued letters of temporary administration to the Public Administrator, directing that it “attempt to identify the fiduciaries of Ruth Young’s estate and Samuel Young’s estate who have a prior right to letters of administration de bonis non and to ascertain the value of the assets in need of administration.”

 

The moral of the story is that those seeking appointment as fiduciaries must take great care to ensure the accuracy of the allegations of their petition. A mistake, even one alleged to be innocent, could prove costly.

 

            The term “adopted-out” child, commonly used by the courts, refers to a child adopted out of his or her biological family, i.e., a child placed for adoption by his or her biological family. A detailed discussion of the inheritance rights of adopted-out children is available here. Recently, in a case of first impression, Matter of Svenningsen, the Appellate Division, Second Department, addressed the inheritance rights of a child adopted by the decedent (prior to his death, of course) and his spouse, but subsequently re-adopted out to another family eight years after the decedent’s death.

 

The child, Emily, was born in China on July 7, 1995. The decedent, John Svenningsen, and his wife, Christine, formally adopted Emily in 1996. They entered into a Chinese adoption agreement in which they guaranteed that they would deem Emily to be their biological child; that they would not transfer or have her re-adopted; and that Emily had a right to inherit from their estates. 

 

The decedent died on May 28, 1997, survived by Christine, five biological children, and Emily. He left a Last Will and Testament dated March 17, 1997 (which was admitted to probate in July of that year), as well as two irrevocable inter vivos trusts for his children, dated July 20, 1995, and October 29, 1996. 

 

In the 1995 trust, created prior to Emily’s adoption, the decedent directed the division of the trust assets equally among his children, when the oldest child reached the age of 30.  The trust defined the term “children” to include the decedent’s four living children (the fifth had not yet been born), identified by name, “and any additional children born to or adopted by [the decedent] after the creation of this Trust.”

 

The 1996 trust established six equal and separate irrevocable trusts, one for each of the decedent’s children.  Each child, including Emily, was expressly named as a beneficiary.  The trust instrument identified Emily as the sole beneficiary of her separate irrevocable trust, denominated as “The Emily Fuqui Svenningsen Trust.”

 

The decedent’s Will created two testamentary trusts – a credit shelter trust and a marital trust. The credit shelter trust was for the benefit of the decedent’s “then living issue, per stirpes. . . .” The marital trust was to be funded upon Christine’s death for the benefit of the decedent’s “then living issue, per stirpes. . . .” The Will defined the term “issue” as including “children who have been legally adopted at the date of my death as well as children with respect to whom legal adoption proceedings had been commenced prior to the date of my death though not completed at the time of my death.” 

 

In 2003, approximately six years after the decedent’s death, Christine enrolled Emily in a school for children with special educational needs. Christine’s attorneys contacted school administrators, inquiring about putting Emily up for adoption. Ultimately, Maryann Campbell, a school official, and Fred Cass, her husband (for ease of reference, the “Petitioners”), agreed to adopted Emily. Christine terminated her parental rights with respect to Emily in 2004. The re-adoption was consummated in 2006 by court order. When they adopted Emily, the Petitioners were unaware of the provisions of the decedent’s will or trusts, although they were ultimately advised that the decedent had arranged money for Emily’s education and medical needs. 

 

In November, 2007, Christine’s financial advisor requested the Petitioners’ consent to separate Emily’s interest in the decedent’s estate from those of the decedent’s biological children, through the creation of a spray trust. In connection with that request, the advisor provided the Petitioners with a list of estimated values of estate assets, and estimated Emily’s interest in the trusts at $842,397. Ultimately, the Petitioners examined the files of the Westchester County Surrogate’s Court and learned that the decedent’s estate had an estimated value, on the estate tax return, of $250,000,000. The Petitioners commenced proceedings seeking to compel accountings with respect to Christine’s administration of the decedent’s estate, and with respect to the 1995 and 1996 trusts.

 

The respondents in each of the proceedings asserted affirmative defenses based on Emily’s alleged lack of standing. The Petitioners moved for summary judgment compelling the accountings and the respondents cross-moved for summary judgment dismissing the petitions.  Among other things, respondents argued that Emily’s contingent interests in the trusts were extinguished upon adoption.  The Surrogate’s Court, Westchester County, granted the Petitioners’ motion and denied respondents’ cross-motion. The court directed the respondents to account. An appeal ensued.

 

The Second Department affirmed, in a decision authored by Justice Leonard B. Austin.

 

The court began its analysis with a review of the law concerning the inheritance rights of adopted and adopted-out children, including a detailed discussion of Domestic Relations Law § 117 and Estates, Powers and Trusts Law 2-1.3. It then turned to the Court of Appeals’ decision in Matter of Best, 66 NY2d 151 [1985]). At issue in that case was the right of an adopted-out child to inherit from his biological maternal grandmother. The Court held that, absent a contrary indication in the will, an adopted-out child is not entitled to share in a class gift to issue in the will of a biological relative.  The Appellate Division explained that Best “remains relevant for the policy considerations enunciated in support of termination of an adopted-out child’s right of inheritance.”

 

The court summarized the issues before it as “whether the decedent expressly intended to include Emily as a beneficiary under the subject trusts and whether Emily’s interest in those trusts vested prior to her being adopted by the petitioners.” The court answered both those questions in the affirmative.

 

First, as to the decedent’s intent, the court noted that Emily was expressly named in the 1996 trust; and although she is not mentioned specifically by name in the Will or in the 1995 trust, “she is plainly referred to by status in both instruments” — referring to definitions of the  term “issue” in the trust instrument and in the Will. The court rejected respondents’ argument that the court should dismiss as “mere surplusage” the inclusion of adopted children in the definition of “issue.” In sum, the court concluded that

 

Emily’s adoption by the petitioners did not, and was not intended to, terminate her interest in the Marital Trust or the 1995 Trust.  The decedent expressed an intention to include his adopted child in the absence of any reason to believe that his status as the parent of Emily would be terminated by her subsequent adoption many years after his death.  Further, at the time of the decedent’s death, Emily was not an “adopted-out” child but instead was, and remained, his issue, as defined by the Trust instruments, despite the subsequent unforeseeable actions of Christine.

 

Turning to the issue of whether Emily’s rights in the trusts vested prior to her re-adoption, the court concluded that “while the rights of Emily and the other beneficiaries may be inchoate, they are, nevertheless, vested by their inclusion in the trust document.  Thus, Emily’s interests under the decedent’s will and the 1995 Trust fully vested, subject only to the condition of her survival as provided for in the instruments (citation omitted).” 

 

The court further noted that SCPA 2205 permits a “a person interested” to compel an accounting. A “person interested” is defined by SCPA 103(39) as “[a]ny person entitled or allegedly entitled to share as beneficiary in the estate.” The court concluded that Emily was a “person interested” and entitled to an accounting. Therefore, absent a genuine issue of fact requiring a trial, the Surrogate’s Court properly granted summary judgment in the Petitioners’ favor.

 

One thing is clear from the Svenningsen decision. Regardless of how convoluted the facts of a given case, or how complex the law governing its resolution, when it comes to inheritance rights, the courts are guided predominantly by the decedent’s intentions.

Determining the identity of permissible or necessary parties to an accounting proceeding is often a simple task. But in rare cases, the answer is not always so easy. Most recently, in Matter of Cohen, Nassau County Surrogate Edward W. McCarty III was called upon to determine whether a potential creditor of a trust beneficiary was a “person interested” in a trust accounting proceeding. The Court answered the question in the negative.

Michael S. Cohen, died on March 18, 2002. Under the terms of his will (which was admitted to probate), the decedent directed that a trust be created for the benefit of his adopted son, Kevin Cohen (“Cohen”), the decedent’s only child.  The will further directed that the trust terminate ten years after the decedent’s death, i.e., March 18, 2012, and that all remaining principal and income be distributed to Cohen (or, if he did not survive the termination of the trust, his minor daughters).

Cohen, formerly an attorney, was convicted in 2010 of 37 counts (including second-degree grand larceny, 11 counts of third-degree grand larceny and 10 counts of third-degree forgery) for stealing more than $300,000 from clients who thought he was assisting them in arranging adoptions; but the children did not actually exist. A criminal restitution order under Criminal Procedure Law § 420.10 was entered against him. The Lawyers Fund for Client Protection (the “Fund”)  reimbursed 10 of Cohen’s former clients, all of whom assigned and subrogated their claims against Cohen to the Fund.

In January 2011, the trustee filed an intermediate account with the Surrogate’s Court. The trustee named as an interested party the Nassau County Attorney’s Crime Victims Project, which represented Cohen’s former clients in their claims against him. The County Attorney’s Office represented the interests of the former clients before the Lawyers Fund became involved, and it continued to represent one client who did not seek reimbursement from the Fund.

Both the Fund and the Nassau County Attorney filed objections to the account. The Fund, for its part, maintained that it had an interest in the accounting because of open questions on whether particular estate assets (including an annuity) were part of the trust or owned by Cohen separately.

Wendy H. Sheinberg, Esq., the guardian ad litem for Cohen’s two minor children, moved, inter alia, to amend the petition and account to strike the Nassau County Attorney and the Fund as interested parties, and to dismiss their objections to the account.

The Court began its analysis by noting that the statutory definition of “person interested” specifically excludes creditors. Indeed, SCPA § 103(39) provides that “[a] creditor shall not be deemed a person interested.” The Court then reviewed the cases relied upon by the Fund and the County Attorney, determining them to be distinguishable from the case at bar. Instead, the Court relied upon Matter of Lainez, 79 AD2d 78 (2d Dept 1981), in which the Appellate Division, Second Department, held that a creditor of a beneficiary who is still alive is not a proper party to an account in which the beneficiary has an interest.

The Court also rejected the agencies’ argument that affording them “interested person” status “would be a more efficient way for them to uncover information about Cohen’s assets than if they had to use other discovery methods.” However laudable the goal of efficiency, the Court explained, it “does not give rise to a privilege, right, or status which would otherwise be unavailable.”

Accordingly, the Court determined that as mere potential creditors of a living trust beneficiary, the Fund and the Nassau County Attorney were not persons interested in the decedent’s estate or the accounting. It therefore granted to guardian ad litem’s motion.

The Surrogate’s decision does not leave the two agencies without a remedy, however. The Surrogate’s dismissal of the agencies’ objections was explicitly made without prejudice to their commencing a proceeding pursuant to Executive Law §632-a (6) – the so-called “Son of Sam” law – and seeking the issuance of a preliminary injunction restraining the payment of trust principal to Cohen upon the termination of the trust. The Surrogate also directed that no payments from the trust be made to Cohen for 30 days upon its termination (presumably to give the agencies the opportunity to make an application under the Son of Sam law).

In Trotta v. Ollivier, the Appellate Division, Second Department, decided an issue of first impression in any New York State appellate court, to wit, whether the estate of a joint tenant may sue a surviving joint tenant to recover one-half of payments made by the decedent for the purchase and upkeep of property. The court answered this question in the negative.

The facts of the case, as alleged in the complaint, were not particularly remarkable. In 1992, the decedent, Susan Leone, and the defendant, Charles Ollivier, purchased real property as joint tenants with the right of survivorship. Thereafter, they lived together for a period of time as an unmarried couple.  From her own funds, Leone allegedly paid $90,000 toward the purchase price, a construction loan, and other closing costs and expenses, and thereafter paid $102,000 for the mortgage, $20,000 for property insurance, $11,000 for repairs, $2,500 for utilities, and $1,000 for replacement appliances. In total, Leone allegedly expended $226,500 from her own funds in connection with the property. Allegedly, Ollivier did not contribute to the purchase and carrying charges of the property or, if he did, his contributions were not equal to those of Leone. At no time did either Leone or Ollivier seek a partition of the property.

Leone died unexpectedly in 2008.  Subsequent to her death, the plaintiff, the executor of Leone’s estate, made mortgage and other payments on the property totaling $7,500.

The executor commenced an action against Ollivier in Supreme Court alleging unjust enrichment and seeking a judgment reimbursing the estate for one-half of the purchase price of the property and the carrying charges of the property, and full reimbursement of the $7,500 in carrying charges paid by the estate.

The trial court granted Ollivier’s pre-answer motion to dismiss the complaint for failure to state a cause of action, holding that the estate’s reimbursement claim did not survive Leone’s death, and that RPAPL 1201 — discussed below — was inapplicable. The Appellate Division reversed, agreeing that the complaint failed to state a cause of action as to any of the expenses paid by Leone prior to her death, but holding that the estate stated an unjust enrichment claim against Ollivier for reimbursement of the $7,500 paid post-death.

The court began its analysis by noting that Leone, while she was alive, could have sought to partition the property, effectively severing her joint tenancy with Ollivier, and in that regard could have sought an equitable adjustment of the interests she and Ollivier held in the property.  She never did so. The court further noted that “Leone, during her lifetime, was free to manage her finances and spend her money as she saw fit, even if, with the benefit of hindsight, her decision to purchase the subject property and hold title with Ollivier as a joint tenant, and to continue to pay its ongoing expenses after Ollivier moved to another address, inured to the financial benefit of Ollivier.” Thus, according to the court, the estate had no claim for unjust enrichment for reimbursement of Leone’s pre-mortem expenditures.

The court further rejected plaintiff’s argument that RPAPL 1201 provided the basis for a claim for reimbursement. That statute provides that “[a] joint tenant or a tenant in common of real property, or his executor or administrator, may maintain an action to recover his just proportion against his co-tenant who has received more than his own just proportion, or against his executor or administrator.” Despite a “paucity” of case law interpreting the statute, the court determined that RPAPL 1201 vests joint tenants and tenants in common, or their estates, with the right to recover monies “received” by a co-tenant that exceed his or her proportionate share; it does not extend the right of recovery to expenses “paid” by a tenant beyond his or her equitable share means.

Accordingly, the court held that no claim existed against Ollivier with respect to pre-death payments made by Leone.

The court reached a different determination with respect to the $7,500 the estate paid toward the property’s expenses after Leone’s death.  When those payments were made, ownership of the property had already passed to Ollivier by operation of law.  The estate, according to the court, had a valid claim for unjust enrichment in connection with those payments, as it would be “against equity and good conscience to permit Ollivier to retain the value of those payments.”

 

In a recent decision in the Matter of Lally, the Schenectady County Surrogate’s Court decided an issue of standing on a set of particularly interesting facts.

The case involved a charitable trust agreement that directed that “St. Clare’s Hospital of Schenectady, New York Foundation Inc. Schenectady, New York” (along with various other charitable beneficiaries) receive a portion of the remainder of the subject trusts. 

According to the petitioner, St. Clare’s Hospital of Schenectady, N.Y. Foundation, Inc. (the “Foundation”) is a not-for-profit corporation established to support and assist St. Clare’s Hospital of Schenectady (the “Hospital”) in expanding and developing its services to the community. However, in 2008, the New York State “Berger Commission” mandated that the Hospital close its doors. Allegedly, the commission required the Hospital to surrender its license to operate and to execute an Asset Transfer Agreement with Ellis Hospital (“Ellis”), which assumed the sole responsibility of providing hospital and other healthcare services previously provided by the Hospital, and is the sole remaining hospital in Schenectady County. While the Foundation remains in existence as a not-for-profit corporation, and holds significant assets, it no longer supports or assists the inoperative Hospital. 

          

The corporate trustee of the subject trusts, Trustco Bank, brought a cy pres proceeding in the Surrogate’s Court, to determine whether the Hospital’s relinquishment of its license to operate renders the administration of the subject trusts according to their literal terms impractical or impossible. Ellis filed a Notice of Appearance in the proceeding. The Foundation moved to “reject” the Notice of Appearance, in essence asking that the court rule that Ellis had no standing to participate in the proceeding. The Attorney General filed papers in support of the Foundation’s motion, and Ellis, naturally, opposed it. The trustee took no position.

 

By way of background, courts generally entertain cy pres proceedings when the intended recipients of a charitable donation can no longer be identified. In such cases, courts are authorized to release funds for purposes as close as possible to the wishes of the donors. As one court explained,

 

the cy pres doctrine takes its name from the Norman French expression, cy pres comme possible, which means “as near as possible.”  The doctrine originated to save testamentary charitable gifts that would otherwise fail.  Under cy pres, if the testator had a general charitable intent, the court will look for an alternate recipient that will best serve the gift’s original purpose.

                                (Airline Ticket Comm’n. Antitrust Litig. Travel Network, Ltd. v United Air Lines,

                                Inc., 307 F3d 679, 682 [8th Cir 2002]).

 

The court first addressed — and rejected — various procedural arguments. First, it rejected the Attorney General’s argument that it was premature to determine Ellis’ standing prior to the court deciding whether it would exercise its cy pres power in the first place. Second, it rejected the argument that the court should not reach the issue of standing because Ellis neither initiated the proceeding nor was suing to enforce its claim to the subject charitable gift. Having rejected those procedural arguments, the court went on to address the merits of the motion, i.e., the issue of Ellis’ standing to participate in the proceeding.

 

The parties agreed that the court should apply the standing rule enunciated by the Court of Appeals in Alco Gravure v. The Knapp Foundation, 64 NY2d 458 (1985). That case was a declaratory judgment action brought by corporate plaintiffs whose employees were the intended beneficiaries of a charitable foundation.  In deciding the issue of the plaintiffs’ standing to maintain the action, the Court held that one who is merely a possible beneficiary of a charitable trust, or a member of a class of possible beneficiaries, is not entitled to sue for enforcement of the trust. Rather, the Attorney General has the statutory power and duty to represent the beneficiaries of any disposition for charitable purposes. However, the Court also recognized an exception to the general rule, where a particular group of people has a special interest in funds held for a charitable purpose, as when they are entitled to a preference in the distribution of such funds and the class of potential beneficiaries is sharply defined and limited in number (see id. at 465).

 

The Surrogate noted that the facts in Alco Gravure differed from the facts of the case before it because, first, Alco Gravure was not a cy pres proceeding; second, the plaintiffs in Alco Gravure were members of a named class of beneficiaries (i.e., persons employed by the defendant corporation); and, third, the issue in Alco Gravure pertained to the plaintiffs’ standing to sue, not standing to appear and participate as an intervenor as in this case. Nevertheless, the court stated that it would apply the rules enunciated in Alco Gravure, there being no other authority providing any superior guidance.

 

Applying those rules, the court rejected the argument advanced by the Attorney General and the Foundation that Ellis is merely one of an undefined class of hundreds of potential beneficiaries of a cy pres-directed distribution of the trust, with no preferred status in a case. Instead the court determined that Ellis had a unique, contractual relationship with the Hospital that set it apart from all other potential charitable beneficiaries, and that therefore it was entitled to a preference in the distribution. The court based its determination on the facts regarding the Berger Commission’s mandate and the Asset Transfer Agreement between the Hospital and Ellis, by which Ellis acquired the Hospital’s assets and assumed its hospital services.

 

However, the court was careful to emphasize that its ruling should not be interpreted as meaning that in the event it determined to exercise its cy pres power, Ellis would be the likely recipient of the subject charitable disposition.  The court’s ruling only provided Ellis with the status of an interested party, with the right to file a responsive pleading, participate in discovery, make motions, and participate during the trial.

 

Although the importance of the court’s decision in Matter of Lally might not extend much further than the specific facts of that case, it certainly provides further authority for the proposition that the Surrogate’s Courts are, first and foremost, courts of equity.

This is my third “dog pun” post in as many years. 

If you’ve read this blog since its inception, or have merely been sniffing through the archives, then know that real estate heiress Leona Helmsley left $12 million in her will in trust for her four-legged friend, Trouble. She also created a charitable trust valued at between $5-8 billion. In a two-page mission statement, she expressed her desire that the trust funds be used for the care and welfare of dogs. 

In my post dated December 31, 2008 — titled “Leona’s Wishes May Be Thrown To The Dogs” — I opined that a court might construe the mission statement as constituting merely a precatory request, not a mandatory directive. On February 26, 2009, in my post titled “A Sop For Cerberus”, I reported that in an “advice and direction” proceeding, New York County Surrogate Troy Webber had indeed decided that Ms. Helmsley’s trustees had the discretion to distribute the funds to charities as they saw fit, not just to canine causes.

Not content to let sleeping dogs lie, however, four animal welfare charities sought to intervene in the proceeding after the fact and vacate the court’s decision. They argued to the court that their causes were insufficiently protected by the New York State Attorney General and that they should have an opportunity to be heard in the matter. However, in a Decision and Order dated April 15, 2011, Surrogate Nora Anderson denied their application.

Essentially, the court found no reason to depart from the general rule that possible trust beneficiaries or members of a class of possible beneficiaries do not have standing to participate in court proceedings to enforce the provisions of the trust. The court also rejected the proposed intervenors’ argument that they fell within a narrow exception to that general principle, affording standing to a particular group with a special interest in funds held for a charitable purpose. Instead, as the court explained, by statute the Attorney General is conferred with the authority to represent all possible unnamed charitable beneficiaries. Further, the court rejected the charities’ argument that the Attorney General failed to doggedly protect their interests.

 This decision will no doubt leave the proposed charitable intervenors a bit dog-eared. But it appropriately — and thankfully (I’m all out of dog puns) — brings closure to a nearly 25-year-old saga (in dog years, of course: http://www.onlineconversion.com/dogyears.htm).