Probate Proceeding — Summary Judgment

December 01, 2002

In a contested probate proceeding, the petitioners moved for summary judgment dismissing the objections to probate.The Court granted the motion as to the issues of testamentary capacity, undue influence, and fraud, and denied the motion on the issues of due execution and forgery.

As to the issue of due execution, the Court held that although it appeared that the petitioners had clearly established all the usual elements of due execution, in view of the objectants’ allegations that the person who signed the will was not the decedent and that the signature was a forgery, the petitioners’ motion for summary judgment had to be denied.

With regard to the allegation of forgery, the Court held that the objectants had the burden of proof. In opposition to the motion, objectants alleged that the signature on the will was a forgery. However, they did not produce any competent evidence from any expert or other person familiar with decedent’s handwriting. Moreover, an affidavit from a handwriting expert stated that she could not make a conclusive determination based on the exemplars which she had reviewed. Nevertheless, the Court found that the opposing affidavits from decedent’s daughters, though excludable at trial pursuant to the dead man’s statute, were sufficient to deny the motion to dismiss the objections to the propounded instrument on the basis of forgery.

In re Estate of James, New York Law Journal, October 23, 2002, p.24 (Surrogate’s Court, Kings County, Surr. Feinberg)

Summary Judgment- Accounting Proceeding
In a contested accounting proceeding, the objectants moved for partial summary judgment with respect to his claims, inter alia, that petitioner engaged in self-dealing by making improper distributions of trust securities, and that petitioner improperly paid himself annual trustee’s commissions.

With respect to the issue of self-dealing, objectant argued that the petitioner made in-kind distributions to himself which constituted virtually all the unrealized capital gains in the trust. Objectant claimed that the petitioner avoided this exposure by distributing to himself the unappreciated securities in the trust. Based thereon, objectant maintained that petitioner engaged in self-dealing and breached his fiduciary duty by giving himself preferential treatment regarding the division of the assets of the trust. In his defense, the petitioner maintained that the objectant made a specific request for the in-kind distribution, and that he was authorized to make the distribution pursuant to the terms of the trust.

The Court held that the petitioner had a duty of undivided loyalty to the trust and to each of its beneficiaries. This duty is designed to prevent self-dealing. Hence, where a trustee is given absolute discretion, he must not use it to “feather his own nest.” He must avoid all situations where his interests or those of a third party with whom he is aligned conflict with those of the beneficiaries.

Based on the foregoing standards, the Court found that the petitioner breached his duty of undivided loyalty when he distributed the assets in issue in-kind to the objectant. The Court found that a reading of the trust so as to absolve the petitioner from any liability for such breach would be contrary to public policy as a violation of EPTL 11-1.7. Accordingly, objectant’s motion for summary judgment on this issue was granted.

With respect to objectant’s motion for summary judgment on the issue of commissions for the period 1983 to 1999, Objectant maintained that petitioner overpaid himself commissions for this period contrary to the provisions of SCPA 2309(4). This statute provides, in pertinent part, that a trustee who distributes all trust income in a given year waives his right to any unpaid annual commissions payable from income. Notably, petitioner did not dispute this point on commissions, but simply attributed the miscalculation to his accountant. Accordingly, based on the record, the Court found that since the petitioner failed to retain any income for the years 1983 through 1999, commissions payable from income were waived, and petitioner was surcharged in the amount of the overpayment.

In re Estate of Louise Gold, New York Law Journal, October 21, 2002, p. 26 (Surrogate’s Court, Nassau County, Surr. Riordan)

Validity of Claim
In a contested proceeding to determine the validity of a claim, the executrix moved for summary judgment seeking dismissal of the claim on the grounds that it was barred by the statute of limitations, and that the purported promissory notes in issue were usurious and unenforceable.

The notes, which were four in number, were dated during the period 1991 through 1994. The petitioner’s claim against the estate of the decedent, who died in 1997, was filed in 1998.

The Court noted that the statute of limitations for claims based upon promissory notes is six years, and that a creditor’s filing against an estate constitutes the interposition of the claim and stops the running of the statutory time period. Hence the Court found that as to the notes dated in 1993 and 1994, the claims were timely. As to the note dated in 1991, the Court found that petitioner’s claims of partial payment on the note created an issue of fact as to the tolling of the statute of limitations, the Court holding that part payment constitutes an acknowledgment of a debt, a promise to pay the remainder, and a revival of the debt for statute of limitations purposes.

As to the movant’s claims that three of the notes were usurious, the Court held that intent is an element of usury, and is a question of fact unless the instrument is clearly usurious on its face. If so, usurious intent may be implied from the charging or receiving of interest greater than the legal rate. Where, however, an instrument is not clearly usurious on its face, the presumption of intent is not conclusive, and may be rebutted by evidence that the excessive charge was the result of mistake or inadvertence.

In this context, the Court found that Notes 1 and 2 were not facially usurious, as they simply provided that the creditor’s outstanding bills were forgiven, without specifying their amount. Accordingly, this branch of the motion, as to Notes 1 and 2, was denied.

As to Note 3, the Court found the conflicting evidence regarding whether the amount charged on the loan was interest or a penalty designed to induce payment also created a question of fact which required that the motion regarding this note be denied.

In re Estate of Walsh, New York Law Journal, October 22, 2002, p. 23 (Surrogate’s Court, Westchester County, Surr. Scarpino)

Subpoena- Third Party
In a contested accounting proceeding, a non- party to the proceeding moved to vacate a subpoena duces tecum served upon him by the objectant. The objectant opposed the motion.

The subpoena at issue required the appearance of the non-party, who was married to one of the executors and trustees of the decedent’s will, at a deposition, and requested that he bring with him the corporate records of entities in which he and others had an interest.

The non-party claimed that none of the records sought were relevant to the proceeding, in that the neither the decedent nor his estate were corporate shareholders. The objectant maintained that she was entitled to inquire into possible assets of the estate, and annexed a document which suggested that the decedent loaned $20,000 to one of the entities about which information was sought.

The Court held that while the standard for disclosure is liberal, the mere assertion that the material sought might prove relevant was insufficient to require disclosure. Further, the Court found that the subpoena sought documents, such as tax returns, shareholder agreements, and corporate books and minutes, not generally available to creditors, and thus was improper as well as irrelevant.

Accordingly, the subpoena was vacated.

In re Estate of Gould, New York Law Journal, October 8, 2002, p. 22 (Surrogate’s Court, Westchester County, Surr. Scarpino)

Editor’s Note: The author is counsel to the firm of Farrell Fritz, P.C., where she concentrates in the field of trusts and estates. In addition, she is a member of the Board of Directos of the Suffolk County Bar Association, and an Officer of the Suffolk Academy of Law. She serves as an adjunct professor of law at Touro College, Jacob D. Fuchsberg Law Center, Huntington, New York, where she teaches Trusts and Estates and Trusts and Estates Administration.

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