Opinion
19213D.
Decided September 7, 2010.
Stern Rinder, Attorneys for Objectant/Claimant Ellin Halbert West, Goshen, New York, By: Mark D. Stern, Esq.
Stoloff Silver, LLP, Attorneys for Co-Executors Landon and Waschitz, Monticello, New York, By: Richard A. Stoloff, Esq., Attorneys for Laurie Halbert Landon, individually, Monticello, New York. By: Henri Shawn, Esq.
In this accounting proceeding (in the probate of the Last Will and Testament dated November 3, 1999 and Codicil dated October 11, 2002 of decedent Mannie Halbert [date of death May 4, 2004], admitted to probate on January 6, 2005), the co-executors move for summary judgment dismissing Objections 3 and 5 of the Third Amended Objections to Account dated May 1, 2007 of Ellin Halbert West (West), a daughter of decedent, and dismissing West's Claims dated April 25, 2007. Laurie Halbert Landon (Landon), a daughter of decedent and co-executor, joins in the co-executor's motion in her individual capacity. West opposes the motion.
By separate motion, West moves for partial summary judgment on her claim to enforce the terms of decedent's prior mutual reciprocal Will and Agreement not to revoke same, both dated December 21, 1964. The co-executors, as well as Landon in her individual capacity, oppose the motion.
Insofar as it is relevant to the facts herein, it is undisputed that by mutual reciprocal Wills executed on December 21, 1964, Mannie and his wife, Nettie Halbert, agreed to leave each other one-half of their net estates in trust, with the remainder of the spousal trust to pass in trust in equal shares to their two daughters, Ellin Halbert (now West) and Laurie Halbert (now Landon); their residuary estates are left in trust in equal shares to their two daughters until the daughters reached the age of 35 years. On the same date, Mannie and Nettie executed a separate Agreement not to revoke their mutual reciprocal Wills without the consent of the other testator; the Agreement further states that it inures to the benefit of their heirs.
Two copies of Mannie's 1964 mutual Will, both executed on the same day, are provided. In addition to the primary bequests stated above, one copy has three blank bequests to his father, mother and sister; on the other copy, two of the blanks are filled in by hand so as to make small bequests to his mother and sister. The discrepancies in these two documents is irrelevant to the issues herein.
The parties agree that there are no factual issues to be determined and that the issue of law to be determined is whether the 1964 mutual reciprocal Wills and Agreement are valid and enforceable to support West's claim as a creditor for a one-half share of Mannie's estate pursuant thereto. Therefore, no trial is needed.
This Court's record shows that Nettie pre-deceased Mannie on September 21, 1971 and her 1964 mutual reciprocal Will was admitted to probate by this Court on May 18, 1972. It is undisputed that after Nettie's death neither the spousal trust nor the residuary trusts for the two daughters was established by the co-executors/co-trustees of Nettie's estate, Mannie and George Gilbert, Nettie's brother.
It is further undisputed that commencing in 1993, Mannie executed six Wills and Codicils, the last being the 2002 Codicil to the November 1999 Will. Prior to the issuance of letters testamentary herein, West signed an agreement on October 5, 2004 to revise the Generation Skipping Trust (GST) established in the 2002 Codicil so as to set aside one-third of the GST and to hold that one-third as a separate fund for the benefit of West's daughter and to sign a consent to probate. Thereafter, in accordance with the agreement, West signed and delivered a waiver of process and consent to probate on December 29, 2004.
The co-executors filed a petition for judicial settlement dated October 6, 2006 and intermediate accounting dated August 26, 2006 showing cash on hand in excess of $2,600,000.
West served Amended Objections to Account dated March 20, 2007 and Second Amended Objections to Account dated March 27, 2007, claiming to be entitled under Mannie's 1964 mutual reciprocal Will and Agreement to a 50% interest in his estate, plus 50% of all lifetime gifts and transfers made by Mannie. West also filed a claim dated April 25, 2007 as a creditor for one-half of the estate based upon the 1964 mutual reciprocal Wills and Agreement, which was rejected by the co-executors. On or about May 1, 2007, West served her Third Amended Objections to Account, reiterating the aforesaid objections and adding the allegation that Mannie made lifetime gifts to Landon and her children in excess of those gifts made to West and her daughter. The co-executors filed Replies to all Objections, asserting numerous affirmative defenses.
West first filed Objections to Account dated January 10, 2007, asserting that she is a creditor of the estate based on a theory not at issue herein.
Motion to Dismiss Objections No. 3 and #5 of the Third Amended Objections Failure to state a cause of action: Dismissal of Objection #3 of the Third Amended Objections (Objection #3) for failure to state a cause of action is denied. On a motion to dismiss pursuant to CPLR 3211(a)(7), the allegations of the pleading are deemed to be true; and the pleading will be deemed to allege whatever may be reasonably implied from the statements ( Foley v D'Agostino, 21 AD2d 60 [2nd Dept 1964]). While "a Will is ambulatory in nature and ordinarily revocable during the life of the testator" ( Blackmon v Battcock, 78 NY2d 735, 739), it is well-settled that "two persons may validly agree to dispose of their estates in a particular manner, and that such an agreement may find expression in a joint or mutual will" ( Glass v Battista, 43 NY2d 620, 623-624). A party who has accepted the benefits granted him or her under such an instrument must adhere to its terms ( Ibid., at 624). A beneficiary to a mutual reciprocal Will and agreement not to revoke the Will has a claim as a creditor in the probate of a subsequent Will ( see Tutunjian v Vetzigian, 299 NY 315, 319 [1949]; In re Estate of Wiggins, 45 AD2d 604, 606-607 [4th Dept 1974]; In re Carvel Foundation, 8 Misc 3d 1025A, aff'd 2 AD3d 847 [2d Dept 2003]). West has sufficiently alleged facts to support a claim as creditor under the alleged contract not to revoke the purported 1964 mutual reciprocal Will.
Marriage of Mannie and Nettie: Inasmuch as the Judgment dated June 21, 1948 of New York Supreme Court Justice Ferdinand Pecora (which declared null and void the judgment of divorce rendered by the Circuit Court of Dade County, Florida, on April 1, 1947 dissolving the marriage between Harry Specter and Nettie Specter) was declared void, on the grounds of lack of jurisdiction, by Order dated September 6, 1974 of New York Supreme Court Justice Jacob B. Grumet, the Court gives no credence to the argument of the co-executors that the parties were not married when they executed the 1964 mutual reciprocal Wills and Agreement.
Participation in changes to Mannie's subsequent Wills: "It is axiomatic that [c]ontractual rights may be waived if they are knowingly, voluntarily and intentionally abandoned' [citations omitted]. Moreover, waiver of a contractual right may be established by affirmative conduct or by failure to act so as to evince an intent not to claim a purported advantage . . . and must be based on a clear manifestation of intent to relinquish a contractual protection' [citations omitted]" ( Natale v Ernst , 63 AD3d 1406 , 1407-1408 [3d Dept 2009]).
It is undisputed that in the preparation of the 1994 and November 1999 Wills, West accompanied Mannie to the attorney/draftsman's office and that she participated in communications and discussions as to Will provisions in the November 1999 Will. The co-executors argue that in doing so, West sanctioned the changes which Mannie made in his subsequent Wills. They further argue that the changes made were inconsistent with the provisions of the 1964 mutual reciprocal Will and West thereby lost her right to enforce the 1964 mutual Will and Agreement.
The terms of the mutual reciprocal Wills impose a clear obligation on the part of Mannie and Nettie to provide, at death, first for each other and then for their children in equal shares, with small potentially invalid bequests in Mannie's Will to his surviving relatives. Mannie's subsequent Wills, with the exception of the 2002 Codicil, are in most part consistent with the general testamentary scheme of the 1964 mutual Wills and Agreement of dividing his estate equally between the two surviving daughters.
West and Landon are named co-executors and co-trustees beginning in 1993, with an additional co-trustee added in 1994 and deleted in 1996; an additional co-executor and co-trustee is added in June 1999; and the additional co-trustees are changed in November 1999.
The 1993 Will is consistent with the 1964 mutual Will, leaving the estate outright to both daughters equally, who by this time were over the age of 35 years. The bequests to relatives were omitted in the 1993 and subsequent Wills until the November 1999 Will. The 1994 Will leaves tangible property equally to the two daughters (as do the subsequent Wills except for the 2002 Codicil) and the residue in two equal trusts, one for each daughter, which continue beyond the termination period of the trusts established by the 1964 mutual Wills. The 1996 codicil changes the co-executors/trustees but leaves the beneficial scheme intact. There is no evidence that West contributed to these Wills in any way which would constitute a waiver of her rights under the 1964 mutual Wills and Agreement.
The two 1999 Wills include generation skipping trust provisions for each daughter and their issue (grandchildren now being in existence) which take advantage of tax exemptions and burden the bequests with trusts beyond the trust termination period previously established in the 1964 Wills. West states that she was not aware of the June 1999 Will until after it was made. She did participate in the discussions resulting in the November 1999 Will which maintained the two equal generation skipping trusts for the daughters. However, the two letters dated August 9 and 24, 1999 from West to Jay Zeiger, Esq., the drafting attorney, demonstrate that West did not sanction the changes made in the subsequent Wills, particularly the bequests in trust rather than outright and the control of executors/trustees over distribution. The evidence establishes that West did not participate in the drafting of this Will to the extent that her acts constituted a waiver of contractual rights.
The November 1999 Will also adds three small bequests prior to establishing two equal residuary generation skipping trusts for the daughters. The addition of the small bequests ($10,000 each to Mannie's niece and nephew and a $25,000 charitable bequest) do not deviate significantly from Mannie's 1964 mutual Will in that the total value of the these bequests is less than the $50,000 total bequests to decedent's mother and sister in the 1964 mutual Will. Further, these small bequests and the failed bequest of an interest in a horse (no value stated) are de minimus considering the size of the estate. West's alleged sanction of such provision, i.e. the small bequests, should not defeat, as a matter of law, her equitable rights to a claim as creditor of 50% of the $2,600,000+ residuary estate pursuant to the 1964 mutual Wills and Agreement.
West was only 23 years old and Landon was a minor during much of the probate of Nettie's estate. Mannie and Nettie's brother, the uncle of West and Landon, were the co-executors of Nettie's estate. West stated in her deposition that she knows only what Mannie told her about Nettie's estate and that she never reviewed the Surrogate's Court records of the estate. Considering this close relationship and her youth, it is not unreasonable that West would have trusted and relied on Mannie and her uncle without investigation into the details of the estate proceeding. West further stated that she did not see or have a copy of Nettie's 1964 mutual Will until January of 2007, although her attorneys received a copy in 2004.
"Knowledge acquired by an agent acting within the scope of his [or her] agency is imputed to his [or her] principal and the latter is bound by such knowledge' [citations omitted]" ( Bauer v CS-Graces, LLC , 48 AD3d 922 , 924 [3rd Dept 2008], appeal den 10 NY3d 712). Although the attorneys for the co-executors in Nettie's estate also represented West in her divorce, they were acting in two separate and distinct capacities. In representing West in her divorce action, they were not acting as her agents insofar as the estate was concerned; therefore, their knowledge of the mutual Wills and agreement, acquired as agents of the co-executors, cannot be imputed to West under the theory of agency.
Landon and co-executor Waschitz have also stated that they were unaware of the mutual Wills prior to the death of Mannie. Their attorney herein stated in a letter dated 2007 that he did not know of the 1964 mutual Wills and Agreement. The co-executors did not give notice in the probate petition or otherwise, to West, as a person adversely effected by the propounded Will and Codicil by virtue of the mutual Wills and Agreement.
There is no record in Nettie's estate proceeding that West received a copy of Nettie's mutual Will. Other than knowledge by public notice of recorded documents, there is no evidence that any of the parties or the attorneys of the co-executors actually knew of the mutual Wills and Agreements until after Mannie's death.
Accordingly, there is no evidence presented that West made a knowing, voluntary and intentional waiver of her rights as a creditor of Mannie's estate pursuant to the 1964 mutual Wills and Agreement by her participation in Mannie's subsequent Wills.
Waiver of process, consent to probate and the GST Agreement: The 2002 Codicil to the 1999 Will substantially changes the testamentary scheme by leaving West only a $25,000 bequest and excluding her as a beneficiary in all other respects, and thereby breaches the terms of the 1964 mutual Wills and Agreement. In addition, the 2002 Codicil leaves a $250,000 bequest to Laurie; establishes the GST for the benefit of Laurie, her two daughters and West's daughter; establishes a residuary trust for the benefit of Laurie, her two daughters and West's daughter; adds an in terrorem clause specifically addressed to challenges by West and her daughter; and removes West as co-executor and co-trustee. The co-executors assert that West's waiver of process and consent to probate of the 2002 Codicil, as modified by the GST Agreement, were in contravention of the 1964 Wills and Agreement and waived her rights thereunder.
As West's recourse to enforce her rights under the 1964 mutual Wills and Agreement was to file a claim as a creditor ( see Tutunjian, supra), she was under no obligation to contest the 1999 Will and 2002 Codicil, or to require service of process, in order to protect her rights. Indeed, conflict between the propounded Will and a prior mutual Will and/or violation by the propounded Will of an agreement not to revoke a prior Will are not valid grounds for objection ( see SCPA 1408). By waiving process West submitted to the personal jurisdiction of the Court; by consenting to probate, she stipulated that the November 1999 Will and 2002 Codicil would be admitted to probate ( see Groppe et al., Harris 5th Edition New York Estates: Probate, Administration and Litigation § 6:106 [1996]; 3 Warren's Heaton on Surrogate's Court Practice § 41.04[2] [7th ed LexisNexis Matthew Bender]). Neither the waiver of process nor the consent to probate effected West's rights as a creditor. The GST Agreement, executed prior to and as consideration for West's waiver and consent to probate, enhanced West's daughter's share in the GST established in the Codicil but did not waive West's rights as a creditor of the estate.
Since no new Will made by Mannie could defeat the testamentary scheme of the prior mutual Wills and Agreement ( Glass, supra at 624), a subsequent in terrorem clause cannot defeat West's contractual rights under the 1964 mutual Wills and Agreement.
Statute of limitations, revocation by Nettie, revocation by Mannie, estoppel, waiver: The co-executor's have not provided any proof that West received a copy of Nettie's Will and the Agreement and no document filed in Nettie's estate proceeding shows that West received a copy of Nettie's Will. Nettie's Will was recorded in the Surrogate's Court at Book 54, page 322, without the Agreement.
The original file for the Estate of Nettie Halbert in the Sullivan County Surrogate's Court was lost; the attorneys' for the Estate of Nettie Halbert have provided their file to the Court for filing in order to reconstruct the Court's file.
The co-executors assert that because West failed to assert her rights under Nettie's Will, she should be deemed to have waived her claim under Mannie's 1964 mutual Will and Agreement and estopped from asserting any such rights herein. The petition to determine estate tax in Nettie's estate lists residuary trusts for the benefit of each daughter in the amount of $5,000. The co-executors claim that the estate was insolvent and there is no showing that these trusts were or were not established and what, if anything, West knew about them. In any event, any failure of West to claim against Nettie's estate would not defeat her rights under Mannie's 1964 mutual Will and the Agreement.
They further argue that the statute of limitations on West's claim herein began to run when Nettie's Will was probated. However, Nettie did not breach the 1964 Agreement. Any failure to fund the residuary trust was a violation of fiduciary duty of the co-executors and co-trustees under Nettie's Will (Mannie and Nettie's brother George Gilbert) and pertained only to West's rights pursuant to Nettie's estate.
An agreement to make a Will is enforceable only after the death of the obligor ( see Brown v Brown , 12 AD3d 176 [1st Dept 2004]). After Nettie's death, West had an expectancy interest as beneficiary in Mannie's estate under the 1964 mutual Wills and Agreement until his death and a vested interest in Mannie's estate under subsequent Wills by virtue of a valid claim as a creditor of his estate pursuant to the 1964 mutual Wills and Agreement. The earliest date on which a breach by Mannie of his 1964 mutual Will and Agreement could have been be asserted as a claim against Mannie's estate is January 5, 2005, the date on which letters testamentary were issued ( see SCPA 1802). West's claim was served and filed on or about April 25, 2007, within the six-year statute of limitations ( see CPLR 213).
The co-executors argue that Nettie's transfer of her interest in the Raleigh Hotel to Mannie on or about October 20, 1966 (evidenced by an undisputed copy of the relevant stock certificates in H G Operating Corporation, which owned and operated the Raleigh Hotel) effectively revoked her mutual and reciprocal Will with the consent of Mannie, as evidenced by his acceptance of the transfer, and released Mannie from his contractual obligation not to revoke the mutual reciprocal Wills.
Nettie owned an undivided 50% interest in 50 shares of stock issued to Mannie and Nettie, as tenants by the entirety, by H G Operating Corporation. Prior to the transfer, this jointly owned asset was not a testamentary asset. The transfer did not revoke the mutual Wills and Agreement because: first, Nettie's undivided share of the stock was not a testamentary asset; and second, upon the transfer, the stock shares became an individually held asset belonging to Mannie and thus a testamentary asset included in Mannie's mutual Wills and Agreement. Nettie could transfer her share of stock confident that Mannie was bound by the mutual Wills and Agreement not to revoke and by the testamentary scheme therein created.
Mannie Halbert did not receive any benefit from the 1964 mutual Will: A party to a mutual reciprocal Will must adhere to its terms after the death of the first party to such Wills if the surviving party accepts the benefits granted to him/her under the Will of the first party to die ( Matter of Estate of Cohen, 83 NY2d 148, reargument den. 83 NY2d 953; Tutunjian, supra). The co-executors claim that, when including the attorneys fees and settlement amount of the claim by Nettie's ex-husband, estate debts (including the settlement with Nettie's ex-husband and associated attorney's fees) exceeded the gross value of the estate and that Mannie paid all estate debts in excess of the value of the estate; therefore, Mannie did not receive a benefit from the probate of Nettie's mutual reciprocal Will.
Mannie probated Nettie's mutual reciprocal Will. In so doing he received the full benefit of her mutual Will. Even under the co-executors' interpretation of Nettie's federal estate tax return, the $45,827 of individually owned assets which passed through Nettie's estate would have paid the estate debts listed in the federal tax return and much of the litigation expense and settlement. Mannie received the benefit of having Nettie's estate debts paid from her funds, rather than from his assets ( see DRL 32[1]; Fam Ct Act 412; Soc Serv L 101). The tax return also lists a $53,544 bequest to Mannie, which certainly benefitted him.
The transfer of Netties's share of H G Operating Corporation stock, no value for which is provided herein, did not defeat the 1964 mutual Wills and Agreement because she transferred the asset to Mannie, who was also bound by the testamentary scheme, which included that the surviving spouse would pass his or her estate to their two surviving daughters in equal shares. Nettie, as a party to a mutual reciprocal Will and contract not to revoke the Will, was free to dispose of her assets during her lifetime as long as such transfers and gifts did not defeat the purpose of the agreement ( see Rich v Mottek, 11 NY2d 90). None of Nettie's transfers to Mannie defeated the purpose of the mutual Wills and Agreement to provide first for the surviving spouse and second for their two daughters in equal shares ( see Schwartz v Horn, 31 NY2d 275, 280; Margulis v Teichman, 125 Misc 2d 729 [Sur Ct Nassau County 1984]). In accepting the inter vivos transfers from Nettie of assets held jointly, individually and as tenants by the entirety, as well as the use of Nettie's funds to pay her final debts and any residue of Nettie's estate, Mannie received the benefit of the mutual reciprocal Wills and Agreement and was required to adhere to their terms ( see Matter of Cohen, supra; Tutunjian, supra).
Additionally, Mannie received the benefit of the mutual promises made by Nettie in that she made inter vivos transfers to Mannie consistent with the testamentary scheme of the mutual Wills and Agreement; she left her entire estate to Mannie and their two daughters, of mutual concern to both testators, pursuant to the terms of the mutual Wills; and she did not revoke her mutual Will prior to her death ( see Rastetter v Hoenninger, 214 NY 66; In re Estate of Coffed, 46 NY2d 514, 518-519; In re Carvel Foundation, supra).
The Court has considered the remaining arguments of the co-executors and finds them to be unsupported in law and by the facts herein.
Accordingly, the co-executor's motion for summary judgment dismissing Objections #3 and #5 of the Third Amended Objections is denied.
West's Motion for Partial Summary Judgment to Enforce the Terms of Mannie Halbert's 1964 Mutual Will and Agreement
Based upon the undisputed facts and for the reasons discussed above, West's motion is granted to the extent that her claim against the estate pursuant to her interest in Mannie's 1964 mutual Will and Agreement is valid and enforceable; and is further granted to the extent that said claim is in the amount of 50% of the net estate value (that being the approximate amount of $2,600,000 set forth in the accounting as available for distribution), together with 50% of the total of inter vivos gifts made by Mannie to West, Landon, the three grandchildren and to any others which would defeat the purpose of the 1964 mutual Wills and Agreement, minus the value of inter vivos gifts received by West and her daughter (the testamentary intent of the 1964 mutual Wills being to treat grandchildren as having a per stirpes share), the exact amount of the claim to be determined after a full accounting of all inter vivos gifts made by Mannie to Landon, West and the three grandchildren.
Accordingly, it is
ORDERED that the motion to dismiss objections #3 and #5 of the Third Amended Objections is denied in all respects; and it is further
ORDERED that the motion for partial summary judgment in favor of claimant West enforcing the terms of Mannie's Halbert's mutual Will and Agreement, both dated December 21, 1964, is granted as hereinabove set forth.
This shall constitute the Decision and Order of the court.
The original Decision Order and all papers are being filed in the Sullivan County Clerk's Office. Counsel are not relieved from the provisions of CPLR 2220 regarding service with notice of entry.