303 N.Y. 33 | NY | 1951
Lead Opinion
Appellant-executrix seeks by this discovery proceeding to bring into the estate of her deceased husband, of whose will she is the sole beneficiary, four savings bank accounts. Each of those accounts was opened by the husband (decedent), fifteen months before his death, in his own name in trust for respondent, his infant grandchild, th^it is, as “ Totten trusts ”. The balances in those four accounts, when he died, totaled about $14,000. His gross estate (other than those bank accounts) was of the value of about $3,300.
Petitioner’s theory is that “the aforesaid purported trust accounts are illusory in that decedent retained full and complete control and exercised full dominion over said accounts at all times ”, and that they are, therefore, assets of the estate. Eespondent’s submission is that the bank accounts, as bona fide Totten trusts, became respondent’s absolute property, at decedent’s death.
The will, naming petitioner wife as executrix and sole beneficiary, was executed in 1939. In 1946, at about the time decedent and appellant ceased living together, these four accounts were opened by decedent in four savings banks. Decedent afterwards made several deposits in one of the accounts and one deposit in another, but made no withdrawals from any of them, and never in any way disaffirmed or revoked any of the trusts. There is
The Surrogate held that the transfers were all illusory, and that the estate owned the entire proceeds thereof. In so ruling, the Surrogate did not find that there was in fact anything unreal or fictitious about the setting up of these deposits, or that decedent had any intent except that his granddaughter should have them at his death. The Surrogate’s opinion was, in essence, this: that under Krause v. Krause (285 N. Y. 27), and Burns v. Turnbull (294 N. Y. 889), a trust by a husband, made for the the purpose of defeating his wife’s expectant interest in his property, is illusory and void.
The Appellate Division modified the Surrogate’s order by directing that there should be paid into the estate not the whole balance of the accounts, but so much only as should be necessary to give the widow her share, as in intestacy (Decedent Estate Law, §§ 18, 83), of the whole property left by her husband, including the bank balances. The Appellate Division, like the Surrogate, concluded that these transfers were illusory, but it is clear again that the appellate court, like the trial court, found them illusory, not on any proof that they lacked actuality or reality, but solely because they were made for the purpose of keeping the widow from collecting that share of her husband’s property allotted to her (under certain circumstances) by the two above-quoted sections of the Decedent Estate Law.
We hold that respondent’s legal position is correct, and that these Totten trusts were, on this record, valid, effective and not illusory. It is, perhaps, regrettable that any husband resorts to such transfers to'keep his money from his wife. But Totten trusts, if real and not merely colorable or pretended, are valid transfers with legally fixed effects. Section 18, as this court pointed out in Newman v. Dore (275 N. Y. 371, 379), citing Leonard v. Leonard (181 Mass. 458), gives to a wife, not an absolute right which attaches to all her husband’s property as soon as he acquires it, but “ only an expectant interest in the property of her husband which becomes part of his estate ” (see, to the same effect, Judge Cranp’s statement in Herrmann v. Jorg
There is nothing illusory about a Totten trust as such. Wo take notice that great numbers of them exist, many in favor of young children. Their legal effect was pronounced long ago (1904) in Matter of Totten (179 N. Y. 112, 126), as follows: “ In case the depositor dies before the beneficiary without revocation, or some decisive act or declaration of disaffirmance, the presumption arises that an absolute trust was created as to the balance on hand at the death of the depositor. ’ ’ That rule must be applied here, in the absence of any proof that these transfers were “ intended only as a mask for the effective retention by the settlor of the property which in form he had conveyed” (Newman v. Dore, 275 N. Y. 371, 381, supra). Since there was no such evidence here, these Totten-trusts were like all other
Applicable here is the language and thought of Inda v. Inda (288 N. Y. 315), as to the effect of a joint savings bank account, as against a claim of illusoriness. This court noted, in the Inda opinion (p. 317), that the Banking Law preserves as to joint accounts (just as it does as to Totten trust deposits), “ the form of deposit * * * as a lawful and convenient method for the transmission of property.” This court concluded, in the Inda case, that, whatever may have been the actual intent of the depositor, everything required by law for the creation of a joint tenancy had been done, and, therefore, the settled legal result followed, as of course.
Two other matters should be noticed. First, we point out that this widow, being the sole testamentary beneficiary, had no right to file, and could accomplish nothing by filing, a notice under section 18 (supra) of intention to “ take against the will ”. If, as executrix (see McQuaide v. Perot, 223 N. Y. 75, 79) she had been successful in getting these moneys into the estate, she would have, as beneficiary, gotten the full benefit thereof. That brings us to the second matter. The Appellate Division, reasoning further from its conclusion that these trusts were illusory because destructive of section 18 benefits, decided that only so much thereof should be set aside as was required to put the widow in the section 18 position. Strictly, the correctness of that part of the Appellate Division’s order is not before us, since the infant took no appeal and there is thus no
For the reasons given, the order should be affirmed, with costs to all parties appearing separately and filing separate briefs payable out of the estate.
Concurrence Opinion
(concurring). By this discovery proceeding — instituted pursuant to section 205 of the Surrogate’s Court Act — Bernice Halpern, as executrix of the will of her deceased husband,- would have four bank accounts in four separate savings banks in trust for Sandra Jean Lerner declared to be the property of the decedent’s estate and demands that all moneys in those accounts be delivered to her as executrix. The beneficiary of the trusts, Sandra Jean Lerner, is a granddaughter of decedent and a respondent in this proceeding.
After a trial the Surrogate of Bronx County held that the four savings bank trusts (Totten trusts
On January 23, 1948, Henry Halpern died leaving a will, executed January 5, 1939, by the terms of which he named his wife, Bernice Halpern — the petitioner herein — as sole legatee and executrix. It appears, however, that in November, 1946, decedent and his wife separated and were living apart at the time of his death. - -
The decedent’s last will and testament was admitted to probate and letters testamentary were issued on May 22, 1948, to the petitioner, the named executrix. However, the bankbooks and the four deposits totaling $13,934.51 were not included as part of the decedent’s estate in the petition for probate.
It is conceded that the petitioner did not at any time file as decedent’s widow a notice of election under section 18 of the Decedent Estate Law. It also appears that — as provided by the will — she has received all of decedent’s estate totaling $3,290.94 not including, however, any of the funds in the four savings bank accounts.
About August 22, 1949 — one year and three months after the will was probated — the petitioner instituted this proceeding, her claim being that the four savings bank accounts are the property of the decedent’s estate and that the funds therein should be turned over to her as executrix. In support of t.hut claim the petitioner argues: (1) that the Totten trusts — constituting testamentary transfers of property — are void in violation of section 21 of the Decedent Estate Law; (2) that these particular Totten trusts were revoked by the testator’s acts and conduct; and (3) that in any event these Totten trusts are illusory and must be declared void since they violate sections 18 and 83 of the Decedent Estate Law.
The petitioner’s second argument — that the four Totten trusts were revoked by testator’s acts and conduct — is also, in our view, without merit. We have seen that three of the four bankbooks were found by petitioner in decedent’s safe-deposit box at the time of his death, and that thereafter the fourth bankbook was found by his daughter among his personal belongings. On this branch of the case there was testimony by the decedent’s daughter that just prior to his death he had stated to her — “ 1 I have a few bank books for the child ’ ’ ’ and “ ‘ * * * when I go, I want it to go to the baby, Tanda [Sandra Jean]. ’ ” Upon evidence of record before us we conclude the courts below correctly ruled that during his lifetime the decedent in no way revoked or disaffirmed the four Totten trusts.
We come then to petitioner’s third argument, viz., that the four Totten trusts are illusory and, therefore, under the decisions in Newman v. Dore (275 N. Y. 371), Krause v. Krause (285 N. Y. 27), and Burns v. Turnbull (294 N. Y. 889), the savings bank accounts were the property of the estate of the decedent, disposition of which should be governed by the terms of his will.
Although each of the fact-finding courts — the Surrogate and the Appellate Division — have held that the Totten trusts here involved were illusory, they disagreed as to the legal effect of
At the Appellate Division, where the Surrogate’s decree was modified, the Totten trusts were held to be illusory but were set aside only to the extent that they encroached upon the widow’s share in the decedent’s estate as provided under sections 18 and 83 of the Decedent Estate Law. It is the position of the respondent as beneficiary of these savings bank trusts that petitioner’s only right to share therein is by virtue of section 18 of the Decedent Estate Law and that, since she has failed to file an election to take against the terms of the will as the statute requires, she may not rely upon, nor may she invoke that section for the purpose of setting aside the trusts. Bespondent further argues that at best the trusts should be set aside only to the extent necessary to guarantee the widow her intestate share and that they are not wholly invalid.
The legal effect of an illusory transfer which is in conflict with statutory rights to which a surviving spouse may be entitled under sections 18 and 83 of the Decedent Estate Law was considered in Newman v. Dore (275 N. Y. 371, supra). In that case — which did not involve a Totten trust — the court ivas concerned with whether a trust set up by a husband during his life could under any circumstances constitute an unlawful invasion of the expectant interest of his wife. There the decedent had left a will which created a trust of one third of his property for his wife. Just prior to his death, however, he had established an inter vivas trust of all his property — naming as beneficiaries persons other than his wife. Under that trust agreement the decedent as settlor had retained almost complete control of the trust property. In an action by the beneficiary to compel the trustee to carry out the terms of the trust it was held that the trust was illusory and therefore could not be used as a means of defeating the expectant interest of the wife in her husband’s estate. In the opinion of this court per Lehman, J., it was said (p. 379): “ Since the law gives the wife only an expectant interest in the property of her husband which becomes
The decision in none of the three cases to which reference is last made above deals with the question presented by the order of the Appellate Division, viz., whether the four Totten trusts here involved should be set aside in their entirety or only to the extent necessary to guarantee the widow her intestate share thereof under section 18 of the Decedent Estate Law. For reasons presently to be stated that question is not a factor in the determination of this appeal.
The order of the Appellate Division, as we have seen, determines that the four Totten trusts are illusory to the extent that they encroach upon the widow’s share in the decedent’s estate “ guaranteed under sections 18 and 83 of the Decedent Estate Law”. The four trusts are sustained by the Appellate Division order with respect to what remains after the widow shall have received under the will the equivalent of the share ‘ ‘ guaranteed to her by sections 18 and 83 of the Decedent Estate Law ” computed as though the balance in said accounts had been part of the decedent’s estate at the time of his death. Such a disposi
Here, concededly, the petitioner has never filed a -notice of election to take against the terms of her husband’s will. Accordingly she cannot take advantage of benefits afforded by section 18; nor can she avoid the legal consequences of her failure to comply with the conditions contained in that section.
Moreover, the present discovery proceeding has been instituted by the petitioner as executrix of the decedent’s will, not by her individually, as widow, to enforce her rights, if any, under section 18. Whatever personal rights the petitioner, as widow, may have in the estate of her husband, may not be enforced in a proceeding, such as the one before us, brought by her as executrix. “ It has been repeatedly held that persons suing or being sued in their official or representative capacity are, in contemplation of law, distinct persons, and strangers to
Despite the foregoing considerations, which are set forth to indicate wherein we are not in agreement with the rationale of the Appellate Division order, we are constrained to affirm that order by reason of the fact that no appeal therefrom was taken in behalf of the infant beneficiary of the Totten trusts. (See Ginsberg v. City of Long Beach, 286 N. Y. 400, 403).
The order should be affirmed, with costs to all parties payable out of the estate.
Loughran, Ch. J., Dye and Fuld, JJ., concur with Desmond, J.; Lewis, J., concurs in result in separate opinion in which Conway and Froessel, JJ., concur.
Order affirmed.
Matter of Totten (179 N. Y. 112).
