OPINION OF THE COURT
The underlying facts are not in dispute. Anna Druck lived with her son, Michael Sharff. Michael Sharff was devoted to his mother. She was unable to handle her own affairs. He supervised her medical care. He managed her financial affairs and made sure that she paid her bills timely.
Michael Sharff died on August 25, 2000. At his death, he was 64 and Anna Druck was almost 96. Michael Sharff had executed a will, dated May 23, 1996. In his will, he left his residuary estate in trust for the benefit of his mother. He named Goodman and Sadoff as executors of his will and trustees of the residuary trust. Under the terms of the trust, the trustees were to pay the net income to Anna Druck, quarter-annually. In addition, the trustees were authorized to invade principal for the benefit of the mother. The relevant language of the will reads as follows: “I authorize my Trustees to pay to my mother, at any time and from time to time, so much of the principal of the trust as my Trustees may in their absolute and unreviewable discretion deem advisable for my mother’s health, support and maintenance.”
Upon the death of Anna Druck, the trust terminates. From the principal then remaining, he left $180,000 to Sadoff; $15,000 each to Sharon Coghlan, Stephanie Goodman, Arthur Leiby, Jeffrey Ostroff, Adam Tyson, Rose Kandel, Rebecca Sharff, Jeremy Sharff, Carrie Gurawitz, and Lyn Gurawitz; $15,000 in equal shares to Sue Greenbaum and Cy Greenbaum; $15,000 in equal shares to Pepi Diamond and Harry Diamond; and the balance of the trust principal to Maxine Sadoff. Michael Sharff s will was admitted to probate on May 2, 2001 and letters testamentary and letters of trusteeship were issued to the trustees.
After Michael Sharff’s death, Anna Druck’s mental and emotional condition deteriorated and she was unable to manage
On January 4, 2002, Goodman and Sadoff applied for appointment as Anna Brack’s coguardians pursuant to article 81 of the Mental Hygiene Law. The transcript of the court proceedings shows that the court intended to appoint them as guardians of the person and property of Anna Brack in June 2002. In the meantime, the court appointed Goodman temporary guardian of the property so that she would have access to Anna Brack’s financial records. However, a formal order was not issued (allegedly because a transcript was necessary). Anna Brack became ill in September 2002. The court appointed Goodman as temporary guardian of Anna Brack’s person. Shortly thereafter, on October 8, 2002, Anna Brack died, terminating the guardianship proceeding.
The will of Anna Brack was admitted to probate on February 7, 2003 and letters testamentary issued to Kandel. Under her will, executed the same day as her son’s will, she left $20,000 to a sister and the residuary to be divided between Hadassah and charities selected by her executor.
By the time Anna Brack died, the trustees had expended $241,120.13 from the residuary trust on Anna Brack’s behalf. In addition, the trustees spent $2,075 of their own money for her care, for a total expenditure of $243,195.13. The net income of the trust for this period was only $6,776.26. The trustees served Kandel with a notice of claim for the difference, $236,418.87. The notice of claim alleged that this amount was loaned to Anna Brack and expended for her support and main
The trustees then brought the instant proceeding to determine the validity of their claim. Kandel opposed the claim, claiming that the funds were paid pursuant to petitioners’ duties under the trust. The trustees served Kandel and his attorney, John Levitt, with notices to be deposed. Kandel moved for summary judgment dismissing the claim. The trustees oppose the motion on the ground that they required additional discovery. They seek more complete responses to the interrogatories and requests for documents that they served.
CPLR 3212 (f) authorizes the court to deny summary judgment or grant a continuance pending discovery when facts essential to justify opposition to the motion may exist but cannot be stated. However, the party making the motion must show what “essential” facts exist and what steps he or she has taken to discover them. In the instant case, the gravamen of their claim is that they were prohibited by the will’s language from invading principal of the trust for Anna Druck’s benefit because she had ample private resources and that, therefore, they made a “loan” to her.
The trustees argue that they need further discovery on whether Anna Druck’s assets, combined with trust income, were sufficient for her care. Such discovery might be warranted if Kandel took the position that Anna Druck’s personal assets were insufficient for her support and maintenance. However, Kandel does not dispute that Anna Druck’s assets were sufficient to pay for her support and maintenance. Rather, he claims that petitioners had the duty to invade principal notwithstanding Anna Druck’s substantial assets. Under these circumstances, there is no need to establish all of Anna Druck’s assets. The record reflects that Anna Druck’s assets at her death were approximately $1,000,000 and Michael’s assets at his death
During oral argument, the parties disagreed whether the trustees ever expressed an intention to be repaid for the principal advanced. Kandel alleged that no requests were made until 26 months after the distributions had been made. Over Kandel’s objection, the court allowed limited deposition of Kandel and Levitt on the issue of whether there was any understanding to repay the expenses. Based on the above, the application to deny the motion for summary judgment or to stay the motion pending further discovery is denied (see Schumacher v Sea Craft Indus.,
Kandel argues that the claim, based on an alleged loan, must be denied because there is no evidence of a loan. Moreover, he claims that such a loan would be unenforceable under the statute of frauds, that Anna Druck lacked the mental capacity to agree to such a loan. He also notes that the petition filed by Goodman in the guardianship petition stated that Anna Druck had no debts. The only evidence in opposition is the affidavit of Goodman that the trustees believed that they would be reimbursed for the expenditures. “In no way did we ever consider that we were making distributions to Anna Druck from the Sharff Estate, other than the interest income to which Anna Druck was otherwise entitled.” (Goodman affidavit, dated Mar. 16, 2004.)
Summary judgment may be granted only where it is clear that no triable issue of fact exists (see, e.g., Alvarez v Prospect Hosp.,
A “loan” is a contract by which one party advances monies to the other upon a promise to repay (see 2 Black’s Law Dictionary 1085 [4th ed 1951]; see also Citadel Mgt., Inc. v Telesis Trust, Inc.,
In the instant case, the income beneficiary was under no obligation to speak. She was never informed that the distribution was a loan and, from the record, it is not clear that she had the requisite capacity to assent to repayment even if she had been informed. In addition, as Kandel notes, Goodman’s petition to be appointed guardian of Anna Druck stated that Anna Druck had no debts.
The burden of proving a loan is on the petitioners, as executors and trustees under Michael Sharff’s will. Any doubts on the sufficiency of the proof is resolved against them (Vinlis Constr. Co. v Roreck,
Quasi contract is an equitable theory that provides for repayment when one has paid out money which another in good conscience and equity should have paid. It is not based on an express agreement. Rather it is imposed by law (Bradkin v Leverton,
“A quasi or constructive contract rests upon the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another. In truth it is not a contract or promise at all. It is an obligation which the law creates, in the absence of any agreement, when and because the acts of the*899 parties or others have placed in the possession of one person money, or its equivalent, under such circumstances that in equity and good conscience he ought not to retain it, and which ex aequo et bono belongs to another. Duty, and not a promise or agreement or intention of the person sought to be charged, defines it.” (Miller v Schloss,218 NY 400 , 407 [1916].)
A quasi-contractual obligation is one imposed by law where there has been no agreement or expression of assent, by word or act, on the part of either party involved. (Bradkin v Leverton,
Kandel argues that the claim for reimbursement should be denied because it is merely an attempt to obtain funds from Anna Druck’s estate for the benefit of Sadoff. Since there are sufficient funds to pay the general bequests upon the termination of the trust, any monies recovered will be distributed to Sadoff. Kandel alleges that Goodman and Sadoff never made a claim for repayment while Anna Druck was alive, nor made any application to the court for advice and direction as to whether they were obligated to do so.
This attack on their good faith and their expectation of repayment is vehemently denied by the trustees. At his deposition, Kandel testified that he met with petitioners shortly after Michael’s death. He expressed the opinion that Anna Druck would be best cared for in a nursing home. He denied agreeing to reimburse petitioners for the monies expended on Anna Druck’s care. Levitt was deposed and stated that when he was informed by petitioners of their position, he advised them to file a claim against the estate.
It is true that the trustees could have applied to the court for advice as to whether they were obligated to provide support for Anna Druck despite her personal resources. However, they were not obligated to do so. The trustees should not be faulted for paying the expenses of Anna Druck’s support while she was alive, even though they did not believe that they had any obligation to do so, and leaving the issue of repayment for her estate.
The trustees attempt to defeat the motion for summary judgment by arguing that there is a question of fact whether they invaded the trust with the intention to seek reimbursement. On the contrary, the gravamen of their claim is that they did not believe they could invade principal for Anna Druck’s support given her resources, and they expected to be repaid. Goodman states in her affidavit that she discussed the situation with Kandel shortly after Michael’s death and that she told Kandel that she and Sadoff would be paying Anna Druck’s bills from assets of Michael’s estate and would seek reimbursement at an appropriate time. She states that Kandel, who at this point was only a potential successor executor/trustee of Michael’s will, declined to get involved in Anna Druck’s care. After Anna Druck’s death, Goodman spoke with Kandel and Levitt about reimbursement and allegedly was informed that they had no objection to the claim. Therefore, there is no question of fact that the trustees intended to be repaid for the payments.
That said, the claim for equitable relief depends upon the correctness of their assumption that they could not pay for the income beneficiary’s support because she had adequate resources. It is not disputed that they spent almost a quarter of a million dollars for her support. They allege that the payments were made with the expectation that they would be repaid from Anna Druck’s assets once a guardian was appointed. If the trustees were not authorized to invade the trust for Anna Druck’s benefit under the circumstances presented, they have stated a valid claim for repayment (see e.g. Matter of Garcy,
The invasion of principal for Anna Druck’s support was left to the “absolute and unreviewable discretion” of the trustees. The grant of absolute discretion in the will means that the trustees have greater latitude in exercising their discretion (Restatement [Third] of Trusts § 50, Comment e). The court will not
Nonetheless, the court has the responsibility to ensure that the trustees do not abuse their discretion. Accordingly, the court has the authority to correct abuses in the exercise of absolute discretion that are arbitrary or the result of bad faith (see Matter of Gilbert,
In the absence of an express provision in the will, the court must construe the intent of the testator. The trustees argue that the motion for summary judgment should be denied as premature because there are questions of fact whether Michael intended the trustees to consider Anna’s assets in determining whether to invade principal. The issue presented is one of construing the testator’s intent. While this is obviously a question of fact, the trustees have presented no disputed facts relevant to the determination of the construction of the will. There is no reason why the construction of an invasion clause cannot be the subject of a motion for summary judgment {see, e.g., Rezzemini v Brooks,
The cases have construed trusts with the discretionary power to invade for support as either a gift of support or a gift of income only, with the discretion to invade principal only if necessary. Where the gift is one of support, the testator does not attach a condition of need, and intends that the gift of principal be as broad as the gift of income (see Matter of Emberger,
If, on the other hand, the gift is one of income, with the right to principal only if needed for the beneficiary’s support, there is no absolute gift of principal. The prime gift is that of income. The testator intends that the invasion of the principal be dependent upon the needs or requirements of the beneficiary. In such cases, the trustees must consider the beneficiary’s personal re
In support of their position, the trustees have attached the affidavit of the attorney who drafted Michael Sharffs will. The draftsman states that the provision is a standard provision he uses when the testator intends to bequeath his residuary estate to an elderly parent. The trust provision allows the testator to provide for the needs of the parent, while preserving the corpus of the estate for distribution to the beneficiaries of the testator’s choice after the parent’s death.
The attorney/draftsman claims that the power of invasion was meant solely as a “fail-safe” provision to protect his mother in the event that she comes upon “hard times.” The attorney claims that the requirement that the parent use their own resources has a “distinct estate planning advantage: the mother’s own assets are used for her support which assets would otherwise be subject to taxes on her death, rather than using trust assets which would not be subject to estate taxes upon the mother’s death.” The attorney concludes:
“There was no reason for the Trustees to routinely pay the mother’s expenses without regard to the mother’s resources. I do not believe that Michael Sharff ever intended that his Trustees would voluntarily exercise their discretion to invade the principal of the trust to support his mother if his mother had resources of her own to support herself.”
Kandel argues that the will is clear on its face, so that the affidavit is inadmissable to establish the decedent’s intention (Matter of Cord,
While the specific language must be considered, the function of the court is to determine the intent of the testator and, if the testator’s intention can be determined, to implement it (Matter of Scott,
The question of whether a trustee, in disbursing principal, must consider the assets of the beneficiary has generated significant litigation. Analysis of the cases shows that the decisions are based on “a careful analysis of the wording of each, the circumstances surrounding the decedent in each case at the time of the making of the will and the relationship of the decedent to the beneficiaries of the trusts” (In re Cowee’s Will,
For example, in Holden v Strong (
The trial court found that the trustee had a duty to support the son, even though he earned some income. On appeal, the Court of Appeals affirmed, holding that the trustee had the duty to provide for his support and maintenance according to his condition in life even though he was able to support himself by his own exertions.
“We do not understand that in order to receive the benefit of the provisions of the will it is necessary for him to remain idle and refrain from all personal exertion, neither does the fact that he is frugal and saving and has accumulated a fund which he has*904 deposited in the bank deprive him of the right to the support provided for him.” (Id. at 475.)
In Rezzemini v Brooks (
The trial court found that the trustee had to pay for the son’s support and could not consider resources. The Appellate Division reversed. The Court of Appeals reversed the decision of the Appellate Division. The Court found that the mother knew of the income when she drew her will. She did not provide that remaindermen were to be paid the principal upon the son’s death. Instead, she provided that the principal, “or so much thereof as may then remain” should be paid to the remainder-men. This indicated that the son was to be supported first from the income and second from principal if necessary.
In Matter of Emberger (
Six weeks before the testator executed his will, he purchased an annuity for his wife providing $100/month. Although there was no judicial determination of incompetency, his wife required supervision and was listed as an alleged incompetent in the probate proceeding. Emma died shortly before the widow. The widow’s executor objected to Emma’s account on the ground that Emma used the $100 annuity to pay for the widow’s support instead of the trust principal.
In Matter of Flyer (
The testator died four years after executing the will. The wife spent most of the remaining years of her lifetime in hospitals and nursing homes and was finally confined to Pilgrim State Hospital after she attempted suicide. She had cash and property in her own name worth $10,000 and income from Social Security payments amounting to about $1,800 per year. She owed about $10,000 in hospital bills. The committee for the wife sued for a construction that the trustee was obligated to pay this bill without considering the widow’s assets. The surrogate held in favor of the committee, and required the trustee to pay all amounts necessary for the widow’s support and maintenance out of both principal and income without consideration of the widow’s private resources. The Appellate Division affirmed. Justice McGivern dissented, finding that invasion of principal would slowly erode the trust, while the widow’s right to Social Security payments would uselessly accumulate.
On appeal, the Court of Appeal reversed. The Court held that the will, read as a whole, showed an intent to provide for his wife during her lifetime. However, his primary concern was for his children. He desired to preserve his estate for them and did not intend to exhaust the trust for his widow’s support, a result which might ensue if principal was to be invaded without regard to his wife’s own income. The testator’s provision for his wife from trust principal, as opposed to income, was secondary.
The trustees rely on cases such as Matter of Flyer (
In the instant case, there are facts that support each side’s construction. The language used, providing for distribution of “the then principal of the trust,” is suggestive of a gift of support (see Rezzemini v Brooks,
On the other hand, while Anna Druck was the primary concern of the testator, Sadoff and Goodman were clearly very important to the testator. Goodman and Sadoff met Michael Sharff through a camp that he ran. Sadoff was hired as a bookkeeper for the camp and Goodman and her family attended the camp. They were his two closest friends and he appointed them as trustees, relying on their judgment in the care of his mother if he predeceased her. He provided a small gift of $15,000 to Goodman and a gift of $180,000 and the residuary interest in the remainder to Sadoff. This interest is worth over $500,000, even after the distributions to Anna Druck at issue here.
Based on the facts, the court finds that the testator did not intend that the trust be depleted despite his mother’s substantial assets. The testator clearly intended that there be a substantial fund left at the trust’s termination. This is inconsistent with the intention to distribute principal to the point of depletion of the trust, no matter what Anna Druck’s resources were.
Nor did he intend that his mother’s assets be depleted before the trustees could provide for her support out of principal. This construction would give the trustees no discretion to invade the trust corpus for his mother’s support until she became impoverished. It is hard to reconcile this construction with the testator’s lifetime devotion to his mother’s needs.
Rather, he intended that the trustees balance the needs of the mother, given her available resources, with the needs of the trust to preserve principal for the beneficiaries. Under this construction, the trustees may consider the beneficiary’s personal resources as one factor in exercising their discretion to invade principal of the trust for support. The trustees must balance the needs of the income beneficiary, considering her resources, with the interests of the remaindermen.
The court recognizes that the prior decisions have required a construction that limits the trustee’s discretion. If the gift is one of support, there is no discretion to consider the income beneficiary’s situation. If the gift is of income, there is no discretion to invade principal for her needs until her resources are depleted to the point her support cannot be met by her own resources. Nonetheless, the court believes that there are sound policy reasons for adopting a less restrictive construction.
We are construing a will. In such an endeavor, particularly where the discretion to invade principal is involved, the courts have recognized citations to prior cases as rarely determinative. “Under ordinary circumstances . . . particular precedents are substantially valueless” (Matter of Gatehouse,
While this construction might be considered a departure from previous cases, the modern trend is to recognize that the testator may have had a number of objectives — to provide for the care of the income beneficiary and to preserve sufficient trust corpus for the remaindermen. The court does not believe the testator intended to deplete the funds of either beneficiary, the income beneficiary or the remaindermen, at the expense of the other.
Such recognition finds support in the recent revision of the Restatement of Trusts. In the recent revision, the commentators provide that if the trust provisions do not address whether to consider the beneficiary’s personal resources, the general rule of construction is that the trustee is to consider the resources but to retain some discretion in the matter (Restatement [Third] of Trusts § 50 [2], Comment e).
This is a revision from the Restatement’s previous position that there was a presumption that the trustees could not use principal for the beneficiary’s support if the beneficiary’s resources were sufficient (see Restatement [Second] of Trusts § 128, Comment e).
Such a construction allows the trustees, in exercising their discretion, to take into account if the beneficiary is or may be able to receive public benefits. To the extent consistent with the terms and purposes of the trust, the presumption is that the discretion is to be exercised so as to avoid disqualifying benefits for beneficiaries or to pay for benefits otherwise payable from public assistance (see Matter of Oddo v Blum,
Based on the record, the court construes the will as requiring the trustees to consider Anna Druck’s resources as one of the factors in determining whether to exercise their discretion and pay the expenses of her health, support and maintenance from
Under the facts of this case, Anna Druck’s resources were unavailable to her after her son died because no one had authority to act on her behalf and she herself was incapable of managing her affairs. This was the reason they paid her expenses out of trust income, and then principal, until shortly before they expected a guardian to be appointed who could utilize her assets to pay her bills. Then they stopped paying her expenses.
It could be argued that there were no personal assets available to Anna Druck to pay for the expenses of her health and support, mandating invasion of the trust. Even if the trustees could consider the lack of assets a temporary phenomenon, their paying Anna Druck’s expenses out of principal until such time as a guardian was appointed was in furtherance of the testator’s intent. The purpose of the trust was to provide for the needs of the parent, while preserving the corpus of the estate for distribution to the beneficiaries of the testator’s choice after the parent’s death.
The trust was in no danger of being depleted by the expenditures. The trustees ceased paying Anna Druck’s expenses when it appeared that a guardian would be appointed, shortly before Anna Druck’s death. Even after such expenditures, there are substantial funds to distribute to the remaindermen. The expenditure of over $240,000 from trust principal still leaves substantial assets of over $1,000,000 to distribute to the remaindermen. Invasion of the trust corpus under these circumstances would be a proper exercise of their discretion.
When this is combined with the fact that there is no evidence of a loan, and that one of the trustees even denied the existence of such a loan in her petition to be appointed Anna Druck’s guardian, the court is constrained to treat the payments as a distribution of principal, not a loan.
The trustees paid $243,195.13 for Anna Druck’s support. Of this amount $6,776.26 came from trust income, $234,343.87 came from trust principal and $2,075 came from the trustee’s personal funds. The motion for summary judgment is granted to the extent that the claim for the reimbursement of
The trustee’s claim for $2,075, however, is granted. This claim is for monies which the trustees spent from their own funds. This is a valid claim against the estate of Anna Druck. Handel’s application for an order determining that the estate of Anna Druck is entitled to the trust income of $6,776.26 is denied. The law is clear that the trustees may pay for Anna Druck’s health, support and care from income and, to the extent income was insufficient, from principal (Rezzemini v Brooks,
Notes
. The trust had not been funded at the time of Anna Druck’s death. Nonetheless, the trust was created when the decedent died. Where the will names the same persons as executors and trustees, they act in two functions (see Matter of Willson,
. The trustees had previously served notices to depose the executor and the attorney. They also served interrogatories and a demand for documents. The executor had refused to reply to all of the interrogatories, or to provide documents concerning Anna Druck’s assets on the grounds that the requests were improper and not relevant to the proceeding. The depositions were stayed by the motion for summary judgment (CPLR 3214 [b]).
. However, in Matter of Martin (
. While Anna Druck never required such assistance, one can assume that the testator was aware of the requirements and the possibility that, if his mother lived long enough, she would become eligible for public assistance.