You are here: / Trusts and Estates

A Party Which Is Merely a Possible Beneficiary of a Charitable Trust Does Not Have Standing to Bring an Action to Enforce the Trust

The Second Department reversed Supreme Court finding that the plaintiff Historical Society did not have standing to bring an action seeking a declaratory judgment re: the intent of the grantor of a charitable trust.  At stake are trust assets of $81 million distributed to a charitable foundation (Foundation) set up by the grantor.  The Foundation was set up to sponsor and encourage historical societies. Plaintiff Historical Society sought a declaratory judgment that it was a beneficiary of the trust. The Second Department held that Supreme Court should have dismissed the complaint, explaining that the attorney general is responsible for representing charitable trust beneficiaries and there was no indication the plaintiff Historical Society was a party with a “special interest” entitling it to sue for enforcement on its own behalf:

In an action for the enforcement of a charitable trust, EPTL 8-1.1(f) provides that “[t]he attorney general shall represent the beneficiaries of such dispositions for religious, charitable, educational or benevolent purposes and it shall be his [or her] duty to enforce the rights of such beneficiaries by appropriate proceedings in the courts.” A party with a special interest in the enforcement of the trust may have standing to commence such an action; however, “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” … . This “special interest” is found by looking to the trust’s chartering documents to discern the purpose of the trust, and whether there is a class of intended beneficiaries that is entitled to a preference and is sharply defined and limited in number … .

In support of their motion, the appellants submitted the Foundation’s certificate of incorporation … which states that the Foundation’s purpose includes educating the public about state and local history and encouraging and sponsoring existing and future historical societies. That document does not name the Historical Society as a beneficiary, nor does it name any beneficiary. [The grantor’s] will did not mention the Historical Society. Accordingly, the Historical Society was not part of a class of potential beneficiaries of the Foundation that is sharply defined and limited in number. Therefore, it lacked standing to commence this action … . Sagtikos Manor Historical Socy., Inc. v Robert David Lion Gardiner Found., Inc., 2015 NY Slip Op 03342, 2nd Dept 4-22-15

 

,

Premises Clause Prevails Over Habendum Clause in a Deed/Failure to Expressly Label Parties and Include the Parties’ Addresses Does Not Invalidate a Deed

The Third Department determined that where there is a conflict between the premises clause and the habendum clause in a deed, the premises clause prevails.  Here the premises clause clearly indicated the creation of a life estate with the remainder interest going to decedent’s only children.  The habendum clause indicated the decedent conveyed the property to “[defendant] and assigns forever.”  The court also noted that the failure to label the parties and include the parties’ addresses in a deed does not invalidate the deed, although it may preclude recording of the deed:

…[T]he rules of construction applicable to deeds provide that where there is a conflict between the provisions set forth in the premises clause and those in the habendum clause relative to the extent of the conveyance, the premises clause will control, absent a clear indication of a contrary intent elsewhere in the deed … . Here, the premises clause provides that the remainder interest in the property is conveyed to plaintiffs, and nothing in the deed other than the habendum clause suggests that decedent had a contrary intent. …

Contrary to defendant’s assertion, Real Property Law § 258 did not require the deed to expressly label plaintiffs as parties or to include their addresses. The statute does not mandate the use of the deed formats that it sets forth, but instead provides that “this section does not prevent or invalidate the use of other forms” (Real Property Law § 258). Although the failure to include a party’s address may prevent a deed from being recorded, it does not operate to invalidate the underlying conveyance … . Basile v Rose, 2015 NY Slip Op 03213, 3rd Dept 4-16-15

 

,

Attesting Witnesses Did Not See Decedent’s Signature on the Will and One Attesting Witness Did Not Know the Document Was a Will—The Will Was Not Duly Executed and the Petition for Probate Was Properly Dismissed

The Third Department determined the petition seeking probate of a will was properly dismissed because the attesting witnesses did not know whether the decedent had signed the will.  One attesting witness was approached by decedent in the hallway of the assisted living facility where the witness worked and saw only the page of the document which he signed.  Another attesting witness, also approached in the hallway by the decedent, was not aware she was signing a will and did not see decedent’s signature on the document. The court explained that an attestation clause, standing alone, will not demonstrate due execution of a will. “…[T]he testator must acknowledge his or her signature to the witnesses. The testator must also declare to each witness that the document is the testator’s will (see EPTL 3-2.1 [a]).” Here, two of the three attesting witnesses did not sign the will in conformity with the statutory requirements:

To be duly executed, a will must be subscribed by the testator in the presence of at least two attesting witnesses, or the testator must acknowledge his or her signature to the witnesses. The testator must also declare to each witness that the document is the testator’s will (see EPTL 3-2.1 [a]). Here, the subject will contains an attestation clause. However, Surrogate’s Court must nonetheless examine the attendant circumstances to determine the validity of the will, and it is well established that the attestation clause standing alone will not suffice to meet the proponent’s burden of demonstrating due execution by a preponderance of the evidence if affirmative proof reveals that the required elements were lacking … . In this analysis, “the testimony of the attesting witnesses is entitled to great weight” … . Matter of Yen, 2015 NY Slip Op 03228, 3rd Dept 4-16-15

 

, , ,

Plaintiff’s Motion to Appoint a Temporary Administrator after Defendant’s Death Properly Denied—Relevant Law Explained

In affirming the denial of plaintiff’s motion to appoint a temporary administrator after the defendant in a lead-paint action had died, the Second Department explained the relevant law:

“If a party dies and the claim for or against him [or her] is not thereby extinguished the court shall order substitution of the proper parties” (CPLR 1015[a]…). “A motion for substitution may be made by the successors or representatives of a party or by any party” (CPLR 1021…). “Generally, the death of a party divests a court of jurisdiction to act, and automatically stays proceedings in the action pending the substitution of a personal representative for the decedent” … .

In most instances a personal representative appointed by the Surrogate’s Court should be substituted in the action to represent the decedent’s estate … . However, in the event no such representative exists, an appropriate appointment may be made by the Supreme Court and that individual may be substituted in place of the decedent … . Indeed, “[t]he Supreme Court is a court of general jurisdiction with the power to appoint a temporary administrator, and may do so to avoid delay and prejudice in a pending action” … . The determination of whether to exercise its authority to appoint a temporary administrator is committed to the sound discretion of the Supreme Court, and will not be disturbed by this Court so long as the determination does not constitute an improvident exercise of discretion … .

Under the circumstances of this case, the Supreme Court providently exercised its discretion in denying the plaintiff’s motion, inter alia, to appoint a temporary administrator (see CPLR 1015[a]…). Although in most instances the personal representative of the decedent’s estate should be substituted, here, the plaintiff failed to demonstrate what steps she had taken to secure the appointment of a personal representative in the appropriate Surrogate’s Court or that resort to the appropriate Surrogate’s Court was otherwise unfeasible … . Furthermore, the plaintiff did not contend that this action, which is based on events occurring nearly 20 years ago, was trial-ready … . Under the circumstances presented here, the plaintiff failed to adequately demonstrate why the appointment of a temporary administrator was needed to avoid undue delay and prejudice. Lambert v Estren, 2015 NY Slip Op 02454, 2nd Dept 3-25-15

 

, ,

Trustee’s Settlement of Claims Against Countrywide/Bank of America Stemming from Sale of Mortgage-Backed Securities Approved

The First Department, in a full-fledged opinion by Justice Saxe, determined the trustee properly exercised its discretion in settling the claims stemming from mortgage-backed securities sold by Countrywide Home Loans between 2004 and 2008. Countywide was subsequently purchased by Bank of America (BofA). The First Department explained the courts’ powers re: reviewing the settlement under CPLR Article 77:

The ultimate issue for determination here is whether the trustee’s discretionary power was exercised reasonably and in good faith … . It is not the task of the court to decide whether we agree with the Trustee’s judgment; rather, our task is limited to ensuring that the trustee has not acted in bad faith such that his conduct constituted an abuse of discretion … .

We agree with Supreme Court that the Trustee did not abuse its discretion or act unreasonably or in bad faith in embarking on the settlement here. The Trustee acted within its authority throughout the process, and there is no indication that it was acting in self-interest or in the interests of BofA rather than those of the certificateholders.

Importantly, “if a trustee has selected trust counsel prudently and in good faith, and has relied on plausible advice on a matter within counsel’s expertise, the trustee’s conduct is significantly probative of prudence” (Restatement [Third] of Trusts § 77, Comment b[2]). While reliance on the advice of counsel may not always be the end of the analysis regarding a claimed breach of trust — it is possible for a trustee to specifically seek out legal advice that would support the trustee’s desired course of conduct, or there may be other circumstances establishing that it was unreasonable to follow the legal advice (id.) — a party challenging the decisions of a trustee who followed the advice of a highly-regarded specialist in the relevant area of law can prevail only upon a showing that, based on the particular circumstances, the reliance on such counsel’s assessment was unreasonable and in bad faith. Court approval of the settlement does not require that the court agree with counsel’s judgment or assessment; all that is required is a determination that it was reasonable for the Trustee to rely on counsel’s expert judgment. Matter of Bank of N.Y. Mellon, 2015 NY Slip Op 01880, 1st Dept 3-5-15

 

, ,

Charitable Trust’s Challenge to Tax Foreclosure Time-Barred—Four-Month Statute of Limitations Applies to Action for Declaratory Judgment—RPTL, not the EPTL, Controls

The Third Department determined the action challenging the tax foreclosure on parcels of land owned by a charitable trust set up to hold land for Native Americans must be dismissed as time-barred.  The court further determined that County Court had subject matter jurisdiction because the matter was subject to the Real Property Tax Law (RPTL), not the Estates Powers and Trust Law (EPTL), and there was, therefore, no requirement that the Attorney General be notified of the tax foreclosure proceedings:

Under RPTL article 7, a property owner claiming to be aggrieved by an assessment of real property on the basis that the assessment is excessive, unequal or unlawful, or that the property is misclassified, may file a petition challenging the assessment, but “such a proceeding shall be commenced within thirty days after the final completion and filing of the assessment roll containing such assessment” (RPTL 702 [2]; see RPTL 704 [1]; 706 [1]). Where a party is alleging that the assessment is void — either through a challenge to the methodology of assessment or the jurisdiction of the taxing authority to assess particular property — the party may instead bring a proceeding pursuant to CPLR article 78 or a declaratory judgment action … . Both of those options are governed by a four-month statute of limitations … . The Court of Appeals has expressly rejected plaintiffs’ argument that, because the property is allegedly mandatorily exempt from taxes, the assessment is illegal and void and may be challenged at any time … . Plaintiffs concede that they had notice of the Town’s determination regarding the taxable status of the parcels, and filed a grievance to administratively challenge the tax bills when the property was first listed as not tax exempt, but they failed to appeal when the Town denied the grievance. Plaintiffs did not file any further grievances, actions or proceedings until they commenced this action more than a year after the final foreclosure proceeding was concluded. Accordingly, while an action for declaratory judgment was a proper method, the statute of limitations bars plaintiffs’ challenges to their tax assessments … . Turtle Is Trust v County of Clinton, 2015 NY Slip Op 01698, 3rd Dept 2-26-15

 

Principles of Ademption Applied to Property Transferred Out of the Estate

The Third Department found the doctrine of ademption applicable to the lifetime transfer of property which divested the testator of ownership:

[The principles of ademption] are set forth in EPTL 3-4.3, which states that “[a] conveyance, settlement or other act of a testator by which an estate in his property, previously disposed of by will, is altered but not wholly divested does not revoke such disposition, but the estate in the property that remains in the testator passes to the beneficiaries pursuant to the disposition. However, any such conveyance, settlement or other act of the testator which is wholly inconsistent with such previous testamentary disposition revokes it.” Ademption will not lightly be found under EPTL 3-4.3, which is construed strictly given that its terms permit a testator to nullify dispositions without engaging in the elaborate formalities ordinarily required to revoke his or her will, either in whole or in part … . Matter of Braunstein, 2015 NY Slip Op 01703, 3rd Dept 2-26-15

 

, , ,

Re: Breach of Fiduciary Duty and Fraud Causes of Action—Application of the “Repudiation Rule” and the “Discovery Rule” to the Statute of Limitations Explained

Plaintiff (a governmental agency charged with administering the workers’ compensation system) brought this action against workers’ compensation trusts alleging the trusts became insolvent because of defendants’ misconduct. Plaintiff alleged breach of fiduciary duty, fraud, breach of contract and sought common law indemnification. The bulk of the decision is devoted to determining the timeliness of the actions. The decision addressed the “repudiation rule” and the “discovery rule” in fraud actions, as well as many other issues not summarized here:

…[T]he repudiation rule, which provides that “the applicable statutory period . . . does not begin to run until the fiduciary has openly repudiated his or her obligation or the relationship has been otherwise terminated” … . The Court of Appeals has instructed that, under the repudiation rule, “the time starts running when a successor [fiduciary] is put in place” … . After the fiduciary “has yielded . . . to a successor, . . . [t]he running of the statute [of limitations] then begins, and only actual or intentional fraud will be effective to suspend it” … . * * * … [T]he repudiation rule acts as a toll of the limitations period for all misconduct committed by the fiduciary prior to repudiation of its obligation or termination of the relationship. In other words, all of the alleged misconduct prior to the severance date is included in the actionable portion of the claim. * * *

…[A] portion of plaintiff’s breach of fiduciary duty claim is grounded in its allegations that the … defendants breached their fiduciary duties to the trusts by fraudulently concealing or misrepresenting the financial condition of the trusts, the danger of operating deficits and issues associated with underwriting deficiencies, and that [defendants] did so as part of a scheme to increase membership and thereby increase its own commissions. These are fraud allegations, and they are essential to this portion of the fiduciary duty claim. That is, the relevant portion of the claim is “based on fraud” and “there would be no injury but for the fraud” … . As such, that portion of the fiduciary duty claim is subject to a six-year limitations period … . * * *

The “discovery rule” is found in CPLR 213 (8), which provides that claims based on fraud “must be commenced [within] the greater of six years from the date the cause of action accrued or two years from the time [a] plaintiff . . . discovered the fraud, or could with reasonable diligence have discovered it.” It is settled that “[t]he inquiry as to whether a plaintiff could, with reasonable diligence, have discovered the fraud turns on whether the plaintiff was possessed of knowledge of facts from which [the fraud] could be reasonably inferred” … . New York State Workers’ Compensation Bd v Consolidated Risk Servs Inc, 2015 NY Slip Op 01699, 3rd Dept 2-26-15

 

,

Elements of a Constructive Trust Not Adequately Pled

The Second Department determined plaintiff’s complaint did not state a cause of action for a constructive trust.  Plaintiff alleged she was 50% owner of rental property ostensibly owned by the defendant, her uncle, based upon her uncle’s sharing the rent with plaintiff’s father (now deceased).  The Second Department noted that there was no allegation of a promise running from the uncle to the plaintiff, an essential element of a constructive trust.  The court further noted that plaintiff’s claim she inherited her father’s 50% interest in the property must be adjudicated as part of her father’s estate proceedings:

In general, a constructive trust may be appropriate in situations ” [w]hen property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest'” … . The necessary elements for imposition of a constructive trust are (1) a confidential or fiduciary relationship, (2) a promise, (3) a transfer in reliance on that promise, and (4) unjust enrichment … .

Here, contrary to the Supreme Court’s determination, the plaintiff’s complaint, as amplified by her affidavit, does not adequately plead a cause of action to impose a constructive trust on the … property. While a confidential relationship exists between the plaintiff and the defendant as uncle and niece, the complaint does not allege the existence of a promise between the plaintiff and the defendant, or a transfer in reliance upon a promise between them.

Further, … the plaintiff’s allegations in support of a theory that she should be deemed a 50% owner of the … property do not adequately plead the elements of a constructive trust. Her claim of entitlement is based on the laws of inheritance, and must be pursued by the executor or administrator of her father’s estate … . Igneri v Igneri, 2015 NY Slip Op 01419, 2nd Dept 2-18-15

 

,

Remainderman Was Entitled to the Tax and Insurance Payments Made on Behalf of the Holder of the Life Estate/Life Estate Should Have Been Extinguished as a Matter of Equity

Plaintiff is the remainderman of defendant’s life estate in real property.  Defendant refused to pay the real estate taxes and insurance for the property.  Plaintiff paid the taxes and insurance and sued for those payments and to have the life estate extinguished. The Second Department determined Supreme Court should have granted summary judgment to the plaintiff:

 

“The essential inquiry in any action for unjust enrichment or restitution is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered” … . A plaintiff must show that (1) the other party was enriched, (2) at the plaintiff’s expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered … .

The plaintiffs established their prima facie entitlement to judgment as a matter of law on their first cause of action, which alleged unjust enrichment and sought restitution, and their second cause of action, which alleged waste and sought to extinguish the defendant’s life estate. As life tenant, the defendant was obligated to pay the property taxes and hazard insurance on the subject property, and the intentional failure to do so constitutes waste … . It is undisputed that the defendant intentionally failed to pay the property taxes and hazard insurance on the subject property, and he has clearly expressed his intention not to do so in the future. Under these circumstances, the remainder interest in the subject property is in constant danger of forfeiture in a tax lien sale, unless the plaintiffs continue paying the property taxes and hazard insurance premiums the defendant is otherwise obligated to pay. The plaintiffs therefore demonstrated, prima facie, that the defendant was unjustly enriched by the plaintiffs’ payment of these expenses for the defendant, and that equity warrants extinguishing his life estate in the subject property. In opposition, the defendant failed to raise a triable issue of fact … . Main Omni Realty Corp v Matus, 2015 NY Slip OP 00341, 2nd Dept 1-14-15

 

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy