Middlesex County Welfare Bd. v. Motolinsky

• Decision Date: 20 January 1944
• Docket Number: 149/156.
• Parties: MIDDLESEX COUNTY WELFARE BOARD v. MOTOLINSKY et al.
• Court: New Jersey Court of Chancery

35 A.2d 463

MIDDLESEX COUNTY WELFARE BOARD

v.MOTOLINSKY et al.

149/156.

Court of Chancery of New Jersey.

Jan. 20, 1944.

COPYRIGHT MATERIAL OMITTED.

Suit by Middlesex County Welfare Board against Abraham L. Motolinsky, substituted administrator c. t. a., etc., and others to restrain proceedings in the Orphans' Court and to impress a lien upon proceeds of life policies and previously conveyed realty to secure reimbursement for old-age assistance paid to Elizabeth Balabas, deceased, wherein counterclaims were filed and John S. Matruska was permitted to join in the bill as a party complainant.

Decree advised in accordance with opinion.

1. The Court of Chancery will not ordinarily assume jurisdiction where a proceeding involving the same subject matter has already been instituted in another court, and in which proceeding a complete and adequate adjudication of the rights and remedies of the parties can be accomplished.

2. The Orphans' Court lacks jurisdiction (except in the case of insolvent estates) to hear and determine the validity or extent of claims of creditors against a decedent's estate.

3. Under R.S. 17:34-28, N.J.S.A. 17:34-28, creditors are limited to the recovery, from the proceeds of the insurance, of the amount of premiums paid in fraud of creditors by the assured or person effecting the insurance, subject to the statute of limitations.

4. Courts of equity can no more disregard statutory and constitutional requirements and provisions than can courts of law.

5. The mere payment by a third party of premiums on an insurance policy does not, of itself, entitle such party to some right in or lien on the proceeds. Additional circumstances may exist which warrant the imposition of an equitable lien on the fund, such as (a) where the advancements are made pursuant to a contract with the beneficial owner of the policy; (b) where the assessments were paid by one who reasonably supposed he was the beneficiary; (c) where a person, not being the owner of a policy, nor bound to pay the premiums, but having some interest or color of interest in it, voluntarily pays the premiums thereon and thus keeps it alive for the benefit of a third party; (d) where a pledgee or mortgagee pays the premiums to protect his security, etc.

6. The burden of proving fraud rests upon the complainant. It cannot be presumed, nor can it be lightly inferred.

Edmund A. Hayes, of New Brunswick (John T. Keefe, of New Brunswick, of counsel), for complainant.

Leo S. Lowenkopf, of Perth Amboy, for complainant Matruska.

Samuel Convery, of Perth Amboy, for administrator.

Louis Sellyei, of Perth Amboy (Guido J. Brigiani, of Perth Amboy, of counsel), for defendant Balabas.

Louis A. Mezey, of New Brunswick (Herman H. Anekstein, of New Brunswick, of counsel), for defendant Szabo.

JAYNE, Vice Chancellor.

On May 26, 1936, one Elizabeth Balabas presented to the complainant, Middlesex County Welfare Board, a verified application for old-age assistance in which she declared that she owned or possessed no assets, real or personal, other than a burial plot and an insurance policy of a fraternal society in the amount of $200. To the question ‘Have you within the last five years disposed of real estate, money in bank, or other property by sale, assignment, gift or otherwise?’ she replied, ‘Sold in Sheriff's sale.’ She executed and delivered to the complainant the requisite collateral assignment and agreement to reimburse. A ‘certificate of notice of agreement to reimburse’ and a ‘certificate to reimburse’ were thereafter filed by complainant in the Middlesex county clerk's office in pursuance of the pertinent statute. The former was filed on October 10, 1936, the latter on March 20, 1942. Mrs. Balabas obtained pecuniary assistance in monthly payments from September 1, 1936, to September 30, 1940, aggregating $1,382.18. She died testate on October 30, 1940.

In the course of the administration of her estate, the complainant ascertained that at the time of the decedent's application for old-age assistance, there were eight other existing policies of insurance payable upon the event of her death to her estate, and that she had thereafter effectuated a change of beneficiary in four of them, designating the defendant Caroline Szabo as the beneficiary of two policies issued by the Colonial Life Insurance Company, and the defendant William Balabas as the beneficiary of two issued by Metropolitan Life Insurance Company. The remaining four policies continued to be payable to her estate. Moreover, it was discovered that by a deed dated September 6, 1934, and recorded on November 5, 1934, Mrs. Balabas had conveyed to Caroline Szabo two tracts of real estate situate in the Borough of Metuchen.

On September 18, 1939, Mrs. Balabas executed a will in which she then purposed to bequeath to Caroline Szabo ‘the funds from the insurance policies carried on my life,’ specifically listing the eight policies. Her last will and testament was executed on October 14, 1939, and its probate has been affirmed by the Middlesex County Orphans' Court. The defendant Abraham L. Motolinsky is the administrator c. t. a. of the decedent's estate.

The following paragraphs of the will are somewhat illuminating:

‘First: I direct that my body decently interred in the Our Lady of Hungary Rom. Catholic Church cemetery, according to the rites and ceremonies of that Church, that my funeral expenses shall not be less then $400.00, and that my Funeral Director shall Mr. John Mitruska of Perth Amboy, N. J.

‘Second: I hereby give and beueath to my son Bela Balabas Matosz of 68 Henry St., Fords, N. J., and Caroline Szabo of 43 Lincoln Ave., Metuchen, N. J., in equal alike shares the funds from the insurance policies carried on my life in the following companies:

Metropolitan Life Ins. Co., Policy No. 122505783-$255.00

Metropolitan Life Ins. Co., Policy No. 119350359-400.00

Metropolitan Life Ins. Co., Policy No. 121251763-184.00

John Hancock Life Ins. Co., Policy No. 26086678-400.00

The Prudential Ins. Co., Policy No. 105792057-400.00

The Prudential Ins. Co., Policy No. 103319979-500.00

The Colonial Life Ins. Co., Policy No. 3468046-180.00

The Colonial Life Ins. Co., Policy No. 3402078-300.00 Upon condition that after my decease, all expenses for my burial in the plot owned by me, and a headstone over my grave with necessary inscriptions thereon for the cost of not less than $100.00, first to be deducted from the total of aforesaid funds. I am bequeating into Mrs. Carolina Szabo who is a stranger to me other wise because during my life time she rendered aid and assistance to me, and faithfully paid from her own fund a large part of the premiums on the aforsid policies.'

By means of an agreement designed to more promptly liberate the insurance companies from their acknowledged liabilities and likewise shield the adverse claims of these defendants pending eventual solution, the insurance companies entrusted the proceeds of the policies amounting to $2,753.91 to the administrator of the assured's estate, who sought by petition to have the Middlesex County Orphans' Court determine ‘the ownership of said funds in dispute’ and ‘instructions by the court as to the distribution of said funds.’

The complainant thereupon filed the present bill charging fraudulent practices by Mrs. Balabas, Caroline Szabo and William Balabas, as well as other causes of action cognizable by this court, and praying that the proceeding in the Orphans' Court be enjoined and that a decree be made by this court in effect impressing a lien upon the proceeds of the policies and upon the parcels of real estate previously conveyed, to secure the reimbursement of the complainant.

True, this court will not ordinarily assume jurisdiction where a proceeding involving the same subject matter has already been instituted in another court, and in which proceeding a complete and adequate adjudication of the rights and remedies of the parties can be accomplished. Lewis v. Morgan, 132 N.J.Eq. 343, 28 A.2d 215.

Significantly, the decedent's estate has not been decreed to be insolvent and therefore it was not manifest that the Orphans' Court had jurisdiction to adjudge the rights of these parties to the fund, to judicially determine their respective shares and to afford the desired equitable remedies (liens) sought by the complainant as a creditor of the estate and by the defendants Szabo and Balabas arising from the alleged payment by them of premiums.

It has been resolved that the Orphans' Court lacks jurisdiction (except in the case of insolvent estates) to hear and determine the validity or extent of claims of creditors against a decedent's estate. Miller v. Pettit, 16 N.J.L. 421; Vreeland v. Schoonmaker, 16 N.J.Eq. 512; Middleton v. Middleton, 35 N.J.Eq. 115; Partridge v. Partridge's Ex'rs, 46 N.J.Eq. 434, 19 A. 662, affirmed 47 N.J.Eq. 601, 22 A. 1075; Mullaney v. Mullaney, 65 N.J.Eq. 384, 387, 54 A. 1086; In re Fulper's Estate, 99 N.J.Eq. 293, 132 A. 834. The claim of an alleged cestui que trust to establish a trust in his favor as against a portion of the apparent assets of the decedent in the hands of the representative was declared to be extraneous the jurisdictional orbit of the Orphans' Court. O'Callaghan's Appeal, 64 N.J.Eq. 287, 51 A. 64. Similarly, a claim by an alleged donee who asserted a title to a portion of the assets of the estate by virtue of an inter vivos gift was held to be beyond the range of the jurisdiction of an Orphans' Court. In re Campfield's Estate, N.J.Prerog., 98 A. 381. See, also, In re Estate of McSpirit, 73 N.J.Eq. 613, 68 A. 755.

The proceeding undertaken in the Orphans' Court did not involve a controversy concerning the fairness and correctness of the inventory or the allowance of the account of the administrator, nor is the present controversy one between the decedent's estate and the administrator in his assertion of a personal claim to assets in hand. The parties Caroline Szabo and William...