Aurora G. v. Harold Aaron G.

• Citation: 98 Misc.2d 695,414 N.Y.S.2d 632
• Parties: In the Matter of AURORA G., Petitioner, v. HAROLD AARON G., Respondent.
• Decision Date: 15 March 1979
• Court: New York Family Court

Page 632

414 N.Y.S.2d 632

98 Misc.2d 695

In the Matter of AURORA G., Petitioner, v. HAROLD AARON G., Respondent.

Family Court, New York County.

March 15, 1979.

Forsythe, LeViness & Pearson by William D. Hand, New York City, for Teachers Ins. & Annuity Assoc., of America & College Retirement and Equities Fund

Harvey Tropp, New York City, for petitioner.

DECISION

JACK TURRET, Judge:

The issue here involves whether child support payments can be enforced by the sequestration of the fathers' benefits under his annuity contracts with the College Retirement and Equities Fund (CREF) and the Teachers Insurance and Annuity Association of America (TIAA). These Corporations moved this court to vacate and modify an order of sequestration in a support proceeding.

On June 18, 1978, petitioner commenced a proceeding to declare respondent the father of her three children and for an order of support. Judge Richard D. Huttner (Fam.Ct. New York County) signed an order of filiation on July 10, 1978, declaring respondent the father of the children and payment of $139 per week for their support. In late October, 1978, petitioner again came before this court on respondent's failure to comply with the order of support. Since respondent had departed from this state for Massachusetts (apparently in July, 1977) Judge Phillip Thurston (Fam.Ct. New York County, now retired) made an order of sequestration pursuant to § 457 of the Family Court Act. The order applied to the annuity contracts which respondent had with TIAA and CREF and required those corporations "to remit to petitioner out of the proceeds, income, cash surrender value, corpus or equity of respondent, in the annuity contracts the sum of $139.00 weekly".

On January 31, 1979, CREF and TIAA moved this court to modify or vacate the sequestration order insofar as it affected respondent's annuity contracts with CREF and TIAA. Petitioner opposes that motion and prays that this court:

(a) deny the motion;

(b) order all monies due and owing be paid; and

(c) require respondent to exercise an option he possesses to advance the starting date of the CREF annuity (and presumably, allow the sequestration of the proceeds).

The Corporations' motion is based on § 166(3) of the Insurance Law and on Alexandre v. Chase Manhattan Bank, 61 A.D.2d 537, 403 N.Y.S.2d 21 (1st Dept., 1978). They argue that these authorities preclude the court from sequestering the benefits of the annuity contracts of respondent. Petitioner asserts that those contracts can be attached. She relies on § 166(3)(b) of the Insurance Law (an exception to the rule of § 166(3)) and urges that the rule of law expressed in Alexandre v. Chase Manhattan Bank, (supra), is inapplicable here.

Respondent's status differs as to each annuity contract. Payments under the TIAA contract had commenced on January 1, 1978, while the benefits under the CREF contract will begin in September 1994. Since each annuity possesses special characteristics, and inasmuch as the arguments of each party differ regarding each annuity, they are treated separately. The arguments of petitioner and the corporations were carefully considered. (Since Judge Thurston no longer sits in this court at Intake B (the motion part) this Family Court judge possesses authority to review and of necessity vacate or modify the order of (CPLR 2221, Judiciary Law § 7-a)).

I. It is the ruling of this court that the order of sequestration of October 31, 1978 be modified so as to delete all reference to the CREF annuity.

CREF is a non-profit corporation created by a statute (L.1952, c. 124) which provides, Inter alia :

"no money or other benefit provided or rendered by the corporation hereby formed . . . shall be subject to assignment or pledge, or be liable to attachment, garnishment, or other process, or to be

seized, taken, appropriated, or applied by any legal or equitable process or operation of law to pay any debt or liability of any such person. (See § 9 of L.1952, c. 124).

The annuity contract between respondent and CREF provides for a starting date of September 1, 1994 and the respondent has an option to advance or delay such date. Premiums are paid in by or on behalf of the respondent and, under the terms of the CREF certificate, respondent has no right to withdraw any premiums paid in; they cannot be assigned, pledged or borrowed against and do not represent any cash surrender value for respondent. CREF possesses no monies, funds, assets or properties of respondent; and nothing of value is presently due respondent.

Petitioner seeks an order compelling respondent to exercise his option to accelerate the annuity starting date (presumably, if granted, she would attempt to sequester the benefits being paid thereunder). This request must be denied as this court is constrained to follow Alexandre v. Chase Manhattan Bank, (Supra ). That case involved a similar attempt to force the annuitant to advance his CREF or TIAA annuity's starting date in order to sequester the benefits. The Appellate Division refused to compel the acceleration of the date. That court also held that the accumulated premiums being held by the corporations were beyond the reach of the petitioner. See also Fordyce v. Fordyce, 80 Misc.2d 909, 365 N.Y.S.2d 323 (Sup.Ct.Nassau County, 1974).

Were the court to order advancement of the starting date, we would be powerless to sequester any benefits paid to respondent under the CREF annuity given the clear and unambiguous legislative intent set forth in the CREF enabling statute, Supra. In light of Alexandre v. Chase Manhattan Bank, (Supra ), and the CREF enabling statute (Supra ), petitioner cannot reach the CREF annuity.

Petitioner argues that § 166(3) of the Insurance Law sets forth an exemption in subparagraph (b) which would permit the court to rule in her favor. The legislature, in the CREF enabling statute, clearly mandated that CREF benefits may not be sequestered. This statute, relating specifically to the CREF contract, takes precedence over the general language of § 166(3)(b) of the Insurance Law. Also, nothing in that section of the Insurance Law subverts the holding of the Alexandre case (supra).

Not only must petitioner's request be denied, but the corporation's motion must be granted as to the CREF annuity. The sequestration order must be modified to exclude reference to the CREF annuity since:

1. the accumulated premiums lie beyond petitioner's reach (See Alexandre v. Chase Manhattan Bank, supra );

2. the starting date of the CREF annuity cannot be advanced by court order (See Alexandre v. Chase Manhattan Bank, (supra) and;

3. all benefits under the CREF annuity are immune from sequestration (See the CREF enabling statute, supra).

II. The order of sequestration of October 31, 1978 regarding the TIAA annuity contract will stand, subject to the directions hereinafter made.

The annuity contract between respondent and TIAA presents different issues. Unlike, CREF, TIAA was not created by a special act of the New York Legislature. TIAA functions are guided by the Insurance Law. Further, respondent elected to advance the TIAA annuity starting date and monthly payments began on or about January 1, 1978.

The annuity amount which respondent presently collects stands at $144.26 monthly and is comprised of two elements: a guaranteed amount ($71.58) and an additional dividend amount ($72.68). The latter is a variable amount which is not guaranteed to respondent, and is determined by the TIAA Board of Trustees.

The TIAA annuity contract, provides inter alia:

"Protection against claims of creditors: The benefits, rights, and privileges accruing to the annuitant . . . will not be transferable or subject to surrender, commutation or anticipation . . . To the extent permitted by law annuity and other benefit payments will not be subject to the claims of any creditor of the annuitant . . . or to legal process."

Attention will first be given to TIAA's more general arguments:

A. TIAA asserts that since its annuity contract states that the benefits thereunder are immune to the claim of creditors or to legal process, such benefits cannot be sequestered. Where similar exemption provisions have been found in pension contracts (i. e., where the pension contract provides that its payments are not subject to sequestration) the courts have consistently subjected those pension contracts to sequestration notwithstanding any exemption section in order to permit enforcement of a parent's obligation to support a child. Matter of M. H. v. J. H., 93 Misc.2d 1016, 403 N.Y.S.2d 411 (Fam.Ct.Qns.Co., 1978). See also Matter of Michel v. Michel, 86 Misc.2d 774, 384 N.Y.S.2d 381 (Fam.Ct., Ren.Co., 1976). The TIAA contract herein is not a pension contract per se. The provisions of and payments under, the TIAA contract closely resemble those of a pension agreement and the same rule should apply. Exemption provisions of pension contracts do not enjoin a court from sequestering payments under the pension plan where the court's goal is to secure funds for the support of the children of the pensioner. The provisions in the TIAA contract do not preclude the court from attaching the annuity payments given by TIAA. The purpose is the application of funds for the support of respondent's offspring. See Matter of J. H. v. M. H., supra, Cogollos v. Cogollos, 93 Misc.2d 406, 402 N.Y.S.2d 929 (Sup.Ct., N.Y.Co., 1978) and cases cited therein. See also Fordyce v. Fordyce, supra, where the court refused to accept a claim that trust assets were not amenable to sequestration because the terms of the agreement prevented it.

B. Alexandre v. Chase Manhattan Bank, (supra) is not authority to enjoin sequestration of the TIAA payments. Alexandre v. Chase Manhattan Bank, (supra) is distinguishable on its facts from the instant case. There, an attempt was made to obtain accumulated premiums and advance the annuity's starting date. No benefits were due or being paid under the TIAA or CREF...