Clark v. Tibbetts

• Decision Date: 07 April 1948
• Docket Number: No. 167,Docket 20861.,167
• Citation: 167 F.2d 397
• Parties: CLARK, Atty. Gen. v. TIBBETTS.
• Court: U.S. Court of Appeals — Second Circuit

167 F.2d 397 (1948)

CLARK, Atty. Gen. v. TIBBETTS.

No. 167, Docket 20861.

Circuit Court of Appeals, Second Circuit.

April 7, 1948.

Murray D. Welch, of New York City (George A. Dickinson, of New York City, on the brief), for defendants-appellants.

David E. Feller, Atty., Dept. of Justice, of Washington, D. C. (David L. Bazelon, Asst. Atty. Gen., John F. X. McGohey, U. S. Atty., of New York City, and Max Isenbergh, Sp. Asst. to Atty. Gen., on the brief), for plaintiff-appellee.

Before SWAN, AUGUSTUS N. HAND, and CLARK, Circuit Judges.

CLARK, Circuit Judge.

This appeal attacks first the jurisdiction and power of the district court to make the declaration it did of rights of the Alien Property Custodian in property originally owned by Mary Martha Taylor, deceased, and second the correctness and propriety of the declaration made. The issues arise because Mrs. Taylor attempted to make provision for her daughter, Martha Sakrausky, and the latter's issue, through the device of an outright gift by will to a legatee who by prior secret agreement had agreed to dispose of it for the daughter's benefit as the mother had directed. Though the record does not so state explicitly, we are told in the briefs that Mrs. Sakrausky was an illegitimate child of Mrs. Taylor and the latter resorted to this device in order to make provision for the daughter at her death without disclosing this relationship.¹ In this, of course, she has been ultimately unsuccessful, due to a series of unforeseen events which have brought about the disclosure and have produced some interesting legal problems. For the legatee taking the gift died about a month after the testatrix, before he had had opportunity to execute the agreement; and the Custodian by two orders has vested in himself all the interest of Mrs. Sakrausky and her issue in both the original owner's and the legatee's estates on the ground that these ultimate takers are enemy aliens.² This action was brought because the representatives of these estates refused to honor the demand of the Custodian for delivery of the property.

The pertinent and decisive facts are set forth in the pleadings and are not in dispute. We must start with the agreement executed by Mrs. Taylor on January 14, 1932, with her attorneys, Harland B. Tibbetts, George F. Lewis, Robert C. Rand, and Murray D. Welch, wherein she made provision for her daughter. This is a carefully drawn legal document covering almost all contingencies — save the one in issue. Its introductory paragraphs set forth that Mrs. Taylor had that day executed her last will and testament wherein she bequeathed and devised certain described properties to one of the parties of the second part, and that such bequests and devises had been made on the understanding that they would be disposed of by the party receiving them in accordance with the terms of the agreement. Then followed these specific terms. The parties of the second part agreed that the properties so received "shall be used for the benefit of Martha Sakrausky and/or her children, in the manner, to the extent and upon the conditions hereinafter expressed." The one receiving the properties was to have absolute discretion in paying or delivering them outright to Martha Sakrausky or her children or both, or in creating trust funds for their benefit, or in using the properties in any other manner for their benefit. If, however, he determined to create a trust, then he might, in his discretion, provide for a remainder to charity if Martha Sakrausky and her children died prior to the termination of such trust leaving no issue.

The agreement also contained an in terrorem clause to the effect that Martha Sakrausky and her children would lose all their rights under it if she, or any one on her behalf, contested the probate of the will, challenged the validity or effectiveness of any part of it, or made any claim or demand "based upon any alleged blood relationship between the said Martha Sakrausky and" Mrs. Taylor; in that event, the party receiving the properties would be authorized to pay over the proceeds to such educational, religious, or charitable institutions as he might select. Further it was stated that Mrs. Taylor might at any time alter her will by the execution of a new will, but the obligations assumed by the parties of the second part should continue in full force unless abrogated or modified by written agreement between the parties. Finally, it was provided that if any bequest or devise to one of the parties of the second part "should be rendered illegal, invalid or void by reason of any of the provisions of this agreement," then the person receiving such property should pay it over absolutely to Martha Sakrausky, or if she were dead, to her issue, or if she died leaving no issue, to an educational, charitable, or religious institution selected by him.

Mrs. Taylor died on June 2, 1943. Her will, executed on June 2, 1941, was admitted to probate in the Surrogate's Court of Westchester County on November 15, 1943. By it, she nominated Harland B. Tibbetts and the New York Trust Company as her executors; and if Tibbetts failed to qualify, then she named George F. Lewis in his stead. The Trust Company renounced and Tibbetts died on July 6, 1943. Hence letters testamentary were issued to the defendant George F. Lewis as her sole executor. Tibbetts' will was probated on July 20, 1943, with letters testamentary being issued to his widow, defendant Florence G. Tibbetts.

Mrs. Taylor's will contained separate bequests and devises "absolutely unto the said Harland B. Tibbetts, if he shall survive me; or if he shall predecease me, then unto the said George F. Lewis * * *." The properties so given were those referred to in the 1932 agreement. But the agreement contained no specific provisions declaring Mrs. Taylor's intentions if the party receiving the properties under the agreement by virtue of surviving her should nevertheless die before entering on the performance of its terms. Actually, as we have seen, Tibbetts survived Mrs. Taylor, but died even before her will had been probated. Under the terms of the will his taking seems clear, however. Indeed, the Surrogate's Court of Westchester County so ruled. The complaint herein shows that Lewis, as executor of Mrs. Taylor's estate, began proceedings in February, 1944, in the Surrogate's Court for a construction of her will and the 1932 agreement. In his petition (which is attached to defendants' answer) Lewis alleged that the legacies were made so that the properties would be administered in accordance with the earlier agreement, and that, since Tibbetts died prior to the performance thereof, the properties should be paid by Lewis as executor to himself as legatee subject to the terms of the agreement. He also submitted an affidavit by Florence G. Tibbetts (also attached to defendants' answer) specifically waiving her right to claim any of the legacies made her husband under Mrs. Taylor's will and joining in the prayer for relief contained in Lewis' petition. Nevertheless, the surrogate held, in an opinion filed in April, 1944, that the language of the will was clear and unambiguous, that under the circumstances there was "no authority for the receipt of the proffered extrinsic evidence," and that the "named legatee, or his estate, enjoys an absolute gift which cannot be taken away or diminished by reason of the provisions of such agreements. Petitioner, as executor, has no alternative but to carry out the clear testamentary directions." And the order entered on May 8, 1944, reiterated that "the Court is without authority to receive the proffered extrinsic evidence consisting of two certain inter vivos agreements executed by the testatrix and others prior to the date of the will of the deceased."

Plaintiff's vesting orders against Mrs. Sakrausky and her issue were made on November 26, 1945, and this action was instituted March 15, 1946. Plaintiff, asking generally for a definition of his rights as successor to the Sakrausky interests, sought specifically a direction that a constructive trust either in his favor or in favor of Mrs. Taylor's estate be impressed upon all the moneys and properties received from her estate by the Tibbetts estate or executrix. He also asked for such other relief as may be deemed just and equitable. Defendants Tibbetts and Lewis, representing their estates, filed a lengthy answer with many defenses and attached exhibits raising the issues which are discussed below. In addition to these separate legal points, they urged generally that they have discretionary and fiduciary obligations to see that Mrs. Taylor's wishes are carried out. The Attorney General of the State of New York, who had been joined as a party defendant because of possible claims which might be made by undetermined educational, religious, or charitable institutions, filed an answer praying for the protection of the rights of such unknown beneficiaries under the 1932 agreement. Thereafter plaintiff moved for judgment on the pleadings. Federal Rules of Civil Procedure, rule 12(c), 28 U.S.C.A. following section 723c. The district court granted the motion and entered judgment that the property subject to the 1932 agreement is "impressed with a constructive trust" in plaintiff's favor, subject to such deductions for taxes, debts, and expenses of administration as might properly be allowed by the Westchester County Surrogate's Court and any other court "having jurisdiction in the premises." It also stated that plaintiff was entitled "to the transfer, conveyance and payment of the same" and retained jurisdiction for the purpose of entering orders necessary to secure its enforcement. In the appeal taken by the two executors the state Attorney General has not joined.

1. Jurisdiction. The attack made on the court's jurisdiction centers first on the right of the Custodian to secure a declaration of his rights in specific property and second on a claim...