Crichton's Estate, In re

• Decision Date: 01 June 1967
• Citation: 228 N.E.2d 799,20 N.Y.2d 124,281 N.Y.S.2d 811
• Parties: , 228 N.E.2d 799 In the Matter of the ESTATE of Powell CRICHTON, Deceased. Margaret S. HEMINGWAY, as Executrix of Powell Crichton, Deceased, Appellant, v. Gloria C. McGEHEE et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 811

281 N.Y.S.2d 811

20 N.Y.2d 124, 228 N.E.2d 799

In the Matter of the ESTATE of Powell CRICHTON, Deceased.

Margaret S. HEMINGWAY, as Executrix of Powell Crichton, Deceased, Appellant, v. Gloria C. McGEHEE et al., Respondents.

Court of Appeals of New York.

June 1, 1967.

Joseph M. Baltz, Jr., White Plains, and Colin Campbell Ives, New York City, for Margaret S. Hemingway, executrix, appellant.

Frederick M. Schlater and Arthur E. McInerney, New York City, for Gloria C. McGehee and another, respondents.

KEATING, Judge.

Powell Crichton died on November 15, 1962. A native of the State of Louisiana, he apparently migrated to this State early in life. He was a member of the New York Bar and resided for many years in Westchester County.

Mr. Chichton was twice married. His first wife died in 1923. Two years later he took his second wife, Martha, who along with two children of their marriage and the two children of the first marriage, survived him. The marriage of Martha and Powell Crichton was apparently not a happy one, and the couple separated 10 years later in 1935. Although the separation did not end in divorce, the couple lived separate and apart from 1935 until Powell's death.

The will of Mr. Crichton made no provision for his second wife. Instead, all of his estate passes, under the terms of his will, in trust, with the income payable in varying percentages to his four surviving children. The estate was valued at approximately $360,000. The bulk of that property consisted of bank accounts in Louisiana and stocks and bonds held in custody accounts in that State. ¹ In addition to this personal property, the deceased left real property also located in Louisiana.

The will of Mr. Crichton named his secretary, Margaret S. Hemingway, as executrix of the estate. Miss Hemingway qualified in the State of New York where the will was probated and in the State of Louisiana where ancillary proceedings were instituted. On June 3, 1965, Miss Hemingway as ancillary executrix initiated in Louisiana a proceeding for the approval of her inventory and for the computation of the Louisiana inheritance taxes. The widow asserted a claim to community property rights in the personal property there inventoried, which was objected to by the son and daughter of the first marriage. The preliminary exceptions of the son and daughter to the jurisdiction of the Louisiana court to determine the ownership of the personal property were rejected by the Louisiana court, and on January 4, 1966 that court issued an order 'permanently' restraining the executrix from disposing of or removing the property from Louisiana. As of this date, the Louisiana courts have yet to make a ruling on the merits of the widow's claim.

While these proceedings were taking place in Louisiana the executrix filed an intermediate account in New York on September 20, 1965. The account set forth as allowed but unpaid the widow's share of the community property in the sum of $156,000.

On December 2, 1965 the daughter of the first marriage filed an objection to the allowance of the community property claim on the ground that (1) Louisian's community property laws were inapplicable; (2) under Louisiana law the claim was invalid; and (3) the widow had no rights except to take against the will as provided for in section 18 of the Decedent Estate Law, Consol.Laws, c. 13--a right which she had not chosen to exercise.

The widow appeared and filed an objection to the inclusion in the account of items being accounted for in Louisiana on the ground that (1) they were being held by Margaret Hemingway as ancillary executrix in Louisiana and had not come into her hands as domiciliary executrix and (2) the Louisiana court had enjoined the ancillary executrix from removing or disposing of those items.

On a motion for partial summary judgment made by the daughter, the Surrogate held that Louisiana's community property laws were not applicable and he sustained the objection to the allowance of the claim for community property. ² The executrix and the widow appealed to the Appellate Division (Second Department) which unanimously affirmed. During the course of that proceeding, the widow's appeal was dismissed for failure to prosecute. The executrix appeals by leave of this court from the order of the Appellate Division.

There are a number of questions which must be resolved by this appeal. The first of these relates to the jurisdiction of the Surrogate to determine whether or not the widow has a community interest in the property in question. It is urged that the 'Surrogate's Court erred in determining the ownership of property situated in Louisiana since the Surrogate's Court did not have jurisdiction over such property nor over the ancillary executrix appointed in Louisiana.'

There is little question but that the Surrogate lacked the power to determine the rights of persons, not parties to this proceeding and over whom he had no jurisdiction, in the bank accounts, stocks and bonds located in Louisiana. (Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283; Riley v. New York Trust Co., 315 U.S. 343, 62 S.Ct. 608, 86 L.Ed. 885; Baker v. Baker, Eccles & Co., 242 U.S. 394, 37 S.Ct. 152, 61 L.Ed. 386.) The Surrogate, however, does have the power to render a decree which is binding on those persons over whom he has in personam jurisdiction. (Hanson v. Denckla, supra, 357 U.S. p. 254, 78 S.Ct. 1228.)

It is not disputed that the Surrogate had such jurisdiction over the widow and other beneficiaries of the estate. The Surrogate also had jurisdiction over the sole executrix of the estate. The authority of the executrix to represent the estate is recognized in Louisiana and New York and, therefore, any judgment rendered in this jurisdiction is binding on her both here and in Louisiana. (Carpenter v. Strange, 141 U.S. 87, 104, 11 S.Ct. 960, 35 L.Ed. 640; Helme v. Buckelew, 229 N.Y. 363, 367, 128 N.E. 216; Turley v. Dreyfus, 33 La.Ann. 885; Restatement, Conflict of Laws, 1st and 2d (Tent.Draft), §§ 506, 510; Leflar, Conflict of Laws, § 195.)

The Surrogate, therefore, had jurisdiction to render an in personam judgment conclusively resolving the legal issues presented by this case. That he had subject-matter jurisdiction to determine whether the wife was the owner of property listed in the name of the decedent certainly cannot be questioned. (Surrogate's Ct.Act, § 40.)

It is urged, however, that the permanent injunction issued by the Louisiana court, pending termination of the proceeding in that jurisdiction, is entitled to full faith and credit and precludes a determination on the merits by the courts of this State. This order of the Louisiana court, though labelled permanent, is nothing more than an injunction Pendente lite, issued for the purpose of preserving the status quo until the Louisiana courts decide the issue on the merits. The order refers to the property in question as 'allegedly' belonging to Mrs. Crichton and refers to her 'alleged' interest therein. It is not a final order and, since there is no final Louisiana judgment on the merits, the courts of this State are not prohibited by the full faith and credit clause from dealing with the case on the merits.

The discussion thus far has been confined to the preliminary questions presented by this appeal. The main issue posed for our consideration is the choice of the applicable law.

Louisiana is one of several States of the Union which regulate the property rights of married persons through a system of laws known as community property. While this opinion is not the place for a detailed study of the community property system in Louisiana ³, a somewhat general discussion of those laws is appropriate.

In the absence of a marriage contract to the contrary, every marriage in the State of Louisiana 'superinduces of right' the partnership of 'acquets and gains'. (La.Civ.Code of 1870, art. 2399.) By virtue of this provision all property acquired by either spouse during marriage becomes the property of both and, upon dissolution of the marriage or upon the death of either spouse, the property is divided equally between the two or between the surviving spouse and the heirs of the deceased. (LaCode of 1870, art. 2406.) During the marriage, however, the husband has complete control of the property and he may dispose of movable property by gift or sale. (La.Code of 1870, art. 2404; Oliphint v. Oliphint, 219 La. 781, 54 So.2d 18 (1951).) For the purpose of income tax laws, however, the wife is regarded as having a present interest as opposed to a mere expectant interest in the property. (Bender v. Pfaff, 282 U.S. 127, 51 S.Ct. 64, 75 L.Ed. 252.)

It should be noted that not all of the property of the spouses becomes part of the community of 'acquets and gains.' Property owned by either party prior to the marriage is not included nor is the property acquired during the marriage by gift, devise or bequest. (See Morrow, Matrimonial Property Law in Louisiana, supra.)

These rules just enumerated are part of 'an ingenious, complex, and highly purposeful distribution of property rights between husband and wife' (United States v. Yazell, 382 U.S. 341, 351, 86 S.Ct. 500, 506, 15 L.Ed.2d 404). It is obvious, however, that Louisiana has no interest in regulating the property rights of married persons who are domiciled elsewhere, who were not married in that State nor ever resided there as husband and wife. Indeed, the Louisiana courts have recognized this to be the case. (See Hyman, Lichtenstein & Co. v. Schlenker & Hirsch, 44 La.Ann. 108.) ⁴

The Louisiana Legislature has determined, however, that its community property laws should govern property acquired in Louisiana by nonresidents after their marriage. (Code of 1870, art. 2400.) ⁵ While it has been suggested that this action is indicative of the strength of the community property system in Louisiana (Morrow, Matrimonial Property Law in Louisiana, 34 Tul.L.Rev. 3,...