Draganoff's Estate, In re

• Decision Date: 17 June 1964
• Parties: In the Matter of the Judicial Settlement of the Accounts of Proceedings of John J. BREEN, Public Administrator, County of Westchester, as Administrator of the Goods, Chattels and Credits of Todor Draganoff, Deceased. Surrogate's Court, Westchester County
• Court: New York Surrogate Court

Page 104

252 N.Y.S.2d 104

43 Misc.2d 233

In the Matter of the Judicial Settlement of the Accounts of

Proceedings of John J. BREEN, Public Administrator, County

of Westchester, as Administrator of the Goods, Chattels and

Credits of Todor Draganoff, Deceased.

Surrogate's Court, Westchester County.

June 17, 1964.

Robert A. Mendelsohn, White Plains, for petitioner.

Wolf, Popper, Ross, Wolf & Jones, New York City, for attorneys-in-fact for Bulgarian distributees, respondents.

HARRY G. HERMAN, Surrogate.

The law firm of Wolf, Popper, Ross, Wolf & Jones, as attorneys-in-fact for alien non-resident distributees of this decedent, residing in Bulgaria, requests that the distributive shares of said distributees be paid directly to the attorneys-in-fact for transmission to Bulgaria and that said shares not be deposited with the Commissioner of Finance of Westchester County, in view of the removal of Bulgaria from Treasury Department Circular No. 655, which prohibits transmittal of Federal funds to the countries listed therein.

In support of its endeavor to resist application of Section 269-a of the Surrogate's Court Act, the attorneys-in-fact filed the affidavit of David Sloane, Esq., sworn to on February 5, 1964, to which were appended photocopies of a letter from John O. Halby, Acting Assistant General Counsel, Treasury Department, and Supplement 14 to Treasury Department Circular No. 655.

The attorneys-in-fact urge that since the United States has removed Bulgaria from Treasury Department Circular No. 655, which prohibits the sending of United States Government checks and warrants to persons who are nationals of and residents in the countries named therein, this is proof that the legatee or a distributee of a decedent's estate will have the benefit or use or control of the money due him, within the meaning of Section 269-a of the Surrogate's Court Act.

Section 269-a of the Surrogate's Court Act provides:

' § 269-a. Deposit in court for benefit of legatee, distributee or beneficiary. 1. Where it shall appear that a legatee, distributee or beneficiary of a trust would not have the benefit or use or control of the money or other property due him, or where other special circumstances make it appear desirable that such payment should be withheld, the decree may direct that such money or other property be paid into the surrogate's court for the benefit of such legatee, distributee, beneficiary of a trust or such person or persons who may thereafter appear to be entitled thereto. Such money or other property so paid into court shall be paid out only by the special order of the surrogate or pursuant to the judgment of a court of competent jurisdiction.

'2. In any such proceeding, where it is uncertain that an alien legatee, distributee or beneficiary of a trust, not residing within the United States or its territories, would have the benefit or use or control of the money or other property due him, the burden of proving that such alien legatee, distributee or beneficiary of a trust will receive the benefit or use or control of the money or other property due him shall be upon him or on the person or persons claiming from, through or under him.'

Section 269-a was enacted as Chapter 975 of the Laws of 1960, effective April 28, 1960. Previous to that date the first paragraph of the present Section 269-a appeared as the concluding paragraph of Section 269 of the Surrogate's Court Act, to which it was added as an amendment by Chapter 343 of the Laws of 1939, effective April 24, 1939, having been proposed by the Executive Committee of the New York State Surrogates' Association. An explanatory note, appended to the original bill, stated:

'The purpose of the amendment is to authorize the deposit of monies or property in the Surrogate's Court in cases where transmission or payment to a beneficiary, legatee, or other person resident in a foreign country might be circumvented by confiscation in whole or in part. The amendment authorizes the impounding of the fund by the Surrogate to await the time when payment can be made to the beneficiary for his own benefit use and control.' (Matter of Weidberg, 172 Misc. 524, 527, 15 N.Y.S.2d 252, 256.)

The beneficent purposes of Section 269-a have been applied generally to protect the interests of nationals of the 'Iron Curtain' countries (see Matter of Marek, 11 N.Y.2d 740, 226 N.Y.S.2d 444, 181 N.E.2d 456 [1962], appeal dismissed for want of a substantial federal question sub nom. Ioannou v. New York, 371 U.S. 30, 83 S.Ct. 6, 9 L.Ed.2d 5 [1962]; Matter of Geiger, 7 N.Y.2d 109, 195 N.Y.S.2d 831, 164 N.E.2d 99 [1959]; Matter of Siegler, 284 App.Div. 436, 132 N.Y.S.2d 392).

The courts continue to recognize that in the absence of proof by competent evidence that an alien resident in an 'Iron Curtain' country will receive the benefit or use or control of funds of a decedent's estate sent to him there, and where it has not been established that the rate of exchange offered is not confiscatory when compared to the market place rate of exchange, Section 269-a should be applied, and the non-resident alien's share should be deposited (Matter of Frederick, N.Y.L.J., January 16, 1964, p. 14, col. 7, Cox, S. [not otherwise reported]; Matter of Geiger, N.Y.L.J., January 8, 1964, p. 15, col. 4, Cox, S. [not otherwise reported]; Matter of Greenberg, N.Y.L.J., June 16, 1964, p. 14, col. 3-4, Cox, S. [not otherwise reported]).

The fact that Bulgaria and other 'Iron Curtain' countries were listed in Treasury Department Circular No. 655 was a reason justifying a determination by the court that a legatee or distributee might not have the benefit or use or control of the fund and that Section 269-a should be applied (Matter of Braier, 305 N.Y. 148, 111 N.E.2d 424 [1953], appeal dismissed for want of a substantial federal question sub nom. Kalmane v. Green, 346 U.S. 802, 74 S.Ct. 32, 98 L.Ed. 334 [1953]). Removal of a country from this list, however, may be in furtherance of the political and diplomatic objectives of the United States. It is not a finding by the United States that payees of Federal funds will actually receive the funds at full value. It is not, nor could it be, a determination that Bulgarian legatees or distributees will receive the benefit or use or control of funds from decedents' estates. The court must make its own independent determination as to this (Matter of Doktor, 18 Misc.2d 223, 224, 183 N.Y.S.2d 60, 61; Matter of Klein, 203 Misc. 762, 765, 123 N.Y.S.2d 866, 869), and such a determination cannot be delegated to any other authority or agency (Matter of Schmiedl, N.Y.L.J., March 24, 1964, p. 14, col. 3, DiFalco, S. [not otherwise reported]).

The attorneys-in-fact inaccurately contend that Matter of Braier, supra, 305 N.Y. at p. 158, 111 N.E.2d at p. 428 enunciated a rule that if a country is removed from the Treasury Department List, the Surrogate must permit distribution of estate funds to the alien legatees and distributees. What the Court of Appeals actually stated in Braier (305 N.Y. at p. 158, 111 N.E.2d at p. 428) was that in that case the Surrogate had determined independently of the position of the United States Government that 'the probability was that, even if the funds had been transmitted to Hungary, the legatee would not have received them' and that '[a]s soon as conditions in that country change--and the laws of our government permit unblocking of the funds belonging to an Hungarian national--the surrogate will undoubtedly order the funds withdrawn from the city treasury and transmitted to the legatee' (emphasis supplied).

The reasons for the enactment of Section 269-a have been...