Estate of Myles

• Decision Date: 04 May 1979
• Parties: ESTATE OF Edith Georgina Russell Platt MYLES. Surrogate's Court, New York County
• Court: New York Surrogate Court

Page 702

416 N.Y.S.2d 702

99 Misc.2d 501

ESTATE OF Edith Georgina Russell Platt MYLES.

Surrogate's Court, New York County.

May 4, 1979.

Waldemar J. Dittmar, New York City, for petitioners.

Davis, Polk & Wardwell, New York City (James W. Lloyd, William S. Beslow, New York City, of counsel), for respondent.

MILLARD L. MIDONICK, Surrogate.

Petitioners, the remaindermen of a trust which had been a part of one of respondent's common trust funds, seek to have this court fix the date of valuation for the purposes of withdrawal of those funds from the common trust fund. Respondent cross-moves for summary judgment dismissing the petition.

Pursuant to the terms of decedent's will and codicil, one half of the residuary trust was to remain in trust for the life of the wife of decedent's son and upon her death the remainder was distributable to the issue of that son. The wife died on September 28, 1978. Notice of her death was given to the bank on September 29, 1978. Subsequently, the common trust fund was valued as of this latter date, the last business day of September, and this trust's interest was valued at $322,083.30. As of October 31, 1978 and November 30, 1978, the common trust fund was again valued and the trust's interest therein was respectively $291,226.91 and $294,650.25. The trust was withdrawn from the common trust fund as of the November date although respondent had indicated that it would be withdrawn as of the October valuation date.

Petitioners request that this court fix the date for withdrawal from the common trust fund as September 29, 1978. Respondent, however, contends that the earliest date upon which a withdrawal could be made would have been October 31, 1978, and so, a withdrawal on November 30, 1978 benefited petitioners. Respondent admits that if the value of petitioners' interest had been lower in November than in October, it would have been liable.

Investment and withdrawal of funds in a common trust is controlled by subdivision 6 of section 100-c of the Banking Law, which provides as follows:

6. No money of any estate, trust or fund shall be invested in nor funds be withdrawn from a common trust fund except as of a date on or as of which the value of such fund and all investments therein shall be determined. * * * No withdrawal of funds shall be made from such common trust fund unless at least five days prior to the date of withdrawal notice of intention to make such withdrawal shall have been given to the trust company by a person entitled to require such withdrawal or, in lieu of such notice, the determination to make such withdrawal shall have been noted in the records of such trust company. The court having jurisdiction of an account of a trust company maintaining such common trust fund may by order at any time and whether or not an accounting proceeding is pending fix the date of valuation for the purpose of withdrawal of any share or interest in such common trust fund. (emphasis added)

Petitioners seek to avoid the apparent effect of this subdivision on a practicality theory based upon 1) the provisions of subdivision 8 of section 100-c of the Banking Law:

8. On or as of the last business days of January, April, July and October of each year, each trust company maintaining such a common trust fund shall determine the value thereof and of the assets or investments therein, Pursuant to such rules and regulations as may be prescribed by the banking board with respect thereto * * * . Such trust company may in like manner determine such valuations on or as of such other day or days as such trust company selects, provided that such other valuation date is selected for such purpose not less than one week prior thereto and that at the time of such selection a minute thereof is entered in the records of such trust company. Any such valuation so made or action taken in reliance thereon, if made or taken in good faith and pursuant to such rules and regulations of the banking board, Shall fully protect such trust company and shall not be questioned upon the settlement of any account relating to such fund. (emphasis added)

and 2) sections 22.43(a) and 22.52(a) of title 3 of the Official Compilation of Codes, Rules and Regulations of the State of New York, (General Regulations of the Banking Board):

22.43 Valuation schedule. (a) Within 15 bank business days, or such other reasonable period as may be prescribed by the plan of operation, After any valuation date, the trust investment committee shall cause to be prepared a schedule of investments as of the valuation date which shall contain:

(1) a description of each security issue or investment;

(2) its face value;

(3) its value as carried on the books of the common trust fund and

(4) its value as determined as of such valuation date.

22.52 Periodic statement. (a) Within 20 bank business days after any valuation date, or within such other reasonable period as may be prescribed by the plan of operation the trust investment Committee shall cause to be prepared, as of such valuation date, A statement of condition of the common trust fund on the basis of such valuation, showing separately the items of principal and income, and containing a memorandum of the following:

(1) the number of units outstanding;

(2) The value per unit and

(3) the income per unit since the preceding valuation date. (emphasis added)

(Respondent valued the fund in question as of the last business day of each month.)

Petitioners' position is a novel one and clearly one of first impression. They contend that since respondent is not required to compute the values until 15 days after the valuation date, respondent, admittedly having done so within ten days but no earlier than five days,...