Gross' Estate, In re

• Citation: 317 N.Y.S.2d 45,35 A.D.2d 830
• Parties: In the Matter of the ESTATE of Harry L. GROSS, Deceased. Florence WITT, Appellant, v. Doris GROSS, as Executrix, Respondent.
• Decision Date: 23 November 1970
• Court: New York Supreme Court Appellate Division

Page 45

317 N.Y.S.2d 45

35 A.D.2d 830

In the Matter of the ESTATE of Harry L. GROSS, Deceased.

Florence WITT, Appellant, v. Doris GROSS, as Executrix, Respondent.

Supreme Court, Appellate Division, Second Department.

Nov. 23, 1970.

Katz, Robinson, Brog & Seymour, New York City, for petitioner-respondent; Milton A. Seymour, Milton Zwisohn, New York City, of counsel; William Paul Kinsella, New York City, on the brief.

Before CHRIST, P.J., and RABIN, HOPKINS, MUNDER and MARTUSCELLO, JJ.

MEMORANDUM BY THE COURT.

In a proceeding by the executrix (the testator's widow) to settle her account, an objectant (a daughter of the testator) appeals from a decree of the Surrogate's Court, Queens County, entered March 27, 1969, which dismissed her objections and settled the account as filed.

Decree affirmed, with costs against appellant personally.

In August, 1963 the deceased executed a will, article Eighth of which provides in pertinent part as follows: 'I hereby direct that those monies derived from my interest in H. L. Gross & Bro., or any successor in interest to the said partnership be given, in trust, to my Trustee Doris Gross, for the benefit of my children * * * and my granddaughter'. The objections were based on the executrix's alleged failure to establish the trust contemplated by article Eighth with the monies derived from the testator's business interest. Instead, the executrix relied upon the terms of a stockholders' agreement executed nine months after the making of the will, in May, 1964 (the partnership had by then become a corporation, with the testator a one-third stockholder), which provided in substance that, upon the death of a stockholder, his interest in the corporation was to be paid to his surviving present wife at the rate of $200 per week until fully paid, and, if the wife survived thereafter, she was to receive $100 per week for life.

The Surrogate, and we think rightly, relied upon Matter of Hillowitz' Estate, 22 N.Y.2d 107, 291 N.Y.S.2d 325, 238 N.E.2d 723, to dismiss the objections. That case held that a partnership agreement which provided that, in the event of the death of any partner, his widow was to receive a sum representing his interest in the partnership was Not invalid as an attempted testamentary disposition. Such an agreement was a third-party beneficiary contract, performable at death. It need not conform to the requirements of the statute of wills (Matter of Hillowitz' Estate, Supra, p. 110, 291 N.Y.S.2d p. 327, 238 N.E.2d p. 725). At bar, the testator provided in his will that his partnership interest was to be held in trust for the benefit of his children and granddaughter. Prior to his death, however, he made a different arrangement. He contracted to transfer his corporate interest to his wife, effective at his death. This was valid. At his death, i.e., at the time his will is deemed to speak, the testator's wife, the executrix, was entitled to her husband's business interest as a third-party beneficiary under the stockholders' agreement, and Not as a trustee under the will.

MUNDER and MARTUSCELLO, JJ., concur.

CHRIST, P.J., concurs, with the following memorandum, in which SAMUEL RABIN, J., concurs:

Once having determined that the 1964 stockholders' agreement was not an invalid testamentary disposition (Matter of Hillowitz' Estate, 22 N.Y.2d 107, 291 N.Y.S.2d 325, 238 N.E.2d 723), there still remains the question of the testator's intent. A careful reading of all the pertinent documents indicates that his prime and controlling intent was to provide first for his wife and only secondarily for those who would benefit under the testamentary trust.

Thus, at the time the testator made his will, there was an existing partnership agreement, executed in 1956, which provided for (1) payment of the value of the testator's partnership interest to his estate, in monthly installments of $200 each, and (2) payment of the sum of $100 per week to his widow, 'as income, and not on account of principal'. When this disposition is considered together with the provisions of the 1963 will, it is apparent that only the value of the testator's partnership interest would pass under the will to fund the trust, with his widow receiving her $100 per week income individually. The stockholders' agreement executed subsequent to the will provided, however, that the value of the testator's corporate interest be paid to his widow at the rate of $200 per week, with the balance to go to his estate if she died before final payment of the agreed value. If she survived such final payment, she was also to receive an additional $100 per week for life. Accordingly, no funds would pass to the estate unless the testator's widow died prior to final payment of the agreed value.

The Surrogate's decree was correct. Upon the testator's death, the executrix herein, as the widow, became entitled to the agreed value of his corporate interest pursuant to the stockholders' agreement, free and clear of any trust. These monies were intended for her personal benefit and did not become subject to the testamentary trust.

HOPKINS, J., dissents and votes to reverse the decree and remit the proceeding to the Surrogate's Court for a hearing, with the following memorandum:

The question is primarily one of intention. The will, before directing that the proceeds of the testator's interest in the partnership be held in trust by his wife, in the same article provided:

'I have been and am now a partner in the partnership known as H. L. Gross & Bro., and I have entered into a partnership agreement and various other undertakings And subsequent to the making of this Will I may enter into various other agreements and undertakings that will direct the disposition of my interest in the said business or any successor in the interest to the said business' (emphasis supplied).

In fact, within nine months after the making of his will, the testator with his partners changed the form of the business into a corporation and entered into a stockholders' agreement which directed the disposition of his interest in the business. Since no hearing...