In re Brunswick's Estate

• Citation: In re Brunswick's Estate, 143 Misc. 573, 256 N.Y.S. 879 (N.Y. Surr. Ct. 1932)
• Decision Date: 14 April 1932
• Citation: 143 Misc. 573,256 N.Y.S. 879
• Parties: In the Matter of the Estate of FREDERICK W. BRUNSWICK, Deceased.
• Court: New York Surrogate Court

143 Misc. 573

256 N.Y.S. 879

In the Matter of the Estate of FREDERICK W. BRUNSWICK, Deceased.

Surrogate's Court, Westchester County.

April 14, 1932

Proceeding on accounting of executor.

Submit decree in accordance with this opinion and decision.

SYLLABUS

On this accounting proceeding claim is made by decedent's widow to shares of stock of a corporation pursuant to the terms of an agreement by which a voting trust was executed making decedent and said widow voting trustees and providing that the interest of either on death, including the stock and voting trust certificate, automatically vested in the survivor. It further appears that the decedent's will gave his interest in the corporation to his widow in compliance with the terms of the agreement. The agreement involved mutual obligations and considerations growing out of a litigation in which decedent was indebted to his wife and to a corporation in which they were the only stockholders. Decedent merely acknowledged the indebtedness and undertook to pay not by the voting trust which passed nothing, but by the creation of a trust to hold his stock as trustee for his wife with the stock passing to her on death. Equity will enforce an executory agreement when there was an actual valuable consideration.

The fact that the agreement permitted either to sell to a third party did not destroy the trust nor did the fact that the deed of trust contains a full power of revocation or that the writing is to become effective only after the death of the party render it testamentary in character. Nor did reserving the right during life to sell or the power to withdraw a part or all of the principal make the transaction testamentary.

Under the circumstances it must be held that the decedent intended to and did create a voluntary trust for the widow in the shares of the stock of the corporation owned by him, he becoming a trustee for the beneficiary. These shares may now be delivered to the widow.

A claim of the widow against the estate for moneys expended in payment of decedent's obligations in his lifetime must be allowed, but a claim based upon a check made three years prior to decedent's death and never presented to the bank on which it was drawn must be disallowed (Neg. Inst. Law §§ 131-133, 241, 321, 322).

A claim based upon three promissory notes in the absence of anything to show a consideration therefor must be disallowed, but a claim for rent pursuant to the terms of a lease must be allowed.

COUNSEL

S. Joseph Oxenberg, for the executor.

Sperry & Yankauer [Walter D. Yankauer and Samuel Weinberg of counsel], for legatee and creditor.

Schneider & Groggins [Stanley S. Groggins of counsel], for objecting creditor.

Phillips & Avery [Royd D. Lutz of counsel], for objecting creditor.

Milton Dammann [Maurice R. Roche of counsel], for widow, claimant.

SLATER S.

In this accounting proceeding the executor seeks the court's determination of the ownership of certain shares of stock of a corporation known as Frederic's, Inc. The widow, Anna W. Brunswick, has made a claim upon the executor to turn over to her 127 shares of stock of Frederic's, Inc., by virtue of an agreement dated December 16, 1926. The court is also asked to pass upon the claim of the widow against certain certificates of stock of the Brunswick Holding Corporation; also to pass upon the claims of one Marie Brandee, the Edmar Realty Company, Inc., and Harry W. Lichtenstein.

The decedent died February 17, 1931, by suicide. Decedent's last will was dated August 29, 1930.

The court will take up the claims in the order as above indicated.

With regard to the stock of Frederic's, Inc.: The ownership of this stock in December, 1926, was as follows: The decedent owned 127 shares and the widow owned 123 shares, making 250 shares of the issued stock of the corporation. In November, 1926, Frederic's, Inc., brought a suit in the Supreme Court in New York county against Frederick W. Brunswick, the decedent, for the sum of $111,268.37. Anna W. Brunswick, on behalf of herself and as a stockholder of Frederic's, Inc., brought an action against the decedent and others in the Supreme Court, county of Westchester, demanding judgment restraining the decedent, as an officer of Frederic's, Inc., and the Brunswick Holding Corporation, from selling, mortgaging or disposing of the real property described in the complaint, and demanding that the Brunswick Holding Corporation be required to convey certain real property to Frederic's, Inc. All the stock of the Brunswick Holding Corporation (which held title to the home at Peekskill) was owned by the decedent, Frederick W. Brunswick. On or about December 16, 1926, the two actions were settled, a stipulation by counsel was entered into, resulting in the agreement dated December 16, 1926, by and between the decedent, Frederick W. Brunswick, and Anna W. Brunswick, the wife, the owners of all the stock of Frederic's, Inc.

In the agreement, after certain 'whereas' clauses, the parties recited the consideration of one dollar and other good and valuable consideration, and agreed: 'First. For a period of ten years next ensuing the date hereof, unless sooner terminated by the mutual consent of the respective parties hereto, in the event that either of the parties to this agreement be desirous of disposing by sale or otherwise of his entire interest in the capital stock or voting trust certificates representing the same held by him or her in the corporation, Frederic's, such party does hereby agree to first offer in writing to the other party to this agreement such interest, whether it be entire or otherwise, before disposing of the same or attempting to dispose of the same to any other person, firm or corporation.'

Under the second clause of the agreement, either might purchase the stocks offered, at the sum of $300 per share, and must exercise the privilege of buying within a period of ninety days.

The third clause provides that, in case of unwillingness to buy, the party offering the stock may dispose of it to other persons.

The fourth clause states: 'It is further mutually understood and agreed by and between the parties hereto and as a consideration for the execution of this agreement and for the execution of the stipulation annexed hereto, that upon the death of either party to this agreement, whether intestate or otherwise, the interest of such deceased party in the corporation Frederic's, whether such interest be evidenced by certificates of stock or by voting trust certificates, or any claim or debt due by the corporation to the said party, shall forthwith automatically, by virtue of such death, belong to and become vested in the survivor, and upon the death of such party, the said shares of stock, voting trust certificates and/or other interests are hereby assigned, transferred and set over to the survivor, provided, however, that such party has not previously thereto disposed of his or her shares of stock, voting trust certificates or interest in said corporation Frederic's in accordance with the terms previously set forth herein.

'Each of the parties covenants that in order to carry out this agreement, said party will not bequeath or otherwise dispose of such party's shares of capital stock, voting trust certificates and/or other interest in the corporation Frederic's in any testamentary document, and in the event that either party shall execute such testamentary document, that in such testamentary document said party will confirm by adequate language the obligation imposed by this agreement.

'In order to make effective this agreement, the certificates of stock owned by each of the parties hereto in the corporation Frederic's and/or the voting trust certificates representing such certificates of stock and/or any and all certificates of stock issued in substitution thereof, shall have inscribed across the face thereof the following notation: 'This certificate is not subject to sale, assignment, hypothecation or other transfer, except as set forth in an agreement between all the stockholders of Frederic's, dated the 16th day of December, 1926, copy of which has been filed with the Secretary of Frederic's.'

'Fifth. It is further mutually understood and agreed by and between the parties hereto that the object of this agreement is to keep the control and management of the said corporation in the hands of said parties and to prevent any stranger to this agreement from obtaining possession of any of its capital stock, except in accordance with the terms hereof.'

The other paragraphs of the agreement provide that offer of sale shall be in writing, and the agreement to be binding upon the parties and their heirs and legal representatives, who are obligated to execute any and all claims and to give any further assurance necessary to make effective the covenants and obligations of such then deceased party.

This agreement was signed by the parties and was acknowledged. Pursuant to this agreement, a voting trust agreement was executed at the same time making the two stockholders the voting trustees. A trust certificate was also executed by the two parties. A certificate of stock running to the two parties as voting trustees for 250 shares of the stock was executed by the officers of the company. The minutes of directors and of stockholders of the company were offered in evidence, showing the assenting to the execution of the papers above stated. Anna W. Brunswick, individually, and as stockholder of Frederic's, Inc., executed a general release to Frederick W. Brunswick, to the Brunswick Holding Corporation and to Frederic's, Inc., releasing all actions and all manners of action and causes of action, suits, debts, sums of money, accounts, etc. Frederic's, Inc.,...