Kish's Estate, In re

• Decision Date: 31 July 1968
• Docket Number: No. A--152,A--152
• Citation: 52 N.J. 454,246 A.2d 1
• Parties: In the Matter of the ESTATE of Esther KISH a/k/a Esther Kiss, deceased. WOLF, POPPER, ROSS, WOLF & JONES, Attorneys-in-fact, Plaintiffs-Respondents, v. TRENTON TRUST COMPANY and Julius Kovacs, Executors, etc., et al., Defendants, and Arthur J. Sills, Attorney General of New Jersey, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 454

52 N.J. 454

246 A.2d 1

In the Matter of the ESTATE of Esther KISH a/k/a Esther

Kiss, deceased. WOLF, POPPER, ROSS, WOLF & JONES, Attorneys-in-fact, Plaintiffs-Respondents, v. TRENTON TRUST COMPANY and Julius Kovacs, Executors, etc., et

al., Defendants,

and

Arthur J. Sills, Attorney General of New Jersey, Defendant-Appellant.

No. A--152.

Supreme Court of New Jersey.

Argued June 4, 1968.

Decided July 31, 1968.

William J. Walsh, Deputy Atty. Gen., for defendant-appellant Arthur J. Sills, Attorney General, pro se (Elias Abelson, Deputy Atty. Gen., and William J. Walsh, Deputy Atty. Gen., of counsel and on the brief).

Martin Popper, New York City, and Jesse Moskowitz, Jersey City, for the plaintiffs-respondents (Jesse Moskowitz, Jersey City, attorney).

The opinion of the court was delivered by

HALL, J.

This appeal derives from a proceeding instituted by the attorneys-in-fact for certain interested parties under the will of Esther Kish, a New Jersey decedent, who are nationals and residents of Hungary, to compel payment by the executors of their distributive shares. It is here on certification to the Appellate Division, 50 N.J. 405, 235 A.2d 899 (1967), granted on the petition of the Attorney General. That tribunal affirmed a judgment of the Mercer County Court, Probate Division, directing distribution to these persons.

The crucial issue presented to us--quite a different one than in the trial court and the Appellate Division--is the validity of N.J.S. 3A:25--10, N.J.S.A. (L.1940, c. 148) in view of the decision of the United States Supreme Court in Zschernig v. Miller, 389 U.S. 429, 88 S.Ct. 664, 19 L.Ed.2d 683 (1968), rehearing denied 390 U.S. 974, 88 S.Ct. 1018, 19 L.Ed.2d 1196 (1968), handed down after our grant of certification, which held that an Oregon statute dealing with the same subject matter, as customarily applied, infringed the federal foreign relations power exclusively committed by the United States Constitution to the President and Congress.

N.J.S. 3A:25--10, N.J.S.A. provides:

'Where it shall appear that a legatee, next of kin 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 court to which the fiduciary is accountable, or, in the case of a trust where the trustee was appointed other than by a court, the superior court, on motion of any person in interest, or, failing such, on motion of the attorney general, or on the court's own motion, may direct that such money or other property be paid into such court for the benefit of such legatee, next of kin, 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 order of the court. * * *' (Emphasis added).

The reason for the measure is set forth in the statement annexed to the bill at the time of legislative introduction:

'The purpose of this statute is to authorize the deposit of monies or property in the appropriate court in cases where the 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, as in foreign countries where assets belonging to individuals, especially when in the form of foreign credits, are often seized and wholly or largely appropriated by the Government. This statute authorizes the impounding of the fund by the court to await the time when payment can be made to the beneficiary for his own benefit, use and control. This statute is substantially similar to a recent New York statute amending section 269 of the New York Surrogate's Court Act.' ¹ (Emphasis added).

The testatrix here bequeathed one-half of her residuary estate for division among a list of named relatives residing in Hungary, with the share of any who should predecease to be divided among the survivors. She further provided that if, for any reason, the shares could not be paid to the Hungarian beneficiaries within 20 years after her death, that portion of her estate was to be paid over one-quarter to a church in Trenton, one-quarter to an orphanage in Pennsylvania and one-half to an individual resident in the latter state.

The Hungarian beneficiaries all gave powers of attorney to the plaintiffs, a New York law firm, to collect and forward their shares. There apparently has never been any real question of the identity of these persons as being those the testatrix intended to benefit or that they were the persons who executed the powers. The executors filed a complaint in the Probate Division, seeking allowance of their final account, R.R. 4:106--1 and 3, and an order of distribution, R.R. 4:108--1.

Before the hearing thereof (the account was approved by the court at that hearing), the plaintiffs commenced this summary proceeding within the probate cause, asking for a judgment that the executors pay the shares to them as attorneys-in-fact. N.J.S. 3A:25--24, N.J.S.A.; R.R. 4:117--1; R.R. 4:85. (It may be observed that the matter could have been determined on the executors' application for an order of distribution, without the necessity of commencing an affirmative proceeding). The executors, the contingent beneficiaries and the Attorney General were made parties defendant, the last named primarily because of his role as the protector of the public interest in the contingent charitable bequests to the church and the orphanage. See R.R. 4:99--7 and 4:117--6. On the return of the order to show cause he took the position, pursuant to the authority given him by N.J.S. 3A:25--10, N.J.S.A. (the other defendants took no real part in the proceeding), that the Hungarian shares should be paid into court because those beneficiaries would not have the full, undiminished benefit, use or control of the money if it were paid over to the attorneys-in-fact. The action proceeded as a plenary one, R.R. 4:85--4, and evidence, both testimonial and documentary, was offered by both sides on that question.

The trial court decided that '* * * the evidence, considered as a whole, establishes clearly and convincingly that foreign legatees residing in Hungary can receive legacies from estates of relatives in this country subject to an official rate of exchange but without confiscation or substantial diminution, and that they will have full use and control of such monies transmitted to them.'

The judgment provided that the executors pay to the New Jersey attorney of the attorneys-in-fact one-half of the amount of each share, upon presentation to the executors of a proper refunding bond and release in that amount executed by the attorneys-in-fact, for transmission to the beneficiary. The latter was required to execute a receipt therefor before the United States Consul in Hungary, which was to be filed with the court. Thereupon the executors were directed similarly to pay over the balance of the share upon presentation of a refunding bond and release therefor. Again the beneficiary was directed to execute a receipt for this balance before the Consul, likewise to be filed with the court.

The Attorney General appealed, principally on the ground that the proofs did not establish that the Hungarian beneficiaries would enjoy the full and undiminished value of their shares. The Appellate Division's affirmance, in an unreported opinion, simply stated that there was substantial credible evidence in the record to support the trial court's finding. The Attorney General's petition for certification urged not only the same ground of insufficiency of proof of the statutory requisites, but also contended that the decision conflicted with other decisions of the Appellate Division on the same subject matter.

In our grant of certification, we directed that additional and more direct testimony be taken and returned to us 'with respect to the circumstances under which the agent of the beneficiaries was dealing, how the agent handles funds to be remitted and how the agent knows that the beneficiaries receive the remitted funds and the amount thereof'. This was done on behalf of the attorneys-in-fact; the Attorney General offered no additional evidence, later stating that it would be impractical or impossible to offer any witness to contradict that testimony. Thereafter, before the parties' briefs were filed, Zschernig was decided.

The Oregon statute there involved provided that the right of a non-resident alien to take real or personal property or the proceeds thereof in Oregon is dependent:

(1) Upon the existence of a reciprocal right of a United States citizen to take property in the foreign country on the same terms as a citizen or inhabitant of that country;

(2) Upon the right of United States citizens to receive payment here of funds from estates in the foreign country; and (3) 'Upon proof that such foreign heirs, distributees, devisees or legatees may receive the benefit, use or control of money or property from estates of persons dying in this state without confiscation, in whole or in part, by the governments of such foreign countries.'

The burden to establish the fact of existence of the reciprocal rights is placed upon the non-resident alien; if they are not found to exist and there is no other eligible heir, the property is to be disposed of as escheated property.

Although our statute is custodial only and contains no reciprocity requirement, we think these differences are of no significance on the question of relevancy of the decision to the New Jersey statute and its application, in view of the sweeping rationale of the opinion of Mr. Justice Douglas, dealing as it did particularly with the 'benefit, use and control' requirement rather than relying on the escheat provision. Other action of that court buttresses this conclusion. On the same day Zschernig was handed down, the court summarily vacated the...